A Project Report on Production & Operation Management of IFFCO-KANDLA Submitted To: Prof.

Hitendra Lachhwani

Submitted By:
Anjali Nair-12035 Kruti Rawal-12040 Khushma Thacker-12051 Grishma Parihar-12018 Pratik Parmar-12037 Debendra Manna-12031 Gujra Rahul-12019

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Acknowledgement
We are thankful to Mr. Dodiya (Employee Trainee) and our faculty Prof. Hitendra Lachhwani. We are thankful to HR Manager of IFFCO who co-operate with us and they gave proper guidance & necessary information regarding the unit.

We are also thankful to Tolani Institute of Management Studies for providing us such valuable opportunity of getting the knowledge of real meaning of industry.

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Sr. No.
1 2 3 4 5 6 7 8 9 10 11 12 13

Content Introduction Core Process Corporate Strategy Competitive Priorities Production Process Capital Intensive Manufacturing Process Production & Inventory Strategy Quality & Lean Resource Planning Analysis Conclusion Bibliography

Page No.
4 9 11 14 16 21 22 32 36 41 43 44 45

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Introduction
IFFCOs NPK plant is located adjacent to Kandla Port Trust Oil jetty. IFFCO was built at a cost of 30 crores with two streams having a licensed capacity of 1,27,000 tons of P2O5. This plant was designed by MS. Dorr Oilver, to produce three grades of NPK based on DAP, the plant was commissioned on 26 th November 1974 and its commercial production was started on 1st January 1975. Due to increased demand for complex fertilizer, the capacity of NPK plant has been doubled at a cost of Rs. 28.6 crores and thus two streams (i.e. train C and D) were added with the licensed capacity increasing from 1,27,000 MT P2O5 per annum to 2,60,000 MT P2O5 per annum. IFFCO Kandla again went for expansion in 1996-97. Kandla Phase- II NPK/DAP project conceptualized the setting up of two additional streams (train E and F) with an annual production capacity of 2, 10,700 P2O5 MTPA of at a cost of 205.30 crores.

Dr. U.S. Awasthi is the Managing Director and Chief Executive Officer of IFFCO who has been vested with the overall responsibility of the affairs of IFFCO's day to day activities.

Mr. M.R. Patel is the Sr. Executive Director at IFFCO Kandla Unit. Tolani Institute of Management Studies Page 4

IFFCO Plants:

Kalol Kalol unit - the oldest unit of IFFCO is located at 26 km from Ahmedabad on the Ahmedabad Mehasana highway.

Aonla Aonla is about 28 KM south west of Bareilly on Bareilly-Aonla road.

Phulpur Situated near Allahabad in Uttar Pradesh.

Kandla IFFCO's KANDLA PLANT is located on the western bank of Kandla creek adjacent to Kandla Port Trust oil jetties.

Para deep (Orrisa) Paradeep is located on village Mudsadia, Jagatsinghpur.

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Vision
To augment the incremental incomes of farmers by helping them to increase their crop productivity through balanced use of energy efficient fertilizers, maintain the environmental health and to make cooperative societies economically & democratically strong for professionalized services to the farming community to ensure an empowered rural India.

Mission
IFFCO's mission is "to enable Indian farmers to prosper through timely supply of reliable, high quality agricultural inputs and services in an environmentally sustainable manner and to undertake other activities to improve their welfare"

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

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Products

Urea
IFFCO's Urea is not merely a source of 46% of nutrient nitrogen for crops, but it is an integral part of millions of farmers in India. A bag of IFFCO's urea is a constant source of confidence and is a trusted companion for Indian farmer.

DAP
Diammonium Phosphate It is the most popular phosphatic fertilizer because of its high analysis and good physical properties. The composition of pure salt of DAP is N-21.19% and P205 -53.76%. Fertilizer grade DAP is 18:46:0.

NPK
NPK complex fertilizers produced at Kandla are DAP based grades. At present two grades Grade I - 10:26:26 and Grade II-12:32:16 are produced. Granular NPK complexes are free flowing and do not pose any problem during handling and storage. However, exposure of material for long period to very high humidity may cause caking. Therefore, NPK complexes are bagged in quality tested HDPE bags to prevent.

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BIO Fertilizers

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

Our Product - Water Soluble Fertilizer:

Water soluble fertilisers are now set to be produced in the country with the Indian Farmers Fertiliser Cooperative Limited setting up a manufacturing plant at its Kandla unit in Kutch district. At present, 100 per cent water soluble fertiliser is imported. The 50-million-tonne plant is expected to facilitate easy availability of this fertiliser of urea phosphate, which is highly in demand for drip irrigation of cash crops. The product has significant impact on quality and yield of cash crops, horticulture crops, vegetables and grains.

