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It is management structure report on the Fauji Fertilizer Company (FFC) which is may be useful for uoy as well

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  1. 1. FAUJI FERTILIZERS 1- Introduction With a vision to acquire self - sufficiency in fertilizer production in the country, FFC was incorporated in 1978 as a private limited company. This was a joint venture between Fauji Foundation (a leading charitable trust in Pakistan) and Haldor Topsoe A/S of Denmark. The initial authorized capital of the company was 813.9 Million Rupees. The present share capital of the company stands at Rs. 3.0 Billion. Additionally, FFC has Rs. 1.0 Billion stakes in the subsidiary Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited). FFC commenced commercial production of urea in 1982 with annual capacity of 570,000 metric tons. Through De-Bottle Necking (DBN) program, the production capacity of the existing plant increased to 695,000 metric tons per year. Production capacity was enhanced by establishing a second plant in 1993 with annual capacity of 635,000 metric tons of urea. FFC participated as major shareholders in a new DAP/Urea manufacturing complex with participation of major international/national institutions. The new company Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited) commenced commercial production with effect from January 01, 2000. The facility is designed to produce 551,000 metric tons of urea and 445,500 metric tons of DAP. -1-
  2. 2. This excellent performance was due to hard work and dedication of all employees and the progressive approach and support from the top management. In the year 2002, FFC acquired ex Pak Saudi Fertilizers Limited (PSFL) Urea Plant situated at Mirpur Mathelo, District Ghotki from National Fertilizer Corporation (NFC) through privatisation process of the Government of Pakistan. This acquisition at Rs. 8,151 million represents one of the largest industrial sector transactions in Pakistan 1.2- Mission FFC's mission is to sustain its role as the leader in industrial and agricultural advancement of Pakistan by setting and achieving new and higher goals and taking initiatives. The Company is committed to ensuring safe and conducive work environment, providing high quality products and allied services to its customers and profitable returns to its shareholders. 1.3- Vision FFC is focused on harmonizing its capabilities and maximizing its potential. FFC's vision for the future envisages diversification and undertaking ventures at home and abroad in collaboration with leading international partners. 1.4- ISO-9002 Another major landmark for Fauji Fertilizer Company is ISO-9002 certification for its manufacturing division at Goth Machhi. Quality in all areas has been a hallmark of the Company right from the beginning and our product "SONA UREA" has already established its rightful place in the market. -2-
  3. 3. Therefore, to bring our system in line with internationally recognized quality standards, we decided to go for ISO-9002 certification. To achieve a total quality management system, we surpassed the requirement of ISO-9002 standards by including all support services like Administration, Personnel, Finance, Hospital, Schools and Management Club etc. also in the certification scope. We selected Bureau of Veritas Quality International (BVQI), England, a leading certification agency as our registrar.BVQI is honoured by various accreditation authorities of the world. Quality Management System of FFC got ISO certified in its first attempt during November 1997 with the honor of being the 1st Fertilizer Plant in Pakistan. Since then we have not looked back. We have passed all surveillance audits with commendable remarks from our registrar. Since 21 February, 2001 Quality Management System of FFC now stands recertified (ISO 9002) by BVQI after successful completion of initial certification period of 3 years. -3-
  4. 4. 2- Management CHIEF EXECUTIVE AND MANAGING DIRECTOR Lt. Gen. Munir Hafiez HI(M), (Retired) Chief Financial Officer Mr. Abid Maqbool General Manager Marketing Mr. Asad Sultan Chaudhry -4-
