A STUDY OF “ORGANISATIONAL “ORGANISATIONAL STRUCTURE OF INDIAN FARMERS FERTILIZER COOPERATIVE LIMITED WITH SPECIAL ANALYSIS OF THE PHULPUR PLANT”
SUBMITTED BY: SHOBHIT EUSEBIUS Reg. No. 08PG0028
CHRIST COLLEGE INSTITUTE OF MANAGEMENT BANGALORE
ACKNOWLEDGEMENT
My Organizational Structure Study at the Phulpur plant of Indian Farmers Fertilizer Co-operative Limited proved to be a good learning experience for me. In these ten days of my study at IFFCO I was able to gather a lot of information about the organisational design of IFFCO in general and in particular about the Phulpur Plant of IFFCO.
I would like to thank Mr. V.P V.P.. Srivastava, Head Vigilance Vigilance Officer of IFFCO Phulpur for allowing me to visi visitt the the plan plantt and and the the vari various ous depart departme ment ntss and and also also for for the the perso persona nall effo effort rt he made made in familiarizing me with the organisation. I am also thankful to Dr. D.N. Verma of the Training Section of IFFCO Phulpur Plant for guiding me through the stud y and providing all the relevant data.
Last but not least I would thank God Almighty for guiding me throughout and keeping me safe and sound so that I could complete my project properly. properly.
Shobhit Eusebius
2
TABLE OF CONTENTS CONTE NTS
1.
INTRO NTROD DUCTI UCTIO ON
2.
HIST HISTOR ORY Y OF IFFC IFFCO O
3.
IFFC IFFCOO-IN IN BRIE BRIEF F
4. VISI VISION ON & MIS MISSI SION ON 5. KEY RESUL RESULT T AREAS AREAS OF OF IFFCO IFFCO 6. PROFIL PROFILE E OF PRODU PRODUCTS CTS AND SER SERVIC VICES ES 7. GOVE GOVERN RNAN ANCE CE OF IFFC IFFCO O 8. IFFCO IFFCO CENTRAL CENTRAL ORGANISA ORGANISATIONA TIONAL L STRUCTURE STRUCTURE 9. DETAILED DETAILED ORGANIS ORGANISA ATIONAL TIONAL STURCTURE STURCTURE OF THE THE IFFCO PHULPUR PHULPUR PLANT PLANT 10. DEPART DEPARTMENT MENTAL AL PROFILES 11. ANALYSIS ANALYSIS OF THE ORGANISATION ORGANISATION STRUCTURE OF THE PHULPUR PLANT •
WORK SPECIALIZATION
•
DEPARTMENTALIZATION
•
CHAIN OF COMMAND
•
SPAN OF CONTROL
•
CENTRALISATION / DECENTRALISATION
•
FORMALIZATION
12. MANAGERIAL MANAGER IAL OBSERV OBSERVATIONS FROM THE STUDY: 13. SWOT ANALYSIS ANALYSIS:: 14. SUGGESTIO SUGGESTIONS NS 15. CONCLU CONCLUSI SION ON
3
INTRODUCTION
The Indian fertilizer industry has been supplying a substantial portion of the growing demand of fertilizers within the country. India is the third largest producer of fertilizers in the world. There are 60 large size fertilizer plants in the country, manufacturing a wide range of nitrogenous, phosphatic and complex fertilizers. Besides, there are 81 mediu m and small scale single superphosphate units.
The cooperative sector has come to play a significant role in the Indian fertilizer industry. In terms of nutrients, the share of cooperative sector in the installed capacity is 19.7 % for nitrogen and 10.2 % for phosphate. Indian Farmers Fertilizer Cooperative Limited (IFFCO), a Multi-unit Co-operative Society established on November 3, 1967 accounts for 64% of the installed capacity of Nitrogen and the total of the Phosphate capacity in the cooperative sector. In the last 41 years IFFCO has emerged as the pioneer venture in the cooperative sector. It has witnessed a meteoric rise and has blossomed into the largest manufacturer and marketer of fertilizers in the country. The success of IFFCO has encouraged the growth of the cooperative movement in INDIA.
The following is an organisational structure study of Indian Farmers Fertilizer Cooperative Limited with special analysis of the IFFCO Phulpur plant.
HISTORY OF IFFCO 4
During mid- sixties the Co-operative sector in India was responsible for distribution of 70 per cent of fertilizers consumed in the country. This Sector had adequate infrastructure to distribute fertilizers but had no production facilities of its own and hence was 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. In the year 1964, the Cooperative League of USA proposed to the Government of India that the American Cooperatives were interested to collaborate with Indian Cooperatives in setting up a fertilizer production co-operative. The idea appealed to the Government of India and eminent cooperators of the country. It was a unique venture in which the farmers of the country through their own Cooperative Societies created this new institution to safeguard their interests. Thus Indian Farmers Fertilizer Co-operative Limited (IFFCO) was registered on November 3, 1967 as a Multi-unit Cooperative Society. On the enactment of the Multistate Cooperative Societies act 1984 & 2002, the Society is deemed to be registered as a Multistate Cooperative Society. The U.S. Cooperatives through Cooperative Fertilizer International (CFI) provided a million dollar aid besides technical know-how to IFFCO.
The Society is primarily engaged in production and distribution of fertilizers. The byelaws of the Society provide a broad frame work for the activities of IFFCO as a Cooperative Society. The number of co-operative societies associated with IFFCO has risen from 57 in 1967 to 38,155 at present.
IFFCO commissioned an Ammonia - Urea complex at Kalol and the NPK/DAP plant at Kandla both in the state of Gujarat in 1975. 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. IFFCO has acquired a fertilizer unit at Paradeep in Orissa in September 2005.