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1. CORE PROCESS:

Supplier Relationship Process:

Over the years IFFCO has developed expertise in its manufacturing processes as well as developed good supplier relationships. Working effectively with suppliers has added significant value to the products of the firm. With the help of procurement of better raw-materials which is in turn result of efficient supplier relationship, IFFCO has been able to improve the quality of its products. The demand forecasting for IFFCO KANDLA unit is done by its head office. The head office has a vendor list from which it sends raw material requisition to the vendors. These in turn send tenders to the company and the company selects those vendors who quote the lowest prices, with quality material and with a quick delivery time.

New Product Development Process:

With the increasing needs in agriculture and improved technology, the need for better fertilizers evolved. Thus IFFCO through its sincere efforts developed new products with the help of its Research and Development Department. New products like bio fertilizers and water soluble fertilizers were developed and production for the same started at IFFCO Kandla unit.

Order Fulfillment Process:

With improved technology and transport facilities, IFFCO has been able to satisfy its customers by producing top quality products and delivering them to its customers on time. Tolani Institute of Management Studies Page 9

Customer Relationship Process:

With sincere efforts in marketing IFFCO has been able to identify its potential customers, build relationship with external customers and facilitate the placement of orders by customers. The distribution of
IFFCOs fertilizer is undertaken through over 37,000 co-operative societies. The entire activities of Distribution, Sales and Promotion are coordinated by Marketing Central Office (MKCO) at New Delhi assisted by the Marketing offices in the field. IFFCO has its own retail outlets called Farmers

Service Centers. There are 158 Farmers Service Centers available. In these retail outlets agriculture inputs like fertilizers, seeds, pesticides and agriculture implements are made available to the farmers. These centers also provide technical guidance to the farmers. IFFCO has promoted several institutions and organizations to work for the welfare of farmers, strengthening cooperative movement, improve Indian agriculture. Indian Farm Forestry Development Cooperative Ltd (IFFDC), Cooperative Rural Development Trust (CORDET), IFFCO Foundation, Kisan Sewa Trust belongs to this category. Thus IFFCO has maintained efficient Customer Relationships.

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2. CORPORATE STRATEGY:

IFFCO is a CO- OPERATIVE SOCIETY

Corporate strategy provides an overall direction that serves the framework for carrying out an organizations functions. It specifies the business or businesses the company will pursue and opportunity and threats in the related environment and identifies growth objectives. Form of any big organization is very important. According to Co-operative Society Act, IFFCO follow all the rules and regulations of the co-operative society

What is Cooperative Society?

The strength of co-operative movement emanates from its ability to empower people who are individually weak and often helpless. The spirit of co-operations encourages people to come together on the basis of equality to achieve their economic interests. Voluntary association of individuals is the important aspect of any co-operative endeavor. Equality is assured to all the individuals involved in an unselfish atmosphere. The goal is to achieve the common economic interests of the group of individuals who have come together for the purpose. To decide the corporate strategy and form an organization there has to be some market survey done. The organization needs to develop core competencies to become successful.

ENVIROMENTAL SCANNING:
In order to set up of fertilizer plant at Kandla, IFFCO had to do environmental scanning to understand the availability of resources and facilities. For this purpose IFFCO had to carry out a market survey regarding the existence of Fertilizer Manufacturing plants, their

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suppliers, customers, prices of raw- materials and end products, Government Policies etc. Besides these arrangements for efficient transport facilities and storage facilities needed to be acquired. A detailed study of the atmospheric changes and weather conditions were conducted to ensure the safety of manufacturing processes and storage facilities as the rawmaterials required were all of hazardous nature. The investments in infrastructure of the plant, finding efficient sources of energy consumption, efficient production, optimum utilization of resources and minimum level of pollution were the major concerns for IFFCO.

DEVELOPING CORE COMPETENCIES:

Core competencies are unique resources and strength that an organization possesses.

Workforce:

IFFCO has a well-trained diverse and flexible workforce. All the workers are provided with training and development programs. The production process is carried out continuously and therefore skilled workers are required to work in shifts. In cases when there is shortage of employees, other workers are made to work overtime. Incentives and benefits given to employees motivate them to work more and develop better skills which are the key success of well trained workforce at IFFCO. Facilities:

IFCCO has well located facility in regard to offices, stores and plants. Efficient storage facilities for raw materials like NPK/ DAP, POTASH, AMONIA, etc. Market and Financial Know-How:

At the time of incorporation installation of plant, procurement of raw materials, efficient production process (less wastage) etc. was costly. As

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time passed, with changes in technology IFFCO improved its working by gaining knowledge of market and financial know-how. This helped IFFCO to give tough competition to the existing fertilizer manufacturer.

System and technologies:

With improving technology IFFCO had adopted better technological systems, efficient machineries and better information systems that helped IFFCO to improve its manufactured process and reduce its cost.

