Internsp Report On NFC by $linky City

An Internship Report
Introduction
Pakarab Fertilizers Private Limited Multan 1

P
AKISTAN is an agricultural country having 70% of its population
earns their lively hood through agriculture, due to which they are
concentrated in villages. The total area of Pakistan is 796096 sq.
km and a population is about 1.4billion out of total cultivated area 70% is
irrigated through canals system and tube wells while the rest of area is fully
dependent on rain falls, about 35% of land is under cultivation. The main
crops of the country are
 Wheat
 Cotton
 Sugarcane
 Rice
Though Pakistan is an agricultural country yet the average croping intensity

of the net area shown is much lower as compare to other countries. There are
many reasons and facts behind this lack ness. They are following:
 Traditional Methods of Farming

 Inadequate Use of Fertilizers
 Water logging
 Satinity
 Deficiency of Facilities
 Low Quality Seeds
 Lack of Motivation

But the main reason for the low productivity is selection and inadequate use
of fertilizers. It is the most important fact. Having insufficient fertilizer and
due to continuous cultivation of the same area lead us to low productivity of
the soil. In order to support National Economy Govt. of Pakistan had
decided to establish an industrial development corporation.

National Fertilizers Corporation

In 1973 National Fertilizer Corporation (NFC) was incorporated to facilitate
the agriculture sector and to make proper and adequate use of fertilizers and
increase it’s production in the country. The basic aim of the company is to
achieve self-reliance and self-sufficiency in the production and distribution
of fertilizers, to arrange for group financing and economic development
fund, to provide farmers with agronomy services and to develop personal
policies and train new persons for fertilizer industry.
OBJE CTI VES

In addition to the aims mentioned above, NFC has been established to strive
for the following goals:
 To increase the efficiency of existing production plants

 To establish additional Nitrogen & Phosphate production Plants
 Development of Marketing & Distribution infrastructure
 Conduct liaison with Government administration.
 Maintain an up-to-date marketing advisory cell.
NFC acts as a holding company that directs coordinate, and controls the
group activities, lays down guidelines for economic and technical
development of corporation and coordinates the planes for their
implementation.

COM PANI ES UND ER
ADM INIST RATI ON

National Fertilizer Corporation has the following companies under its
administrative control and one training center named NFC Training Center
in Multan.
.
FACTORY NAME LOCATION

Hazara Phosphate Fertilizers Haripur Hazara
Lyallpur Chemical and Fertilizers Faisalabad
Pakarab Fertilizers Multan
Paksaudi Fertilizers Mirpur Mathelo
Pakamerican Fertilizers Daudkhel
Pakchina Fertilizers Haripur Hazara
FU NC TI ON S
Corporate office of NFC is located in Lahore which monitors the activities
of all its subsidiaries. The corporate office is responsible for the following
main functions:
 To act as Secretariat of the Board of Directors of the company.

 To evolve corporate policy frame work of the company.
 To establish short term and long term objectives of the company.
 Compilation of the company surveys, economic report and statistical data
pertaining to Fertilizers Industry.

 To compile future feasibility reports.

 To evolve company, s management development of the company.
 To make plans for manpower development of the company.
 To evolve reporting system on the activities of the company and prepare
periodic progress reports.
 To conduct internal audit and approve annual budget.
 To arrange foreign procurement and arrange clearing and forwarding.
 Protocol and public relationing and liaison with outside agencies
including NFC, and provincial and Federal Government.
 To coordinate the activities of various functional groups at corporate
office and the Manufacturing plant.

Pakarab
Fertilizers

PAKARAB FERTILIZERS (Pvt) Ltd
P
akistan Industrial Development Corporation had established
Natural Gas Fertilizer Factory (NGF) at Multan in 1962 with
Ammonia and Nitric Acid plant of 200 tons each per day with
Ammonium Nitrate and Urea as the final products having daily production
of 330 and 180 tons respectively. The plant was not able to achieve the rated
capacity and it was supplemented with an Amonpac unit in 1968 with daily
production of 60 tons of Ammonia. This unit was also not able to fulfill the
guarantee tests. Pakistan Industrial Development Corporation engaged
services of Ms. Arthur D. Little Inc. to determine what specific type of plant
expansion and revamping could be carried out at Multan to place the plant
on an economical, sound and competitive basic with respect to other new
low cost large fertilizers projects set up in Pakistan. After detailed
investigation and discussion, it was ultimately decided to expand the
fertilizer facilities by using some of the existing facilities in conjunction
with a new Ammonia, Nitrophos (NP) and Calcium Ammonium Nitrate
(CAN) plant as well as additions to the existing off sites and Nitric Acid
units so as to achieve a conservation of resources.
In pursuance of the afore-mentioned decision, Pakarab Fertilizers Limited

(PFL), a company in public sector was introduced on 15th November, 1973
as a joint venture between the Pakistan Industrial Development Corporation
and Abu Dhabi National Oil Company with share holding in the capital at
52% and 48% respectively.

As mentioned earlier Pakarab Fertilizers (Pvt.) Limited (PFL) was

established as result of protocol concluded and signed on 15th November,
1973 by the Federal Government to further strengthen and develop fraternal
ties between Islamic Republic Of Pakistan and State of Abu Dhabi to
cooperate in the fields of petroleum, industries and natural resources
available in both countries on the basis of mutual benefits to both the
Muslim brotherly countries. A memorandum of understanding was
concluded between WPIDC (Pakistan) and ADNOC (Abu Dhabi) on March
7,1973 and a participation agreement emerged on 1st November, 1973 to
establish a joint venture for expansion and modernization of the old Natural
Gas Fertilizer Factory at Multan.
LOCATI ON
Pakarab Fertilizers (Pvt.) Limited (PFL) is located at Khanewal road, about
7 km from Multan. The factory premises cover the area of 172 acres and the
housing colony is located at an area of 130 acres.
OBJE CTI VES

The objectives of the company, among others, as laid down in the
memorandum of the company and articles of association, are to carry on the
business of manufacturing and scale of the following products as a result of
Completion modernization and expansion plan.

CAPACITY
INTERMEDIATE Before After
PRODUCT Expansion Expansion
Ammonia 200 960
Am. Nit. Crystals ----- 610
Nitric Acid 200 1400
CAPACITY
FINISHED Before After
PRODUCT Expansion Expansion
Urea 180 220
C. Amm. Nitrate 330 1500
Nitro phosphate ---- 1015
COM PANY FEA TU RES

The company now a living symbol of excellent relations between both the
Islamic States was introduced on 15th November 1973 with total authorized
capital of Rs. 1000 million. PFL has equity share capital participation of
Pakistan through NFC and Abu Dhabi through ADNOC in the ratio of 52
and 48 % respectively, with a paid up capital of Rs. 743.061 million.
PFL project completed at total cost of Rs. 2511.44 million inclusive
Of foreign exchange component of Rs. 1292.00 million is the largest
fertilizer complex in Pakistan and the only project producing fertilizers in
the country.

Ammonia / Urea rehabilitation / expansion and rationalization was also

undertaken with World Bank Loan of US $ 24.10 million and the project
completed at a total cost of Rs. 359.164 million. All components of the
complex are in full operations with daily production capacities as follows
and a Powerhouse 27 megawatts (3 turbo generators of 9 mw each):
PRODUCT CAPACITY (METRIC TONS)

Prilled Cal. Amm. Nitrate (CAN) 1,500
Prilled Nitro phosphate (NP) 1,015
Prilled Urea 280
Nitric Acid 1,380
Ammonia 960

OR GANIZ ATI ON AL ST RUCTU RE

Pakarab Fertilizers Limited (PFL) is a private limited company having a
Board of Directors comprising of 11 members including the Chairman:
 Six Members Representing NFC

 Five Members From ADNOC (Abu Dhabi)
The Board of Directors has appointed a full time managing director. The
Managing Director as Chief Executive of the company is responsible for the
efficient management and operation of the plants. There are four general
manager assisting MD. They are:
 GM Finance
 GM Manufacturing
 GM Commercial
 GM Audit
Under each general manager, there are two or three senior managers. Under
senior manager there are manager then assistant managers and finally
supervisors. As our concern is with accounts department only, We will
discuss only the concerned department sketch.
The Managing Director, in accordance with the Memorandum and Articles

of Association, is the Chief Executive of the company and is answerable to
the Board of Directors. The company has two functional offices i.e. the

corporate office presently located at Lahore and manufacturing plant at

Multan.
The organizational structure of corporate office is broadly designed into four

cells based on expertise and functions, namely the Personnel Group, headed
by Personnel Manager, the Finance Group, headed by General Manager
(Finance), the Planning Group, headed by General Manager (Planning), and
the Secretarial Group, headed by Secretary.
Besides evolving company’s Management policies and procedures, the

function of the corporate office is also to render advisory services to the
Manufacturing plant. The Functional heads in the corporate office report to
Managing Director directly.

