Inventory-Management at IFFCO

PROJECT REPORT
ON
INVENTORY MANAGEMENT AND RATIO ANALYSIS
OF
IFFCO AONLA
SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS OF THE AWARD OF THE DEGREE OF
MASTERS OF BUSINESS ADMINISTRATION
INDUSTRY GUIDE:
SUBMITTED BY:
MR. ASHOK MAHESWARI

(ACCOUNTS OFFICER)
IFFCO, AONLA
PRADEEP VERMA
Roll No.- 0807270411
MBA IIIrd Sem.
VT No- 464
SUBMITTED TO:
1
IIMT MANAGEMENT COLLEGE
MEERUT
MR. K.K. PANDEY

DEPUTY MANAGER (TRAINING)
STUDENTS CERTIFICATE
Certified that this report is prepared based on the summer internship
project undertaken by me in IFFCO, AONLA from 06th June TO 31st
July 2009 under the able guidance of Mr. ASHOK MAHESWARI
(Accounts Officer) at IFFCO Aonla Unit as Industry Guide and Mr.
AFTAB AHMAD H.O.D at IIMT MANAGEMENT COLLEGE, Meerut
Campus in partial fulfilment of the requirement for award of degree of
Master Of Business Administration from Uttar Pradesh Technical
University, Lucknow.
Date.
Signature
Signature
Name______________
Name ___________
Student
Course Director
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CERTIFICATE FROM H.O.D.(MBA)

Certified that this report is prepared based on the summer internship
project undertaken by Mr. Pradeep Verma, a student of MBA Section
B, in IFFCO, AONLA from 06th JUNE TO 31st JULY, 2009 under my
guidance in partial fulfilment of the requirement for award of degree of
Master Of Business Administration from Uttar Pradesh Technical
University, Lucknow.
(Aftab Ahmad)
H.O.D. (MBA)
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ACKNOWLEDGEMENT
Expression of sincere gratitude is just a partial acknowledgment. The
accomplishment of this project INVENTORY MANAGEMENT & RATIO
ANALYSIS OF IFFCO would have not been possible individually without the
encouragement, assistance & valuable support from various sources. My vocabulary
falls short of word to express my sincere gratitude to Mr. Ashok Maheswari
(Accounts Officer) under whose guidance I had the opportunity to carry out the
present work.
I am very thankful to Mr. D. Kalia, Chief Manager (Training ) & Mr. K.K.
Pandey, Dy. Manger (Training) who supported me & helped me throughout the
project.
I am thankful to Finance & Account staff & to all the employees of IFFCO
who cooperated with me during my training period.
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I OWE A DEEP SENSE OF GRATITUDE TO ALL THE RESPONDENTS

WHO GAVE ME VALUABLE INFORMATION FOR THE PROJECT.
PRADEEP VERMA
MBA-III Sem.
42 YEARS OF COOPERATIVE GLORY
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IFFCO AONLA PLANT
LIST OF CONTENTS
Page No.
1) Introduction to topic
2) Objective of study
3) Research Methodology
10
4) Introduction about IFFCO
11-19
5) Objective of the company
20
6) Management
21-23
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7) Aim, Vision, Mission
24-25
8) Vision 2010, Approach
26
9) Commitment, Principles
27
10) IFFCOs Emblem
28
11) Organization chart of IFFCO
29
12) Investment outside IFFCO
30-33
13) All India share of IFFCO
34
14) Performance highlights
35
15) IFFCO Associates
36
16) Awards galore
37-38
17) Growth in Member Societies
39
18) Aonla unit
40-45
19) Finance and accounts department
46-50
20) Inventory management
51-53
21) Various sections of inventory
54-60
22) Payment against purchase
61-62
23) Delay in delivery
63
24) Imported material
64
25) Material coding
65-66
26) Packing & Dispatch
67
27) Inspection of material
68
28) Accounting of raw material
69-71
29) Store section
72-74
30) ABC List of Aonla I & II
75-76
31) Accounting for Stores
77-80
32) Insurance and verification
81-85
33) Techniques of Inventory control
86-91
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34) Inventory software
92-101
35) Production department
102-106
36) Different vouchers
107-122
37) SWOT Analysis & Strategies
123-126
38) Ratio analysis of IFFCO
127-153
39) Conclusions & Recommendations
154-155
40) Bibliography
156
LIST OF GRAPHS
1) Inventory turnover
2) Working capital turnover
3) Current ratio
4) Cash ratio
5) Solvency ratio
6) Stock to current asset ratio
7) Raw material
8) Owned capital turnover
9) PBT to sales
10) Capital turnover
130
132
134
136
138
140
142
144
146
148
INTRODUCTION TO THE TOPIC
INVENTORY MANAGEMENT
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Managing the level of inventory is like maintaining the level of water in a bath tub with
an open drain. The water is flowing out continuously. If water is let in too slowly, the tub
is soon empty. If the water is let in too fast, the tub overflows.
The dictionary meaning of inventory is stock of goods. The investment in inventory is
very high in most of the undertakings engaged in manufacturing. The amount of
investment is sometimes more in inventory than in other assets. About 90 percent part of
working capital is invested in inventories. It is necessary for every management to give
proper attention to inventory management. A proper planning of purchasing, handling,
storing and accounting should form a part of inventory management. By proper planning
it is possible for a company to reduce its levels of inventories to a considerable degree,
without any adverse effect on production and sales, by using simply inventory planning
and control technique. The reduction in excessive inventories carries a favorable impact
on companys profitability.
An efficient system of inventory management will determine
1) What to purchase
2) How much to purchase
3) From where to purchase
4) Where to store, etc.
Effective inventory management enables an organization to meet or exceed customers

expectations of product availability while maximizing net profits or minimizing costs
OBJECTIVE OF STUDY
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The main aim of study is to check the efficiency and effectiveness of inventory
management system at IFFCO Aonla.
Investment in inventory incurs a high cost. Therefore effective management is necessary
to minimize the cost and ultimately increases profitability of an organization.
Apart from our main objective, our other objectives are:
1) To analyze the level of investment in inventory by IFFCO.
2) To study the inventory policy of the company.
3) To analyze the policy adopted by the company.
4) To analyze the financial position of the company.
5)
To give suggestion if any, regarding effective inventory management, to ensure

smooth and uninterrupted supply without making unnecessary investment of
funds in inventory.
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RESEARCH METHODOLOGY
Research covers the search for retrieval of information for a specific purpose.
Basically research is the objective and systematic method of finding solution to a
problem. The steps followed to conduct this study are as follows:(1) Formulating research problem The problem under study viz. how effective are
the measures applied by Iffco, Aonla to control the inventory is basically studied through
analytical research. Material is important for the efficiency of the system. It is a matter of
great importance for inventory department. Inventory department of IFFCO, Aonla is
responsible for efficient inventory control. Thus the whole study is conducted under the
guidance of officers of this department.
(2) Extensive literature survey Many published studies, books or material on effective
control of inventory were referred to for getting a true direction to research process.
(3) Data collection The study is conducted through collection of data through surveys,
interviews with officials etc. Personal interviews were conducted where a set of preconceived questions were asked from the officers of inventory department regarding
material control policies adopted by them. Books of accounts of Aonla I and Aonla II are
studied thoroughly to details about inventory stock, cost of material consumed, increase and
decrease in stock in the last few years etc.
Sample of material was obtained randomly. ABC analysis was used where sample
of material was graded under three categories: A, B, C.
(4) Analysis and interpretation The data about inventory is analysed to find out the
effectiveness and efficiency of inventory policy. As regards the financial performance, the
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data about different financial indicators is analysed to calculate the different ratios and to
draw the graphs.
INTRODUCTION ABOUT IFFCO

During mid- sixties the co-operative sector in India was responsible for
distribution of 70 per cent of fertilisers consumed in the country. This sector had adequate
infrastructure to distribute fertilisers but had no production facilities of its own and hence
dependent on public/private sectors for supplies. To overcome this lacuna and to bridge
the demand-supply gap in the country, a new cooperative society was conceived to
specifically cater to the requirements of farmers. Thus was born IFFCO, the worlds
largest fertiliser cooperative. It was a unique venture in which the farmers of the
country through their own co-operative societies created this new institution to
safeguard their interests. Indian Farmers Fertiliser Cooperative limited, a multi-state
Cooperative has emerged as a role model for cooperatives Over 42 years of its inception,
IFFCO has turned into a true Cooperative Of the Farmers, By the Farmers and For the
Farmers. IFFCO has steadily grown in strength and stature from a modest membership of
57 societies in 1967-68 to 39564 societies as on 31st March, 2008. The initial equity
capital of Rs.6 lakh contributed by the cooperatives in 1967-68 has also gone upto a paidup capital of Rs.426 crore.
Indian Farmers Fertiliser Co-operative Limited (IFFCO) was registered on
November 3, 1967 as a Multi-unit Co-operative Society. On the enactment of the Multi
state Cooperative Societies Act 1984 which was amended in 2002, the Society is deemed
to be registered as a Multi state Cooperative Society. The Society is primarily engaged in
production and distribution of fertilisers. The byelaws of the Society provide a broad
framework for the activities of IFFCO as a Cooperative Society.
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A pioneer in this field, IFFCOs growth reflects its belief in the strength of the
farmer. Several prestigious awards stand testimony to the fact that IFFCO is driven by its
values and the dedication of its people. This is an organisation that believes in fair play
and has always followed transparent and professional practices in corporate governance.
PRODUCTION
The largest producer of fertilisers in the country, IFFCO has five state-of-the-art
plants that ensure its special position. These are considered to be among the best
professionally managed fertiliser plants in the world.
IFFCO had set up the KALOL plant for manufacture of Nitrogenous Fertiliser and
KANDLA plant for manufacture of Phosphoric fertiliser. These plants commenced
commercial production in the year 1974-75. . Another ammonia - urea complex was set
up at Phulpur in the state of Uttar Pradesh in 1981. The ammonia - urea unit at Aonla was
commissioned in 1988. As part of the new vision and in order to augment its complex
fertilizer manufacturing capacity, IFFCO acquired DAP/NPK/NP plant in Paradeep,
Orissa in September 2005. This was a historic moment, for it was the first private sector
unit to be acquired by any Indian cooperative. The Paradeep unit was expected to achieve
an optimal production load during 2008-09. During 2007-08, IFFCOs plants rolled out
68.47 lakh tonne of fertiliser material comprising 39.63 lakh tonne of urea and 28.84 lakh
tonne of NPK/DAP/NP which bears ample testimony to its superlative performance.
IFFCOs market share in N production is 20 percent and 25 percent in P2O5 produced in
the country. IFFCO has initiated energy saving schemes in all its five ammonia plants at a
cost of Rs. 410 crore
MARKETING AND DISTRIBUTION

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A strong marketing team and a sound distribution network make the bottom line
secure. Backed by this belief, IFFCO has gone all out to extend its reach, resulting in the
highest-ever sales of fertilizer material this year. With the completion of Kalol Expansion
Project, IFFCO is all set to realize the objective of producing 100 lakh tonne of
fertilizers, thereby attaining the distinction of world leader in fertilizer production. Every
fourth bag of fertilizer produced and every third bag of fertilizer sold in the country
belongs to IFFCO.
Around 40,000 cooperative societies and 158 Farmers Service Centres spread
across 29 states and union territories in India make sure that IFFCOs productsNPK/NP/DAP/UREA-are easily available to farmers.
These impressive figures have been made possible largely because of the fact
that IFFCO distributes its products through cooperative channels. Though the cooperative
structure may differ from state to state, the goal is to reach out to each district, taluka and
village and hence sell more.
This year, IFFCO has dispatched around 86 lakh tonne of fertilizer material from
its plants and ports by rail and road. With the aim of delivering to the doorstep of the
farmer in all parts of the country, the organisation hired storage space at more than 1,700
locations.
IFFCOs Farmers Service Centres not only supply material under one roof, they are
used as contact points for providing technical know-how to farmers. These Centres also
organize promotional programmes such as soil test campaigns and farmers meetings.
. During 2007-08, IFFCO has notched up a record sale of 93.24 lakh tonne of
fertiliser material comprising of 54.29 lakh tonnes of urea and 38.95 lakh tonne of
NPK/DAP/NP witnessing a growth of 8.3% as against 86.10 lakh tonnes in the previous
year. Best ever marketing productivity also sprang to 6158 tonne/head.
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FINANCIAL PERFORMANCE
The society recorded an all time high turnover of Rs.12163 crore during 2007-08
while its pre tax profit stood at Rs.380.52 crore and profit after tax at Rs.257.59 crore.
The society declared a dividend of 20% for its shareholders for seventh successive year.
HUMAN RESOURCE PUTTING PEOPLE FIRST

No vision, however grand, can be fulfilled without the cooperation of its people.
Recognizing this fact, IFFCO has made a sustained investment in its people, creating an
environment that attracts the best talent. At IFFCO, we see teamwork at its best.
Employees at all levels share a common dream, a dream that is understood in IFFCOs
Vision 2010. Hence, enhancing skills is of great significance for the organisation.
Other initiatives to help the growth of its people included workshops on human
values, leadership and work ethics. There were also many technical activities that led to
development and skill upgradation. Employees were sponsored for participation I
prestigious both in India and abroad.
With the firm belief that Information and Communication Technology (ICT) helps
the people and the organisation to grow together, IFFCO has augmented its workflow
applications. The Corporate Data Centre in New Delhi has been refurbished with the
latest technology. A new VPN was created to provide round-the-clock connectivity in the
plants, zonal office and head office.
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IFFCO has, over the years, successfully showcased its image in India and overseas.
Its achievements and its contributions to the farming community are highlighted in
various exhibitions and fairs.
Given the fact that IFFCO acknowledge that people are the key drivers in its growth,
there is little wonder, then, that the work environment here is one that encourages
creativity and nurtures success.
A YEAR OF APPRECIATION (2008-09)

It was a moment of pride for every member when the President of India in the year
2007 lauded IFFCOs efforts at conserving energy and keeping its consumption at the
lowest level. This National Energy Conservation Award 2008 was among many accolades
IFFCO received for its safety and conservation endeavours from FAI, CII and
Government of India. These awards, interalia, include for Best Production Performance,
Energy Conservation and Efficient Water Management to Phulpur Plant; Awards for Best
Technical Innovation, Safety and Environment Management to Aonla Plant; Energy
Conservation and Industrial Safety Award to Kalol Plant; and SUN and NDTV Green IT
Award to Kandla Plant.
In addition IFFCO has pocketed SMART WORKPLACE AWARD in the
manufacturing and industrial segment by the prestigious Economic Times, Acer Intel
Smart Workplace Award. At the world communications awards in London its associate
IKSL has been conferred award for Best Content Service and Best Project Management.
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Another significant event was the laying of the foundation stone of Indias firstever Kisan SEZ (Special Economic Zone) by Dr. Y.S. Rajasekhara Reddy, Chief Minister
of Andhra Pradesh.
Further, IFFCOs Managing Director, Dr. U.S. Awasthi, received honorary
Doctorate of Science degree from Dr Balram Jakhar, Governor of Madhya Pradesh, at the
Vikram University Campus in Ujjain.
Aonla Unit for the first time has crossed production of 20 lakh MT of urea which is
commendable. Paradeep has achieved greater laurels by producing more than 13 lakh MT
of NP/DAP despite shortage of raw material. Society has crossed the landmark sales and
transportation of over 112 lakh MT of fertilizers material registering a sharp rise of 20%
over the last year. With this, IFFCO has now become the largest marketer of process
fertilizers not only in India but in the entire world. Society has already achieved the sales
turnover of about Rs.32800 crore during the financial year 2008-09.
During the year 2008-09, the society has entered into a long term agreement with
LEGEND International for supply of rock phosphate along with equity stake. It has
initialed an MoU with Kazphosphate, a leading chemical and fertilizer manufacturing
company of Kazhakistan. Another agreement of intent has been signed with Qatar for
setting up a Urea plant.
CORPORATE SOCIAL RESPONSIBILITIES