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3. COMPETITIVE PRIORITIES:

Competitive Priorities are the critical operational dimensions a process or supply chain must possess to satisfy internal as well as external customers, both now and in future.

COST:
Despite steep rise in prices of raw materials and unprecedented rupee depreciation in the year 2011, IFFCO had not passed on the increasing cost of fertilizers to farmers. It always considers benefit of farmers and accordingly sets prices of its products. IFFCO gets subsidy from Indian Government so that it can continuously provide top quality Fertilizers to the farmers at the least possible rates.

QUALITY: Fertilizers manufactured by IFFCO are of top quality. The sole aim of IFFCO is to enrich the lives of farmers by providing them best quality fertilizers at the least possible rate. IFFCO tops when compared to its competitors like Hindalco Corporation, Gujarat State Fertilizers and Chemicals
(GFSC), TATA chemicals etc. IFFCO has won several awards in the year 2011 and also before that for its performance in manufacturing top quality products.

TIME: IFFCO follows continuous manufacturing process and therefore it is always able to produce its products as per the demand in the market. IFFCO has its own retail outlets known as Farmers Service Centers and therefore it is able to track the increasing requirements for fertilizers in the market. IFFCO due to its continuous production process and efficient transport facility

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(which includes rail, road and sea) is able to provide On-time Delivery of its products to its customers. Other competitive priorities are the operational capacity of IFFCO itself. IFFCO Kandla unit has the biggest Zinc Sulphate Monohydrate Plant of capacity 100(Metric Ton Per Day) MTPD as on date with annual capacity of 30,000 MT. it is a cooperative society and therefore the subsidies received from Government is a very important factor that helps IFFCO to produce top quality fertilizers at less costs.

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4.

PRODUCTION PROCESS :

Process Description of Kandla Phase -I (Streams A, B, C & D):

NH3 PHOS.ACID GRANULATOR SCRUBBER LIQUOR

DRYER

PRENEUTRALIZER

SLURRY PUMP

PRODUCT

CONVENTIONAL

The manufacturing process uses the well known conventional slurry granulation process. The plant consists of four identical streams with a common product handling, storage, reclaiming and bagging facilities. .Phosphoric acid containing 52 to 54 % P2O5 and scrubber liquor containing 20 to 25 % P2O5 at NH3/H3PO4 mole ratio of 1.2 to 1.3 are fed to a vertical cylindrical reactor called preneutraliser where it is reacted with anhydrous liquid ammonia to a mole ratio of 1.4 or a pH of 5.6 to produce an ammonium phosphate slurry containing 18 to 20 % water. About 70 % of the total phosphoric acid requirements are fed to the Tolani Institute of Management Studies Page 16

preneutraliser. The rest is fed to the scrubber system from where it goes to the preneutraliser in the form of scrubber liquor at a pH of 8 to 5.2.

The ammonium phosphate slurry from the preneutraliser is pumped to a rotary drum granulator where it is sprayed over the rolling bed of recycles fines and solid raw materials feeds like potash, urea and filler to form granules. Further, ammoniation upto a mole ratio of 1.8 to 1.85 is carried out inside the granulator by means of ammonia spargers located below the bed of materials. The granulated product containing 2.5 % water is then dried in a co-current rotary drum dryer with hot air produced by combustion of fuel oil/LSHS. The dried product is elevated by means of continuous discharge type bucket elevators and distributed over double deck vibrating screen by means of a drag flight conveyor.

Product of the required size (between 1 mm and 4 mm) is separated in the screen from the oversize and undersize. The on-size product collects in a compartment in the product bin and is withdrawn at the required rate by a vibrating pan feeder. Excess product size materials and oversize materials pulverized in a chain mills are discharged into the recycle flights conveyor.

The undersize material collect in a fines bin and discharge into the recycle conveyor, where it mixes with the crushed oversize and fresh solid raw material feeds to form the recycle feed to the granulator. The recycle conveyor, which is a drag flight conveyor, discharge the material into a continuous discharge bucket elevator which in turn discharge into the granulator.

The product discharge from the vibrating pan is conveyed to a rotary drum cooler where the product is cooled from 70 deg. to about 40 deg. The product

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discharged from the cooler is elevated by a product elevator in each train which discharges into the product conveyor common for all four trains.

The scrubbing system consists of a fumes scrubber, Dust scrubber, Dryer scrubber & Cooler scrubber. The first three are venturi cyclonic type. Scrubber liquor supplemented by fresh phosphoric acid feed is circulated by pumps in all the scrubbers except the cooler scrubber where only water is circulated. Dust laden air from the dryer, cooler and other equipments pass through cyclones where a major portion of the dust is separated before being scrubbed in the respective scrubbers. Fumes from the preneutraliser and granulator are scrubbed in the fumes scrubber. Each scrubber is provided with a fan for creating the required draft. The scrubbed gasses are let out into the atmosphere through a common stack.

