Internship Report

Fatima Fertilizer Company Limited

Submitted by

SALMAN JAVED
Fatima Fertilizer Company Limited Internship Report

Table Of Content

Table Of Content .................................................................... 1

AKNOWLEGMENT ................................................................ 3
INTERNSHIP REPORT ON FFCL ......................................... 4
Vision OF FFCL ..................................................................... 4
Mission OF FFCL .................................................................. 5
COMPANY PROFILE ............................................................ 5
Nature of Business .................................................................. 6
Board of Directors .................................................................. 6
FFCL’s Plants and products .................................................. 7
Contribution towards stakeholders ......................................... 7
Competitor’s Analysis............................................................. 8
SWOT Analysis ....................................................................... 8
Learnings at FFCL’s finance department............................... 9
Payment section .................................................................... 10
Employee’s Claim ................................................................. 12
Inventory section .................................................................. 12
Fixed Assets .......................................................................... 14
Welfare and Education Society ............................................. 16

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Fatima Fertilizer Company Limited Internship Report

Cash section ......................................................................... 16

Internal Audit Department.................................................... 17
Recommendations ................................................................. 19
References ............................................................................ 19

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Fatima Fertilizer Company Limited Internship Report

AKNOWLEGMENT

The internship opportunity I had with Fatima Fertilizer Company was a great chance
for learning and professional development. Therefore, I consider myself as a very lucky
individual as I was provided with an opportunity to be a part of it. I am also grateful for
having a chance to meet so many wonderful people and professionals who led me
though this internship period.

Bearing in mind previous I am using this opportunity to express my deepest gratitude

and special thanks to the heads of Finance department in Fatima fertilizer company who
in spite of being extraordinarily busy with their duties, took time out to hear, guide and
keep me on the correct path and allowing me to carry out my project at their esteemed
organization and extending during the training.

It is my radiant sentiment to place on record my best regards, deepest sense of gratitude

to finance team, for their careful and precious guidance which were extremely valuable
for my study both theoretically and practically.

I perceive as this opportunity as a big milestone in my career development. I will strive

to use gained skills and knowledge in the best possible way, and I will continue to work
on their improvement, in order to attain desired career objectives. Hope to continue
cooperation with all of you in the future.

Sincerely,

Name: SALMAN JAVED

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Fatima Fertilizer Company Limited Internship Report

INTERNSHIP REPORT ON FFCL

Dear Sir, It is a great honour for me to present you the internship report. My internship
started on 1 June 2018 and Ended on 20 July 2018. The whole staff of FFCL has been
very cooperative with me during my 7 weeks internship tenure. My internship tenure
was spent on the Finance and Internal Audit department at plant site in Mukhtar Garh
Sadiqabad. Due to certain constraints I have not been able to gather all the facts and
figures about the FFCL because of the confidentiality of information. Yet, the report is
a comprehensive one, containing an introduction of FFCL and my learning and
practical experience at FFCL . The practical work during the internship period has been
a rewarding and enlightening experience. I have never been in a professional
environment ever before. I learned a lot during my internship program. Everyone was
very cooperative and guided me through all the way.

Vision OF FFCL

To be a world class manufacturer of fertilizer and ancillary products, with a focus on

safety, quality and positive contribution to national economic growth and development.
We will care for the environment and the communities we work in, while continuing to
create shareholders’ value.

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Mission OF FFCL

1. To be the preferred fertilizer Company for farmers, business associates and suppliers
by providing quality products and services.

2. To provide employees with an exciting, enabling and supportive environment to

excel in, be innovative, entrepreneurial in an ethical and safe working place based on
meritocracy and equal opportunity.

3. To be a responsible corporate citizen with a concern for the environment and the
communities we deal with.

COMPANY PROFILE

Fatima Fertilizer Company Limited (Fatima) is a joint venture between two major
business groups in Pakistan namely, Fatima Group and Arif Habib Group, with its head
office located in Lahore.