  5. 5. General Manager Manufacturing & Operations Mr. Zafar Hadi General Manager Technology & Engineering Syed Iqtidar Saeed General Manager Plant (Goth Machhi) Mr. Tahir Javed General Manager Plant (Mirpur Mathelo) Mr. Naeem-ur-Rehman Company Secretary Brig. Khalid Kibriya (Retired) MD/Secretary Appointment Managing Directors FFC Name From To Maj Gen Rao Farman Ali Khan (Retired) May 78 Aug 85 Lt Gen Ahmad Jamal Khan, HI(M), SI(M) (Retired) Sep 85 Feb 92 Lt Gen Imtiaz Waraich, HI(M), SJ, SBt, TBt Feb 92 Apr 96 (Retired) Lt Gen M. Arif Bangash, HI(M), SBT (Retired) Apr 96 Dec 96 Lt Gen Khalid Latif Moghal, HI(M), SBt (Retired) Dec 96 Mar 97 Lt Gen Zia Ullah Khan, HI(M) (Retired) Mar 97 Mar 00 Lt Gen Amjad Shuaib, HI(M) (Retired) Mar 00 Mar 03 Lt Gen Mahmud Ahmed, HI(M) (Retired) Mar 03 Mar 06 Lt Gen Munir Hafiez, HI(M) (Retired) Mar 06 To Date Additional Managing Directors FFC -5-
  6. 6. Name From To Maj Gen Khurshid Haider (Retired) May 78 Jan 87 Maj Gen Qazi Abid Hussain, HI(M), SI(M) Jan 87 Sep 91 (Retired) Maj Gen AKM Khalil ur Rehman, HI(M), SI(M), Sep 91 Dec 95 SBt (Retired) Lt Gen Khalid Latif Moghal, HI(M), SBt (Retired) Jan 96 Dec 96 Company Secretaries Name From To Lt Col Maqbool Mahmood (Retired) May 78 May 84 Brig Aziz ur Rehman Khan (Retired) May 84 Jan 90 Brig Ali Jawahar Khan (Retired) Jan 90 Nov 91 Brig Muhammad Ajmal (Retired) Nov 91 Jan 94 Col Azhar Ali Shah, SBt (Retired) Jan 94 Apr 96 Brig Muhammad Ajmal (Retired) Apr 96 Oct 96 Brig Muhammad Akram Khan (Retired) Oct 96 Jul 01 Brig Muhammad Saleem Suleman, SI(M) (Retired) Aug 01 May 07 Brig Khalid Kibriya (Retired) JAN 08 3- Hierarchy -6-
  7. 7. CHIEF EXECUTIVE Chief Financial Officer GM GM GM Plant GM Plant Technology GM Manufacturig (Goth (Mirpur & & Operations Marketing Engineering Machhi) Mathelo) ZM ZM ZM North Central South RM RM RM RM RM RM RM RM RM RM RM Lahore Faisalabad Sahiwal Peshawar Bhawalpur D.G.Khan Multan Vehari Hyderabad Sukkur Nawabshah Sales Sales Sales Sales ]Sales Sales Sales Sales Sales Sales Sales Officers Officers Officers Officers Officers Officers Officers Officers Officers Officers Officers -7-
  8. 8. 4- Human Resource Management 4.1- Organizational Culture: The culture of the organization is very much differentiated with their competitor. The culture of the organization is too much dynamic that is encouraged to the individual to do hardworking & show the achievement. Following are the practices that make the culture of the organization dynamic.  Centralization/ Decentralization: The culture of the organization is centralized and also decentralized that everyone has followed the orders of the Top management and decentralized in the sense that some decision are taken into consideration and solved by the specific department head.  Employees Relationship The culture has focused on the good relations among the employees. each and every person is working in the friendly environment and co-operate with each other. 4.2- Human resource practices: Following are the practices conducted in the FFC.  Recruitment  Hiring  Training  Performance Management  Employee Development  Pay structure  Compensation & Benefits -8-
  9. 9. 4.2.1- Recruitment: In FFC both recruitment processes are followed. External Recruiting: In the external recruiting, FFC advertises through its website & also through the newspaper. They also attract the job applicants through the reference of existing employees. Internal recruiting: They also make internal recruitment by hiring an existing employee to another job according to the need. 4.2.2-Hiring: The hiring procedure they have conducted is the following. • Take the written tests • Conduct the interview Interview is compulsory in every hiring, while taking the interview the HR manager and the specific department manager must be present. 4.2.3- Training: In the training, FFC has gone for the two ways. Internal Training: The management has gathered its pool of the experienced people who trained the employees in their skills, behaviors & attitudes. External Training: They hired the international consultancy firm who gives training to the employees and assists in the different areas of job. The training period is of the two months. -9-
  10. 10. Experienced personnel come from Denmark, china and gave training. On the job training and off the job training is given to the employees. For example employees are sending to foreign country for higher studies on scholarship. 4.2.4- Performance Management: They made evaluation of their employees after six months. Feedback is taken from employees and their performance is judged. 4.2.5- Employees Development: The channel has strongly focused on the employee development.  Cover the laps among the employees by using the frequently the mentor in the organization.  Make promotions regarding to their performance  Job rotation is also done if the managers see any need of it. But they also watch the interest of the employee. 4.2.6- Pay Structure: FFC has lead the market pay strategies that is they have pay the more than the 5-10% which has developed the external motivation in the employees. 4.2.7- Compensation and benefits: The compensation and benefits given by the management are followings: • Annual Bonus • Free education • Free pick & drop to there employees • Free medication - 10 -