Process Description of Kandla Phase-II (Streams E & F ):

NH3 GPR GRANULATOR

DPR PHOS.ACID SCRUBBER LIQUOR DRYER

PRODUCT

DUAL PIPE REACTOR

COOLER

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Merchant grade Phosphoric acid containing 54% P2O5 is reacted with liquid Ammonia in dryer pipe reactor (DPR) installed inside the rotary dryer upto a mole ratio of 1:1.05 (moles of Ammonia to moles of H3PO4 ) and in the granulator pipe reactor (GPR) installed inside the rotary drum granulator upto a mole ratio of 1:1.4.

The reaction is highly exothermic resulting in the evaporation of water content of the phosphoric acid and recycled scrubber liquor. While discharging from the granuator pipe reactor the pressure is 4 to 5 Kg/cm2 and temperature between 120 to 130 deg C. While discharging from dryer pipe reactor the pressure is between 3 to 4 Kg/cm2 and temperature is between 1200 to 1300 C. The discharge from the GPR & DPR fall on the rotating bed of recycle fertiliser material in the corresponding equipments i.e. Granulator & Dryer. Dry raw materials like Urea, Filler & Muriate of Potash are added into the granulator through independent feeders which discharge into a common recycle conveyor along with recycle material like crushed oversize, fines and excess product. The fertiliser material in the granulator is further ammoniated to a mole ratio of 1:1.8 by sparging ammonia through the bed in the granulator. The granulated fertiliser containing about 2.5% moisture is then discharged into the rotary dryer where it is dried with hot air from the fuel oil fired combustion chamber in a co-current flow. The moisture of the fertiliser material gets reduced to less than 1%.

The fertilizer material is then screened in double deck vibrating screens. The separated oversize material (above 4mm) is crushed in roll crushers and forms part of the recycle sent to the granulator, the product size material (-4mm to 1mm) goes to a rotary cooler and is the final product, the fines material (less than 1mm) is also recycled back to the granulator.

The off gases from dryer and cooler are passed through respective dryer and cooler cyclones and then sent for wet scrubbing. The off gases from the granulator Tolani Institute of Management Studies Page 19

are first scrubbed in an inclined venturi scrubber followed by a wet venturi type fumes scrubber. The exit gas from the dryer and granulator scrubbers are once again passed through a tail gas scrubber for maximum recovery of nutrient from these gases, before being discharged to the stack. Dusts from various dust generation points at different locations are sucked by the dust fan through a network of ducting lines. The dust is then deducted in cyclones and later sent for wet scrubbing. The scrubbing medium is weak phosphoric acid solution. The scrubber liquor is consumed in the granulator pipe reactor and the dryer pipe reactor.

Phosphoric acid & ammonia are reacted in a preneutraliser vessel / pipe reactor forming ammonium phosphate slurry. Potash, Urea, Filler & recycled material are fed into the granulator by a system of elevators & belt conveyors. Ammonium phosphate slurry is sprayed over the bed of solid materials in the rotary granulator. Granulated product is dried in rotary dryers. Double deck screens separate product material from the oversize & undersize which is recycled to granulator. Product material is cooled in rotary cooler & sent to storage or for bagging. Kandla Phase II plant uses pipe reactors inside the granulator & dryer for reaction instead of preneutraliser

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5. CAPITAL INTENSIVE:

Setting up a manufacturing plant is not an easy task. It involves huge investment in terms of human resource and financial investment. IFFCO started its operations by setting up a plant to produce three grades of NPK based on DAP. This plant was worth 30 crores with two streams having a licensed capacity of 1,27,000 tons of P2O5. Further the capacity of NPK plant was doubled at a cost of Rs. 28.6 crores and thus two more streams were added with the licensed capacity increasing from 1,27,000 MT P2O5 per annum to 2,60,000 MT P2O5 per annum. IFFCO Kandla again went for expansion in 1996-97 this time the plant was of worth 205.30 crores.

Fixed Automation:

IFFCO opted for fixed automation process because of the very nature of the products to be produced. All the products produced at IFFCO are such that each product requires specific raw-materials and different production process. This is the reason as to why the resources used here are not flexible.

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6. MANUFACTURING PROCESS:
In a manufacturing process, all the resources including man, material, money, plant and machinery needs to be brought together for production. All the resources are equally important for manufacturing process. Taking into consideration the type of product to be produced, availability of rawmaterials, investment in plant and machinery, the set up time of machinery, shut down time of machinery etc. the manufacturing firm needs to decide the type of manufacturing process. There are four types of manufacturing processes:

1. Job Process 2. Batch Process 3. Line Process 4. Continuous-flow Process

IFFCO follows the Continuous-flow Process for production of NPK/DAP. For this purpose IFFCO has efficient skilled employees and workers who work in shifts of 8 hours. When at times there are shortage of certain employees in particular shifts, other employees are made to work overtime.