5
IFFCO has made strategic investments in several joint ventures. Godavari Fertilizers and Chemicals Ltd (GFCL) & Indian Potash Ltd (IPL) in India, Industries Chimiques du Senegal (ICS) in Senegal and Oman India Fertilizer Company (OMIFCO) in Oman are important fertilizer joint ventures. Indo Egyptian Fertilizer Co (IEFC) in Egypt is under implementation. As part of strategic diversification, IFFCO has entered into several key sectors. IFFCO-Tokio General Insurance Ltd (ITGI) is a foray into general insurance sector. To take the benefits of emerging concepts like agricultural commodity trading, IFFCO has taken equity in National Commodity and Derivative Exchange (NCDEX) and National Collateral Management Services Ltd (NCMSL). IFFCO Chattisgarh Power Ltd (ICPL) which is under implementation is yet another foray to move into core area of power. IFFCO is also behind several other companies with the sole intention of benefiting farmers.
At IFFCO, the thirst for ever improving the services to farmers and member co-operatives is insatiable, commitment to quality is insurmountable and harnessing of earths' bounty to drive hunger away
from
India
in
an
ecologically
sustainable
manner
is
the
prime
mission.
IFFCO, to day, is a leading player in India's fertilizer industry and is making substantial contribution to the efforts of Indian Government to increase food g rain production in the country.
6
IFFCO-IN BRIEF
•
World’s Largest Fertilizer Co-operative.
•
Largest producer of fertilizers in the Country.
•
•
Number of Plants : Five(Kalol, Kandla, Phulpur, Aonla & Paradeep)
Installed Annual Capacity (‘000 MT)
o
•
Urea : 3689.4
o
NPK/DAP: 4335.4
o
Total ‘N’ : 2373.9
o
TOTAL ‘P2O5’-1712.8
Only Fertilizer Institution in the country to have surpassed 70 lakhMT per annum in terms of production and 86 lakhMT per annum in respect of sales.
•
Contributed about 19.1%to the total ‘N’ and 24.5% to the total “P2O5” produced in the country during the year 2006-07.
•
Fertilizers marketed through 38155 Cooperative Societies and 158 Farmers Service Centres.
•
Service to the Farmers through a variety of programmes.
7
SHARE CAPITAL: All Share Capital wholly owned by Cooperatives only.
Authorized Share Capital
1000.00 (Rs. in Crore)
Subscribed and Paid up Capital
422.69
(Rs. in Crore)
(Source: IFFCO At A Glance 2006-07)
GROWTH IN NUMBER OF MEMBER SOCIETIES:
45000 38155
40000
35072
35000
28134
30000
25528
37381
30200
26960
25000 20000 15000 10000 5000
57
0 1967-68 1974-75 1980-81 1986-87 1992-93 1998-99 2004-05 2006-07
*Legend: X-axis :Years Y-axis: Number of societies
8
CUMULATIVE ACHIEVEMENTS TILL DATE:
FERTILIZER PRODUCTION
969.340 Lakh MT
FERTILIZER SALE
1032.496 Lakh MT
TURNOVER
Rs. 79842 Crore
PROFIT BEFORE TAX
Rs. 6064.35 Crore
PROFIT AFTER TAX
CONTRIBUTION TO EXCHEQUER
Rs. 4736.82 Crore
Rs. 4310.88 Crore
GROWTH IN PRODUCTION CAPACITIES:
9
CAPACITY UTILISATION: (LAST 5 YEARS)
10
TOTAL FERTILIZER PRODUCTION: (LAST 5 YEARS)
TOTAL SALE OF FERTILIZERS: (LAST 5 YEARS)
11
TURNOVER: (LAST 5 YEARS)
NETWORTH (LAST 5 YEARS)
12
FINANCIAL PERFORMANCE: (LAST 5 YEARS)
13
VISION & MISSION VISION To augment the incremental incomes of farmers by helping them to increase their crop productivity through balanced use of energy efficient fertilizers, maintain the environmental health and to make cooperative societies economically & democratically strong for professionalized services to the farming community to ensure an empowered rural India.
MISSION 1. To provide to farmers high quality fertilizers 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.
6. Foster a culture of trust, openness and mutual concern to make working a stimulating and challenging experience for stake holders. 7. Building a value driven organisation with an improved and responsive customer focus. A true commitment to transparency, accountability and integrity in principle an d practice. 8.
To acquire, assimilate and adopt reliable, efficient and cost effective technologies.
9. Sourcing raw materials for production of phosphatic fertilizers at economical cost by entering into Joint Ventures outside India. 10. To ensure growth in core and non-core sectors. 11. A true Cooperative Society committed for fostering coope rative movement in the country. IFFCO is dedicated to emerging as a dynamic organisation, focusing on strategic strengths, seizing opportunities for generating and building upon past success and enhancing earnings to maximize the shareholders' value.
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KEY RESULT AREAS OF IFFCO
1. FERTILIZER PRODUCTION : The main aim of IFFCO is to remove the dependence of the Indian Fertilizer sector on Foreign Imports. For achieving this goal IFFCO runs and maintains its Five Production plants and also aims to increase its production capacity by adopting new technology and acquiring new plants.
2. PROMOTION OF AGRICULTURAL AND RURAL DEVELOPMENT: To achieve this target IFFCO undertakes production, processing and manufacture of insecticides, pesticides, seeds, agriculture machinery and implements and other agricultural production requisites by setting up or taking on lease manufacturing units either directly or in collaboration with or as a joint venture with other Cooperative Institution. Also IFFCO’s CORDET is a major endeavor in this direction.
