Project Report on Inventory Mgmt

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PROJECT REPORT

ON

“

STUDY OF INVENTORY

MANAGEMENT

IN IFFCO ”

In partial fulfillment of the requirement for the

award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

(2007-2010)

DEPARTMENT OF MANAGEMENT

GRAPHIC ERA INSTITUTE OF

TECHNOLOGY

AFFILIATED TO H.N.B

AFFILIATED TO H.N.B GARHWAL UNIVERSITY, DEHRADUNGARHWAL UNIVERSITY, DEHRADUN

U

UNNDDEER R TTHHE E SSUUPPEERRVVIISSIIOON N OOF F SSUUBBMMIITTTTEED D BBY Y

M

MR R AAMMAAR R JJOOHHRRI I AAKKAASSH H AAGGAARRWWAALL

F

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Before I start introducing the adventures of my 4 weeks summer training, I Before I start introducing the adventures of my 4 weeks summer training, I feel it obligatory to pay my humble

feel it obligatory to pay my humble thanks to those who made thisthanks to those who made this opportunity for me to undergo my summer

opportunity for me to undergo my summer training. For this, ofcourse,mytraining. For this, ofcourse,my first thanks goes to my

first thanks goes to my guide RAMESH GOEL who helped me to completeguide RAMESH GOEL who helped me to complete this report.

this report.

Very many thanks to IFFCO Aonla Officers

Very many thanks to IFFCO Aonla Officers speciallyspecially MR.D. KALIA MR.D. KALIA (Training department head), MR.K.K.PANDEY (Finance Department). (Training department head), MR.K.K.PANDEY (Finance Department). They were very helpful to me

They were very helpful to me and always readily helped and guided me.and always readily helped and guided me. Thanking

Thanking all of them again.all of them again.

AKASH AGARWAL AKASH AGARWAL

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PREFACE

The successful completion of this project was a unique experience for The successful completion of this project was a unique experience for me because by visiting many place and interacting various person ,I me because by visiting many place and interacting various person ,I achieved a better knowledge about sales . The experience which I achieved a better knowledge about sales . The experience which I gained by doing this project was essential at this turning point of my gained by doing this project was essential at this turning point of my care

career er this project is this project is beinbeing g submisubmitted which tted which contecontent nt detaidetailed analysisled analysis of the research under taken by me.

of the research under taken by me.

The research provides an opportunity to the student to devote his/her The research provides an opportunity to the student to devote his/her

ski

skills lls knoknowlewledge dge and and comcompetpetencencieies s reqrequiruired ed durduring ing the the tectechnihnicalcal session.

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CONTENT

 AcknowledgmentAcknowledgment

 HistoryHistory

 Board of DirectorsBoard of Directors

 RatingRating  IntroductionIntroduction Finance Department Finance Department Material Department Material Department Purchase Section Purchase Section

 Terminology used in Purchase Department Terminology used in Purchase Department

 Store sectionStore section

Receipt section Receipt section Custody section Custody section Spare section Spare section

 Inventory ControlInventory Control

Techniques Techniques

Inventory Software Inventory Software

 Production DepartmentProduction Department

 Inventory ManagementInventory Management

 Objective of the studyObjective of the study

 Concept of Inventory ManagementConcept of Inventory Management

 Research and MethodologyResearch and Methodology

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CERTIFICAT

CERTIFICATE OF

E OF COMPLETION OF WORK

COMPLETION OF WORK

This is to certify that AKASH AGARWAL has completed the This is to certify that AKASH AGARWAL has completed the

project title

“A STUDY ON INVENTORY MANAGEMENT IN

IFFCO”

under my guidance and supervision.under my guidance and supervision.

He is submitting the project in the partial fulfillment of the He is submitting the project in the partial fulfillment of the requirement for the award of Bachelor of Business

requirement for the award of Bachelor of Business Administration,

Administration, H.N.B H.N.B GARHWAL GARHWAL University, University, Dehradun.Dehradun.

This work is original and has not

This work is original and has not been published orbeen published or submitted elsewhere for any purpose what so ever. All submitted elsewhere for any purpose what so ever. All sources of information have been mentioned and dully sources of information have been mentioned and dully acknowledged.

acknowledged.

The performance was satisfactory during the development of The performance was satisfactory during the development of

the project. the project.

Faculty Faculty

Dept. of Management Studies Dept. of Management Studies GEIT, Dehradun.

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During mid- sixties the Co-operative sector in I

During mid- sixties the Co-operative sector in India was responsible for ndia was responsible for distribution of 70 per cent of

distribution of 70 per cent of fertilisers consumed in the country. This Sector fertilisers consumed in the country. This Sector had adequate infrastructure to distribute fertilisers but had no

had adequate infrastructure to distribute fertilisers but had no productionproduction facilities of its own and hence dependent on public/private Sectors for facilities of its own and hence dependent on public/private Sectors for supplies. To overcome this lacuna and to bridge the

supplies. To overcome this lacuna and to bridge the demand supply gap indemand supply gap in the country, a new cooperative society was conceived to specifically cater to the country, a new cooperative society was conceived to specifically cater to the requirements of farmers. It was an unique venture in which the farmers the requirements of farmers. It was an unique venture in which the farmers of the country through their own Co-operative Societies created this new of the country through their own Co-operative Societies created this new institution to safeguard their interests. The number of

institution to safeguard their interests. The number of co-operative societiesco-operative societies associated with IFFCO have risen from

associated with IFFCO have risen from 57 in 1967 to 38, 155 at pr57 in 1967 to 38, 155 at present.esent. Indian Farmers Fertiliser Co-operative Limited (IFFCO) was registered on Indian Farmers Fertiliser Co-operative Limited (IFFCO) was registered on November 3, 1967 as a Multi-unit Co-operative Society. On the enactment November 3, 1967 as a Multi-unit Co-operative Society. On the enactment

of the Multistate Cooperative Societies act 1984 & 2002, the

of the Multistate Cooperative Societies act 1984 & 2002, the Society isSociety is deemed to be registered as a

deemed to be registered as a Multistate Cooperative Society. The Society isMultistate Cooperative Society. The Society is primarily engaged in production and distribution of fertilisers. The byelaws primarily engaged in production and distribution of fertilisers. The byelaws of the Society provide a broad frame work for the activities of IFFCO as a of the Society provide a broad frame work for the activities of IFFCO as a Cooperative Society.

Cooperative Society.

IFFCO commissioned an ammonia - urea complex at Kalol and the IFFCO commissioned an ammonia - urea complex at Kalol and the NPK/DAP plant at Kandla both in the state of

NPK/DAP plant at Kandla both in the state of Gujarat in 1975. Another Gujarat in 1975. Another ammonia - urea complex was set up at Phulpur in the state of Uttar Pradesh ammonia - urea complex was set up at Phulpur in the state of Uttar Pradesh in 1981. The ammonia - urea

in 1981. The ammonia - urea unit at Aonla was commissioned in 1988.unit at Aonla was commissioned in 1988.

