INTERNSHIP REPORT

ON

FAUJI FERTILIZER BIN QASIM LTD

SUBMITTED TO
Fauji Fertilizer Bin Qasim Ltd(Finance Department)
SUBMITTED BY
Muhammad Awais Tariq
CAF(Qualified)
PAC(LAHORE)
4th June,2018-29th June 29, 2018
 ACKNOWLEDGEMENT
My profound thanks and gratitude to illustrious management of FFBL for
providing me the life time opportunity to learn the mechanics of financial
management of this internationally reputed company. Working here with highly
reputed and competent staff was unique honor.

I appreciate and acknowledge the personal help and assistance of finance

Manager Mr.Javed Akhter who is highly professional leader and wonderful human
being. Without his involvement my job wouldn’t have been so easy and
rewarding.my sincere thanks to Mr.Arshad Mehmood, Mr.Arsalan Babar,
Mr.Ahmed Shumail, Mr.Usman Waqas and Mr.omer Akhter Who are always forth
coming to help me in every stage. I will always love to be member of this highly
professional team in future too.
 HISTORY
Fauji Fertilizer Bin Qasim Limited Plant site is modern Granular Urea
and Di-Ammonium phosphate (DAP) fertilizer manufacturing complex,
built at cost of US$ 468 Million and located in eastern zone of Bin
Qasim, Karachi.

Initially named as FFC-Jordan Fertilizer Company (FJFC), with effect

from 17th NOV 1993, with FFC (30%), FF (10%) and JPMC (10%) as main
sponsors. The company was formally listed with stock exchange in May
1996 and Commercial production commenced with effect from Jan
2000. However, it continued to run in crises due to technical, financial
and managerial reasons till 2001.DAP plant brought to suspension in
2001 due to accumulated loss of Rs.6.5 Billion.it resumed production in
Sep 2003, after lapse of 2 years.

Renamed as Fauji Fertilizer Bin Qasim Ltd.(FFBL) in 2003, as such Jordan

Phosphate Mines Co.(JPMC) Had sold its entire equity in the company.
The company turned out to be profitable after 3 years.
 INTRODUCTION
Fauji Fertilizer Bin Qasim limited is the largest chemical producer and
distributor in Pakistan. Incorporated in 1993 under the company’s
ordinance 1984 The enormousness of the company is backed by the
fact that it owns the largest market share in the whole country.
Company was listed in Karachi, Lahore, and Islamabad Stock Exchange
in year 1996 and started commercial production in 2000 and has been
in the top 25 companies of Pakistan ever since due to its flourishing
performance

Fertilizer requirements in the country are met from both domestic

production and imports. There are 3 plants of which 2 plants are at
Rahimyarkhan and 1 at Mirpur. The annual production capacities are as
follow: urea 4.3 million tones, DAP 650 thousand tones, CAN 450
thousand tones, NP compounds 305 thousand tones, SSP 180 thousand
tones and for NPK compound 100 thousand tones

Fauji Fertilizer bin Qasim limited plant site is a modern Granular urea
and Di-Ammonium Phosphate(DAP) fertilizers manufacturing complex
and located in Eastern Zone of Bin Qasim Karachi with head office at
Jinnah Boulevard Phase II, DHA, Islamabad
 Vision
To be the for most premier
organization focused on quality and growth, leading to enhanced
stakeholders value

Mission
Fauji Fertilizer Bin Qasim limited is
commited to remain amongst the best companies by maintaining the
spirit of excellence through sustainable growth while ensuring best
practices
 CORE VALUES

 CORPORATE RESPONSIBILITY
LEGAL/COMPLIANCE OBLIGATION
INTEGRITY & HONESTY
CONFIDENTIALITY
CONFLICT OF INTREST
SAFETY AND HEALTH
DEDICATION TO QUALITY
CORPORATE IMAGE
SUBSIDARIES
 Fauji Power Company Limited(FPCL)
 Fauji Meat Limited(FML)
 Fauji Foods Limited(FFL)

JOINT VENTURE
 Pakistan Maroc phosphate

Main Products
 Granular Urea (Sona Urea)
 Di-Amonia Phosphate(DAP)