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Layout of K-I Unit at IFFCO Kandla

Ground Floor

preneutraliser tank Combustion Chamber Primary Product Elevator Secondary Product Elevator

First Floor

Fine Conveyors Quench Air Fan

Second Floor

Pulveriser Oversized Pulveriser Raw material bins (Urea, Potash, Filler, MAP)

Third Floor

Product Cooler Dryer Granulator

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Cooler Feed Conveyor Fourth Floor Vibrating Screens Cooler Fans Fifth Floor SDF (Screen Drag Feeder) Dust Fans Cyclones

Raw Materials, Work in Progress and Finish Goods

Inventory

Raw Material

WIP

Finished Goods

Stores and Spares

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RAW MATERIALS Raw materials required for the production of phosphoric fertilizers:

NPK 1 (10:26:26) & NPK 2 (12:32:16) Phosphoric Acid (P2O5) Ammonia (NH3) Urea (NH2CHNH2) Potash Filler Sulphuric Acid

DAP (18:46:00) & MAP (11:56:00) Phosphoric Acid (P2O5) Ammonia (NH3) Urea Filler Sulphuric Acid

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Raw Material Imports:

Name of Raw Material

Ammonia 99%

Supplier Country
Saudi Arabia, Qatar, OMIFCO (Gulf), Kalol (IFFCO), R.C.F., G.N.C.F., KRIBCO.

Potash (MOP)

Germany, Canada, Russia, Israel, Jordan, (through Gov. agencies)

Phosphoric Acid (P2O5)

Morocco, U.S.A., Mexico, Senegal, Tunisia, Egypt,

Urea Sulphuric Acid

Kalol (IFFCO) Indian Supplier

De-foamer (Olic Acid, H-601, Nopco-8-5 and Locally SPAK-81-M) Fillers (Silica Sand) Locally

Tendering and placement of orders for above imported raw materials is done at Head Office (Delhi). Production targets and projected consumption requirement of raw materials, the commercial section of TS department at Head Office takes the procurement action. Potash and Urea are procured from M/s. Indian Potash Limited and commercial department at Head Office from time to time depending on the materials requirements places purchase orders. Tolani Institute of Management Studies Page 26

Raw Material Storage:

For phosphoric acid storage there are 8 tanks and each having capacity of 10000MT and there are 3 atmospheric ammonia tank, capacity of 15000MT, 10000MT and 5000MT respectively. There are 2 Horton sphere for the storage of ammonia having capacity of 15000MT each. Potash storage Capacity is 84000MT, for urea and filler storage capacity is 8500MT. for water there are 2 tanks each having capacity of 6000MT.
Sr.no. 1 2 3 4 5 Raw Material phosphoric acid Ammonia Potash Urea & filler Water Capacity (MT) 80000 33000 84000 8500 12000

Investment in Raw Material : All manufacturing firm have to carry inventory of raw materials. The level of raw materials inventory is influenced by the following consideration: 1. Volume of safety stock to have an uninterrupted production. 2. Determining the reorder point. 3. Balancing of cost and risk.

Safety Stocks:
They serve the cost reducing function by minimizing the risk of the production due to the out-of-stocks. Procurement lead time and condition of supply determine the level of th e safety stocks.

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Transit Time for different Raw Material:

Raw material Phos acid Ammonia Potash Urea Filler Average transit time 17 days 5 days 13 days 5 days 1 day

Here lead time cannot be calculated as all raw material purchases are done by Head Office and here they use transit time instead of lead time. Transit time means time required for shipment of raw material to reach Kandla while lead time is the time when the need for more inventories is recognized until the time it becomes available. The cost of being out of stock may be the cost of closing the production line. The production loss due to the raw material shortage at IFFCO Kandla unit for the year 2010-11 is given below.
P205 Average day consumption Transit time 17 5 13 5 1 per 2747.58 Urea 41.44 Potash 2300.97 Ammonia 1289.25 filler 131.65

Reorder point 46708.86 (MT)

207.2

29912.61

6466.25

131.65

Therefore safety stocks are needed to be maintained. To determine the reorder point under certainty, we should know lead time and average usage.

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For the above calculation of reorder point, transit time is used instead of lead time. The reorder point under certainty is calculated by the formula

Reorder point = Transit time*average per day consumption + safety stock

Storage and Handling of Raw-Materials:

Urea and Filler is stored in 6 numbers long asbestos covered storages. Phosphoric Acid is imported from Foreign Countries in bulk tankers. Atmospheric ammonia storage facility consists of three double wall double integrity design storage tanks having capacities of 5000 MT, 10,000 MT and 15,000 MT at a temperature of -33 degree centigrade and atmospheric pressure. Imported potash in the form of crystalline potassium chloride is received in trucks and stored in a covered storage area which has a capacity to store 80,000 MT A new concentrate Sulphuric Acid unloading, storage and handling facility has been constructed at IFFCO Kandla. Storage tank is of Mild steel and vertical cylindrical type and having a storage capacity of 5000 MT.