In 1993, IFFCO had drawn up a major expansion programme of all the four In 1993, IFFCO had drawn up a major expansion programme of all the four plants under overall aegis of IFFCO

plants under overall aegis of IFFCO VISION 2000 . The expansion projectsVISION 2000 . The expansion projects at Aonla, Kalol, Phulpur and Kandla have been completed on schedule. at Aonla, Kalol, Phulpur and Kandla have been completed on schedule. Thus all the projects conceived as part

Thus all the projects conceived as part of Vision 2000 have been realisedof Vision 2000 have been realised without time or cost overruns. All the

without time or cost overruns. All the production units of IFFCO haveproduction units of IFFCO have established a reputation for excellence and quality. A new growth path has established a reputation for excellence and quality. A new growth path has been chalked out to realise newer dreams

been chalked out to realise newer dreams and greater heights through Visionand greater heights through Vision 2010 which is presently under implementation. As part of the

2010 which is presently under implementation. As part of the new vision,new vision, IFFCO has acquired fertiliser unit at Paradeep in Orissa in September 2005. IFFCO has acquired fertiliser unit at Paradeep in Orissa in September 2005. As a result of

As a result of these expansion projects and acuisition, IFFCO's annualthese expansion projects and acuisition, IFFCO's annual capacity has been increased to 3.69 million tonnes of

capacity has been increased to 3.69 million tonnes of Urea and NPK/DAPUrea and NPK/DAP equivalent to 1.71 million tonnes of P2O5.

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IFFCO has made strategic investments in

IFFCO has made strategic investments in several joint ventures. Godavariseveral joint ventures. Godavari Fertilisers and Chemicals Ltd (GFCL) & Indian Potash Ltd (IPL) in India, Fertilisers and Chemicals Ltd (GFCL) & Indian Potash Ltd (IPL) in India, Industries Chimiques du Senegal (ICS) in

Industries Chimiques du Senegal (ICS) in Senegal and Oman India Fertiliser Senegal and Oman India Fertiliser Company (OMIFCO) in Oman are im

Company (OMIFCO) in Oman are important fertiliser joint ventures. Indoportant fertiliser joint ventures. Indo Egyptian Fertiliser Co (IEFC) in

Egyptian Fertiliser Co (IEFC) in Egypt is under implementation. As part of Egypt is under implementation. As part of strategic diversification, IFFCO has entered into several key

strategic diversification, IFFCO has entered into several key sectors.sectors.

IFFCO-Tokio General Insurance Ltd (ITGI) is a foray into general insurance IFFCO-Tokio General Insurance Ltd (ITGI) is a foray into general insurance sector. Through ITGI, IFFCO has formulated new services of benefit to

sector. Through ITGI, IFFCO has formulated new services of benefit to farmers. 'Sankat Haran Bima Yojana' provides fr

farmers. 'Sankat Haran Bima Yojana' provides free insurance cover toee insurance cover to farmers along with each bag of IFFCO fertiliser purchased. To take the farmers along with each bag of IFFCO fertiliser purchased. To take the benefits of emerging concepts like agricultural commodity trading, IFFCO benefits of emerging concepts like agricultural commodity trading, IFFCO

has taken equity in

has taken equity in National Commodity and Derivative ExchangeNational Commodity and Derivative Exchange

(NCDEX) and National Collateral Management Services Ltd (NCMSL). (NCDEX) and National Collateral Management Services Ltd (NCMSL). IFFCO Chattisgarh Power Ltd (ICPL)

IFFCO Chattisgarh Power Ltd (ICPL) which is under implementation is yetwhich is under implementation is yet another foray to move into core area of power. IFFCO is also behind several another foray to move into core area of power. IFFCO is also behind several other companies with the sole intention of benefitting farmers.

other companies with the sole intention of benefitting farmers. The distribution of IFFCO's fertiliser is

The distribution of IFFCO's fertiliser is undertaken through over 38155 co-undertaken through over 38155 co-operative societies. The entire activities of Distribution, Sales and

operative societies. The entire activities of Distribution, Sales and Promotion are co-ordinated by Marketing Central Office (MKCO)

Promotion are co-ordinated by Marketing Central Office (MKCO) at Newat New Delhi assisted by the Marketing offices in the

Delhi assisted by the Marketing offices in the field. In addition, essentialfield. In addition, essential agro-inputs for crop production are made available to the

agro-inputs for crop production are made available to the farmers through afarmers through a chain of 158 Farmers Service Centre (FSC). IFFCO has promoted several chain of 158 Farmers Service Centre (FSC). IFFCO has promoted several institutions and organisations to work for the welfare of

institutions and organisations to work for the welfare of farmers,farmers,

strengthening cooperative movement, improve Indian agriculture. Indian strengthening cooperative movement, improve Indian agriculture. Indian Farm Forestry Development Cooperative Ltd (IFFDC),

Farm Forestry Development Cooperative Ltd (IFFDC), Cooperative RuralCooperative Rural Development Trust (CORDET), IFFCO Foundation, Kisan Sewa Trust Development Trust (CORDET), IFFCO Foundation, Kisan Sewa Trust belong to this category. An ambitious project 'ICT Initiatives for

belong to this category. An ambitious project 'ICT Initiatives for FarmersFarmers and Cooperatives' is launched to promote e-culture in rural

and Cooperatives' is launched to promote e-culture in rural India. IFFCOIndia. IFFCO obsessively nurtures its relations with farmers

obsessively nurtures its relations with farmers and undertakes a largeand undertakes a large number of agricultural extension activities for their benefit every

number of agricultural extension activities for their benefit every year.year.

At IFFCO, the thirst for ever improving the services to farmers and member At IFFCO, the thirst for ever improving the services to farmers and member co-operatives is insatiable, commitment to quality is insurmountable and co-operatives is insatiable, commitment to quality is insurmountable and harnessing of mother earths' bounty to drive hunger

harnessing of mother earths' bounty to drive hunger away from India in anaway from India in an ecologically sustainable manner is the prime mission. All that IF

ecologically sustainable manner is the prime mission. All that IFFCOFCO cherishes in exchange is an everlasting smile

cherishes in exchange is an everlasting smile on the face of Indian Faron the face of Indian Farmer mer who form the moving spirit behind this m

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Board of Directors

The Directors of

The Directors of IFFCOIFFCO

Shri Surinder Kumar Jakhar, Chairperson Shri Surinder Kumar Jakhar, Chairperson Shri. N. P. Patel, Vice-Chairperson

Shri. N. P. Patel, Vice-Chairperson Directors

Directors

Shri Amal Kumar Verma Shri Amal Kumar Verma Shri S.L. Dharmegowda Shri S.L. Dharmegowda Shri Sudhir Rajpal

Shri Sudhir Rajpal

Shri Harminder Singh Jassi Shri Harminder Singh Jassi Shri Kartic Chandra Sarkar Shri Kartic Chandra Sarkar Shri Umesh Tripathi

Shri Umesh Tripathi Shri Ramakant Bhargava Shri Ramakant Bhargava Shri Subhash Chandra Garg Shri Subhash Chandra Garg Shri Ankushrao R. Tope Shri Ankushrao R. Tope Shri Prem Chandra Munshi Shri Prem Chandra Munshi Shri Tryambakrao G. Sirsath Shri Tryambakrao G. Sirsath Shri Vithalbhai H. Radadia Shri Vithalbhai H. Radadia Shri Pramod Kumar Singh Shri Pramod Kumar Singh Shri Sheesh Pal Singh Shri Sheesh Pal Singh