In line with its vision and mission statement, IFFCO has undertaken several
social activities in the areas of education, community development, environment
protection and horticulture, health care/medical facilities etc, all with the intent of
reaching out to those in need and improving the quality of their lives. Adopting a village
is of paramount importance to IFFCO. The programme started with an objective to bring
about overall development in the living standards of rural community through integrated
rural development with particular emphasis on agriculture development, creation of
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drinking water facilities, medical and veterinary check up. IFFCO has adopted 439
villages, thus empowering many lives.
Another scheme that benefits the farmers is Sankat Haran Bima Yojana, launched
by IFFCOs subsidiary, IFFCO-Tokio General Insurance Company Limited (ITGI). Here,
farmers are provided insurance against accidents with the purchase of a 50 kilogram bag
of IFFCO fertiliser. This reaches out to member cooperative societies. The policy has
helped over 7,000 people since its inception in September 2001. ITGI also offers
customized policies for farmers such as Barish Bima Yojana, Mausam Bima Yojana and
Janta Bima Yojana.
IFFCO has initiated several promotional projects to provide greater opportunities to
the farmer by organizing field days, farmers meetings, sales point personnel training, crop
seminars, special agriculture campaigns to effect transfer of modern farming trends.
Besides, kits containing seeds, fertilisers, bio-fertilisers and agrochemicals along with
booklets/literature were distributed to farmers. The aim: enhancing crop productivity and
thus improving lives.
In keeping with its intent of empowering the weaker sections of society, including
women, IFFCO presents monthly scholarships to deserving students and also organizes
training programmes for women. The organisation has instituted 17 IFFCO Chairs at
agricultural universities and cooperatives. The emphasis is on current topics in
agriculture. IFFCO uses its 12 storage-cum-community Centres for helping people come
together and share their experiences.
The environment is a major concern with IFFCO. Its units and townships
comprise beautiful landscapes, surrounded by trees. IFFCO is also committed to
improving the safety, health and environment of its manufacturing units, in line with
international norms. The Kalol, Phulpur, Aonla and Kandla units have been awarded the
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ISO- 14001 certificate for Environment Management System. Further, the Kalol, Phulpur
and Aonla plants have received the ISO-9001 certification for Quality Management.
IFFCO has contributed Rs 10 crore to set up the IFFCO Kisan Sewa Trust. This
Trust assists farmers in getting medical treatment. Employees also contribute regularly to
it. The Kisan Sewa Trust organizes cancer detection and eye camps and arranges for
blood through the Red Cross Society.
The IFFCO Foundation has been promoted as the think tank of the organisation.
Its objective is to focus on strengthening village level cooperatives in harmony with the
law and culture of the country.
Indian Farm Forestry Development Cooperative Limited (IFFDC), promoted by
IFFCO, was given a certificate of appreciation by the Tata Energy Research Institute for
its efforts towards good corporate citizenship. The Cooperative Rural Development Trust
provides practical training to farmers and has organized 229 programmes in 2008,
benefiting 22,221 farmers.
INFORMATION AND COMMUNICATION TECHNOLOGY

IFFCO is taking measures to develop web based services to provide exhaustive
information on agriculture, fertiliser industry, agro-chemicals, and information on
cooperative sector. For this purpose, 108 touch screen monitor based Farmers
Information Kiosks or Cyber Dhabas in 10 languages have been installed in 17 different
states of the country. Besides that, IFFCO has developed and implemented several ERP
solutions and e-commerce solutions for internal use as well as for use in its joint projects.
Some of these solutions have got recognition by Indian as well as by International
Media Groups.
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During 2008-09, IFFCO has undertaken enhancement of WAN & Network security
for all the plants and marketing offices across the country. Symantec antivirus server has
been consolidated and clients installed on all the machines across the country for
protection against virus attacks.
In short, we can say that:
IFFCO IS:
1.
Largest producer of fertilisers in the country
2.
No. of Plant Locations : Five
3.
Installed Annual Capacity (000 MT)

a.
UREA
- 4242.2
b.
NPK/DAP
- 4335.4
c.
TOTAL N
- 2628.2
d.
TOTAL P2O5 - 1712.8
4. Only Fertiliser Institution in the country to produce 68.47 lakh MT of fertilisers

and 93.24 lakh MT of sales during 2007-08.
5. Contributed about 20% to the total N and 25% to the total P 2O5 produced in
the country during the year 2007-08.
6. Fertilisers marketed through 39564 Cooperative Societies and 158 Farmers
Service Centers.
7. Service to the Farmers through a variety of programmes.
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OBJECTIVES OF THE COMPANY

The broad objectives of setting up this venture:1) Producing fertilisers.
2) Promoting the fertilisers distribution system in the co-operative sector.
3) Ensuring availability of fertilisers at the farmers doorstep.
4) Creating scientific awareness among farmers.
5) Promoting nations growth through modern farming techniques.
6) Improving agricultural productivity through balanced fertiliser application.
7) Strengthening cooperation distribution system.
8) To promote the activity for enriching the life of the rural.
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9) To achieve self reliant and self generated economy.

IFFCO has grown steadily since its inception today. It has emerged not only as
the largest fertiliser producing organization in India but also Asias largest fertiliser
co-operative.
Prices of IFFCO's Fertilisers

(Applicable only within India)
(Indian Rupees Per Tonne w.e.f 18-06-2008)
UREA
M.R.P.
NPK
DAP
MOP
N-46%
10-26-26
12-32-16
20:20:00
18-46-0
K-60%
4830
7197
7637
6295
9350
4455
Local Taxes Extra, where ever applicable.
MANAGEMENT
The Representative General Body (RGB) which is the General Body forms the
supreme body that guides the various activities of IFFCO. The RGB consists of:
1. Members of the Board of Directors.
2. One delegate from each of the Member Societies holding shares of the value of
Rs.100 thousand and above; such delegate shall be as per the provisions of the
Multi-State Cooperative Societies Act/Rules as amended from time to time;
3. Delegates to be elected from amongst the representatives of Member Societies
(other than Members holding shares of the value of Rs. 100 thousand and above )
in each State/ Union Territory at the rate of one delegate for every 200 societies or
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part thereof. However the maximum number of such delegates from any
State/Union Territory at the rate of one delegate for every 200 societies or part
thereof shall not exceed 25. Such elected delegates shall be as per the provisions
of the Multi-State Cooperative Societies Act/ Rules amended from time to time.
The Board of Directors of IFFCO carry out all functions as specified under the
Multi-state Cooperative Societies Act/Rules. The Board of Directors frame
policies, direct the various activities of the Society and undertake any other
activities conducive to overall growth and development of Societies. The Board is
headed by the Chairman.
The Managing Director is the Chief Executive of the organisation with
responsibilities for general conduct, supervision and management of day to day
business and affairs of IFFCO. The The Finance Director oversees the financial
aspects and the Marketing Director looks after the marketing functions of IFFCO.
The Director (Technical) looks after the Techincal aspects, Director (HRD) is
responsible for all the Human Resources, Director (Joint ventures) oversees all the
Joint Venture operations and Director (Coop. Development) looks after Cooperative
Development. These functional directors are assisted by Senior Executives who are
experts in various disciplines.
BOARD OF DIRECTORS
The Directors of IFFCO
Chairperson Shri Surinder Kumar Jakhar
Vice-Chairperson- Shri N.P. Patel
DIRECTORS
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Shri Chandra Prakash

Shri S.L. Dharme Gowda
Shri Kartick Chandra Sarkar
Shri Harminder Singh Jassi
Shri M.Gopal Reddy
Shri Ankushrao R.Tope
Shri Rajhans Upadhyaya
Shri G.C. Maikota
Shri Vithalbhai H. Radadia
Shri Sheesh Pal Singh
Shri Raj Kumar Tripathi
Shri Balvinder Singh Nakai
Shri Ravindra Pratap Singh
Shri K. Srinivasa Gowda
Shri K. Somashekhar Rao
Shri Simachal Padhy
Shri Pramod Kumar Singh
Shri R.K.Dhami
Shri B.S.Vishwanathan
Managing Director Dr. U.S. Awasthi
Deputy Managing Director-cum-Marketing Director Shri D.K. Bhatt
Deputy Managing Director-cum-FD Shri Rakesh Kapur
Director (Technical) - Shri V.K. Bali
Director (Coop. Development) Dr. G.N. Saxena
Director (HRD) Shri S.K. Mishra
Director (Joint Ventures) Mr. K.L. Singh
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BANKERS
India Overseas Bank
State Bank of India
Bank of Baroda
Standard Chartered Bank
The Maharashtra State Co-operative Bank Ltd.
The West Bengal State Co-operative Bank Ltd.
Madhya Pradesh State Co-operative Bank Ltd.
The Karnatake State Co-operative Bank Ltd.
The Punjab State Co-operative Bank Ltd.
The Hongkong and Shanghai Baking Co-operation Ltd.
ICICI Bank Ltd.
IDBI Bank Ltd.
IFFCOs MAIN AIM

Strengthening
management and participatory character of the Indian Cooperative
Movement by using duly tested and appropriate consultancy, advisory and technological
interventions sourced from within the country and abroad and in accordance of the
Cooperative Principles and in harmony with the law and culture of the land.
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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 fertilisers; maintain the
environmental health; and to make co-operative societies economically and
democratically strong for professionalized services to the farming community to ensure
an empowered rural India.
MISSION
IFFCOs mission is to enable Indian farmers to prosper through timely supply of
reliable, high quality fertilisers and farm inputs and services in an environmentally
sustainable manner and to undertake other activities to improve their socio-economic
status.
1) To provide to farmers high quality fertilisers in right time and in adequate
quantities with an objective to increase crop productivity.
2) To make plants energy efficient and continually review various schemes to
conserve energy.
3) Commitment to health, safety, environment and forestry development to enrich
the quality of community life.
4) Commitment to social responsibilities for a strong social fabric.
5) To institutionalize core values and create a culture of team building,
empowerment and innovation which would help in incremental growth of
employees and enable achievement of strategic objectives.
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6) Foster a culture of trust, openness and mutual concern to make working a

stimulating and challenging experience for stakeholders.
7) Building a value driven organization with an improved and responsive customer
focus. A true commitment to transparency, accountability and integrity in
principle & practice.
8) To acquire, assimilate and adopt reliable, efficient and cost effective technologies.
9) Sourcing raw materials for production of phosphatic fertilisers at economical cost
by entering into joint ventures outside India.
10)
To ensure growth in core and non-core sectors.
11)
A true co-operative society commitment for fostering co-operative
movement in the country.

Emerging as dynamic organization, focusing on strategic strengths, seizing
opportunities for generating and building upon past success, enhancing earnings to
maximize the shareholders value.
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VISION 2010
Having accomplished the objectives envisaged in vision2000andmission-2005
IFFCO embarked on vision2010 which focuses on future growth and development of
the society and aims at:
1. Attaining an annual turnover of Rs.15,000 crore by 2010.
2.Installation of Ammonia and Urea plants including acquisition of fertiliser units
3.Backward integration to meet feed stock requirements such as Phosphoric acid,
Natural gas etc.
4. Generation of Power
5.Production and marketing of micro-nutrients, seeds, bio-fertilisers, pesticides etc.
6.Value addition to agri-products and marketing
7.Information technology and IT enabled services
8.Easblishment of retail chain in urban and semi-urban locations.
9.Diversification into new growth areas such as mobile telephony and communication
Technology in the rural areas.
Under Vision 2010,IFFCO has set up a power generation company in Chattisgarh and
formed a joint venture to manufacture Phosphoric Acid in Egypt
APPROACH
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To achieve our mission, IFFCO as a Cooperative society, undertakes several activities

covering a broad spectrum of areas to promote welfare of member cooperatives and
farmers. The activities envisaged to be covered are exhaustively defined in IFFCOs Byelaws
COMMITMENT
Our thirst for ever improving the services to farmers and member co-operatives is
insatiable, commitment to quality is insurmountable and harnessing of mother earths
bounty to drive hunger away from India in an ecologically sustainable manner is the
prime mission.
All that IFFCO cherishes in exchange is an everlasting smile on the face of Indian
Farmer who forms the moving spirit behind this mission.
BUSINESS PRINCIPLES OF THE COMPANY
Appreciation of national need of generation upto optimum return of investment.
To fair price of the product manufactured by the company is subsidy to the

farmers.
Total consumer satisfaction as a quality of the product, price of the product and
better service after selling the product.
Effective management information system.
To increase the efficiency of the workers.
To maintain better human relations and discipline among all the employees.
To develop good relation with customers.

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IFFCOS EMBLEM
The Emblem of any organisation i.e. the logo is very important by which the
company is known to everyone or that is identity of the company. After one year of
establishment in 1968, the organisation has decided to make an EMBLEM of IFFCO. The
executive of the company said that which can be easily fit into any place or easily
changeable according to the place and made by simple geometrical method. So the
EMBLEM is made by Mr. M.I. Gupta, Chief Visualiser Developer and looks like
Logos ratio is1:2:5 and the color is green. The rectangle shows that the Indian
economy is depend upon the agriculture and green color shows the faith of the farmers,
they believe that after using the urea their fields will always be green, the remaining
white color shows that the quality of the IFFCOs product is very good and oval shape is
meant for the wealth and prosperity.
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ORGANISATION CHART OF IFFCO
Board of Directors
Chairman & Vice Chairman
Managing Director
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Dy.MD-cumMkt.
Director
Dy.MD-cum-
Director
Director
Director.
Finance
Director
(Technical)
(HRD)
(Coop.
Development)
INVESTMENT OUTSIDE IFFCO

1. Indian Potash Ltd (IPL)
IFFCOs Equity
: Rs. 2.68 Crore
Percentage of Equity held
: 34% ( Rs. 32.4 million)
Paid up capital( Mar 31,2000) : Rs 95 million

Activity
: Marketing of Potash and imported fertilisers

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IPL is the Indian canalizing agency for domestic potash requirements.
2. Industries Chimiques du Senegal (ICS) I & II

: 19.09 %
Plant Site
: Darou, Senegal
Products
: Rock Phosphate, Phosphoric Acid and NPK Fertilisers
Activity
: Phosphoric Acid at Darou (Senegal)
Production capacity
: 1.5 million TPA
Paid up capital (Mar 31,2000) : Rs 6.5 billion

IFFCO has taken over the management and operational control of ICS Senegal in 200809.
3. IFFCO - TOKIO General Insurance Company Ltd. (ITGI)

IFFCOs Equity
: Rs. 193.90 Crore
: 72.64%
Activity
: General Insurance
Corporate Office
: New Delhi
Paid up capital (Mar 31,2006)
: Rs 2.2 billion
ITGI has launched a new policy named Janta Bima Yojana which is providing
insurance cover to the poorest of the poor at very nominal premium.
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PARTNERS IN ITGI
Joint Venture Partner : TM Asia Pte. Ltd.
Total Equity
: Rs. 220 Crore
4. Oman India Fertiliser Company (OMIFCO)

IFFCOs Equity
: Rs. 329.08 Crore
: 25%
Plant Site
: Sur, Oman
Products
: Ammonia, Urea
5. Indo Egyptian Fertiliser Co. (IEFC)

Project Cost
: USD 325 million
IFFCOs Paid up Equity
: Rs. 38.89 Crore
Debt : Equity Ratio
: 70 : 30
IFFCOs Equity
: 76%
El Nasr Mining Co.
: 24%
Activity
: Phos. Acid Plant
6. National Commodity and Derivative Exchange (NCDEX)

: Rs. 30 Crore
: 12%
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Redeemable Preference Share Capital : Rs. 10 Crore

Activity
: On Line Trading in commodity futures
7. National Collateral Management Services Ltd. (NCMSL)

IFFCOs Equity
: Rs. 4 Crore
: 13.33%
Activity
: Collateral Risk Management Solutions
8. IFFCO Chhattisgarh Power Ltd

Project Cost
: Rs. 6265 Crore
: Rs. 11.10 Crore
Debt : Equity Ratio
: 70 : 30
IFFCO Equity
: 74%
CSEB
: 26%
Activity
: Power Generation (1320 MW)
9. Kisan International Trading FZE (KIT)

Investment
Location
Activity
: Rs. 11 Crore*
: Dubai
: Special purpose vehicle (SPV) for shipping, logistics and
investments in new overseas Joint Ventures.

* Includes Rs. 9.80 crore towards 9 bonus shares received during 2007-08.
10. Jordan India Fertiliser Company (JIFCO)

Project Cost : USD 580 Million
IFFCO Equity : 52% (Rs. 2.08 Crore)
JPMC Equity : 48%,
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Activity
: Phos. Acid Plant
11. IFFCO Kisan Sanchar Ltd. (IKSL)

Paid up Share Capital : Rs. 5 Crore
IFFCO Equity
: Rs. 3.65 Crore
(73%)
IKSL has expanded its network in most parts of the country. Its products viz. Kisan
Torch and Kisan Lantern are gaining popularity amongst the farmers. IKSL is sending
five free voice messages disseminating agricultural related information to about 15 lakh
farmers everyday.
12. IFFCO Kisan SEZ Ltd.

Project Cost
: Rs. 2400 Crore
Others
Indian Farm Forestry Development
Cooperative (IFFDC)
: Rs. 8.60 Crore
Maharashtra State Coop. Bank Ltd. : Rs. 10 Lakh
IFFCO Kisan Bazar
: Rs. 9 Lakh
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Provisional highlights of IFFCO performance during 2008-09.
Highest
Production
of
(Previous Best 70.12 lakh MT in 2006-07)
Fertilisers 71.68 lakh MT
Highest
Production
of
(Previous Best 39.63 lakh MT in 2007-08)
Production
of
(Best 32.26 lakh MT in 2006-07)
Urea
40.68 lakh MT
NPK/DAP/NP 31.00 lakh MT
Highest
Sales
of
(Previous best 93.24 lakh MT in 2007-08)
Fertilisers 112.33 lakh MT
Highest
Sales
of
Urea 58.49 lakh MT
Highest
Sales
of
NPK/DAP 53.84 lakh MT
Highest
(Previous best Rs.12163 crore in (2007-08)
Turnover Rs 32800 crore
Plant
(Best 1669 MT in 2005-06)
Productivity
Highest
Marketing
(Previous best 6158 MT in 2007-08)
Productivity 7380 MT per employee
1376 MT per employee
Composite
Energy
Lowest 5.907Gcal / MT in 2007-08)
Consumption 5.9433 Gcal/ MT
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IFFCO ASSOCIATES
1. INDUSTRIES CHIMIQUES DU SENEGAL

2. OMAN INDIA FERTILISER COMPANY S.A.O.C.
3. INDIAN POTASH LTD.
4. NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD.
5. NATIONAL COLLATERAL MANAGEMENT SERVICES LTD.
6. COOPERATIVE RURAL DEVELOPMENT TRUST
7. KISAN SEWA TRUST
8. IFFCO FOUNDATION
9. LEGEND INTERNATIONAL HOLDINGS INC
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AWARDS GALORE
KALOL UNIT
1) Seven awards received for overall performances from FAI.
2) Two awards for industrial safety from GOI.
3) Award for technical innovation from FAI.
4) Two Rajya Bhasha Shield for promoting Hindi.
5) Award for safety from National Safety Council, Chicago.
6) Indo German greentech environment excellence award.
PHULPUR UNIT
1) Four awards for productivity from NPC.
2) Six national safetys award from GOI.
3) Two awards for overall performance from FAI.
4) Two awards for technical innovation from FAI.
5) FAIs Award for Best Overall Performance of an operating fertiliser unit for Nitrogen
(Ammonia and Urea) Plant jointly with Zuari Industries Limited, Goa.
6) Three national energy conservation awards.

