Operations Report-Pakarab Fertilizers

PAKARAB FERTILIZERS LIMITED-Operations 1
OPERATIONS MANAGEMENT REPORT
ON
Submitted to:
Dr. Hayat M Awan
Submitted By:
Iqra Khan
MB-08-12
( 31-12-2009)
IQRA KHAN (MB-08-12)

PREFACE
In this report I have presented various operations of PFL. I have looked into
every detail of PFL operations as far as I could find out by visiting Pakarab and
meeting its executive. I have covered all the topics of operations management in this
report as taught by my respected teacher
Dr. Hayat M. Awan
For the sake of information I met,
1) Mr. Ejaz Hussain Khan Senior Production
Manager
For the cost information purposes I analyzed the financial Report of 2006-7.
I may have made some mistakes in this report but I tried to scan out all possible
errors from my side..In case of any deficiency or error, I ask apologies .
Thank you.
Regards,
Iqra Khan

CONTENTS
My report is covering the following subjects:-
1) Introduction Fatima group
2) Introduction Pakarab
3) Production facilities
4) Products of Pakarab
5) Organization setup of Pakarab
6) Corporate strategy
7) Operations Strategy
8) Inputs of Pakarab
9) Process analysis
10) Capacity of Pakarab
11) Locations
12) Forecasting of Production
13) Process strategy
14) Total Quality Management TQM
15) Inventory management
16) Sales & Operations Planning
17) Resource Planning
18) CDM Project
19) EMS
20) OHSAS
21) New Projects
22) Future Plans
23) Findings and suggestions
24) Contact Info

INTRODUCTION FATIMA GROUP
PROFILE HISTORY
 Family business established 1936: Third Generation Managing Business.

 Group sales: US$ 350 Million.
 65 years in the Textile Business with Export Experience of 50 Years, Exports to the US, Japan, Hong
Kong, Europe.
 15% per annum Sales Growth Rate, Projected Sales 2010 about US$ 700 Million.
 Textile Division Consists of 4 Ring Spinning Mills with about 200,000 Spindles and 3 Weaving
Mills with 436 Air Jet Looms, Captive Gas Fired Power Plants supplying 25 M.W electricity to the
factories.
 Group employs 8,000 people.
INTRODUCTION PAKARAB FERTILIZERS

I selected “Pak Arab Fertilizers (Pvt.) LTD” located on Khanewal Road for the practical
knowledge of Operations Management and to have a deep insight of my course and its
methodologies, It is a manufacturing organization.
Its process are complex, Pakarab has a competitive edge over other Fertilizer industries in
terms of quality, and it has plants of NP (Nitro-Phosphate Fertilizer) and CAN (Calcium
Ammonium Nitrate fertilizer) which are only 3, 4 plants in all over the world.
VISION STATEMENT
Our philosophy is to deal honestly and fairly with our customers by providing the best products
and services to merit and earn their trust, and to deal fairly with our business associates. We

believe that the relationship that exists in the market today between the customer and the supplier
has run afoul due to greed, mistrust, and short-sightedness. We believe that the customer is
interested in a true business partner and we intend to build such relationships. We intend to create
wealth for our shareholders and in turn value for ourselves. We believe that all energy comes from
our customers and we respect and cherish the opportunity to serve them
HISTORY PAKARAB
A treaty was signed between Pakistan Industrial Development Corporation (now NFC) and
ADNOC (Abu Dhabi National Oil Company) on March 7, 1973 and an agreement was made on 1st
November l973, to establish a new company named PAKARAB FERTILIZERS (Pvt.) LTD. in the
public sector, as a joint venture for the expansion and modification of the old National Gas
Fertilizers. Pakarab Fertilizers Limited was established as protocol concluded and signed on the
15th November 1972 by the Federal Government to further strengthen and develop internal ties
between Islamic Republic of Pakistan and the State of Abu-Dhabi to cooperate in the fields of
Petroleum industries and National resources for the mutual benefits. The company was
incorporated on 12 November 1973 with total authorized capital of Rs 1000 Million with a paid up
capital of Rs.743.061 Million. The project was completed at a total cost of RS 2511.44 Million
with a foreign exchange of Rs.1292.25 Million .It is the largest project of its type in the country.
PRIVATIZATION OF PAKARAB
On July 14, 2005 Pakarab Fertilizer was privatized at a cost of Rs14.125 billion under
privatization policy of Government of Pakistan, acquired by Reliance Exports (Private) Limited
under the umbrella of Fatima Group and Arif Habib Group. The company has provided
employment opportunities to more than 2000 persons, which also includes indirect employment
with contractors. In addition to above, establishment of this fertilizer complex has resulted in
economic activity in terms of fertilizers and other factory related trading / supplies.
QUALITY POLICY
Pakarab Fertilizers Limited is committed to produce quality products conforming product
specifications. We dedicate ourselves for continual improvement in product quality, productivity
and profitability through teamwork, motivation, safe operation, training and feedback to earn
customer satisfaction and confidence
ISO CERTIFICATION

The company was certified by M/s SGS, UK Ltd. on August 08, 2003 for Quality Management
System (ISO 9001:2000). The certificate has expired on August 07, 2006. The company has
initiated for recertification audit of Quality Management System (ISO 9001:2000) by another
company M/s Vincotte International Medal East LLC Dubai, United Arab Emirates. The
certification audit is planned in near future after improving upon the current Management System.
HEAD OFFICE PLANT SITE
Chief Executive Officer (CEO) Director Operations / Acting

Mr. Fawad Ahmad Mukhtar Mr. Muhammad Saleem Zafar
Chief Financial Officer Senior Production Manager

Mr. Ejaz Hussain Khan Mr. A. Majid Tariq (F.C.A)
Advisor-Fertilizer Division Manager Training & Laboratory

Mr. A. Majeed Zia Mr. Muhammad Abad Khan
General Manager Marketing General Manager (HR / Admin)

Brig (Retd) Umair Ahmad Mr. Nadeem Tariq
Director Technical Senior Electrical & Instrument Manager