Shri Balvinder Singh Nakai Shri Balvinder Singh Nakai Shri Ravindra Pratap Singh Shri Ravindra Pratap Singh Shri Simachal Padhy

Shri Simachal Padhy Shri K. Srinivasa Gowda Shri K. Srinivasa Gowda Shri A. Praveen Reddy Shri A. Praveen Reddy Shri B. S. Vishwanathan Shri B. S. Vishwanathan Shri Raj Kumar Tripathi Shri Raj Kumar Tripathi

Dr U.S. Awasthi (Managing Director) Dr U.S. Awasthi (Managing Director)

Shri. Rakesh Kapur (Jt. Managing Director) Shri. Rakesh Kapur (Jt. Managing Director) Shri. K.L. Singh (Director (Technical)

Shri. K.L. Singh (Director (Technical)

Dr. G.N. Saxena (Director (Coop. Development) Dr. G.N. Saxena (Director (Coop. Development) Shri R.P.Singh (Acting Director (HRD)

Shri R.P.Singh (Acting Director (HRD)

Shri. Arabinda Roy (Acting Marketing Director) Shri. Arabinda Roy (Acting Marketing Director)

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Ratings assigned by CRISIL: Ratings assigned by CRISIL:

(1) Rating for Governance and Value Creation (GVC) P

(1) Rating for Governance and Value Creation (GVC) Practices of IFFCO:ractices of IFFCO: CRISIL has, assigned a “GVC Level 2” rating to IFFCO. This rating

CRISIL has, assigned a “GVC Level 2” rating to IFFCO. This rating indicates that the capability of the Society with respect to

indicates that the capability of the Society with respect to wealth creation for wealth creation for all its stakeholders, while adopting sound corporate governance practices, is all its stakeholders, while adopting sound corporate governance practices, is High.

High.

(2) Rating for the Rs. 100 crore Commercial Paper Programme of IFFCO. (2) Rating for the Rs. 100 crore Commercial Paper Programme of IFFCO. CRISIL has assigned a “P1+ (pronounced “P One Plus”) rating to IFFCO’s CRISIL has assigned a “P1+ (pronounced “P One Plus”) rating to IFFCO’s Rs.100 Crore Commercial Paper Programme.This

Rs.100 Crore Commercial Paper Programme.This rating indicates that therating indicates that the degree of safety with regard to

degree of safety with regard to timely payment of interest and principal ontimely payment of interest and principal on the instrument is Very Strong.

the instrument is Very Strong.

(3) Rating for the Rs. 400 crore Bonds Programme of IFFCO. (3) Rating for the Rs. 400 crore Bonds Programme of IFFCO.

CRISIL has assigned the rating on IFFCO’s Long Term Borrowing CRISIL has assigned the rating on IFFCO’s Long Term Borrowing Programme to AA/Stable.The rating indicates high degree of saf

Programme to AA/Stable.The rating indicates high degree of safety withety with regard to timely payment of interest

regard to timely payment of interest and principal on the instrument.and principal on the instrument. Ratings assigned by FITCH

Ratings assigned by FITCH

(4) Rating for the Rs. 100 crore Commercial Paper Programme of IFFCO. (4) Rating for the Rs. 100 crore Commercial Paper Programme of IFFCO. FITCH Ratings has assigned a National Short Term Rating of ‘F1+(Ind)’to FITCH Ratings has assigned a National Short Term Rating of ‘F1+(Ind)’to IFFCO’s Rs. 100 crore Commercial Paper Programme.

IFFCO’s Rs. 100 crore Commercial Paper Programme.

(5) Rating for Long Term Borrowing Programme of IFFCO. (5) Rating for Long Term Borrowing Programme of IFFCO. FITCH Ratings assigned National Long - Term

FITCH Ratings assigned National Long - Term Rating of ‘AA+(ind)’ to theRating of ‘AA+(ind)’ to the Long Term Debt Programme of IFFCO. The outlook on the Long Term Long Term Debt Programme of IFFCO. The outlook on the Long Term Rating is “Stable”.

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FINANCE & ACCOUNTS DEPARTMENT FINANCE & ACCOUNTS DEPARTMENT

Money or capital being a scare as well as crucial resource in the working of Money or capital being a scare as well as crucial resource in the working of an

any y orgorgananizizatatioion, n, neneededs s to to be be gigiveven n prprimime e imimpoportrtanancece. . ThThe e fifinanancnciaiall res

resourources ces havhave e beebeen n plaplannenned d and and concontrotrollelled d in in a a proproper per and and concontintinousous manner. As among the most crucial decisions of a firm are those which manner. As among the most crucial decisions of a firm are those which re

relalate te to to fifinanancnce. e. FiFinanancnce e & & acaccocoununts ts frfrom om an an inintetegrgral al papart rt of of ananyy organization. Proper and smooth functioning of this section is very vital for organization. Proper and smooth functioning of this section is very vital for the organization to survive and grow.

the organization to survive and grow.

Finance function are of two types: Finance function are of two types:



 Managerial finance functionManagerial finance function



 Routine finance functionRoutine finance function

Man

Manageageriarial l finfinancance e funfunctictions ons are are so so calcalled led becbecausause e thethey y reqrequiruire e skiskilfulfull planning, control and execution of f

planning, control and execution of financial activities.inancial activities.

Ro

Roututinine e fifinanancnce e fufuncnctitionons s on on ththe e ototheher r hahandnd, , do do nonot t rereququirire e a a grgreaeatt manag

managerial abiliterial ability y to carry to carry them out. They them out. They are chiefly and are chiefly and are incidentare incidental toal to the effective handling of the material finance f

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The Finance & Accounts Department. Of IFFCO,

The Finance & Accounts Department. Of IFFCO, Aonla is divided into 3Aonla is divided into 3 sections, to facilitate smooth and easy functioning and control.

sections, to facilitate smooth and easy functioning and control.

Organisation Structure

FINANCE & ACCOUNT FINANCE & ACCOUNT

DEPARTMENT DEPARTMENT BOOKS/ BOOKS/ FICC Cell FICC Cell FINANCIAL FINANCIAL CONCURRENCE CONCURRENCE SECTION/ BUDGET SECTION/ BUDGET PSL PSL SECTION SECTION BILL BILL SECTION SECTION PAYROLL PAYROLL SECTION SECTION Supply Supply Section Section Note Sheet Note Sheet Payment Payment Work Work Order Order Indigeneou Indigeneou ss Supply Supply Imported Imported Supply Supply Works Works Contract Contract Service Service Contract Contract

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Line Of Control In Finance & Account Department

ACCOUNT OFFICERS ACCOUNT OFFICERS

…….

JUNIOR ACCOUNT OFFICERS… JUNIOR ACCOUNT OFFICERS…

SENIOR ACCOUNTANT SENIOR ACCOUNTANT JUNIOR ACCOUNTANT JUNIOR ACCOUNTANT

HOD

D.G.M. (F &

A)

Ch

MANAGE(F & A)

SENIOR

MANAGE(F & A)

MANAGER

(Account)

MANAGE

R

(Account)

MANAGER

(Account)

MANAGER

(Account)

Deputy

Account

Manage

rr

Deputy

Account

Manage

rr

Deputy

Account

Manage

rr

Deputy

Account

Manage

rr

Senior A/C Officers

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BOOKS SECTION

This section basically deals

This section basically deals with accounting function, maintenancewith accounting function, maintenance and keeping of records.

and keeping of records.

