6. Inventory-Management at IFFCO

8/21/2019 6. Inventory-Management at IFFCO

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PROJECT REPORT

ON

“INVENTORY MANAGEMENT AND RATIO ANALYSIS

OF

IFFCO AONLA”

SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS OF THE AWARD OF THE DEGREE OF

MASTERS OF BUSINESS ADMINISTRATION

INDUSTRY GUIDE : SUBMITTED BY :

MR. ASHOK MAHESWARI PRADEEP VERMA

(ACCOUNTS OFFICER) Roll No.- 00!"!0#$$IFFCO% AONLA MBA III&' S.

VT No- #*#

SUBMITTED TO:

1

IIMT MANAGEMENT COLLEGE

MEERUT

http://www.iffco.nic.in/


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MR. K.K. PANDE+

DEPUT+ MANAGER (TRAINING)

STUDENT,S CERTIFICATE

Certifed that this report is prepared based on the summer internship

project undertaken by me in IFFCO, AONLA rom 06th June TO 31st

July 2009 under the able guidance o Mr. ASHOK MAHESWAI

(Accounts Ocer at !""CO Aonla #nit as !ndustry $uide and Mr.

AFTA! AHMA" H.O." at !!%& %A'A$%'& CO))$* %eerut

Campus in partial ulflment o the re+uirement or a,ard o degree o

M#ster O$ !us%ness A&'%n%str#t%(n rom #ttar -radesh &echnical

#ni.ersity* )uckno,/

ate/

1ignature 1ignature

'ame 'ame

1tudent Course irector

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CERTIFICATE FROM H.O.D.(MBA)

Certifed that this report is prepared based on the summer internship

project undertaken by Mr. Pradeep Verma, a student o %3A 1ection

43* in IFFCO, AONLA rom 06th J)NE TO 31st J)L* * 2009 under my

guidance in partial ulflment o the re+uirement or a,ard o degree o

M#ster O$ !us%ness A&'%n%str#t%(n rom #ttar -radesh &echnical#ni.ersity* )uckno,/

(Atab Ahmad

5/O// (%3A

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ACKNOWLEDGEMENT

Expression of sincere gratitude is ust a partia! ac"no#!edg$ent% T&e

acco$p!is&$ent of t&is proect 'IN(ENTOR) MANAGEMENT * RATIO

ANAL)+I+ O, I,,CO- #ou!d &a.e not /een possi/!e indi.idua!!0 #it&out t&e

encourage$ent assistance * .a!ua/!e support fro$ .arious sources% M0 .oca/u!ar0

fa!!s s&ort of #ord to express $0 sincere gratitude to Mr% As&o" Ma&es#ari

Accounts Officer under #&ose guidance I &ad t&e opportunit0 to carr0 out t&e

present #or"%

I a$ .er0 t&an"fu! to Mr% 4% 5a!ia C&ief Manager Training * Mr% 5%5%

6ande0 40% Manger Training #&o supported $e * &e!ped $e t&roug&out t&e

proect%

I a$ t&an"fu! to ,inance * Account staff * to a!! t&e e$p!o0ees of I,,CO

#&o cooperated #it& $e during $0 training period%

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I O8E A 4EE6 +EN+E O, GRATITU4E TO ALL T9E RE+6ON4ENT+

89O GA(E ME (ALUA:LE IN,ORMATION ,OR T9E 6RO;ECT .

PRADEEP VERMA

MBA-III S.

42 YEARS OF COOPERATIVE GLORY

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IFFCO AONLA PLANT

LI+T O, CONTENT+ 6age No%

1 I&o'/1o o o21

2 O3415 o6 7/'8 93 R7&; M;o'olo


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> A1% V171o% M1771o "#-">

? V171o "0$0% A22&o; "*@ Co1% P&112l7 "!

1 IFFCO,7 E3l "

11 O&

33 T;1/7 o6 I5o&8 o&ol *-9$

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37 I5o&8 7o6@& 9"-$0$

3=

3@ Col/71o7 Ro'1o7 $>#-$>>

7 B13l1o*

LIST OF GRAPHS

$) I5o&8 /&o5& $=0

") Wo&1< 21l /&o5& $="

=) C/&& &1o $=#

#) C7; &1o $=*

>) Sol58 &1o $=

*) So o /&& 77 &1o $#0

!) R@ &1l $#"

) O@' 21l /&o5& $##

9) PBT o 7l7 $#*

$0) C21l /&o5& $#

INTRODUCTION TO THE TOPIC

INVENTOR+ MANAGEMENT

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'Managing t&e !e.e! of in.entor0 is !i"e $aintaining t&e !e.e! of #ater in a /at& tu/ #it&

an open drain% T&e #ater is f!o#ing out continuous!0% If #ater is !et in too s!o#!0 t&e tu/is soon e$pt0% If t&e #ater is !et in too fast t&e tu/ o.erf!o#s%-

T&e dictionar0 $eaning of in.entor0 is Bstoc" of goods% T&e in.est$ent in in.entor0 is

.er0 &ig& in $ost of t&e underta"ings engaged in $anufacturing% T&e a$ount of

in.est$ent is so$eti$es $ore in in.entor0 t&an in ot&er assets% A/out @ percent part of

#or"ing capita! is in.ested in in.entories% It is necessar0 for e.er0 $anage$ent to gi.e

proper attention to in.entor0 $anage$ent% A proper p!anning of purc&asing &and!ing

storing and accounting s&ou!d for$ a part of in.entor0 $anage$ent% :0 proper p!anning

it is possi/!e for a co$pan0 to reduce its !e.e!s of in.entories to a considera/!e degree

#it&out an0 ad.erse effect on production and sa!es /0 using si$p!0 in.entor0 p!anning

and contro! tec&niDue% T&e reduction in excessi.e in.entories carries a fa.ora/!e i$pact

on co$pan0s profita/i!it0%

An efficient s0ste$ of in.entor0 $anage$ent #i!! deter$ine

1 8&at to purc&ase2 9o# $uc& to purc&ase

3 ,ro$ #&ere to purc&ase

7 8&ere to store etc%

'Effecti.e in.entor0 $anage$ent ena/!es an organiation to $eet or exceed custo$ers

expectations of product a.ai!a/i!it0 #&i!e $axi$iing net profits or $ini$iing costs-

OBECTIVE OF STUD+

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'T&e $ain ai$ of stud0 is to c&ec" t&e efficienc0 and effecti.eness of in.entor0

