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Apart from the aforementioned plants there are fertilizer plants located elsewhere. These are the Oswal Chemicals and fertilizers plant located in Paradeep which has been bought by the IFFCO in recent years and the Indian Farmers and Fertilizers Corporation Ltd. is located at Baragarh. A new phosphate fertilizer complex at Paradeep, a joint venture of Island Republic of Nauru and Government of India has been built. It produces Di-Ammonium Phosphate with a capacity of 2,400 tons per day in first phase. Its second phase also started and produces Phosphoric Acid and Phosphorus Pentaoxide. Deepak Fertilizers to set up ammonium nitrate project at Paradeep.
COMPANY PROFILE
Paradeep Phosphates Limited (incorporated in 1981) is a premier fertilizer company engaged in manufacturing and marketing of complex phosphatic fertilizers. The company was initially commissioned as a joint venture between Government of India and Republic of Nauru and subsequently, in 1993 it was changed into a wholly owned Government of India Enterprise. After disinvestment by Government of India in February 2002, the
management of the company is presently with the fertilizer majors - ZuariChambal Group and OCP of Morocco. PPL produces about 1.2 million metric tonnes of DAP and other complex fertilizers annually. The plant also produces intermediary products like Phosphoric Acid and Sulphuric Acid, which are critical raw materials in the manufacture of phosphatic fertilizers.
Cont..
The plant, located in the port town of Paradeep in the district of Jagatsinghpur in Odisha, has an installed capacity of 7,20,000 metric tonnes per annum of DAP (2,400 metric tonnes per day). PPL is one of the largest integrated DAP plants in India. With a market share varying around 13%, it has a strong presence in the complex fertilizer market - its products marketed under the popular NAVRATNA brand represent a combination of multiple nutrients like Nitrogen, Phosphorus, Potash and Sulphur etc. PPLs range of products caters to almost all agricultural applications. With a stellar turnaround, PPL is a case study in favour of privatization. The companys focus on performance and continuous efforts towards development are reflected in the FAI Awards for Improvement in Overall Performance of the company in 2002-03, 2005-06, 2008-09 and the Best Technical Innovation in the year 2005 - 06. PPL received the ISO 14001: 2004 certification in May 2006 for good environment management systems, reflecting the fact that along with technical advancement, the company also values maintaining and working towards a clean and safe environment.
BRIEF HISTORY
December 1981: Paradeep Phosphates Limited was incorporated as a joint venture of the Government of India and the Republic of Nauru. Subsequently, it became a wholly owned Govt. of India Enterprise in June 1993. February 1986: Phase - I DAP plant came into operation. June 1992: Phase - II Plants viz. SAP, PAP and a power plant with two turbines came into operation. June 1993: Withdrawal of the Republic of Nauru by which PPL became a Public Sector Enterprise, wholly owned by the Government of India. February 2002: Government of India divested 74% of stake. Zuari Maroc Phosphates Ltd., a 50-50 joint venture of Zuari Industries Limited and Maroc Phosphore S.A, a wholly owned subsidiary of OCP, Morocco took over PPL. March, 2007: ZMPL holds 80.45% stake in PPL and the Government of India holds 19.55% stake.
Excellence
Discipline Caring for the people
PRODUCTS SERVICES
MOP Muriate of Potash (MOP), one of the major plant nutrients, is imported by PPL through various ports of India and is sold in the marketing territory along with other complex fertilisers. Quality of Potash Provides strength to the stems and develops the root system Increases resistance to diseases in plants Improves nitrogen and phosphorous uptake. Essential for grain filling and grain weight. Ammonia & Sulphuric Acid Ammonia is required by refrigeration units and steel plants. Sulphuric Acid is demanded by Alum manufacturing units, chemical units and steel plants. PPL has large storage capacities for these products, which are available for industrial consumption in and around Odisha.
PRODUCT SERVICES
cont
Zypmite Zypmite is a micronutrient mixture containing Sulphur, Zinc, Boron, Calcium and Magnesium. Zypmite fortified helps improve soil fertility, increases the intake of NPK fertilisers and improves quality of yield. Di - Ammonium Phosphate (DAP - 18:46:0) Highest nutrient content More than 64%. Contains 18 % Nitrogen, 46% Phosphorous, and 2% Sulphur. Ammonia cal nitrogen improves phosphorous availability as compared to nitrate nitrogen. Best basal fertiliser for all crops. Suitable for all types of soil. Less labor intensive NP - 20:20:0:13 (Ammonium Phosphate Sulphate) Ammonium Phosphate Sulphate. Best fertiliser for Oil seed crop and pulses. Ideal for application in vegetables where frequent fertiliser application is done. The high sulphur content improves the milling and baking quality of cereals
PRODUCT SERVICES
cont
NPK - 12:32:16 Contains three major plant nutrients. Highest total nutrient among NPK containing product (62%) with three major plant nutrients in granule form. Nitrogen in Ammoniacal (Ammonium Sulphate) form. Phosphates (P2O5) and Potash (K2O) contents are almost wholly in water soluble form making it easily and quickly available to plants. 1:1 ratio of Phosphorous & Potash most suitable fertilizer for sugarcane & potato cultivation. Less time and labor required to apply a single fertilizer than to apply straight fertilizer separately. 26%potassium in water soluble form. Also contains 2% sulphur enhances the yield and quality of crops such as Onions, Tobacco, Ginger, Garlic, Tomato, Cabbage, Oil Seed etc. NPK - 10:26:26 High constituent NPK containing (60%) three major plant nutrients. Phosphorous & Potash nutrient ratio of 12:32:16 is 2:1 most suitable fertilizer for basal application , where high rate of P2O5 is recommended as compared to potash. More than one essential plant nutrient are available in packet.