  11. 11. 5- Communication In FFC downward and upward communication is used through hard and soft copy but they converted their communication channel from hard copy to soft copy. There are following way of communication in FFC. • Use of telecommunication i.e. cooperate SMS • Use of electronic media, e-mail, fax etc. They heavily invested in the technology. They are using the latest technology especially imported from the foreign country. 6- Motivation FFC focused on the motivation of employees to do work and for this purpose FFC give them different types of incentives, bonuses, pay incentives, per motion, Medical facility, residential facility, fair well, annual dinners and much more. Just like it FFC create a community for employees. The Company has built a model township for its employees at this remote location which consists of residential accommodation along with allied facilities. In caring for the community in health, education, environment & sports, Fauji Fertilizer Company Limited follows its key objective: "To use all skills, energies and technologies in building the image of the company, by strictly adhering to the Company Core Values, that makes its employees to contribute towards society in a way and enhance its image as a leading Fertilizer Business company in Pakistan." - 11 -
  12. 12. For this FFC is providing excellent health, education, recreational and sports facilities to its employees. Health facilities include a modern clinic equipped with a laboratory in the vicinity of the residential area. A panel of competent doctors is available round the clock to take care of the community's health. Two schools, FFC Grammar School & FFC Model School are operating in parallel in the FFC Township, offering upto the Higher Secondary level. Imparting computer literacy to children is one of the main elements of FFC schools, modern education. We operate two separate Management and Staff clubs, offering sports, recreational as well as social activities. The clubs are equipped with basic facilities like swimming pools, Tennis/Squash courts, Health gym and much more. A lush green (09 holes) golf course is a panoramic element of FFC sports facilities and it has promoted many good golfers in the community. Many sports events like Annual Sports, Married Vs Bachelors and Sports Gala etc. are held from time to time, imparting healthy entertainment to the residents. Social events like Musical Evening, Mushaira, Eid-Milan, etc. are also part of the social activities of the club. 7- Globalization Impact Now a day world became a global village and every field is directly affected by the incident done all over the world. Fauji Fertilizer Company Limited also affected by the political and social conditions of world just like increase in oil prices. With this new technology, innovation, ways of communication and new management styles affect the FFC in positive manners. - 12 -
  13. 13. 8- Decision Making In FFC decision making done by the team work. Leaders consult with individual or group subordinates, obtaining their ideas and opinion, and then make the decision. While doing decision making FFC identifying and diagnosing the problems or facts or both, generalizing the alternatives, choosing best alternative and after implication evaluation the results. Evaluating Identify Generating Choosing results and Evaluating Implication alternative best diagnosing Alternative Decision solutions alternative problem FFC decision making some times very lightly affected by organizational politics, emotions and personal preferences but FFC management quickly overcome on it due to good controlling. 9- Planning In FFC planning through by a proper channel and it take a long time. When they plan something, they started their planning from the beginning of year and almost taking one year on research and other precaution and facts relating to their planning they implied what they planed. In their planning there is a proper channel/ sequence which we mentioned above. - 13 -