The fertilizer complex, producing mix fertilizer products, is a fully integrated

production facility, located at Sadiqabad, District Rahim Yar Khan. The foundation
stone was laid on April 26, 2006 by the then Prime Minister of Pakistan. The Complex
has dedicated gas allocation of 110 MMCFD from the Mari Gas Field and has 56 MW
captive power plants in addition to off-sites and utilities. Commercial production
commenced on July 01, 2011. The Complex, at its construction peak, engaged over
4,000 engineers and technicians from Pakistan, China, USA, Japan and Europe.

The Complex had initially an annual design capacity of:

• 500,000 Metric Tons of Urea • 420,000 Metric Tons of Calcium Ammonium Nitrate
(CAN) • 360,000 Metric Tons of Nitro Phosphate (NP)

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Nature of Business

Fatima Fertilizer Company Limited (Fatima) is primarily involved in the manufacturing

and marketing of fertilizers, capable of producing two intermediary products, i.e.
Ammonia and Nitric Acid and three final products which are Urea, Calcium
Ammonium Nitrate (CAN) and Nitro Phosphate (NP). The fertilizer complex is a fully
integrated production facility occupying 947 acres of land located at Mukhtar Garh,
Sadiqabad, District, Rahim Yar Khan. Fatima plays a significant role in nourishing
through its diverse fertilizer portfolio.

Board of Directors

Mr. Arif Habib Chairman

Mr. Fawad Ahmed Mukhtar Chief Executive Officer

Mr. Fazal Ahmed Sheikh Director

Mr. Faisal Ahmed Mukhtar Director

Mr. M. Abad Khan Director

Mr. Muhammad Kashif Habib Director

Ms. Anja E. Nielsen Independent Director

Mr. Tariq Jamali Nominee Director – NBP

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FFCL’s Plants and products

The facility is composed of the Following Productions units;

- Ammonia Plant

- Urea Plant

- Nitric Acid plant

- Calcium Ammonium Nitrate (CAN) plant

- Nitro Phosphate (NP) plant

Contribution towards stakeholders

Over the years FFCL has been successful in making its vision come
true. It is on its way of becoming a world class manufacturer or fertilizers by producing
high quality fertilizers which the farmers would prefer for their fields. However not
only this FFCL is contributing positively in the national and economic growth and
development of Pakistan. It is not only earning high returns for its shareholders but also
satisfying the needs of its other stake holders and its environment. FFCL has high
environmental sensitive policies. Starting with its plant site FFCL always try to make
its premises more green and east to live in. FFCL has a high standard toxic and nontoxic
waste handling policy to reduce the damaging environmental effects. It has offices with
go green certificates. FFCL is consistent on reuse and recycle policy. Its working
environment is hygienic. FFCL is constantly trying to reduce its paper needs and trying
to convert most of its paperwork based operation electronic. FFCL still has a lot to
achieve for its stake holders and is progressing towards its goals day and night.

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Competitor’s Analysis

Fatima Fertilizer Company is also carrying out competitor's analysis and in order to be
competitive and win the competitive value equation it is focusing on tight control of
capital spending, improved inventory control, and lower product and manufacturing
costs through standardized manufacturing platforms. Fatima Company has stiff
competition with engro Fertilizer Company and Fuji Fertilizer Company.

SWOT Analysis

STRENGTHS
 Differentiated and diversified product portfolio, i.e. NP, CAN and Urea.

 Manufacturer of cost efficient substitute of DAP.

 Diversified pool of qualified and committed human resource.

 Extensive and growing Dealers Network.

 Largest Technical Support team and unique farmer and customer services.

WEAKNESSES

 No alternate to single source of natural gas supply.

 Relatively New Brand competing against established brands.

 Dependence on single source and imbalanced Logistics support.

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OPPORTUNITIES

 Potential to increase per acre consumption of fertilizers.

 Further strengthening of NP and CAN image compared to other fertilizers.

 Capacity enhancement through Revamp of Ammonia and other Plants.

Government’s refocus on incentivizing farmers to promote agriculture growth.
International collaborations for business development.

 Taping foreign markets via exports.

THREATS
 Climate changes and water scarcity impacting agriculture.

 Continuing energy crises.