7) Three awards for best environmental protection from FAI.
8) Best environmental excellence awards from Indo German green tech foundation.
9) Best technical paper award by FAI.
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KANDLA UNIT
1) Twelve safety awards from national safety council Bombay GOI.
2) Twenty-three safeties award from Gujarat.
3) Raj Bhasa award for promoting Hindi.
4) Six awards for overall performance from FAI.
AONLA UNIT
1) Award for best implemented project ( 2nd price) from GOI.
2) Award for conservation of energy from GOI
3) National Award for Excellence in Energy Management
4) C Indo German and Greentech Environment Excellence Award
5) C Award for Best overall performance from FAI
6) C Two Awards for Excellence in Safety from FAI
7) C Two Safety Awards from National Safety Council of India
8) C Rajiv Ratna National Gold Award 2005 for Best Executive
9) C Excellence Award for papers published on Safety and Health in
Chemical Industry and Hazard Identification & Risk Management
10) National energy conservation award 2006
11) Golden Peacock Environment Management Award 2008
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GROWTH IN THE NUMBER OF MEMBER SOCIETIES

1967-68
57
1974-75
25528
1980-81
26960
1986-87
28134
1992-93
30200
1998-99
35072
2004-05
37381
2007-08
39564
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ABOUT AONLA UNIT

LOCATION
State
Uttar Pradesh
State Capital
Lucknow
Distance from Lucknow
280 Km.
Distance from New Delhi
260 Km.
Nearest Airport
New Delhi
Railway Station
Aonla (10 Km. From the Plant)
Road
Plant is In BareillyAonla Bareilly highway.
Area under Plant
260 Hectares
Area under Township
220 Hectares
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YEAR OF COMMISSIONING:
: 1988
INVESTMENT
: Rs.651.6 Crore AONLA- I
YEAR OF EXPANSION
: 1996
INVESTMENT
: Rs.954.7 Crore AONLA- II
YEAR OF DEBOTTLENECKING: 2008

INVESTMENT
PRODUCT
: Rs.149.2 Crore
CAPACITY
TPD
TECHNOLOGY
TPA
AMMONIA
3480
11,48,400
HALDOR TOPSOE
UREA
6060
19,99,800
SNAMPROGETTI
2788
9,19,908
The IFFCO AONLA Unit is located in the Gangetic Plains of Uttar Pradesh in
Bareilly district about 28 Km. Southwest on Bareilly-Aonla Road. It was set up on 08
January 1985 and started commercial urea production at 16 July 1988. The infrastructure
of AONLA unit is very big and constructed on 713 acres of land.
IFFCO Aonla unit is the most efficient and quality-wise as well as environmental
oriented unit so that M/s KPMG Peat Marwick, a quality registrar has certified it as ISO:
9002 unit and M/s BVQI London has accredited it as ISO:14001 unit. The Aonla unit, an
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MEERUT
Ammonia- urea complex is comprised of the two phases:

o AONLA-1
o AONLA-2
AONLA -1 was established in 1988 and it was digested to nation by honourable
Prime Minister of India late Shri Rajeev Gandhi on 17 May 1989.
AONLA-2 was established in1996 December. This unit was designed to nation by
honorable Prime Minister of India Shri I.K. Gujral on 28 Jan 1997.
SALIENT FEATURES OF AONLA UNIT
Particular
Aonla-1
Aonla-2
Ammonia
4,45,500MT
4,45,500MT
Urea
7,26,000MT
7,26,000MT
Project zero date
08.01.1985
30.09.1993
Mechanical completion
08.01.1988
30.11.1996
Capacity (P.A.)
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Ammonia
started
production 15.05.1988
15.12.1996
Urea production started
18.05.1988
26.11.1996
Feedstock
Natural gas
Natural gas with Naphtha
(Natural Gas from HBJ pipeline being supplied from Bombay high)
Capacity Enhancement of Aonla and Phulpur Units

IFFCO has submitted the Techno-Economic Feasibility Report (TEFR) for
Capacity Enhancement of Aonla and Phulpur Unit to the Department of Fertilisers
(DOF).
Following enhancement in capacity has been envisaged with a total annual increase in
Urea Capacity by 5.115 lakh MT:
Name of Unit
Present Capacity
Proposed
Increase
in
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( MTPD)
Capacity (MTPD) Capacity (MTPD)
Phulpur-1
1670
2080
410
Phulpur-2
2620
3000
380
Aonla-1
2620
3000
380
Aonla-2
2620
3000
380
Total
9530
11080
1550
The installed cost for the Enhanced Capacity is estimated at about Rs. 19 lakh per MTPD
of Urea as against the Rs. 65-70 lakh per MTPD Urea in case of a Grassroots Plant.
Therefore De-bottlenecking of existing Urea Units is the best route to create additional
Urea
capacity.
IFFCO has initiated action for De-bottlenecking of its plant at Aonla and Phulpur
Units for Capacity Enhancement. We are awaiting final clearance from DOF. Incidentally
this will also reduce the subsidy to Government vis a vis imported Urea.
PLANTS OF AONLA UNIT

There are mainly four plants in the unit namely:
1. Ammonia Plant
2. Urea plant
3. Product Handling Plant
4. Steam and Power Generation Plant
1. AMMONIA PLANT
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There are two streams of Ammonia plants having the capacity to produce 2x1520
MTDP of liquid ammonia. The technology is based on Haldor Topsoe, Denmark process
with Natural Gas and Naphtha as main raw material.
2. UREA PLANT
There are four streams of Urea Plant having the capacity to produce 4x1310 MTPD
OF Urea Fertiliser. The technology is based on Snamprogetti, Italy on Ammonia stripping
process.
3. PRODUCT HANDLING PLANT

Product handling plant is composed of Urea storage known as Silo and packing and
transport activities. Two silos of 45,000 and 30,000 MT capacity have been provided to
Urea product to ensure continuous urea production even if it is not taken off due to nonavailability of rail wagons or seasonal demand fluctuations.
4. STEAM AND POWER GENERATION PLANT

To meet the continuous power supply needs of the main plants, captive power plant
and stem generation facilities have been provided. In this plant, two gas turbines each
having the capacity of 18MW along with heat recovery steam generation unit has been
provided to cater to the plant needs of power and steam. Additionally, HRU unit of
Ammonia II add to the steam supply of the complex.
ORGANISATION CHART AT AONLA UNIT

Sr. General Manager
General Manager
General Manager
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JGM/DGM
JGM/DGM
Production
Maint.
Ammonia
JGM/DGM
JGM/DGM
JGM/DGM
Technical
Utility
Comm.
F&A
F& A
Mechanical
Process
Power Plant
Purchase
Electrical
Design &
Offsite
Store
JGM/DGM
Plant
Urea Plant
Drawing
Product
Instrumental
Library &
Handling
Civil
Document
Fire & Safety

& Env.
Traffic
Laboratory
Training &
Development
General
Engg.
JGM/CM
JGM/CM
Finance & Accounts Department At A Glance

The Finance & Accounts Department of IFFCO, Aonla is divided into 5 sections, to
facilitate smooth and easy functioning and control.
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Organisation Structure
FINANCE & ACCOUNT
DEPARTMENT
BOOKS/FICC
CELL
FINANCIAL
CONCURRENCE
Supply
Section
Indigenous
supply
BILL
SECTION
PAYROLL
SECTION
Note Sheet
Payment
Imported
supply
PSL
SECTION
Work Order
Work
contract
Service
contract
Line of Control in Finance & Account Department

HOD
JGM/DGM (F & A)
MEERUT
50
Chief Manager
(F& A)
Chief Manager
(F& A)
Sr.Manager
(Account)
Sr.Manager
(Account)
Manager Account
Manager Account
Sr.Manager
(Account)
Manager Account
Sr.Manager
(Account)
Manager Account
Deputy Account Manager
Sr. Account Officers

Account officers
Jr. Account Officer
Sr. Accountant
Jr. Accountant
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FINANCE AND ACOUNTS DEPARTMENT

Each company is carried with a purpose of earning money. Money or capital
being a scare as well as crucial resource in the working of any organization needs to be
given prime importance. The financial resources have been planned and controlled in a
proper and continuous manner. As among the most crucial decisions of a firm are those
which relate to finance. Finance & accounts from an integral part of any organization.
Proper and smooth functioning of this section is very vital for the organization to survive
and grow.
Finance functions are of two types:
Managerial finance function
Routine finance function
Managerial finance functions are so called because they require skilful planning,
control and execution of financial activities.
Routine finance functions on the other hand, do not require a great managerial
ability to carry them out. They are chiefly and are incidental to the effective handling of
the material finance functions.
The various areas covering under the preview of subsections are as follows
1. BOOKS SECTION
This section basically deals with accounting function, maintenance and keeping of
records.
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The various functions include:
Books: Preparing and maintaining balance sheets.

IFCC (Fertiliser Industries Coordination committee)
Costing & Pricing Cells
Reporting
2. PAY ROLL SECTION

This section deals with the payments of salary and wages to the employees and
extending various other benefits are covering under to preview are
Salary
Leave Travel Concession (LTC)
Medical Allowance
Conveyance
Advances
Loans to employees
Aonla Unit undertakes processing of salary and other staff related payments of all
employees through Human Resource Management System (HRMS). It is an integrated
package based on Oracle DBMS. The System integrates Personnel & Administration
Department and Finance & Accounts Department.
Simultaneously, Financial Accounting System (FAS) which is also based on
Oracle DBMS has been launched in F&A DEPARTMENT through which General Ledger
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MEERUT
Sub Ledger of Employees is maintained and Trial Balance and Financial Accounts are
generated. There is also inter- relation of HRMS and FAS so that cash payment/receipt
vouchers, Bank Payment Vouchers and Journal Vouchers generated in HRMS are
automatically posted online to Payroll Section of Finance & Accounts Department.
3. Taxation Section
As per the status and operations of the society, It deals with the following Taxes: Central Excise Duty
Income Tax
Service Tax
Sales Tax
Central Excise Duty

As we know that this duty is charged by Central Government on the goods
manufactured. IFFCO mainly produce ammonia and urea at Aonla plant. So duty on
ammonia is charged. In this relation monthly production report is prepared and all
documents and accounts are prepared by the Finance & Accounts Department. The duty
is deposited in the Government bank account on the 5th day of the month.
EXCISE Duty is not charged on production of Urea.
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CONCEPT OF INVENTORY MANAGEMENT

Dictionary meaning of inventory is detailed list of movable articles. The
literary meaning of inventory is stock of goods. According to International Accounting
Standards-2, inventory is a tangible property which is held:
For sale in the ordinary course of business;
In the process of manufacture for such a sale;
For consumption in the process of production of goods and services for sale
including maintenance supplies and consumables other than machinery spares.
Inventory Management involves the control of assets being produced for the
purpose of sale in the normal course of the company's operations. The goal of effective
inventory management is to minimize the total costs - direct and indirect - that are
associated with holding inventories. However, the importance of inventory management
to the company depends upon the extent of investment in inventory.
The term inventory includes:
Inventory of Raw Materials :
In the case of manufacturing concerns, various types of raw materials are
being used in the production system. To ensure smooth production function and also
to avoid any kind of production delays the concern has to keep inventory of raw
materials.
Inventory of Stores and Spare Parts :
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This inventory consists of those products which serve as accessories to the

main products manufactured for the purpose of sale. Bolts, nuts screws, clamps, etc.,
are the examples of stores and spares parts. Such spare parts are either bought from
outside or manufactured in the concern itself.
Inventory of Work-In-Process (W.I.P.) :

Sometimes the manufacturing system involves various processes for
converting raw materials into finished goods. As such, some materials might have
been issued to the production process but might not have been completed as finished
goods. This is known as work-in-process.
Inventory of Finished Goods :
All goods manufactured during a particular period may not be sold
immediately. These are to be kept in warehouse. The idea is to uncouple the
production and sales function so that it is no longer necessary to produce the goods
before a sale can occur.
The application of managerial function on the basis of management principles
in the field of inventory is termed as inventory management. Managerial functions are
performed with respect to inventory; it may be called inventory management.
The objective of inventory management is to plan the optimum size of inventory
which is neither excessive nor deficient and is timely available. For timely availability
along with optimum size, there is need for controlling as well. Only on the basis of
various control techniques one can ensures whether inventory would be timely available.
But effective control in itself depends upon organizing and coordination. Thus, inventory
management comprises the functions of planning, controlling and organizing the types of
all goods, quantity, status, flow and time- sequence etc.
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Need for inventory management

Inventory management is an integral part of general management. Three important
functional aspects of a business are closely related to inventory management. These are:
1) Production management
2) Marketing management
3) Financial management
Here the production management and marketing management are related to the
physical aspect of inventory management and; financial management is concerned with
the financial aspect of the inventory management.
In production management, production manager will always strive to have a large
inventory of raw materials and of such a good quality as to ensure stable production
operations.
In marketing management, marketing manager aims at satisfying ever increasing
demands for improved customers service by having large inventory of inside goods.
57
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In financial management, finance manager will effort towards to keep investments

in different types of inventory at a minimum possible level so that the business concern
may earn maximum return.
MATERIAL DEPARTMENT
Material Department is responsible for the proper handling of inputs and
controlling of material inputs. Proper handling of input materials ensures the smooth
running of plant. Material department recognizes the need of the input materials and
arranges them for the plant. It includes the procurement, verification and controls of
materials in right quantity and at right time to facilities the production function.
Material management includes two important functions:
Purchasing
Storing and control of materials
Thats why; it is divided into following sections:
Purchase section ( It is responsible for purchasing of materials )
Store section ( It stores the inputs)
These both sections are interrelated and perform their function on coordination.
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All purchases are to be made only by the materials department except purchases of petty
item through some vouchers and Department Managers within the limits prescribed in
purchase procedure/power of officer. Material purchase indent should give following
information:
1) Quantity in stores
2) Average monthly consumption since last purchase for stock items
3) Maximum /minimum level
4) Last purchase order reference
5) Reorder level
PURCHASE SECTION
The purchase department is at the interface of internal and external department.
Purchase department do enquiry about the inputs whether it is required or not. This
enquiry is done in two ways that are:
1) Single stage
2) Two stage
After enquiry purchase department invites a tender. After confirmation of all
terms and conditions the department contacts the supplier and orders for the inputs. Thus
it is responsible for purchasing of materials and other raw materials whatever is required
by the organization. Purchase department is responsible for the delivery of right amount
of material at the right time and at the right location to avoid the hampering of the
production.
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Purchasing is distinct from buying. Purchasing involves the extra knowledge as the
tenders, various vendors, their prices, comparison between them, after sale service,
dispatching follow up and payment terms.
The purchase department considers various things before purchasing the raw materials.
1. Information about the input material
2. Sources of material- vendor
3. Reasonable price of that material
4. All terms and conditions
Indenter is that person who raises the indent.
PURCHASE PROCESS
The purchase process can be expressed as following:
INDENTER
Material Purchase Requirement (MPR)

