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INTERNSHIP REPORT Submitted by: Khurrum Atta 2k8/BBA/73 Institute of Business Administration, University of Sindh, Jamshoro. Submitted to: Sir Kher Muhammad Zardari Internship Report by Khurrum Atta & Adil Ghouri

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INTERNSHIP REPORTSubmitted by: Khurrum Atta 2k8/BBA/73 Institute of Business Administration, University of Sindh, Jamshoro.

Submitted to: Sir Kher Muhammad Zardari Director(IBA)

Internship Report by Khurrum Atta & Adil Ghouri

IN THE NAME OF ALLAH, THE MOST KIND THE MOST MERCIFUL.

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Internship Report by Khurrum Atta & Adil Ghouri

LETTER OF TRANSMITTAL

January 2nd , 2012 Sir Kher Muhammad Zardari, Director(IBA), University of Sindh, JamshoroI 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.

Sincerely, Khurrum Atta

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Internship Report by Khurrum Atta & Adil Ghouri

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.

Regards, Khurrum Atta

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Internship Report by Khurrum Atta & Adil Ghouri

Table of ContentsSr # Particulars Page No.

CHAPTER NO. 1 Introduction1.1 1.2 1.3 1.4 1.5 1.6 Background Of Study Purpose Of Study Nature Of Study Methodology Limitations Scheme Of The Report

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CHAPTER NO. 2 Introduction To Organization2.1 2.2 2.3 2.4 2.5 2.6 2.7 Company's Profile Mission Vision History Performance & Production Organizational Structure Role of FFBL

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CHAPTER NO. 3 Introduction To Departments3.1 3.2 3.3 HCM Marketing Finance

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CHAPTER NO. 4 Finance Department4.1 4.2 4.3 4.4 Book Keeping Section Sales And Distribution Section Budgeting Section Disbursement Section

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CHAPTER NO. 5 Conclusion And Suggestions5.1 5.2 Conclusions Suggestions Bibliography Appendices

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AbstractThis 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 REPORT1.1 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.

1.2 Purpose of Study:Following are the purposes of study; 1.2.1 General purpose:

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

1.3 Nature of study:The study was very critical in nature because of the confidentiality.

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:8| Page

Internship Report by Khurrum Atta & Adil Ghouri

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.

1.6 Scheme of the report:The report is divided into five chapters which are as under; CHAPTER # 1 It includes the introduction to the report, CHAPTER # 2 It has the information about the organization, CHAPTER # 3 It contains the brief introduction about the departments of FFBL, CHAPTER # 4 It is dealing with the details of finance department and sub-departments of finance in FFBL Karachi, and CHAPTER # 5 it captures the conclusions and recommendations which are based on the research of internee.

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2 INTRODUCTION TO ORGANIZATION2.1 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

2.2 Corporate missionFauji Fertilizer Bin Qasim Limited is committed to remain amongst the best companies by maintaining the spirit of excellence through sustained growth rate in all activities, competitive price, quality fertilizer and providing safe and conducive working environment for the employees.

2.3Corporate visionTo 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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2.4 History of FFBL:Fauji Fertilizer Bin Qasim Limited Plantsite is a modern Granular Urea and Di-Ammonium Phosphate (DAP) fertilizers manufacturing complex, built at a cost of US$ 468 Million and located in Eastern Zone of Bin Qasim, Karachi, with Head Office at Harley Street, Rawalpindi. Initially named as FFC-Jordan Fertilizer Company (FJFC), wef 17th Nov 1993, with FFC (30%), FF (10%) and JPMC (10%) as main sponsors. The company was formally listed with stock exchanges in May 1996 and commercial production commenced wef Jan 2000. However, it continued to run in crises due to technical, financial and managerial reasons till 2001. DAP Plant brought to suspension in 2001 due to accumulated loss of Rs. 6.5 Billion. It resumed production in Sep 2003, after a lapse of 2 years. Renamed as Fauji Fertilizer Bin Qasim Ltd. (FFBL) in 2003, as such Jordan Phosphate Mines Co. (JPMC) had sold its entire equity in the company. Accordingly Phosphoric acid supply agreement with Jordan was terminated. The company turned out to be profitable after 3 years i.e, by 2004 and declared 'maiden dividend' in 2004. Profitability has constantly been on the rise since then and 2007 has been the most profitable year of the company. One of the milestones in the success of FFBL is its accreditation of ISO certification, which was achieved in Mar 2006 for both the Head Office and Plantsite.