$anage$ent s0ste$ at I,,CO Aon!a%-

In.est$ent in in.entor0 incurs a &ig& cost% T&erefore effecti.e $anage$ent is necessar0

to $ini$ie t&e cost and u!ti$ate!0 increases profita/i!it0 of an organiation%

Apart fro$ our $ain o/ecti.e our ot&er o/ecti.es areF

1 To ana!0e t&e !e.e! of in.est$ent in in.entor0 /0 I,,CO%

2 To stud0 t&e in.entor0 po!ic0 of t&e co$pan0%

3 To ana!0e t&e po!ic0 adopted /0 t&e co$pan0%

7 To ana!0e t&e financia! position of t&e co$pan0%


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RESEARCH METHODOLOG+

Researc& co.ers t&e searc& for retrie.a! of infor$ation for a specific purpose%

:asica!!0 researc& is t&e o/ecti.e and s0ste$atic $et&od of finding so!ution to a

pro/!e$% T&e steps fo!!o#ed to conduct t&is stud0 are as fo!!o#sF

1 Fo&/l1< &7&; 2&o3l H T&e pro/!e$ under stud0 .i% &o# effecti.e are

t&e $easures app!ied /0 Iffco Aon!a to contro! t&e in.entor0 is /asica!!0 studied t&roug&

ana!0tica! researc&% Materia! is i$portant for t&e efficienc0 of t&e s0ste$% It is a $atter of

great i$portance for in.entor0 depart$ent% In.entor0 depart$ent of I,,CO Aon!a is

responsi/!e for efficient in.entor0 contro!% T&us t&e #&o!e stud0 is conducted under t&e

guidance of officers of t&is depart$ent%

(") E715 l1&/& 7/&58 H Man0 pu/!is&ed studies /oo"s or $ateria! on effecti.e

contro! of in.entor0 #ere referred to for getting a true direction to researc& process%

(=) D oll1o H T&e stud0 is conducted t&roug& co!!ection of data t&roug& sur.e0s

inter.ie#s #it& officia!s etc% 6ersona! inter.ie#s #ere conducted #&ere a set of pre

concei.ed Duestions #ere as"ed fro$ t&e officers of in.entor0 depart$ent regarding

$ateria! contro! po!icies adopted /0 t&e$% :oo"s of accounts of Aon!a HI and Aon!a H II are

studied t&oroug&!0 to detai!s a/out in.entor0 stoc" cost of $ateria! consu$ed increase and

decrease in stoc" in t&e !ast fe# 0ears etc%

+a$p!e of $ateria! #as o/tained rando$!0% A:C ana!0sis #as used #&ere sa$p!e

of $ateria! #as graded under t&ree categoriesF A : C%

7 Al8717 ' 1&2&1o H T&e data a/out in.entor0 is ana!0sed to find out t&e

effecti.eness and efficienc0 of in.entor0 po!ic0% As regards t&e financia! perfor$ance t&e

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data a/out different financia! indicators is ana!0sed to ca!cu!ate t&e different ratios and to

dra# t&e grap&s%

INTRODUCTION ABOUT IFFCO

4uring $id sixties t&e cooperati.e sector in India #as responsi/!e for

distri/ution of > per cent of ferti!isers consu$ed in t&e countr0% T&is sector &ad adeDuate

infrastructure to distri/ute ferti!isers /ut &ad no production faci!ities of its o#n and &ence

dependent on pu/!icpri.ate sectors for supp!ies% To o.erco$e t&is !acuna and to /ridge

t&e de$andsupp!0 gap in t&e countr0 a ne# cooperati.e societ0 #as concei.ed to

specifica!!0 cater to t&e reDuire$ents of far$ers% T&us #as /orn I,,CO t&e #or!ds

!argest ferti!iser cooperati.e% I @7 /1/ 5/& 1 @;1; ; 6&&7 o6 ;

o/&8 ;&o/=? to 3@


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A pioneer in t&is fie!d I,,COs gro#t& ref!ects its /e!ief in t&e strengt& of t&e

far$er% +e.era! prestigious a#ards stand testi$on0 to t&e fact t&at I,,CO is dri.en /0 its.a!ues and t&e dedication of its peop!e% T&is is an organisation t&at /e!ie.es in fair p!a0

and &as a!#a0s fo!!o#ed transparent and professiona! practices in corporate go.ernance%

PRODUCTION

T&e !argest producer of ferti!isers in t&e countr0 I,,CO &as fi.e stateoft&eart

p!ants t&at ensure its specia! position% T&ese are considered to /e a$ong t&e /est

professiona!!0 $anaged ferti!iser p!ants in t&e #or!d%

I,,CO &ad set up t&e 5ALOL p!ant for $anufacture of Nitrogenous ,erti!iser and

5AN4LA p!ant for $anufacture of 6&osp&oric ferti!iser% T&ese p!ants co$$enced

co$$ercia! production in t&e 0ear 1@>7> !a"& tonne of ferti!iser $ateria! co$prising 3@%=3 !a"& tonne of urea and 2?%?7 !a"&

tonne of N654A6N6 #&ic& /ears a$p!e testi$on0 to its super!ati.e perfor$ance%

I,,COs $ar"et s&are in BN production is 2 percent and 2< percent in 6 2O


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A strong $ar"eting tea$ and a sound distri/ution net#or" $a"e t&e /otto$ !ine

secure% :ac"ed /0 t&is /e!ief I,,CO &as gone a!! out to extend its reac& resu!ting in t&e&ig&este.er sa!es of ferti!ier $ateria! t&is 0ear% 8it& t&e co$p!etion of 5a!o! Expansion

6roect I,,CO is a!! set to rea!ie t&e o/ecti.e of producing 1 !a"& tonne of

ferti!iers t&ere/0 attaining t&e distinction of #or!d !eader in ferti!ier production% E.er0

fourt& /ag of ferti!ier produced and e.er0 t&ird /ag of ferti!ier so!d in t&e countr0

/e!ongs to I,,CO%

Around 7 cooperati.e societies and 1


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FINANCIAL PERFORMANCE

T&e societ0 recorded an a!! ti$e &ig& turno.er of Rs%121=3 crore during 2>?