Single stage
Enquiry
Two stage
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E- Procurement
Manual
(15 days)
(21 days)
Opening
Quotation Comparative Statement (QCS)
Technically Acceptable L-1 Bidder
Order
(With approval of competent authority)
The diagram can also be summarized as follows:
1) RAISING OF INDENT: First of all the indenter raises the indent. This
indenter may belong to any department. Now the indenter informs to the store. If
that particular material is not available at the particular point of time then store
informs to the purchase department. After it the working of purchase department
starts.
2) RECOGNITION OF NEED: The purchase department recognizes the need

of indenter and checks whether that material is available in the store or not. The
availability of input material at all points of time is the responsibility of purchase
department.
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3) REQUISITION TO PURCHASE: This is an intimation to purchase

department by the indenter that he has need of certain materials. He raises indent
by filling a form Material Purchase Requisition (MPR). For stock items MPR is
raised by store keeping in view maximum, minimum & re-ordering lable. In this
he gives several information like:a. Material description/ Proposed Reason
b. Item code/ proposed code
c. Unit
d. Quantity required
e. Value
f. Budget code
g. MPR No.
h. Indenter
4) MRP SCRUTINY: Next step involves scrutinizing of the MRP to certified the
genuinely of the need, for this, first approval to given by immediate higher authority
of the indenter. Next, the MRP is send to the stores, to check whether the material is
available or not. If it is not available the MRP goes to the purchase department. For
further action. Here it is scrutinize in three ways :-
Approval scrutiny
Budget scrutiny
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Technical scrutiny
5) SENDING or ENQUIRY/INVITATION TO BID: Enquiry can be done

by two types:
I.
II.
Single stage
Two stage
SINGLE STAGE: Single stage is followed when there is no or very few
chance of technical deviation. Here there is no restriction on supplier or
vendor. This enquiry is done in case of nonproprietary items.
TWO STAGE: Two stage enquiry is followed when there is more chances of
technical deviation. This enquiry is done in case of proprietary items.
Items can be classified in to two categories keeping in view the purchasing function
Proprietary items: These are those items e.g. spares which have to be
bought from particular supplier or vendor.
Nonproprietary items: These are those for which there is no restriction

on vendor.
Enquiry is sent in order to know the prices and other terms and conditions of vendors.
Bidding can be done in three waysI.
Proprietary bidding: This is for the proprietary items and is sent to only
one vendor. Here the proprietor is invited to set a competitive price.
II.
Limited tender enquiry: This is done for non proprietary items and bids
are invited from a limited no. of vendors selected from the registered
vendors with the company.
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III.
Press tender/Open bidding: For non prosperity item, if approved vendor

list is not available and amount involved in purchase is more than fifty
lakh then press tenders are issued in various news papers. There may be
global tenders also. However if estimated value of enquiry is less then
fifty lakh, the vendor list shell be developed with the approval of
Competent Authority
6) Receiving of offers: Bids are received by purchase department and opened on the
date and time stipulated in the document before tender committee to compare the
quotations- Quotations comparison statement (QCS), of technically & commercially
acceptable bids, is made and bid with lowest landed cost is chosen. QCS is also sent
to the technical department for its comments. Work Order/Rate contract can be given
to more than one bidder as per requirement & terms of ITB but on the L-1 bidder
rates.
7) Purchase order: After selecting the best offer, purchase order is sent to that
vendor with all the terms and conditions specified and details of the material to be
purchased are also given. A bank guarantee of performance is taken from the vendor
in advance which is usually 5% of the P.O.A. time limit is set for delivery of
consignment and in case of delay a penalty is imposed @ 0.5% of P.O. per week to
the maximum 5% of the P.O.A.
8) Receipt of materials: After the consignment reaches the stipulated place, the
payment is done by the organization according to the purchase terms agreed upon by
the two parties. The material is checked for quality conditions, quantity and then sent
to the store where the store releases the Stores Receipt Voucher (SRV). From here
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MEERUT
it is delivered to the indenter. Normal payment is done after 30 days from the receipt
or acceptance of material.
9) Follow up done for every order: It may be regarding delay in supply, changes
in price, defective or damaged items supplied etc. For every indent, a separate file is
opened and correspondence goes on. For every step, recommendations of indenter,
manager (F&A), materials manager & general manager are sought. In case of
damaged input materials the store does not accept the materials. A rejection report is
prepared in case of damaged items.
PAYMANT AGAINST PURCHASE:

There are various modes of payment through which payment is done:
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MEERUT
1.
Advance payment to supplier :

If both the parties are agreed upon advance payment that is specifically provided
in the contract order, only then advance payment is given. The advance payment to
contractors shall be made against submission of bank guarantee in the Performa
provided by IFFCO. Advance payment against indemnity bond shall not be released as
provided in the purchase procedure.
2.
Full payment / 90% to 95% payment :
In case the terms of payment provide for full payment or part payment against
dispatch documents through bank, the supplier will be negotiating the documents through
the bankers. After the documents are received by the bankers, they are forwarding bank
intimation along with a copy of the purchase order to ascertain that the invoice is raised
for the material ordered and conforms to the other terms and conditions of purchase
order.
After the intimation from the bank is received the invoice of the suppliers will be
scrutinized by the Finance and Account Department for the followingi.
Purchase order number
ii.
Whether materials supplied are as specified in the purchase
iii.
Whether materials supplied are as specified in the purchase order.
iv.
Quantity supplied.
v.
Price basis whether F.O.R. or Ex-works
vi.
Whether excise duty, sale tax and other taxes are as per the order.
vii.
Whether bank charges are claimed as per the purchase order.
viii.
Other terms and conditions of the purchase order.

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MEERUT
ix.
Document with bank for retirement should have consignee copy of GR.
Where there is delay in supplying the material and the payment through bank is
90% to 95%. It should be ensured that penalty for delay, as provided in the purchase
order, is recovered before releasing the balance payment. Where payment required to be
made, a clarification is to be sought from materials department and proper approval taken
for waiving of penalty or otherwise before retiring documents.
The payments under the contracts must be regulated as per the expressed terms
and conditions. Any payment not covered by the contractual terms and conditions should
not be released.
3. Full payment / Balance payment after receipt of materials :

In case the purchase order provides the 100% payment after receiving of
materials and accepted payment is to be released after the SRV is received from the stores
department. In case 95% or 90% released against document retired from bank then the
balance payment can be released after receipt of SRV from store, which confirms that the
material has been accepted after inspection and taken on charge.
Before released of the payment, the invoices should be scrutinized as the case of
payments released through bank. In addition it should also be verified whether all the
items invoiced have been received, inspected and accepted as per the SRV.
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MEERUT
DELAY IN DELIVERY
In any contract, the time and date of the delivery is the essence of the contract. In
the event of delay in the execution of the order beyond the date of delivery as stipulated
in the order, the project authorities may take following actions
1. Accept delayed delivery at price reduced by a sum equivalent to 0.5 % if the value
goods not delivered for every week of delay or part thereof limited to a maximum
of 5% of the contract value.
OR
2. Cancel the order in part or full and purchase such cancelled materials from
elsewhere on account and at the risk of the suppler without prejudice to his right
inspect of goods delivered.
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MEERUT
IMPORTED MATERIAL
Materials procured may be either indigenous or imported. For major projects the
foreign contracts are normally finalized at head office level and payment against these
contracts are made by the concerned unit. Orders are also placed by the unit directly.
Payment is made to the foreign party by debiting to the appropriate advance account. If
the payments are made through L/C against documents, the same shall be debited to
advances to foreign suppliers account. On receipt of material at site, project engineer
shall accept the material and initiate for preparation of DCSRV/SRV. After receiving
DCSRV/SRV project accounts will clear the suppliers advance account for material.
Clearing and handling of imported material is the responsibility of material

department on the arrival of ship the materials will be cleared with reference to the
invoices and bills. For any short landing or breakage between the port of dispatch and
port of destination, claim action shall be taken by them.
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MEERUT
MATERIAL CODING
It is very typical for the every organization to maintain the stock items in case of
largenumber of items. It will be very typical to identify them at the time of requirement.
So the items are coded to avoid confusion. For the coding of materials the account person
assigns code for every item of store. Thus every item has a code that is called its material
code.
Material coding facilitates the account persons and store manager to maintain the
transactions of the items whether of receiving or of issuing.
Every item maintained by its code in the stock as well as in the store accounting
section. The item/material code remains same in stores and accounting section. Whenever
a transaction is done in store for the inventories the full details of that transaction is send
to store accounting section also, because the computers of stores and accounting section
are connected through Local Area Network. (LAN)
In this way it is very comfortable task to maintain the inventories on the inventory
software with the help of material coding.
Advantages of codification
1. Lengthy descriptions are replaced by a simple code.
2. It economizes space in forms and reduces clerical work.
3. Ease in identification of stores.
4. It is comprehensive.
5. It facilitates, mechanized accounting.
6. Secrecy of description can be maintained.
7. It ensures clarity.
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MEERUT
CODING
There are different types of coding that are as follows:
a)Numeric: Each item is given a number.
b)Alphabetic: Each item is denoted by a combination of alphabets. If the alphabet
selected indicates the inventory sound when it is pronounced, it is known as
mnemonic system. This helps in remembering the codes.
c) Alphanumeric: It is a combination of alphabets and numeric code.
d)Decimal System: It is basically a numeric system; sub-group may be indicated by
decimals.
In IFFCO 12 digits coding is done.
The various codes for the different materials are as follows:
1.
Ammonia 11
2.
Urea
3.
Offsite
- 12
- 13
4. Product handling -14

5.
Power plant -15

2 digits = for the plant location
3 digits = for the equipment
3 digits = for the material
3 digits = for the size and
1 digit = for the item identification.
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MEERUT
Packing & Dispatch

All packing, boxing and protection shall conform to the specification or
requirements of the order. The supplier shall be held liable for the damage or breakage of
the goods due to defective or insufficient packing. It will be according to term and
conditions that are given already in the format.
All goods shall be dispatched by rail/road freight paid and the railway receipt/lorry
receipt shall be posted to the concerned officer of IFFCO.
DOCUMENT REQUIRED FOR THE DISPATCH OF GOODS

Following documents are required for the dispatching of materials:
Challan
3 copies
Packing list
3 copies
Test certificate
3 copies
Railway/ Lorry/ Air
4 copies
Consignment note
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MEERUT
Inspection of Material
The material department shall coordinate with other departments and arrange
inspection of material at vendors shop prior to dispatch. Inspection of materials in other
cases shall be carried out on receipt of materials at site. Only materials those cleared by
the inspection will be taken on charge in stores. The person inspecting the material will
sign
on the stores receipt voucher in token of having inspected and accepted the material.
Generally indenter is called upon for the inspection of the material.
Sometimes inspection is done at the gate of IFFCO. Only after inspection material
enters into the store. If there is any damage in the material or they are insufficient in
quantity then rejection report is prepared. Its copies are distributed among all the parties
which are involved in it.
Damaged/Short/Rejected Materials
If the materials are received short or in damaged condition, there are some
conditions in this regard.
In cases where the responsibility for the transit insurance is on IFFCO, a claim should
be lodged with insurance company for the value of material plus incidentals. This
insurance is done by IFFCO TOKIO GENERAL INSURANCE COMPANY. As soon
as the shortage per damage of the materials is noticed the material department will
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MEERUT
lodge the provisional claim with the underwriters and pass on the relevant papers to
the finance & accounts department for lodging monetary claim.
In respect of transit insurance claims bill section will pass an adjustment

Entry debiting claim recoverable account and credit the Advance to
Vendors account. After the adjustments the bill section sent the copy of journal
voucher along with all necessary details such as P.O. No. , MRR No. quantity and
value, name of the supplier to the insurance section for following up the claim with
the insurance company.
Where the responsibility for short supply or damages in transit is of the suppliers, the
material department should take up the matter with the supplier for arranging
replacement. A report is prepared in this case. Its copies are sent to the supplier,
purchase department and finance and account department.
Accounting of Raw Materials

Based on the projected consumption requirement of raw materials, the
procurement action is taken by the commercial department at the head office which is in
Delhi.
Described below is the accounting requirement of major raw material.
Imported Phosphoric acid and Ammonia

The consignment of phosphoric acid and Ammonia are received at Kandla and the
material actually received is valued at the contracted cost & freight price.
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MEERUT
Where free on board (FOB) price is agreed, the ocean freight element is loaded
separately. All connected expenditure like customs duty; handling charges etc. are also
included in inventory valuation.
The valuation of inventory at the month end is to be made on the basis of exchange
rates prevailing on the last day of the month. The difference if any between the
provisional rate and the actual payment rate shall be charged off to the consumption
account, if the material is already consumed.
The account department also ensures that all claim suppliers for shortage are
booked on monthly basis and necessary on quarterly basis for the pending claims.
Indigenous Ammonia
The indigenous ammonia is supplied by KRIBHCO / GNFC to Kandla unit. The
quantity received is accounted at the price payable to the party which is fixed by the
Govt. of India. This price is fixed at par with the landed cost of imported ammonia.
Potash
Potash purchase orders are placed by the commercial department time to time
depending on the material requirement. The material received valued at agreed price plus
local sales tax and freight for transportation of material up to plant site.
The finance department at head office ensure that payment for these raw materials
are released on due dates to avoid interest liability. After releasing the payments the inter
unit debit advice is sent to plant. On receipt of the payment advices the suppliers account
is adjusted in the plant.
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MEERUT
Natural Gas
Kalol, Phulpur and Aonla plant consume as feed stock and fuel. As per the contract
with ONGC, gas is supplied to IFFCO at the price fixed by Govt. of India from time to
time.
The meters provided at the inlet point in the plants are the basis for monthly billing.
Meter reading is carried out jointly by ONGC / GAIL and IFFCO representatives. The
unit sends the e-mail to head office for making payment to ONGC / GAIL after due
certification of bill by the head of technical department about quantity of gas received.
Naphtha
Naphtha is supplied by IOC against advance payment terms. There are excise duty
concessions available for these items provided they are consumed for manufacture of
fertilisers. Accounts department in coordination with production department shall ensure
that all the excise duty requirements are fulfilled that the duty concessions are fully
availed. The inventory is valued based on the quantity received as per MRR received
from production department on monthly basis. The price payable to IOC for naphtha is
fixed by the Govt. from time to time. The naphtha is supplied by IOC from its refiners
located at Mathura, Koyli, BRPL, Panipat & Bagoun to Kalol, Phulpur & Aonla units.
Catalysts & Resins

The Catalysts & Resins are produced by the material department at the plant; on the
receipt of the material the inventory is valued at the agreed price. For Catalysts & Resins
where IFFCO has pooling arrangement with other companies, the material received is
taken to inventory at the actual price paid and equivalent amount is credited to material
received on loan account.
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MEERUT
This entry will be reverse when the material is procured by IFFCO and replenished
for return of loan. The inventory and consumption account then shall be accounted at the
actual procurement price.
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MEERUT
STORE SECTION
Store of any organization is of vital importance. It is the responsibility of stores to
receive the material required by the organizations operations to keep it properly & to
issue it as when required. The stores are divided in two subsections for greater flexibility
like receipt and custody section. In IFFCO there are two stores.
a. Store A for Aonla-1( this store contains that spares which are used by Aonla-1)
b. Store B for Aonla-2 unit.( it contains mainly catalysts used by Aonla-2 )
Store has the following warehouses:
Main Store
Cement godown
Petrol Pump
Cable yard
Chemical godown
Paint godown
PDIL store
A.
RECEIPT SECTION This section is responsible for receiving the materials and inspecting them. The
process involves following steps.

1)
The document regarding the material may be sent to the stores, purchase,
concerned department. But ultimately they have to be send to stores.
The documents may be:
Goods receipt / railway receipt / challan

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MEERUT
Form 38
Excise duty
Toll tax
2)
The particulars of the document are noted in the carrier receipt register (CRR).
3)
After the entry in the register, the document is given to an agent termed as
handling contractor. He will collect the material.
4)
Consignments cases are intact. If not he will ask for open delivery. Then he has to
deliver the goods to stores. In case of damage he has to give a certificate. Some
consignment may receive without document i.e. door delivery and is some cases it
may be face to face delivery.
5)
If any discrepancy is found during checking, the accounts section is informed for
necessary action and getting claim from insurance company. The date of receipt is
filled in CRR.
6)
The next operation is filling the stores receipt vouchers (SRV). Here the quantity
mentioned in challan and purchase order are compared, SRV Has 7 copies, two
for accounts and one for each purchase, stores, indenter, master file & custody
section.
7)
Inspection is done by the indenter:
Suppose all items are accepted then the material is handed to custody section
after putting identification & giving a SRV control number.
If some items are defective then the accepted items will be sent to custody and
for defective ones, information is sent to supplier, accounts, indenter &
insurance company and the particulars noted in rejection register.
If there is some breakage then either item may be replaced by company or claim
against insurance is obtained, when an item is replaced, its dispatch advice is
made.
8) Direct charge SRV (DCSRV) is prepared when indenter wants material directly
from receipt section.
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MEERUT
B)
CUSTODY SECTION This section is responsible for proper keeping of materials and issuing them when
required by different department and contractors. The material received here is first
checked as per SRV for every material there is a card. These cards are located in bins
according to code of material is received in custody the card information is updated.
When someone wants to issue certain material he has to fill the store issue voucher
(SIV). Once the item is issued again information is updated in the kardex. When a
particular part is returned then this received in stores by internal stores return voucher
(ISRV). After issuing the material the number of issue and the quantity issued is noted in
SIV control registers.
Custody section takes care of spares.
SPARES
About 36848 spares of Aonla Unit-1 are housed in store and 17799 spares of Aonla
Unit-2 are housed in store. Spares have been classified plant wise. The first digit of the
code of item is numbered according to given criterion
Ammonia
Urea
Product handling
Power
Sp. Equipments
General items
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MEERUT
In IFFCO inventory is divided into two types:

i.
General and
ii.
Spares
General are those inputs which can be used at various sites as wire, pipe etc.
Spare are those inputs which are specific to a particular plant and are of particular size.
ABC CLASS WISE LIST OF PHYSICALLY VERIFIED ITEM
AONLA UNIT -1
Verified A Class
B Class
C Class
Unclassified Total
in the
General Spare General Spare General Spare General Spare General Spare
year
2000-01
2001-02
2002-03
2004-05
22
20
8323
10381 0
8345
10401
2005-06
72
122
3512
1277
3584
1400
2006-07
49
41
90
2007-08
134
402
384
630
3982
4072
4500
5104
23
112
229
613
523
1876
775
2631
134
403
550
884
16097
16381 523
1876
17304
19544
Total
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MEERUT
ABC CLASS WISE LIST OF PHYSICALLY VERIFIED ITEMS

AONLA UNIT-2
Verified
in
A Class
B Class
C Class
Unclassified
Total
the General Spare General Spare General Spare General Spare General Spare
year
2001-02
110
271
203
393
313
664
2002-03
11
11
2004-05
2713
5353
2713
5353
2005-06
1185
311
1185
811
2006-07
13
13
2007-08
134
389
257
626
1428
2204
1819
3279
159
219
139
1115
298
1334
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MEERUT
Total
134
389
367
897
5703
9055
139
1115
6343
ACCOUNTING FOR STORES