3. DEVELOPMENT OF AGRICULTURAL COOPERATIVES : IFFCO aims to undertake, promote, assist and encourage development of cooperatives with special thrust on sustainable agriculture and tries to provide for social, economic and culture development of the members through cooperative bodies, voluntary institutions and other entities. IFFCO also promotes research and training on the application of modern management, technology and global experience for cooperative development
15
PROFILE OF PRODUCTS AND SERVICES 1. UREA IFFCO's Urea is not merely a source of 46% of nutrient nitrogen for crops, but it is an integral part of millions of farmers in India. A bag of IFFCO's urea is a constant source of confidence and is a trusted companion for Indian farmer.
2. BIO – FERTILIZERS A biofertilizer unit was established at Cooperative Rural Development Trust, Phulpur (Uttar Pradesh) in 1996 - 97 and other at Kalol (Gujarat) in 2003-04 with an annual capacity of 75 MT and 165 MT respectively of different cultures such as Rhizobium, Azotobacter, PSM, Azospirillium and Acetobacter. Phosphate Solubilising Micro Organism - Several soil bacteria and fungi
possess the ability to bring insoluble phosphates into soluble forms by secreting organic acids. They can be applied to and recommended for all crops
Rhizobium - It is the most important nitrogen fixing organism. It lives
symbiotically in the root nodules of leguminous plants and supply nitrogen to the plant through nitrogen fixation. Besides, supplying nitrogen to the crop, nitrogen fixed by legume - Rhizobia association would also leave residual nitrogen for the succeeding crops. The beneficiary crops are Groundnut, Soybean, Red-gram, Green-gram, Black-gram, Lentil, Cow pea, Bengal-gram and Fodder legumes.
Azotobacter - It is non symbiotic nitrogen fixing bacteria recommended for non leguminous. The
Azotobacter performs well if the soil organic matter content is high.
Azospirillium - It is an associative microaerophilic nitrogen fixer is commonly found in association
with the roots of cereals and forage grasses. The beneficiary crop includes Sugarcane, Vegetables, Maize, Pearl millet, Rice, Wheat, Fodders and Oil seeds.
Acetobacter - It is a symbiotic bacteria capable of fixing atmospheric nitrogen by living within the
sugar plant. They are found in all parts of plant body. It is suitable for sugarcane cultivation.
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3. AMMONIUM PHOSPHATE SULPHATE It is the most widely used fertilizer in the country. It is a white crystalline salt, containing 20 to 21 percent ammonical nitrogen and 17 percent Phosphates. Being soluble in water, it acts quickly, but despite its high solubility, its nitrogen is not readily lost in drainage, because the ammonium ion is retained by the soil particles. it is, therefore, very suitable for wet-land crops
4.
NPK
(Nitro-Phospho-Potassium)/DAP
(Diammonium
Phosphate) As far as Indian farmer is concerned, IFFCO's NPK/DAP is a source of crucial nutrients N, P, K for the crops. The two grades of NPK produced by IFFCO, 10:26:26 and 12:32:16, indicating the content of N, P, K proportion, are tailor made to supply the exact composition required for replenishment of the soil.
5. AMMONIA Ammonia is the intermediate product in Urea production. Out of total energy consumed for the production of Urea, 80% of the Energy is consumed in production of Ammonia. Therefore, efficient production of Ammonia has greatest impact on Specific Energy Consumption.
6. COOPERATIVE RURAL DEVELOPMENT TRUST (CORDET) IFFCO promoted Cooperative Rural Development Trust (CORDET) in the year 1979 to provide education and training to farmers on various aspects of crop production, horticulture, animal husbandry,
farm machinery
etc. CORDET is
service
providing endeavor of IFFCO.
Land for CORDET adjacent to Phulpur plant of IFFCO was made available by Motilal Nehru Memorial Trust and CORDET has established Motilal Nehru Farmers Training Institute at Phulpur. At CORDET, Phulpur the training programmes are of one-six week duration, while at CORDET, Kalol training programmes of one-two weeks duration are held on different aspect related to farm production. At CORDET, Phulpur a bio-fertilizer unit was established in 1996-97 with an annual capacity of 75 MT of different strains. Bio-fertilizers are sold through IFFCO’s Farmers Service Centres and Cooperative societies and also distributed to the farmers.
17
GOVERNANCE OF IFFCO The cooperatives are run on the cardinal principle of being owned, controlled and used by the members. In accordance with the same, the activities of IFFCO are governed by the elected body/bodies through democratically expressed popular will of the member societies. The existing Multi-state Cooperative Societies Act, 1984 and the Byelaws framed by the General Body of IFFCO form the main frame work to guide the IFFCO activities. In accordance with the existing law, IFFCO has a Representative General Body (RGB); which is a main policy making body. The RGB is the supreme body which lays down the policies to achieve the objectives of the Society.
Composition of The Representative General Body: 1 Members of the Board of Directors. 2 Member Societies holding shares of the value of Rs 100 thousand and above send their representative directly on the Representative General Body of IFFCO. These are mostly Chairmen of their respective societies elected by the members of that society. 3 Member-Societies having shares of lower denominations total value of which is not exceeding Rs 100 thousand, are grouped into constituency of 200 societies. The Chairman of the respective societies in this group of 200 societies form the electoral college; out of which one representative is elected as a delegate for the RGB of IFFCO. The maximum number of such delegates from any State / Union Territory does not exceed 25.