PRODUCTION PLANT
The Manufacturing plant of the company at Multan is headed by a General
Manager (Manufacturing). In the organizational set up of the Manufacturing
plant a Deputy General Manager is second in position. Down below, there
are nine Divisional or Functional Heads placed laterally, each having
predetermined functions. These Functional heads are as follows:
 Production Manager
 Technical Manager
 Engineering Manager
 Chief Accountants
 Industrial Relations Managers
 Services & Security Managers
 Procurement Manager
 Safety Engineer
 Senior Medical Officer
Besides their predetermined functions, these functional heads are liable to

perform any other function, which competent Authority may assign to them
from time to time.
These Functional Heads report to the General Manager (Manufacturing)

through the Deputy General Manager. In the organizational structure of the
plant, the Safety Engineer by virtue of his duties reports directly to the
General Manager (Manufacturing).

FU NC TI ON S
The functions of the Manufacturing plant are broadly described as under:
 Utilize all the resources to achieve optimum productivity.

 Efficient and economical operation and maintenance of the
manufacturing plant.
 Quality control of finished products.
 Procurement of raw material including spare parts and storage thereof.
 Packing and dispatch of finished goods and storage thereof.
 Accounts maintenance and cost control.
 Industrial relations and training of man power.
 Administrative services.
 Security.
FUT UR E PL AN S
The existing Ammonia, NP, and CN / CAN plant of PFL are in operation
since 1978–79. They have already outlived their economic lives and it is
difficult to obtain sustain production / product quality from the existing
plants in their present form at the rated capacities. The rate of production
would rather continue to decrease progressively. The present operation of the
plant is expensive because of increased maintenance cost, higher
consumption of raw materials, spare parts, chemicals and frequent breaks
down of pumps / compressors / exchangers etc. The existing plants also
suffer from high-energy consumption.

With the objective of achieving rated production capacities and decreasing

the energy consumption, PFL engaged various international consultants to
carry out through feasibility study of the plants. For the revamping of
Ammonia and NP–CN plants, feasibility studies were conducted by M/s.
Haldor Topsoe of Denmark, M/s. UHDE / BASF of W. Germany & M/s JCI
of Japan respectively.
Their study reports have been received and critically studied by PFL
Management. The proposals are under active consideration for implication
after approval from Government of Pakistan.

PLANTS IN OPERATION
Pakarab Fertilizers Private Limited is the largest complex in Pakistan and is
the only plant producing compound fertilizers in the country. The main
fertilizers of Pak Arab Fertilizers are Nitrophospate and Calcium
Ammonium Nitrate. The plants that are working efficiently are:
 Ammonia Plant
 Nitrophasphate Plant
 Nitric Acid Plant
 Calcium Ammonium Nitrate Plant
 Urea Plant
AMM ONI A PL ANT

It was designed plant by Kellogg to produce 910 MTPD of Ammonia using
Natural gas. The process is basically divided into following steps:
 Reforming
 Shift Conversion
 Gas purification
 Synthesis
 Ammonia Storage
The Kellogg Ammonia plant has started its operation on 27 September 1978.
Hydrogen recovery unit installed in 1986 by Petrocarbon, which increased
the production of Ammonia from 910 to 950, MTPD. This plant was

however designed in mid seven tees. Technological advancement has

resulted in the evolution of low energy consuming Ammonia plants. In order
to complete with these newly designed plants; the management of Pakarab
was actively considering the replacement of existing ammonia converters
with low energy, high efficiency radial flow converters in the near future.
Other retrofit proposals intended to be implemented include a feed stock
saturator, heat recovery system in the catacarb circuit and replacement of
primary reformer tubes with improved material.
NI TRO P HO SPH ATE ( NP) PLA NT

The plant was commissioned on 12 January 1979 and the modification was
completed in June 1983. The plant produces 1,015 metric tons per day of
Nitro phosphate, a fertilizer complex containing 23% each of nitrogenous
and phosphates (P205) nutrients. The plant, which is the first complex
fertilizer plant in Pakistan, based on Stamicarbon process using rock
phosphate, nitric acid and ammonia as raw materials. The Engineering
contractor was belonged to East Germany. The process has following steps:
 Dissolution
 Crystallization
 Separation
 Neutralization/Evaporation
 Prilling
 NP Storage

NI TI RC ACI D PL ANT
Using ammonia as a raw material produces the nitric acid required as an
intermediate for the production of Nitro phosphate and Calcium Ammonium
Nitrate (CAN) fertilizers. The old C & I/Girdler process plant has a capacity
of 180 metric tons per day of nitric acid, calculated on 100% basis. The new
plant, based on UHDE process produces acid in two parallel lines each with
a designed capacity of 600 metric tons per day of acid calculated as 100%.
The new Nitric Acid plants were commissioned on 11 September 1978. The
processes use ammonia and air as raw materials, and have the following
steps to produce Nitric Acid:
 Evaporation
 Oxidation
 Absorption
 Nitric Acid Storage
Platinum recovery system was installed in 1988 on each line. The purpose of
these recovery systems is to save volatile platinum on the surface of
recovery gauzes. These recovery systems have resulted in substantial
savings in consumption of platinum metal.

CALCIUM AMMONIUM NITRATE PLANT

Calcium Ammonium Nitrate (CAN) plant was commissioned on 26
November 1978. The plant has a daily designed capacity of 1,500 metric
tons of prilled fertilizer grade Calcium Ammonium Nitrate (CAN)
containing 26.58 nitrogen nutrients. CAN is a product mix of calcium
carbonate and ammonium nitrate. Pure CAN containing 35% Nitrogen, is
diluted by Calcium carbonate to eliminate its explosive nature.
Direct Neutralization of Ammonia gas with aqueous Nitric Acid and from
double decomposition of Calcium Nitrate obtained as by product from NP
plant with Ammonium Carbonate. Following are the basic process steps in
the formation of CAN:
 CAN Conversion
 Filtration
 Neutralization
 CAN Evaporation
 Prilling
 CAN storage
URE A PLA NT
Balancing Modernization and rehabilitation of the old Urea plant was carried
out by shnamprogetti to increase the production from 180 to 280 MTPD of
Urea. The Urea plant has been producing more than 280 MTPD Fertilizer

since rehabilitation and modification. The modernization of the plant was

completed in June 1986. The process has following steps:
 Synthesis
 Purification
 Concentration
 Prilling
 Urea Storage
PR ODUC TI ON TABLE
The company produced 790025 metric tons of fertilizer during 1988-89 as
compared to last year production of 759175 metric ton resulting in
production higher by 4.063%. The product wise output is as under:
Type 1988-1989 1987-1988 %age

CAN 350553 91144 332723 86508 5.36
NP 330768 152153 333697 153492 0.87
UREA 10804 5004 92773 42676 17.17
The NP, Urea production has been higher by 8.63% and 17.64% respectively
as compared to the budget. The management is currently planning,
modification of ammonia plant and revamping of NP, CAN plants which had
been in operation for the past two decades. These essential modifications are
not only to maintain but also to improve the existing production capabilities
to achieve energy conservation.