The various functions include : The various functions include :



 Books : Preparing and Maintaining balance sheets.Books : Preparing and Maintaining balance sheets.



 IFCC (Fertiliser Industries Coordination committee)IFCC (Fertiliser Industries Coordination committee) Costing & Pricing Cells

Costing & Pricing Cells Reporting

Reporting

PAY ROLL SECTION

This section deals with the payments of

This section deals with the payments of salary and wages to thesalary and wages to the employees and extending various other benefits area covering under to employees and extending various other benefits area covering under to preview are –

preview are –



 SalarySalary



 Leave Travel Concession (LTC)Leave Travel Concession (LTC)



 Medical AllowanceMedical Allowance



 ConveyanceConveyance



 AdvancesAdvances



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MATERIAL DEPARTMENT

Materials from the most critical inputs of any business firm organization Materials from the most critical inputs of any business firm organization Proper handling and control of material inputs ensures the smooth running Proper handling and control of material inputs ensures the smooth running of

of plaplant. nt. MatMaterierial al manmanageagemenment t incincludludes es the the proprocurcuremeement nt ississuanuance ce andand con

controtrol l of of matmaterierials in als in rigright ht quaquantintity ty and at and at rigright ht titime me to to facfaciliilitieties s thethe production function.

production function.

From this we can gather that material management includes two important From this we can gather that material management includes two important functions:

functions: •

• PurchasingPurchasing •

• Storing and control of materialsStoring and control of materials

Hence, it is divided into sections: Hence, it is divided into sections:

•

• Purchase sectionPurchase section •

• Stores sectionStores section

Through performing two extent these two section are interrelated and work Through performing two extent these two section are interrelated and work in coordination.

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PURCHASE SECTION

The purchase department, in any organization, is at the interface of internal The purchase department, in any organization, is at the interface of internal and external environment. This department is responsible for purchase of and external environment. This department is responsible for purchase of v

vararioious us mamacchihinneses, , raraw w mamateteririalals s anand d ooththeer r ititemems s rereququirireed d by by ththee organization. Purchase function from integral part of material management organization. Purchase function from integral part of material management and it plays very important function as it is through this procedure that the and it plays very important function as it is through this procedure that the right amount of material required is delivered at the right place and at the right amount of material required is delivered at the right place and at the ri

righght t titime me so so ththat at ththe e prprococesess s of of proproduductctioion n or or mamanunufafactcturiuring ng gogoes es onon unhampered.

unhampered.

There is a distinct difference between “ buying and purchasing”.The latter There is a distinct difference between “ buying and purchasing”.The latter involving knowledge of various vendors, their prices, comparison of the involving knowledge of various vendors, their prices, comparison of the prices, actual buying, after sale service and followup, besides payment terms prices, actual buying, after sale service and followup, besides payment terms

etc. etc.

The purchase department of an organization must know following things: The purchase department of an organization must know following things: •

• Knowledge of the materialsKnowledge of the materials •

• Soucre of material- VendorsSoucre of material- Vendors •

• Reasonable priceReasonable price

The most important thing is that indenter m

The most important thing is that indenter must trust the vendor.ust trust the vendor.

PURCHASE PROCESS PURCHASE PROCESS

i)

i) Recognition of need:Recognition of need: The purchase function is perform whenever The purchase function is perform whenever

something is neede and which not

something is neede and which not available in stores department atavailable in stores department at the particular point of time.

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ii)

ii) ReqRequisuisitiition on to to purpurchachase se :: ThThis is is is an an inintitimamatition on to to pupurcrchahasese

department by the indenter that the needed certain materials. He department by the indenter that the needed certain materials. He raises request by filling form as ‘ material purchase requisition’ raises request by filling form as ‘ material purchase requisition’ (MPR). In this he

(MPR). In this he furnishes several information like:-furnishes several information like:-•

• Name of the item & its code no. Name of the item & its code no. •

• Amount required.Amount required. •

• Technical and other specifications.Technical and other specifications. •

• Estimated price.Estimated price. •

• Required delivery date.Required delivery date. •

• Suggested vendors.Suggested vendors. •

• Section/ Deptt. Code No.Section/ Deptt. Code No.

iii)

iii) MRP scrutiny :MRP scrutiny : Next step involves scrutinizing of the MRP toNext step involves scrutinizing of the MRP to

certified the genuinely of the need, for this, first approval to given certified the genuinely of the need, for this, first approval to given by immediate higher authority of the indenter. Next, the MRP is by immediate higher authority of the indenter. Next, the MRP is

send to the

send to the stores, to check stores, to check wether the material wether the material is available or is available or not.not. If it is not available the MRP goes to the purchase deptt. For futher If it is not available the MRP goes to the purchase deptt. For futher action. Here it is scrutinize in three

action. Here it is scrutinize in three ways :-ways :-•

• Approval scrutinyApproval scrutiny •

• Budget scrutinyBudget scrutiny •

• Technical scrutinyTechnical scrutiny

iv)

iv) Sending or Enquiry/invitation to bid:Sending or Enquiry/invitation to bid: Items can be classified inItems can be classified in

to two categories keeping in view the purchasing function – to two categories keeping in view the purchasing function –

•

• Proprietary items : Proprietary items : These are those items e.g. spares whichThese are those items e.g. spares which

have to be bought from particular

have to be bought from particular supplier or vendor.supplier or vendor.

•

• Nonproprietary items: Nonproprietary items: These are those for which there is noThese are those for which there is no

restriction on vendor. restriction on vendor.

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vendors. Bidding can be done in three ways vendors. Bidding can be done in three ways

•

• Proprietary bidding : Proprietary bidding : This is for the proprietary items and isThis is for the proprietary items and is

sent to only one vendor. Here the proprietor is invited to set a sent to only one vendor. Here the proprietor is invited to set a competitive price.

competitive price.

•

• Limited tendor enquiry : Limited tendor enquiry : This is done for non proprietory itemsThis is done for non proprietory items

and bids are invited from a limited no. of vendors selected from and bids are invited from a limited no. of vendors selected from the registered vendors with the company.

the registered vendors with the company.