Bagging (Packaging) at IFFCO:

Bagging is an important section of product storage. It is process by which finished good is packed in various sizes. The bagging plant has a total of fourteen slat conveyors, thirteen of which are fitted each with two Nos. of microprocessor based semi-automatic weighing machines and stitching machine and each salt is capable of weighing and stitching at a rate of 900-950 bags per hour. One fully automatic weighing and bagging machine is also installed along with bag placer which has capacity of weighing at a rate of 1200 bags per hour. Tolani Institute of Management Studies Page 29

There are different signs of colors shown on bag for differentiating the grades of fertilizer like:

Sr. No. 1 2 3 4

Fertilizer NPK 10:26:26 NPK 12:32:16 DAP 18:46:00 MAP 11:56:00

Colors Of Strip On Bag Red color Strip Green Color Strip Red & Green Color Strip Brown Color Strip

Sr. No. 1 2 3

Bags size 50 Kg. 40 Kg. 25 kg.

These different color strips are there on the bags to make identification of the stock in the warehouse. Information about the type of product, the maximum retail price, and the information about the offer of the insurance on the each bag purchased by farmer is also provided on the bag. The machines do automatic stitching of bags. The bags are reprocessed so no wastage of bags is seen in the department. The workers working in this department are having a piece wage system. Space has been provided for storing more that 3 million empty bags in the bagging plant and the covered platform area can be used for stacking more than

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5000 MT of bagged product. Bagged product is transported by road within the state of Gujarat and Rajasthan and by railway wagons to places all over the country.

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7. Inventory Management and Control:

For the purpose of production, Budgeted Sales and Production estimates are prepared by the Head Office at Delhi. IFFCO plant at Kandla prepares list of raw materials required and sends it to a head office for approval. Once the list is approved procedure for procurement of raw material is carried out. The head office at New Delhi finances procurement of all the raw materials. All long term decisions are taken at Head Office, New Delhi and only operational decisions are undertaken at this unit. Supplier of raw material are generally fixed and main criteria for their selection are cost and quality and some other factors also such as payment terms, services etc.

INVENTORY MANAGEMENT:
Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization. It is an important concern for managers in all types of businesses to manage inventory. Inventory management helps organizations to utilize their capacity and potential to full extent. This type of efficiency can only happen if the right amount of inventory is flowing through the supply chain. In order to achieve this efficiency the organizations need to calculate economy order quantity levels taking into consideration the demand for product, quantity already available in stock, lead time of suppliers, etc.

The basic objective of inventory control is to reduce investment in inventory and utilise the saving in more productive processes of the organization. Calculation of economic order quantity helps the organization to determine what quantity of raw material needs to be procured and in what time. The organization also needs to determine the sale forecast, study the production capacity and plan for production schedules.

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A company needs to maintain adequate stock of materials for a continuous supply to the factory for an uninterrupted production. The firm may purchase large quantities of raw materials than needed for the production to obtain quantity discounts of the bulk purchasing. In IFFCO Kandla they follow Contract method for procurement of raw materials which is handled by head office.

Economic Order Quantity:

Objective: total cost of inventory is minimized.. The EOQ is used as a part of a continuous review system, in which the level of inventory is monitored at all times, and a fixed quantity is ordered each time the inventory level reaches a specific reorder point. The EOQ provides a model for calculating the appropriate reorder point and the optimal reorder quantity to ensure the instantaneous replenishment of inventory with no shortage. Total cost is the sum of 2 costs. 1) Ordering cost 2) Carrying cost

Ordering cost: This is incurred making purchases. This covers cost involved in planning of requirement, calling tenders, deciding suppliers, issuing purchase orders, follow up. Clerical cost incurred from various departments is included in ordering cost.

Carrying cost: This is incurred in maintaining the stock. This includes interest on money locked upon the material stocks, taxes and duties, insurance on goods, obsolescence (Unusable parts), some materials deteriorate or get spoilt and are unfit for use, Shrinkage or reduction in volume, evaporation (losses), rentals for space occupied by the stores, labor

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cost, and maintenance cost. Carrying cost is worked out in percentage and can be as high as 30% to 35%. EOQ is a point where ordering cost & carrying cost are equal (which is seldom possible) or the point where these two costs meet favorably. If ordering cost is increasing, the carrying cost will be decreasing and vice versa. At IFFCO the EOQ is decided by the Head Office and the orders for procurement of raw-material is also done by the Head Office. Kandla unit plant provides information about the stock levels in the plant and accordingly the Head Office makes arrangement for procurement of raw material.

