A

STUDY OF

“ORGANISATIONAL STRUCTURE OF
INDIAN FARMERS FERTILIZER CO-
OPERATIVE LIMITED WITH SPECIAL
ANALYSIS OF THE PHULPUR PLANT”

SUBMITTED BY:
SHOBHIT EUSEBIUS
Reg. No. 08PG0028

CHRIST COLLEGE INSTITUTE OF MANAGEMENT

BANGALORE
 ACKNOWLEDGEMENT

My Organizational Structure Study at the Phulpur plant of Indian Farmers Fertilizer Co-operative
Limited proved to be a good learning experience for me. In these ten days of my study at IFFCO I
was able to gather a lot of information about the organisational design of IFFCO in general and in
particular about the Phulpur Plant of IFFCO.

I would like to thank Mr. V.P. Srivastava, Head Vigilance Officer of IFFCO Phulpur for allowing me
to visit the plant and the various departments and also for the personal effort he made in
familiarizing me with the organisation. I am also thankful to Dr. D.N. Verma of the Training Section
of IFFCO Phulpur Plant for guiding me through the study and providing all the relevant data.

Last but not least I would thank God Almighty for guiding me throughout and keeping me safe and
sound so that I could complete my project properly.

Shobhit Eusebius

2
 TABLE OF CONTENTS

1. INTRODUCTION

2. HISTORY OF IFFCO

3. IFFCO-IN BRIEF

4. VISION & MISSION

5. KEY RESULT AREAS OF IFFCO

6. PROFILE OF PRODUCTS AND SERVICES

7. GOVERNANCE OF IFFCO

8. IFFCO CENTRAL ORGANISATIONAL STRUCTURE

9. DETAILED ORGANISATIONAL STURCTURE OF THE IFFCO PHULPUR PLANT

10. DEPARTMENTAL PROFILES

11. ANALYSIS OF THE ORGANISATION STRUCTURE OF THE PHULPUR PLANT

• WORK SPECIALIZATION

• DEPARTMENTALIZATION

• CHAIN OF COMMAND

• SPAN OF CONTROL

• CENTRALISATION / DECENTRALISATION

• FORMALIZATION

12. MANAGERIAL OBSERVATIONS FROM THE STUDY:

13. SWOT ANALYSIS:

14. SUGGESTIONS

15. CONCLUSION

3
 INTRODUCTION

The Indian fertilizer industry has been supplying a substantial portion of the growing demand of
fertilizers within the country. India is the third largest producer of fertilizers in the world. There are
60 large size fertilizer plants in the country, manufacturing a wide range of nitrogenous, phosphatic
and complex fertilizers. Besides, there are 81 medium and small scale single superphosphate units.

The cooperative sector has come to play a significant role in the Indian fertilizer industry. In terms of
nutrients, the share of cooperative sector in the installed capacity is 19.7 % for nitrogen and 10.2 %
for phosphate. Indian Farmers Fertilizer Cooperative Limited (IFFCO), a Multi-unit Co-operative
Society established on November 3, 1967 accounts for 64% of the installed capacity of Nitrogen and
the total of the Phosphate capacity in the cooperative sector. In the last 41 years IFFCO has emerged
as the pioneer venture in the cooperative sector. It has witnessed a meteoric rise and has blossomed
into the largest manufacturer and marketer of fertilizers in the country. The success of IFFCO has
encouraged the growth of the cooperative movement in INDIA.

The following is an organisational structure study of Indian Farmers Fertilizer Cooperative Limited
with special analysis of the IFFCO Phulpur plant.

HISTORY OF IFFCO
4
During mid- sixties the Co-operative sector in India was responsible for distribution of 70 per cent of
fertilizers consumed in the country. This Sector had adequate infrastructure to distribute fertilizers
but had no production facilities of its own and hence was dependent on public/private Sectors for
supplies. To overcome this lacuna and to bridge the demand supply gap in the country, a new
cooperative society was conceived to specifically cater to the requirements of farmers. In the year
1964, the Cooperative League of USA proposed to the Government of India that the American
Cooperatives were interested to collaborate with Indian Cooperatives in setting up a fertilizer
production co-operative. The idea appealed to the Government of India and eminent cooperators of
the country. It was a unique venture in which the farmers of the country through their own Co-
operative Societies created this new institution to safeguard their interests. Thus Indian Farmers
Fertilizer Co-operative Limited (IFFCO) was registered on November 3, 1967 as a Multi-unit Co-
operative Society. On the enactment of the Multistate Cooperative Societies act 1984 & 2002, the
Society is deemed to be registered as a Multistate Cooperative Society. The U.S. Cooperatives
through Cooperative Fertilizer International (CFI) provided a million dollar aid besides technical
know-how to IFFCO.

The Society is primarily engaged in production and distribution of fertilizers. The byelaws of the
Society provide a broad frame work for the activities of IFFCO as a Cooperative Society. The
number of co-operative societies associated with IFFCO has risen from 57 in 1967 to 38,155 at
present.

IFFCO commissioned an Ammonia - Urea complex at Kalol and the NPK/DAP plant at Kandla both
in the state of Gujarat in 1975. Ammonia - Urea complex was set up at Phulpur in the state of Uttar
Pradesh in 1981. The Ammonia-Urea unit at Aonla was commissioned in 1988. IFFCO has acquired
a fertilizer unit at Paradeep in Orissa in September 2005.

5
IFFCO has made strategic investments in several joint ventures. Godavari Fertilizers and Chemicals
Ltd (GFCL) & Indian Potash Ltd (IPL) in India, Industries Chimiques du Senegal (ICS) in Senegal
and Oman India Fertilizer Company (OMIFCO) in Oman are important fertilizer joint ventures. Indo
Egyptian Fertilizer Co (IEFC) in Egypt is under implementation. As part of strategic diversification,
IFFCO has entered into several key sectors. IFFCO-Tokio General Insurance Ltd (ITGI) is a foray
into general insurance sector. To take the benefits of emerging concepts like agricultural commodity
trading, IFFCO has taken equity in National Commodity and Derivative Exchange (NCDEX) and
National Collateral Management Services Ltd (NCMSL). IFFCO Chattisgarh Power Ltd (ICPL)
which is under implementation is yet another foray to move into core area of power. IFFCO is also
behind several other companies with the sole intention of benefiting farmers.

At IFFCO, the thirst for ever improving the services to farmers and member co-operatives is
insatiable, commitment to quality is insurmountable and harnessing of earths' bounty to drive hunger
away from India in an ecologically sustainable manner is the prime mission.
IFFCO, to day, is a leading player in India's fertilizer industry and is making substantial contribution
to the efforts of Indian Government to increase food grain production in the country.

6
 IFFCO-IN BRIEF

• World’s Largest Fertilizer Co-operative.

• Largest producer of fertilizers in the Country.

• Number of Plants : Five(Kalol, Kandla, Phulpur, Aonla & Paradeep)

• Installed Annual Capacity (‘000 MT)

o Urea : 3689.4

o NPK/DAP: 4335.4

o Total ‘N’ : 2373.9

o TOTAL ‘P2O5’-1712.8

• Only Fertilizer Institution in the country to have surpassed 70

lakhMT per annum in terms of production and 86 lakhMT per
annum in respect of sales.
• Contributed about 19.1%to the total ‘N’ and 24.5% to the total
“P2O5” produced in the country during the year 2006-07.
• Fertilizers marketed through 38155 Cooperative Societies and 158
Farmers Service Centres.
• Service to the Farmers through a variety of programmes.

7
SHARE CAPITAL:
All Share Capital wholly owned by Cooperatives only.

Authorized Share Capital 1000.00 (Rs. in Crore)

Subscribed and Paid up Capital 422.69 (Rs. in Crore)

(Source: IFFCO At A Glance 2006-07)

GROWTH IN NUMBER OF MEMBER SOCIETIES:

45000
38155
40000 37381
35072
35000 30200
28134
30000 25528 26960
25000
20000
15000
10000
5000 57
0
1967-68 1974-75 1980-81 1986-87 1992-93 1998-99 2004-05 2006-07

*Legend:
X-axis :Years
Y-axis: Number of societies

8
CUMULATIVE ACHIEVEMENTS TILL DATE:

FERTILIZER PRODUCTION 969.340 Lakh MT

FERTILIZER SALE 1032.496 Lakh MT

TURNOVER Rs. 79842 Crore

PROFIT BEFORE TAX Rs. 6064.35 Crore

PROFIT AFTER TAX Rs. 4736.82 Crore

CONTRIBUTION TO EXCHEQUER Rs. 4310.88 Crore

GROWTH IN PRODUCTION CAPACITIES:

9
CAPACITY UTILISATION:
(LAST 5 YEARS)

10
TOTAL FERTILIZER PRODUCTION:
(LAST 5 YEARS)

TOTAL SALE OF FERTILIZERS:

(LAST 5 YEARS)

11
TURNOVER:
(LAST 5 YEARS)

NETWORTH
(LAST 5 YEARS)

12
FINANCIAL PERFORMANCE:
(LAST 5 YEARS)

13
 VISION & MISSION
VISION
To augment the incremental incomes of farmers by helping them to increase their crop productivity
through balanced use of energy efficient fertilizers, maintain the environmental health and to make
cooperative societies economically & democratically strong for professionalized services to the
farming community to ensure an empowered rural India.

MISSION

1. To provide to farmers high quality fertilizers in right time and in adequate quantities with an
objective to increase crop productivity.
2. To make plants energy efficient and continually review various schemes to conserve energy.
3. Commitment to health, safety, environment and forestry development to enrich the quality of
community life.
4. Commitment to social responsibilities for a strong social fabric.
5. To institutionalize core values and create a culture of team building, empowerment and
innovation which would help in incremental growth of employees and enable achievement of
strategic objectives.
6. Foster a culture of trust, openness and mutual concern to make working a stimulating and
challenging experience for stake holders.
7. Building a value driven organisation with an improved and responsive customer focus. A true
commitment to transparency, accountability and integrity in principle and practice.
8. To acquire, assimilate and adopt reliable, efficient and cost effective technologies.
9. Sourcing raw materials for production of phosphatic fertilizers at economical cost by entering
into Joint Ventures outside India.
10. To ensure growth in core and non-core sectors.
11. A true Cooperative Society committed for fostering cooperative movement in the country.

IFFCO is dedicated to emerging as a dynamic organisation, focusing on strategic strengths, seizing

opportunities for generating and building upon past success and enhancing earnings to maximize the
shareholders' value.

14
 KEY RESULT AREAS OF IFFCO

1. FERTILIZER PRODUCTION: The main aim of IFFCO is to remove the dependence of

the Indian Fertilizer sector on Foreign Imports. For achieving this goal IFFCO runs and
maintains its Five Production plants and also aims to increase its production capacity by
adopting new technology and acquiring new plants.

2. PROMOTION OF AGRICULTURAL AND RURAL DEVELOPMENT: To achieve this

target IFFCO undertakes production, processing and manufacture of insecticides, pesticides,
seeds, agriculture machinery and implements and other agricultural production requisites by
setting up or taking on lease manufacturing units either directly or in collaboration with or as
a joint venture with other Cooperative Institution. Also IFFCO’s CORDET is a major
endeavor in this direction.

3. DEVELOPMENT OF AGRICULTURAL COOPERATIVES: IFFCO aims to undertake,

promote, assist and encourage development of cooperatives with special thrust on sustainable
agriculture and tries to provide for social, economic and culture development of the members
through cooperative bodies, voluntary institutions and other entities. IFFCO also promotes
research and training on the application of modern management, technology and global
experience for cooperative development

15
 PROFILE OF PRODUCTS AND SERVICES
1. UREA
IFFCO's Urea is not merely a source of 46% of nutrient nitrogen for crops, but it is an integral part
of millions of farmers in India. A bag of IFFCO's urea is a constant source of confidence and is a
trusted companion for Indian farmer.

2. BIO – FERTILIZERS
A biofertilizer unit was established at Cooperative Rural Development Trust, Phulpur (Uttar
Pradesh) in 1996 - 97 and other at Kalol (Gujarat) in 2003-04 with an annual capacity of 75 MT and
165 MT respectively of different cultures such as Rhizobium, Azotobacter, PSM, Azospirillium and
Acetobacter.
Phosphate Solubilising Micro Organism - Several soil bacteria and fungi
possess the ability to bring insoluble phosphates into soluble forms by secreting
organic acids. They can be applied to and recommended for all crops

Rhizobium - It is the most important nitrogen fixing organism. It lives

symbiotically in the root nodules of leguminous plants and supply nitrogen to the
plant through nitrogen fixation. Besides, supplying nitrogen to the crop, nitrogen
fixed by legume - Rhizobia association would also leave residual nitrogen for the succeeding crops.
The beneficiary crops are Groundnut, Soybean, Red-gram, Green-gram, Black-gram, Lentil, Cow
pea, Bengal-gram and Fodder legumes.

Azotobacter - It is non symbiotic nitrogen fixing bacteria recommended for non leguminous. The
Azotobacter performs well if the soil organic matter content is high.

Azospirillium - It is an associative microaerophilic nitrogen fixer is commonly found in association

with the roots of cereals and forage grasses. The beneficiary crop includes Sugarcane, Vegetables,
Maize, Pearl millet, Rice, Wheat, Fodders and Oil seeds.

Acetobacter - It is a symbiotic bacteria capable of fixing atmospheric nitrogen by living within the
sugar plant. They are found in all parts of plant body. It is suitable for sugarcane cultivation.

16
3. AMMONIUM PHOSPHATE SULPHATE
It is the most widely used fertilizer in the country. It is a white crystalline salt, containing 20 to 21
percent ammonical nitrogen and 17 percent Phosphates. Being soluble in water, it acts quickly, but
despite its high solubility, its nitrogen is not readily lost in drainage, because the ammonium ion is
retained by the soil particles. it is, therefore, very suitable for wet-land crops

4. NPK (Nitro-Phospho-Potassium)/DAP (Diammonium

Phosphate)
As far as Indian farmer is concerned, IFFCO's NPK/DAP is a source of crucial nutrients N, P, K for
the crops. The two grades of NPK produced by IFFCO, 10:26:26 and 12:32:16, indicating the
content of N, P, K proportion, are tailor made to supply the exact composition required for
replenishment of the soil.

5. AMMONIA
Ammonia is the intermediate product in Urea production. Out of total energy consumed for the
production of Urea, 80% of the Energy is consumed in production of Ammonia. Therefore, efficient
production of Ammonia has greatest impact on Specific Energy Consumption.

6. COOPERATIVE RURAL DEVELOPMENT TRUST (CORDET)

IFFCO promoted Cooperative Rural Development Trust (CORDET) in the year 1979 to provide
education and training to farmers on various aspects of crop production, horticulture, animal
husbandry, farm machinery etc. CORDET is service providing endeavor of IFFCO.

Land for CORDET adjacent to Phulpur plant of IFFCO was made available by Motilal Nehru
Memorial Trust and CORDET has established Motilal Nehru Farmers Training Institute at Phulpur.
At CORDET, Phulpur the training programmes are of one-six week duration, while at CORDET,
Kalol training programmes of one-two weeks duration are held on different aspect related to farm
production. At CORDET, Phulpur a bio-fertilizer unit was established in 1996-97 with an annual
capacity of 75 MT of different strains. Bio-fertilizers are sold through IFFCO’s Farmers Service
Centres and Cooperative societies and also distributed to the farmers.

17
 GOVERNANCE OF IFFCO

The cooperatives are run on the cardinal principle of being owned, controlled and used by the
members. In accordance with the same, the activities of IFFCO are governed by the elected
body/bodies through democratically expressed popular will of the member societies. The existing
Multi-state Cooperative Societies Act, 1984 and the Byelaws framed by the General Body of IFFCO
form the main frame work to guide the IFFCO activities. In accordance with the existing law, IFFCO
has a Representative General Body (RGB); which is a main policy making body. The RGB is the
supreme body which lays down the policies to achieve the objectives of the Society.

Composition of The Representative General Body:

1 Members of the Board of Directors.

2 Member Societies holding shares of the value of Rs 100 thousand and above send their
representative directly on the Representative General Body of IFFCO. These are mostly Chairmen of
their respective societies elected by the members of that society.

3 Member-Societies having shares of lower denominations total value of which is not exceeding Rs
100 thousand, are grouped into constituency of 200 societies. The Chairman of the respective
societies in this group of 200 societies form the electoral college; out of which one representative is
elected as a delegate for the RGB of IFFCO. The maximum number of such delegates from any State
/ Union Territory does not exceed 25.

18
BOARD OF DIRECTORS:

IFFCO Board of Directors, comprising of 30 Members, is responsible for direction and control of
management of affairs of the society within the broad policies laid down by the General Body of
IFFCO. The Board interprets the organisational objectives and sets up specific goal to be achieved
by the group of professional managers headed by the Chief Executive. The Board of Directors of
IFFCO carry out all functions as specified under the Multi-state Cooperative Societies Act/Rules.
The Board of Directors frame policies, direct the various activities of the Society, and under take any
other activities conducive to overall growth and development of Societies. The Board is headed by
the Chairman.

Managing Director: He/She is the Chief Executive of the organisation with responsibilities for
general conduct, supervision and management of day to day business and affairs of IFFCO.
Finance Director: He/She oversees the financial aspects.
Marketing Director: Looks after the marketing functions.
Director (Technical): looks after the Technical aspects.
Director (HRD): Is responsible for all the Human Resources.
Director (Joint ventures): He/She oversees all the Joint Venture operations.
Director (Coop. Development): looks after Cooperative Development.
These functional directors are assisted by Senior Executives who are experts in various disciplines.

19
IFFCO CENTRAL ORGANISATIONAL
STRUCTURE

CHAIRMAN

BOARD OF
DIRECTORS

MANAGING
DIRECTOR

TECHNICAL DIRECTOR HUMAN DIRECTOR DIRECTOR

MARKETING FINANCE
RESOURCE JOINT- CO-OPERATIVE
DIRECTOR DEVELOPMENT VENTURES DEVELOPMENT
DIRECTOR DIRECTOR

Chairperson: Shri Surinder Kumar Jakhar

Directors
Shri Pradeep Shukla Shri K. Srinivasa Gowda
Shri S.L. Dharme Gowda Shri K. Somashekhar Rao
Shri Kartick Chandra Sarkar Shri Simachal Padhy
Shri Harminder Singh Jassi Shri Pramod Kumar Singh
Shri M.Gopal Reddy Shri R.K.Dhami
Dr. Ramesh Chandra Sagar Shri B.S.Vishwanathan
Shri Rajhans Upadhyaya Dr U.S.Awasthi, (Managing Director)
Shri G.C. Maikota Shri D. K. Bhatt, (Marketing Director)
Shri Vithalbhai H. Radadia Shri V. K. Bali, (Director Technical)
Shri Sheesh Pal Singh Shri. Rakesh Kapur, (Finance Director)
Shri Raj Kumar Tripathi Shri S.K Mishra, (Director HRD )
Shri Balvinder Singh Nakai Dr. G. N. Saxena, (Director Coop. Develop.)

20
Shri Ravindra Pratap Singh Mr. K.L Singh , (Director Joint ventures)

DETAILED ORGANISATIONAL STURCTURE

OF
THE IFFCO PHULPUR PLANT

UNIT PROFILE:

Situated near Allahabad in Uttar Pradesh, IFFCO Phulpur complex has two production units –
Phulpur unit-I and Phulpur unit-II and is the world’s largest fertilizer complex based on naphtha
as feed stock.
Phulpur unit- I comprising of one 900 Te/day Ammonia Plant and a 1500 Te/day Urea Plant along
with associated off-site facilities like Steam generation plant, Power generation plant, DM water
plant, Inert gas plant etc. was commissioned way back in 1981. Due to increasing demand-supply
gap of Urea in the country, Govt. of India has given approval for expansion project at Phulpur site
since basic infrastructure facilities were available at Phulpur.
Phulpur-II was commissioned in December 1997 and consists of 1350 MTPD Ammonia plant and
2200 MTPD Urea plant along with associated off-site facilities based on latest state of art
technologies.

CORDET AT IFFCO PHULPUR:

The CORDET Centre at IFFCO Phulpur provides various services to farmers such as training on
modern technology in agriculture and related topics, Solving problems of the local farmers by way
of organizing camps in their villages. Some fields in which CORDET provides special training are:
Seed Production ,Horticulture ,Green Fodder Production Unit, Poultry, Fish, Agricultural, Drip,Bio-
Gas Plant ,Seed Multiplication Programme, Village development programme. These Services are

21
provided to farmers from a CORDET institute known as Motilal Nehru Farmers Training Institute
which has Dr. Bachhan Singh as the Principal.

CORDET is equipped with the facilities to fulfill its objectives. Specialists are available for
imparting practical training. Exercise room, Library, hostel, Canteen, Chaupal and Play ground are
available for the farmers. Ultra modern equipment, LCD and overhead projectors , Audiovisual
multimedia facilities are available to make the training fruitful. Colour T.V.,
musical instruments, games like volleyball, Table Tennis, Carrom, Chess etc. are available at
CORDET.

At CORDET, Phulpur a bio-fertilizer unit was established in 1996-97 with an annual capacity of 75
MT of different strains. Bio-fertilizers are sold through IFFCO’s Farmers Service Centres and
Cooperative societies and also distributed to the farmers

MANAGEMENT OF THE PHULPUR UNIT:

Name Designation
Mr.Surjit Singh Senior General Manager
Mr. A. K. Bhargava General Manager
Mr. V.P. Srivastava Head Vigilance
Mr. A. M. Goswami Jt. General Manager(Utilities)
Mr.B.B.Sachar Jt. General Manager(Finance
&Accounts)
Mr. Ranjan Dwivedi Jt. General Manager
(Personnel&Administration)
Mr. S.R.Kushwaha Jt.General Manager(Materials)
Mr.Ashish Kumar Panda Jt.General Manager(Production-I)
Mr.Mukul Srivastava Jt.General Manager(Production-II)
Mr.Yogesh Narula Jt.General Manager(Technical)
Mr.G.K.Gautam Jt. General Manager(Inspections &
Plant Health)
Mr.Sandeep Ambekar Jt.General Manager(Maintenance)

22
 ORGANISATIONAL STRUCTURE OF IFFCO PHULPUR

SENIOR

GM

HEAD
GM VIGILA-
NCE

JGM JGM JGM JGM JGM JGM JGM JGM

JGM
P -II UTS F &A P&A MT TECH INS & PH MAINT CSO
P -I

Abbreviations used:
GM: General Manager
JGM: Joint General Manager
P-I: Production Department – I
P- II: Production Department -II
UTS: Utilities Department
F&A: Finance & Accounts Department
P&A: Personnel & Administration Department
MT: Materials Department
TECH: Technical Department
INS&PH: Inspections & Plant Health Department
MAINT: Maintenance Department
CSO: Chief Security Officer

The Phulpur plant follows functional departmentalization and is divided into the 9
departments mentioned above.

23
DEPARTMENTAL PROFILES:
1. Production Department – I : Production Department – I which is in-charge of running
the two Ammonia plants and also handles all matters concerning plant safety and fire control
has the following organizational structure.

JOINT GENERAL MANAGER

(PRODUCTIONS-I)

DY. GENERAL MANAGER DY. GENERAL MANAGER

(AMMONIA PRODUCTION I & II) (FIRE & SAFETY)
)

CHIEF MANAGER
CHIEF MANAGER
(AMMONIA PRODUCTION I & II) (FIRE & SAFETY)

MANAGER MANAGER
(AMMONIA PRODUCTION I & II) (FIRE & SAFETY)

This department strives to run and maintain both the ammonia plants at maximum functional
efficiency. This department also makes certain that the whole plant has sufficient safety measures
and controls installed and properly maintained.
To ensure maximum efficiency this department:
• Systematically uploads production details into the Management Information System (MIS)
database.
• Executes regular performance and energy audits of both plants to identify and repair sources
of wastage.
• Ensures co-ordination with other departments such as Production Department II , Materials
and Off-sites etc.
• Carries out periodic checks of all Plant Safety and Control Measures.
The following performance chart elaborates the efficiency of this department:
Ammonia Plant I
Particulars 2006-07 2005-06 2004-05
Production (Thousand MT) 341.390 320.249 336.170
24
Cap. utilization (%) 105.89 99.33 102.06
Ammonia Plant II
Production (Thousand MT) 506.172 516.240 496.784
Cap. utilization (%) 100.93 102.90 99.44

2. Production Department – II: This Department is in-charge of running the two Urea
plants and also product handling and transportation. It has the following organizational
structure.

JOINT GENERAL
MANAGER
(PRODUCTION-II)

DY.GENERAL DY. GENERAL DY. GENERAL

MANAGER MANAGER MANAGER
(UREA I & II) (PRODUCT HANDLING) (TRANSPORTATION)

CHIEF MANAGER CHIEF

CHIEF MANAGER MANAGER
(PRODUCT HANDLING)
(UREA I & II) (TRANSPORTATION)

MANAGER MANAGER
(UREA I & II) MANAGER
(TRANSPORTATION)
(PRODUCT HANDLING)

25
This Department is responsible for running the two Urea Plants and is also in charge of product
handling and transportation. The main functions of this department are as follows:
• Maintaining and operating the two urea plants at maximum efficiency and continuously
uploads production details into the M.I.S. database.
• To reduce energy wastage
• To maintain co-ordination with other departments such as Production Department I ,
Materials and Off-sites etc.
• To package and transport finished products to the stores with minimum wastage and to
transport packaged product from stores to the transport department as and when required
• To maintain the Rail and road transportation infrastructure and to transport finished and
packaged products to the required destination as instructed.

The efficiency of this department can be analyzed by studying the following performance charts of
the two Urea Plants:

Urea Plant I
Particulars 2006-07 2005-06 2004-05
Production (Thousand MT) 573.603 551.100 565.056
Cap. utilization (%) 104.08 100.00 104.45

Urea Plant II
Particulars 2006-07 2005-06 2004-05
Production (Thousand MT) 506.172 516.240 496.784
Cap. utilization (%) 100.93 102.90 99.44

26
3. Utilities Department: This department is responsible for the running and maintenance of
various ancillary facilities such as Steam generation plant, Power generation plant, De-Mineralised
water plant, Inert gas plant, Instrument Air plant, Reverse Osmosis Plant etc. The basic
organizational structure of this department is as follows.

JOINT GENERAL MANAGER

(UTILITIES)

Dy. GENERAL MANAGER Dy. GENERAL MANAGER

(OFF SITES) (POWER PLANT)

CHIEF MANAGER CHIEF MANAGER

(OFF SITES) (POWER PLANT)

MANAGER MANAGER
(OFF SITES) (POWER PLANT)

This department has two functional sub-divisions.

One division is responsible for facilities such as Steam generation plant, De-Mineralised water plant,
Inert gas plant, Instrument Air plant, and Reverse Osmosis Plant.
The other division is responsible for the functioning of the Power Plants. Therefore this department
handles all the supplementary installations which are necessary for the efficient functioning of the
main Urea and Ammonia Production plants. It also streamlines the activities of these off site plants
with the requirements of the main production plant.
27
4. Finance & Accounts Department: The finance and accounts department handles all
financial matters of the Phulpur plant. It records and also handles the transactions, it has sections for
book keeping, payroll maintenance, bills, Financial instruments and contracts, bank transactions,
Excise & Sales tax and a Budget & Reconciliation Section. It has the following structure.

JOINT GENERAL MANAGER

FINANCE &ACCOUNTS

Dy. GENERAL MANAGER Dy. GENERAL MANAGER

(FINANCE) (ACCOUNTS)

CHIEF MANAGER CHIEF MANAGER

(FINANCE) (ACCOUNTS)

MANAGER MANAGER
(FINANCE) (ACCOUNTS)

This department records transactions on accrual basis and works on strict policies and guidelines laid
down by higher levels of management. This department maintains all transactions on computerized
accounting software specially developed for IFFCO by IBM on its Louts – Domino platform where
all necessary records are automatically stored in a central database to provide easy access to higher
levels of management.

28
5. Personnel & Administration Department: This department executes all Human
Relations and General administration related activities of the Phulpur plant. The Personnel &
Administration department has the following structure.

JOINT GENERAL
MANAGER

CHIEF MANAGER
CHIEF MANAGER
(GENERAL
(HUMAN RELATIONS)
ADMINISTRATION)

MANAGER MANAGER MANAGER

(HUMAN RELATIONS) (LEGAL MATTERS) (CONTRACT LAWS)

This department has two functional sub-divisions, namely Human relations and General
administration. Human Relations has further sub-levels such as Human relations, Legal Matters and
Contract Laws, the General Administration sub-division however has no such sub-levels. The
General Administration sub-division deals with matters relating to welfare activities, perks and
employee loans. The efficiency of the Personnel & Administration department can be evaluated by
considering the following points:

o The Phulpur plant has faced no major strikes in the last 25 years.
o The Phulpur plant has not faced any losses due to any kind of labour unrest.
o Labour turnover in the Phulpur plant is negligible.

29
6. Materials Department: This department is responsible for the physical storage of all stores
and purchases and following is the basic organizational structure within this department.

JOINT GENERAL MANAGER

(MATERIALS)

Dy. GENERAL MANAGER Dy. GENERAL MANAGER

(STORES) (PURCHASES)

CHIEF MANAGER CHIEF MANAGER

(STORES) (PURCHASES)

MANAGER MANAGER
(STORES) (PURCHASES)

The materials department is responsible for storage and issue of all purchases and finished goods. It
maintains adequate storage facilities so as to minimize deterioration of stock during storage. It also
maintains proper inventory records of all issues and receipts. The materials department decides on
the Economic order quantity and re-order levels and places purchase orders accordingly. The
materials department of IFFCO Phulpur follows the perpetual inventory system with continuous
stock taking and consequent updating of the stores ledger and bin card.

30
7. Technical Department: The Technical department has following sub-divisions
o Process: This is an engineering sub-division which is responsible for the continuous
evaluation and maintenance of all engineering process carried out in the plant
o General Engineering: This sub-division provides engineering and technical support to the
whole plant.
o The above mentioned sub-divisions of the Technical department work in co-ordination with
the Inspections and Plant Health Department and Maintenance Department.
o Research & Development: This Department is responsible for applying new technologies
during plant upgradation and also for the development of newer more efficient production
techniques.
o Environment& Pollution Control: This sub-division is responsible for proper disposal of
industrial waste.
o Training: This Sub-division trains and orients new employees and also conducts refresher
courses for old employees.
The Technical department has the following structure:

31
 JOINT
GENERAL
MANAGER
(TECHNICAL
DEPARTMENT)

DY.
DY. DY. DY.
GENERAL GENERAL DY.
GENERAL GENERAL MANAGER GENERAL
MANAGER MANAGER
(R&D) (ENVIRONMENT MANAGER
MANAGER (GENERAL &
(PROCESS) ENGINEERING) POLLUTION (TRAINING)
CONTROL)

CHIEF MANAGER CHIEF CHIEF CHIEF

CHIEF MANAGER (GENERAL MANAGER MANAGER MANAGER
(PROCESS) ENGINEERING) (R&D) (E&P (TRAINING)
CONTROL)

MANAGER
MANAGER (E&P
MANAGER MANAGER
MANAGER (GENERAL CONTROL)
(R&D) (TRAINING)
(PROCESS) ENGINEERING)

8. Inspection & Plant Health: This Department is responsible for regular inspections of all the
processes, systems and controls of the plant and their general maintenance. This department also
reviews whether all policies and procedures are being followed in all technical departments. This
Department does not execute the repair or maintenance work it only identifies the problem and
reports it to the Maintenance or technical departments with a suggestive plan for the maintenance
required.

The following is the organizational structure within this department.

32
 JOINT
GENERAL
MANAGER
(INSPECTION&
PLANT HEALTH)

DY. DY.
GENERAL GENERAL
MANAGER MANAGER
(INSPECTION) (PLANT HEALTH)

CHIEF MANAGER
CHIEF MANAGER
(INSPECTION)
(PLANT HEALTH)

MANAGER MANAGER
(INSPECTION) (PLANT HEALTH)

9. Maintenance Department: The maintenance department has the following sub-divisions:

o Electrical Maintenance: This sub-division provides engineering support to all plant facilities
for the maintenance of all electrical fittings and equipments.
o Mechanical Maintenance: This sub-division is an engineering division responsible for the all
mechanical maintenance, upgrades and installations.
o Instrumentations& Process Control: This sub-division is responsible for all plant
Instrumentation. It executes regular check ups and maintenance runs and works in co-
ordination with the Processes sub-division of the technical department.

33
 o Civil: This sub-division is responsible for the installation and upkeep of all civil amenities
within the plant including the employee township at IFFCO Phulpur plant.

JOINT
GENERAL
MANAGER
(MAINTENANCE
DEPARTMENT)

DY.
DY. DY.
GENERAL DY.
GENERAL GENERAL
MANAGER GENERAL
MANAGER MANAGER
(INSTRUMENTATION MANAGER
(ELECTRICAL (MECHANICAL
& (CIVIL)
MAINTENANCE) MAINTENANCE)
PROCESS CONTROL)

CHIEF MANAGER
(ELECTRICAL CHIEF MANAGER
CHIEF MANAGER
MAINTENANCE) (MECHANICAL CHIEF MANAGER (CIVIL)
MAINTENANCE) (I&P CONTROL)

MANAGER
(ELECTRICAL MANAGER
MANAGER MANAGER
MAINTENANCE) (MECHANICAL
(I&P CONTROL) (CIVIL)
MAINTENANCE)

ANALYSIS OF THE ORGANISATION

STRUCTURE OF THE PHULPUR PLANT

Factors taken into consideration while analyzing the Organisational structure of IFFCO Phulpur:
o Work Specialization
o Departmentalization
o Chain of Command
34
 o Span of Control
o Centralisation / Decentralisation
o Formalization

1. WORK SPECIALIZATION:

 This is the process of dividing the many tasks performed within the organisation into
specialized jobs and tasks with a view of improving performance of the organisation. This
approach rest firmly on the assumption that the more a particular job is broken down into
simple component parts the more specialized and efficient a worker can be in performing his
part of the job.

IFFCO Phulpur plant is a fertilizer production plant which runs on advanced technologies and
therefore there is a high degree of specialization of tasks to ensure maximum efficiency. All jobs are
broken down into a number of steps and each step is completed by different individuals or groups.
IFFCO runs intense training programmes for new employees and also refresher courses for existing
employees and trains them in specific fields of operation. These employees then work in their fixed
areas of specialization only where their advanced training and continuous repetition of the same task
helps them to achieve maximum efficiency. These sub-divided tasks performed by specialized
individuals or groups club together to maintain the functioning of the Phulpur Plant at high standards
of efficiency.

2. DEPARTMENTALIZATION

 After the division of jobs through work specialization jobs need to be grouped together so
that common tasks can be co-coordinated . This co-ordination helps increase effectivity of
35
 specialization. The basis by which jobs are grouped together is called departmentalization.
Departmentalization maybe on the basis of function, product, geography, process or
customer.

The Phulpur plant of IFFCO follows functional departmentalization i.e. people who perform similar
functions are grouped together and assigned to the same department. This form of
departmentalization helps the plant to achieve economies of scale (by allowing employees
performing the same jobs to share facilities and avoid duplication of activities). It also allows
individuals to specialize and the result is a highly skilled workforce which is a direct benefit to the
organisation. The plant has the following departments :
1. Production – I
2. Production -II
3. Utilities
4. Finance & Accounts
5. Personnel & Administration
6. Materials
7. Technical
8. Inspections & Plant Health
9. Maintenance

The profiles of these departments have already been discussed above.

3. CHAIN OF COMMAND:

36
  The unbroken line of authority that extends from the top of the organization to the lowest
echelon and clarifies who reports to whom. Chain of command refers to the hierarchical
arrangement of authority and responsibility. They flow in a clear, unbroken vertical line from
the highest executive to the lowest employee. Clarity of direction is the basis for the chain.
Chain of command has two complementary concepts: “authority” and “unity of command”
Authority refers to the rights inherent to a managerial position to give orders and expect
them to be obeyed.
The concept of unity of command holds that no subordinate should receive directions
from more than one superior.

The Chain of Command is very well defined and rigid in the Phulpur Plant of IFFCO. The division
and sub-division of all tasks is distinct and adequate authority is given to all employees to perform
their specific jobs. The well defined organisational structure also ensures unity of command. The
Phulpur plant encourages flow of communication along the chain of command to ensure efficiency.
It encourages both downward and upward flow of communication in the chain. It uses all
conventional methods of office communication such as letters, circulars, notes, notices, reports,
memoranda etc. IFFCO also utilizes a digital system of communication specially designed for it by
IBM on its “Lotus Notes” suite of software and a “Management Information System” known as
“SANJAY” based on IBM’s “Lotus Domino Platform”. These communication systems ensure a
smooth flow of the Chain of Command.

4. SPAN OF CONTROL:

 The number of subordinates a manager can efficiently and effectively direct is known as the
span of control. In other words the number of people formally required to report to each
manger is his span of control. Span of control is clearly represented by an organisational

37
 chart. If the span of control is wide organisation tends to have a flat hierarchy and if the span
of control is narrow organisation has a tall hierarchy.

As can be seen from the organisational designs of IFFCO Phulpur the span of control is not fixed in
the organisation but varies at different levels. However in general the Phulpur Plant has a tall
hierarchy with narrow spans of control and many levels. This narrow span of control facilitates a
close control of all employees by their managers and thus facilitates higher efficiency.

5. CENTRALISATION / DECENTRALISATION:

 Centralisation refers to the degree to which decision making is concentrated at a single point
in the organisation. The implications of centralisation is that the decision making power with
regard to planning, organizing, directing and control is in the hands of mangers at the top
level.
Decentralisation is the extent to which authority and decision making are spread throughout
all levels of an organisation rather than being reserved exclusively for top management.

The Phulpur Plant of IFFCO has a highly centralized structure of authority. The major policy
decisions, strategies and goals are set by the Board of Directors of IFFCO and conveyed to the top
levels of management of the IFFCO Phulpur plant. At the Phulpur plant the Senior General Manager
along with the General Manager and the Joint General Managers then analyze the Goals set for them
and make decisions and plans to attain them. However The Board only lays down a broad outline
and sets goals, all decisions regarding the daily affairs of the plant and the methods to be adopted to
achieve the goals are taken by the Top Levels of management at the Phulpur plant.

6. FORMALIZATION:

 Formalization refers to the degree to which jobs within the organization are standardized. If a
job is highly formalized then the employee has a minimum amount of discretion over when
and how it is to be done. Employees can be expected always to handle the same input in
38
 exactly the same way, resulting in a consistent and uniform output. There are explicit job
descriptions, lots of organisational rules and clearly defined procedures covering work
processes in organizations in which high levels of formalizations exist.

The Phulpur plant has high levels of formalization for most jobs. This is in line with its
organisational set up which has a rigid chain of command and high centralisation. However the level
of formalization is not very high for top levels of management.

MANAGERIAL OBSERVATIONS FROM THE

STUDY
39
1. IFFCO has a Bureaucratic Organisational structure and is characterized by a high degree of
specialization, formalized rules and regulations, functional departments, centralized
authority, narrow spans of control and decision making that follows a rigid chain of
command.

2. Intra-departmental Structuring of management tasks is more or less fixed in all departments.

There are usually four managerial levels in each department starting from the Joint General
Manager and going down to the manager.

3. The Structural Environment at IFFCO Phulpur is Mechanistic in nature i.e. there is a high
degree of specialization and rigid rules and regulations are imposed. The mechanistic
structure is a basic characteristic of most Bureaucratic Organizations.

4. The Phulpur Plant has designed its organisational structure to function in a highly stable
business environment. The plant functions throughout the year to achieve pre-determined
targets and the management tries to avoid any unexpected changes in this production plan.
The structure is so rigid that sudden changes cannot be handled easily.

5. In some departments there are unnecessary sub-divisions and this tends to reduce efficiency.
For example in the Personnel & Administration Department both Legal Matter and Contract
Laws could be handled by one sub division.

6. The Inspections & Plant Health Department seems unnecessary, the Maintenance Department
itself could have had Inspections and Plant Health as a sub-division.

SWOT ANALYSIS
40
STRENGTHS:
1.Largest producer of fertilizers in the Country.
2. Five strategically located plants with cutting edge production technologies.
3. Most plants achieve capacity utilization in excess of 100% .
4. A large number of co-operative societies are associated with IFFCO (38,155 at present).
5. Vast Marketing and distribution network due to the high number of co-operatives associated
with IFFCO.
6. Their service providing network and feedback network is also pervasive in Indian rural areas
.
7. Highly diverse and strategic portfolio of external investments.
8. No external trade unions exercise any power within IFFCO.

WEAKNESSES:

1. IFFCO has a bureaucratic organisational structure and therefore is obsessed with working
within set frameworks defined by rigid rules and regulations. This often discourages
innovation and may also cause sub unit conflicts. In some cases blind adherence to rules and
regulations may limit the perspective of a manager and result in Functional unit goals
overriding organisational goals.
2. The organisational setup is very rigid and is not very efficient in handling sudden changes in
business environment.
3. There is excessive sub-divisions in some departments and this results in inefficiency.

41
OPPURTUNITIES:

IFFCO has embarked upon a growth plan titled “VISION 2010” to achieve annual turnover of Rs.
15,000 Crore(USD 3400 Million)by the year 2010.
Broadly identified business activities under the “VISION 2010” are:

1. Installation of Ammonia/Urea plants and also acquisition of fertilizer units.

2. Generation of Power
3. Production and Marketing of micro-nutrients, seeds, bio- fertilizers, pesticides etc.
4. Value addition to agri-products and marketing
5. Banking and Financial Services
6. Information Technology and IT enabled services
7. Establishments of Retail Chain in urban and semi-urban
locations

THREATS:

1. Competition from KRIBHCO i.e. Krishak Bharati Co-operative another government under
taking which also produces fertilizers and is very similar to IFFCO in nature.
2. Aggressive competition from private companies which are now entering the fertilizer sector.
3. The Government of India has a major influence on the functioning of IFFCO. It is the
Government which decides “What to produce?”, “How much to produce?” and “Where to
sell?”. This factor often becomes IFFCO’s major weakness as it sometimes has to function
under undue political pressure and take steps which are non-profitable.
4. Government policies on Import of fertilizers from foreign nations and decrease in subsidies.

42
 SUGGESTIONS

1. The organisation should establish a national level committee which can familiarize the
government with the ground realities in the Fertilizer sector and also advise the government
in formation of Policies regarding distribution of fertilizers, import of fertilizers and
subsidies.

2. There should an Entrepreneurship Development Cell at all plants which should encourage
innovation amongst employees. This would infuse some of the positives of an organic design
in to the organisational environment. This cell should lay new business ideas and innovations
in front of the top levels of management.

3. Unnecessary sub-divisions in departments should be eliminated to promote efficiency. In the

Personnel & Administration department one sub-division can handle both Legal Matters and
Contract Laws.

4. The Inspections & Plant Health Department can be dissolved. The Maintenance Department
can have an additional sub-division for Inspections & Plant Health. This will streamline the
organisational structure and also increase the efficiency of overall maintenance.

5. The Co-operation should not be rigid in its approach and should be ready to face sudden
variations in business environments. Managers should not limit themselves to following
regulations blindly but should proactively analyze situations.

43
 CONCLUSION

The organisational study of the IFFCO Phulpur Plant and also the analyses of IFFCO in general
demonstrates that a bureaucratic organisational structure is not always inefficient. In fact if properly
applied it has many positive aspects especially in large and complex organizations. For example,
some types of rules and regulations are required to avoid unpredictability and arbitrary action. Some
sort of hierarchal arrangement is necessary to manage the large number of people in an organisation.
Therefore the key is to utilize the characters of a bureaucratic structure but not to over emphasize on
them as that results in rigidity in the structure. In a bureaucratic organisational structure an efficient
business environment may be created by having the right mix of mechanistic and organic models.

IFFCO's experience has also shown that cooperative sector can succeed even in high investment,
high technology areas like fertilizer production. The large scale extension activities and cooperative
development programmes have strengthened the bond between IFFCO and the Indian farmers who
are the consumers as well as members of the village level cooperative societies. The confidence
generated by this success has paved way for a vigorous growth programme to expand its existing
units as well as establish new units. This will enable IFFCO to emerge as a global leader in
production and marketing of chemical fertilizers located in a single country.

44
 BIBLIOGRAPHY

1. Robbins, Judge & Sanghi : “Organizational Behavior”, 2007, Dorling

Kindersley (India) Pvt. Ltd.

2. Greenberg & Baron: “ Behavior In Organization”,2003, Prentice – Hall of India

Pvt. Ltd.

3. L.M. Prasad: “Organisational Behavior”, 2004, S. Chand & Sons.

4. IFFCO AT A GLANCE 2006-07.

5. Dr. U. S. Awasthi, “Indian Farmers Fertilizer Cooperative Limited-

Experiences”.

6. www.iffco.nic.in

45