#&i!e its pre tax profit stood at Rs%3?%


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I,,CO &as o.er t&e 0ears successfu!!0 s&o#cased its i$age in India and o.erseas%

Its ac&ie.e$ents and its contri/utions to t&e far$ing co$$unit0 are &ig&!ig&ted in.arious ex&i/itions and fairs%

Gi.en t&e fact t&at I,,CO ac"no#!edge t&at peop!e are t&e "e0 dri.ers in its gro#t&

t&ere is !itt!e #onder t&en t&at t&e #or" en.iron$ent &ere is one t&at encourages

creati.it0 and nurtures success%

A +EAR OF APPRECIATION ("00-09)

It #as a $o$ent of pride for e.er0 $e$/er #&en t&e 6resident of India in t&e 0ear

2> !auded I,,COs efforts at conser.ing energ0 and "eeping its consu$ption at t&e

!o#est !e.e!% T&is Nationa! Energ0 Conser.ation A#ard 2? #as a$ong $an0 acco!ades

I,,CO recei.ed for its safet0 and conser.ation endea.ours fro$ ,AI CII and

Go.ern$ent of India% T&ese a#ards intera!ia inc!ude for :est 6roduction 6erfor$ance

Energ0 Conser.ation and Efficient 8ater Manage$ent to 6&u!pur 6!antK A#ards for :est

Tec&nica! Inno.ation +afet0 and En.iron$ent Manage$ent to Aon!a 6!antK Energ0

Conser.ation and Industria! +afet0 A#ard to 5a!o! 6!antK and +UN and N4T( Green IT

A#ard to 5and!a 6!ant%

In addition I,,CO &as poc"eted '+MART 8OR56LACE A8AR4- in t&e

$anufacturing and industria! seg$ent /0 t&e prestigious Econo$ic Ti$es Acer Inte!

+$art 8or"p!ace A#ard% At t&e #or!d co$$unications a#ards in London its associate

I5+L &as /een conferred a#ard for :est Content +er.ice and :est 6roect Manage$ent%1=


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Anot&er significant e.ent #as t&e !a0ing of t&e foundation stone of Indias first

e.er 5isan +E +pecia! Econo$ic one /0 4r% )%+% Raase"&ara Redd0 C&ief Minister of And&ra 6rades&%

,urt&er I,,COs Managing 4irector 4r% U%+% A#ast&i recei.ed &onorar0

4octorate of +cience degree fro$ 4r :a!ra$ ;a"&ar Go.ernor of Mad&0a 6rades& at t&e

(i"ra$ Uni.ersit0 Ca$pus in Uain%

Aon!a Unit for t&e first ti$e &as crossed production of 2 !a"& MT of urea #&ic& is

co$$enda/!e% 6aradeep &as ac&ie.ed greater !aure!s /0 producing $ore t&an 13 !a"& MT

of N64A6 despite s&ortage of ra# $ateria!% +ociet0 &as crossed t&e !and$ar" sa!es and

transportation of o.er 112 !a"& MT of ferti!iers $ateria! registering a s&arp rise of 2J

o.er t&e !ast 0ear% 8it& t&is I,,CO &as no# /eco$e t&e !argest $ar"eter of process

ferti!iers not on!0 in India /ut in t&e entire #or!d% +ociet0 &as a!read0 ac&ie.ed t&e sa!es

turno.er of a/out Rs%32? crore during t&e financia! 0ear 2?@%

4uring t&e 0ear 2?@ t&e societ0 &as entered into a !ong ter$ agree$ent #it&

LEGEN4 Internationa! for supp!0 of roc" p&osp&ate a!ong #it& eDuit0 sta"e% It &as

initia!ed an MoU #it& 5ap&osp&ate a !eading c&e$ica! and ferti!ier $anufacturing

co$pan0 of 5a&a"istan% Anot&er agree$ent of intent &as /een signed #it& atar for

setting up a Urea p!ant%

CORPORATE SOCIAL RESPONSIBILITIES

In !ine #it& its .ision and $ission state$ent I,,CO &as underta"en se.era!

socia! acti.ities in t&e areas of education co$$unit0 de.e!op$ent en.iron$ent

protection and &orticu!ture &ea!t& care$edica! faci!ities etc a!! #it& t&e intent of

reac&ing out to t&ose in need and i$pro.ing t&e Dua!it0 of t&eir !i.es% Adopting a .i!!age

is of para$ount i$portance to I,,CO% T&e progra$$e started #it& an o/ecti.e to /ring

a/out o.era!! de.e!op$ent in t&e !i.ing standards of rura! co$$unit0 t&roug& integrated

rura! de.e!op$ent #it& particu!ar e$p&asis on agricu!ture de.e!op$ent creation of

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drin"ing #ater faci!ities $edica! and .eterinar0 c&ec" up% I,,CO &as adopted 73@

.i!!ages t&us e$po#ering $an0 !i.es%

Anot&er sc&e$e t&at /enefits t&e far$ers is +an"at 9aran :i$a )oana !aunc&ed

/0 I,,COs su/sidiar0 I,,COTo"io Genera! Insurance Co$pan0 Li$ited ITGI% 9ere

far$ers are pro.ided insurance against accidents #it& t&e purc&ase of a


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I+O 171 certificate for En.iron$ent Manage$ent +0ste$% ,urt&er t&e 5a!o! 6&u!pur

and Aon!a p!ants &a.e recei.ed t&e I+O@1 certification for ua!it0 Manage$ent%

I,,CO &as contri/uted Rs 1 crore to set up t&e I,,CO 5isan +e#a Trust% T&is

Trust assists far$ers in getting $edica! treat$ent% E$p!o0ees a!so contri/ute regu!ar!0 to

it% T&e 5isan +e#a Trust organies cancer detection and e0e ca$ps and arranges for

/!ood t&roug& t&e Red Cross +ociet0%

T&e I,,CO ,oundation &as /een pro$oted as t&e t&in" tan" of t&e organisation%

Its o/ecti.e is to focus on strengt&ening .i!!age !e.e! cooperati.es in &ar$on0 #it& t&e

!a# and cu!ture of t&e countr0%

Indian ,ar$ ,orestr0 4e.e!op$ent Cooperati.e Li$ited I,,4C pro$oted /0

I,,CO #as gi.en a certificate of appreciation /0 t&e Tata Energ0 Researc& Institute for

its efforts to#ards good corporate citiens&ip% T&e Cooperati.e Rura! 4e.e!op$ent Trust

pro.ides practica! training to far$ers and &as organied 22@ progra$$es in 2?

/enefiting 22221 far$ers%

INFORMATION AND COMMUNICATION TECHNOLOG+

I,,CO is ta"ing $easures to de.e!op #e/ /ased ser.ices to pro.ide ex&austi.e

infor$ation on agricu!ture ferti!iser industr0 agroc&e$ica!s and infor$ation on

cooperati.e sector% ,or t&is purpose 1? touc& screen $onitor /ased ,ar$ers

Infor$ation 5ios"s or C0/er 4&a/as in 1 !anguages &a.e /een insta!!ed in 1> different

states of t&e countr0% :esides t&at I,,CO &as de.e!oped and i$p!e$ented se.era! ER6

so!utions and eco$$erce so!utions for interna! use as #e!! as for use in its oint proects%

+o$e of t&ese so!utions &a.e got recognition /0 Indian as #e!! as /0 Internationa!