•

• Pr Presess s tetendndoror/O/Opepen n bibiddddining g :: If If ththe e amamouount nt ininvovolvlved ed inin

p

puurcrchahasse e is is momore re ththaan n tthrhree ee lalakkhs hs anand d ththe e ititeem m is is nononn p

proproprierietotory ry ththen en prpresess s tetendndorors s arare e isissusued ed in in vavaririouous s nenewsws papers. There may be global tendors

papers. There may be global tendors also.also.

v)

v) Receiving of offers:Receiving of offers: After all the bids have been submitted theAfter all the bids have been submitted the

te

tendndorors s arare e opopen en bebefofore re tetendndoor r cocommmmitittetee e to to cocompmparare e ththee

quotations-Quotations comparison statement (QCS) is made and bid with Quotations comparison statement (QCS) is made and bid with lowest quotation is generally chosen. QCS is also send to the lowest quotation is generally chosen. QCS is also send to the technical deptt and in consultation with it one more than one

technical deptt and in consultation with it one more than one offersoffers are chosen, giving quality and price the top priority.

are chosen, giving quality and price the top priority.

vi)

vi) Purchase order :Purchase order : After selectiAfter selecting the ng the best offer, purchase order isbest offer, purchase order is

sent to that vendor with all the terms and conditions specified and sent to that vendor with all the terms and conditions specified and details of the material to be purchased are also given. A bank details of the material to be purchased are also given. A bank guarantee of performance is taken from the vendor in advance guarantee of performance is taken from the vendor in advance which is usually 5% of the P.O.A. time limit is set for delivery of which is usually 5% of the P.O.A. time limit is set for delivery of consignment and in case of delay a panality is imposed @ 5% of consignment and in case of delay a panality is imposed @ 5% of P.O. per week.

P.O. per week.

vii)

vii) ReRececeipipt t of of mamateteririalals:s: After After ththe e coconsnsigignmnmenent t rereacachehes s ththee

st

stipipululatated ed plplacace, e, ththe e papaymymenent t is is dodone ne by by tthe he ororgagaananisisatatioionn according to the purchase terms agreed upon by the two parties. according to the purchase terms agreed upon by the two parties.

(19)

The material is checked for quality conditions and then sent to the The material is checked for quality conditions and then sent to the store where the

store where the

store release the “ Stores Receipt Voucher” (SRV). From here it is store release the “ Stores Receipt Voucher” (SRV). From here it is delivered to the vendor.

delivered to the vendor.

viii)

viii) Follow up done for every order:Follow up done for every order: It may be regarding delay inIt may be regarding delay in

sup

supplyply, , chachangenges s in in priprice, ce, defdefectective ive or or damdamageaged d ititems ems supsuppliplieded etc.For every indent, a separate file is opened and crrespondance etc.For every indent, a separate file is opened and crrespondance goes on. For every step, recommendations of indenter, manager goes on. For every step, recommendations of indenter, manager (F& A), materials manager & general manager are sought.

(20)

Payment against purchase

There are various modes of payment There are various modes of payment



Advance payment to supplier :

Advance payment shall be made to the suppliers only in such cases where it Advance payment shall be made to the suppliers only in such cases where it is

is spespecifcificaically lly proprovidvided ed in in the the concontractract t ordorder. er. The The advadvancance e paypaymenment t toto con

contratractoctors rs shashall ll be be madmade e agaagainsinst t subsubmismissiosion n of of banbank k guaguaranrantee tee in in thethe Performa provided by IFFCO. Advance payment against indemnity bond Performa provided by IFFCO. Advance payment against indemnity bond shall not be released as provided in

shall not be released as provided in the purchase procedure.the purchase procedure.



Full payment / 90% to 95% payment

Full payment / 90% to 95% payment ::

In case the terms of payment provide for full paymeny or part payment In case the terms of payment provide for full paymeny or part payment against dispatch documents through bank, the supplier will be negotiating against dispatch documents through bank, the supplier will be negotiating the documents through the bankers. After the documents are received by the the documents through the bankers. After the documents are received by the bankers, they are forwarding a bank intimation alongwith a copy of the bankers, they are forwarding a bank intimation alongwith a copy of the purchase order to ascertain that the invoice is raised for the material ordered purchase order to ascertain that the invoice is raised for the material ordered

and conforms to the other terms

and conforms to the other terms and conditions of purchase order.and conditions of purchase order.

After the intimation from the bank is received the invoice of the suppliers After the intimation from the bank is received the invoice of the suppliers will be scrutinized by the finance and account department for

will be scrutinized by the finance and account department for the following-the

following- Purchase order number Purchase order number

 Whether materials supplied are as specified in Whether materials supplied are as specified in the purchasethe purchase

 Purchase order number Purchase order number

 Whether materials supplied are as specified in Whether materials supplied are as specified in the purchaseorder.the purchaseorder.

 Quantity supplied.Quantity supplied.

 Price basis whether F.O.R. or Ex-worksPrice basis whether F.O.R. or Ex-works

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 Whether bank charges are claimed as per Whether bank charges are claimed as per the purchase order.the purchase order.

 Other terms and conditions of the purchase Other terms and conditions of the purchase order.order.

Where there is delay in supplying the material and the payment through Where there is delay in supplying the material and the payment through bank is 90 % to 95 %. It should be ensured that penality for delay, as bank is 90 % to 95 %. It should be ensured that penality for delay, as provided in the purchase order, is recovered before releasing the balance provided in the purchase order, is recovered before releasing the balance payment. Where payment required to be made , a clarification is to be payment. Where payment required to be made , a clarification is to be

so

sougught ht frofrom m mamateteriarials ls dedeptptt t anand d prpropoper er apapprprovoval al tatakeken n fofor r wawaivivining g of of penality or otherwise before retiring documents.

penality or otherwise before retiring documents.

The payments under the contracts must be regulated as per the expressed The payments under the contracts must be regulated as per the expressed terms and conditions. Any payment not covered by the contractual terms terms and conditions. Any payment not covered by the contractual terms andand conditions should not be released.

conditions should not be released.



Full payment / Balance payment after receipt of materials :

In case the purchase ored provides the 100 % payment after receiving of In case the purchase ored provides the 100 % payment after receiving of materials and accepted payment is to be released after the MRR is receised materials and accepted payment is to be released after the MRR is receised from the stores department. In case the purchase order despatch documents from the stores department. In case the purchase order despatch documents and the balance payment after receipt of

and the balance payment after receipt of materials, the balance payment maymaterials, the balance payment may also to be released after the MRR is received and it is confirmed that the also to be released after the MRR is received and it is confirmed that the material has been accepted after inspection and taken on

material has been accepted after inspection and taken on charge.charge.

Before released of the payment, the invoices should be scrutinized as the Before released of the payment, the invoices should be scrutinized as the ca

case se of of papaymymenents ts rereleleasased ed ththrorougugh h babanknk. . In In adaddiditition on it it shshouould ld alalso so bebe verified whether all the items invoiced have been received, inspected and verified whether all the items invoiced have been received, inspected and accepted per the MRR.

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Delay In Delivery

In case of project purchases, the time

In case of project purchases, the time and date of the delivery is the contract.and date of the delivery is the contract. In the event of delay in the execution of the order beyond the date of In the event of delay in the execution of the order beyond the date of delivery as stipulated in the order,

delivery as stipulated in the order, the project authorities may take fthe project authorities may take followingollowing actions –

actions –

1.

1. AccAccept delept delayeayed delivd delivery at price redery at price reduceuced by d by a a sum equsum equivaivalenlent t to 0.5to 0.5 % if the value goods not delivered for every week of delay or part % if the value goods not delivered for every week of delay or part thereof limited to a maximum of 5% of the contract value.

thereof limited to a maximum of 5% of the contract value.

OR OR

2.