2.5 Performance & Production:FFBL fertilizer complex is state of the art manufacturing facility with advanced Distributed Control System for safe and efficient operation. The phosphoric acid being raw material for DAP plant is imported from Morocco and initially stored in tanks at Port Qasim. Design capacity viz-a-viz actual production of Plants is as under:

Manufacturing Plants

Production (Metric Ton / Day)

Original

Actual (Approx)

Urea Granular DAP AMMONIA11 | P a g e

1670 1350 1270

1920 2230 (After Revamp) 1570 (After Revamp)

Internship Report by Khurrum Atta & Adil Ghouri

2.6 Organizational Structure2.6.1 Board of Directors

Chief Executive Officer and Managing Director Lt Gen Hamid Rab Nawaz, (Retd)

Board of director Lt Gen Muhammad Zaki, HI, HI (M), (Retd)

Board of director Lt Gen Malik Arif Hayat, (Retd)

Board of director Mr. Qaiser Javed

Board of director Brig. Jawaid Rashid Dar, SI(M)

Board of director Dr. Nadeem Inayat

Board of director Nasier A. Sheikh

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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.

Mr. Qaiser Javed is a Fellow Member of Institute of Chartered Accountants of Pakistan

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 of13 | P a g e

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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.

Dr. Nadeem Inayat is an outstanding professional, having rich experience in managing,

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:

Chief Executive Officer and Managing Director

General Manager Technology & Operations General Manager Finance (Operations)

General Manager Marketing

General Manager Administration

General Manager Technical General Manager HR Operations

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Chief Executive Officer and Managing Director Lt. Gen. Mahmud Ahmed HI(M) (Retired)

GENERAL MANAGERS

General Manager Technology & Operations Mr. Abdul Waheed Sheikh

General Manager Finance (Operations) Mr. Abid Maqbool

General Manager Marketing Dr. Muhammad Sadiq

General Manager Admin

General Manager HR

General Manager Technical Operations Mr. Abdul Waheed16 | P a g e

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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

2.7 Role of FFBL:FFBL is the only fertilizer complex in Pakistan producing DAP fertilizer Granular Urea. Thus making significant contribution toward agriculture growth of country by meeting 45% of the demand of DAP and 13% of Urea in domestic market.17 | P a g e

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3. INTRODUCTION TO DEPARTMENTS3.1 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.18 | P a g e

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4 FINANCE DEPARTMENTAs 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.4.1

BOOK KEEPING SECTION:

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.19 | P a g e

Introduction. Abbreviation. Legal Aspects. Functions. Purchase Requisition. Request for Quotations. Purchase Order Contract.

Internship Report by Khurrum Atta & Adil Ghouri

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:

Purchase Requisition initiated by required personnel

Sent to department heads

Approval by Department head

For war ded to Proc ure men t

Bid Opening Committee opens quotations

Comparative Statements are generated

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Material is inspected by inspection department

After the approval of material, payment for material is made through disbursement department

After approval

Procurement calls for quotations from vendors

Reviewed by Procurement & Warehouse

Seal ed quo tati ons are rece ivedVendor with lowest price and technically approved quotation is chosen

Proc ure men t issu es PO to ven dorMaterial is received along with its invoice

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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4.2 SALES AND DISTRIBUTION SECTION:In the sales and distribution section, we were entertained by Mr. Nadeem Akhtar and Mr. Hassan Mumtaz. At first, they explained us about the procedure of sales and the distribution channel practiced by FFBL. They told us that entire marketing for the SONA Granular Urea and SONA DAP is done by Fauji Fertilizer Limited Company and the Sales and Distribution Section of FFBL controls the Haulage Transportation service which delivers goods to different warehouses located in various cities and districts of Pakistan. The SD section also, through the integrated information system of SAP, keeps complete information for the status of their distribution channel at all times and it is updated on day to day basis. This data covers the information of their products stocked at the various warehouses present anywhere in Pakistan. The data for sales is provided to them by FFC, as they do the sales and marketing for FFBLs produced goods, and then the SD section updates their SAP database and equates it with the data provided to them by plant-site warehouse.

4.3 BUDGETING SECTION:In the budgeting section we were entertained by Mr. Ghulam Jilani and Mr. Mohammad Shafiq. Budgeting is the most important part as it provides you the estimated future expense or cost of your company. It reviews and analyzes operations and capital expenditure budget and constantly monitors it through SAP reports on the monthly basis. In this section, we were told that about its functions and significance. After the inception of SAP, the job of budgeting have become lesser in terms of paper work but still the budget monitoring and costing is very challenging. The major Functions of Budgeting Section are given below: Review and analyze operations and Capital Expenditure Budget Budget Monitoring Preparation of Monthly MIS Report Preparation of product Cost Sheet Review of Product Requisitions of direct purchase for local and foreign material Review Contracted Out Service

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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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CAPEX overall Projects Summary Projects in Progress

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.

4.4 Disbursement Section:The major function for the disbursement section was to make payments to the vendors or contractors. In the disbursement section, I learned about the how payments were made against the invoices, cheques are prepared and a journal voucher is finalized with copies of purchase requisition, purchase order, comparative statement, invoice and payees cheque attached to it.

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5 Conclusions And Suggestions5.1 Conclusion:

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.

Bibliography25 | P a g e

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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

PR COS CAPEX PPM

= = = =

Purchase Requisite Contracted out services Capital Expenditure Procurement Procedure Manual

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