Mr. Pervaiz Iqbal Mr. Nasir Butt
Senior Technical Services Manager

Mr. Muhammad Saleem Zafar
Maintenance Manager
Mr. Muhammad Tariq Javed
PAKARAB MARKETING
“Market Leader in supplying efficient plant nutrients”

PFL Marketing Division was established on 14th July 2005 after the acquisition of Pakarab
Fertilizers by Fatima Group. This complex is owned by a consortium of Fatima Group and Arif
Habib Securities.Pakarab is offering special product line in chemical fertilizers, such as nitrate
based and chemically granulated nitrogen products. Pakarab is marketing around 750,000 tones of
fertilizers that includes three products NP, CAN and Urea. Marketing Division is responsible for
all marketing operations like Sales Planning, Distribution and warehousing, Sales, and Technical
Support Services

PRODUCTS OF PAKARAB
NITROPHOS
It is unique combination of phosphoric and nitrogen, having balance proportion of nitrogen (N)
and phosphorus (P). It provides synergetic effect in terms of efficiency. It is only compound N & P
contains nitrate type of nitrogen. It is unique in shape and no body can adulterate it with any other
material. It is equally good for application at the time of sowing or after sowing. It is the best
source of early stage nutrient supplement in case of vegetables and transplanted crops. Its
chemically reaction is acidic having pH 3.5. This gives an edge over other basal fertilizers.
Pakistan’s most of soils are alkaline in reaction and its acidic reaction makes it more favorable to
plant to recover nutrient from soils. It is equally good for manual or mechanical application. It has
good storage capacity.
CALCIUM AMMONIUM NITRATE (CAN)

It is only nitrogenous fertilizer having synergetic combination of nitrate and ammonia type
of nitrogen. This makes it superior over urea. Its nitrate portion starts working right after
irrigation and ammonical source works later on. Its N is not lost thru volitization or leaching as
other fertilizers. It works in conditions when soil has very low moisture when no other
nitrogenous fertilizer can be applied. It can be used when there is good dew on soil surface in
winter. It is neutral in pH hence farmers can use it with liberty at any stage of crop. It is safe
and has no phototoxic effect on plant. It is free flowing and can be applied mechanically or
manually. It is technically proven to be the best source of nitrogen supplement to the crop in
case of saline and water logged (salt effected soils and water logged soils). It works 20 %
longer period than other source, means it is more in term of lasting effects. It is free from
adulteration. It contains 2% SOP, an ideal source of potassium and sulfur supplement. This is
also the best fertilizer for fertigation (application after dissolving it in irrigation water).
In-House Products
Ammonia

Nitric Acid
PRODUCTION FACILITIES
CALCIUM AMMONIUM NITRATE (CAN) PLANT
Designed capacity of this plant is 1500 M. Tons per day Calcium Ammonium Nitrate having 26%
Nitrogen contents and 1-2 % Potassium Sulphate as additional nutrient to stabilize the prills & fulfill the soil
requirement. It is manufactured by mixing 75% molten Ammonium Nitrate and 25 % Calcium Carbonate in
the mixing tank at 170 C. 550-700 M. Tons per day Ammonium Nitrate is produced directly by reacting
Ammonia gas and 60% Nitric acid in the Neutralization Reactor. 1050 M. Tons per day Ammonium Nitrate is
produced in the CN Section by reacting Calcium Nitrate solution with Ammonia and Carbon dioxide gases in
the CN Reactors. 600 M. Tons per day Calcium Carbonate is also produced in the same CN Reactors.
Calcium Ammonium Nitrate is hygroscopic by nature and absorbs moisture from the atmosphere therefore it
can be used in the soil with out sufficient water. It contains 13% Nitrate Nitrogen which supplies nutrients
immediately to the plants and rest 13% Ammonium Nitrogen gives food slowly till ripe up of the crop.
Process of the plant is designed by Hoescht whereas detail engineering is done by UHDE Germany. This
plant is in production since 1979.
NITROPHOSPHATE (NP) PLANT

The process was based on license from Stamicarbon, Holland, while detailed Engineering was
made by Uhde, Germany. The plant was designed to produce 229.4 MTPD of P2O5 or 1015 MTPD of NP
having 22.6% P2O5 with 300 on-stream days/annum. The plant could not produce NP product at its rated
capacity both in terms of designed quality as well as quantity at the time of guarantees; Uhde was made to
undertake modifications on the plant, which they performed through addition of 2-lines of Crystallizers
making total six lines. Similarly 2 centrifuges were added to 4 existing ones and additional refrigeration
capacity was provided. However, even after the modifications designed product quality could not be
achieved. The plant consumes much higher energy level compared with design. In view of the fact that plant
could not produce 22.6% P2O5, the specs were revised to 20% P2O5 and 22% Nitrogen (originally 22.6%
each of Nitrogen and P2O5).
UREA PLANT
A new Urea unit of 280 MTPD capacity commenced production in April, 1986 based on
Snamprogetti design. Old Urea unit, Evaporation unit and Prilling Tower were retained. The new plant has
330 operating days/annum. Urea unit is a trouble free unit. It has the highest production efficiency. The
highest production achieved was 387 MTPD against design of 280 MTPD (38.2% higher). Last year a
production capacity of 101,754 MT of Urea as compared to design of 92,420 MT/annum and was 10.12%
higher in spite of gas load shedding (+ 13,619 M. Tons).
AMMONIA PLANT
Based on Kellogg process, steam reforming of the natural gas, the plant commenced production in
November 1978. The plant had capacity of 910 MTPD, which was enhanced by 50 MTPD through addition
of Purge Gas Recovery Unit in April, 1986. The plant is designed to operate 330-days per annum (initially
320-days/ annum prior to capacity increase. Present energy consumption at the plant is 9.6 G.Cal /MT of
Ammonia (excluding non-productive gas), which was 9.464 G.Cal /MT of Ammonia during guarantee period

NITRIC ACID PLANTS:

There are two units (three lines) of Nitric Acid production. The old line has a capacity of 180 MTPD
of 60% Nitric Acid strength. This line commenced production in 1963. Other two lines have a capacity of 600
MTPD of 60% Nitric Acid. These two lines commenced production in December, 1978. The old line was
modified in 1986 when an additional Absorption Tower was added, which resulted in increase of Nitric Acid
concentration to 60% strength and reduced pollution level i.e. NOx Emission from 4000-6000 mg/cubic meter
to 800 mg/cubic meter. The plant is operated as and when required. The two new lines have on stream factor
of 330 days (originally 320 days). The old line consumes 0.310 MT Ammonia/ton Nitric Acid (100% basis)
while the new lines consume 0.290 MT Ammonia/ton of Nitric Acid (100% basis). Thus old unit of Nitric
Acid consumes higher energy. Approximately 40% of total Ammonia produced is used to produce Nitric
Acid.
UTILITIES PLANTS
The Utilities Plant supply's the following utilities required by the production plants of Pakarab.
 Steam by BORSIG boilers three with a capacity of 85 t/hr each and produces 40 bar steam at 395
Celsius.
 Electric power by three turbo generators of BBC with a normal capacity of 7.6 MW/hr each and
produces 6KV electric supply.
 De mineralized water by three trains of 120 m3/hr flow and quality of <10 PPB silica water.
 Raw water by deep wells as no surface water is available.
 Cooling water by three cooling towers with total capacity of 38000 m3/hr for total cooling water
need of the complex.
 Instrument Air and Plant Air by four air compressors.
 Nitrogen by cryogenic Nitrogen Making Plant made in China with a Capacity of 720 m3/hr and
Nitrogen gas purity of 3 ppm Oxygen.
 Effluent treatment, Chromate Removal and Disposal
ORGANIZATIONAL SETUP
Salient Features of Pakarab:
Total authorized capital =Rs.1000 million

Total cost of Pakarab fertilizer =Rs.279.010 m
Foreign Exchange Component =Rs.1326.00 m
Paid up capital =Rs.743.061 million
Loan Financing :
IBRD =Rs.602.532 m
ADB = Rs.267.300 m
OPEC = Rs.108.900 m
Citibank =Rs.49.5 m
In 1986 the rehabilitation/ Expansion and rationalization of Ammonia / Urea Plant was
initiated and completed at total cost of (Rs.359.164 m) with World Bank loan of U.S. $ 42.1m

After board of Director is “Managing Director” under Manager Director is General Manager
(Manufacturing), General Manager (Finance), Secretary of PFL and General Manager (Audit).
After GM. (M) is GM. (E), GM. (Safety), GM. (Production), and GM. (T & P) under each GM.
are Senior Managers, under each Senior Manager there are Managers/ Dy, Managers/ Assistant and
various subordinates.
DEPARTMENTALIZATION IN PAKARAB
There are four major Divisions
•Manufacturing Division
•Internal Audit Division
•Accounts Division
•Corporate Affairs & Commercial Division
Manufacturing division
1. Production Divisions
2. Technical and planning Division
3. Engineering Division
4. Commercial department
5. Inspection department
6. Safety operation and environment department
7. P & A / IR department.
8. Security and Gen. Admin department
9. Medical Services department
Accounts division
1. Finance
2. Book Keeping Section
3. Budget Section
4. Payroll Section
5. Payable Section
6. Inventory Costing Section
Internal Audit and commercial divisions are not further divided
For exports and imports dealing office is in Karachi.

The managing Director as chief executive of the company is responsible for efficient
management and operation of the plants and is assisted by 3 Divisional heads General Manager

(Manufacturing), General Manager (Finance) and General Manager Corporate and commercial
(company secretary)
Production Division:
Each plant is headed by unit Manager, further assisted by Deputy Unit Managers and Shift
Engineers.
Production department always works with cross functioning with other department e.g. in
making Urea In Urea plant, if any raw material or spare part for machines are required, they raise
purchase request which is sent to store section. If that thing is not available in store, it is sent to
commercial department which perform the function of purchasing. So, inventory management
must have to determine the inventory level whenever any inventory is removed from to store. It
must have to keep the record for all departments. Must know which inventory is taken by which
department. So that is must sent to the inventory section of the Accounts department. So that cost
is calculated by Accounts departments.
Other functioning departments of PFL are engineering and Technical which work
ultimately for the production of fertilizer. Engineering and Technical departments are the roots of
this factory.
All the departments work in close coordination to achieve optimum production.
Various division mentioned above have following departments
1. workshop and garage
2. Project planning
3. Material department
4. Electrical department
5. Instrument department
6. Civil department
7. Field Maintenance West / East
8. Compressors and turbines
9. Industrial & Relation / Personnel
10. Security
11. Inspection
12. Internal Audit and Management systems department.
13. Safety operation and environment department.
 There is a Training center for new entrants.
Due to departmentalization every individual is responsible to his unit Manager wile Unit Manager
to General Manager and who is ultimate responsible to CEO who is all in all of the organization.
SERVICE OR MANUFACTURING:

It is a manufacturing organization because products are physical, durable its out puts can
be inventoried, there is low customer contract because PFL only produces out put and delivers
them to FNML (i.e. its main distribution / marketing center).
 Long response time is taken
 It has regional and national market.
 Large facilities of operations are available,
 Organization is both Labor and Capital intensive because, huge equipment are their in PFL
and a large number of work force is required to run those plants and equipment.
CORPORATE STRATEGY
COMPETITIVE PRIORITIES
Competitive priorities of Pakarab are:
1) Cost:
 Pakarab has monopoly in CAN and NP, fertilizer, which is their Distinctive Competency.
In Urea there are competitors e.g. Engro and Fauji Fertilizer. So 92400 MT Urea is sold per annum
along with NP and CAN.
 No other fertilizer Co. has facility to produce CAN and NP. As for the production of NP
“Rock Phosphate” is imported from Canada, Jordan, and Morocco. So it is very costly. There was a
subsidy for NP, but now Govt. of Pakistan has finished this subsidy so the cost of fertilizer has
been increased.
 Price of CAN and Urea are low.
2. Quality:
 Pakarab have fixed Quality standards to achieve (international standards)
 Fixed targets i.e. fixed level of fertilizer production.
 They design standard products, their international standards set for
Quality of NP, CAN and Urea are:

NP (Nitro-Phosphate )
P 2 O 5: 23%
N2 : 23%
CAN: (Calcium Ammonia Nitrate)
N2 : 26%
Urea:

N 2 : 46%
Occasionally, due to design problem and facilities (atmospheric conditions) quality of NP and
CAN deviates from standards. But this happens so rarely, that they ignore this factor.
3. Time:
Their plants work 24 hours a day, 7 days a week and total working days for a year are
330 days. Remaining 35 days are for maintenance of wear and tear of plants. This is called
shut down period.
There is delivery of products as soon as they are prepared. They deliver their products
on time delivery , customers do not face any back order or organization does not face any
stock problem. They have raw material in stores.
4. Flexibility:
There is no volume flexibility as there is fixed production, fixed capacity of plant and
fixed standards are there. It is difficult for them to enhance their volume but they can
accelerate the rate of production by increasing the amount of phosphate in Nitro-Phosphate
and hence result in Urea Nitrogenous compound. It thus increases their production as they
have exceeded their target production in 1996 which was 831,523 million tons.
Pakarab is utilizing its 100 percent capacity even in Urea there is over utilization.
OPERATIONS STRATEGY
Operation strategy in PAKARAB is product focused
1) Pakarab has fixed capacity plant.

2) High – volume of production
3) A few standardized products are produced (CAN, NP & Urea)
4) Quality is consistent
5) Emphasis in on low cost
6) It does not produce any customized or specialized product.
ENTRANCE – EXIT STRATEGY:
Its entrance is early while there are no rear chances of its Exit from Market.
As it is producing CAN & NP which are 3, 4 plants in the world and which is very essential
fertilizer, so a PFL has monopoly in the country.

So it has a late Exit, hence we can say PFL has “Early Entry–Late Exit” strategy.
MAKE–TO–STOCK STRATEGY:
Product focus manufacturing firms follow 'make to stock' strategy in which firms hold items in stock for
immediate delivery. This strategy is feasible because most product focus firms produce high volumes of
products. Operation strategy for PAKARAB is product focused so based on this strategy make to stock
strategy is adopted. There is mass production in this organization so 'make to stock' is feasible.
INPUTS OF OPERATIONS
(1) MATERIALS:-
• For production of “NP” Rock Phosphate is imported

from Canada, Jordan and Morocco.
It comes first through by air in Karachi then from Karachi (through rail) to Peran
Ghaib and then to Multan Pakarab (through rail).
• Natural Gas, for the production Ammonia NH 3
comes direct from Sui-Northern pipeline. Average monthly Sui gas bill of Pakarab is
around 30 million PKR.
 There is normally a contract with suppliers of 5 years or 10 years. Its units of
measurement are per 1000 Cubic meter and it is used in millions of cubic meter in production
plants.
In natural gas there is 95% methane, and rest of portion consists of organe, ethane, ethene, and
other impurities. They purify it and oxygen is separated and thus CO 2 and H 2 gases are collected as
a separate by-product,
1) N + H 2 NH 3 (Ammonia)
Main product
2) CO 2 + NH 3 Urea
NH 3 gives raw material to other plants.
3) NH 3 HNO 3 (Nitric Acid)

(60% concentration)
4) NH 3 NOX gas (Nitric oxide)

For 1 metric ton of NP, 0.71 MT Rock Phosphate is required.
(2) WORK FORCE :
In very start of Pakarab establishment people were given training but now there is a basic
Qualification standard.
 IT Institute gives the diplomas to new trainees.

 But now Pakarab has very skilled and well trained labor they have skilled labor especially
in plants such as Urea, Ammonia, NP and CAN and they don’t have good skills in instrumentation
as when the people gain good training and experience they quit the organization for better
emolument. In Pakarab 3 shifts work at a time 1 shift = 8 hours
Total Labor force = 1200
Work force strategy :
Pakarab follows level-work force strategy i.e. there is no hiring or firing, employee have
stable career but there is no subcontracting but there is over time incase if a worker, is on leave
then one has to replace him.
 Executives: 151
 Office workers: 181
 Daily Wages workers: 4140
(3) MANAGERS :
Managerial positions are from 180-200.
(4) LAND :
Total area of factory is 172 acres
Total area housing colony is 130 Acres.
(5) EQUIPMENT AND FACILITIES:
Basic Equipment is turbine and compressors along with a number of complex and expensive
equipment. One of top management says if they want to expand their facility, or their area of
production they will select same type of area in which PFL is currently located because of
dominant location factors discussed later in the report.
PROCESS ANALYSIS

Pakarab fertilizer was completed at a total cost of Rs.2279.010 million. Subsequently
Ammonia /Urea plant rehabilitation/expansion and rationalization of the plants was initiated and
completed in 1986 at a total cost of Rs.359.164 million.
Process Descriptions:
1- NITRO PHOSPHATE FERTILIZERS (NP):