2. CanceCancel the ordel the order in part or fur in part or full and pull and purchase surchase such cancch cancelled maelled materialterialss from elsewhere on account and at the risk of the suppler without from elsewhere on account and at the risk of the suppler without prejudice to his right inspect of goods delivered.

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TERMINOLOGY USED IN PURCHASE DEPTT.

Q.C.S.

Q.C.S. Quotations comparison statementQuotations comparison statement L.O.I.

L.O.I. Letter of IndentLetter of Indent T.O.I

T.O.I.. TTeelleex x oof f IInnddeenntt T.O.P.

T.O.P. Terms of PaymentTerms of Payment F.O.R.

F.O.R. Free on Rail / RoadFree on Rail / Road M.P.R.

M.P.R. Material Purchase RequisitionMaterial Purchase Requisition E.X.W.

E.X.W. Ex-Works(At the supplliers work)Ex-Works(At the supplliers work) F.A.S.

F.A.S. Free Along SideshipFree Along Sideship N.I.T.

N.I.T. Notice Inviting Tender Notice Inviting Tender S.O.R.

S.O.R. Schedule Of RatesSchedule Of Rates B.O.Q.

B.O.Q. Bill Of QuantitiessBill Of Quantitiess I.T.B.

I.T.B. Invitation To BidInvitation To Bid F.O.B.

F.O.B. Free On BoardFree On Board C.I.F.

C.I.F. Cost Insurance & FreightCost Insurance & Freight 5R’s

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About Imported Materials

Mat

Materierials als proprocurcured ed may may be be eiteither her indindigeigeneoneous us or or impimportorted. ed. For For majmajor or projects the foreign contracts are normally finalised at head office level and projects the foreign contracts are normally finalised at head office level and payment against these contracts are made by the concerned unit. Where the payment against these contracts are made by the concerned unit. Where the order have been placed by the unit directly, they will make the payment to order have been placed by the unit directly, they will make the payment to the foreign party by debiting to the appropriate advance account. If the the foreign party by debiting to the appropriate advance account. If the pa

paymeyments are nts are madmade e thrthrougough h L/C L/C agaagainsinst t docdocumeumentsnts, , the same the same shashall ll bebe debited to advances to foreign suppliers account. On receipt of material at debited to advances to foreign suppliers account. On receipt of material at sit

site, e, proprojecject t engengineineer er shashall ll prepreparpared ed the MRR the MRR and sent and sent samsame e to to proprojecjectt accounts for clearing the supplier’s advance account for m

accounts for clearing the supplier’s advance account for material.aterial.

Clearing and handling of imported material is the responsibility of material Clearing and handling of imported material is the responsibility of material department on the arrival of ship the materials will be cleared with reference department on the arrival of ship the materials will be cleared with reference to the invoices and bills. For any short landing or brokage between the port to the invoices and bills. For any short landing or brokage between the port of dispatch and port of destination, claim action shall

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Material Coding

In every organisation it is very difficult to maintain the stock items in case In every organisation it is very difficult to maintain the stock items in case of large number of items. So the need of coding is created. For the material of large number of items. So the need of coding is created. For the material coding the account persons assign the codes for each item of stores. So in coding the account persons assign the codes for each item of stores. So in this away every item has it’s

this away every item has it’s code, and code is called material code.code, and code is called material code.

Ma

Mateteriarial l cocodiding ng facfacililititatates es ththe e acaccocoununt t pepersrsonons s anand d ststorore e manmanagager er or or incharge to maintain the transactions of the items whether of receiving or of incharge to maintain the transactions of the items whether of receiving or of issuing.

issuing.

Every item maintained by itt’s code in the stode as well as in the store Every item maintained by itt’s code in the stode as well as in the store accounting section. The item / material codes remains same in stores aand accounting section. The item / material codes remains same in stores aand ac

accocoununtiting ng sesectctioion. n. WhWhenenevever er a a trtranansasactctioion n is is dodone ne in in ststorore e fofor r ththee inven

inventorietories s the full the full detaidetails ls of of that transacthat transaction is tion is send to send to inveninventorietories s the fullthe full det

detailails s of of thathat t tratransansactiction on is is sensend d to to the the stostore re accaccounountinting g secsectiotion n alsalso,o, because the computers of stores and accounting section are connected in because the computers of stores and accounting section are connected in

Local Area Network.(LAN) Local Area Network.(LAN)

In this way it is very comfortable task to maintian the inventories on the In this way it is very comfortable task to maintian the inventories on the inventory software with the help of material coding.

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Packing & Despatch

Al

All l papackckining, g, boboxixing ng anand d cracratiting ng anand d prprototecectition on shshalall l coconfnfororm m to to ththee specification or requirements of the order. The seller shall be held liable for specification or requirements of the order. The seller shall be held liable for damage or brokagee to the goods due to defective or insufficient packing, damage or brokagee to the goods due to defective or insufficient packing, marking as specifically advised in the order or dispatch instruction shall be marking as specifically advised in the order or dispatch instruction shall be done by seller in d

done by seller in delible elible paint and in such paint and in such manner to ensure that the samanner to ensure that the same isme is clearly visible.

clearly visible.

All goods shall be dispatched by rail / road freight paid and the railway All goods shall be dispatched by rail / road freight paid and the railway receipt / lorry receipt shall be

receipt / lorry receipt shall be posted to the concerned incharge of IFFCO.posted to the concerned incharge of IFFCO.

Inspection of Material

Th

The e mamateteriarial l dedepapartmrtmenent t shshalall l cocoorordidinanate te wiwith th ototheher r dedepapartrtmenments ts anandd arrange inspection of material at vendor’s shop prior to dispatch. Inspection arrange inspection of material at vendor’s shop prior to dispatch. Inspection of materials in other cases shall be carried out on receipt of materials at site. of materials in other cases shall be carried out on receipt of materials at site. Only materials those cleared by the inspection will be taken on charge in Only materials those cleared by the inspection will be taken on charge in stores. The person inspecting the material will sign on the stores receipt stores. The person inspecting the material will sign on the stores receipt voucher in token of having inspected and accepted the material.

voucher in token of having inspected and accepted the material.

Damages / Short / Rejected Materials

If the material are received short or in damaged condition there are some If the material are received short or in damaged condition there are some conditions in this regard.

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

 In cases where the In cases where the responsibility for the responsibility for the transit insurance is transit insurance is on IFFCO, on IFFCO, aa claim should be lodged with insurance company for the value of material claim should be lodged with insurance company for the value of material plus incidentals. As soon as the shortage per damage of the materials is plus incidentals. As soon as the shortage per damage of the materials is noticed the material department will lodge the provisional claim with the noticed the material department will lodge the provisional claim with the underwriters and pass on the relevant papers to the finance & accounts underwriters and pass on the relevant papers to the finance & accounts department for lodging monetary claim.

department for lodging monetary claim.



In In rerespspecect t of of trtranansisit t ininsusurarancnce e clclaiaims ms bibill ll sesectctioion n wiwill ll papass ss anan adjustment entry debiting “claim recoverable account” and credit the “ adjustment entry debiting “claim recoverable account” and credit the “ Advance to

Advance to

vendors account”. After the adjustments the billn section sent the copy vendors account”. After the adjustments the billn section sent the copy of journal voucher along with all necessary details such as P.O. No. , of journal voucher along with all necessary details such as P.O. No. , MRR No. quantity and value, name of the supplier to the insurance MRR No. quantity and value, name of the supplier to the insurance section for following up the claim with the

section for following up the claim with the insurance company.insurance company.