FINANCE
DEPARTMEN
T

FINANCE DEPARTMENT
A
n effective accounting department furnishing valuable services to
all levels of management is absolutely vital to any organization.
Particularly, the many complex parts of present day corporations
call for supplying the management team with the ways and means of
attaining company objectives. In this regard finance division plays a very
important division and its correlated sections.
Finance department is working as the heart of Pakarb Fertilizer. This is one

the biggest department of the company. All the payments and receiving have
been done in this department. Furthermore it handles the accounts of
company’s assets. It also prepares budget of the company.
Internal audit Section is working separately but it also comes under Finance
Department. Similarly Computer Section is also currently working under
Finance Manger, According to the new organ gram the computer section will
work separately. Computer service manager will be directly answerable to
MD. Functioning of these department are discussed below.
DEP AR TMEN T S KET CH

In this department the management is in the following sequence:
 GM Finance
 Senior Manager Finance
 Senior Manager Accounts

Senio r M ana ger (Fi nance)

Under senior manager finance there is one manager of inventory/payable
and under manager there are three assistant managers, who are the
following:
 Assistant Manager Inventory

 Assistant Manager Payable
 Assistant Manager Sales
Senio r M ana ger (A ccounts )

Under senior manager finance there are two managers as given below:
 Manager Accounts
 Manager Fixed Assets
There are two assistant managers and supervisor under senior manager
accounts, they are as below:
 Assistant Manager Cash

 Superintendent Budget

DEP AR TMEN T SE CTI ON S

Accounts department of PFL is working on a very update system. All the
systems are computerized. In some section batch system is also introduced.
There are about ten sections in accounts department. These sections are
shown in following tables under two separate heads though overall the
department name is Accounts & Finance but both work separately and under
each five sections:
Section Types
ACCOUNTS & FINANCE DEPARTMENT
ACCOUNTS SECTIONS FINANCE SECTIONS
Payroll Book keeping
Inventory Payable
Fixed Assets Sales
Letter of Credit Cash & Bank
Insurance Budget

PAYROLL SECTION
Payroll means the list of employees receiving regular salaries. This section
controls the payments of all the regular employees working in the company.
It prepares the pay slips for all the end of each month. Before
computerization all the work in this section was done manually. Now this
system has been computer. The most important of output is pay slips which
are prepared on monthly or yearly bases after punching all the current month
date on the disk. The date about all the employees comes from time office,
which is a branch of payroll section. The number of days worked are
punched on the disk at the end of each month from this section of the
employees where a terminal has been installed, Which is directly connected
with supervisor. After feeding the date into the computer, section on
immediate request.
Payroll section comes under finance division and is a part of accounts

department. General manager (finance) is heading this department. Under
whom, is senior Manger, then deputy Manager\Assistant Manager. Within
the Payroll Section Senior Supervisor is the in charge of allowances such as
house rent, that are obligatory by laws. Personnel are divided in various
levels such as labor, ancillary staff on executives. The allocation of basic
Pays, allowances and other facilities depend upon these levels within the
organization.
In PFL, presently employees are divided into three categories namely,

Management, Executives and Non Executives staff. These are coded as

belonging to M, G or S groups respectively. The ranking within these groups

is as follows:
 M3 To M1 (M3 is the highest rank within the group )

 G1 To G6 (G1 is the highest rank within the group )
 S1 To S6 (S1 is the highest rank within the group)
Terms and conditions, annual increments, loans, allowances and all other
emoluments pertaining to employees are passed to payroll section through
the personnel department.
There are two reports generated at the year-end, which are known as Income
Tax Summary, and Year-End consolidated Report. Income Tax Summary, is
sent to income tax office and the Year-End Consolidated report is sent to the
cash and budget section. Where the budget for the next year has been
prepared based upon this information. At Pakarab payroll system is divided
into 5 different subsystem. These are given as follows:
 Payroll For Executives

 Payroll For Supervisors
 Payroll For Maintenance Staff
 Payroll For Subordinates
 Payroll For Operation Staff

Every payroll is processed separately one after the other, the data receives
from different resources is entered into the computer by account department
at the end of month and is processed.
PR OCE DU RE
At present time there are two hundred executives, supervisors working at
PFL. The data is collected form different departments, where the accounts
department receives it and organized it for computer input. It takes two to
four days to complete this task.
The computation of data takes place in computer section where different

reports and pay cheques have been generated. These are being checked by
accounts section and sent to chief manager finance for further checking. He
checks and approved these documents, then these documents are brought to
the cash section. With the help of these documents cashier prepares checks
for the payment and send to the assistant manager and General Manager
Finance. He again checks and finally approves them. Now these cheques are
sent to different bank along with the bank summaries prepared by the cash
section. Bank credits the amount to the individual accounts. Other
documents are sent to the concerned departments. One summery is routed to
the general ledger for book keeping purpose.
DOC UME NTATI ON & OPE RA TIO N

A document is a written record of “what had been done?” It moves from
hand to hand, person to person and department to department. The simplest
way of working the flow of the document is flow-charting. With the help of

figures and diagrams, We can illustrate how documents move. In payroll

section, before the data is to be keyed in, form no. GPP-2 is going to be
filled. It is known as Employee’s Transaction. One from is for allowances
and other is for deductions. These two forms are filled on the basis of
different reports received by the payroll section. These reports include:
 Fair Price shop Statement (Fair Price Shop)

 Transportation Recovery Statement (Transportation Department)
 Statement of Telephone Calls (Telephone Section)
 Club Dues Recovery statement (Club)
In addition, other statements regarding income tax, provident fund

contribution and loans are also prepared. All the above raw data is organized
in a manner so that it can be fed to the computer. The main processing of the
program is run. Formulas are used to calculate the net pay come to final
summary containing full details of pays, allowances and allocation to funds
like provident fund. Mosque fund, EOBI fund and income tax.
After the processing is over, seven different kinds or reports are generated
which are:
 Payroll Slip
 Bank Statement
 EOBI Statement
 Pension Statement
 Income Tax Statement
 Pay Allowance Summary

 Payroll Deduction Summary

In addition is above reports a few more reports are generated after

processing the payroll for all of the employees. These reports are:
 Mosque Fund
 Club Fund
 Bank advice
 Loan deduction
 Telephone Charge
This system is fully automated on computer to achieve flexibility, efficiency

and effectiveness in the whole process of this section. For this purpose
Cobol 400 system files being used for the system in computer section to
meet the section specific requirement are:
 PAYITRN (Transaction File)

 Pay23BIF (BASIC Information file)
 PAY23COD (Code Master file)
The basic information file contains the information about and employees
like Action Code, Employees Name, Pension code, Grade, Bank Code,
Account no., Office code, Pay Stop code, EOBI code and Record code.
They receive recovery statement from transportation department, statement

of official private trunk calls from telephone department the same way they
receive other statements from different departments. i.e., from income tax,
provident fund contribution is calculated by the month end of each loan is

given to some of the loan and house building loan is given to some of the
employees, they are also calculated at the end of each month.
STEPS
The following are the steps involved in operations of the payroll section to
obtain the predefined objectives of this section:
 The payroll system starts with the 32 different inputs provided from
different Sections departments.
 All the data gathered in the prove step is prepared for computer for
computer input by the assistant accountants.
 Then data entry clerk punches it on computer and after processing,

employees do the editing of obtained reports.
 The main processing is carried out on input data. During this processing
all necessary formulaic are applied on the input data.
 Eight different kinds of reports have been generated after main

processing. The deputy manager for any error or wrong calculation
checks these reports.
 In this step the senior manager finance carefully checks the pay
deduction summary and pay allowance summary against any mistake or
error.

 The final pay deduction summary and pay allowance summary are
approved by the General Manager Finance
 The cashier prepares the cheques that are further signed by the GM
Fiancé and dispatched to the related banks.
 Finally, all the reports prepared above are sent to concerned departments
and sections.

INVENTORY & FIXED ASSETS

SECTION
The Inventory & Fixed Assets section has been developed for the immediate
information’s of assets of the company. It presents the substantial portion of
the company is also necessary that is why this system is running in the
company. In this system depreciation of each asset is calculated annually.
So, this system controls all the fixed assets of the company and works as
controller for the fixed assets. The inventory and fixed assets department is
headed by Senior Manager Accounts. Working under him is Manager
inventory and Fixed Assets and then the supervisors and asstt.manager.
Day to day inventory affairs include issuance and receipt of goods and
materials to various departments. In this regard a specific procedure is
adopted to standardize every activity and hence have a good control over the
inventory.
PR OCE DU RE FOR RECE IPTS &
ISS UES
The procedure for receipts and issues of goods is detailed below:
Receipts
 After the inspection of goods, the storekeeper prepares serially numbered
copy of goods receipt and inspection report.