Media Groups%

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4uring 2?@ I,,CO &as underta"en en&ance$ent of 8AN * Net#or" securit0

for a!! t&e p!ants and $ar"eting offices across t&e countr0% +0$antec anti.irus ser.er &as /een conso!idated and c!ients insta!!ed on a!! t&e $ac&ines across t&e countr0 for

protection against .irus attac"s%

In s&ort #e can sa0 t&atF

I,,CO I+F

1% Largest producer of ferti!isers in t&e countr0

2% No% of 6!ant Locations F ,i.e

3% Insta!!ed Annua! Capacit0 B MT

a% UREA 7272%2

/% N654A6 733 !a"& MT of ferti!isers

and @3%27 !a"& MT of sa!es during 2>?%


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OBECTIVES OF THE COMPAN+

T&e /road o/ecti.es of setting up t&is .entureF

1 6roducing ferti!isers%

2 6ro$oting t&e ferti!isers distri/ution s0ste$ in t&e cooperati.e sector%

3 Ensuring a.ai!a/i!it0 of ferti!isers at t&e far$ers doorstep%

7 Creating scientific a#areness a$ong far$ers%

+trengt&ening cooperation distri/ution s0ste$%

? To pro$ote t&e acti.it0 for enric&ing t&e !ife of t&e rura!%

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@ To ac&ie.e se!f re!iant and se!f generated econo$0%

I,,CO &as gro#n steadi!0 since its inception toda0% It &as e$erged not on!0 as

t&e !argest ferti!iser producing organiation in India /ut a!so Asias !argest ferti!iser

cooperati.e%

Prices of IFFCO's Fertilisers(Applicable only within India)

I!"i#! R$%ees Per To!!e &ef ()*+,*-++).

/REA NP0 DAP MOP

N*1,2 (+*-,*-, (-*3-*(, -+4-+4++ ()*1,*+ 0*,+2

M.R.P. 4830 7197 7637 69! 93!0 44!!

"ocal #a$e% &$t'a whe'e ee' applicable.

MANAGEMENT

T&e Representati.e Genera! :od0 RG: #&ic& is t&e Genera! :od0 for$s t&e

supre$e /od0 t&at guides t&e .arious acti.ities of I,,CO% T&e RG: consists ofF

1% Me$/ers of t&e :oard of 4irectors%

2% One de!egate fro$ eac& of t&e Me$/er +ocieties &o!ding s&ares of t&e .a!ue of

Rs%1 t&ousand and a/o.eK suc& de!egate s&a!! /e as per t&e pro.isions of t&e

Mu!ti+tate Cooperati.e +ocieties ActRu!es as a$ended fro$ ti$e to ti$eK

3% 4e!egates to /e e!ected fro$ a$ongst t&e representati.es of Me$/er H+ocieties

ot&er t&an Me$/ers &o!ding s&ares of t&e .a!ue of Rs% 1 t&ousand and a/o.e

in eac& +tate Union Territor0 at t&e rate of one de!egate for e.er0 2 societies or

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part t&ereof% 9o#e.er t&e $axi$u$ nu$/er of suc& de!egates fro$ an0

+tateUnion Territor0 at t&e rate of one de!egate for e.er0 2 societies or partt&ereof s&a!! not exceed 2


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+&ri C&andra 6ra"as&

+&ri +%L% 4&ar$e Go#da

+&ri 5artic" C&andra +ar"ar

+&ri 9ar$inder +ing& ;assi

+&ri M%Gopa! Redd0

+&ri An"us&rao R%Tope

+&ri Ra&ans Upad&0a0a

+&ri G%C% Mai"ota

+&ri (it&a!/&ai 9% Radadia

+&ri +&ees& 6a! +ing&

+&ri Ra 5u$ar Tripat&i

+&ri :a!.inder +ing& Na"ai

+&ri Ra.indra 6ratap +ing&

+&ri 5% +rini.asa Go#da

+&ri 5% +o$as&e"&ar Rao

+&ri +i$ac&a! 6ad&0

+&ri 6ra$od 5u$ar +ing&

+&ri R%5%4&a$i

+&ri :%+%(isanat&an

Managing 4irector H 4r% U%+% A#ast&i

4eput0 Managing 4irectorcu$Mar"eting 4irector H +&ri 4%5% :&att

4eput0 Managing 4irectorcu$,4 H +&ri Ra"es& 5apur 4irector Tec&nica! +&ri (%5% :a!i

4irector Coop% 4e.e!op$ent H 4r% G%N% +axena

4irector 9R4 H +&ri +%5% Mis&ra

D1&o& (o1 V/&7) M&. K.L. S1


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BANKERS

India O.erseas :an"

+tate :an" of India

:an" of :aroda

+tandard C&artered :an"

T&e Ma&aras&tra +tate Cooperati.e :an" Ltd%

T&e 8est :enga! +tate Cooperati.e :an" Ltd%

Mad&0a 6rades& +tate Cooperati.e :an" Ltd%

T&e 5arnata"e +tate Cooperati.e :an" Ltd%

T&e 6una/ +tate Cooperati.e :an" Ltd%

T&e 9ong"ong and +&ang&ai :a"ing Cooperation Ltd%

ICICI :an" Ltd%

I4:I :an" Ltd%

IFFCO,7 MAIN AIM

'+trengt&ening $anage$ent and participator0 c&aracter of t&e Indian Cooperati.e

Mo.e$ent /0 using du!0 tested and appropriate consu!tanc0 ad.isor0 and tec&no!ogica!

inter.entions sourced fro$ #it&in t&e countr0 and a/road and in accordance of t&e

Cooperati.e 6rincip!es and in &ar$on0 #it& t&e !a# and cu!ture of t&e !and%-

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VISION

'To aug$ent t&e incre$enta! inco$es of far$ers /0 &e!ping t&e$ to increase t&eir crop

producti.it0 t&roug& /a!anced use of energ0 efficient ferti!isersK $aintain t&e

en.iron$enta! &ea!t&K and to $a"e cooperati.e societies econo$ica!!0 and

de$ocratica!!0 strong for professiona!ied ser.ices to t&e far$ing co$$unit0 to ensure

an e$po#ered rura! India%-

MISSION

I,,COs $ission is 'to ena/!e Indian far$ers to prosper t&roug& ti$e!0 supp!0 of

re!ia/!e &ig& Dua!it0 ferti!isers and far$ inputs and ser.ices in an en.iron$enta!!0

sustaina/!e $anner and to underta"e ot&er acti.ities to i$pro.e t&eir socioecono$ic