DIVESTMENT OF THE COMPANY:On the Feb 28, 2002 the government of India in line with its policy for disinvestments, of divested 74% of PPL stake in favour of Zuari Maroc Phosphates Pvt. Ltd. (ZMPPL). ZMPPL is a 51%-49% joint venture of Zuari Industries Ltd, the flagship fertilizer company of K.K.Birla group and Maroc Phosphate SA, a wholly owned company of fertilizer giant OCP, Morocco. After disinvestment, the company has become a subsidiary company of both Zuari Industries Ltd. and ZMPPL under section 4(1)(b)& (c) of the Companies Act 1956 with effect from Feb 28, 2002. Further the company was also converted from a public company to a private company with effect from April 29, 2002 after completion of necessary formalities under the Companies Act 1956.
Paradeep Phosphates Limiteds manufacturing capacity per annum is DI-Ammonium Phosphate (DAP) - 7.20 lakh tons. Phosphoric Acid - 2.25 lakh tons. Sulphuric Acid - 6.60 lakh tons.
CORPORATE OBJECTIVES
PPL business objectives are as follows: To maximize capacity utilization. To optimize operational efficiency and productivity. To maintain highest international standards of excellence in product quality. To provide a steady growth in business by technology up gradation expansion and diversification. To have global presence and earn foreign exchange. To maintain leadership in domestic market. To develop a strong R&D base and increase business development activities. The major object of the corporation is to work towards maintaining the right balance of sustainable development. PPL has taken appropriate measures towards building safe environment within and outside the plant.
Major Current Assets i. Cash ii. Accounts Receivables iii. Inventory iv. Marketable Securities
Major Current Liabilities i. Bank Overdraft ii. Outstanding Expenses iii. Accounts Payable iv. Bills Payable
OPERATING CYCLE
The Working capital requirements of a firm mainly depend, to a great extent upon the operating cycle of the firm. It may be defined as the time duration starting from the procurement of goods or raw materials and ending with the sales realization. Length and nature of the cycle depends on the size and nature of firm. In case of a manufacturing concern like PPL series starts from the procurement of raw material and ending with the sale realization of finished goods (after going through the different stages of production). It involves three phases. So, the time gap between the happening of the first event and happening of the last event is called as operating cycle. The operating cycle in PPL (generally in all manufacturing firms) consists of the time required for both completion of the chronological sequence of all the following: Procurement of raw materials and services. Conversion of raw materials into work-in-progress. Conversion of work-in-progress into finished goods. Sale finished goods (Cash or Credit). Conversion of receivables into cash.
0.04
0.03
0.02
0.02
0.16
0.38
0.09
0.99
1.85
3.80
3.62
4.17
5.58
4.19
37
197
96
102
88
65
87
Debtors to sales 1.34 Ratio Average 7 Collection 27 Period W.C 8 Turnover 1.71 Ratio C.A 9 To 65 total asset C.A 10 To Sales 178.88 Ratio Creditor 11 Turnover 1 Ratio 6
5.34
2.60
1.86
1.75
2.12
1.31
37
14
19
20
17
27
3.60
5.42
3.20
2.24
3.98
1.26
64
69
76
77
63
80
73.85
65.76
82.31
84.08
79.63
94.5
2003-2004 2004-2005
56,835 54,161
38,204 33,796
18,631 20,365
2004-2006
2006-2007 2007-2008
68,413
98,305 1,00,297
49,237
61,018 47,004
19,176
37,287 53,293
-1189
18,111 16,006
2008-2009
2009-2010
95,550
2,45,314
65,395
1,65,373
30,155
79,941
-23,138
49,786
Capital
Capital (%)
Capital
Interpretation According to this graph after paying tax PPL makes a profit of less than Rs.15000 lakh in comparison to previous year which is not a good sign for the company.
400000
300000 200000 100000 0
Series1
Interpretation Due to increase in production and sales or due to high commodity prices in the first half of the year, company recorded a higher turnover of more than Rs.5000 crore. But it is less than previous years performance which is not a good sign for the company.