Phosphate Rock imported from Jordan and Morocco and Nitric Acid produced within
Pakarab Fertilizers are the basic raw materials for NP Fertilizer manufacture Phosphate
rock containing 74% Tricalcium Phosphate is digested with Nitric Acid in dissolving
reactors. Phosphate Liquor obtained mainly contains phosphoric acid, calcium nitrate and
excess nitric acid. As high amount of calcium nitrate in liquor is not required, 75% of same
is eliminated by cooling to 0 degree Celsius in crystallizers and subsequent centrifuges and
filters are converted to Ammonium Nitrate and Calcium Carbonate at calcium Nitrate
conversion plant. NP Liquor from filter is mixed with Ammonium Nitrate solution,
neutralized with Ammonia, concentrated in evaporators and is prilled.
2- CALCIUM AMMONIUM NITRATE FERTILIZERS (CAN):
Ammonia vapors from NP plant are neutralized with Nitric Acid in reactor to form 90%
Ammonium Nitrate Solution. Calcium Nitrate melt from Nitro-phosphate plant is
transformed to Ammonium Nitrate and precipitated Calcium Carbonate, the two reaction
products separated through vacuum filtration. Ammonium Nitrate Liquor is then
concentrated to 99.5% in falling film evaporators in Ammonium Nitrate Conversion plant.
Calcium ammonium nitrate slurry so produced is then prilled and coated with suitable
coating agent to avoid caking of the product.
3- UREA FERTILIZERS :
Ammonia and Carbon Dioxide from Ammonia plant are compressed and fed to Urea
Reactors at about 150 Kg/Cm 2 , forming 50% Urea and balance Ammonium Carbonate
which is later decomposed in series of decomposers yielding 70% Urea Liquor which is
then concentrated in evaporators and then fed to prilling tower for prilled Urea.
4- AMMONIA:
Natural Gas, containing 92% methane and higher hydrocarbons is the basic raw
material for Ammonia manufacture. This feedstock is purified in Desulfurization section,
after which it is mixed with steam and cracked into stages in presence of Nickel catalyst.
Air is added at the inlet to second stage to provide the required amount of Nitrogen, for
the production of Ammonia. Carbon Monoxide is converted into Carbon dioxide and
Hydrogen in Shift converters.
Carbon dioxide is removed by washing with hot Potassium Carbonate solution and CO 2
is recovered from Potassium Carbonate solution by reducing pressure and heat. CO 2 thus

obtained, becomes available for the production of Urea Fertilizer and consumption at
Calcium Nitrate conversion plant.
Residual Carbon Oxides, being poisonous for Ammonia synthesis catalyst are
eliminated by conversion to methane in methanator. Purified synthesis gas is compressed
and fed to Ammonia converters. Synthesized Ammonia is recovered by Chilling in
Refrigeration section.
5- NITRIC ACID :
The plant comprise of three steams, the new two are capable of each producing 600 and
third old steam is capable of producing 180 metric tones per day of Nitric Acid.
Ammonia is vaporized, mixed with air and the mixed steam is passes over platinum
catalyst gauzes in converters at 900 degree Celsius forming Nitric Oxide and Nitrogen
Dioxide converted steam is cooled by steam generation and cooling water, and then fed to
absorption columns wherein water absorbs Nitrogen Dioxide, forming Nitric Acid (60 %
concentrated).
Output
Productivity changes = . = 100%
Input
I.e. production of Pakarab is 100% efficient Labor.
O utput
Productivity = = More than 90%.
Personsor Hour W orked
Raw material efficiency = 94%.
NP:
N : 22 + 1 %
P2O5 : 20 + 1 %
Moisture : < 0.7 %
CAN:
N : 26 + 0.5 %
CN : < 1.1 %
Moisture : < 0.8 %
Urea:
N : 46 min. %
Biuret : < 1.2 %

Moisture : < 0.5 %

NH3 : < 300 ppm
Break – Even Point:
The point where there is no profit and no loss, there production manager told me that they
achieve Breakeven point in March because in month of December, there is increase in expenditure
as a slurry accumulates in plants due to Rock Phosphate impurities which creates wear and tear in
plants. So plants are repaired and cleaned and hence there is a shut down period. Due to break in
production, Break even point is reached in March
Taxes:
1-Government imposes taxes on fertilizers.
2- Taxes are also imposed on raw material and natural gas i.e. 50% general sales tax. All
equipment if Pakarab are insured.
CAPACITY IN PAKRAB
There are six plants PFL:
1 – Ammonia plant.
2 – Nitric Acid plant.
3 – NP plant.
4- CAN plant.
5 – Urea plant.
6 – Utilities.
 INTERMEDIATE PRODUCTS CAPACITY

Production capacity of plant is:-
Nitric Acid (old plant) = 180 MTPD
Nitric Acid (new plant) = 1200 MTPD
Ammonia = 960 – 1000 MTPD
Ammonia Nitrate Crystals=On demand
 DESIGN CAPACITY:
Peak capacity of plants is as follows:

Normal operations are some times greater than design (Peak) capacity i.e. more 100% capacity
CAN 450, 000 MT/Annum

NP 304500 MT/Annum
Urea 42400 MT/Annum
Rock Phosphate 260,000 MT/Annum
they can work. But due to some problem i.e. Natural Gas load shedding production can be less than
capacity’s but it is rare chance.
 CAPACITY CUSHION:
= {100% capacity} – {Utilization rate}
= Normally zero
Because plant utilizes its 100% peak capacity.
There is not such bottle neck operation that has lowest effective capacity. In facility thus limits
system’s out put.
 ENERGY UTILITIES:
Power = 18 to 27 MW
(3 turbo generators 9 MW each)
And through operations and chemical transformations the output is generated.
 FERTILIZERS:
CAN = 1500 MTPD

NP = 1015 MTPD
PRILLED Urea = 300 MTPD
 DAILY CONSUMPTION: Raw material

Natural gas = 52.5 Million Cubic Feet.
Rock Phosphate = 710 tons
 NUTRIENTS CAPACITIES:
Nitrogenous = 222,681 (N) tons
Phosphate = 70,035 (P2O5) tons

LOCATIONS
While locating the geographic site for a facility, i.e. Geographic dispersion of operations, a lot
of factors are considered. The dominant factors which are considered while selecting a site for
Pakarab are:
1. Favorable labor climate
2. Proximity to target market (Agriculture Area)
3. Quality of life
4. Proximity to suppliers and resources (availability of raw material)
5. Proximity to parent company’s facilities.
6. Links to other parts of the country
1) FAVORABLE LABOR CLIMATE:
a. In the area around PFL, a lot of skilled labor is available for factory. Labor is
easily available for both routine work and shut down period. PFL is located at by-pass and
has close and easy links with the Sheikhupura, MuzaffarGarh. So people from different
area come here.
2) QUALITY OF LIFE:
a. Employees are given good Quality of life, suitable working environment and
bonuses and incentives are gives when employee achieve the difficult targets or exceed from
target production.
There is a separate well-established housing colony for people working here.
Employees living in this colony are provided with many facilities electricity and local
telephone calls are free for them. In addition there is a market in which all the basic
necessities are provided. Three banks i.e. branches of MCB, NBP, HBL are working here.
Three mosques are also there for them plus two clubs are there for their recreational
activities. One is “Officer’s Clubs other is for workers. Many functions are held on
different occasions picnic party is one of them. Parks are also here. One English medium
and two Urdu medium schools are there.
Efficient transportation system is there for the children of employees, who study in city
Schools out side the Colony.
For the shift engineers and employees who came from out side a separate transportation
system is there for their Convenience. Two medical centres are there, one for ladies other
for gents; Welfare Trust for poor employees is there. Two rest houses are there for
Company and Different Check Posts are there in the Colony.