status%-

6 To pro.ide to far$ers &ig& Dua!it0 ferti!isers in rig&t ti$e and in adeDuate

Duantities #it& an o/ecti.e to increase crop producti.it0%

2 To $a"e p!ants energ0 efficient and continua!!0 re.ie# .arious sc&e$es to

conser.e energ0%

7 Co$$it$ent to &ea!t& safet0 en.iron$ent and forestr0 de.e!op$ent to enric&

t&e Dua!it0 of co$$unit0 !ife%

8 Co$$it$ent to socia! responsi/i!ities for a strong socia! fa/ric%

To institutiona!ie core .a!ues and create a cu!ture of tea$ /ui!ding

e$po#er$ent and inno.ation #&ic& #ou!d &e!p in incre$enta! gro#t& of

e$p!o0ees and ena/!e ac&ie.e$ent of strategic o/ecti.es%

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: ,oster a cu!ture of trust openness and $utua! concern to $a"e #or"ing a

sti$u!ating and c&a!!enging experience for sta"e&o!ders%

; :ui!ding a .a!ue dri.en organiation #it& an i$pro.ed and responsi.e custo$er

focus% A true co$$it$ent to transparenc0 accounta/i!it0 and integrit0 in

princip!e * practice%


MEERUT


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VISION "0$0

9a.ing acco$p!is&ed t&e o/ecti.es en.isaged in '.ision2-and-$ission2


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To ac&ie.e our $ission I,,CO as a Cooperati.e societ0 underta"es se.era! acti.ities

co.ering a /road spectru$ of areas to pro$ote #e!fare of $e$/er cooperati.es and

far$ers% T&e acti.ities en.isaged to /e co.ered are ex&austi.e!0 defined in I,,COs :0e

!a#s

COMMITMENT

Our t&irst for e.er i$pro.ing t&e ser.ices to far$ers and $e$/er cooperati.es is

insatia/!e co$$it$ent to Dua!it0 is insur$ounta/!e and &arnessing of $ot&er eart&s

/ount0 to dri.e &unger a#a0 fro$ India in an eco!ogica!!0 sustaina/!e $anner is t&e

pri$e $ission%

A!! t&at I,,CO c&eris&es in exc&ange is an e.er!asting s$i!e on t&e face of Indian

,ar$er #&o for$s t&e $o.ing spirit /e&ind t&is $ission%

BUSINESS PRINCIPLES OF THE COMPAN+

• Appreciation of nationa! need of generation upto opti$u$ return of in.est$ent%

• To fair price of t&e product $anufactured /0 t&e co$pan0 is su/sid0 to t&e

far$ers%

• Tota! consu$er satisfaction as a Dua!it0 of t&e product price of t&e product and

/etter ser.ice after se!!ing t&e product%

•

Effecti.e $anage$ent infor$ation s0ste$%

• To increase t&e efficienc0 of t&e #or"ers%

• To $aintain /etter &u$an re!ations and discip!ine a$ong a!! t&e e$p!o0ees%

• To de.e!op good re!ation #it& custo$ers%

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IFFCO,S EMBLEM

T&e E$/!e$ of an0 organisation i%e% t&e !ogo is .er0 i$portant /0 #&ic& t&e

co$pan0 is "no#n to e.er0one or t&at is identit0 of t&e co$pan0% After one 0ear of

esta/!is&$ent in 1@=? t&e organisation &as decided to $a"e an EM:LEM of I,,CO% T&e

executi.e of t&e co$pan0 said t&at #&ic& can /e easi!0 fit into an0 p!ace or easi!0

c&angea/!e according to t&e p!ace and $ade /0 si$p!e geo$etrica! $et&od% +o t&e

EM:LEM is $ade /0 Mr% M%I% Gupta C&ief (isua!iser 4e.e!oper and !oo"s !i"e

Logos ratio is1F2F< and t&e co!or is green% T&e rectang!e s&o#s t&at t&e Indian

econo$0 is depend upon t&e agricu!ture and green co!or s&o#s t&e fait& of t&e far$ers

t&e0 /e!ie.e t&at after using t&e urea t&eir fie!ds #i!! a!#a0s /e green t&e re$aining

#&ite co!or s&o#s t&at t&e Dua!it0 of t&e I,,COs product is .er0 good and o.a! s&ape is

$eant for t&e #ea!t& and prosperit0%

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ORGANISATION CHART OF IFFCO

31


MEERUT

:oard of 4irectors

C&air$an * (ice C&air$an

Managing 4irector


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INVESTMENT OUTSIDE IFFCO

$. Indian Potash Ltd (IPL

I,,COs EDuit0 F Rs% 2%=? Crore

6ercentage of EDuit0 &e!d F 37J Rs% 32%7 $i!!ion

6aid up capita! Mar 312 F Rs @< $i!!ion

Acti.it0 F Mar"eting of 6otas& and i$ported ferti!isers

32


MEERUT

40%M4cu$

M"t%

4irector

4irector

Tec&nica!

4irector

9R4

4irector%

Coop%

4e.e!op$ent

40%M4cu$

,inance

4irector


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I6L is t&e Indian cana!iing agenc0 for do$estic potas& reDuire$ents%

". Ind!st"i#s Chi$i%!#s d! S#n#&a' (ICS I II

6ercentage of EDuit0 &e!d F 1@%@ J

6!ant +ite F 4arou +enega!

6roducts F Roc" 6&osp&ate 6&osp&oric Acid and N65 ,erti!isers

Acti.it0 F 6&osp&oric Acid at 4arou +enega!

6roduction capacit0 F 1%< $i!!ion T6A

6aid up capita! Mar 312 F Rs =%< /i!!ion

I,,CO &as ta"en o.er t&e $anage$ent and operationa! contro! of IC+ +enega! in 2?

@%

=. IFFCO ) TO*IO G#n#"a' Ins!"an+# Co$,an- Ltd. (ITGI

I,,COs EDuit0 F Rs% 1@3%@ Crore

6ercentage of EDuit0 &e!d F >2%=7J

Acti.it0 F Genera! Insurance

Corporate Office F Ne# 4e!&i

6aid up capita! Mar 312= F Rs 2%2 /i!!ion

ITGI &as !aunc&ed a ne# po!ic0 na$ed ';anta :i$a )oana- #&ic& is pro.iding

insurance co.er to t&e poorest of t&e poor at .er0 no$ina! pre$iu$%

33


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PARTNERS IN ITGI

;oint (enture 6artner F TM Asia 6te% Ltd%

Tota! EDuit0 F Rs% 22 Crore

4.O$an India F#"ti'is#" Co$,an- (OMIFCO

I,,COs EDuit0 F Rs% 32@%? Crore

6ercentage of EDuit0 &e!d F 2 F 3

I,,COs EDuit0 F >=J

E! Nasr Mining Co% F 27J

Acti.it0 F 6&os% Acid 6!ant

* . Nationa' Co$$odit- and D#"i0ati0# E1+han (NCDE

I,,COs 6aid up EDuit0 F Rs% 3 Crore

6ercentage of EDuit0 &e!d F 12J37


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Redee$a/!e 6reference +&are Capita! F Rs% 1 Crore