  14. 14. First of all they analysis the situation and see with the alternative goals and plan and measure the opportunity cost. After that they select the best way and last step of their planning is implication with monitoring and controlling. While doing planning and implication of planning they also see and measure internal and external threats, weakness, strengths, resources etc. The most interesting thing in FFC’s planning that there is vertical planning but from Bottom to Top because their bottom staff directly relating to their customers (farmers) so they started planning at gross root level. 10- Innovation Impact In fertilizer sector innovation is not so much important aspect. Because as old as fertilizer product as increase in value and demand of product. Because Industry Market innovation are slowly as compare to Consumer Market In FFC for the purpose of innovating ideas Research and Development (R&D) Department is working. They used the latest equipment and welcome to positive innovation by all over the world. 11- Controlling Controlling is a very much important aspect of big business. FFC controlling technique is Bureaucratic. Because of in rules and regulation they use Bureaucratic controlling mean the formal control, feed forward control aims to prevent problem before they arise, feed back control implies the performance measure by the data and analysis the results. With this they have the also have audit management and budgetary control by the help of auditors, balance sheet, income statement and financial ratios. - 14 -
  15. 15. Set Measure Determine performance Compare performance deviation stander With in Standards Limits Taking corrective Action No Yes Continuous work progress Some times employees show reaction against these control then management take the actions against him/her. 12- Services Provided to Customers FFC provided to their customers technical and mechanical services. With this Fauji Fertilizer Company Limited has been providing Agricultural Advisory Services to the farming community throughout Pakistan since 1981, for increasing the agriculture production in general and the farmers’ economic returns in particular. FFC in pursuit of its national commitment and moral obligation maintains regular contact with farmers and Agricultural Institutions to ensure constant and efficient transfer of latest technology - 15 -
  16. 16. 12.1- Farm Advisory Services - 16 -
  17. 17. 12.2- Technical Training Company Training Area Year 1. Kaltim-3 Fertilizer, Indonesia Urea Plant Operation 2001 2. Fertinito, Venezuela Ammonia/Urea (Operation & 1999 Maintenance) 3. Huainan Chemical Works, China Ammonia Back End Operation. 1998 4. Gulf Petrochemical Ind. Bahrain. Urea Plant Operation 1997 Maintenance 5. State Oil Company, Norway Ammonia F.E. Operation 1996 6. Hainan Group, China Urea Plant Operation & 1996 Maintenance 7. Inner Mongolian, China Urea Plant Operation 1995 8. SNGCP Group. China Urea Plant Operation 1994 9. Jamuna Fertilizer, Bangladesh Ammonia Plant Operation & 1989-91 Maintenance 10. Kaltim-3 Fertilizer, Indonesia Ammonia Plant Operation. 1987 13- Financial Information 13.1- Dividend Details/Bonus Shares/Book Closure Dividend Bonus Shares BOOK CLOSURE Status of Div BOD % Total % Total From To 3rd Interim-05 32.5 97.5% 10 - 117 12-12-05 19-12-05 Final-2005 22.5 120% - 40% 119 20-02-06 28-02-06 1st Interim-06 22.5 - - - 119 19-06-06 25-06-06 2nd Interim-06 20 - - - 121 09-10-06 13-10-06 3rd Interim-06 18.5 - - - 122 25-12-06 31-12-06 Final-2006 39 100% - - 124 22-02-07 28-02-07 1st Interim-07 25 - - - 125 23-06-07 29-06-07 2nd Interim-07 22.5 - - - 127 06-09-07 12-09-07 3rd Interim-07 27.5 - - - 128 03-12-07 09-12-07 Final-2007 35 110% - - 130 23-02-08 29-02-08 1st Interim-08 35 - - - 131 27-06-08 03-07-08 * Highest in the history of the company 13.2- Share's Value - 17 -