 Volatile law and order situation.

 Weak economic situation of Farmers.

Learnings at FFCL’s finance department

I had a Good time as an intern in FFCL. I have learned way more than I have written in
this report. This report was just a summary of what I have learned here at FFCL. I
cannot express verbally how thank full I am to all the senior and staff members for their
support. I strongly hope this experience will be very value able for me in my
professional future as an accountant. I learned many things which I couldn’t have

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learned in the books. The professional environment here at FFCL will be a strong
practice for me wherever I will be performing my tasks as an accountant.

Payment section

In the payment section. Only amounts up to 200k are cleared here in plant site payment
section, any amount or bill above this limit is sent to head office for clearance. That
was the first thing I learned here. After that there comes bills verification. A Request
For Payment (RFP) document is sent to payment section for the clearance of the bill.
Related document are attached like invoice and sales tax invoice relative JR and JO,
the cost breakdown, the comparative statement and then summary of services taken
which provides the actual breakdown of the services taken and their cost. After
verifying payment amount payment is then issued to relative end user for use.

Other than this, payment section has other roles too like maintaining payable
ledgers and bank ledger of the plant site. At every month end a Bank Reconciliation
Statement is prepared by payment section matching the bank statement balance and
company’s bank ledger balance. Any differences in the closing amounts occur due to
bank charges, any cheques in transits, uncleared cheques or any other charge like
withholding tax.

Cash payments are made weekly to labour in the company premises in cash. At every
week services breakdown and wages amount of each individual is prepared by IR
department and then sent to the payment officer dealing with weekly labour wages.
Payment officer then make payments to each labour after verifying their ID details.

Other than this the payment section also issues fuel vouchers. At FFCL senior
employees are entitled free fuel up to a certain limit. This limit is fixed according to
fuel policy on the designation of the employee. To gain their fuel there are two ways
for an employee to claim the fuel. First they can get fuel coupons from the finance
officer and get the fuel from company owned fuel station Or secondly they can acquire
the fuel from outside and ask for reimbursements by submitting their fuel bills.

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Company’s fuel coupons are available to those employees too who doesn't have a free
fuel benefit. The benefit of purchasing fuel coupon from company is that they are
relatively cheaper than the market fuel station. Employees can avail cheap fuel by
purchasing fuel coupons from payment staff person.

Payment section deals with:

 Manpower Bills

Man power deals with:

I. Planning

1. Daily wages

II. IR

1. Job order employees

2. Contractual employee

 Other than manpower

I. Other then manpower deals with:

II. Civil contracts

III. Retention bills

IV. Approvals of advance for special events

V. Planning bills like SCN

VI. Local bill like PO, utility bills

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Employee’s Claim

Employees claim are the routine expenses incurred by the employees of FFCL which
are either for the company or which are allowed by the company to their employees and
can be reimbursed. Example of such claims can be air travels for company or for
personal purpose but allowed by the company in employee’s benefit terms. In finance
department an officer deals with these claims. A Daily Expense Statement (DES) is
used by the employees to reimburse the expenses they made. All the supporting
documents are attached along with DES like air-plane tickets or RFT( Request for
Travel), and then the finance officer checks and verify those documents and match it
with the terms of the company policy of FFCL or contractual employee. After
verification if the claim is valid then it is authorized and sent to payment section for
payment.

Inventory section

Inventory section in finance department deals with the recording of all the costs related
to purchases made in respect of raw material for manufacturing and purchases of any
fixed asset or equipment. A purchase requisition (PR) is raised whenever inventory
level reaches its reorder level. Warehouse/End user raises the requisition for the
purchase of material and sends it to procurement department. Then procurement
department makes the Purchase Order (PO) in accordance with the quotations received
from material suppliers. Then material is ordered and it is then received by the Material
Warehouse. Material warehouse then call the end user for the inspection of material
and a Material inspection Report(MIR) is made to mention whether the goods received
are in accordance to end user’s requirement or not. If material comply with the end
user’s specifications, then a material receiving report (MRR) is made by the end user
and goods are stored to warehouse. If some of the goods are faulty or doesn’t comply

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end user specifications then those goods are rejected and material exception report
(MER) is produced mentioning the damaged goods. These damages are informed to
vendors and insurance claim is raised if vendor does not take responsibility of damages.
End user can receive material through Material Issuance Vouchers (MIV) from Material
warehouse.