General Outline of stores Function:
a. The authority of receipt, store and issue of all material is centralized in the
materials department subject to exception in permitted in certain cases. In certain
cases a nominal stock of few consumable items can be permitted with uses
departments such as maintenance, laboratory and administration department for
meeting emergencies. In addition certain chemicals are permitted to be stored in
production department due to the operational needs.
b. The authority of storage of packing materials like bags is vested with bagging
department. The bagging department receives the material, gets it inspected in
laboratory, issued the same for product bagging and maintains the stocks.
c. Maintenance of records for all quantitative transaction of packing material is the
responsibility of bagging department. Similarly the raw materials are handled by
production department with all responsibilities in respect of quantity accounting.
Functions of Store Accounting Section

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MEERUT
11456
The section dealing with accounting of stores in the finance department shall
have following functions:-
1.
Accounting of receipts, issues, return and transfer of materials.
2.
Accounting of imported materials for capital works and operations.
3.
Associating with stores section for stock verification.
4.
Valuation of stores items should do on weighted average basis.
Receipt /Issues/ Returns Transfer of Materials

a) The second copy of the material receiving reports after pricing, shall be passed on
to the stores accounts sections to scrutinized the same with reference to store item
code quantity of measure etc. and process it for accounting of receipt of materials.
After issue / return of materials, issue section of stores department arranges data
entry on the daily basis. Checklist processed is sent to stores accounting section
for scrutiny in respect of store item code, cost / service code, expense code and
unit measure etc.
b) The corrections and financial and financial adjustments are made to arrive at final
check list after scrutiny of final check list entry in priced store ledger is to be
processed. The section shall ensure that all receipts, issues and returns / transfer
voucher raised by the stores section are finally posted in the price store ledger.
c) For clearance of imported materials, amount deposited for custom duty in the PD
account etc. Shall be cleared against individual MRRs on receipt bill of entry
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MEERUT
d) The issue notes shall be priced on the weighted average rate basis after accounting
the last receipt of material.
e) After ascertaining the nature of expenditure, the job for which material is issued;
an appropriate account code shall be given in accordance with the chart of
account.
f) In case of material like steel plates etc. where materials are received on actual
weight basis and the issues are accounted are on theoretical weight basis as per
sectional measurements, the quantity accounting shall be kept on weight basis.
The difference in quantity in weight basis, if any, shall be adjusted to revenue /
capital account, as then case may be, in consultation with consuming department,
in case the shortage is more than the consumption norms, the same should be
recovered from the contractor.
g) For all issue notes relating to works contracts, one copy of the price issue notes
may be sent to the work accounts section to enable them to debit the contractors
account. A monthly abstract also be prepared and passed on to works accounts
group for check.
h) Details for receipts and issue of materials received / issued on loan shall be
maintained by the store account section loan transactions shall be approved by the
competent authority. It is the responsibility of material department to take action
to square up the transactions within the reasonable time.
i) Inter unit transfer of material shall be accounted at cost basis freight and other
incidental charges shall be borne by the transferee unit.
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MEERUT
j) Materials issued to contractors shall be priced at the monthly weighted average

rate and debited to materials issued to contractors account. The accounting for the
difference between issue price and recovery price provided in the contract shall be
cleared by the accounts section dealing with the works. Recovery should be
predefined basis and must be uniform.
k) For material returned to stores, return note shall be priced by the stores accounting
section at the same rate which it was issued and the Value shall be debited to the
relevant code of stores and spares parts inventory accounts by credit to the cost
center / job number where the material is received back. The return note shall be
priced on the basis of the original issue requisition against which the material was
drawn if such reference is available, otherwise the same should valued at the
prevailing average monthly rate applicable to that material.
l) No material shall be transferred to one card to another card without giving proper
information to the stores account section. Such transfers shall be made by means
of a transfer voucher on receipt of such transfer voucher and pass adjustment
entries by debiting and crediting respective accounts.
m) Under the mechanized system of store accounting, all documents, such as MRRs
issue notes return notes and transfer vouchers shall be sent to the EDP section
after exercising the prescribed checks. The EDP section shall prepare the all
accounting abstracts with the summary figures with monthly journal entry. In
addition, it shall prepare the priced store ledger. Ledger abstract for all items
transacted during the month giving the opening stock, receipts, issues and past
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MEERUT
closing balance shall also be prepared. A copy of this statement shall be forwarded
to store section for verification of the bin card balances. Discrepancy if any shall
be reconciled by the store section with the stores accounts section.
n) The price store ledger balance for each category store shall reconciled value wise
with the control account balance in the ledger wherever possible. The accounts
section shall draw out reconciliation on monthly basis. After reconciliation a
monthly material consumption statement, cost center wise, is prepared and
circulated to concerned department by the 10th of following month for verification
of its correctness and for monitoring the budgeted expenditure, if any discrepancy
is reported, the same is adjusted in the ensuring month.
Insurance of Stock & Stores

For stocks of ammonia, naphtha, general stores, bags, phosphoric acid, and finished
products held at plants, insurance shall be taken to cover the risks arising out of fire
explosion, riot, strike terrorism, malicious damage, earthquake, etc. The stock of finished
products lying at different marketing warehouses should also be adequately covered
through the warehousing agencies.
According to the value of stores and finished products keeps on varying from time
to time, insurance shall be obtained in the form of declaration policy whereby the average
daily stock for each product held during the month shall be declared to the insurers in the
first week of the next month.
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MEERUT
According to the declaration policy, the insured amount for each product shall be
stated separately. The liability of the insurers is limited to the insured amount. At any
time if it is found that the actual stock is more than the insured amount to avoid less
amount of insurance. In case of a declaration policy, insurance premium is payable for
minimum 35 % of the insured value.
Before insurance is obtained, various categories of stores shall be reviewed with a
view to select such items for which insurance is considered necessary.
Verification of Inventories
The officer of stores will coordinate the job of physical verification and the
accounts officer in charge shall render all assistance to ensure that the physical
verification of inventories is carried out as per the policy and the policy and the approved
program. The store department will ensure that the posting in the Kardex are updated
before the verification of inventories. Kardex contains all the information that is in the
store.
The inventories are classified in three categories for verification purpose.
Raw material & Packing materials
Stores, Chemicals & Spare parts
Finished products
The stocks of raw materials, packing materials and finished products are to be
verified on quarterly basis by an independent surveyor by the society. No adjustments
need be carried out in the books of accounts unless the discrepancies in liquid raw
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MEERUT
materials and solid raw material are in excess of 1% to 5% respectively. This is as per
guidelines issued by the head office.
In case of finished goods also the same principle applied except that no adjustments
in the books of accounts shall be made. However the stock registers shall be adjusted on
the basis of actual stock in order to replace the notional figures of stocks by more
accurate estimate based on physical verification.
The inventories for other items such as stores, spares, construction materials etc. are
also verified every year keeping in view ABC analysis of stock items value and exercise
of verification may be completed by March every year.
For the purpose of verification of stores, chemicals & spare parts shall be classified
in to A, B, C categories.
Categories
Value (Rs. per unit)
Quantum of Verification
Above Rs. 50,000/-
100%
10,001 to 50,000/-
70%
Below Rs. 10,000/-
25%
A team of stock verifiers shall prepare a stock verification sheet giving the
kardex balance and the physical balance of each item covered in the stock verification.
After filling up the particulars of the value and quality discrepancies with reference to the
priced stores ledger balance, the stock verification sheets shall be forwarded to the
materials department for scrutiny and reconciliation and adjustment in consultation with
finance department accepted shortage shall be processed for the approval of the
competent authority.
RECONCILIATION AND ADJUSTMENT

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MEERUT
After each physical verification by the custodians of inventories and suitable

adjustment action has to be taken. It is desirable to complete the physical verification
work by March every year so that reconciliation/adjustment action can be completed
within the year itself.
Internal Check
1)
One set of document for receipts, issues and return of materials shall be sent to the
accounting section of finance department. Based on these documents, priced store

ledger shall be prepared for each item for stores. The material code number between
stores and accounts shall be identical. The priced store ledger shall provide value of
each receipt, Issue and return transaction along with quantity ledger. The quantity
balance appearing in priced store ledger shall serve as counter check for accuracy of
bin card balance in store which is essential for proper functioning of inventory control
system
2)
The priced store ledger shall not be maintained for large number of low value
items such as stationery, medicines, canteen stores etc. in this case the expenditure
shall be charged to the appropriate expense account at time purchase. Quantitative
record shall be kept by the concerned department and shall be produced as and when
required for audit purpose.
Inventory Control
Inventory control is concerned with minimizing the total cost of inventory. The
three main factors in inventory control decision making process are:
a.
The cost of holding the stock (e.g., based on the interest rate).
b.
The cost of placing an order (e.g., for row material stocks) or the set-up cost of
production.
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MEERUT
c.
The cost of shortage, i.e., what is lost if the stock is insufficient to meet all
demand.
The third element is the most difficult to measure and is often handled by
establishing a "service level" policy, e. g, certain percentage of demand will be met from
stock without delay.
The Inventory Management system and the Inventory Control Process provides
information to efficiently manage the flow of materials, effectively utilize people and
equipment, coordinate internal activities, and communicate with customers.
Inventory Management and the activities of Inventory Control do not make decisions or
manage operations; they provide the information to Managers who make more accurate
and timely decisions to manage their operations.
Inventory control is a systematic control and regulation of purchase and usage of
materials in such a way so as to maintain an even flow of production at the same time
avoiding excessive investment in inventories. Efficient material control reduces losses
and wastage of materials that otherwise pass unnoticed.
Inventory control is the core of material management. The need and importance of
inventories varies in direct proportion to the idle time cost of men and machinery, and
urgency of requirements. If men and machinery in the factory could wait and so could the
customers, materials good not lie in want for them and no inventory need to be carried.
But it is highly uneconomical to keep the men and machine waiting and the requirements
for modern life are so urgent that they can not wait for materials to arrive after the need
for them has arisen.
Because materials constitute a significant part of the total production cost of
the product. Thus, cost is controllable to some extent; proper planning and controlling of
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MEERUT
inventories are of great importance. If investment in inventory will be more then the
company has to bear carrying cost and that finance can not be utilized.
A good inventory management policy should ensure smooth and uninterrupted
supply without making unnecessary investment of funds in inventory. This requires that
inventory management policy must balance the requirements of the following two
opposing and conflicting ends:
i)
To maintain a large quantity for smooth operation and efficient customers

services.
ii)
To maintain only a minimum possible inventory because holding costs and

opportunity cost of funds invested in inventory.
OBJECTIVES OF INVENTORY CONTROL

Scientific control of inventories should serve the following purposes:
1) To provide the continuous flow of required materials, parts and components for
efficient uninterrupted flow of production.
2) To minimize investment in inventories keeping in view operating requirements.
3) To provide for efficient store of materials so that inventories are protected from losses
by fire and threat and handling time and costs are kept at minimum.
4) To keep surplus and absolute items to minimum.
5) To protect the inventory against deterioration, obsolescence and unauthorized use.
6) To ensure that finished goods are available for delivery to customers just to fulfill the
orders.
TECHNIQUES OF INVENTORY CONTROL

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Reduction of surplus stock is an essential requirement inventory control. Various

techniques are available to solve the various types of problems associated with inventory
control:1) Min-Max plan
2) Order cycling system
3) Fixation of various levels
4) Use of control ratios
5) Review of slow and non-moving items
6) The ABC Analysis
1) Min-Max plan:
In this plan analyst lays down a maximum and minimum for each stock item. Minimum
level establishes the reorder point and order is placed for quantity of material, which will
bring it to the maximum level.
2) Order Cycling System:

In this system, quantities in hand of each item or class of stock are reviewed periodically.
In that, if it is observed that stock level of a given item will not be sufficient till the next
schedule review keeping in view of its probable rate of depletion, an order is placed to
replenish its supply.
3) Fixation of Various Levels:

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Certain stock levels or fixed levels are given below:-
A). Maximum Level

It is the quantity of materials beyond which a firm should not exceed its stocks. If
the quantity exceeds maximum level limit then it will be overstocking.
Maximum
Level
Re-ordering
level
Re-ordering
Quantity-(Minimum
Consumption*Minimum Re-ordering period)
B). Minimum Level

It represents the quantity of stock that should be held at all the time, stock level is
normally not allowed facing below this level.
Minimum Level = Re-order level (Normal consumption*Normal Re-order Period)
C). Safety Level

Normal issues of stock usually stopped at this level and made only under specific
instructions. Safety stock is a buffer to meet some unanticipated increase in usage.
Safety stock level = Ordering Level (Average rate of consumption * Re-order level)
OR
= (Maximum rate of consumption Average rate of consumption) * Lead Time.
d). Re-ordering Level

When the quantity of materials reaches at a certain figure then fresh order is sent to
get materials again.
Re-ordering level = Maximum Consumption*Maximum Re-order period.
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4) Use of Control Ratios:

Inventory turnover ratio helps management to avoid capital being locked up
unnecessarily. This ratio reveals the efficiency of stock keeping .
Inventory turnover ratio =Cost of materials consumed / Cost of average stock held
during the period
Where,
Cost of average stock = [Cost of opening stock + Cost of closing stock] / 2
Inventory turnover ratio [in days] =Days during the period /Inventory turnover
ratio.
5) Review of slow moving and non- moving items:

Stock turnover ratio should be as high as possible. Loss due to obsolescence be
eliminated or these items used in some profitable work.. Slow moving stock should be
identified and speedily disposed off. The speed of movement should be increased. The
turnover of different items of stock can be analyzed to find out the moving stocks.
The percentage of slow moving stores = Slow moving stores / Total Inventory
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TECHNIQUE USED IN IFFCO FOR INVENTORY CONTROL

The ABC Analysis:
With the numerous parts and materials that enter into each and every industrial
production, inventory control leads itself, inventory and foremost, to the problem of
analysis. Such analytical approach is popularly known as ABC (ALWAYS BETTER
CONTROL) Analysis.
This Plan is based upon segregation of material for selection control. It measures money
value i.e. cost significance for each materials item in relation to total cost and inventory
value. The logic behind is that the management should study each item of stock in terms
of its usage, lead-time , technical or other problems and its relative money value in the
total investment in inventories.
Critical, i.e. high value items deserve very close attention, and low value items need to be
devoted minimum expense and effort in the task of controlling inventories.
The ABC Reports are made:

A inventory reports lists parts having little or no turnover. Turnover frequency is
measured by an exposure index. We calculate the index by dividing a parts inventory
quantity by its usage during the most recent 24 month period.
B report shows the parts with more than a one year supply but less than a 2-year
supply.
C report lists the parts with more than six months supply but not more than one year.
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Criteria For Judging The Inventory System

While the over-all objectives of the inventory system is to minimize the cost to the firm
the risk level acceptable to the management, the more proximate criteria for judging the
are:
Comprehensibility Inventory system range from the utterly simple to the complex ones. Irrespective of how
simple or how complex a system is, regardless of whether it is automated or manual, it
should be clearly understood by all affected parties. The system must be properly
explained to all concerned people so that its purpose, logic and rationale are transparent.
This generates enthusiasm for the system and enhances its credibility. Otherwise it is
likely to be perceived as a mysterious Black box of dubious value.
Adaptability The questions raised in this context are:

1. Is the system responsive to change?
2. Can new products, new situations and new requirements be handled by the system?
A certain degree of flexibility and adaptability must be desired into the system to make it
versatile. Of course this cannot be and this should not be carried too far. The system must
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not provide for every possible and imaginable contingency. If it is developed with this
ideal, it is likely to be a complex monstrosity. Remember the caveat that the design of any
system should ordinarily take care of about 90% of the cases, leaving the balance 10% to
be handled by hand.
Timeliness Inventories may suffer loss in value on account of a variety of factors. The more common
sources of value decline are:
Obsolescence caused by changes in technology & shifts in consumer taste.
Physical deterioration with the passage of time.
Price fluctuation because of inherent volatility of certain commodities
The inventory system should be capable of inducing timely action. It should provide
adequate forewarning which triggers appropriate corrective steps
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Inventory Software
In IFFCO the PSL software is used for the management of inventories. This software
holds all the transactions of the stocks. So this software helps much in maintenance of
stocks. It makes very easy to account persons to maintain the transactions of inventories.
A part of this software is installed on the systems of the stores, whenever a transaction is
made in the store, the details of that transaction is reaches to the systems of the store
accounting section, because both the systems are connected in the local area network
(LAN). So with the help of LAN environment it is very easier to accountants to retrieve
the information regarding the transactions made by the stores.
Apart from this, this software has the variety of qualities which we can discuss with the
help of menus of software. There are six different menus in this software these are as
follows:
i.
Data entry
ii.
Queries
iii.
Reports
iv.
Processing
v.
Calculator
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vi.
Exit
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DATA ENTRY MENU
Data Entry
Document entry
Adjustment SIV
SRV
SIV
ISRV
SAV
STV
(IN)
STV
(Out)
Adjustment ISRV
Physical
Verification Entry
Entry of Surplus/
obsolete/ Insur.
The very first menu that is data entry is used for the various types of entries of
transactions. In the data entry menu there are several options shown in above diagram.
Document Entry:
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This option is used to enter the data in various types of documents like SRV,
SIV, ISRV, STV (in), STV (out) etc.
Adjustment Entry:
With the help of this option we may easily make the adjustments in the stock
issue voucher (SIV), due to any previous adjustment. If the value of material has wrongly
feed in the documents or the valuation is high then it is used to decreases the value of that
material.
Adjustment ISRV:
This option of data entry menu has the same working in issue stock return
voucher (ISRV). This is used whenever the valuation of any material has to increase.
Thus easily adjustments are made.
Physical Verification:
In case of verification of stock the person responsible for stock verification
estimates a range of items for verification and after verifies the selected range of items,
they punched the quantity verified or lock the verified quantity till the next verification.
Entry of Surplus/ Obsolete:

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This option is used for adjust the surplus items which is declared by the plant.
The surplus items means, the items which are exceeds from the records. So in case of this
situation the accountants make entry @ of 1 Rupee per unit of items. There are some
spares which are not in used. We give entry them in surplus. While the spares which are
not in working condition or they are outdated, comes under obsolete items.
REPORTS MENU
Reports
Summary account head wise

Month Report before PSL runs
PSL JV
Month Report after PSL runs
Inventory Consumption
Kardex
Code wise inventory status
Yearly summary for HO
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Issue above
Issue more than
Other reports
Summary A/C head wise:

This option creates the summary reports of all the A/Cs in respect of accounts
heads like
Inventory spares (Ammonia, Urea etc.)
Loose Tools
Chemicals
General Stores
Construction Materials etc.
Monthly report before PSL runs:

This option creates the monthly report of all the documents like SIV, ISRV,
SAV, STV (in), STV (out) etc. so that the account persons may check whether the
documents are correct or not., because if there is any mistake in any document and PSL
run is performed it will create the wrong final reports.
Monthly report after PSL runs:

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The working of this option is same as the previous option but the difference is
that the reports made after the PSL run are more accurate updated and non volatile in
nature.
PSL JV:
After processing of PSL run all the documents becomes updated and all the
transactions also gets updated. So that by this option we can see all the journal voucher of
the entries of inventories.
Inventory consumption:
This option of the report menu shows the data regarding the consumption of
materials according to the date. We can see the consumption of a particular item. This
report helps in forecasting of material purchasing for the future consumption of the
materials. It helps in deciding the re-order level of inventory.
Code wise inventory status:

This option creates a report inventory code wise. We can create report for
selected codes. This code is of 12 digits in the IFFCO.
Kardex:
The kardex is the very useful tool for showing the current status of all the items.
Kardex shows the update inventory and also shows the past status of every past tears. The
accountant may see the past status as on any past date. The kardex retain all information
about the material. As when the material was received i.e. receipts, when the material was
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issued i.e. issues, its balance in the store, vendor, its current stock, its value, location in
the store and as well as its minimum, maximum and reorder level. Thus it reserves every
information about the materials.
It is in form of a software in IFFCO. Here I have given a example of kardex in which

each detail of material is written. It is as follows.
QUERIES MENU
Queries
Brows Inventory Master
This menu has single option that is brows inventory master. In this option we
may see the status of various materials or items.
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As the name of this menu, we can perform the query task, on the basis of material
codes, that are of twelve digits number. This option is very helpful in search of any
particular transaction in inventories. In a query task we are supposed to enter the material
code in the material code box and then click over the retrieve button. As soon as we click
over the retrieve button the whole in formation regarding that code is appears on the
screen.
The appearing statement contains the material code, material description, opening
quantity, closing quantity, values, PSL rate that is the per unit price and also the location
of that material.
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PROCESSING MENU
Processing
Weekly PSL proc.1
Put
account
INVMAST
group
in
Reverse stock for Physical

Kardex mismatch
Cumulative process
Reverse stock for PSL Kardex
mismatch
PSL Process 1
Processing is the most important task of this software, because all the reports
which are forwarded to the concerning authorities and are the basis for the further actions
are made only after the processing or the PSL run. PSL processing makes update all the
documents.
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PSL Process I:
The option process I update and calculate the values for all documents and makes
available to create the final reports. Once a PSL run is processed the data can not be
changed, So that this task is very sensitive so the operating person should have the great
care and responsibility in processing task. PSL Process is done for tallying codes and
value of the material.
Put A/C group in inventory Master:

This option also a processing task when we executes this option it assigns the
account group to all the inventory / item codes so that these codes may link to a particular
account group. In this inventory are grouped.
Reverse stock for PSL kardex mismatch:

It is very important processing because it creates a list of all the items which are
mismatching in respect of units / quantity between the
PSL and kardex. If there is any mismatch in PSL and Kardex the report shows those
mismatches on the screen.
Reverse stock for physical kardex mismatch:

This option creates a list of mismatches of karedx and physical verification. This
processing performed once in year, because the physical verification of the inventories is
done once in a year.
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Calculator & Exit Menus
The calculator menu has no sub option we can use the calculator only by clicking
on the calculator menu. It helps much in manual calculations make the surety of
correctness.
Apart from this the exit menu is simply for quitting the software, whenever we
click over the exit menu it exits from the software.
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PRODUCTION DEPARTMENT
IFFCO Aonla is town to production of Urea. It is carried out with the help of two
ammonia plants. For every ammonia plant there are two urea plants each of 1100 MTPD
capacity. Urea Plant is linked with two product handling plants. So, we can study the
production department into three parts as follows:
1. Ammonia Plant
2. Urea
3. Product handling Plant
Ammonia Plant:
Ammonia plant is designed to produce 1380 MTPD liquid ammonia based on
Haldore Topsoe Process with Natural Gas the main raw material. For the production of
Ammonia Hydrogen & Nitrogen are required in the ratio 3:1. The source of hydrogen is
Natural gas, water and the source of nitrogen is atmospheric air. Nitrogen gas is supplied
by GAIL through HBJ pipe line from Bombay High and is used as feed stock which
contains large percentage of Methane, along with Ethane, Propore, Butane, Pentane, CO2,
Nitrogen and Sulphur compounds. Small quantity of Sulphur compound in the gas is
removed by passing the gas through de-sulphurisation unit. Sulphur free gas is yhan mixed
with steam and sent to primary reformer where reforming reaction takes place in the
presence of catalyst and produces a gaseous mixture of hydrogen, carbon mono-oxide and
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carbon- dioxide. Further reforming takes place in the secondary reformer where air is
added to furnish the nitrogen required for ammonia synthesis. Hot reformed gases from
Secondary reformer are cooled by heat recovery in Waste Heat Boilers, and introduced in
the shift
Converters where most of the CO get converted into CO2. Carbon dioxide from
gaseous mixture is separated in CO2 absorber using benefield process and sent to urea
plant. Residual of oxides of carbon in synthesis gas leaving absorber are converted to
methane in the Methanator.
Pure synthesis gas from methanator exit is compressed and sent to Ammonia
converter where ammonia is formed ammonia product obtain in sent to urea plant for
manufacturing urea.
Urea Plant:
Two streams of Urea plant each having capacity of 100 MTPD has been provide.
Urea process is based Snamprogetti Ammonia Self Stripping process.
Ammonia and CO2 obtain from NH3 plant are sent to Urea Reactor operating at 150
ATM pressure and 180o C temperature. In urea Reactor Ammonia and CO2 react to form
Ammonium Carbonate a part of which dehydrates to urea. Reactor product from urea
reactor flow to a steam heated H.P stripper where most of them converted carbamate get
stripped of as gaseous ammonia and COS. Urea solution having the bottom of stripper still
contains some amount of carbamate. Further purification of urea to about 72 %
concentration takes place in medium and low pressure decompressors. Vapour of ammonia
and CO2 obtained from the above purification section are converted into ammonium
carbamate and recycled back to Urea Reactor for production of Urea Vaccum
concentration are provided to concentrate 72 % Urea solution to 99.8 % in two stages
operating at 0.3 atm and 0.03 atm respectively. Urea melt ( 99.8 % concentration) from the
concentration section is pumped to the top of natural draft Prilling Tower and sprayed by
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the means of rotating pril bucket. The fine droplets while descending through the lower
come into contact with cold air are solidify to form prills. Product Urea from the bottom of
prilling tower is sent to Urea Silo or Product handling plant.
Product Handling Plant:

Homogeneous and freely flowing urea from the bottom of Prilling Tower is
transported to Urea silo by means of belt conveyors at the rate of 220 TPD.
Three weeks factory production equivalent to 45,000 MT can be stored in Urea Silo.
This ensured uninterrupted Urea Plant operation even when there is no off take for product
urea due to non-availability of railway wagons or irregular seasonal defacilities.
Product from Silo is reclaimed by means of Scrapper Reclaimer Urea from Silo is
made free from lumps (due to its prolonged storage ) by passing it through vibrating
screens and delumbers. The product is transported to Bagging House by means of various
Belt Conveyors. The system can also take fresh urea from prilling tower to Bagging House
by Urea Silo through a stream of various Belt conveyors.
Bagging House mainly consists of 8 bagging stations. Each station has two weighing
and filling machines and one stiching machine. These weighing and filling machines are
fully automatic, sophisticated and computerized based on latest technology from M/S
Richard Simon and Sons U.K. There are such 16 number of computapae Unit. Each is
capable 10 weights to 50 kg or more weightments at the rate of 600 bags per hour.
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The system is equipped with Data logge facility which can display and record various
figures and fact from the plant. The field bags from these automatic bagging machines are
moved on slate conveyor and mouth is closed by industrial stitching machine supplied by
M/S Unimee, Calcutta. The product in filled bags can be transported for various purposes
such as :
1.
Stacking on filled bag storage.
2.
Loading directly into truck.
3.
Loading directly into wagons.
Product handling plant is designed to load a rack of 2,400 MT of fertiliser in 8 hrs.

Plant is equipped with covered platform three in number. One for stacking filled bags
which can store equivalent to 2 rack loads i.e. 5,000 MT and another two platform which
are equipped with 6 Nos. of automatic wagon loader ( 3 on each platform ), each has
capacity of automatic loading of wagons at the rate of 1,200 bags per hr. These 3 covered
platforms are sufficiently long to accommodate a complete rack so as to load from filled
bags storage as well as directly from bagging stations. These automatic wagon / lorry
loading machines are supplied by M/S Mollers, West Germany. Average time taken for
each wagon loading is 20 to 25 min. An average time in loading a lorry is 10 to 12 min
only. Wagon on average will carry 450 bags i.e. more than on an average two truck carry.
A truck on an average will carry 200 bags approximately.
Empty Bags:
Empty bags size is 36.25 in inches or 915 X 610 in mm, weighing 10 grams in
case HDPE bags made out of 10 X 10 mashes per inch using. Denier of tape equal to
1,000 and width of tape 1.5 mm. The monthly requirement of bag is around 10 Lakhs.
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There are 2 million bag storage capacities in 1400 m2 area. The cost of bags varies from
Rs 11.40 to 11.90 for HDPE and around 6.5 for Jute bag.
The bag will be supplied various vendors based at Kanpur, Calcutta, Hyderabad,
Ahmadabad, Aurangabad etc. The movement of empty bags from these destinations to out
side is by road. Average daily traffic will be two to three trucks. IFFCO has very strict
quality control of bags. The bags once are ready for dispatch from vendors workshop are
got inspected by various up to date inspection agencies sponsored by us. The consignment
on its arrival at site is also screened by our Laboratory before it is piled for storage.
Storage is equipped with EOT crimes two in number, each having lifting capacity of 1
tonne.
Railway Siding:
From main track of Chandausi- Barely broad quage, NR section tapping has been
taken at Bisharat Ganj Railway, Take-up station. Two additional loop lines and
simultaneous reception facilities have been incorporated at Take-up station. Railway track
has been laid which is 09.38 km long through major one villages acquiring 110 acre
approx. of land.
In plant, yard forms 2.3 km in length and is equipped with:
I.
II.
III.
3 loading lines (from 700-715 meter in length).

4 lines for dealing incoming and out going traffic (from 715-803 meter long).
1 Engine escape line (685 meter long).
In addition to it, the plant has:
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a. 2 lines each 340 meter long accommodating one rake length for fuel oil stock.
These lines are laid over ballast less platform and have concerts floor in order to
recover spillage / leakage while handling fuel oil stock.
b. 2 line each 340 meter long to accommodate off loading of completing Naphtha
rake, an alternative fuel for power plant.
DIFFERENT VOUCHERS
In IFFCO there are 3 types of receipt and 1 issue voucher are generally used for the
particular receipt and issue material. These are listed as below:
1. RECEIPT VOUCHER
SRV (Store receipt voucher)
ISRV (Internal store receipt voucher)

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DCSRV (Direct consumption store receipt voucher)
2. ISSUE VOUCHER
SIV (Store issue voucher)
3. ADJUSTMENT VOUCHER
SAV (Stock adjustment voucher)
STV (Stock transfer voucher)
SRV
When material is checked with challan / invoice and the purchase order for quantity SRV
(store receipt voucher) is prepared and the material kept in section.
SRV can be of two types:
(a) FIS (Receipt from supplier voucher)
These vouchers are generally generated by the store whenever the material is received
from the supplier/ vendor in stores.
(b) H.P (Receipt voucher for direct consumption)

These vouchers are generally generated when material is directly received by the indenter
for direct consumption of raw material.
The copy of these SRV will be dispatched departments such as:

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(a) 1 copy to purchase department.

(b) 1 copy to indent department.
(c) 2 copy account department.
(d) 1 copy lie with stores itself.
ISRV (INTERNAL STORE RECEIPT VOUCHER)

If the hundred percent of the issued material have not been utilized by the particular
department or parties, in this stage the concerned party or department will revert back the
remaining raw material to store by using such type of issue voucher.
These ISRV can be of 5 types which are as follows:
BD: Such type of ISRV are generally used by the particular department for the general item.
BB: Such type of ISRV are used for the spare return by the particular department.
BC: Such type of ISRV are generally used by the contractor for return of remaining raw
material.
BE: These vouchers are used for stationary items.
BA: these are also used by controller for spares.
Note: The copy of these ISRV will be send to the following departments mentioned as:
(a) One copy to store.
(b) Two copy to account department.
(c) One copy lies with the indenter itself.
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Note: The issue notes shall be priced on the Weighted Average Rate basis after accounting
the last receipt of the material. After ascertaining the nature of the expenditure , the job for
which the material is issued , an appropriate account code shall be given in accordance with
the chart of account.
SIV (STORE ISSUE VOUCHER)

The accepted & stock charged material is to user department against Store Issue
Voucher issue to contractor through SIV. The authority of the SIV is given to competent
person of Indenter department and this sign checked by the store section before issue and any
permanent employee of IFFCO AONLA shall sign it at the time of receipt of material by the
indenter department.
These SIV can be of 5 types such as:
ID: Such types of SIV are generally used by the particular department for the general item.
IB: These vouchers are issued by the department for spares.
IC: Such types of vouchers are generally issued to the contractor in case of general items.
IE: Such vouchers are generally issued by the particular department for the stationary items.
IA: These vouchers are generally used when the spares are issued to contractor.
NOTE: The copy of these SIV will be dispatched to following department such as:
(a) One copy to purchase department.
(b) One copy to indenter.
(c) Two copy to account department.
(d) One copy lie with the store itself.
(e) One additional copy to security.
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DCSRV (Direct Consumption Store Receipt Voucher)

DCSRV is prepared when the material is not purchased through purchasing
order. There are some materials which are not bought through purchasing order. As an
indenter needs a stationary material then he has no need to go through the whole
purchasing process. He has to take permission from its immediate officer. After that he
may purchase that product and form DCSRV i.e. Direct Consumption Store Receipt
Voucher.
SAV (Store Adjustment Voucher)

These vouchers are used when there is some fault in the code of the material. In
this case SAV is prepared. But in SAV the value of the material should be same that is
equal to the previous material which was entered in the voucher by mistake.
STV ( Store Transfer Voucher)

Store Transfer Voucher is used in case of transferring the material from one store to
another. As we know that there are two stores in IFFCO. One is for Aonla-1 Unit and
second for Aonla-2 Unit. In Aonla-2 store generally catalyst are stored. Thus STV is used
when we transfer the input material from one store to another.
STV are of two types:
1) STV(in)
2) STV(out)
STORE ISSUE VOUCHER
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No.
Deptt.
Job/ work order Cost

center
S
no.
Material Code
Exp. code
department
Description U.M.
Qty
Qty
Req
d.
Issued
See.
Balan Rs. P.
ce
1
2
3
4
Please use one voucher for max. Hash Total
four items Preferable same group
Authorised
by
Received Issued Kardex

by
by
posted by
Checked by MGR/
J.S.O./ S.O. MGR(S)
Sr. P.S.L.
Posting
Name
Designatio
n
IFFCO
INTERNAL STORE RETURN VOUCHER
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Job/work order
Vendor Code
ISRV No.
Date
SIV No.
Date
Exp. code
department
S.no.
Material Code
Descriptio
n
Unit
Qty
Qty
Retu
rn
Receive
See.
Balanc
e
Rs. P.
1
2
3
4
Reason for Return- New/Serviceable/Recondition/Scrap/Empty cylinder
Inspected
by
Authorise
d by
Returne
d by
Received by
Kardex
Posted
P.S.L. Posted by
Certified
by
Name
Designatio
n
STORE ISSUE VOUCHER CONTRACTOR

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No.
Deptt.
Job/
order
S.
no.
work Cost
center
Material Code
Exp. code
department
Description U.M.
Qty
Qty
Req
d.
Issued
See.
Balance Rs. P.
1
2
3
4
Please use one voucher for max. Hash Total
four items Preferable same group
Authorised
by
Received Issued Kardex

by
by
posted by
Checked by MGR/Sr. MGR(S) P.S.L.