Acti.it0 F On Line Trading in co$$odit0 futures

!. Nationa' Co''at#"a' Mana$#nt S#"0i+#s Ltd. (NCMSL

I,,COs EDuit0 F Rs% 7 Crore

6ercentage of EDuit0 &e!d F 13%33J

Acti.it0 F Co!!atera! Ris" Manage$ent +o!utions

. IFFCO Chhattis&a"h Po3#" Ltd

6roect Cost F Rs% =2=< Crore

I,,COs 6aid up EDuit0 F Rs% 11%1 Crore

4e/t F EDuit0 Ratio F > F 3

I,,CO EDuit0 F >7J

C+E: F 2=J

Acti.it0 F 6o#er Generation 132 M8

9. *isan Int#"nationa' T"adin& FE (*ITIn.est$ent F Rs% 11 CroreLocation F 4u/ai

Acti.it0 F +pecia! purpose .e&ic!e +6( for s&ipping !ogistics and

in.est$ents in ne# o.erseas ;oint (entures%

Inc!udes Rs% @%? crore to#ards @ /onus s&ares recei.ed during 2>?%

$0. 5o"dan India F#"ti'is#" Co$,an- (5IFCO6roect Cost F U+4


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Acti.it0 F 6&os% Acid 6!ant

$$. IFFCO *isan San+ha" Ltd. (I*SL6aid up +&are Capita! F Rs% < Crore

I,,CO EDuit0 F Rs% 3%=< Crore>3J

I5+L &as expanded its net#or" in $ost parts of t&e countr0% Its products .i% 5isan

Torc& and 5isan Lantern are gaining popu!arit0 a$ongst t&e far$ers% I5+L is sending

fi.e free .oice $essages disse$inating agricu!tura! re!ated infor$ation to a/out 1< !a"&far$ers e.er0da0%

$" . IFFCO *isan SE Ltd .6roect Cost F Rs% 27 Crore

Oth#"sIndian ,ar$ ,orestr0 4e.e!op$ent

Cooperati.e I,,4C F Rs% ?%= CroreMa&aras&tra +tate Coop% :an" Ltd% F Rs% 1 La"&

I,,CO 5isan :aar F Rs% @ La"&

3=


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3>


MEERUT


38/170

Pro5isio!#l 6i76li76ts of IFFCO %erfor8#!ce "$ri!7 -++)*+9

3?


MEERUT

:i76est Pro"$ctio! of Fertilisers

(Previous Best 70.12 lakh MT in 2006-07)

;(,) l#


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IFFCO ASSOCIATES

1% IN4U+TRIE+ C9IMIUE+ 4U +ENEGAL

2% OMAN IN4IA ,ERTILI+ER COM6AN) +%A%O%C%

3% IN4IAN 6OTA+9 LT4%

7% NATIONAL COMMO4IT) * 4ERI(ATI(E+ EC9ANGE LT4%

% 5I+AN +E8A TRU+T

?% I,,CO ,OUN4ATION

@% LEGEN4 INTERNATIONAL 9OL4ING+ INC

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AWARDS GALORE

*ALOL UNIT

1 +e.en a#ards recei.ed for o.era!! perfor$ances fro$ ,AI%

2 T#o a#ards for industria! safet0 fro$ GOI%

3 A#ard for tec&nica! inno.ation fro$ ,AI%

7 T#o Ra0a :&as&a +&ie!d for pro$oting 9indi%


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*ANDLA UNIT

1 T#e!.e safet0 a#ards fro$ nationa! safet0 counci! :o$/a0 GOI%

2 T#ent0t&ree safeties a#ard fro$ Guarat%

3 Ra :&asa a#ard for pro$oting 9indi%

7 +ix a#ards for o.era!! perfor$ance fro$ ,AI%

AONLA UNIT

1 A#ard for /est i$p!e$ented proect 2nd price fro$ GOI%

2 A#ard for conser.ation of energ0 fro$ GOI

3 Nationa! A#ard for 'Exce!!ence in Energ0 Manage$ent-

7 C Indo Ger$an and Greentec& En.iron$ent Exce!!ence A#ard

C T#o +afet0 A#ards fro$ Nationa! +afet0 Counci! of India

? C Rai. Ratna Nationa! Go!d A#ard 2< for :est Executi.e

@ C Exce!!ence A#ard for papers pu/!is&ed on '+afet0 and 9ea!t& in

C&e$ica! Industr0- and '9aard Identification * Ris" Manage$ent

1 Nationa! energ0 conser.ation a#ard 2=

11 Go!den 6eacoc" En.iron$ent Manage$ent A#ard 2?

71


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GROWTH IN THE NUMBER OF MEMBER SOCIETIES

1@=>=? F

1@>7>< F 23?1

2>? F 3@


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ABOUT AONLA UNIT

LOCATION

+tate Uttar 6rades&

+tate Capita! Luc"no#

4istance fro$ Luc"no# 2? 5$%

4istance fro$ Ne# 4e!&i 2= 5$%

Nearest Airport Ne# 4e!&i

Rai!#a0 +tation Aon!a 1 5$% ,ro$ t&e 6!ant

Road 6!ant is In :arei!!0HAon!a :arei!!0 &iga0%

Area under 6!ant 2= 9ectares

Area under To#ns&ip 22 9ectares

73


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+EAR OF COMMISSIONINGF F 1@??

INVESTMENT F Rs%=?? @1@@?

T&e I,,CO AONLA Unit is !ocated in t&e Gangetic 6!ains of Uttar 6rades& in

:arei!!0 district a/out 2? 5$% +outest on :arei!!0Aon!a Road% It #as set up on ?

;anuar0 1@?< and started co$$ercia! urea production at 1= ;u!0 1@??% T&e infrastructure

of AONLA unit is .er0 /ig and constructed on >13 acres of !and%

I,,CO Aon!a unit is t&e $ost efficient and Dua!it0#ise as #e!! as en.iron$enta!

oriented unit so t&at Ms 56MG 6eat Mar#ic" a Dua!it0 registrar &as certified it as I+OF

@2 unit and Ms :(I London &as accredited it as I+OF171 unit% T&e Aon!a unit an

77


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A$$onia urea co$p!ex is co$prised of t&e t#o p&asesF

o AONLA1

o AONLA2

AONLA 1 #as esta/!is&ed in 1@?? and it #as digested to nation /0 &onoura/!e

6ri$e Minister of India !ate +&ri Raee. Gand&i on 1> Ma0 1@?@%

AONLA2 #as esta/!is&ed in1@@= 4ece$/er% T&is unit #as designed to nation /0

&onora/!e 6ri$e Minister of India +&ri I%5% Gura! on 2? ;an 1@@>%

SALIENT FEATURES OF AONLA UNIT

6articu!ar Aon!a1 Aon!a2

Capacit0 6%A%

A$$onia 77


46/170

A$$onia production

started

1


47/170

MT64 Capacit0 MT64 Capacit0 MT64

6&u!pur1 1=> 2? 71

6&u!pur2 2=2 3 3?