10000 0 -10000 -20000 -30000 Interpretation According to this analysis the company faces net loss for five year before privatization but after privatization it become a profit making company.
1 2 3 4 5 6 7 8 9 10
Axis Title
1 8.5 8
2 10 11.2
3 12.1 12.2
4 12.9 13
5 12.5 12.8
6 10 9.9
7 11.9 12
Interpretation As compared to previous year the production is decreased by1.5 lakh metric ton and sales decreased by 2.9 lakh metric ton. This year sales remain stable according to production.
DISTRIBUTION OF EXPENSES ( %)
Interpretaion From this analysis it is concluded that PPL expenses is more while consuming raw material. Then after while in purchasing traded goods and in other expenses. Expenses are made through selling and distribution of products. Through this distribution analysis we know about the area or field where expenses are made.By knowing this PPL was able to minimise or maximise the expenses. PPL import raw material from outside to make its finished products which cost is very high.
All the payments and remittances are being controlled from PPL corporate office by monitoring the daily position of collection and requirement of payments. The requirement of various units are sent to corporate office and considering the requirement and availability of funds the corporate office advices different units to release various payment by remitting such amount by telegraphic transfers.
RECEIVABLES MANAGEMENT
Receivable is a type of loan extended by the seller to the buyer to facilitate the purchase process. The receivable is an asset as it represents a claim of firm against its customer expected to be realized in near future. Since credit sale assumes a regeable portion of total sales in PPL, so here the receivable management is an area of attention PPL has set of a credit terms and policies under which goods are sold on credit. CREDIT POLICY OF PPL PPL has been holding a good rank in Odisha and in Indian market. It is happened due to a credit policy and proper management of receivable. The following is the summary of the companys credit policies. The company has adopted SAP technology in almost all the departments by which all the works are being done automatically. The company sells most of its products on cash basis. It doesnt give more credits to its dealer and agents those who market its product. The company always takes some advances before giving any delivery. It also accepts the letter of credit and cheques. If any default arises, then they cancel the deal over there.
TO IMPROVE THE WORKING CAPITAL POSITION, VARIOUS STEPS HAVE BEEN TAKEN BY THE MANAGEMENT OF PPL, WHICH INCLUDES
Depositing of cheques collected by different reasons on the same day in the specified bank and the statement of such cheques deposit e-mailed to corporate office. Agreement with the respective banks to give credit to their respective branches in Bhubaneswar by second or third day from the date of deporting the cheques and transfer of such amount consortium of banks accounts under cash management system. All the payment and remittances are being controlled from PPL corporate office by monitoring the daily position of collection and requirements of payments. The requirement of various units are being sent to corporate office and considering their requirement and availabilities of funds, the corporate office advise different unit to release various payments by remitting such amounts by telegraphic transfers.
FINDINGS
PPL also maintains the level of current asset more than twice of the current liabilities; so it may be integrated to be sufficiently liquid. PPL has also gone for long term financing with short terms source keeping in view contains of the individual company, a judicious mix of long and short-term finances should be invested in current assets.
PPL maintains a healthy amount of current assets which shows an increasing trend but at the same time the company should recover is debt amount by which there would be sufficient cash balance. If the company can have sufficient cash balance then it can utilize its current assets in innovative projects for further profit maximization. The operation cycle of PPL is gradually becoming efficient. Although PPL has been holding a good rank in Odisha and Indian market but it is not maintaining a good credit policy and management or receivables. The company sells most of its product on credit basis. The company has a system of centralized control and decentralized collections. The control office at Bhubaneswar receives a statement of sales and outstanding daily from all branches to initiate appropriate action. The company sells to corporate client only through a bank guarantee. Initially new dealers are given no credit. The company has many branches in India and abroad for the quick collection from customers. But the sundry debtors have been increasing continuously. The company does not receive most of its revenue from cash sales. It has been using the perpetual inventory system for inventory management. The corporate office records all the event of inventory after it is recorded in the production centre. It has also good internal management system for better prosperity.
CONCLUSION
PPL continues to be a vital and crucial company for Odisha as well as India. The approach will be to enhance the capacity of PPL to enable them to meet these objectives efficiently and effectively and to formulate the regulatory framework aimed at strengthening the supervision of PPL to enhance its safety and soundness. It includes operational reengineering to be undertaken by PPL to gear them towards meeting their expected roles more efficiently and effectively and to ensure that this will be achieved without resulting in financial problems to the company. Improvement in quality of PPL is the need of the hour. Proper coordination, strengthening of financial strength and proper corporate governance can hopefully achieve the desired result. Last two year it could able to get that much profit as it had got the year before the last some year. But this year touches another milestone. So it is conducted the company has a very strong financial position almost in every respect because the company is going to profit. In the liberalization, privatization and globalization (LPG) era those organizations can survive, if they have sound capital structure.