 Where the resposibility for short supply or damages in transit is of theWhere the resposibility for short supply or damages in transit is of the suppliers, the material department should taake up the matter with the suppliers, the material department should taake up the matter with the supplier for arranging replacement.

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Accounting Of Raw Materials

Bas

Based ed on on the the proprojecjected ted conconsumsumptiption on reqrequiruiremeement nt of of raw raw matmateriaerials, ls, thethe procurement action is take by the commercial department at head office. procurement action is take by the commercial department at head office.

Described below is the accounting requirement of major r

Described below is the accounting requirement of major raw material.aw material.

Imported Phosporic acid and Ammonia

The consignment of phosporic acid and Ammonia

The consignment of phosporic acid and Ammonia are received at kandla andare received at kandla and the material actually received is valued at the contracted cost & freight the material actually received is valued at the contracted cost & freight price.

price.

Where free on board (FOB) price is agreed, the ocean freight element is Where free on board (FOB) price is agreed, the ocean freight element is loaded separately. All connected expenditure like customs duty, handling loaded separately. All connected expenditure like customs duty, handling charges etc. are also included in uinventory valuation.

charges etc. are also included in uinventory valuation.

The valuation of inventory at the month end is to be made on the basis of The valuation of inventory at the month end is to be made on the basis of exchange rates prevailing on the last day of the month. The difference if any exchange rates prevailing on the last day of the month. The difference if any between the provisional rate and the actual payment

between the provisional rate and the actual payment rate shall be charged rate shall be charged off off to the consumption account, if the material is

to the consumption account, if the material is already consumed.already consumed.

The account department also ensure that all claim suppliers for shortage are The account department also ensure that all claim suppliers for shortage are booked on monthly basis and necessary on quarterly basis for the pending booked on monthly basis and necessary on quarterly basis for the pending

claims. claims.

Indigenous Ammonia

The indigenous ammonia is supplied by KRIBHCO / GNFC to kandla unit. The indigenous ammonia is supplied by KRIBHCO / GNFC to kandla unit. The quantity received is accounted at the price payable to the party which is The quantity received is accounted at the price payable to the party which is fixed by the Govt. of India. This price is fixed at par with thee landed cost of fixed by the Govt. of India. This price is fixed at par with thee landed cost of imported ammonia. However after the abolition of price control

(29)

fe

fertrtililisiser. er. ThThis is prpricice e is is fifixexed d at at papar r wiwith th ththe e lalandnded ed cocost st of of imimpoportrteded ammonia.

ammonia.

Potash

Potash purchase orders are placed by the commercial department time to Potash purchase orders are placed by the commercial department time to time depending on the material requirement. The material received valued at time depending on the material requirement. The material received valued at agreed price plus local sales tax and freight for transportation of material up agreed price plus local sales tax and freight for transportation of material up to plant site.

to plant site.

The finance department at head office ensure that payment for these raw The finance department at head office ensure that payment for these raw ma

maataterierialals s arare e rereleleasased ed on on dudue e dadatetes s to to avavoioid d inintetererest st liliababililitity. y. AfAfteter r releasing the paayments the inter unit debit advice is sent to plant. On releasing the paayments the inter unit debit advice is sent to plant. On receipt of the payment advices the supplier’s

receipt of the payment advices the supplier’s account is adjusted in the plant.account is adjusted in the plant.

Natural Gas

Kalol and Aonla plant consume as feed stock and fuel. As per the contract Kalol and Aonla plant consume as feed stock and fuel. As per the contract with ONGC, gas is supplied to IFFCO at the price fixed by Govt. of India with ONGC, gas is supplied to IFFCO at the price fixed by Govt. of India from time to time.

from time to time.

The meters provided at the inlet point in the plants are the basis for monthly The meters provided at the inlet point in the plants are the basis for monthly billing. Meter reading is carried out jointly by ONGC / GAIL and IFFCO billing. Meter reading is carried out jointly by ONGC / GAIL and IFFCO representatives. The unit sends the telex to head office ffor making payment representatives. The unit sends the telex to head office ffor making payment to ONGC / GAIL after due certification of bill by the head of technical to ONGC / GAIL after due certification of bill by the head of technical department about quantity of gas received.

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Naphtha

Naphtha is supplied by IOC aagainst advance payment terms. There are Naphtha is supplied by IOC aagainst advance payment terms. There are

ex

excicise se duduty ty coconcncesessisionons s avavaiailalablble e fofor r ththesese e ititemems s prprovovidided ed ththey ey araree co

consnsumumed ed fofor r mamanunufafactcturure e of of fefertrtililizizerers. s. AcAccocoununts ts dedepapartrtmement nt inin coordination with production department shall ensure that all the excise duty coordination with production department shall ensure that all the excise duty requirements aare fulfilled that the duty concessions are fully availed. The requirements aare fulfilled that the duty concessions are fully availed. The inventory is valued based on the quantity received as per MRR received inventory is valued based on the quantity received as per MRR received from production department on monthly basis. The price payable to IOC for from production department on monthly basis. The price payable to IOC for naphtha is fixed by the Govt. by time to time

naphtha is fixed by the Govt. by time to time the naphtha is supplied to kalolthe naphtha is supplied to kalol unit from Mathura refinery.

unit from Mathura refinery.

Catalsts & Resins

The Catalysts & Resins are produced by the material department at the The Catalysts & Resins are produced by the material department at the palnt, on the receipt of the material the inventory is valued at the agreed palnt, on the receipt of the material the inventory is valued at the agreed price. For Catalysts & Resins where IFFCO has pooling arrangement with price. For Catalysts & Resins where IFFCO has pooling arrangement with other companies, the material received is taken to inventory at the actual other companies, the material received is taken to inventory at the actual pric

price e paid and equivalepaid and equivalent amount is nt amount is credicredited to ted to “ “ materimaterial received on al received on loanloan account”.

account”.

This entry will be reverse when the material is procured by IFFCO and This entry will be reverse when the material is procured by IFFCO and replenished

replenished for return of loanfor return of loan. The inven. The inventory and consutory and consumption account tmption account thenhen shall be accounted at the actual procurement price.

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STORE SECTION

Store of any organization is of vital importance. Its is the responsibility of Store of any organization is of vital importance. Its is the responsibility of stores to receive the material required by the organization’s operations to stores to receive the material required by the organization’s operations to keep it properly & to issue it as when required. The stores are divided in to keep it properly & to issue it as when required. The stores are divided in to thr

three ee subsubsecsectiotions ns for for gregreateater r fleflexibxibiliility ty liklike e recreceipeipt, t, cuscustodtody, y, ississues ues andand spares.

spares.

Store have following warehouses: Store have following warehouses:

 Main StoreMain Store

 Cement godownCement godown

 Petrol PumpPetrol Pump

 Cable yardCable yard

 Cemical godownCemical godown

 Paint godownPaint godown

 PDIL storePDIL store

A.