 Storekeeper allocates item code, in accordance with the coding scheme,

for each item of store received.
 Storekeeper takes charge of materials purchased and records the quantity
in Bin Cards.
 In case materials are no more required by the department, the concerned
department prepares store return note.
 Storekeeper sings all copies of store return note and records the quantity
in Bin Cards in Receipt column.
 Forward original copy to finance department for valuation and entry in
store ledger.
 Calculate Bin Card’s new balance and initial.
Issues
 Storekeeper receives serially mumbled first two copies of store
requisition form duly approved and signed by the department head.
 Take out relevant Bin Card of material required to be issued.
 Ascertain whether quantity in hand appearing in the Bin Card is adequate
for issues.
 If balance in hand is inadequate, prepare purchase Requisition for the
materials in short supply.
 Amend quantity to be issued against appropriate item in store
Requisition, or mention “Items not available” if any issue is possible.
 Tear off original purchase requisition and send to manager finance.
 Storekeeper signs the store requisition after items have been issued.

 Signature of the recipient of the goods is obtained on all copies of store

requisition.
 Separate original copy of store requisition and forward the same to
finance department after marking of item codes for entry in the stock
ledgers.
 Second copy of store requisition are gathered for the day and posted into
Bin Cards.
 Storekeeper marks “Posted in Bin Cards” and initials File second of store
requisition chronologically.
 Update the bin cards balance and initials.
NE W A SSETS P UR CH ASE
Any department requires whenever any asset requires any asset material
requisition form has been filled there and is approved by the head of that
department. It is sent to stores for the purpose of receiving particular items
mentioned on the form. The storekeeper receives it he form and checks the
items. If the items are available, he hands over the items. If the items are
available, he hands over the items to the person and gets the form signed. In
case the items are not available in stores, he writes “NA”on the form and
sends it back to the department. New, because department needs the items, it
prepares purchase requisition form. This form again checked approved by
the head of the department. Four copies of this form are prepared which are
distributed as follows:

DESCRIPTION COPIES
Office 01
Stores 02
Procurement Department 01
Now, procurement department purchases the items and, after inspection,

these come to the stores where two reports are prepared.
 Material Inspection Report.

 Material Receiving Report (MRR)
There are 4 copies of MRR. These are distributed as follows.
DESCRIPTION COPIES
Store accounts ONE
Accounts payable ONE
Supplier ONE
Office copy ONE
The stores account section which, after proper valuation of asset, sends one
copy accounts payable for further processing receives the first two copies.

DATA S OU RCES
As mentioned above fixed asset section receives the Material Requisition
from store section. These reports are received on daily basis along with the
revised list prepared by the store section. A control register is maintained
manually and all the daily dak received from the store section is punched on
the hard disk and the edit list is received. Then both the edit list and register
entries are tallied with RPs received from store section. If they are not
matching, the necessary errors are removed and again an edit list repeated
until the correct edit list is received. When all the data has been transferred
correctly, the RRs are verified and returned to the store section.
After verification of these reports another manually maintain register is

updated. Sometimes some of the RRS and MRS canceled due to some
wrong entries. These RRS or MRS is also send to the store accounts and
they also posted into the subsequent registers, but with the remarks “
canceled”
Another control book called MATERIAL REQUITING CONTROL BOOK

Is also maintained manually. This book contains the RR nos of the blocks
issued and as the RRs are received there no are marked to show that they
have been received. At this stage the RRs are computerized into three
classes. These are following:
 General Stores (G.S)

 New Spares (N.S.P.S)
 Fixed Assets (F.A)

 Store Account (S.A)
There main heads are allotted particular codes are written in the material
requisition control book. Which are:
DESCRIPTIONS CODES
New spares N.S 1400
General stores G.S 1600
Fixed Assets F.A 3400
Store Acc. S.A 2100
Their record keeping is also distributed within the office and hence the
control book also helps to determine and locate any particular RR
distributed. The RRS sent to the Payable department are sent along with
manually maintained ‘Store Account Book’ where the details of RPS are
filled and after verification by the accounts payable department on receipt of
RRS is returned to store accounts.
The RRs of fixed Assets are received. These may be broadly classified as for
Multan/Lahore/Karachi offices. On the bases of these RRs. ‘Schedule of
addition in fixed assets’ is prepared manually. From this schedule Asset
accounting system master data pickup form is prepared. This form is then
used to input data into the computer. At the same time a summary is
prepared on the bases o this summary JVs are prepared in duplicate for each
main read only summarizing all accounts belonging to one main head one
copy of the final accounts.

When the asset is purchased using the capital budget, written permissions
obtained for purchasing that asset. This permission letter is also submitted
along with MR.
When the Lahore, Karachi office purchase some assets, it does not submit
the material requisition or receiving report but it only sends material
inspection report along with the “BANK PAYMENT VOUCHER” since the
Lahore, Karachi office payments are made directly through banks and not
through account payable sanction at Multan. The Material Inspection Report
has three copies as follows:
 Office Copy
 Originator
 Supplier
Sometimes the purchases are made by petty cash. In this case purchase order
is not filled and only MR, RR and Material Receiving Report are filled and
submitted to the related offices.
The company holds some contracts with some suppliers on annual basis. For
such suppliers vouchers are not prepared manually, but prepared by the
computer.
Sometimes wrong entries are posted to different heads. In such cases, new
MRRs are prepared to reverse the entries. Sometimes material amendment to
indicate any wrong entry that had been previously submitted. These forms

give references of the previous RR to locate, identify and correct the

mistake. Stores reversal form is also prepared for the entries that have been
amended. This form contains not only the new entries but also the previous
entries that have been corrected. This form is filled in directly by the
computer.
After having got the material issued by any cost center, due to any reason,
the center wants to return the material it has obtained previously, it fills
Material Return Note, which is treated in the manner as MRs and RRs. It is
also possible that some asset is sold out or transferred to some other unit or
place. When an asset is sold out, it is written out and the record deleted.
When it is transferred to some other unit, the asset is written off and the
particular unit’s account in question is given debit with the amount of the
asset and a debit memo prepared and sent to the receptive unit. That unit in
turns sends a credit memo and the asset are added to the assets of the Multan
unit. This memo also prepared in the fixed asset dept.
After the addition to the assets has been posted into the computer through
the master data pick up form; an edit list is printed and checked by the fixed
assets dept. If any mistakes are pointed out these are marked and later on
corrected. The deletion of records is also made through the same form. The
only difference between the entries of the addition or the deletion records on
the pickup form is that, in the column of account type. 1 is written for
adding the record and 3 is written for deleting a record. Similarly for those
that are to be checked 2 is written in accent type column. The edit list given
at the end clearly indicates which record was added. Changed or deleted, so

that the record was added, changed or deleted, so that the final verification
can be made.
At the end of the year a computer printed register is obtained, giving the full
list of all the fixed assets with their relevant information that have been with
the company during the year.
STORAGE MANAGEMENT
Within the store the arrangements of items is based on the following
criterion:
 Size of items
 Weight & ease of handling
 Quantity to be carried
 Frequency of use
PHYSICAL LAYOUT & INVENTORY

Verification of physical balances of inventory is carried out by the
representative of finance department regularly throughout the year in
accordance with a predetermined schedule received from the store of any
discrepancy found, shortage or access, is pointed out and investigated. At the
year-end the shortages are written off with the approval of management and
excess are charged to store. This physical checkup is carried out at one
particular section at a time and during this checkup no issued from or added
to the stock in that particular section.