Some of the goods are purchased from outside the country. These foreign purchases are
mostly major fixed assets or equipment. All costs and overheads that are incurred to
bring that asset or equipment in present condition or location become part of cost of
that asset or equipment. Here banks are involved by both parties through an LC for
security purposes. Both parties ask their banks to act as a middleman for guarantee of
payment and for required asset specification confirmation. If there is any irregularity
then the bank is informed and the bank takes suitable actions to adjust it. After
receiving, inspecting and testing the asset the LC account is cleared and payment is
made to supplier.

Fixed assets purchases and installation can be a lengthy time taking process and its cost
cannot be predicted accurately in advance. For that a LC absorption account is opened
in advance within the company record and all the overheads relating to those assets are
recorded in LC absorption account. When the asset is ready for use all the overheads
are allocated and LC absorption account is cleared .

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Fixed Assets
A fertilizers company like FFCL cannot attract investors without providing its asset’s
worth and assets worth can only be assessed through proper maintenance of assets
records. Assets department at FFCL accounts for the documentation and recording of
every fixed asset whether newly purchased or existing operating fixed assets.

After the assets has been installed and ready to operating all the costs which have
incurred from the purchasing of assets till making it ready to operate become part of its
cost. The documents relating to purchase of asset like invoices certificates, license and
entitlements are kept here in finance section. The asset is then recorded into the ERP
system and FFCL’s own maintained records.

Additions and deletions are recorded on a regular basis. Additions can be like projects
or purchases which increase the operating capacity of the asset. As the costs incur it is
capitalized or added to the assets cost. Costs which are being incurred are classified as
work in progress and are separately recorded until they can be charged to asset’s cost.
Deletions are the sale of any fixed asset or a part of the asset. At every month end a
report produced showing the summary of all the additions, deletions and depreciation
charges for the fixed asset.

Another important task which is done by the fixed asset section of finance department
is ASSET TAGGING. Whenever and asset is received or moved from one department
or cost centre is changed it is tagged. Tagging is coding of every asset at FFCL. Every
asset is given a code according to its relevant cost centre (CC) and requisition cost
centre (RCC) and this code is the identity of that asset so when required it can be easy
to trace an asset just by looking at its CC code. These codes are then tagged to assets
by the finance officer. When an asset is moved from one department to any other
department its previous tag is removed and a new coded tag is issued to that asset. At
every month end the requisition documents are received by fixed asset section for the
allocation of new codes to fixed asset. After assets are tagged reports are produced
regarding the movement of assets and new codes issued to them.

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Diagram of asset capitalization of assets

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Welfare and Education Society

This department take overall responsibility of the welfare of its employees providing
health care ,education and social security. In this section company can facilitate their
employees by the school facilities and company can open different welfare trusts that
section can record and fulfils the needs of the school and welfare trusts . Here all the
transactions is recorded of the school staff salaries and purchases of school
equipment’s and funds of welfare trusts . This section can clear the all payments of the
entire responsibility that is under this section. All the payments is done by the payments
section .Here is the categories of school where the employees children’s can be study
the matric level school where the fee of per student is 500 and the Cambridge level
school where the fees of the students is 1500 and remaining fees can be paid by the
company this fees can be deducted by the employees salary .This section can
reimbursed the school employees claims the claims can be in the nature of medical
claims and traveling claims . The transaction can be recorded in the ERP software . This
section record the EOBI of the employees where the 80rs is contributed by the
employee and 400rs is contributed by the employer . Purchase of any product by the
welfare trusts of the company all the bills can be clear that section by the payment
section .