RECEIPT SECTION

--This section is

This section is resporesponsiblnsible e for receivinfor receiving g the materials and the materials and inspinspectinecting g them.them. The process involves following steps.

The process involves following steps.

1

1)) TThhe d oe d occuummeennt t rreeggaarrddiinng tg thhe m ae m atteerriiaal l mmaay by be e sseennt t o tt t o thhe se sttoorreess,, purchase, concerned deptt. But ultimately they have to be send to

purchase, concerned deptt. But ultimately they have to be send to stores.stores. The documents may be :

The documents may be :

 Goods receipt / railway receipt / challanGoods receipt / railway receipt / challan

 Form 31Form 31

 Excise dutyExcise duty

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register (CRR) register (CRR)

3

3)) AAfftteer tr thhe ee ennttrry iy in tn thhe re reeggiisstteerr, t, thhe de dooccuummeennt it is gs giivveen tn to ao an an aggeenntt termed as handling contractor. He will collect the material.

termed as handling contractor. He will collect the material.

4

4)) CCoonnssiiggnnmmeenntt’’s cs caassees as arre ie innttaacctt. I. If nf noot ht he we wiilll al assk fk foor or oppeen dn deelliivveerryy.. He then has to deliver the goods to stores. In case of damage he has

He then has to deliver the goods to stores. In case of damage he has to give ato give a certificate. Some consignment may without document i.e. door delivery and certificate. Some consignment may without document i.e. door delivery and is some cases it may be face to face delivery.

is some cases it may be face to face delivery.

5

5)) IIf af anny dy diissccrreeppaannccy iy is fs foouunnd dd duurriinng cg chheecckkiinngg, t, thhe ae accccoouunntts ss seeccttiioon in iss informed for necessary action and getting claim from insurance company. informed for necessary action and getting claim from insurance company. The date of receipt is filled in CRR

The date of receipt is filled in CRR

6

6)) TThhe ne neexxt ot oppeerraattiioon in is fs fiilllliinng tg thhe se sttoorrees rs reecceeiippt vt voouucchheerrs (s (SSRRVV) h) heerree the quantity mentioned in challan and purchase order are compared, SRV the quantity mentioned in challan and purchase order are compared, SRV Has 7

Has 7 copiecopies, two s, two for accountfor accounts s and one and one for each for each purchpurchase, stores, indentease, stores, indenter,r, masterfile & custody section.

masterfile & custody section.

7

7)) IInnppeeccttiioon n iis s ddoonne e bby y tthhe e iinnddeenntteerr::

 SuSupppposose e alall l ititemems s arare e acacceceptpted ed ththen en ththe e mamateteririal al is is hahandnded ed toto cus

custodtody y secsectiotion n aftafter er putputtinting g an an ideidentintificficatiation on & & givgiving ing a a SRVSRV control number.

control number.

 If some items are defective then the accepted items will be sent toIf some items are defective then the accepted items will be sent to cus

custodtody y and and for for dedefecfectivtive e oneones, s, infinformormatiation on is is sensent t to to supsuppliplier,er, accounts, indenter & insurance company and the

accounts, indenter & insurance company and the particulars noted inparticulars noted in rejection register.

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 If If ththerere e is is sosome me brbreaeakakage ge ththen en eieithther er ititem em mamay y be be rereplplacaced ed byby company or claim against insurance is obtained, when an item is company or claim against insurance is obtained, when an item is replaced, its dispatch advice is made.

replaced, its dispatch advice is made.

8

8)) DiDirerect ct chchararge ge SRSRV V ( ( DCDCSRSRC) C) is is prprepeparared ed whwhen en inindedentnter er wawantntss material directly from receipt section.

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B)

CUSTODY SECTION

--This section is responsible for proper keeping of materials and issuing them This section is responsible for proper keeping of materials and issuing them wh

when en reqrequiuirered d by by didiffefferenrent t dedepapartrtmement nt anand d cocontntraractctorsors. . ThThe e mamateteririalal recei

received here is ved here is first checkfirst checked as ed as per SRV for per SRV for every materievery material there is al there is a card.a card. These cards are located in bins according to code of material is received in These cards are located in bins according to code of material is received in custody the card information is updated.

custody the card information is updated.

When some one wants to issue

When some one wants to issue certacertain material he has in material he has to fill the to fill the store issuestore issue voucher ( SIV). Once the item is issued again information is updated in the voucher ( SIV). Once the item is issued again information is updated in the card. When a particular part is returned then this received in stores, by card. When a particular part is returned then this received in stores, by internet stores return voucher (ISRV). After issuing the material the number internet stores return voucher (ISRV). After issuing the material the number of issue and the quantity issued is

of issue and the quantity issued is noted in SIV control registers.noted in SIV control registers.

C)

SPARES

– –

Around 30000 spares are housed in stores, spares have been classified plant Around 30000 spares are housed in stores, spares have been classified plant wise. The first digit of the code of item is numbered according to given wise. The first digit of the code of item is numbered according to given

criterion- AmmoniaAmmonia

 UreaUrea

 Product handlingProduct handling

 Power Power

 Sp. EquipmentsSp. Equipments

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ACCOUNTING FOR STORES

General Outline of stores Fuction General Outline of stores Fuction

 The authority oThe authority of receipt, store f receipt, store and issue of and issue of all material is cenall material is centralizedtralized in

in the the matmaterierials als depdepartartmenment t subsubjecject t to to excexcepteption ion in in perpermitmitted ted in in cercertaitainn cases. In certain cases a nominal stock of few consumable items can be cases. In certain cases a nominal stock of few consumable items can be p

perermimitttted ed wiwith th ususes es dedepapartrtmementnts s susuch ch as as mamainintetenanancnce, e, lalaboboraratotoryry,, adm

adminiinistrstratiation on depdepartartmenment t for for meemeetinting g emeemergergencincies. es. In In addadditiition on cecertartainin chemicals are permitted to be stored in production department due to the chemicals are permitted to be stored in production department due to the operational needs.

operational needs.

 The authority of storage of packing materials like bags is vested withThe authority of storage of packing materials like bags is vested with bagging department. The bagging department receives the material, gets it bagging department. The bagging department receives the material, gets it inspected in laboratory, issued the same for product bagging and maintain inspected in laboratory, issued the same for product bagging and maintain the stocks.

the stocks.

Maintenance of records for all quantitative transaction of

Maintenance of records for all quantitative transaction of packing material ispacking material is the responsibility of bagging department. Similarly the raw material are the responsibility of bagging department. Similarly the raw material are handled by production department with all responsibilities in respect of handled by production department with all responsibilities in respect of quantity accounting.

(36)

Fuctions of stores Accounting Section

The section dealing with accounting of stores in the finance

The section dealing with accounting of stores in the finance department shalldepartment shall have following functions

have following functions

:-Accounting of receipts, issues, return and transfer

Accounting of receipts, issues, return and transfer of materials.of materials.

Accounting of imported materials for capital works Accounting of imported materials for capital works and operations.

and operations.

A

Assssoocciiaattiinng g wwiitth h ssttoorrees s sseeccttiioon n ffoor r ssttoocck k verification.

verification.

Valuation of stores items should done on weighted Valuation of stores items should done on weighted average basis.