  18. 18. FAUJI FERTILIZER COMPANY LIMITED FLUCTUATION FOR THE YEARS 1996-2007 YEAR DATE HIGH DATE LOW 2005 16-MAR-05 180.00 27-JUN-05 118 2006 31-JAN-06 144.90 29-DEC-06 105.50 2007 13-JUL-07 131.90 05-JAN-07 103.00 14- Social Responsibility In social responsibility of FFC there come environment and safety of their workers who are worked at sight. Safety has always been a hallmark of out their performance. They have always placed safety ahead of all other business requirements. They have come a long way to develop a safety culture where every body speaks safety language 14.1- FFC Philosophy They believe that most of the accidents are caused by human error and are preventable. The management recognizes that safety is of prime importance and high production targets can only be achieved through a good safety performance. FFC endeavors excellence in the field of personnel and plant safety. Personnel safety is regarded above all business requirements. 14.2- Achievements by adopting safety measures The company runs a safety program through which all employees are educated and trained to perform their duties safely. The effectiveness of the safety program is reflected by the various awards won from National Safety Council (USA) since 1982. The company has received 15 awards of honor. Two special safety awards on outstanding performance were given to FFC in 1989 / 1993 by the council for constantly achieving - 18 -
  19. 19. outstanding performance in the field of safety. FFC also has the honor of achieving all time best 16.49 Million man-hours without lost time injury as of 31 December 2001, which is the all time best. 14.3- Program All safety achievements are accomplished by coordinated efforts of the safety section and all departments. A safety culture at the plant site is created in which employees are motivated to participate in safety talks, slogan competitions and safety incentive programs. House keeping is the essential feature of our safety programs, which enables us to keep our plant in excellent presentable form. All employees receive token award on achievements of safe million man-hours milestone. The company not only believes in safety at the plant but also promotes off the job safety. Township residents and both schools are also part of safety program. 14.4- Monitoring and Control Plant safety performance is reviewed monthly by safe operation committee (SOC). General Manager Plant is the Chairman and all departments Managers are SOC members. Routine plant audits ensure compliance to all safety standards applicable to the industry and strict compliance to industrial codes is adhered to for the new installations and modifications. 14.5- Safety Awards They got 2 safety Awards 14.6- Environment Like safety, environment at plant site is held. All efforts remain focused on the maintenance, preservation and improvement of environment. If not complete elimination, mitigation of pollution is the primary goal. Management is completely committed in its - 19 -
  20. 20. support to sustenance of environment, which encompasses pollution, noise and greenery. FFC has spent millions in achieving a complete control of the environment. For FFC, end of the pipe treatment remains the last resort. It believes in mitigating pollution through recycling, elimination or bringing changes to the system. Plant operation is strictly controlled to maintain a safe environment for plant personnel as well as the surrounding community. 14.7- Environment certificates ISO Certifications ISO Certifications ISO Certifications Sr. No Certification Name Brief Description of Certifications 1 ISO-9001:2000 Quality Management System 2 ISO 14001:1996 Environmental Management System 3 OHSAS 18001:1999 Occupational Health & Safety Assessment Series 15- Marketing - 20 -
  21. 21. Marketing Division, setup in July, 1978 is responsible for all marketing operations including planning, distribution, sales, farm advisory services, field warehousing, finance and administration. With the commencement of commercial production in June 1982, the company started marketing its urea under the brand name "Sona". The company markets not only Sona urea but also imported nitrogen, phosphate and potash based fertilizers The Company is also marketing half a million tonnes of sona urea granular manufactured by Fauji Fertilizer Bin Qasim (formerly FFC – Jordan Fertilizer Co. Ltd). When FFC came into the market with its production in June 1982, the other manufacturers namely Engro, Dawood Hercules and National Fertilizer Corporation were already well established in the market. The brands of Engro (Engro) and Dawood Hercules (Babber Sher) were considered premium brands in Sindh and Central Punjab respectively. FFC had to face very tough competition from the beginning. This competition coupled with the huge surplus of urea in the domestic market posed a great challenge to the company in the initial years. FFC not only met the challenge by capturing the desired market share but in the process, enhanced the brand image of its product Sona urea which has become the number one brand. During the period 1983 to 1986 when a large