Cash section

Here is a cash section that is run under the payments section .This section deals with
those transactions which can be approved by the payment section . Here is done the
payment of all the contractor and the daily wages payments is done here and advance
payments is done here and advance payments remaining amount can be received here
This section can issue the petrol coupon for the employees of the company . All the

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payments of 10k is done here if the amount is exceed the 10k the cash officer can issue
the cheque. The cash officer can done the payments and pay the cheque when the
approval of above authorities is signed the documents of payments . He can issue the
petrol coupons by the different categories like 10 litre , 7 litre , 1 litre , 20 litre coupons
. This coupons can be issued by the name of employee and their employee number if
any situation the coupon is lost the cash officer can be notice that and stop the delivery
of petrol against that coupon number . At the end of the day the cash officer can
reconcile the cash and actual cash payments and remaining cash .And make the report
of the day .cash officer can reconcile the petrol coupons which can be sale . And make
the statement which can shows that at this date how much coupons can be issued and
which category coupons can be issued. He can pay the cheque which can be issued by
the head office this cheques amount is above 200k. All the payments is done by the
approvals of the upper authorities. If the payments is above the 10k the cash officer can
confirm there senior officer to pay the money in the cash form or in the form of cheque.
If any employee or department can need the advance payment by the office use
company use the payment section can allow that payment then the cash officer can pay
that advance payment if the employee can return remaining amount cash officer can be
received that amount. Here is the facility of foreign currency is to be provided if any
employee is need to the foreign currency by the official use in the foreign country that
is provided by the cash section .

Internal Audit Department

Everything that is being done in finance department and has a financial impact on
company’s financial reporting must be reviewed by Internal Audit department before
final processing or payment authorization.

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At the start of the year every audit officer is assigned its Audit Universe. Audit universe
is the particular area for which an audit officer will be reviewing throughout the course
of audit. Audit plan is then prepared for the every assigned area. Audit assertions are
kept in mind at the time of reviewing.

There are two types of audit at Internal Audit department;

- Pre Audit

- Post Audit

Every payment document above 400k amount is subjected to pre audit and must be
reviewed by IA department before processing for further payment except for the man
power bills. Manpower bills are considered as high risk area and even the smallest
amount of manpower bill is subjected to audit review. Manpower bills are reviewed
carefully with the relevant documents attached like Cost breakdown, their attendance,
annual contract or Job order copy and the Socials security, EOBI and other relevant
documents copies. After careful review these bills are signed by internal audit officer
for payment processing.

Other documents subjected to pre audit with above 440k amount can be the payment
orders. Cost breakdown is delivered along with the quotations or comparative
statement. Here the common sense of the auditor matters the most. Auditor must have
a questioning mind as to whether the purchase is reasonable or is needed for FFCL or
whether it is and unnecessary expense. Inquiries are made from the end user and after
reasonable verification the PO is approved for payment.

Every payment document less than 400k is subject to post audit and is reviewed after
the purchase of goods. Gate pass is the important document here for verification. Gate
pass contains the details of the number and type of goods that have entered in FFCL’s
premises. Invoices are matched with relevant gate passes and after reviewing the
invoices the PO is authorized for payment.

Another important task for audit department here is inspection of company controls.
Like for example asset tagging. A staff member of internal audit department is assigned
along with the fixed asset section staff member to improve the process of tagging. Other
than this surprise visits are organized by the IA department section to any part of the

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company premises which has a financial impact for the company. These surprised visits
are used to ensure that controls are in place and are being properly followed. Reports
are then made about the possible deficiencies in the controls and recommendations are
made by the auditor for improvements of controls. Management responsible for
implementing those controls also comments about the possible cause of such
deficiencies and what is being done in response to those deficiencies. These reports are
then delivered to upper management for proper action.

Recommendations

Here is the need to the proper building of the offices for the technical employees. There
must be short and bare minimum documentation should be made to provide easiness
and comfort to the customers. Decrease the paper work by the requirement of different
type of documentations by providing the maximum information of data in the single
paper. There should be delegation of authority up to certain extent that enables
managers to take timely decisions at the spot with confidence and get more involved
and responsible for the job and in turn their efficiency will increase. Employees training
is required by the information of other running departments .

References
www.fatima-group.com

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