Features of products
 DAP is suitable for all crops and soil.
 Recommended for initial application.
 Completely soluble in water
 Good storage properties
 DEPARTMENTS IN FFBL

• FINANCE
• HUMAN RESOURCE
• INFORMATION TECHNOLOGY
• SUPPLY CHAIN
• SHARES
• ADMINSTRATION
• INTERNAL AUDIT
• BUSINESS EXCELLENCE
FINANCE DEPARTMENT IN FFBL

PAYABLES

TAXATION

BUDGETING & PLANNING

TREASURY&FUNDS

FINANCIAL REPOERTING
LEVELS IN FINANCE DEPARTMENT

CFO

SENIOR
MANAGER

MANAGER

SECTION DEPUTY
UNIT MANAGER
MANAGER MANAGER

ASSISTANT SENIOR
MANAGER EXECUTIVE EXECUTIVE

ASSOCIATE MANAGEMENT
OFFICER ASSOCIATES
Payables
The main task of payables department is to make payments to
the local vendors in local currency. Mostly ,the payment is made to
suppliers and employees other than their salary.There is segregation of
duties one individual deals with direct invoices of those expenses which
were incurred by company’s employees and verify the eligibility of that
employee after verification they physically calculate the amount of
expenses and compare with vendor’s invoices and record these invoices
in SAP account.

Another officer deals with direct invoices of production supplies like

liner, bags and chemicals they also compare these invoices with
purchase orders (PO). Unit Manger parks these entries after further
verification it refers towards another officer who prepares the cheque
for payments then cheque are sent for signatures and despatched .
Every employee and vendor has different codes in SAP account.
Taxation
A fee charged (levied) by a government on a product ,income, or
activity is called tax.

Direct tax

If tax is levied directly on personal or corporate income, then it is direct

tax.eg income tax

Indirect tax

If tax is levied on the price of a good or sevice, then it is called an

indirect tax.eg sales tax, custom duties etc.

There are three main types of taxes performed in FFBL

 Corporate income taxes

Refers to income taxes imposed on corporations.FFBL corporate
tax rate is 35%
 Sales tax
Input tax :levied on purchases
Output tax:levied on sales
Net of input tax and out put is paid to government
 Employees tax
Means tax with held by employer on salaries

FFBL manages their taxes carefully. They have well qualified tax
consultants who perform their duties whole heartedly. There is also
segregation of duties in this department. The tax department performs
following tasks:
  File income tax returns
 File sales tax returns
 Check the activation of vendors
 Calculation of withholding taxes
 Reconciliation of tax data
 Tax compliances
 Communication with FBR
 Declaration
 Tax amnesty

For performing the above tasks they take the help from FBR website for
checking the activation of vendors and use IRIS for calculation of
withholding tax.
PAYROLL
Payroll department has its own importance they make the
payments of salaries and wages and loan to the employees. Salaries are
paid to employees on monthly basis. Monthly salary slips are issued.
payroll preparation is completed in HR. Disbursement is responsibility
of finance with prior review. There are approximately more than 1000
employees in FFBL. There are following categories of employees in FFBL

 Regular employees (management)

 Regular employees(non-management)
 Contract employees
 Management Associates
 Daily workers(cos)
 Internees(stipend)

Payroll department maintains the complete data of each employee and

compare the salaries of each month with previous month to avoid
error. They maintain the complete records of each loan payment and
record all these detail in SAP account .Each employee have unique
specific codes maintain by company after verifying the complete detail
of the employee they intimate there banker to transfer the salary in
bank account of employees

Payroll department deals with following three types of vouchers

 Bank vouchers(for payments )

 Cash receipt voucher(CRV)(for inflows)
 Journal voucher(for adjustment of receipt payments)
Budgeting and Planning
FFBL have its own budgeting and
planning department and plays very important role in progress of
company .This department is headed by highly qualified chartered
accountants. The duties which are performed by this department
includes

 Prepare Annual budget

 Decision making
 Business planning
 Check management performance
 Support other department
 Advisory and project planning
 Forecasting
 Various analysis