ST ORE K EEPI NG & RE CO RDS

Finance department maintains the store accounting record independent of the
store department. Storekeeper, however, maintains bin cards. The bin cards
for all the goods are placed in a central location and not attached to the
goods only identification slips are attached to the goods and the racks that
help the store keeper locate the items easily.
IN VENT OR Y PR IC IN G M ETH OD
Perpetual inventory system is being used for pricing the inventory items and
this function by the store accounts section of finance division on the basis of
various documents received.
INVENTORY ACCOUNTING SYSTEM

This system is an online system. Terminals are provided within the stores
department. All issues and receipts are entered into the computer on the basis
or approved forms. Different reports generated on the basis of month or
yearly transactions are as follows:
 Comparative material consumption report

 Slow moving items report
 Stores aging report
 Monthly material issues report

 Consolidated reversal/corrections summary

 Monthly material received report
 Reversals Summary for:

 Receipts
 Issues
 Corrections
In addition, physical stock Adjustment Report is also prepared on the basis

of physical checkup of inventory.
REPORTS FORMATION
There are different reports prepared in fixed asset section, which are given as
follows:
Location Wise Summary

This report is prepared on monthly and annual basis. This repot gives the
information about assets location wise that how much assets where are
situated in the company.
Class Wise Summary

This report is also prepared on monthly and annual basis. This report gives
the information about all the assets class wise.

Annual Register
This register contains the information about all the assets of the company.
All the assets, which are depreciated during the year, and all the assets,
which are retired during the year, described in this register.
Retired Assets
This report contains the information about the retired assets. This report
contains information about not only which are retired during the year but
also were retired previously.
Consolidated Summary
This report is prepared annually. This summary gives the information about
all the fixed assets and retired assets.
Additional Reports
There are some additional reports to support the regular process prepared as
and when required by the management. These reports normally deal
exceptional cases.
OBJE CTI VES

 Calculate and Allocate depreciationm expenses for corporate and tax
calculations.
 Provide record for proper physical control of assets.

 Accounts for transfer of assets within the company.

 On retirement of assets, display the capital gain or loss.
 Calculate the accumulated depreciation of assets and retire them when
net book value is one.
 Printing of different reports of depreciation and others to maintain proper
record of audit.
 This system works for accounts department where data provided by this
system is helpful for preparing very important reports such as income
statement, Balance Sheet, Trial Balance, etc.
DOC UME NTS U SE D

In the Inventory & F. Assets section following documents are being used:
Document Code Description

F-11 Material Receiving Report (MRR)
F-12 Material Return Note
F-13 Material Requisition Report
F-14 Material Dispatch Note
F-15 Physical Stock Adjustment Report
F-16 Master File Update Report
F-17 Inter Store Transfer Note
F-18 Store Reversal/Correction Form
F-19 Material Adjustment Voucher
(See Annexure)

CASH Section
Cash and Budget are two separate sections working under the Finance dept.
The GM (F) is the head of these sections. Cash and budget matters are
farther segregated, added by manager Bank and Cash and Manger budget.
Under the managers are deputy managers and assistant managers segregated
and then account assistants. First I am discussing cash section later I will
discuss Budget section.
WOR K F LOW
The Cashbook system is in operation in Pakarab, which is serving the same
purpose as that of cash. Cash received from customers or disbursed to
vendors is recorded. This record is useful to help management in order to
determine cash resources of the organization for future planning. The daily
receipts and outflows of the company are recorded by accounts department
and further accounting treatment is performed by monthly-computerized
programmers designed for this purpose. In order to under the concept of
product costing in the factory, Istly, we will have to understand the nature of
the factory, the type of productions, the various type of bi-product and final
products. At PFL, two types of cashbooks are maintained:
 Main cash book

 Petty cash book

Transactions are entered in cashbooks through vouchers. Main cash voucher

is used to post transactions in main cashbook and Petty Cash voucher is used
to post transactions in Petty Cash Book.
PAYM ENTS
In case of payments for purchases of any dept. payment voucher is prepared.
In accounts payable section after receiving purchase order form that
particular dept. Account assistant verifies the purchase order with invoice
and prepares the payment voucher and attaches all the relevant document
with the voucher. Then this voucher is signed by the deputy manager
account payable after manual inspection of all the documents. After approval
of these document are being sent to general manager finance that signs the
voucher. Than these documents are sent to cash section where senior cashier
prepares the check signed by superintendent cashbook and attaches the
covering latter with the check. Covering latter include the information about
the total amount, deduction, set amount payable, check no, party no and
data. The manager cash manually inspects and sings these documents and
sends it to the senior manager cash and budget. If the amount of check is
more than 25000 it will be signed by both general manager finance and
General manager Finance and returned to the superintendent cash who sends
it to S & S department in order to dispatch.

RE CE IPTS
Receipts may be cash receipts for collection of checks. Sales Section
prepares the covering letter for cash receipts and forwards it to Cash center.
The manager cash receives the receipts and prepares cash receipt, files the
receipt and enters the amount of receipt in daybook.
In case of collection of cheques Sales Section forwards the covering letter

and check to the cash section where account assistant manually inspects
these entries and writes them in Check Receipt Register.’ It is also signed by
deputy manger cash and then sent to senior cashier who prepares the receipt
and signs it. Then superintendent cash signs this receipt and the amount is
entered in the daybook. Two copies of receipt are being made.
One is office copy and the other copy is sent to cash section where assistant
manager manually inspects it and files the receipt. In case of importance
bank retires the document and then debits the respective amount. At office
the bank adjustment entry is passed against bank debit invoice.
Correspondence with banks is also performed at outstations that are Lahore
and Karachi offices. In case of importance bank retires the document and
then debits the respective amount. At office the bank adjustment entry is
passed against bank debit invoice. Correspondence with banks is also
performed at outstations. Bills are sent to National Fertilizers Marketing
Corporation where they raise debit in their books. Receipts are performed at
Lahore where they raise credit. Larger payments are made at Lahore. Main
cash vouchers are prepared at office and all the relevant documents are
attached with these vouchers. At the end of month all the main vouchers
along with all the relevant documents are sent to PFL Multan. Then at PFL

Multan these vouchers along with relevant documents are filled in their
prepared from these vouchers where adjustment entries are being posted.
Bank reconciliation statement is received at the end of month and reconciled
With the cashbook to clear any discrepancy.
In order to post transaction in the main cash book cashier, at the end of day,
sends payment vouchers, receipts vouchers to cash section. Cash section
receives adjustment voucher from L/C Section. Account assistant at cash
section allots voucher number to these vouchers. This voucher no are
repeated within one month. Almost two to four hundred vouchers are posted
within one month. Then these vouchers are send to the MIS dept. for data
entry. Edit list is produced which is checked of the cash register is produced
and a copy is sent to the superintendent cash, one copy for office record and
one goes to S.M accounts.
At the end of the month, monthly payment summary, monthly receipt

summary is produced and these details are sent to the final a/c section for
posting entries in general ledger. Monthly journal voucher is also prepared.
PETTY CASH BOOK

For the purpose of petty cash transactions of petty cash book authorized
person for petty cash requirements approves an amount of Rs. 50000 or
100000. Payments are being made according to the requirements and
transactions are entered in the petty cash book. Next day a voucher is
prepared for the payments of the previous day and the amount of payments
is received and entered in the petty cash book. Petty cash voucher is

prepared for posting entries in the petty cash book. Petty cash payments may
be for medicine requirements or for miscellaneous purposes. Petty cash book
is updated on daily basis. At the end of month a summary is prepared and
balanced as on and of month is computed.
REP OR TS FOR MA TIO N

There are different reports prepared in cashbook section, which are given as
follows:
Daily Receipts & Payments Summary

It is prepared on daily basis. This report holds the data of all the payments
& receipts of the day in which the transactions occurred.
Monthly Receipts & Payments Summary

Is prepared on monthly basis. This repot holds the data of all the payments
& receipts of the month.
Daily Petty Cash Report

Is prepared on daily basis. The purpose of this report is how much petty cash
is available at present and how much of it is spent.

Monthly Petty Cash Report

Is prepared on monthly basis. This report also gives the information about
cash on hand and about how much cash has been during the month.
Monthly Payment Summary

Is prepared on monthly basis. This report tells about all the payments of the
month.
Monthly Receipt Summary

Is prepared on monthly basis. This report tells about all the receipts of the
month.

BUDGET SECTION
This section is also working under Finance Division. There is a senior
manger under Finance Manager and then there are deputy a manager under
senior manager finance. Under those deputy managers there are further
assistant managers.
All the major activities of this section are reported to General Manager
Finance. When there is time to prepare budget for the next year all the
sections send their budgets to this section. Based on these budgets this
section prepares the budget made can be classified into two types:
 Revenue budget
 Capital budget
The information for capital budget comes from all the sections of finance
division and other divisions while the information for revenue budget comes
from Marketing department. While making budget, the basic factors
considered are:
 Plant condition
 Profit planned
 Production
The process of charging costs to centers and to the productions is based on

predetermined fixed principles. After due consideration of basis factors, the
major input in preparation of budget is the Material Consumption ratios.