J.S.O./ S.O.
Posting
Name
Designatio
n
INDIAN FARMERS FERTILISER COOPERATIVE LTD.

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AONLA UNIT
STORES RECEIPT VOUCHER
SRV NUMBER
DATE
CRR NUMBER
SRV PREPARED:
PO No.& Date
ABNL ABB Ltd.
CRR
Date
GR/RR No.
Freight From:
Truck/Trailer/Wagon
Paid
FARIDABAD
DEPT CODE:
FORM 31 No.
DEPT Name
RR
Unit
Qty.
Value
No
Po:
Date:,
Transporter
S.No.
ITEM CODE
PO
Card balance
DESCRIPTION
SNo
RECD
Date
CHALLAN/BILL
No.
Inspection
remarks
Challan:
Received:
Accepted:
Rejected:
PO
Card balance
No
SNo
DIS/REJ
No.
Po:
Challan:
Received:
Accepted:
Rejected:
DIS/REJ
No.
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INDIAN FARMERS FERTILISER COOPERATIVE LTD.

AONLA UNIT
DIRECT CONSUMPTION STORE RECEIPT VOUCHER
DCSRV
SRV NUMBER
DATE
CRR NUMBER
SRV REF:
PO No.& Date
IFPH
Inter unit trans. IFFCO PHULPUR UNIT

GR/RR No.
Freight From:
Date:,
Transporter
Paid
TRK/WGN
PHULPUR
CRR
Date
RECD
Date
DEPT CODE:
Unit
Qty.
DESCRIPTION
SNo
FORM 31 No.
DEPT Name
S.No.
PO
CHALLAN/BILL
No.
BOLT WITH NUT SIZE M12*165MM No

LONG PT.NO.BN 12*165(SS304)
Value
Inspection
remarks
Po:
Challan:
Received:
Accepted:
Exp.
Code
DIS/REJ
No.
Rejected:
PO
No
SNo
Po:
Challan:
Exp. code
Received:
Accepted:
DIS/REJ
125

MEERUT
Rejected:
DESPATCH ADVICE
No.
NO:
TIN NO:
KER ENGG. WORKS
C.B.GUNJ.
BAREILLY
RAMPUR ROAD, BAREILLY

S.NO
DESCRIPTION
2RE-69
NO)
AUTHORITY
DISPATCH:GM
FOR
UNIT
REMARKS
MR
FOR
MACHINING
MR
-DO-
MR
-DO-
MR
-DO-
PREP. BY
DESPATCH
THROUGH:
DOOR
DELIVERY
RR/GR NO:
GATE PASS:
CASE
MARK
ROUND
QUANTITY
P.O/W.O.NO:
RAR(5
DIMENSIONS&
TOTAL NO PKG
NET
WT.
PKD.BY
PKGS
FREIGHT
COST: RS.
SIV NO:
SR. MANAGER STORES
THE AFORESAID ITEMS HAVE BEEN RECEIVED IN GOOD ORDER &

CONDITION
COPY TO: 1) CONSIGNEE
4) INDENTOR
2) TRANSPORTER
5) G.M.APP./W.O.FILE
126

MEERUT
3) CM(F &A)/ INSURANCE

.
RECEIVERS SIGNATURE& STAMP
REJECTION/DISCREPENCY REPORT
REF:
DATED:
M/S AB SALES & SERVICES

365, HARRIS GANJ
KANPUR
FAX:
CRR NUMBER:
SUB: OUR P.O. NO:4410/1294/WS0137//071125

YOUR REF/INVOICE/BILL.CHALLAN NO. 10/SP/TAX/08
RR/LR NUMBER: GR 8319469
DATE:
Transpoter: SOUTH EASTERN ROADWAYS
DATE:
BOMBAY
Dear Sir,
Please refer to the supply of materials against your invoice/Challan No. as mentioned
above. On opening the case/s and checking the contents the following discrepencies have
been observed.
S.No
Material
Unit
QUANTITY
Remarks
127
MEERUT
Description
Desp.
Received Excess Short
Rejected
1.
2.
The packing case/s was/were received in sound/broken condition.
ACTION REQUIRED BY YOU

YOU ARE REQUESTED TO:1. Make good of shortages.
2. Dispatch replacement against breakages/unacceptable material.
3. Inform disposal action for breakages/unacceptable material.
4. Being excess supply than our order quantity, material has not been accepted.
Cost of damage if any_____________________________________________

Payment Terms:
yours faithfully,
For INDIAN FARMERS FERTILISER COOP.LTD.
Location
CH. MANAGER (STORES)
e-Mail:
Fax:
Through E-proc
Phone
128

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INDIAN FARMERS FERTILISER COOPERATIVE LIMITED

Aonla Unit, P.O. IFFCO Township, Bareilly
TENDER ENQUIRY
MPR No
080380
INDENTORS COPY
UTILITIES DEPT
Enquiry No: 6000/672/UT0044/IE/080308(*)

This Enquiry is due on 14/07/2008
Desired Delivery: 4 Weeks
Enquiry Type Single Stage

Dear Sir,
Please submit your Sealed Quotation, with earliest delivery, as per terms and
conditions and specification given below and enclosed herewith.
S.No.
1
Item Code
Description
Quantity
Unit
DC Liquid Chlorine 99% pure as per IS code
220
MT
646/1988(latest version) in IFFCO.
PERFORMANCE BANK GUARANTEE:

The seller on award of P.O./W.O., shall furnish a Performance Bank Guarantee equivalent
to 5% of the P.O. value in our Performa enclosed. This bank guarantee shall be issued by
any State Bank of India and its associates. Nationalised/ Scheduled Commercial Bank/
129
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Cooperative Bank who are members of IFFCOs consortium of Banks (Except other
cooperative and Gramin Banks) having branch in India and be valid to cover the
guarantee period with a claim period of further six months.
INDIAN FARMERS FERTILISER COOPERATIVE LIMITED

PURCHASE ORDER
Thru Courier
M/s : JASUBHAI ENGINEERING PVT.
Order No.
Add: 803-4, Chiranjiv Towers, Nehru Your Quot:

place
Our Enq No:
City: New Delhi
Pin: 110019
Delivery
E-mail:
Dely Pd.
Code: JASU
Consignee:
Test Copy
Destination:
Dear Sir,
Please arrange to supply the following as per your quotation referred above
subject to conditions mentioned herein and enclosed herewith.
S.No Description
Quantity
Unit
Rate
Amount
1
2
Total Value
Price Basis
: Ex-Works Ahmadabad
P& F Charges : P&F Charges @ 2.00% extra

130
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Excise Duty
: Extra as applicable against documentary evidence present rate is @
14.42%
Sales Tax
: Extra as applicable against form C
Freight Condn.: On freight to pay basis.
IFFCO-AONLA
MATERIAL PURCHASE REQUITION:
MPR-NO.: 080472
Dept-Ref-No.: 2200/2171
Budget
Code
Sanctioned- UtilisedAmt
Amt
This
MPR(Rs.)
Balance
Issue-Date:
Expected:
Dly Date:
N*.05
..
..
..
Class: Stock, capital, D.C., Supply, Ordinary, Proprietory, Domestic, Single stage
Indentor: ADMN SECTION
Suggested Vendor Ctegory: Godrej & Boyce Mfg. Co. Lucknow.
MPR Description: Procurement of official furniture for the year-2008
Brief Justification: Office furniture are required for different section/deptt.
Last Pos/WOs Ref Nos:
Last Pos/WOs total value:
S.No
Item code Material

decription
DC
Unit
Quantity
required
Inventory Value
levels
Stk-oth.unit/
last
3yr
consumption
131
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DC
DC
INDIAN FARMER FERTILISER COOPERATIVE LTD.

AONLA UNIT
SAV NUMBER: 089UYW008

DATE : 8/6/2005
STORES ADJUSTMENT VOUCHER
----------------------------------------------------------------------------------------------------------------------------------------------------------FROM
TO
----------------------------------------------------------------------------------------------------------------------------------------------------------Sno Code No. E
Stock
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
132
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--------------------------------------------------------------------------------------------------------------------------------------------SIGN
INDENTER
MANAGER STORE
STORE KEEPER
STORE
STORE OFFICER
SWOT ANALYSIS
Strength
1 Fertilizer is the basic raw material for agriculture production. No Govt. can dare to
make policies which are not conducive to the farmers.
2 Demand of fertilizer is more in the country than the production capacity therefore
whatever is produced will be sold.
3 Government ensures the availability of raw material (NG/NAPHTHA) at reasonable
price as it has at subsidy on fertilizer is subsidize product.
4 IFFCO is a co operative organization and selling its product through cooperative
channel. There are only to organization IFFCO & KRIBCO. it means not much
competition in the channel.
5 all plants are of latest technology of art and are in healthy condition.
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Weakness
1 As per by law of the company it can fallows the cooperative channel only for sale of
its product. In case demand fall short in the channel company end up with higher stock
inventory.
2 Price of the product cannot be raised and government pay the subsidies as per its
calculation of fertilizers cost.
Opportunity
1 IFFCO can cut on cost by reducing energy consumption for per MT of urea, thereby
enhancing its profitability. IFFCO has taken up energy saving project in all its five
ammonia plants at the cost of Rs 410 core.
2 IFFCO can also reduce its fixed cost per MT of urea by enchasing its production
capacity & thereby increase in production and profitability. IFFCO has taken up capacity
enhancement project for all its ammonia & urea plants.
3 IFFCO also taken up power project at Chhattisgarh.
4 IFFCO has also contributed 25% equity in Oman India fertilizers company (OMIFCO).
5 IFFCO is also perusing a multiproduct kisan SEZ at NELLORE in A.P.
6 IFFCO has also entered into a long term of take and supply agreement with
International Holdings of AUSTRALIA for supplying rock phosphate
to insure raw
material supply NPK/DAP fertilizers plants.
Threats
1 NG supply in the country is not sufficient to meet present country requirement,
however NG in liquid from is imported from various Gulf countries and regasified at
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Petronet in GUJRAT to meet demand of fertilizers units. If supplies of NG suffer due to

an region, it will be reflected in production of IFFCO.
2 Naphtha is also imported Gulf countries. Its rates are not stable in the international
market & it availability is also affected by its international demand.
3 Rock phosphate is also imported to produce NPK/DAP at IFFCOs Kandla & Paradeep
Units. Supply of ROCK Phosphate is also a threat to the production NPK/DAP. It rate are
not stable in the international market.
Analysis
With the finding of NG at KG basin of RIL most of requirement of fertilizers units will be
meet for the countries on resources and dependability on the import will be reduce there
by ensuring the raw material supply to the fertilizer units at reasonable price. Further
IFFCO has made long term agreement for procurement of ROCK phosphate with various
countries to overcome it major threats of raw materials for the production of NPK/DAP.
Therefore it can be said that IFFCO is on sound footing to protect it stability and enhance
it profitability by cutting on cost and increasing production in years to come
Strategies
1 IFFCO is doing its best to conserve energy & keeps it consumption at lowest label
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2 Enhance its production by enhancing the capacity of the exiting plants & constructing
new plants.
3 reducing cost by low energy consumption & increasing production to enhance it
profitability.
4Ensure supply of raw material by entering into agreement nationally or international
with the suppliers.
5 IFFCO also care for farmer and the community. This commitment is reflected in many
ways, on a day- to-day bases. IFFCO believes in the welfare of society. It has embarked
on many Corporate Social Responsibility(CSR) Project. These projects cover education
,community development, environment & health.
a) IFFCO has installed CDR plants to reduce discharge of flue gases in the atmosphere.
b) IFFCO has adopted 439 villages, with special emphasis on agriculture and better for
management, thus empowering many lives.
c) ITGI in collaboration with IFFCO has introduce for farmer a Sankat Haran Bima
yojana . Under this policy farmer are provided insurance against accident with the
purchase of a 50 kilogram bag of IFFCO fertilizer. This policy has helped over 7000
people since its inception in sep. 2001
d) IFFCO has initiated several promotional projects to provide greater opportunities to
the farmer by organizing field day, farmers meetings, sales point personal tanning,
crop seminars, special agriculture campaigns to effect transfer of modern farming
trends. Besides, Kits containing seeds, fertilizers, bio-fertilizes and agrochemicals
along with book lets-literature were distribute to the farmers. The aim enhancing crop
productivity and thus improving lives
This has brought the farmer community nearer to IFFCO & IFFCO product as popular
brand which ultimately raised demand IFFCO product.
136
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RATIO ANALYSIS OF IFFCO

A ratio is a simple arithmetical expression of the relationship of one number to
another. It may be defined as the indicated quotient of two mathematical expressions.
One of the most important financial tools which have come to be used very frequently for
analyzing the financial strengths and weaknesses of the enterprise is ratio analysis. Ratio
analysis as a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain
decisions.
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Financial ratio analysis is the calculation and comparison of ratios which are
derived from the information in a company's financial statements. The level and historical
trends of these ratios can be used to make inferences about a company's financial
condition, its operations and attractiveness as an investment.
Financial ratios are calculated from one or more pieces of information from a
company's financial statements. A financial ratio can give a financial analyst an excellent
picture of a company's situation and the trends that are developing. A ratio gains utility by
comparison to other data and standards. Ratio analysis can also help us to check whether
a business is doing better this year than it was last year; and it can tell us if our business is
doing better or worse than other businesses doing and selling the same things.
Financial ratio analysis groups the ratios into categories which tell us about
different facets of a company's finances and operations. An overview of some of the
categories of ratios is given below.
1.
Leverage Ratios which show the extent that debt is used in a company's capital
structure.
2.
Liquidity Ratios which give a picture of a company's short term financial

situation or solvency.
3.
Operational Ratios which use turnover measures to show how efficient a

company is in its operations and use of assets.
4.
Profitability Ratios which use margin analysis and show the return on sales and
capital employed.
5.
Solvency Ratios which give a picture of a company's ability to generate cashflow

and pay it financial obligations.
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Ratios are always expressed as a decimal value, such as 0.10, or the equivalent
percent value, such as 10%. Financial ratios allow for comparisons
between companies
between industries
between different time periods for one company
between a single company and its industry average
HOW A RATIO IS EXPRESSED?

As Percentage - Such as 25% or 50%. For example if net profit is Rs.25, 000/and the sales is Rs.1, 00,000/- then the net profit can be said to be 25% of the
sales.
As Proportion
- The above figures may be expressed in terms of the
relationship between net profits to sales as 1: 4.
As Pure Number /Times - The same can also be expressed in an

alternatively way such as the sale is 4 times of the net profit or profit is 1/4th of
the sales
VARIOUS RATIOS FOR IFFCO
1) Inventory Turnover- This ratio indicates the number of times the inventory is
rotated during the relevant accounting period. This ratio is also called as stock
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turnover ratio or stock velocity. This ratio is calculated to consider the adequacy of
the quantum of capital and its justification for investing in stock or Inventory.
Inventory turnover is used to measure the efficiency of sales. Inventory turnover is
the number of times obtained by dividing turnover by inventory.
Inventory Turnover ratio-
Turnover
Inventory
(Rs. in crore )
Particular
2007-08
2008-09
Turnover
12162.82
32933.30
Inventory
1577.10
1731.36
7.71 times
19.02 times
Inventory Turn. Ratio
Interpretation:- It is revealed from above table that the stock turnover has been
increased to 19.02 times in the year 2008-09 as compared to 7.71 times in the year 200708. It shows better control over inventory and efficiency in sales. Since IFFCO is in the
business of fertiliser manufacturing and in this sector a huge investment in plant and
machinery is required. Keeping in view the investment in Plant & machinery in this
sector for which number of spares and stores items are required to be maintained for
upkeep of the plant, the above Inventory Turnover ratio is reasonable. However, IFFCO
should efficiently use various inventory management tools to control the stock levels like
ABC analysis, monitoring of stock levels i.e. ROL, EOQ, Min-Level, Max-Level system
of verification of inventory etc.
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Inventory Turnover Ratio
2)
Working Capital Turnover- This ratio establishes the relationship between the
turnover (sales) and the working capital. It indicates the number of times a unit
invested in the working capital produces sale. In other words, this ratio indicates
whether the working capital has been effectively utilized or not in effecting sales. Net
141
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Current Assets are also known as working capital instead of total current assets is being
compared with the sales. This ratio indicates the velocity of the utilization of net
working capital. It indicates the number of times the working capital is turned over in
the course of a year. This ratio is calculated as follows-
Working Capital Turnover =
Turnover
Working Capital
(Rs. in crore)
Particular
Turnover
Working Capital
Working Capital Turnover
2007-08
12162.82
2008-09
32933.30
4404.17
4490.10
2.76 times
7.33 times
Working Capital = Current Assets Current Liabilities

For the Year 2007-08 = 5775.74 1371.57 = 4404.17
For the Year 2008-09 = 7672.99 3182.89 = 4490.10
Interpretation: -.The higher the ratio, the better it is. However, a very high ratio
indicates overtrading- the working capital being not adequate for the scale of
operations. In the above table both turnover and working capital are increasing. It
appears from the above calculation that Working Capital Turnover ratio has been
increased to 7.33 times in the year 2008-09 as compared to 2.76 times for year 200708. It shows a better utilization of working funds in the business. Hence IFFCO is
using its working capital in a better way.
142
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Working Capital Turnover
143
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3)
Current Ratio- The ratio of current assets to current liability is called current
ratio. This ratio is an indicator of the firms commitment to meet its short-term liabilities.
Current assets include cash and other assets convertible into cash during the operating
cycle of the business. Current liabilities means liabilities payable within a years time. An
ideal current ratio is 2:1.The ratio of 2 is considered as a safe margin of solvency. A very
high current ratio would indicate the less efficient use of funds while a poor current ratio
indicates lack of liquidity and shortage of working capital.
Current Ratio = Current Assets

