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Submitted by: Khurrum Atta 2k8/BBA/73 Institute of Business Administration, University of Sindh, Jamshoro.
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LETTER OF TRANSMITTAL
January 2nd , 2012 Sir Kher Muhammad Zardari, Director(IBA), University of Sindh, Jamshoro
I herewith present my Internship Report, authorized by you, as a requirement for the degree. In this report, I have tried to provide the review & description of my practical learning experience during the internship at the finance department FFBL. I have explicated my experience department wise as I moved from one sub department to another in the financial division of the company. A great advantage for me doing internship at FFBL is that I was introduced with the operations of SAP and its various modules, which added great value to my learning during the course. I hope we have covered all that was required in the report, & foresee your acceptance of the report.
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LETTER OF ACKNOWLEDGEMENT
The credit for my massively useful learning experience of this internship goes to two adherents without whom it would have been a miserable failure. First and the foremost, I am thankful to Almighty Allah, the most gracious and merciful, whose blessings and support were always there for me in making my internship experience a successful one and the extent of that success is substantial in terms of learning and exploring many new element of finance for a large business. Secondly, I am very grateful to all who enabled me to ease this task by providing useful information.
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Table of Contents
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Abstract
This is a brief report concerned with the financial operations of FFBL. FFBL is acting as leading role in agriculture sector. In preparation of this report, I tried my level best to provide all possible figures and facts about FINANCE department of FFBL. Then internship report ends with some recommendations after identification of some problems during the course of internship.
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1. INTRODUCTION TO REPORT
1.1 Background to Study:
This is a brief study about the finance department at FFBL. It contains all facts and figures about the financial activities of FFBL Karachi.
To know the activities of finance, Role of finance department in companys progress, and To view the operations. Specific purpose To give a research view, To provide recommendations to improve the current situation of organization, and It is necessary for the degree (BBA).
1.2.2
1.4 Methodology:
The data is gathered by following methods; 1.4.1 Data source Primary and secondary data is collected to make the report. 1.4.2 Research approach Keeping in view my limitations during and the nature of the study, two research approaches were adopted. These research approaches are:
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Survey. Observation.
1.4.3 Contact method Personal contacts are used to gain the information.
1.5 Limitations:
Following are the limitations faced during my research Lack of published financial data, Lack of access to data, and Non-corporative behavior of employees.
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2 INTRODUCTION TO ORGANIZATION
2.1 Company Profile:
Fauji Fertilizer Bin Qasim Limited is mainly engaged in manufacturing fertilizers. The Company also invests in fertilizer raw material manufacturing operations. FFBL is a subsidiary of Fauji Fertilizer Company Limited, which holds a 50.88% interest in the Company. The company is principally engaged in developing, manufacturing and supplying of Di Ammonium Phosphate (DAP) and granular urea to its customers across the country. In addition, it is engaged in the production of ammonia which it uses itself as a direct raw material in the production of urea and DAP. The company has a capacity to produce 551,100 tons of Urea and 660,000 tons of DAP each year. Fauji Fertilizer has its operations across various locations in Pakistan. The company is headquartered at Rawalpindi, Pakistan
2.3Corporate vision
To be a premier organization focused on safety, quality and growth leading to enhanced stakeholders value.
FFBL incorporated in 1993 FFBL has now become one of the top 25 companies of the country First offshore direct investment by FFBL is in PMP Sole manufacturer of DAP in Pakistan FFBL aims to be the leader in Fertilizer business FFBL is the best quality fertilizer producer in Pakistan
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Manufacturing Plants
Original
Actual (Approx)
Chief Executive Officer and Managing Director Lt Gen Hamid Rab Nawaz, (Retd)
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Lt Gen Hamid Rab Nawaz, HI(M), (Retd) had a distinguished career of service in
Pakistan Army, spanning over a period of 37 years. He has been decorated with Hilal-iImtiaz(Military) for his meritorious services. He is a graduate of Command and Staff College Quetta and National Defence University, Islamabad. At present, he is Managing Director of Fauji Foundation and Chairman of its subsidiary companies-the largest conglomerate of Pakistan.
Lt Gen Muhammad Zaki, HI, HI (M), (Retd) is the Chief Executive & Managing
Director of Fauji Fertilizer Bin Qasim Limited. He was commissioned in the Army on 12 December 1971. He is a graduate of Command and Staff College Quetta and National Defense University, Islamabad. The General Officer had eminent career in the Army, serving on various command and staff assignments. In recognition to his outstanding services, he was awarded Hilal-e-Imtiaz, (HI) and Hillal-e-Imtiaz Military, HI (M).
Lt Gen Malik Arif Hayat, HI(M), (Retd) is the Chief Executive and Managing Director
of Fauji Fertilizer Company Limited. He was commissioned in the Army in 1971. He is a graduate of Command and Staff College, Quetta and National Defence College, Islamabad. Has served on various Command Staff & Instructional assignments in his illustrious career in the Army including the important appointments of Director General Command, Control and Communication, Computer & Intelligence(C4I) at GHQ and Commandant Command and staff College Quetta. He has also commanded an Infantry Division.
and Institute of Taxation Management of Pakistan. He joined Fauji Foundation in 1976. Presently he is holding the position of Director Finance. He is also a member of Board of
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Directors of all subsidiary and associated companies of Fauji Foundation, the Hub Power Company Ltd. and Pakistan Maroc Phosphore S.A (PMP). In addition to being a Director on the FFBL Board, he is also the Chairman of Audit Committee.