Aon!a1 2=2 3 3?

Aon!a2 2=2 3 3?

Tota! @


MEERUT


48/170

T&ere are t#o strea$s of A$$onia p!ants &a.ing t&e capacit0 to produce 2x1


49/170

F1 Ao/7 D2& A A Gl

T&e ,inance * Accounts 4epart$ent of I,,CO Aon!a is di.ided into < sections to

faci!itate s$oot& and eas0 functioning and contro!%

7@


MEERUT

;GM4GM

Tec&nica!

;GM4GM

Maint%

;GM4GM

6roduction

;GM4GM

Uti!it

;GM4GM

Co$$%

;GM4GM

, * A

A$$onia Mec&anica! 6rocess 6o#er 6!ant 6urc&ase ,* A

Urea 6!ant E!ectrica! 4esign *

4ra#ing

Offsite +tore

;GM

Traffic

6roduct

9and!ing

Instru$enta!

Li/rar0 *

4ocu$ent

Genera!

Engg%;GM

,ire * +afet0

* En.%

Ci.i!

La/orator0

Training *

4e.e!op$ent


50/170

O&


51/170

+r% Account Officers

Account officers

;r% Account Officer+r% Accountant

;r% Accountant


52/170

FINANCE AND ACOUNTS DEPARTMENT

Eac& co$pan0 is carried #it& a purpose of earning $one0% Mone0 or capita!

/eing a scare as #e!! as crucia! resource in t&e #or"ing of an0 organiation needs to /e

gi.en pri$e i$portance% T&e financia! resources &a.e /een p!anned and contro!!ed in a

proper and continuous $anner% As a$ong t&e $ost crucia! decisions of a fir$ are t&ose

#&ic& re!ate to finance% ,inance * accounts fro$ an integra! part of an0 organiation%

6roper and s$oot& functioning of t&is section is .er0 .ita! for t&e organiation to sur.i.e

and gro#%

,inance functions are of t#o t0pesF

Manageria! finance function

Routine finance function

Manageria! finance functions are so ca!!ed /ecause t&e0 reDuire s"i!fu! p!anning

contro! and execution of financia! acti.ities%

Routine finance functions on t&e ot&er &and do not reDuire a great $anageria!

a/i!it0 to carr0 t&e$ out% T&e0 are c&ief!0 and are incidenta! to t&e effecti.e &and!ing of

t&e $ateria! finance functions%

T&e .arious areas co.ering under t&e pre.ie# of su/sections are as fo!!o#s

$. BOOKS SECTION

T&is section /asica!!0 dea!s #it& accounting function $aintenance and "eeping of

records%


53/170

T&e .arious functions inc!udeF

:oo"sF 6reparing and $aintaining /a!ance s&eets%

I,CC ,erti!iser Industries Coordination co$$ittee

Costing * 6ricing Ce!!s

Reporting

". PA+ ROLL SECTION

T&is section dea!s #it& t&e pa0$ents of sa!ar0 and #ages to t&e e$p!o0ees and

extending .arious ot&er /enefits are co.ering under to pre.ie# are H

+a!ar0

Lea.e Tra.e! Concession LTC

Medica! A!!o#ance

Con.e0ance

Ad.ances

Loans to e$p!o0ees

Aon!a Unit underta"es processing of sa!ar0 and ot&er staff re!ated pa0$ents of a!!

e$p!o0ees t&roug& 9u$an Resource Manage$ent +0ste$ 9RM+% It is an integrated

pac"age /ased on Orac!e 4:M+% T&e +0ste$ integrates 6ersonne! * Ad$inistration

4epart$ent and ,inance * Accounts 4epart$ent%

+i$u!taneous!0 ,inancia! Accounting +0ste$ ,A+ #&ic& is a!so /ased on

Orac!e 4:M+ &as /een !aunc&ed in ,*A 4E6ARTMENT t&roug& #&ic& Genera! Ledger


54/170

+u/ Ledger of E$p!o0ees is $aintained and Tria! :a!ance and ,inancia! Accounts are

generated% T&ere is a!so inter re!ation of 9RM+ and ,A+ so t&at cas& pa0$entreceipt.ouc&ers :an" 6a0$ent (ouc&ers and ;ourna! (ouc&ers generated in 9RM+ are

auto$atica!!0 posted on!ine to 6a0ro!! +ection of ,inance * Accounts 4epart$ent%

=. T1o S1o

A7 2& ; 7/7 ' o2&1o7 o6 ; 7o18% I 'l7 @1; ; 6ollo@1< T7:-

Centra! Excise 4ut0

Inco$e Tax

+er.ice Tax

+a!es Tax

Centra! Excise 4ut0

As #e "no# t&at t&is dut0 is c&arged /0 Centra! Go.ern$ent on t&e goods

$anufactured% I,,CO $ain!0 produce a$$onia and urea at Aon!a p!ant% +o dut0 on

a$$onia is c&arged% In t&is re!ation $ont&!0 production report is prepared and a!!

docu$ents and accounts are prepared /0 t&e ,inance * Accounts 4epart$ent% T&e dut0

is deposited in t&e Go.ern$ent /an" account on t&e


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CONCEPT OF INVENTOR+ MANAGEMENT

4ictionar0 $eaning of in.entor0 is '1l' l17 o6 o53l &1l7. T&e

!iterar0 $eaning of in.entor0 is stoc" of goods% According to Internationa! Accounting

+tandards2 in.entor0 is a tangi/!e propert0 #&ic& is &e!dF

,or sa!e in t&e ordinar0 course of /usinessK

In t&e process of $anufacture for suc& a sa!eK

,or consu$ption in t&e process of production of goods and ser.ices for sa!e

inc!uding $aintenance supp!ies and consu$a/!es ot&er t&an $ac&iner0 spares%

In.entor0 Manage$ent in.o!.es t&e contro! of assets /eing produced for t&e

purpose of sa!e in t&e nor$a! course of t&e co$pan0Ps operations% T&e goa! of effecti.e

in.entor0 $anage$ent is to $ini$ie t&e tota! costs direct and indirect t&at are

associated #it& &o!ding in.entories% 9o#e.er t&e i$portance of in.entor0 $anage$ent

to t&e co$pan0 depends upon t&e extent of in.est$ent in in.entor0%

T&e ter$ Bin.entor0 inc!udesF

I5o&8 o6 R@ M&1l7 :