18
BOARD OF DIRECTORS:
IFFCO Board of Directors, comprising of 30 Members, is responsible for direction and control of management of affairs of the society within the broad policies laid down by the General Body of IFFCO. The Board interprets the organisational objectives and sets up specific goal to be achieved by the group of professional managers headed by the Chief Executive. 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 under take any other activities conducive to overall growth and development of Societies. The Board is headed by the Chairman.
Managing Director : He/She is the Chief Executive of the organisation with responsibilities for
general conduct, supervision and management of day to day business and affairs of IFFCO. Finance Director: He/She oversees the financial aspects. Marketing Director: Looks after the marketing functions. Director (Technical): looks after the Technical aspects. Director (HRD) : Is responsible for all the Human Resources. Director (Joint ventures) : He/She oversees all the Joint Venture operations. Director (Coop. Development): looks after Cooperative Development.
These functional directors are assisted by Senior Executives who are experts in various disciplines.
19
IFFCO CENTRAL ORGANISATIONAL STRUCTURE CHAIRMAN
BOARD OF DIRECTORS
MANAGING DIRECTOR
MARKETING
FINANCE
DIRECTOR
DIRECTOR
TECHNICAL DIRECTOR
DIRECTOR HUMAN RESOURCE DEVELOPMENT
DIRECTOR JOINTVENTURES
DIRECTOR CO-OPERATIVE DEVELOPMENT
Chairperson: Shri Surinder Kumar Jakhar Directors
Shri Pradeep Shukla
Shri K. Srinivasa Gowda
Shri S.L. Dharme Gowda
Shri K. Somashekhar Rao
Shri Kartick Chandra Sarkar
Shri Simachal Padhy
Shri Harminder Singh Jassi
Shri Pramod Kumar Singh
Shri M.Gopal Reddy
Shri R.K.Dhami
Dr. Ramesh Chandra Sagar
Shri B.S.Vishwanathan
Shri Rajhans Upadhyaya
Dr U.S.Awasthi, (Managing Director)
Shri G.C. Maikota
Shri D. K. Bhatt, (Marketing Director)
Shri Vithalbhai H. Radadia
Shri V. K. Bali, (Director Technical)
Shri Sheesh Pal Singh
Shri. Rakesh Kapur, (Finance Director)
Shri Raj Kumar Tripathi
Shri S.K Mishra, (Director HRD )
Shri Balvinder Singh Nakai
Dr. G. N. Saxena, (Director Coop. Develop.) 20
Shri Ravindra Pratap Singh
Mr. K.L Singh , (Director Joint ventures)
DETAILED ORGANISATIONAL STURCTURE OF THE IFFCO PHULPUR PLANT UNIT PROFILE:
Situated near Allahabad in Uttar Pradesh, IFFCO Phulpur complex has two production units – Phulpur unit-I and Phulpur unit-II and is the world’s largest fertilizer complex based on naphtha
as feed stock. Phulpur unit- I comprising of one 900 Te/day Ammonia Plant and a 1500 Te/day Urea Plant along
with associated off-site facilities like Steam generation plant, Power generation plant, DM water plant, Inert gas plant etc. was commissioned way back in 1981. Due to increasing demand-supply gap of Urea in the country, Govt. of India has given approval for expansion project at Phulpur site since basic infrastructure facilities were available at Phulpur. Phulpur-II was commissioned in December 1997 and consists of 1350 MTPD Ammonia plant and
2200 MTPD Urea plant along with associated off-site facilities based on latest state of art technologies.
CORDET AT IFFCO PHULPUR:
The CORDET Centre at IFFCO Phulpur provides various services to farmers such as training on modern technology in agriculture and related topics, Solving problems of the local farmers by way of organizing camps in their villages. Some fields in which CORDET provides special training are: Seed Production ,Horticulture ,Green Fodder Production Unit, Poultry, Fish, Agricultural, Drip,BioGas Plant ,Seed Multiplication Programme, Village development programme. These Services are 21
provided to farmers from a CORDET institute known as Motilal Nehru Farmers Training Institute which has Dr. Bachhan Singh as the Principal.
CORDET is equipped with the facilities to fulfill its objectives. Specialists are available for imparting practical training. Exercise room, Library, hostel, Canteen, Chaupal and Play ground are available for the farmers. Ultra modern equipment, LCD and overhead projectors , Audiovisual multimedia
facilities
are
available
to
make
the
training
fruitful.
Colour
T.V.,
musical instruments, games like volleyball, Table Tennis, Carrom, Chess etc. are available at CORDET.
At CORDET, Phulpur a bio-fertilizer unit was established in 1996-97 with an annual capacity of 75 MT of different strains. Bio-fertilizers are sold through IFFCO’s Farmers Service Centres and Cooperative societies and also distributed to the farmers
MANAGEMENT OF THE PHULPUR UNIT: Name
Designation
Mr.Surjit Singh
Senior General Manager
Mr. A. K. Bhargava
General Manager
Mr. V.P. Srivastava
Head Vigilance
Mr. A. M. Goswami
Jt. General Manager(Utilities)
Mr.B.B.Sachar
Jt. General Manager(Finance &Accounts)
Mr. Ranjan Dwivedi
Jt. General Manager (Personnel&Administration)
Mr. S.R.Kushwaha
Jt.General Manager(Materials)
Mr.Ashish Kumar Panda
Jt.General Manager(Production-I)
Mr.Mukul Srivastava
Jt.General Manager(Production-II)
Mr.Yogesh Narula
Jt.General Manager(Technical)
Mr.G.K.Gautam
Jt. General Manager(Inspections & Plant Health)
Mr.Sandeep Ambekar
Jt.General Manager(Maintenance)
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ORGANISATIONAL STRUCTURE OF IFFCO PHULPUR
SENIOR GM
HEAD VIGILANCE
GM
JGM P -I
JGM P -II
JGM UTS
JGM F &A
JGM P&A
JGM MT
JGM TECH
JGM INS & PH
JGM MAINT
CSO
Abbreviations used: GM: General Manager JGM: Joint General Manager P-I: Production Department – I P- II: Production Department -II UTS: Utilities Department F&A: Finance & Accounts Department P&A: Personnel & Administration Department MT: Materials Department TECH: Technical Department INS&PH: Inspections & Plant Health Department MAINT: Maintenance Department CSO: Chief Security Officer
The Phulpur plant follows functional departmentalization and is divided into the 9 departments mentioned above .