(3) PROXIMITY TO TARGET MARKET: (i.e. Agricultural Area)
As described earlier, it is located at Khanewal Road which is agricultural area so it is
near to its target Market.
(4) PROXIMITY TO SUPPLIER AND RESOURCES :
Availability of Raw Materials

As described earlier, Pakarab has easy access to its raw material i.e. Natural Gas, which comes
through pipe line and rock Phosphate, is imported from “Morocco”.
For packing material they contract local suppliers. And they adopt “Non-prob” strategy, i.e.
they use rational method, if one supplier is not giving them order in time they contact another
supplier to avoid delays in delivery of order to them. However, “Safety Stock” of “1 month” is
always maintained for packing materials.
Risk and Cost System:

Risk and Cost System is adopted for the expensive material supplier. Thus in this case if suppliers
delays delivery of order Pakarab takes payment from them or liability is taken from them for the
loss of on time delivery. Hence obligations are imposed on suppliers for late delivery.
(5) PROXIMITY TO PARENT COMPANY’S FACILITY:

A training center for new entrants is opposite to PFL which has been established by
NFC which is a great facility of ex-parent Co. of Pakarab.
Environmental Pollution Checks:
Co is taking measures to arrest environmental pollution (i.e. gaseous emission,

liquid effluent and solid wastes and noise pollution).So to improve quality standards and reduce
pollution or wastes, Kellogg designed ammonia converter baskets were replaced with radial flow
type topes-200 design, along with replacement of four centrifuges at NP plant during special shut
dark maintenance.
Rotary drum filter of enhanced capacity (40m 2 ) received at site in April, 1996 is expected
to be commissioned. Its improvement in instrumentation of all plants and in automatic weighing
and bagging system is also in program.
6) LINKS TO OTHER PARTS OF COUNTRY:

PFL is located in the area which has links with many cities, such as Faisalabad, Khanewal,
Lahore, Sheikhupura, MuzaffarGarh and Bahawalpur. So it has no difficulty in transportation.

. FORECASTING OF PRODUCTION
Demand in country is very high but they determine demand with respect to internal factor
i.e. capacity of plants available.
A very fine software application is in “INVENTORY INDENTING AND FORECASTING
SYSTEM”
This system is a part of inventory management system which consists of the following
parts
1. Indenting
2. Forecasting
INDENTING
Demand Item Indents:
This type of indent is raised on demand of user. The indentor sends his demand along with
complete specifications to stores, where the specification are entered into the computer and then a
print out of the indent is sent to the Inspection Engineer for further check up of specification and
then the indent after approval of competent authority is sent to procurement for purchase of items.
Stock Item Indents:
This type of indent is generated when the stock of certain item becomes equal to order
point. Again specifications are entered in the computer. The process continues for 2 weeks and a
print out of demanded items is produced. After going to Inspection cell, these indents are then
sent to procurement department for issuance of purchase order after obtaining quotations etc.
FORECASTING :
A causal method” of forecasting is following in which historical data of past year production is
reviewed and new target of production is thus forecasted.
Actually Ministry of food and agriculture forecasts all of the demand of the country for
fertilizer. They gave these targets then to deferent companies to fulfill. NFC for Pakarab receives
these targets and then distributes it to its units according to their capacities.
Computer Application in forecasting:
As far as computer application is concerned, it is applied in some areas of plant. The

facility of computer was installed in 1986. Before this all the process of central ledger system
cash book system and inventory system were being processed at Pak-Saudi firstly system /36 was

introduced but due to its large size, the modern system was introduced which is AS/400. It is 9
times greater in capacity and speed. Due to this replacement, it has given the facilities or
manipulating data and writing reports. It provides facility to design different screens separately
from the programs besides AS/400 now there is installation of Black Box having enhanced memory
and speed, 7 days a week. To determine EOQ (Economy order quantity) a software system is there
which determine EOQ with respect to consumption pattern, and lead time.
P RO C E S S ST R A T E G Y
PRODUCT-PROCESS MATRIX
Pakarab has continuous flow, standardized and high volume producing processes
RESOURCE FLEXIBILITY
Although they follow level strategy of work force i.e. no hiring & firing is at about the
flexibility of organization we know there is no flexibility in equipment machines and plants while
there is a lot of flexibility in work force. Work force of Pakarab is highly flexible. Because of job
rotation, they are skilled in their job. They are capable of doing many tasks. They are also
transferred form one company to other company e.g. Engineers of Pakarab are transferred to Pak-
American which is in Daud Khel and also transferred to Mirpur Mathelo. Similarly, people from
Pak-Saudi, Pak-American also came here as a trainee or as job rotators.
CAPITAL INTENSITY
Pakarab is highly capital intensive firm having fixed automation.
T O T A L QU A L I T Y M A N A GE M E N T ( T Q M )
“TQM” is adopted in organization in order to get competitive edge over competitor for
quality. In PFL, as they have competing edge in CAN and NP over other fertilizer companies such
as Pak-Saudi, Pak-China, Pak-American, Fauji Fertilizer Engro chemicals, so they have to
maintain their high quality standards.
Therefore, they have separate department in Pakarab who have continuous check over
quality of product. There is a technical division for it. Technical division have laboratories on
sites as well as separate from plant where the laboratory engineers checks the quality of product
which are “in process” and also finished goods are inspected continuously in laboratories.
Samples are taken from the work-in-process are then checked. It should be noted that sampling is
done for chemicals. While for solid materials there is physical checking of inventory. Shift
engineers and laboratory engineers are working in quality control department. Then all the items
products which are not in match with quality standard are recycled.
Quality Control Stages:

Standards are maintained at fix level. They inspect the goods when they receive from
suppliers in the factory.
During production process in each plant, interpreters are there which continuously check
the standard of products. Inspection is also done when the finished goods are prepared.
In laboratory normally for different products different sample size are taken to analyze the
quality of product. E.g. 2 hour sample for a product is taken to measure quality in Laboratory
under the observation of senior in charge.
I N V EN T OR Y M A N A G E M E N T
STORAGE OF RAW MATERIAL:
 Pakarab is using two raw materials:

1. Rock Phosphate
2. Natural Gas.
 Chemicals and spare parts are also used. For storing these materials there are large stores
in the factory.
 As rock phosphate is imported from Morocco, so it is first forecasted
Consider in view safety stock and lead time.
LEAD TIME for Rock Phosphate =12 weeks
SAFETY STOCK for Rock Phosphate is maintained for 3 months, and then order is given to
foreign suppliers by NFML according to the consumption pattern of PEL. Rock-phosphate is
stored here in large quantity chemicals used in production are also stored in large vessels and
drums in the factory. As far as Natural gas is concerned, no storage is there, it is coming
continuously from Sui plant through pipe lines.
CYCLIC INVENTORY is maintained for packing material i.e. bags, liner, threads-demand for
6 months is determined safety stock of 1 month is maintained and local suppliers are selected for
this purpose.
ECONOMIC ORDER QUANTITY (EOQ ): To determine EOQ (Economy order quantity) a

software system is there which determine EOQ with respect to consumption pattern, and lead time.
ABC ANALYSIS
Class A:

The items which are classified in class A have stock value above 100,000 rupees, these
items include compressor, turbines, pumps which are critical items which are considered very
important and are protected very well.
So that, they can work in proper form and must not block the funds – quantity wise they are
10% and value wise 80%.
Class B:
The items having stock value from Rs. 25000 to 100,000 come in this class.
Class C:
The item having stock value below Rs. 25000 come under this class. Quality wise they are 80%
but value wise they are 10%.
Since the Lead Time for manufacturing items = 40 weeks as they are imported from foreign
country. Only 10 weeks is the lead time for local items as they are readily available.
For ABC classification, initially a Bin Card System was used but now along with it a modified
system is also used by inventory management department.
PEL uses Average Method to Value Inventory. I.e. initial value + new purchases, is divided
by total number of transactions of new purchases and initial values.
Cycle – Service lever = 95%
I.e. they are only 4-5% stock out.
INVENTORY CONTROL SYSTEM P or Q:
Q System i.e. continuous review is used for spare parts and equipment.
While periodic review is used for raw material because there is a lots of Inventory which
can not be reviewed again and again for replenishment purpose.
S A L E S & OP E R A T I O N S P L A N N I N G
REACTIVE ALTERNATIVE :
Reactive Alternative is followed i.e. to meet demand they adjust work force, or over time.
PLANNING STRATEGY :
Work force level utilization strategy is used where overtime, under time and vacation scheduling is
used for doing operations in coincidence with demand

RESOURCE PLANNING
Material Requirement Planning

The concept of MRP and MPS is that material requirements planning and master production
scheduling system gives production control, purchasing, and top management the information
needed to plan and control business operations. It identifies their detail production and purchasing
actions which need to taken in response to day-to-day events. It also ties overall business planning
to detail operations through master scheduling function.
Their MRP system comprises of three processes:
1. Bill of Materials
2. Master production schedule
3. Inventory records
The objective if factory behind this MRP is:
1. Decrease inventory investment
2. Decrease out of stock situation for needed component.
3. Provide planning priorities based on due dates.
4. Recorder material based on DD.
BILL OF MATERIALS
The main problems occurs in bill of materials, Suppose company want to make CAN which is
his one of the fertilizer now, company makes plan for the manufacturing of CAN. What type if
machinery is used? How long is the process or each process what is the requirement of the plant.
How many chemicals, raw materials are required for production of certain amount of CAN. How
much spare parts are needed:-In Raw Materials, how many cubic feet of Sui Gas is needed. How
much Rock phosphate should be imported? All the details are made for each product.
MASTER PRODUCTION SCHEDULE
One another important requirement in planning is MPS. Through MPS, they are indirectly
making rough capacity plans. MPS of Urea fertilizer is based on targets and capacity of the firm.
Firm checks what are the forecasted order or what are actual targets given by NFC. What is the

time period of their manufacturing process? What is the lead time of their order? In this way, they
detail description of each of their finished product.
INVENTORY RECORDS
They maintain perpetual inventory record daily movement report. DMR is prepared which
shows issued, stock balance, spare part inventory record, general store inventory and different raw
material inventory.
Maintaining inventory records is the responsibility of accounts department in which there
is a separate section or "Inventory Management” in PFL. They maintain records of new orders
scheduled receipts inventory errors, scrap losses, canceling inventory rejecting shipments and
stock return. It on the cost basis checks all inventory level and then gives to management. When
forecast is made for inventory in PFL in inventory section it comes into Budget section where
Budget is allocated for inventory.
CDM PROJECT
Clean Development Mechanism (CDM) is the first project of this kind in
Pakistan, being commissioned at Pakarab Fertilizers Pvt. Limited, Multan. Basic aim
of this project is the abatement of N2O and NOX emissions from the stack gases of
HNO3 plant. The reduction of Green House Effect of these gases shows our
commitment towards a cleaner environment.
ENVIRINMENT MANAGEMENT SYSTEM (EMS)

Work Procedures / Work Instructions shall be developed according to requirements of
Environmental Management System (ISO 14001:2004) and implemented for better control on
quality of Effluents and Emissions.
OCCUPATIONAL HEALTH & SAFETY ASSESSMENT SERIES (OHSAS)

Work Procedures / Work Instructions shall be developed according to requirements of
Occupational Health & Safety Assessment Series (OHSAS 18001:1999) and implemented for
improvement of safety & health standards.