Current Liabilities
(Rs. in crore)
Particular
2007-08
2008-09
Current Assets
5775.74
7672.99
Current Liabilities
1371.57
3182.89
4.21:1
2.41:1
Current Ratio
Interpretation: - As a general rule, the ideal current ratio is 2:1 and we can see that
the current ratio for the two previous years is above ideal ratio. In the year 2008-09, the
current ratio is moving closer to the ideal one indicating sound utilization of funds. So
we can say that the liquidity position of the concert is sound and it is able to meet its
short term debts and obligations.
144
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Current Ratio
145
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4) Cash Ratio- This ratio measures the relationship between cash in hand and
current assets. A very high cash ratio indicates major items of current assets & may be a
poor indicator of profitability because cash by itself does not earn any profit. Ideally the
proportion should be kept as low as possible. But some amount of cash for daily
requirements of the firm should be kept.
Cash Ratio =
Cash in Hand / Current Assets

(Rs. in crore)
Particular
2007-08
2008-09
Cash in Hand
243.32
69.63
Current Assets
5775.74
7672.99
0.04 :1
0.009:1
Cash Ratio
Interpretation:-
Form the above it can be seen that cash ratio is appropriate from year to year. It shows
that the concern is efficiently using and monitoring cash for day to day transactions.
146
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Cash Ratio
147
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5) Solvency Ratio- This ratio highlights upon the long-term solvency of the concern
and this ratio shows the relationship between the total assets and total liabilities of
the concern. This ratio is obtained by dividing total assets by total liabilities. Total
assets include fixed assets and current assets. Total liabilities include both long term
and short-term liabilities.
Solvency Ratio-
Total Assets
Total Liabilities
(Rs. in crore)
Particular
2007-08
2008-09
12370.06
20486.66
Total Liability
8681.40
16527.79
Solvency Ratio
1.42:1
1.24:1
Total Assets
Interpretation:-
From the above it can be seen that the concern is having a sound position. Its total assets
are 1.24 times of its total liabilities in the year 2008-09; therefore the solvency position is
good i.e. the firm has the ability to pay off its long term liabilities.
148
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Solvency Ratio
149
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6) Stock to Current Assets Ratio- This ratio expresses the relationship between
Stock and Current Assets. It denotes how much proportion of current assets is in the form
of stock .
Stock to Current Assets-
Stock
Current Assets
(Rs. in crore)
Particular
2007-08
2008-09
Stock
1577.10
1731.36
Current Assets
5775.74
7672.99
Stock to Current Assets
0.27:1
0.23:1
Interpretation: The above calculation shows that stock to current asset ratio is
decreasing. Thus it is not a bad situation because a company always wants to retain stock
according to the requirement. It does not want to over-invest in stock. Every company
prefer money in liquid form rather than over-investment.
150
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Stock to current asset ratio
151
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7) Raw Material Turnover Ratio- The raw material turnover ratio represents the
relationship between raw material consumed and average stock of raw material. Here
average stock of raw material is the average of opening stock of raw material and closing
stock of raw material.
Or
Opening stock of raw material + closing stock of r.m.
Average stock of raw material =
Raw Material Turnover =
Raw material consumed

Avg. stock of raw material
(Rs. in crore)
Year
2007-08
2008-09
Raw material consumed
6646.44
13997.22
Avg. stock of raw material
751.04
891.39
Raw Material Turnover
8.85:1
15.70:1
Interpretation: Here Raw material consumed is 6646.44 in 2007-08 and 13997.22 in

2008-09. Avg. stock of raw material is 751.04 in 2007-08 and 891.39 in 2008-09. The
152
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calculation shows that the raw material turnover is 8.85 times in 2007-08 and 15.70 times
in 2008-09. It indicates that raw material turnover is increasing because of more
production. Production is increasing because of increase in demand. Thus it is a favorable
situation.
Raw Material Turnover
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8) Owned Capital Turnover: It represents the relationship between turnover and

shareholders fund.
Owned Capital Turnover =
Turnover
Shareholders fund
(Rs. in crore)
Year
2007-08
2008-09
Turnover
12162.82
32933.30
Shareholders Fund
3688.66
3958.87
Owned Capital Turnover
3.30:1
8.32:1
Interpretation: In the above table the turnover is 12162.82 for the year 2007-08 and
32933.30 for the year 2008-09. Shareholders fund is increasing by 270.21 crores. As a
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result the owned capital turnover has increased drastically by 5.02 times. It clearly shows
that the company is earning profit.
155
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Owned capital turnover
9) Profit Before Tax To Sales- The ratio expresses the relationship between Profit
Before Tax and turnover.
Profit Before Tax to Sales- Profit Before Tax *100

Turnover
(Rs. in crore)
Particular
2007-08
2008-09
Profit before Tax
380.52
441.95
Turnover
12162.82
32933.30
P.B.T. to Sales
0.03 %
0.01 %
156
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Interpretation: Inspite of the fact that profit before tax is increasing from the year
2007-08, profit before tax to sales ratio is decreasing by 0.02 %. It is due to increase in
turnover tremendously.
157
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P.B.T. to Sales
10) Capital Turnover- Sometimes the efficiency and effectiveness of the operation
is judged by comparing the sales with the amount of capital invested in the business.
Capital Employed is equal to Net Fixed Assets and Working Capital. This ratio is
calculated by establishing the relationship between turnover and capital employed.
158
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Capital Turnover-=
Turnover
Capital Employed
(Rs. in crore)
Particular
Turnover
Capital Employed
Capital Turnover
2007-08
2008-09
12162.82
32933.30
9573.96
9746.92
1.04 times
0.96 times
Capital Employed = Net Fixed Assets + Working Capital

For the Year 2007-08 = 5169.79 + 4404.17 = 9573.96
For the Year 2008-09 = 5256.82 + 4490.10 = 9746.92
Interpretation :From the above it is clear that Capital Turnover ratio has been reduced by 0.08 times
from the year 2007-08 in the year 2008-09. It shows over investment in Total assets as
compared to the corresponding sales made by the concern.
159
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Capital Turnover
ANNEXURE
160
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INVENTORIES
As at 31-03-2009
As at 31-03-2008
Inventories (including goods-in-transit Rs. 637.56 crore)

Previous year Rs. 277.63 crore)
Raw material
823.39
959.39
Stores and spares
290.21
327.83
Loose tools
2.03
1.83
Chemical and catalysts
72.49
28.94
Packing materials
37.49
33.26
Construction materials
14.11
14.72
Stock-in-process(Including
intermediary products)
42.30
36.89
Finished goods:
Traded products
319.08
Own manufactured
130.26
Total
59.56
449.34
1731.36
114.68
174.24
1577.10
161
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BALANCE SHEET
SOURCES OF FUNDS
Shareholders Funds:
Share Capital
Reserves and Surplus
Loan Funds:
Secured Loans
Unsecured Loans
Deferred Tax Liability( net)
Total
APPLICATION OF FUNDS
Fixed assets:
Gross block
Less: accumulated depreciation
Net block
Capital work-in-progress
Investments
Current assets, Loan and Advances:
Inventories
Sundry debtors
Cash and bank balances
Loan and advances
As at 31.03.2009
426.28
3532.59
7373.18
5429.60
8808.00
3842.16
4965.84
290.98
Less: Current liabilities & provisions:

Current Liabilities
Provisions
3958.87
12802.78
542.12
17303.77
5256.82
7552.95
As at 31.03.2008
423.93
3264.73
2404.67
4370.97
8138.98
3400.04
4738.94
430.85
1731.36
407.23
69.63
5464.77
7672.99
1577.10
413.76
243.32
3541.56
5775.74
2860.18
322.71
3182.89
1048.49
323.08
1371.57
Net Current Assets

Miscellaneous Expenditure(to the extent
not written off)
TOTAL
3688.66
6775.64
534.19
10998.49
5169.79
1416.73
4490.10
3.90
4404.17
7.80
17303.77
10998.49
162
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PROFIT & LOSS ACCOUNT
(Rs in crore
163
MEERUT
Year ended 31/03/2008

Income from operations
Turnover
Sales
Subsidy on fertilisers
Other revenue
Increase/(Decrease) in
stocks
5968.47
6194.35
12162.82
354.77
(1136.21)
Year ended 31/03/2009

7387.70
25545.60
11381.38
Less: cost of operations
Consumption of raw materials, stores etc.
Raw materials
6646.44
Stores and spares
96.26
Chemicals and catalysts
38.22
Packaging materials
170.43
Power, fuel and water
756.48
7707.83
Less: stock transfer for self
118.81
consumption
Purchase of products for
resale
Employees remuneration
and benefits
Manufacturing,
administration
and
distribution expenses
Interest
Depriciaton / amortisation
Prior period adjustment
(net)
Deferred revenue
expenditure written
off(VRS Expenses)
Profit before tax
Provision for taxation:
current tax
Fringe benefit tax
Deferred tax
Earlier years
Profit after tax
Profit transferred to:
Capital repatriation fund
Contribution towards
Approved
Donations(Under IT Act
1961)
NET PROFIT AS PER
MULTI STATE COOP.
SOCIETIES ACT,2002
7589.02
32933.30
499.00
280.51
33712.81
13997.22
108.34
41.38
200.39
981.80
15329.13
159.41
15169.72
1245.44
14539.23
405.75
595.96
959.49
389.37
410.93
(3.00)
1481.91
1023.20
470.40
(13.46)
3.86
3.90
11000.86
380.52
33270.86
441.95
61.80
92.80
6.50
56.14
(1.51)
8.02
7.93
(26.81)
122.93
257.59
0.46
_
81.94
360.01
0.47
1.00
164
0.46
257.13
MEERUT
1.47
358.54
Significant Financial Indicators
165
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Financial Ratios
200809
200708
200607
200506
200405
200304
200203
200102
200001
199900
Operating profit to
sales (%)
Profit before tax to
sales(%)
Return on capital
employed(%)
Profit before tax to
net worth(%)
Profit after tax to
net worth(%)
Fixed
assets
turnover(times)
Working
capital
turnover(times)
Inventory
of
finished goods
Inventory of raw
material & packing
material
Sundry debtors
Current ratio
Quick ratio
Debt equity ratio
No. of employees
Sales
per
employee(Rs.crore)
6.50
7.67
6.69
6.92
6.52
10.86
8.15
11.84
12.34
13.13
1.34
3.13
2.43
4.85
6.37
8.66
13.26
7.28
4.54
6.91
3.12
3.50
2.53
7.18
10.58
11.32
18.56
9.32
5.60
7.38
11.16
10.31
6.90
13.55
14.27
16.49
24.65
13.32
9.12
13.11
9.09
6.99
4.81
9.60
9.68
10.60
17.02
11.06
9.00
13.11
6.32
2.54
2.20
3.01
3.57
2.78
2.74
2.18
2.12
1.78
7.41
2.62
2.50
4.07
4.58
3.58
4.04
3.76
3.53
3.08
0.12
1.50
1.48
0.74
0.90
1.30
1.88
1.81
1.60
2.51
0.74
1.25
1.01
0.86
0.79
0.79
0.68
0.77
0.63
0.57
0.67
2.41:1
1.87:1
3.23:1
6757
4.87
0.78
4.21:1
3.06:1
1.84:1
6743
1.80
0.90
5.06:1
3.15:1
1.78:1
6826
1.51
0.89
3.49:1
2.37:1
1.42:1
6506
1.77
1.17
2.36:1
1.51:1
2.20:1
5752
1.29
1.50
2.84:1
1.71:1
0.32:1
5977
0.99
1.36
2.62:1
1.51:1
0.33:1
6125
0.99
1.30
2.72:1
1.39:1
0.43:1
6326
0.81
1.20
2.92:1
1.65:1
0.63:1
6405
0.80
1.25
2.93:1
1.47:1
0.78:1
6403
0.71
Key Finding, Learning & Recommendation
166
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I had done my project in inventory management & analysis of IFFCO Financial

strength by ratio analysis. Further .I have also understand the role of F&A departments at
unit level.
Conclusion
Therefore it can be said that IFFCO is on sound footing to protect it stability and
enhance it profitability by cutting on cost and increasing production in years to come.
Further IFFCO has also taken various other venture like SEZ at NELLORE, Power plant
at CHASSIGARDH, IFFCO Tokio General insurance, IFFCO Kisan Sanchar L.T.D.,
IFFCO has taken Joint Venture out of India i.e. OMIFCO at OMAN, JORDAN India
fertilizer company , Industrial Chimiques DU Senegal (ICS)and Kisan International
Trading FZE at Dubai. Therefore IFFCO main business is Product & sell fertilizers but it
has extends its wings for backward integration& meet the needs of its services
Requirement & to serve better to the famer community.
It might seem axiomatic that inventory control is efficient as long as inventory level
is going down.But the fact is that if inventories are minimized without adequate
operations, inventories have been mismanaged rather than controlled efficiently. Thus,
the basic objectives of inventory management appear to be conflicting in nature.
Inventories should increase or decrease in amount or time as related to sales requirements
and production schedules.
In most inventories a small proportion of items accounts for a very substantial usage
(in terms of monetary value and annual consumption ) and a large proportion of items
accounts for a small usage. ABC analysis based on this empirical reality advocates in
essence a selective approach to inventory control, which calls for a greater concentration
of efforts on inventory items accounting for the bulk of usage value.
Responsibility for control of inventories is of the top management. Though
decision in this regard might well be based upon the combined judgement of the
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production manager, the sales manager and the purchasing manager. This is desired in
view of the financial considerations involved in the problem and also because of need for
coordinating different kinds of inventories and conflicting view points of different
departments. Decisions relating to inventories should be taken by higher authority of the
organisation as well as departments.
There are some points that may be given as recommendation or a program may be
constructed for inventory monitoring and controlling which consists of following
elements:
Active disposal of goods that is surplus, obsolete and unusable.
More effective exercise should be followed of vigilance against imbalance of

raw material and work in progress which tends to limit the utility of stocks.
To strict adherence to production schedule.
To shortening the production cycle.
To change in design to maximize use of standard parts and components, which

are available off the shelf.
To maintain the special pricing to dispose off unusually slow moving items.
To make vigorous efforts to expedite completion of unfinished production jobs

to get them in to sellable condition.
168
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BIBLIOGRAPHY
Marketing Research
Research Methodolgy - Kothari, C.R.- 2nd Edition
Business Environment Cherunilam, Francis- Himalaya Publishing House
Industrial Relations - Monappa, Arun Tata Mcgrew Hill Publishing Company
IFFCO Magazine
- Thomas C Kinncar & James R Taylor
Website:
www.iffco.nic.in
169
MEERUT
170
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Inventory-Management at IFFCO

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PROJECT REPORT

SUBMITTED IN PARTIAL FULFILMENT OF THE

MR. ASHOK MAHESWARI

MR. K.K. PANDEY

CERTIFICATE FROM H.O.D.(MBA)

I OWE A DEEP SENSE OF GRATITUDE TO ALL THE RESPONDENTS

42 YEARS OF COOPERATIVE GLORY

IFFCO AONLA PLANT

4) Introduction about IFFCO

5) Objective of the company

7) Aim, Vision, Mission

8) Vision 2010, Approach

10) IFFCOs Emblem

11) Organization chart of IFFCO

12) Investment outside IFFCO

13) All India share of IFFCO

14) Performance highlights

15) IFFCO Associates

16) Awards galore

17) Growth in Member Societies

18) Aonla unit

19) Finance and accounts department

20) Inventory management

21) Various sections of inventory

22) Payment against purchase

23) Delay in delivery

24) Imported material

25) Material coding

26) Packing & Dispatch

27) Inspection of material

28) Accounting of raw material

29) Store section

30) ABC List of Aonla I & II

31) Accounting for Stores

32) Insurance and verification

33) Techniques of Inventory control

IIMT MANAGEMENT COLLEGE

34) Inventory software

35) Production department

36) Different vouchers

37) SWOT Analysis & Strategies

38) Ratio analysis of IFFCO

39) Conclusions & Recommendations

INTRODUCTION TO THE TOPIC

Effective inventory management enables an organization to meet or exceed customers

To give suggestion if any, regarding effective inventory management, to ensure

INTRODUCTION ABOUT IFFCO

MARKETING AND DISTRIBUTION

HUMAN RESOURCE PUTTING PEOPLE FIRST

A YEAR OF APPRECIATION (2008-09)

CORPORATE SOCIAL RESPONSIBILITIES

INFORMATION AND COMMUNICATION TECHNOLOGY

Largest producer of fertilisers in the country

No. of Plant Locations : Five

Installed Annual Capacity (000 MT)

TOTAL P2O5 - 1712.8

4. Only Fertiliser Institution in the country to produce 68.47 lakh MT of fertilisers

OBJECTIVES OF THE COMPANY

9) To achieve self reliant and self generated economy.

Prices of IFFCO's Fertilisers

Local Taxes Extra, where ever applicable.

Shri Chandra Prakash

IFFCOs MAIN AIM