These sheets are provided to all manufacturing centers. The unit managers
prepare the budget estimates for consumption with cost and sub-cost centers,
and also budget estimates for cost centers, which are prepared on monthly
basis.
While making these, the unit managers are supposed to keep in mind a few
guidelines. Some of them are given below:
 All out efforts should be made to conserve the energy.

 The estimates for spares and general stores should have a relation to the
consumption pattern during the last three years. Spare parts and general
store to be used for special jobs must be indicated in a separate list giving
full justification.
 The estimates should be for each item separately and be based on actual
requirement during the year 1993-94 and store inventory that in the
pipeline.
 The estimates for purchase and consumption of revenue items like spares,
chemical and general stores is to be submitted item wise.
 As for as possible designed ratios should be adapted for working out
consumption’s of raw materials including inter transfers from one process
to an other and utilities.
Capital budget should be supported with CE (1) form for each item required
during 1993-94 giving full justification, technical feasibility and complete
cost breakup of each item.

 The estimates for stationary should begin to material manager, who after
consolidation will submit the same to general manager finance.
 The estimates for items of general store of “Common pool for all plants”
should also be consolidated by material manager with consultation of all
concerned.
 No general provision such as miscellaneous and contingencies should be
made. All provision should be based on detailed working on specific
requirement, which should be verifiable at the time of security of the
budget and estimates.
 The list of cost centers, account code, formats for consumption,
purchases are attached. Blank CE (1) can be had from the budget section
according to requirements.
 After having gone through all the above process, estimates are made for
next year production and on its basis cost calculated are transferred to the
individual units involved in the preparation of that product.
In addition to above reports many other reports are also generated, which
are following:
 Cash flow statement

 Sales volume
 Sales value
 Production overheads
 General and administrative expenses
 Budgeted stock level of raw material
 Packing material
 Chemical quantity & value

 Capital budget
 Balance sheet
 Miscellaneous income
 Plant utilization
 Cost of sales
 Financial charges & Personnel expenses
After having prepared all the reports and budgets these are presented to
the executives at head office, and modified if necessary. After due
modifications these statements are then discussed with ADNOC and once
again modified if needed. After finalization of these reports, the budget
for year is approved and hence gains the legal position. Managers are
required to follow it. Periodical variance reports and follow up are also
made.
Presently, the department has got a PC and macros have been developed
in Lotus that utilize production targets and consumption ratios as major
inputs and provide with different output reports.
This section is also responsible to look at the daily balances and future
predicted balances of cash in banks and cash on hand. If it seems to be
going into shortage, follow up is taken to boost the cash inflow by
acquiring loans on increasing receivable turnover.

FOREIGN EXCHANGE AND L/C

SECTION
This section is also a part of finance division and works under the senior
manager cash. In the hierarchy manager cash, foreign exchange and
licensing is the head of the section working under him is assistant manager,
supervisor, dispatcher and a peon. The section is performing the following
activities:
 Obtaining import Licenses & Establishment of L/Cs

 Maintaiance of L/C ledger & Import License register
 Adjustment of Bank documents
 Arranging Shipping Guarantees
 Maintain relevant Sub-ledgers
The section receives copy of purchase order from the commercial

department along with the copy of terms and conditions decided with the
supplier. Then this section has the responsibility of opening the L/C for that
particular item. The process begins with writing the details of contract on a
standard application form of bank and submit it to the bank. A few things are
worth mentioning here. The Government has divided the item into three
categories:
 Freely Importable
 Restricted items
 Better Systems

PFL is dealing with freely item; it is legitimate for all the items to be
insured. For this every items were to be separately insured but at present
PFL has contract with insurance company on yearly basis. Only the
insurance number needs to be mentioned on the L/C. There two types in of
L/C in which PFL is dealing:
 Nil Margin
 Margin L/C
In this type no payment is made in advance by the party when opening L/C
against the import of items while in margin L/C the amount is to be paid in
advance. Owing to reputation and goodwill of the company, the PFL uses nil
margin L/C.
When the L/C has been opened the local bank intimates the foreign bank of
opening the L/C and made the payment advice. The item is thus released for
shipment. Upon receiving the documents the L/C section takes endorsement
from the bank to release the item at port. At the same time the bank gives the
debit note to PFL against the value of imported items. Then the L/C section
arranges clearance agent for the releasing of the items.
For clearing bill of entry is filled, that contains the Pakistan Custom Tariff
(PCT) number and all the related amounts charged to that item. This bill is
first passed, payment made and then the item is released. Once the item has
reached at PFL, “Invoice Pricing Form” is filled that contains all the charges
incurred in getting that item, during all this procedure a separate account of
the item is opened in the sub-ledger of L/C and it is updated now and then

each time expenses related to incur. So that final full value of the item is
known. Another register called SCHEDULE OF L/C CLEARING
ACCOUNT is maintained that contains the record of P.O. No., L/C No. And
the amounts paid in different months for different L/C to one branch of the
bank. Finally the Journal Voucher (JV) is prepared and sends to the book
keeping section for updating the general ledger.

BOOK KEEPING SECTION

In the present hierarchy of the section governed by GM finance assist by
senior manager finance. With in the section a deputy manager is the head
who is being assist by two superintendents.
The section is responsible of keeping the final accounts. The concerned

section maintains individual transactions of every kind but consolidated are
sending through JVs to the final account section. Then this section is
responsible to update the each major head of all sorts of accounts.
Thus this section has close interaction with all other departments/sections
such as payable, sales, inventory, payroll, cash, procurement, commercial
etc. Not only the cash transactions are reported to this section but also
transfer of assets, sales, purchase of assets; daily production and dispatches
are also reported. So most of the reports and key information’s about the
organization are available in this section. In case of transfer assets to other
units, debit/credit notes are prepared and maintained by this section. The
section is provided with two PCs and one terminal of AS/400 through LAN.
One PC is also linked with networking and the other is working in Lotus to
generate the final financial reports. The vouchers are classified as:
 Main Cash/Bank Voucher

 Cash Payment Voucher
 Journal Voucher

These vouchers are prepared in the concerned sections while the main cash
voucher is prepared for cash transactions either through petty cash book or
bank payment.
ACCOUN TS C ODIN G
For the efficient running of the system each account has been allowed a
unique code in a systematic way. Which are as follows:
Accounts Number [XXXX-XX-XXX-XXX]
1 2 3 4
1) Major head
2) Account Name
3) Cost Center
4) Sub-cost Center
The entries to the accounts are made with this system and are identified by
their unique codes.
REPORTS
As a result of day to day transactions and their entries, different type of
reports are generated. These reports are generated independently depending
upon the requirement. In addition, the section also provides reports to the
internal and external auditors. The reports that are generated monthly,
quarterly, annually include:

 Trial Balance
 Income Statement
 Balance Sheet
 Cost Sheets

System
department

Introduction
I
n the present dynamic world of industrialization, the role of timely and
precise information cannot be ignored. The business environment has
always been competitive and has been ever growing by leaps and
bounds. To survive and grow in this environment, business organizations not
only need to control the external activities but also internal one.
Furthermore, at the same time, they have to fulfill the requirements of
Corporate Law Authority. The management may also require information for
decision making purpose. To achieve the all above said objectives,
different kinds of reports have always been generated. To come to an
ultimate stage of reporting, a number of tasks have to be completed, that
includes recording each individual transaction, gathering data, compiling
and segregating the data, preparing groups totals and finally preparing
legible reports and interpreting the figures into meaningful, understandable
words. Formerly all these activities were carried out manually, which
required a lot of time and effort. The result was a slow, delayed and
sometimes poor, inaccurate and inadequate information. But with the advent
of computer, and its literacy among the people, the organizations turned over
to computer systems. With this a new era of reporting the information. The
benefits weighted against the cost incurred in maintaining and maintaining
the data were for more encouraging than maintaining the manual systems.
As the computer technology advanced, more and more people within the
organization were involved in electronic data processing. The establishment
of department to control, secure, makes necessary arrangements for the
safety of data became necessary. For this reason, separate electronic data
processing center / departments were established within the organization.