23
DEPARTMENTAL PROFILES: 1. Production Department – I : Production Department – I which is in-charge of running
the two Ammonia plants and also handles all matters concerning plant safety and fire control has the following organizational structure.
JOINT GENERAL MANAGER (PRODUCTIONS-I) DY. GENERAL MANAGER (AMMONIA PRODUCTION I & II)
DY. GENERAL MANAGER (FIRE & SAFETY)
CHIEF MANAGER
CHIEF MANAGER (FIRE & SAFETY)
(AMMONIA PRODUCTION I & II)
MANAGER (AMMONIA PRODUCTION I & II)
MANAGER (FIRE & SAFETY)
This department strives to run and maintain both the ammonia plants at maximum functional efficiency. This department also makes certain that the whole plant has sufficient safety measures and controls installed and properly maintained. To ensure maximum efficiency this department: •
Systematically uploads production details into the Management Information System (MIS) database.
•
Executes regular performance and energy audits of both plants to identify and repair sources of wastage.
•
Ensures co-ordination with other departments such as Production Department II , Materials and Off-sites etc.
•
Carries out periodic checks of all Plant Safety and Control Measures.
The following performance chart elaborates the efficiency of this department: Ammonia Plant I Particulars Production (Thousand MT)
2006-07 341.390
2005-06 320.249
2004-05 336.170
24
Cap. utilization (%) Ammonia Plant II
105.89
99.33
102.06
Production (Thousand MT)
506.172
516.240
496.784
Cap. utilization (%)
100.93
102.90
99.44
2. Production Department – II : This Department is in-charge of running the two Urea
plants and also product handling and transportation. It has the following organizational structure.
JOINT GENERAL MANAGER (PRODUCTION-II)
DY.GENERAL MANAGER
(UREA I & II)
CHIEF MANAGER (UREA I & II)
MANAGER (UREA I & II)
DY. GENERAL MANAGER (PRODUCT HANDLING)
CHIEF MANAGER (PRODUCT HANDLING)
MANAGER (PRODUCT HANDLING)
DY. GENERAL MANAGER (TRANSPORTATION)
CHIEF MANAGER (TRANSPORTATION)
MANAGER (TRANSPORTATION)
25
This Department is responsible for running the two Urea Plants and is also in charge of product handling and transportation. The main functions of this department are as follows: •
Maintaining and operating the two urea plants at maximum efficiency and continuously uploads production details into the M.I.S. database.
•
To reduce energy wastage
•
To maintain co-ordination with other departments such as Production Department I , Materials and Off-sites etc.
•
To package and transport finished products to the stores with minimum wastage and to transport packaged product from stores to the transport department as and when required
•
To maintain the Rail and road transportation infrastructure and to transport finished and packaged products to the required destination as instructed.
The efficiency of this department can be analyzed by studying the following performance charts of the two Urea Plants:
Urea Plant I Particulars Production (Thousand MT) Cap. utilization (%)
2006-07 573.603 104.08
2005-06 551.100 100.00
2004-05 565.056 104.45
2006-07 506.172 100.93
2005-06 516.240 102.90
2004-05 496.784 99.44
Urea Plant II Particulars Production (Thousand MT) Cap. utilization (%)
26
3. Utilities Department: This department is responsible for the running and maintenance of various ancillary facilities such as Steam generation plant, Power generation plant, De-Mineralised water plant, Inert gas plant, Instrument Air plant, Reverse Osmosis Plant etc. The basic organizational structure of this department is as follows.
JOINT GENERAL MANAGER (UTILITIES)
Dy. GENERAL MANAGER (OFF SITES)
Dy. GENERAL MANAGER (POWER PLANT)
CHIEF MANAGER (OFF SITES)
CHIEF MANAGER (POWER PLANT)
MANAGER (OFF SITES)
MANAGER (POWER PLANT)
This department has two functional sub-divisions. One division is responsible for facilities such as Steam generation plant, De-Mineralised water plant, Inert gas plant, Instrument Air plant, and Reverse Osmosis Plant. The other division is responsible for the functioning of the Power Plants. Therefore this department handles all the supplementary installations which are necessary for the efficient functioning of the main Urea and Ammonia Production plants. It also streamlines the activities of these off site plants with the requirements of the main production plant. 27
4. Finance & Accounts Department: The finance and accounts department handles all financial matters of the Phulpur plant. It records and also handles the transactions, it has sections for book keeping, payroll maintenance, bills, Financial instruments and contracts, bank transactions, Excise & Sales tax and a Budget & Reconciliation Section. It has the following structure.
JOINT GENERAL MANAGER FINANCE &ACCOUNTS
Dy. GENERAL MANAGER (FINANCE)
Dy. GENERAL MANAGER (ACCOUNTS)
CHIEF MANAGER (FINANCE)
CHIEF MANAGER (ACCOUNTS)
MANAGER (FINANCE)
MANAGER (ACCOUNTS)
This department records transactions on accrual basis and works on strict policies and guidelines laid down by higher levels of management. This department maintains all transactions on computerized accounting software specially developed for IFFCO by IBM on its Louts – Domino platform where all necessary records are automatically stored in a central database to provide easy access to higher levels of management.