urea surplus existed in the country, FFC pioneered urea exports which not only helped in stabilizing domestic urea but also earned valuable foreign exchange for the country. The Government of Pakistan deregulated the trade and prices of phosphatic fertilizers on 21 August 1993. Subsequent to this decision FFC started import of these fertilizers and as a result timely supplies were arranged. Farmers were thus provided with quality product in bags with guaranteed correct weight and this brought about a very positive qualitative change in the phosphatic fertilizer business in the country. The Marketing Division now has the necessary expertise to handle fertilizer imports and exports. FFC believes in selling a programme rather than just a product. For this, the company has adopted a customer oriented strategy, marketing quality products backed by efficient and - 21 -
  22. 22. effective support services with emphasis on developing the market through practical and innovative farmer education Their motto/slogan is very easy which is ‫ﺍﭽﻬﻰ ﻜﻬﺍﺩ ﺍﭽﻬﺍ ﺩﻭﺳﺕ‬ They start their drama for farmers “SONA CHANDI” 16- Marketing Network Marketing Zone North Central South Zone Zone Zone - 22 -
  23. 23. CENTRAL ZONE Dera Zonal Ghazi Multan Vehari Bhawalpur Office Region Khan Region Region Region NORTH ZONE Lahore Faisalabad Sahiwal Peshawar Zonal Office Region Region Region Region - 23 -
  24. 24. SOUTH ZONE Zonal Hyderabad Nawabshah Sukkur Office Region Region Region 17- Awards 17.1- Best Presented Accounts Awards Finance Group - Financial Reporting Department ICAP/ICMAP SAFA NCCA Total Awards Chemical & Manufacturing Best Design Year Overall Winner Fertilizer Sector & Lay out Sector 2006 First First First First 4 2005 First First Runner Up Second 4 2004 First First First First 4 2003 First First First First 4 2002 First First - Second 3 2001 - Second - - 1 2000 - Fourth - - 1 - 24 -
  25. 25. ICAP/ICMAP SAFA NCCA Top Awards 5 5 3 3 16 Ranking Awards - 2 1 2 5 Total Awards 5 7 4 5 21 ICAP Institute of Chartered Accounts of Pakistan ICMAP Institute of Cost & Management Accountants of Pakistan SAFA South Asian Federation of Accountants NCCA National Council of Culture & Arts Best Presented Awards 17.1.1- Best Presented Awards For 2006 ICAP/ICMAP Award • Overall First Position • First Position in Chemical and Fertilizer Sector SAFA AWARD • Best Presented accounts in the Manufacturing Sector 17.1.2- Best Presented Awards For 2005 First Position, Chemical & Overall First Fertilizers Sector Position 2nd Position in Manufacturing Sector ICAP ICMAP SAFA Award ICAP ICMAP Award Award 17.1.3- Best Presented Awards For 2004 - 25 -
  26. 26. Best Corporate Report Award First Position, Chemical & Overall First Fertilizers Sector Position ICAP ICMAP ICAP ICMAP Award Award 17.1.4- Best Presented Awards For 2003 Best Presented Accounts- Best Corporate Manufacturing Sector Report Award, Overall 1st Position South Asian ICAP ICMAP Federation of Award Accountants Award Best Corporate Report Award, First Prize First Position, Chemical & Annual Report Fertilizers Sector 2003 National Council ICAP ICMAP Of Culture Arts Award Pakistan Award 17.2- Safety Awards - 26 -
  27. 27. The effectiveness of the safety program is reflected by the various awards won from National Safety Council (USA) since 1982. The company has received 15 awards of honour. Two special safety awards on outstanding performance were given to FFC in 1989 / 1993 by the council for constantly achieving outstanding performance in the field of safety. FFC also has the honor of achieving all time best 16.49 Million man-hours without lost time injury as of 31 December 2001, which is the all time best. 17.3- Top 25 Companies KSE Awards 5th Position In 2007 In 1991, the company was listed on Karachi and Lahore Stock Exchanges and in 1992 on Islamabad Stock Exchange when it was formed. Shares were offered to the public and company employees. In 1993/94 FFC achieved the distinction of paying the highest income tax in the country. Based on the exemplary dividends to the shareholders and other criteria of Karachi Stock Exchange, FFC has consistently remained in the list of top 25 best performing companies of Pakistan consecutively for 14 years since 1994. As a result of excellent performance over the years, the company's ranking in the Karachi Stock Exchange list of 25 companies improved from fifth position in 1995 to second in 1996, it was awarded the first position in 1997 and again second prize in 1998. - 27 -