Brig. Jawaid Rashid Dar, SI(M) Retd had a distinguished career of serving Army,
spanning over 34 years. He held varied Command, Staff and Instructional appointments. He is a graduate of Command and Staff College Quetta, School of Armour Foxt Knox USA and National Defence University Islamabad, Pakistan. During his service, he cammanded an Armour Regminet and an Armour Brigade. In recognition to his outstanding services, he was awarded Sitara-e-Imtiaz (Military). At present, he is working as Director Welfare (Health) Fauji Foundation Head Office Rawalpindi.
operating and advising investment portfolio to top tier Banks and organizations of the Country at senior level. Presently he is holding the position of Corporate Advisor and Head of Investment Division in Fauji Foundation. He is member of FFBL Board of Directors since Jul 2006. He is also a member of Board of Directors of all subsidiaries and associated companies of Fauji Foundation and Pakistan Maroc Phosphore S.A. Brig. Liaquat Ali TI(M), (Retd). is Director Human Resources & Administration at Fauji Foundation. He is graduate of Command and Staff College, Quetta. He is member of FFBL Board of Directors since 1 Dec 2008.
Nasier A. Sheikh is Law Graduate, he has over 38 years experience in Banking/ Financial
Sector in local as well as International Banks. He has held various high profile positions in Banks in Sari-Lanka, UAE and Pakistan and rose to be SEVP and no 2, in Askari Bank Ltd. before taking over another group company of Army Welfare Trust, Askari Leasing Ltd. as CEO.
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2.6.2 Management:
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Chief Executive Officer and Managing Director Lt. Gen. Mahmud Ahmed HI(M) (Retired)
GENERAL MANAGERS
General Manager HR
2.6.3 ROLE AND RESPONSBILITIES: The role and responsibilities of the chairman and the chief executive officer are distinct, clearly defined and documented and are carried out separately by the two officers. The board exercise its powers to carry out its duties with a sense of object judgment and independence in the best interests and the company has circulated a statement of ethics and business practices to establish a standard of conduct, as a model corporate citizen , for the board and employees of the company. Each year, the director attend the orientation coerces of their duties and responsibility to manage the affairs of the company on behalf of the shareholders; these courses are also attended by the management of the company. The board has also adopted vision and mission statements and an over all corporate strategy for the company and formulated policies including risk management, procurement of the goods and services marketing ,terms of credit and discount, acquisition and disposal of of fixed assets and write-off inventories, bad debts, loans and advances, investments and disinvestments of funds with maturity period exceeding six months, borrowing, donations, charities, delegations of financial powers, transitions with related parties, loans and advances, human resource management including succession planning , healthy ,safety and environment . decisions on material transitions or significant matters are documented through resolution passed at their meetings and circulated for approval. The board monitors the operations of the management through three standard committees. Implementations of the decisions, policies and strategies along with maintenance of their record have been delegated to the management under the supervision of the Chief Executive and Managing Director of the company and is executed and controlled through management committees
3. INTRODUCTION TO DEPARTMENTS
3.1 HCM(Human Capital Management):
Introduction
Like any progressive, growing and dynamic organization, the Management of Fauji Fertilizer Bin Qasim Ltd. (FFBL) accords due priority to the Human Resources realizing their vital role in the overall performance. Recruitment Policy
Our recruitment policy is based on sound planning and correct assessment. The Human Capital Management Department is mindful of its demanding responsibilities and is committed to hunt "Right People for Right Job" by adopting transparent, creative, innovative and well thought out recruitment policy. Induction & Grooming
FFBL recognize that our employees need to be equipped with knowledge and skills necessary to meet the challenges of time. Technical Training Center conducts and organizes technical as well as management development trainings using in-house and outside resources. Facilities & benefits
Our employees are provided with all welfare oriented facilities. These include full medical coverage, transport facility, accommodation at Plant Site or in nearby areas on subsidized basis, catering of all employees during office hours etc. These services are provided to ensure that employees are committed fully to their jobs.
3.2 Marketing:
Marketing of FFBL products is done by FFC (fauji fertilizers company).
3.3 Finance:
Finance is the department that deals with financial matters in every organization. It can be told as father of all the departments in every organization. In FFBL, the finance department is related with the accounting and book keeping as the financial matters of the organization are discussed in the head office of the FFBL at Rawalpindi. Finance department in details is discussed in the 4th chapter.
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4 FINANCE DEPARTMENT
As we reached the finance department, we were received there by Mr. Hamid Tariq, with whom we had a very brief meeting, who told us about the different sections of finance at the plant site, which mainly covered the operation part, but the different sections are given as below: 1) Book Keeping Section 2) Budgeting Section 3) Disbursement Section 4) Sales and Distribution Section After that, we were handed a book for code of conduct for procurement called Product Procurement Manual (PPM) and were sent to Book Keeping Section under the supervision of Mr. Jawed Khan.