28
5. Personnel & Administration Department:
This department executes all Human
Relations and General administration related activities of the Phulpur plant. The Personnel & Administration department has the following structure.
JOINT GENERAL MANAGER
MANAGER (HUMAN RELATIONS)
CHIEF MANAGER (HUMAN RELATIONS)
CHIEF MANAGER (GENERAL ADMINISTRATION)
MANAGER (LEGAL MATTERS)
MANAGER (CONTRACT LAWS)
This department has two functional sub-divisions, namely Human relations and General administration. Human Relations has further sub-levels such as Human relations, Legal Matters and Contract Laws, the General Administration sub-division however has no such sub-levels. The General Administration sub-division deals with matters relating to welfare activities, perks and employee loans. The efficiency of the Personnel & Administration department can be evaluated by considering the following points:
o
The Phulpur plant has faced no major strikes in the last 25 years.
o
The Phulpur plant has not faced any losses due to any kind of labour unrest.
o
Labour turnover in the Phulpur plant is negligible.
29
6. Materials Department: This department is responsible for the physical storage of all stores and purchases and following is the basic organizational structure within this department.
JOINT GENERAL MANAGER (MATERIALS)
Dy. GENERAL MANAGER (STORES)
Dy. GENERAL MANAGER (PURCHASES)
CHIEF MANAGER (STORES)
CHIEF MANAGER (PURCHASES)
MANAGER (STORES)
MANAGER (PURCHASES)
The materials department is responsible for storage and issue of all purchases and finished goods. It maintains adequate storage facilities so as to minimize deterioration of stock during storage. It also maintains proper inventory records of all issues and receipts. The materials department decides on the Economic order quantity and re-order levels and places purchase orders accordingly. The materials department of IFFCO Phulpur follows the perpetual inventory system with continuous stock taking and consequent updating of the stores ledger and bin card.
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7. Technical Department: The Technical department has following sub-divisions o
Process: This is an engineering sub-division which is responsible for the continuous evaluation and maintenance of all engineering process carried out in the plant
o
General Engineering: This sub-division provides engineering and technical support to the whole plant.
o
The above mentioned sub-divisions of the Technical department work in co-ordination with the Inspections and Plant Health Department and Maintenance Department.
o
Research & Development: This Department is responsible for applying new technologies during plant upgradation and also for the development of newer more efficient production techniques.
o
Environment& Pollution Control: This sub-division is responsible for proper disposal of industrial waste.
o
Training: This Sub-division trains and orients new employees and also conducts refresher courses for old employees.
The Technical department has the following structure:
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JOINT GENERAL MANAGER (TECHNICAL DEPARTMENT)
DY. GENERAL MANAGER (PROCESS)
CHIEF MANAGER (PROCESS)
MANAGER (PROCESS)
DY. GENERAL MANAGER (GENERAL ENGINEERING)
DY. GENERAL MANAGER (R&D)
CHIEF MANAGER (GENERAL ENGINEERING)
CHIEF MANAGER (R&D)
MANAGER (GENERAL ENGINEERING)
MANAGER (R&D)
DY. GENERAL MANAGER (ENVIRONMENT & POLLUTION CONTROL)
CHIEF MANAGER (E&P CONTROL)
MANAGER (E&P CONTROL)
DY. GENERAL MANAGER (TRAINING)
CHIEF MANAGER (TRAINING)
MANAGER (TRAINING)
8. Inspection & Plant Health: This Department is responsible for regular inspections of all the processes, systems and controls of the plant and their general maintenance. This department also reviews whether all policies and procedures are being followed in all technical departments. This Department does not execute the repair or maintenance work it only identifies the problem and reports it to the Maintenance or technical departments with a suggestive plan for the maintenance required.
The following is the organizational structure within this department.
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JOINT GENERAL MANAGER (INSPECTION& PLANT HEALTH)
DY. GENERAL MANAGER
DY. GENERAL MANAGER
(INSPECTION)
(PLANT HEALTH)
CHIEF MANAGER
CHIEF MANAGER
(INSPECTION)
(PLANT HEALTH)
MANAGER (INSPECTION)
MANAGER (PLANT HEALTH)
9. Maintenance Department: The maintenance department has the following sub-divisions: o
Electrical Maintenance: This sub-division provides engineering support to all plant facilities for the maintenance of all electrical fittings and equipments.
o
Mechanical Maintenance: This sub-division is an engineering division responsible for the all mechanical maintenance, upgrades and installations.
o
Instrumentations& Process Control: This sub-division is responsible for all plant Instrumentation. It executes regular check ups and maintenance runs and works in coordination with the Processes sub-division of the technical department.
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o
Civil: This sub-division is responsible for the installation and upkeep of all civil amenities within the plant including the employee township at IFFCO Phulpur plant. JOINT GENERAL MANAGER (MAINTENANCE DEPARTMENT)
DY. GENERAL MANAGER (ELECTRICAL MAINTENANCE)
CHIEF MANAGER (ELECTRICAL MAINTENANCE)
MANAGER (ELECTRICAL MAINTENANCE)
DY. GENERAL MANAGER (MECHANICAL MAINTENANCE)
CHIEF MANAGER (MECHANICAL MAINTENANCE)
MANAGER (MECHANICAL MAINTENANCE)
DY. GENERAL MANAGER (INSTRUMENTATION & PROCESS CONTROL)
CHIEF MANAGER (I&P CONTROL)
MANAGER (I&P CONTROL)
DY. GENERAL MANAGER (CIVIL)
CHIEF MANAGER (CIVIL)
MANAGER (CIVIL)
ANALYSIS OF THE ORGANISATION STRUCTURE OF THE PHULPUR PLANT Factors taken into consideration while analyzing the Organisational structure of IFFCO Phulpur: o
Work Specialization
o
Departmentalization
o
Chain of Command 34
o
Span of Control
o
Centralisation / Decentralisation
o
Formalization
1. WORK SPECIALIZATION:
This is the process of dividing the many tasks performed within the organisation into specialized jobs and tasks with a view of improving performance of the organisation. This approach rest firmly on the assumption that the more a particular job is broken down into simple component parts the more specialized and efficient a worker can be in performing his part of the job.
IFFCO Phulpur plant is a fertilizer production plant which runs on advanced technologies and therefore there is a high degree of specialization of tasks to ensure maximum efficiency. All jobs are broken down into a number of steps and each step is completed by different individuals or groups. IFFCO runs intense training programmes for new employees and also refresher courses for existing employees and trains them in specific fields of operation. These employees then work in their fixed areas of specialization only where their advanced training and continuous repetition of the same task helps them to achieve maximum efficiency.
These sub-divided tasks performed by specialized
individuals or groups club together to maintain the functioning of the Phulpur Plant at high standards of efficiency.
2. DEPARTMENTALIZATION
After the division of jobs through work specialization jobs need to be grouped together so that common tasks can be co-coordinated . This co-ordination helps increase effectivity of 35
specialization. The basis by which jobs are grouped together is called departmentalization. Departmentalization maybe on the basis of function, product, geography, process or customer.
The Phulpur plant of IFFCO follows functional departmentalization i.e. people who perform similar functions are grouped together and assigned to the same department. This form of departmentalization helps the plant to achieve economies of scale (by allowing employees performing the same jobs to share facilities and avoid duplication of activities). It also allows individuals to specialize and the result is a highly skilled workforce which is a direct benefit to the organisation. The plant has the following departments : 1. Production – I 2. Production -II 3. Utilities 4. Finance & Accounts 5. Personnel & Administration 6. Materials 7. Technical 8. Inspections & Plant Health 9. Maintenance
The profiles of these departments have already been discussed above.
3. CHAIN OF COMMAND:
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The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom. Chain of command refers to the hierarchical arrangement of authority and responsibility. They flow in a clear, unbroken vertical line from the highest executive to the lowest employee. Clarity of direction is the basis for the chain. Chain of command has two complementary concepts: “authority” and “unity of command” Authority refers to the rights inherent to a managerial po sition to give orders and expect
them to be obeyed. The concept of unity of command holds that no subordinate should receive directions from more than one superior.
The Chain of Command is very well defined and rigid in the Phulpur Plant of IFFCO. The division and sub-division of all tasks is distinct and adequate authority is given to all employees to perform their specific jobs. The well defined organisational structure also ensures unity of command. The Phulpur plant encourages flow of communication along the chain of command to ensure efficiency. It encourages both downward and upward flow of communication in the chain. It uses all conventional methods of office communication such as letters, circulars, notes, notices, reports, memoranda etc. IFFCO also utilizes a digital system of communication specially designed for it by IBM on its “Lotus Notes” suite of software and a “Management Information System” known as “SANJAY” based on IBM’s “Lotus Domino Platform”. These communication systems ensure a smooth flow of the Chain of Command.
4. SPAN OF CONTROL:
The number of subordinates a manager can efficiently and effectively direct is known as the span of control. In other words the number of people formally required to report to each manger is his span of control. Span of control is clearly represented by an organisational
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chart. If the span of control is wide organisation tends to have a flat hierarchy and if the span of control is narrow organisation has a tall hierarchy.
As can be seen from the organisational designs of IFFCO Phulpur the span of control is not fixed in the organisation but varies at different levels. However in general the Phulpur Plant has a tall hierarchy with narrow spans of control and many levels. This narrow span of control facilitates a close control of all employees by their managers and thus facilitates higher efficiency.
5. CENTRALISATION / DECENTRALISATION:
Centralisation refers to the degree to which decision making is concentrated at a single point
in the organisation. The implications of centralisation is that the decision making power with regard to planning, organizing, directing and control is in the hands of mangers at the top level. Decentralisation is the extent to which authority and decision making are spread throughout
all levels of an organisation rather than being reserved exclusively for top management.
The Phulpur Plant of IFFCO has a highly centralized structure of authority. The major policy decisions, strategies and goals are set by the Board of Directors of IFFCO and conveyed to the top levels of management of the IFFCO Phulpur plant. At the Phulpur plant the Senior General Manager along with the General Manager and the Joint General Managers then analyze the Goals set for them and make decisions and plans to attain them. However The Board only lays down a broad outline and sets goals, all decisions regarding the daily affairs of the plant and the methods to be adopted to achieve the goals are taken by the Top Levels of management at the Phulpur plant.
6. FORMALIZATION:
Formalization refers to the degree to which jobs within the organization are standardized. If a job is highly formalized then the employee has a minimum amount of discretion over when and how it is to be done. Employees can be expected always to handle the same input in 38
exactly the same way, resulting in a consistent and uniform output. There are explicit job descriptions, lots of organisational rules and clearly defined procedures covering work processes in organizations in which high levels of formalizations exist.
The Phulpur plant has high levels of formalization for most jobs. This is in line with its organisational set up which has a rigid chain of command and high centralisation. However the level of formalization is not very high for top levels of management.
MANAGERIAL OBSERVATIONS FROM THE STUDY 39
1. IFFCO has a Bureaucratic Organisational structure and is characterized by a high degree of specialization, formalized rules and regulations, functional departments, centralized authority, narrow spans of control and decision making that follows a rigid chain of command.
2. Intra-departmental Structuring of management tasks is more or less fixed in all departments. There are usually four managerial levels in each department starting from the Joint General Manager and going down to the manager.
3. The Structural Environment at IFFCO Phulpur is Mechanistic in nature i.e. there is a high degree of specialization and rigid rules and regulations are imposed. The mechanistic structure is a basic characteristic of most Bureaucratic Organizations.
4. The Phulpur Plant has designed its organisational structure to function in a highly stable business environment. The plant functions throughout the year to achieve pre-determined targets and the management tries to avoid any unexpected changes in this production plan. The structure is so rigid that sudden changes cannot be handled easily.
5. In some departments there are unnecessary sub-divisions and this tends to reduce efficiency. For example in the Personnel & Administration Department both Legal Matter and Contract Laws could be handled by one sub division.
6. The Inspections & Plant Health Department seems unnecessary, the Maintenance Department itself could have had Inspections and Plant Health as a sub-division.
SWOT ANALYSIS 40
STRENGTHS: 1.Largest producer of fertilizers in the Country. 2. Five strategically located plants with cutting edge production technologies. 3. Most plants achieve capacity utilization in excess of 100% . 4. A large number of co-operative societies are associated with IFFCO (38,155 at present). 5. Vast Marketing and distribution network due to the high number of co-operatives associated with IFFCO. 6. Their service providing network and feedback network is also pervasive in Indian rural areas . 7. Highly diverse and strategic portfolio of external investments. 8. No external trade unions exercise any power within IFFCO.
WEAKNESSES: 1. IFFCO has a bureaucratic organisational structure and therefore is obsessed with working within set frameworks defined by rigid rules and regulations. This often discourages innovation and may also cause sub unit conflicts. In some cases blind adherence to rules and regulations may limit the perspective of a manager and result in Functional unit goals overriding organisational goals. 2. The organisational setup is very rigid and is not very efficient in handling sudden changes in business environment. 3. There is excessive sub-divisions in some departments and this results in inefficiency.
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OPPURTUNITIES: IFFCO has embarked upon a growth plan titled “VISION 2010” to achieve annual turnover of Rs. 15,000 Crore(USD 3400 Million)by the year 2010. Broadly identified business activities under the “VISION 2010” are:
1. Installation of Ammonia/Urea plants and also acquisition of fertilizer units. 2. Generation of Power 3. Production and Marketing of micro-nutrients, seeds, bio- fertilizers, pesticides etc. 4. Value addition to agri-products and marketing 5. Banking and Financial Services 6. Information Technology and IT enabled services 7. Establishments of Retail Chain in urban and semi-urban locations
THREATS: 1. Competition from KRIBHCO i.e. Krishak Bharati Co-operative another government under taking which also produces fertilizers and is very similar to IFFCO in nature. 2. Aggressive competition from private companies which are now entering the fertilizer sector. 3. The Government of India has a major influence on the functioning of IFFCO. It is the Government which decides “What to produce?”, “How much to produce?” and “Where to sell?”. This factor often becomes IFFCO’s major weakness as it sometimes has to function under undue political pressure and take steps which are non-profitable. 4. Government policies on Import of fertilizers from foreign nations and decrease in subsidies.
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SUGGESTIONS
1.
The organisation should establish a national level committee which can familiarize the government with the ground realities in the Fertilizer sector and also advise the government in formation of Policies regarding distribution of fertilizers, import of fertilizers and subsidies.
2. There should an Entrepreneurship Development Cell at all plants which should encourage innovation amongst employees. This would infuse some of the positives of an organic design in to the organisational environment. This cell should lay new business ideas and innovations in front of the top levels of management.
3. Unnecessary sub-divisions in departments should be eliminated to promote efficiency. In the Personnel & Administration department one sub-division can handle both Legal Matters and Contract Laws.
4. The Inspections & Plant Health Department can be dissolved. The Maintenance Department can have an additional sub-division for Inspections & Plant Health. This will streamline the organisational structure and also increase the efficiency of overall maintenance.
5. The Co-operation should not be rigid in its approach and should be ready to face sudden variations in business environments. Managers should not limit themselves to following regulations blindly but should proactively analyze situations.
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CONCLUSION
The organisational study of the IFFCO Phulpur Plant and also the analyses of IFFCO in general demonstrates that a bureaucratic organisational structure is not always inefficient. In fact if properly applied it has many positive aspects especially in large and complex organizations. For example, some types of rules and regulations are required to avoid unpredictability and arbitrary action. Some sort of hierarchal arrangement is necessary to manage the large number of people in an organisation. Therefore the key is to utilize the characters of a bureaucratic structure but not to over emphasize on them as that results in rigidity in the structure. In a bureaucratic organisational structure an efficient business environment may be created by having the right mix of mechanistic and organic models.
IFFCO's experience has also shown that cooperative sector can succeed even in high investment, high technology areas like fertilizer production. The large scale extension activities and cooperative development programmes have strengthened the bond between IFFCO and the Indian farmers who are the consumers as well as members of the village level cooperative societies. The confidence generated by this success has paved way for a vigorous growth programme to expand its existing units as well as establish new units. This will enable IFFCO to emerge as a global leader in production and marketing of chemical fertilizers located in a single country.
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