This department prepare budget annually, quarterly and weekly to

support different departments and prepare various analyses. They also
make decision regarding different projects by using the concept of NPV
and IRR .They also prepare the feasibility report regarding new project.
They always planning to minimize the cost

The other Important task which is performed by this department is to

prepare presentations for Manager director for different project.
TREASURY AND FUNDS SECTION
Treasury department is responsible for managing the cash and fulfilling
the need of the company regarding cash.it is responsible for making
investment if company has enough funds at lower rates and earned
higher rates

The other main task that is performed by this section is to make the
payments to foreign vendors in foreign currency

There are three types of foreign vendors

 For stock
 For spare parts
 For services

There are three form of payments to foreign vendors

 Telegraphic transfer
 Letter of credit
 Cash against documents

Telegraphic transfer

It is advance form of payment to foreign vendors. in this mode of

payment amounts are directly transfer to vendor’s bank account. only
up to $10000 can be transferred through this mode of payment
Letter of credit

Letter of credit L/C also known as documentary credit is widely used to

make payment secure in domestic and international trade. The
document is used by financial organization at the buyer request. Buyer
also provide necessary instructions in preparing the document.

The international chamber of commerce (ICC) in the uniform custom

and practice for documentary credit (UCPDC) define L/C as:

“an arrangement, however named or described, whereby bank (the

issuing bank) acting at the request and on the instructions of customer
(the Applicant) or on its own behalf:

1.is to make a payment to or to the order third party (the beneficiary)

or is to accept bills of exchange (drafts) drawn by the beneficiary.

2.Authorized another bank to effect such payments or to accept and

pay such bills of exchange (draft).

3.Authorized another bank to negotiate against stipulated documents

provided that the terms are complied with.

A key principle underlying letter of credit (L/C) is that banks deal only in
documents and not in goods. The decision to pay under a letter of
credit will be based entirely on whether the documents presented to
the bank appear on their face to be in accordance with the terms and
conditions of the letter of credit.
PARTIES TO LETTER OF CREDIT

 APPLICANT(OPENER)
 ISSUING BANK
 BENEFICIARY
 ADVISING BANK
 CONFIRMING BANK
 NEGOTIATING BANK
 REIMBURSING BANK
 SECOND BENEFICIARY

CASH AGAINST DOCUMENTS

it is also mode of payment to vendors. It is form of contract with bank

same phenomena like L/C

INSURANCE

Insurance in law and economics, is form of risk management primarily

used to hedge against the risk of a contingent loss. Insurance is defining
as the equitable transfer of the risk of loss, from one entity to another,
in exchange for a premium.

Insurance in FFBL is done on basis of CMI policy (Comprehensive

Machinery Insurance). All assets are insured by Adam jee Insurance
company.
FINANCIAL REPORTING
There are five components of financial statements includes Balance
sheet, profit & loss Account, statement of comprehensive income,
statement of cash flows and statement of changes in equity.

Financial reporting section here in FFBL prepares the above mentioned

set of documents. The said section analyzes all the financial transaction
posted in general ledgers by every section in finance division.

The financial statements being prepared by FFBL

 BALANCE SHEET
 PROFIT & LOSS ACCOUNT
 STATEMENT OF COMPREHENSIVE INCOME
 STATEMENT OF CASH FLOWS
 STATEMENT OF CHANGES IN EQUITY

The above mentioned financial statements are prepared by financial

reporting section on Monthly, Quarterly and Annual basis. The
Quarterly and Annual reports are printed and publicly available at all
the stock exchanges in Pakistan.

The main responsibilities of financial reporting section are as under.

1.Prepration of the financial statements as per International Accounting

Standards.

The flow of transaction or the accounting cycle in FFBL is

a- To park and post the transactions from the data like invoice etc
b- Extraction of general ledger from SAP.
c- Extraction of trial balance from SAP
d- Preparation and extraction of financial statements
2.Publishing of accounts is also the main responsibility of financial
reporting section. these accounts are published and the results are
quoted in all the stock exchanges of Pakistan

AUDITORS
The financial statements of FFBL are audited by external auditors. The
external auditors reviews half yearly accounts and make audit on
annual basis. EY(Ernst & young ) are the external auditors of FFBL