INVENTORY CONTROLS:

One of the primary task in inventory control is determination of stock levels. There are various levels of stocks at IFFCO plant (kandla unit) 1. Deficiency Level : here stock is inadequate to meet needs. 2. Exhaust bin Level : this is the point known as stock out. 3. Buffer or minimum stock level: it is the insurance stock carried to meet exception conditions. 4. Reorder level: this is the level at which order has to be placed. This may not be equal to EOQ, it should be regularly surveyed. 5. Maximum Level: this is the level above which stock should not permit to rise.

Levels of all inventory items except filler (low value silica sand ) are not seasonal.

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TWO BIN SYSTEM:

Physical stock is split into two boxes/bins 1. One bin is called the first bin (main bin) which holds the balance stock. 2. Other bin is called second bin (Reserve bin or Reorder Point) Issues are done from the first bin. When stock of first bin is exhausted issues are done from the second bin. On receipt of stock, second bin is filled to minimum stock and the balance stock is placed in the first bin. Actual physical separation is not possible or required if one is careful to take timely replenishment action as soon as the stock drops to minimum. Reserve bin should have sufficient stock to last lead period and to take care of variations in both lead time and consumption. IFFCO Kandla unit follows Two Bin system and informs the Head Office about the raw-material levels when the stock reaches minimum level.

STORES AND SPARES:

Stores and Spares again have 5 sub categories. 1. General Stores 2. Spares 3. Loose tools 4. Construction materials-steels 5. Construction materials-cement

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8. QUALITY AND LEAN:

TOTAL QUALITY MANAGEMENT:

Laboratory is another important section where the raw material as well as the final product is brought to check whether it is up to the mark or not. Laboratory is divided into six different sections which are as follows:

Hot room: In this section all the work related to heat to creating heat are being done. Usually the work done here is like checking the moisture content of the raw materials so that the material becomes useable.

Sampling room: After the product is produced, it is brought to this section from the production unit. Here the product which is brought after each and every hour is the granulated product. The sample brought is approximately of 1 kg weight. Then the sample is divided in two equal parts and is ground into a mixture. The powder is then diluted with acid to a make a solution. This solution is taken to the auto sampling room.

Auto sampling room: This section is fully automatic and computerized in this section the solution made in the sampling room is brought every hour for analysis and is passed through the analyzing machine, where the solution of the product NPK is automatically divided into 3 parts i.e. N (nitrogen), P (phosphoric acid), K (potash). As the machine is connected to computer, the graph can be seen on the computer monitor and accordingly the percentage of the sample is matched to the standard percentage that is : Grade 1: 10:26:26 Grade 2: 12:32:16 Dap: 18:46:00 Tolani Institute of Management Studies Page 36

The graph is also monitored on the computer installed in the production unit and if any difference is seen in the percentage of the materials used, then accordingly the changes are made in those materials.

Process control room: Here the process done is of in between material i.e, the material between the raw material and the production. After removal of moisture from it, the material is brought here for testing and a report of its suitability is prepared.

Water testing room: In this section. The water is brought for testing after its demineralization (the water is dematerialized in the off sit section). If the water contains any chloride in it, it is sent for mineralization as chlorine water may not be useful in the boilers.

Bag testing room: Here the NPK as well as other bags are brought for checking its quality before going to the bagging department.

The checking is done in terms of: 1) No. of stitches in 1 Sq inch 2) length and width according to the weight 3) end stitches 4) thickness 5) breaking strength etc.

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 QUALITY CONTROL
Quality control during storage:
The products conveyed from the complex plant are scientifically stored in bulk storage and never bagged directly. These are reclaimed with scrapper loaders moving continuously along the length of the bins to get homogenous, blended and composite material for final dispatch. The blending operation helps in removing non-uniformity in the composition of the product received at different manufacturing periods from the plant.

The bagged product is analyzed for all the nutrients before dispatch. The process further improves the nutrient control of the product for compliance of FCO tolerance limit in plant nutrients.

Field level quality control:

Rigid surveillance measures are exercised by the IFFCO marketing field staff to ensure that the quality of the product does not deteriorate during transportation, storage and handling at field level. Samples of the IFFCO product are drawn on random basis by the field officials and sent back to plant laboratory for nutrient check. These samples are collected evenly spread over the entire area of marketing operations all over the country. Thus excellent feedback is available to the plants about the quality of their product in the field, and appropriate actions are being taken to maintain desired level of nutrients in product at field level also.

The above Quality Control Measures thus taken at IFFCO - Kandla, have ensured quality product to the farmers. The cost inherent in the quality control measures adopted, is being amply compensated by the benefit accruing to the manufacturer and the consumer.

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Kandla-ISO 14001:

Kandla

unit

initiated

the

process

of

obtaining

ISO

14001

certification.

National Productivity Council was the consultants for the same and M/S BVQI is the auditors. The final audit for assessment of issue of certificate was carried out. IFFCO Kandla has been certified as Environmental Standards ISO 14001:1996 company by M/S BVQI for the operational scope of "Manufacture of DAP and NPK Fertilizers" with effect from 27th Nov'2000.