These departments have been designed as EDP departments. CIS

departments or MIS departments in different organizations. In PFL there are
five working systems on AS/400 . Now I am going to disuses the following
two major branches of any computer section:
 Hardware
 Software
 System Software
 Application Software
HAR DWARES
In PFL to create the integrity and security of data, AS/400 is being used with
the systems designed in Cobol/400. In Accounts Departments following
hardwares are being used which are connected with the server AS/400
through networking:
Hardware Type Quantity

Server AS/400 01
Terminals 03
Personal Computer (PC) 04
PC Ram 64 MB
PC Hard Drives 4.3 GB
First I am discussing the introduction of AS/400 and operating system after

which I will discuss about the application systems.

IN TRODUCTI ON TO AS /400
In June, 1969, IBM announced the System/3. The new machine was a batch
machine, which meant one job at a time could be read into the machine and
processed. Input data was supplied on the punched cards and the output
could be either printed or punched into cards. Enhancements to the System/3
and new model announcements quickly followed.
IBM announced a disk-based system shortly after, and soon terminals could
be connected. As expected the System/3 was extremely successful. The
combination of nearly programmer less environment and low cost made this
system very attractive to many small businesses that could not previously
afford a computer. This was totally new business for IBM, and
approximately 25,000 machines would ultimately be delivered to customers.
The System/3 was a beginning of the family of computers that includes the
System/32, the System/34 and the System/36. All these systems were based
on original the System/3 architecture. Significant enhancements were added
to this architecture over the years, but much of the original low-level design
of the System/3 still showed through. An example is the original 16-bit
address of the System/3, which limited program sizes to 64 kilobytes.
The System/38 architecture IBM proposed in 1970 was designed to

overcome the technological dependencies of the System/3. The idea was to
create a new architecture that was totally independent of the underlying
hardware technology. As technologies improved, allowing the
implementation of larger, more functional computer hardware at a

reasonable cost, the internal of the system could be changed with no impact
on customer application programs.
IBM originally proposed this new technology-independent architecture for a

system to be announced in 1975 that was intended to replace the System/3.
However, by 1972, the System/3 was so successful that IBM decided to
continue this line of computer and to delay the introduction of the
replacement system. In 1975, IBM introduced a low-end System/3 for a
small business office.
This new computer was originally going to be called the System/3 Model 2,
but its name was changed to the System/32 before it was announced. The
System/34 appeared in 1977 and combined the best of both the System/3 and
the System/32. A new technology implementation of the System/34, called
the System/36, was announced in 1983 and quickly became a big success
with several different models. All of these systems share a common
architectural base.
With the decision to continue the System/3 line of computers, a new and
totally separate development organization was formed in Rochester to
exploit the proposed technology-independent architecture. By being totally
independent of the System/3 development organization, this group was free
to invent a radically new system. After the announcement of the System/38
in 1978, many people wondered how it was possible two such totally
different system designs could come out of the same development location.

The explanation was two separate development organizations that had little
contact with one another. They were even housed in separate building across
town from each other. The System/38 developers had no heritage in the
System/3. They were an outside group of people with little incentive to build
a better version of System/3. For all practical purposes, the two
organizations could have been in different companies.
Rochester would maintain these two separate development organizations

until the System/36 and the System/38 groups merged to build the AS/400.
This merger of the two groups was not so easy, because each group had
strong emotional ties to their own architecture.
The System/36 group could not understand how a big, memory-hungry

architecture like the System/38 could ever satisfy the needs of their small
customers. They pointed to the fact that the System/38 took megabytes of
memory while the Systwm/36 required only a few hundred kilobytes of
memory. With the decision to use the System/38 architecture for new
AS/400, the System/36 group argued that Rochester would not be able to
build low-cost machines to attract the System/36 customer base.
Fortunately, the two organizations were able to work together. The closer
they worked, the more alike they found the systems to be. They also found
that various features of the two systems complemented each other. For
example, the System/36 had a better user interface, while the System/38 had
a better application development environment. The System/36 used separate
intelligent processor to perform I/O operations, which worked better than the
Input Output I/O channel used in the System/38.

SY STEM SO FTWA RES

The system softwares for the hardwares are only two OS/400 for the server
AS/400 while Windows 98 for the Personal Computers. Now First I will
give the brief introduction of OS/400 and its menus after which the
application systems of the AS/400 will be discussed i.e.
 OS/400
 Displays
Operating System-OS/400
The operating system, the OS/400 program, provides the tools you will use
to run the AS/400 System. It allows you to run multiple jobs regardless of
any other programs running at the same time. Major functions of the OS/400
are following:
 Control Language
 Data Management
 Work Management
 Programmer Services
 System Operator Services
 Communication Support
 Security
 PC Support

CONTROL LANGUAGE
Control language is the set of commands used to talk with the computer.
DATA MANAGEMENT
Data management allows the user to define and use data files.
WORK MANAGEMENT
Work management controls many jobs, no matter if you are doing several at
the same time, or if other people are using the system.
PROGRAMMER SERVICES
It provides support for online program development and testing
SYSTEM OPERATOR SERVICES

It provides a menu for easy access to frequently used operator functions.
COMMUNICATION SUPPORT
The OS/400 program supports a wide range of communication functions that
allow your AS/400 system to communicate with other types of systems as
well as other AS/400 systems.
SECURITY
Security protects your valuable work.

PC SUPPORT
The PC support program provides a means of attaching your personal
computer to your AS/400 system as a programmable workstation
Displays
All of the work you do with AS/400 system will centre on displays. You’ve
already worked with two kinds of displays, a menu and Sign On entry
display. Menus help you to get started on a task by showing you options.
Entry displays allow you to interact with the computer. These are four kinds
of displays in all.
 Menu display
 Entry display
 List display
 Information display
Although four kinds of displays look and act differently, they have three
things in common. They have:
 Titles
 Active function keys
 Purpose

APPL IC ATI ON SOFTW AR ES

The application softwares running on the server is designed in Cobol/400
while for the office documents and financial statements office 97 and Excel
97 are being used respectively. The sytems designed in Cobol/400 on
AS/400 are following:
 General Ledger System

 Inventory System
 Payroll System
 Cash Book, Indenting & Forecasting System
A system is a set of inter-related part that interacts with one another, brought
together for a purpose. Every system accepts inputs and processes them into
outputs. Any system or subsystem has a boundary. A boundary is the border
between the system, we are considering and the environment in which
system exist. The environment can be a thought of another system. One
system output is often another systems input.
General Ledger System (GLS)

The GLS Computer application is a truly integrated data processing activity.
Several subsidiary accounting applications proceed its applications. As a
document the GLS is the final consolidated record of all financial
transactions within an organization. All accounts must balance both in debit
and in credit in order to validate the general ledger document and thereby
provide an exact accounting of the total financial activity of an organization.

The GLS application consolidates financial data from all of the accounting
subsystems and proceeds towards the monthly and annual financial
statement. Many financial transactions of a business are first, record in
Chronological order in Journals, then transferred to sub-ledger where they
are organized into accounts such as cash, account receivables & payable,
inventory etc. The summary of all accounts and their balances is known as
“General Ledger”.
At the end of each accounting period, the balance each account in the
general ledger must be computed, the profit or loss of the firm must be
calculated and financial statements of the firm must be prepared. This has
known as the “Closing the Books” of the business. The income statement of
the firm presents its income, expenses and profit loss for a specified
financial year while the balance sheet shows the assets, liabilities of the
business.
OBJECTIVES
 Accurate Monitoring of Financial Position
 Identification of Profit/Loss
 Budgeting for Future Planning
INPUTS
The inputs of GLS are following:
 Account Receivable System
 Account Payable System

 Payroll System
 Cash Book System
 L/c System
 Inventory Accounting
OUTPUTS
The output of GLS includes a listing of all transactions and a trial balance
report, which provides control and balancing all ledger accounts. Beside
Trial balance and general ledger for each month, there are also several
reports and schedules prepared each month and at the end of each year.
The income statement and balance sheet of the firm for an accounting period
is major output of the GLS and has a comprehensive importance for the
financial management. There are some further outputs of GLS, which are
listed as below in the form NFC Performa:
 Cash flow Statement

 Profit Loss Statement
 Operating Expenses Statement
 Cost of Goods Sold Statement
 Manufacturing Expenses Statement
 Sales Statement
 Net Sales Statement
 Production Cost Statement
 Adjustment Sheet

 Material Consumed
FEATURES
 Entry & Collection of Financial data
 Maintenance of Journals & Ledgers
 Trial Balance Preparation
 Production of other Financial Statement
Inventory Control System

Beyond the basic objective of maintaining optimum inventory levels,
Computer based inventory systems are designed for:
 Monitors the Contents & Status of Inventory

 Implement Control Policies
 Support Purchasing
 Order Handling & Shipment
 Inventory Forecasting & Planning
INPUTS
When store department purchase any item from the market, they first give
the accounting code to that specified item according to their procedure, then
they prepared a journal voucher (JV) which is the input of GLS.