NEW PROJECTS
The company has decided to install a new state of the art Co-generation plant to improve plant
efficiencies & reduction in operating costs for this mega project, a turnkey contract is awarded to
Turbomach, Switzerland. Revamp of existing new Cooling Tower with assistance of Italian
consultants is planned to meet the operational requirements of the complex. New standby filter
drum is being installed at NP plant to improve product quality & plant efficiency.
FUTURE PLANS
 De-bottlenecking of Ammonia plant
 Capacity enhancement of Urea plant. DCS for HNO3 plant
FINDINGS AND SUGGESTIONS

 OVERSTAFFING
Pakarab has excessive staff than required. Moreover there is uneven distribution at
place where one man can do the job three people are working there. And at some places a job of three
persons is done by one man. The uneven distribution results in de-motivation of the employees and
gradually his interest in his work decreases that effects the efficiency. In order to Increase the efficiency
of worker, job should be assigned to its caliber to develop his interest in work that increase the output and
decrease the overall cost of organization.
 UNNECESSARY DOCUMENTATION
In the company there is an unnecessary emphasis on documentation. In transactions
a lengthy procedure of paper work is involved that decreases the efficiency and results in wastage of
time. It is also observed that in some cases the same record is maintained by more than one department.
 LESS CAREER DEVELOPMENT

There are very few programs for career development of the employees. People
working in one section or department from years are still with the same knowledge and style of doing job.
There should be proper career planning of employee that not only sharpens the skills of the employee &
improve the efficiency but also results in better and improved output for the organization.
 CENTRALIZATION

Too much centralization is there in the organization. Managers at low level are not
authorized to make decisions even about minor things, they have to consult top management and give
justification on small matters. Involvement of top management and reaching at the final decisions is time
consuming and some times results in heavy losses. Also man at low level with responsibility and no
decision making power gradually loses interest in his job and is de-motivated that effects his performance.
So there should be delegation of authority up to certain extent that enables manager to take timely
decisions at the spot with confidence. When they take decisions they feel themselves more involved and
responsible for the job and in turn their efficiency increases.
 LESS VALUE ADDITION

PFL is quantity conscious rather than the quality, while FFC with almost the same
plant and machinery is giving the same standards. After viewing the marketing analysis we see that
product quality is not up to standard.
CONTACT INFO
HEAD OFFICE
Trust Plaza LMQ Road, Multan.

Tel # : +92 (61) 4512031-2
Fax # : +92 (61) 4511677
PLANT SITE
Khanewal Road, Multan-5960

Tel # : +92 (61) 9220022, 90610000
Fax # : +92 (61) 9220021
MARKETING OFFICE
Trust Plaza LMQ Road, Multan.

Tel # : +92 (61) 4577509
Fax # : +92 (61)

Operations Report-Pakarab Fertilizers

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Operations Report-Pakarab Fertilizers

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PAKARAB FERTILIZERS LIMITED-Operations 1

OPERATIONS MANAGEMENT REPORT

IQRA KHAN (MB-08-12)

IQRA KHAN (MB-08-12)

IQRA KHAN (MB-08-12)

INTRODUCTION FATIMA GROUP

 Family business established 1936: Third Generation Managing Business.

INTRODUCTION PAKARAB FERTILIZERS

IQRA KHAN (MB-08-12)

IQRA KHAN (MB-08-12)

HEAD OFFICE PLANT SITE

Chief Executive Officer (CEO) Director Operations / Acting

Chief Financial Officer Senior Production Manager

Advisor-Fertilizer Division Manager Training & Laboratory

General Manager Marketing General Manager (HR / Admin)

Director Technical Senior Electrical & Instrument Manager

Senior Technical Services Manager

“Market Leader in supplying efficient plant nutrients”

IQRA KHAN (MB-08-12)

CALCIUM AMMONIUM NITRATE (CAN)

IQRA KHAN (MB-08-12)

NITROPHOSPHATE (NP) PLANT

IQRA KHAN (MB-08-12)

NITRIC ACID PLANTS:

Total authorized capital =Rs.1000 million

IQRA KHAN (MB-08-12)

Internal Audit and commercial divisions are not further divided

For exports and imports dealing office is in Karachi.

IQRA KHAN (MB-08-12)

IQRA KHAN (MB-08-12)

 Price of CAN and Urea are low.

 Fixed targets i.e. fixed level of fertilizer production.

 They design standard products, their international standards set for

Quality of NP, CAN and Urea are:

IQRA KHAN (MB-08-12)

1) Pakarab has fixed capacity plant.

ENTRANCE – EXIT STRATEGY:

IQRA KHAN (MB-08-12)

• For production of “NP” Rock Phosphate is imported

NH 3 gives raw material to other plants.

3) NH 3 HNO 3 (Nitric Acid)

IQRA KHAN (MB-08-12)

4) NH 3 NOX gas (Nitric oxide)

(2) WORK FORCE :

 IT Institute gives the diplomas to new trainees.

IQRA KHAN (MB-08-12)

1- NITRO PHOSPHATE FERTILIZERS (NP):

IQRA KHAN (MB-08-12)

Raw material efficiency = 94%.

IQRA KHAN (MB-08-12)

Moisture : < 0.5 %

Break – Even Point:

 INTERMEDIATE PRODUCTS CAPACITY

IQRA KHAN (MB-08-12)

CAN 450, 000 MT/Annum

CAN = 1500 MTPD

 DAILY CONSUMPTION: Raw material

Rock Phosphate = 710 tons

IQRA KHAN (MB-08-12)

1) FAVORABLE LABOR CLIMATE:

IQRA KHAN (MB-08-12)

Availability of Raw Materials

Risk and Cost System: