JSC “Farmak” is the market leader since 2010. What makes a company like this?
the so-called PROJECT, which is intended to introduce the departments “Farmak” with each other. Show how the department / department / department responds from the inside. What concepts does the word “quality” put into. After all, the quality for each unit is its own, but nevertheless it is unique for the entire Company.
Trade union as an aspect of internal social culture of JSC “Farmak”
“A trade union organization is a bridge bringing employees and employers together. The more solid it is, the better. The key factors that strengthen this ‘bridge’ are active life position, openness and transparency, as well as a desire to become a reliable social partner for each Farmak worker and support for the employer”, said Pavlo Oleksiichuk.
When Farmak was established on the basis of M.V. Lomonosov Chemical and Pharmaceutical Plant, the trade union had already existed and operated. At first, it was a local trade union committee, then a plant committee, and since the 1990s – a trade union organization per se. Over this long period of time, the trade union committee as a public organization defended and helped regulate the interests of all participants of labor relationships: both the staff, each individual employee, and the employer as well. Employees seek competitive salary, career development, social guarantees, proper working conditions and opportunities to improve their health, while the employer strives to be an effective company, use modern practices and technologies in production, manufacture high-quality products, refine its work processes and increase the scope of activities. All this cannot be achieved without qualified staff whose interests are represented by the trade union. “My personal role here is to maintain the balance of these interests and their observance, keeping my eye on the ball, so to say”, said Pavlo Oleksiichuk.
The trade union has both full- and part-time employee. Its staff consists of 2 accountants and head – Pavlo Oleksiichuk, who has held this post for 22 years for now. It should be said that for his public and social contribution, at the request of Kyiv Council of Trade Unions in 2017, he was awarded the state 3rd Degree Order of Merit. In 2015, Pavlo Oleksiichuk was conferred the title of Honored Worker of the Federation of Trade Unions of Ukraine.
The accountants respond to inquiries received from the staff, generate reports, keep financial accounting of income and costs of trade union activities, work with banks, health resorts, healthcare and other institutions.
Besides, there are 11 members of the trade union elected by local staff for a term of 5 years. Their work is voluntary. Their main task is to represent the employees’ interests in the trade union committee, to inform colleagues, to process inquiries and proposals. Once per month, they hold meetings to discuss all issues, take collective decisions by voting, etc.
All employees of the company are members of the trade union organization (except for 150 individuals), so their children receive vouchers to health resorts, health improvement camps and medical institutions. 100% of children, whose parents had applied for vouchers, received them. For instance, more than 500 children attended health-improvement facilities last year.
For the New Year’s holidays, the trade union organizes entertainments for children and gives presents. In 2017, children of Farmak employees received 1,356 gifts and as many invitations to New Year’s festivities.
Farmak staff can also obtain resort or health improvement vouchers. Last year, more than 800 employees and members of their families received such vouchers worth a total of more than UAH 4.5 million.
Another aspect of internal social culture is participation in sports events: competitions, Spartakiads and tournaments in Kyiv in various kinds of sports: swimming, football, volleyball, basketball, rowing, chess, sports fishing, etc. The company has teams and groups of reserve players in each of these sports. Last year alone, football and basketball players won 2 games, volleyball players, archers, rowers and chess players – 1 competition each. For these purposes, swimming pools, football and basketball exercise rooms, training grounds are leased. “I am very proud of our teams; it is extremely pleasant when we win prize places, and twice as pleasant – when we do it at Kyiv-wide and industry level. Feeling the collective spirit, Farmak becomes the winner”, added Pavlo Oleksiichuk.
Last year alone, the trade union spent over UAH 800 thousand for cultural and social activities. This included cost of tickets to theaters, exhibitions and museums, as well as outdoor family events and excursions (approximately 1,700 persons).
“We respond to all inquiries from our staff: there is no other option. There are collective appeals and individual ones. People come to us for advice and support, with their troubles and joys”, said Pavlo Oleksiichuk.
The trade union has the possibility to provide financial assistance to all workers in need. Financial assistance can be different and provided for different needs. There is a social project, ‘Loan trade union’, where every employee as member of the trade union can obtain a loan for a maximum amount of UAH 150 thousand at 18% per annum. Our employees have received loans worth a total of more than UAH 2.5 million.
Together with the employer, the trade union not only attends to current Farmak staff, but also cares for those who have worked the longest in the company, which is about 300 veterans of labor. Every year, congratulations and valuable gifts for major holidays are prepared for these persons and financial assistance in the amount of UAH 1,000 each is provided, if required.
In addition to activities within the Company, the trade union is also involved in outside events: participation in conferences or meetings to defend and promote the interests of the Company, the pharmaceutical industry and many other socially significant issues, such as tariffs for the population, the medical reform, priorities of the industry and domestic manufacturers, such as principles of social and economic potential, pricing, addressing important issues at the city and ministry level, etc.
Dossier Preparation and Management department: Corporate Library
«Quality starts with myself» —literally! -jokes Iryna Metchinska, an engineer with the information department or just the main Farmak librarian. The main books about quality are collected in our library, and again all of our employees start their career here. The first thing that people re asking if they intend to grow in the company is: is there a library in the company? “».
The library is an alma mater for pharmacists. All innovations, discoveries and new implementations began with the Faramk library. To date, there are 9 thousand publications: 7.5 thousand of them are scientific and 1,5 thousand are artistic, including 170 for children. The oldest book in the library – “Corrosion of passivity and metal protection” by Evans U.R., 1941 edition. The scientific and technical fund is replenished annually by 350 copies..
«A special place in our fund is dedicated to the ” Bible “of quality – a book by Fedotov A, the Fundamentals of GMP “by Chueshova V. ” Technology of medicines of industrial production “,”State Pharmacopoeia of Ukraine “. Our workers have repeatedly read these books. About 6-9 people come to the library daily. . Books live because they are continually read. People label something, stick with colored stickers. I ask not to remove the bookmarks so you may know what the previous reader indicated for himself “, – says Iryna Metchynska.
On the library shelves there are books on pharmaceuticals, chemistry, biotechnology, management, motivation, self-development, human resources management, marketing, law, etc. Workers choose the books they would like to read, and the library buys them every year. For students we collect all modern textbooks. It’s a global management decision to have all the necessary learning base in the walls of Farmak.
“We have many students. They improve their qualification, defend dissertations. They, of course, need literature – specialized books, textbooks. Everything that is needed for a future pharmacist or chemist is located in our library “, – added Irina.
Farmak is the only pharmaceutical company in Ukraine with its own library. Its significance is difficult to overestimate. Since 2012, the IRBIS program is functioning in the library. It is a unique integrated library and information system where catalogs can find any necessary materials. There is also an electronic library with a database of materials and presentations from all conferences, seminars, events, attended by our employees, ISPE, ISO, GAMP as well as books in English. Access to this database is available to all Farmak employees.
The library in “Farmak”- the only library in the pharmaceutical company in Ukraine
The library is connected to the paid databases ELSEVIER (PharmaPendium, Embase). It is a leading commercial scientific and technical publishing house that publishes 2,000 scientific journals and provides access to 9.5 million scientific articles.
«Children are taught to read by their parents. Therefore, it is very important for them that reading is the main component of personal development, “said Irina. – Thanks to the support of the Farmak`s trade union, the library has 170 children’s books: stories, adventures, fairy tales, fantasy. We communicate with young Pharmacists through their parents and already know who and what they like to read”.
Iryna held each of the 9,000 books in her hands, book on business and read every 5th. Therefore, she willingly advises a book to everyone. She assists new employees in the career transition, helps to acquire necessary managerial knowledge and skills.
“People come for knowledge, communication and for new information. No gadget can replace physical contact with the book, and pharmacists understand it. We are developing the company by reading, ” -says Iryna Metchynska.
Accounting, control, quality analytics, budgets, reports, taxes, tenders, payments, loans, inventory – are recurrent services. Accounting, budgeting, management accounting, tax accounting, treasury and tender departments – provide smooth work, planning and operation of all transactions of the Company.
«Over the past four years, we have not received any remarks from the auditors. For us, this is a qualitative indicator, “said Viktoriya Smarodina, Financial director of JSC” Farmak “.
To comply with the best world standards is the fastest way to success and reliability.
“There is no need to reinvent the wheel in the world of finance in the XXI century. But to comply with the best world standards is the fastest way to success and reliability. External and internal processes, level of report preparation of our Company are no different from the best world practices . Therefore, we ask ourselves “What can be changed to make the process better and control be performed timely?” We draw up the task for improvements for a year and put them into work “, – adds Victoria.
“Figures are catchy. Reporting is like a sports game with certain rules. If we compare financial statements of companies operating in Africa, Europe or Podil district prepared under IFRS it will be like comparing different football teams (so 11 players play football, and its not possible that three out of 11 players are playing basketball). Therefore, if the statements are prepared clearly then the figures are not lying. This is the only measure that can be compared to any company in the world and draw conclusions about how successful the Company is.”
“Farmak” is an open company -says Viktoria Smarodina. This makes it so different from many others on the Ukrainian market. Financial statements of any company are their photos for the past year.Publishing financial results is normal for the civilized world. It indicates that the management of the Company is responsible for the decisions and shares the results to the team, shareholders, society and the country. We audit our reports before publishing. It is open to all interested parties. This is a small step, more of a rule of good tone. I would like this to become normal for all companies in our country. “
Any major project or purchase begins with a tender, just like in a theater it starts from a hanger. 4 people are responsible for this process in the Company in charge with Svetlana Pogrebnaya, Head of the Tender Department.
«In 2017 we conducted 483 tenders, which is more than the quantity of days in a year,” says Svetlana. Every year, this figure is increasing. In 2015 we conducted 317 tendering procedures and in two years Farmak began to conduct more than 150 tenders. “There are many new projects – the company is developing, and the purchase volumes are increasing accordingly.” Svetlana added.
The work quality and efficiency of the tender department can be estimated by the amount of savings made for the Company. In 2017 it was 50 million UAH. Over the past three years, thanks to well-conducted tender procedures, 120 million UAH was saved. “We are always trying to maintain a balance – to hold the tender according to planned time frame and to choose based on best quality-price, eliminate risks and effectively use the resources of the Company. The success of the tender depends directly on the quality of the technical assignment and the degree of the customers involvement in the process” says Svetlana.
The state fiscal authorities monitor and control various companies via paid taxes and fees transferred into the state treasury of the country. Farmak is a large taxpayer and is serviced in the specialized “Office of Large Taxpayers of the State Fiscal Service of Ukraine”.
The company is a payer of 14 types of taxes and duties (income tax, VAT, personal income tax, single social contribution, non-resident tax, land fee, military tax, real estate tax, transport tax, Pension Fund tax for the first registration of cars, rent for special use of water, ecological tax, rent for the use of radio frequency resources, rent for the use of subsoil), as well as reporting and preparing transfer pricing documentation for individual household operations.
The Farmak tax department handles 12 out of 14 taxes and fees (except salary related taxes) as well as preparation of transfer pricing reports.
The most significanttax that illustrates the company’s activities is the income tax. Companies prepare reports and make a tax return. The rules for drawing up the declaration and calculating the taxable profit is significantly different from accounting. The declaration is prepared by the tax department. Every kind of business transactions needs to be analyzed and evaluated how to allocate purposes of tax accounting profit.
Based on the tax rate, which is calculated as the ratio of income tax rate to company’s income, — PJSC Farmak is the biggest taxpayer in the industry.
Farmak JSC is the only pharmaceutical producer to enter the TOP-100 taxpayers in 2017
“We are conducting a transparent business – we do not hide anything, we do not have a program for optimizing tax deductions. Therefore, our tax rate is 4.2% (at an average rate of about 2%). The nearest competitor in the industry is 1%. According to tax rates figures its truly a lot. Also, a significant point is Farmak`s fiscal reimbursement of VAT on a regular basis, without delays and in full, “said Volodymyr Zadorozhny, head of the tax department. “The tax declaration of ” Farmak “can be judged both about the Company in particular, and its leading place in the industry in general”, – added Volodymyr.
Management reporting department
The management reporting department is responsible for budgeting, financial forecasting, planning and its assessment.
For those who have at least once tried to manage and control the family budget this work will be intuitively understandable.
The main objective is to balance the expected revenues and costs for the near future (month, quarter, year). “In a company – as in a large family: there is a conditional” salary ” also there are sales and, accordingly, the receipt of money. And there are payments that may be mandatory or such that can be moved or avoided “, – said Dmitro Shapkin, head of the management reporting department.
The most complicated process is the approval of the annual budget, This is the main financial plan of the company for the next year. The department employees work to make this process from year to year become calmer and less emotional. “If earlier the preparation of the budget ended on the night before its approval, almost on New Year’s Eve, so in comparison the last year the budget was ready and agreed already on December 14”, – recalls Dmitry Shapkin.
However, there was no such year when everything goes according to plan, and the budget is a financial picture of what will happen to the company in the nearest future, and any change in the terms of the projects, supply, shipment will require a correction of the budget, and needs to be balanced again.
It is important not only to create a budget, but also tocontrol it. It all starts with an electronic contract in the SAP system – it checks for its compliance with the signed paper version. In addition, the department confirms each purchase with the factory, based on clear criteria: whether the procurement complies with the terms of the contract, whether the prices have changed, whether the correct budget allocation corresponds. Any price change is analyzed, validity is checked due to the risk of impact on the marginality of the company’s products taking into account the Ukrainian market. Such price changes are very common and unfortunately not in the best direction.
One more direction of the departments responsibilities is evaluation of projects and investment projects. Any major project is evaluated from a financial point of view before start. The department conducts a comparison of earnings or savings as a result of the project implementation taking into account the investments that need to be made. The same approach is used in evaluation of new products: a project shall not be launched, if it is financially unjustified (about 30-40 candidates are processed annually).
The department approves each purchase of the plant .
The final part of the department’s work is the — analysis of financial results. They regularly prepare quarterly management reports. This is a demonstration of financial results of the company in the frame: from different aspects. Here the quality of the information and the speed of its preparation are important, as in addition to the assessment of projects and products, management reporting is one of the most important tools for making managerial decisions.
Department of Treasury
All payments go through the Treasury department. The main function of this department is to provide liquidity. This implies the conduct of payments, the attraction of funds in the event of their shortage or the placement of free funds in financial (monetary, currency, stock and other) markets.
The department consists of 5 employees. In 2017, they processed 27 thousand 292 payments. But this is not their only duty. The Treasury department manages 27 accounts in 6 Ukrainian banks, a loan portfolio that at the end of last year amounted to 500 million USD in Ukrainian and foreign banks, EBRD, insurance and leasing companies.
««Farmak has an impeccable reputation. Bankers come to us with their credit offers. There is not even enough time to hear out everyone. But I remember the times when the company was just getting stronger. It was 12 years ago. Back then, the CEO conducted meetings with the lender herself. We took money for development and investments. It was not such an easy process, as now, and other times, “recalls Maria Kotlyar, Head of the Treasury Department.
Insurance of cargoes — intended for export is handled separately. Over the past year, the Treasury department received compensation for insurance of cargoes and cars for a total of 5.6 million UAH. “Happiness for the Treasury department is when there is a balanced income and expenditure, but it’s never too perfect,” says Maria. Proper planning and prioritization is the key to effective management of the Company’s cash flows. Unlike many companies, we have a payment day of not 2 per week but 5. Every working day we make payments. This is mainly due to automation of the financial management system of TRM – SAP.
Financial reporting department
This is the largest department of the Farmak financial service. In most companies, from small to large, there is an accounting company that collects and processes complete information about the Company’s activities for economic analysis and financial control. It compiles financial statements, stores information on company’s activities.
It is difficult to leave no attention to the importance of financial reporting, since its main users can be investors, company employees, creditors, suppliers, buyers, governmental agencies and other members of society. Reporting is done on a monthly basis, but more attention is paid to quarterly and, moreover annual, because these reports are sent to statistical authorities and to the banks where the Company has active loans, and the annual accounts are published on the site in open access for all users, therefore it is checked especially carefully.
One accountant processes in average 3.5 thousand transactions per month.
“The lack of significant remarks from auditors since 2009 is a key indicator of the quality of our work. During the last two years, auditors are particularly attentive to the testing of internal controls – they monitor key controls of business processes in the Company. Our inspections did not receive any serious remarks, “- said Elena Pershko, Chief Accountant of Farmak.
In 2017 the accounting department processed 125,000 primary documents, which means that each accountant handled approximately 550 documents per month – roughly 30 per day. How does the processing procedure look like? The accountant carefully checks the correctness of the document, all mandatory bank and company details, the correspondence of the essence and cost of the business transaction data displayed in the accounting system and the accuracy of the classification of operations in accordance with the company’s analytical data.
“We generated 760 000 accounting transactions during the year. One accountant processes in average 3.5 thousand transactions per month “, – said Elena.
Moreover, over the past few years the dynamics of operations increased by the constant number of employees: in 2016 – 686 thousand transactions, in 2015 – 647 thousand transactions, in 2014 – 636 thousand transactions. “Such progress is the result of automation of production processes the implementation of modern programs, such as ERP, SAP, BI. These improvements significantly increased the productivity of our department “, – added Elena.
In Ukraine, the Accountants Day is celebrated on July 16th. This day brings together employees of all financial services and, as a rule gatherings continue outside of the office. Team spirit is needed in any team, financiers are no exception. A job well done calls for fun!
Work hard, play hard — our shared motto!