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As I went to the Book Keeping section, Mr. Javed gave us time to thoroughly go through the Procurement Manual which they said had all the ingredients of their nature of transaction they make every day. Procurement Manual: PPM explains the procedure of procurement in a systematic and explicit way for procurement of all types of products and services acquired by FFBL. It is a complete code of conduct for Procurement at FFBL either at head office or Bin Qasim including giving descriptions for the functions of different departments in the procurement. Manual includes: i. ii. iii. iv. v. vi. vii.
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Introduction. Abbreviation. Legal Aspects. Functions. Purchase Requisition. Request for Quotations. Purchase Order Contract.
viii. Low Value and Spot Purchase. The procurement manual though is an out-dated code of conduct for the organization after the inception of SAP, but still the procedure of procurement explained in the document isnt totally inappropriate. After going through the scripture in detail, I was able to understand and acknowledge many new aspect of procurement in a large business organization like FFBL. Procurement Procedure:
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After the approval of material, payment for material is made through disbursement department
After approval
The Book Keeping Section is itself bifurcated into four sections conducting three separate functions, they are as follows:
a) Invoicing section- This section is operated and monitored by Mr. Jawed Khan and Mr.
Nauman Majeed in which they book and check the invoices against their purchase orders. This was purely a part of payable nature and we got to learn how to book invoices in SAP and post it for disbursement.
b) Banks reconciliation and petty cash account- This account is operated by Mr. Atique
Ghanchi who reconcile bank statements with the accounting books for differential payments. He also looks after the petty cash account for everyday advances given to the employees for purchase of goods and services for their respective departments under an amount of Rs. 10000. Some other accounts such as earnest money, vendor registration fee, etc are also operated by Mr. Atique Ghanchi. He encouraged me to take full part in learning how they perform all these activities on SAP with abundance of new aspects of accounting explicitly explained by him.
c) Reconciliation for Vendors Account- This section is taken care of by Mr. Tanveer Ahmed
whose main function is to equate the data of receipts of vendors from the accounting data in their companys books against the payments made in advance to the vendors in the records of FFBL. Despite of their eventful time, He gave us full insight of his functions and description of his work procedures.
d) Sales Tax Returns- General Sales Tax returns, are worked out by Mr. Nasir. In this section
we learned that FFBL gets a rebate for GST which they pay to their vendors for the purchases of material from Government of Pakistan. We also learned how to calculate GST which is different for different nature of products.
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Reviewing Operations and CAPEX Budget: Budgets are made on annual basis by FFBL in such a way that every department send their budget inputs for the next fiscal year with comprehensive description to the budgeting department by 15th August of each year. These budget inputs are then compiled on SAP on the basis of different cost centers. These budgets are then reviewed on various levels from section head to department managers then to GMP and then to GMF & MD with meeting on each level. Then the budget is posted to HO which is further sent to the Board of Directors for final approval. Budget Monitoring: Monitoring of the budget is carried out on monthly basis in which variances for budgeted amount against the actual amount is calculated. These reports are then issued to the respected cost centers for reviews and discussions are carried out at the section head level to find out reasons for variances, if required. These Budget variance reports are then added to MIS report which is made on the monthly basis. MIS Report: MIS report is a comprehensive report made by the budgeting department on monthly basis which gives a complete picture for the current expenses of the company in different departments or in different particulars. MIS report is comprised of the following: Budget Variance Report Production Performance Report Bulk Material Report Feed & Fuel Gas Analysis Overtime Statement Medical Expenses Training Plan Recurring Contracts Telephone & Fax Expenses Companys Vehicle Running Expenses Contracted Out Services
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This MIS report is then dispatched to GMP and GMF FFBL. Product Cost Sheet: Another function for budgeting section is to generate a product cost sheet in which after calculating all the expenses for their production, they compute the variable cost for Ammonia, DAP and UREA per Metric Ton.
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Lack of awareness about the new technology, Lack of knowledge about new implemented decisions , Lack of job satisfaction of employees, Paper system is still present even after the inception of SAP in FFBL, and Less concentration on the expansion of business.
5.2 Suggestions:
The company should have more on the job training programs, New implemented decisions should be discussed from top to bottom, There should be lectures for the job satisfaction of employees, and The database should be managed within the SAP storage so the paper system be eliminated. The management is not considering to expand FFBL, they are maintaining there preestablished venture.
Bibliography
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Mr.Salman Mir Manager Finance at FFBL Karachi. Mr.Kashif Waqas Assistant Manager Finance at FFBL Karachi.
Mr.Javaid Khan Supervisor Sales & Distribution at FFBL Karachi. Mr.Tanvir Supervisor Disbursement at FFBL Karachi.
Mr.Ijaz Ahmed Unit Manager IMS at FFBL Karachi. FFBL performance report(2010).
Websites
ffbl.com.pk wikipedia.org kse.com.pk
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APPENDICES
= = = =
Purchase Requisite Contracted out services Capital Expenditure Procurement Procedure Manual
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