OUTPUTS
The outputs of inventory control system in GLS are as follows:
 Inventory Status Report
 Stock Out Report
 Purchasing Advice
 Inventory Valuation Report
FEATURES
 Monitoring Current Inventory Status
 Locate Inventory Items
 Support Purchasing
 Support Order Processing
 Support Shipment
 Forecasting & Planning
Payroll System
For a small business with few employees payroll records can be easily kept
manually, but as the number of employees increases this task going to
become more difficult for the concerned authorities. Payroll system of PFL
includes following:
 Calculation of Pays
 Preparation of Pay cheques
 Maintaiance of Payroll record

 Periodic Summary Processing

 Maintaiance of Tax Statements
INPUTS & OUTPUTS

The inputs in of payroll system consist of thirty-two documents. After
having all necessary information payroll superintendent enters these
information’s into the computer. Then computer processes those
informations and prepares following reports as output:
 Bank Statement
 Pension Statement
 Income Tax Statement
 EOBI Statement
 Deduction Statement
 Group Insurance Statement
 Gratuity Statement
 Benevolent Fund Statement
Cash Book System

In PFL the cash book system is executed on daily basis. The data consist of
two types of transactions:
 Payments
 Receipts

The transactions, which are related to payments, are further divided into
different types of heads having own account numbers. Similarly receipts
have also accounting codes.
For payments accounts payable sections generate vouchers. Initially the

procurement department sends a purchase order to the supplier. The supplier
supplies the goods to store department where MRR (Material Receiving
Report) is prepared. MRR and purchase order is received by A/c payable
section where payment voucher is prepared. Cashier prepares payment
cheques for the suppliers in reference to said vouchers. Then this cheque is
sent to cashbook manager for final approval. The data is processed by
cashbook system, which generates Bank Payment Report. Similarly incase
of sales there are two types of transactions:
 Sale of Main Product

 Sale of By-product
PFL sell all its final products to NFML (National Fertilizer Marketing
Limited) which performs the marketing activities for the PFL. NFML send a
purchase order and list of dealers to sales section to sales section. Sales
section prepares an invoice in favor of NFML, this invoice is posted on sales
book. Similarly incase of by-products, the customer applies for purchasing
the products and at the same time applies for purchasing the products with
due amounts. After the recommendation of the customer the invoice is
prepared and posted to daily sales book. Incase of any error, an adjustment
voucher is used. Now the data collected from sales book and adjustment

receipt voucher are feeded into the computer, which are processed by
cashbook system, which makes Bank Receipt Voucher.

Conclusion
PFL is one of the largest plants in Pakistan producing compound fertilizers
(Urea, Nitrophosphate, and Calcium Ammonium Nitrate) at the same time.
Very automated production and information technology (Mini System
AS/400) facilities for efficient and effective output. It is the only company in
Pakistan, which is producing bi-products (Ammonia, Ammonium Nitrate &
Nitric Acid), for selling as well as for the final product in its concerned
business sector.
In Finance department the jobs are classified in the sections and people
there, are specialize in their work (Division Labor). They can provide up-to-
date informations regarding inventory management, payroll, sales, accounts,
L/C etc. at any instant. This is because of high level integration of computer
system through LAN on AS/400.
But the on the other hand the problems that I feel in this department are
mismanagement of resources, overstaffing, power & politics. Like in any
governmental institution, in PFL also, there are many resources like scrape
in millions, furniture, extra stores and spare parts etc. All these resources are
on the behalf of RED TAPE of the management.
Another major problem is overstaffing of employees especially in Finance

department. Staff is more than the needs causing heavy payroll expenses.
Actually there is no bookish human resource department for formal
recurring, only the PAWA (the authority by any political influencer) is used
to get a job in 70% cases. Like any government office, here also leg pulling

among the staff is continued behind the scene. Another most important thing
is that the staff usually delays work in regular time to have more working
hour rate in over time hours and no body is there to control them. To
overcome all such problems management should do something to create
intrinsic motivation among the employees or privities it.
Though I have done my internship in finance department of PFL only for

eight weeks, that’s why I am unable to take a glance view of the company,
but I have tried my best to give the brief overview of the company and my
concerned department.

Internsp Report On NFC by $linky City

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An Internship Report

Pakarab Fertilizers Private Limited Multan 1

Though Pakistan is an agricultural country yet the average croping intensity

 Traditional Methods of Farming

Pakarab Fertilizers Private Limited Multan 2

Pakarab Fertilizers Private Limited Multan 3

National Fertilizers Corporation

OBJE CTI VES

 To increase the efficiency of existing production plants

Pakarab Fertilizers Private Limited Multan 4

COM PANI ES UND ER

ADM INIST RATI ON

FACTORY NAME LOCATION

 To act as Secretariat of the Board of Directors of the company.

Pakarab Fertilizers Private Limited Multan 5

 To compile future feasibility reports.

Pakarab Fertilizers Private Limited Multan 6

Pakarab Fertilizers Private Limited Multan 7

PAKARAB FERTILIZERS (Pvt) Ltd

In pursuance of the afore-mentioned decision, Pakarab Fertilizers Limited

Pakarab Fertilizers Private Limited Multan 8

As mentioned earlier Pakarab Fertilizers (Pvt.) Limited (PFL) was

OBJE CTI VES

Pakarab Fertilizers Private Limited Multan 9

COM PANY FEA TU RES

Pakarab Fertilizers Private Limited Multan 10

Ammonia / Urea rehabilitation / expansion and rationalization was also

PRODUCT CAPACITY (METRIC TONS)

Pakarab Fertilizers Private Limited Multan 11

OR GANIZ ATI ON AL ST RUCTU RE

 Six Members Representing NFC

The Managing Director, in accordance with the Memorandum and Articles

Pakarab Fertilizers Private Limited Multan 12

corporate office presently located at Lahore and manufacturing plant at

The organizational structure of corporate office is broadly designed into four

Besides evolving company’s Management policies and procedures, the

Pakarab Fertilizers Private Limited Multan 13

Besides their predetermined functions, these functional heads are liable to

These Functional Heads report to the General Manager (Manufacturing)

Pakarab Fertilizers Private Limited Multan 14

The functions of the Manufacturing plant are broadly described as under:

 Utilize all the resources to achieve optimum productivity.

Pakarab Fertilizers Private Limited Multan 15

With the objective of achieving rated production capacities and decreasing

Pakarab Fertilizers Private Limited Multan 16

AMM ONI A PL ANT

Pakarab Fertilizers Private Limited Multan 17

however designed in mid seven tees. Technological advancement has

NI TRO P HO SPH ATE ( NP) PLA NT

Pakarab Fertilizers Private Limited Multan 18

Pakarab Fertilizers Private Limited Multan 19

CALCIUM AMMONIUM NITRATE PLANT

Pakarab Fertilizers Private Limited Multan 20

since rehabilitation and modification. The modernization of the plant was

Type 1988-1989 1987-1988 %age

Pakarab Fertilizers Private Limited Multan 21

Pakarab Fertilizers Private Limited Multan 22

Finance department is working as the heart of Pakarb Fertilizer. This is one

DEP AR TMEN T S KET CH

Pakarab Fertilizers Private Limited Multan 23

Senio r M ana ger (Fi nance)

 Assistant Manager Inventory

Senio r M ana ger (A ccounts )