LEAN MANAGEMENT

REUSE OR DISPOSE WASTES AND EFFLUENTS: The waste materials produced from the manufacturing process is effectively disposed at a safer place. In IFFCO, bio waste (hospital waste) and canteen waste is disposed by burning or burying them in the pit. Industrial waste (scrap) is sold to Companies or NGO. Plastics are either sold or disposed of by proper procedure. Waste water is recycled and reused. Dust fumes arising from the manufacturing process is processed and made harmless then allowed to pass from the chimney into the atmosphere.

OPTIMUM UTILIZATION OF RESOURCES: The potash and other raw-materials in powder or granule form are stored in big storage areas under huge sheds. These raw-materials are in the form of bulk storage therefore they are spread across the entire storage area. Yet these raw-materials are not allowed to go

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waste as the workers are made to accumulate these and reuse them in the production process.

Five S Methodology: Proper arrangement for every process and storage facilities is a part of lean. Everything should have a place and everything should be in its place. 1. Sort (separate, scrap, sift) Separate the necessary from the unnecessary and get rid of unnecessary.

2. Set in order (straighten, store, simplify) Organize the work area and put everything in its place.

3. Shine (scrub, sweep) Sweep, wash, clean, and shine everything around working area.

4. Standardize Use standard methods to maintain the work area at a high level so that it is easy to keep everything clean for a constant state of readiness.

5. Sustain (systematize, self-discipline) Ensure that all 5S policies are followed through the entire organization by means of empowerment, commitment, and accountability.

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Thus on the basis of above mentioned factors and the observations we found that IFFCO follows the Lean Management though most of the employees are following it without knowing this Management term.

9. RESOURCE PLANNING:

F or e ca st d e m a n d

P ur c ha se R e q u i s i ti o n

Issu e of Te n d er

B i ll O f Ma ter ials

C h ec k Inv ent or y

C a pa city Pla n C a l c u l a ti o n of S c h e d ule

Ma ter ial P la n

P r o d u ctio n or der

P r o d u ctio n Dis p atc h B a g gin g S t or a ge Pro ce ss

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BILL OF MATERIALS:
The entire business process depends on planning and scheduling. From demand forecasting to final dispatch of product to the customers require a detailed planning procedure. IFFCO follows a very systematic process when it comes to resource planning. This includes preparing material budgets, production budgets, sales budgets, financial budgets and above all the master budget. When the business firm forecasts demand for its product, it prepares a purchase requisition and issues tender. The firm needs to prepare a Bill of Materials (BOM) to verify the available stock quantity and the stock quantity needed to be procured. Bill of Materials contains detailed information regarding the raw-materials required and the specific quantity of raw-materials needed. Then after considering the production capacity and materials availability scheduling is done for every activity to be conducted. Production order is given to the manufacturing unit. Production process is carried out and the rawmaterials are converted into Work-in-progress goods (WIP) and then into finished goods. The finished goods are sent to storage warehouses where they are stored in bulk and then sent to the bagging department where the fertilizers are bagged in different sized and coloured bags according to the variety of fertilizers. Finally the fertilizers are dispatched to various parts of the country to its customers through road, rail and sea transport.

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ANALYSIS
IFFCO follows the best possible methods to reduce wastage and to make optimum utilization of its scarce resources. This is because the raw-materials are very costly and also the investment in such huge plants is also huge. There is no scope to waste the financial or other resources as this will affect the functioning of the firm. It undertakes an efficient production process. IFFCO is not an entirely profit making firm. It operates with a noble objective of serving the farmers with best possible products and thus enriching their lives. The procurement and storage of such hazardous raw-materials is very difficult task yet IFFCO has succeeded in its operations with minimum reported accidents till date. It also takes care of its employees and their benefits. Various training and development programs are held for its employees and other welfare activities are carried out by IFFCO in the interest of its employees. Thus the success of a business firm is not profits alone, but an efficient and willing flexible workforce working day and night not only for their own benefits but also for the benefit of the society.

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CONCLUSION

In the overall success of a manufacturing firm, the application of best practices of production as well as best Human Resource practices is essential. With the adoption of latest technologies and optimum utilization of resources any business firm can reap benefits not only for the firm but also for the entire society. As it is said that business earns from the society and therefore it is the responsibility of business firm to provide the society with benefits in return. IFFCO evidently proves to be the best example of this.

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BIBILOGRAPHY
http://www.iffco.coop/

http://www.clamshellbeachpress.com/html/book1_sample.pdf

http://www.iffco.nic.in/applications/brihaspat.nsf/0/0215e21f284706aae525677800325184 /$FILE/doc_7.pdf Some informations taken from the material provided by the organization official.

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