In t&e case of $anufacturing concerns .arious t0pes of ra# $ateria!s are

/eing used in t&e production s0ste$% To ensure s$oot& production function and a!so

to a.oid an0 "ind of production de!a0s t&e concern &as to "eep in.entor0 of ra#

$ateria!s%

I5o&8 o6 So&7 ' S2& P&7 :


56/170

T&is in.entor0 consists of t&ose products #&ic& ser.e as accessories to t&e

$ain products $anufactured for t&e purpose of sa!e% :o!ts nuts scre#s c!a$ps etc%are t&e exa$p!es of stores and spares parts% +uc& spare parts are eit&er /oug&t fro$

outside or $anufactured in t&e concern itse!f%

I5o&8 o6 Wo&-I-P&o77 (W.I.P.) 7

+o$eti$es t&e $anufacturing s0ste$ in.o!.es .arious processes for

con.erting ra# $ateria!s into finis&ed goods% As suc& so$e $ateria!s $ig&t &a.e

/een issued to t&e production process /ut $ig&t not &a.e /een co$p!eted as finis&ed

goods% T&is is "no#n as #or"inprocess%

I5o&8 o6 F117;' Goo'7 :

A!! goods $anufactured during a particu!ar period $a0 not /e so!d

i$$ediate!0% T&ese are to /e "ept in #are&ouse% T&e idea is to uncoup!e t&e

production and sa!es function so t&at it is no !onger necessar0 to produce t&e goods

/efore a sa!e can occur%

T&e app!ication of $anageria! function on t&e /asis of $anage$ent princip!es

in t&e fie!d of in.entor0 is ter$ed as in.entor0 $anage$ent% Manageria! functions are

perfor$ed #it& respect to in.entor0K it $a0 /e ca!!ed in.entor0 $anage$ent%

T&e o/ecti.e of in.entor0 $anage$ent is to p!an t&e opti$u$ sie of in.entor0

#&ic& is neit&er excessi.e nor deficient and is ti$e!0 a.ai!a/!e% ,or ti$e!0 a.ai!a/i!it0

a!ong #it& opti$u$ sie t&ere is need for contro!!ing as #e!!% On!0 on t&e /asis of .arious contro! tec&niDues one can ensures #&et&er in.entor0 #ou!d /e ti$e!0 a.ai!a/!e%

:ut effecti.e contro! in itse!f depends upon organiing and coordination% T&us in.entor0

$anage$ent co$prises t&e functions of p!anning contro!!ing and organiing t&e t0pes of

a!! goods Duantit0 status f!o# and ti$e seDuence etc%


57/170

N' 6o& 15o&8


58/170

In 611l


59/170

A!! purc&ases are to /e $ade on!0 /0 t&e $ateria!s depart$ent except purc&ases of pett0

ite$ t&roug& so$e .ouc&ers and 4epart$ent Managers #it&in t&e !i$its prescri/ed in purc&ase procedurepo#er of officer% Materia! purc&ase indent s&ou!d gi.e fo!!o#ing

infor$ationF

1 uantit0 in stores

2 A.erage $ont&!0 consu$ption since !ast purc&ase for stoc" ite$s

3 Maxi$u$ $ini$u$ !e.e!

7 Last purc&ase order reference


60/170

6urc&asing is distinct fro$ /u0ing% 6urc&asing in.o!.es t&e extra "no#!edge as t&e

tenders .arious .endors t&eir prices co$parison /et#een t&e$ after sa!e ser.icedispatc&ing fo!!o# up and pa0$ent ter$s%

T&e purc&ase depart$ent considers .arious t&ings /efore purc&asing t&e ra# $ateria!s%

1% Infor$ation a/out t&e input $ateria!

2% +ources of $ateria! .endor

3% Reasona/!e price of t&at $ateria!

7% A!! ter$s and conditions

Indenter is t&at person #&o raises t&e indent%

PURCHASE PROCESS

T&e purc&ase process can /e expressed as fo!!o#ingF

IN4ENTER

Materia! 6urc&ase ReDuire$ent M6R

+ing!e stage

EnDuir0 T#o stage

=


MEERUT


61/170

E 6rocure$ent Manua!

1< da0s 21 da0s

Opening

uotation Co$parati.e +tate$ent C+

Tec&nica!!0 Accepta/!e L1 :idder

Order

8it& appro.a! of co$petent aut&orit0

T&e diagra$ can a!so /e su$$aried as fo!!o#sF

$) RAISING OF INDENTF ,irst of a!! t&e indenter raises t&e indent% T&is

indenter $a0 /e!ong to an0 depart$ent% No# t&e indenter infor$s to t&e store% If

t&at particu!ar $ateria! is not a.ai!a/!e at t&e particu!ar point of ti$e t&en store

infor$s to t&e purc&ase depart$ent% After it t&e #or"ing of purc&ase depart$ent

starts%

") RECOGNITION OF NEEDF T&e purc&ase depart$ent recognies t&e need

of indenter and c&ec"s #&et&er t&at $ateria! is a.ai!a/!e in t&e store or not% T&e

a.ai!a/i!it0 of input $ateria! at a!! points of ti$e is t&e responsi/i!it0 of purc&ase

depart$ent%

=1


MEERUT


62/170

=) REQUISITION TO PURCHASE: T&is is an inti$ation to purc&ase

depart$ent /0 t&e indenter t&at &e &as need of certain $ateria!s% 9e raises indent

/0 fi!!ing a for$ BMateria! 6urc&ase ReDuisition M6R% ,or stoc" ite$s M6R is

raised /0 store "eeping in .ie# $axi$u$ $ini$u$ * reordering !a/!e% In t&is

&e gi.es se.era! infor$ation !i"eF

a% Materia! description 6roposed Reason

/% Ite$ code proposed code

c% Unit

d% uantit0 reDuired

e% (a!ue

f% :udget code

g% M6R No%

&% Indenter

#) MRP SCRUTIN+: Next step in.o!.es scrutiniing of t&e MR6 to certified t&e

genuine!0 of t&e need for t&is first appro.a! to gi.en /0 i$$ediate &ig&er aut&orit0

of t&e indenter% Next t&e MR6 is send to t&e stores to c&ec" #&et&er t&e $ateria! is

a.ai!a/!e or not% If it is not a.ai!a/!e t&e MR6 goes to t&e purc&ase depart$ent% ,or

furt&er action% 9ere it is scrutinie in t&ree #a0s F

• Appro.a! scrutin0

• :udget scrutin0

=2


MEERUT


63/170

• Tec&nica! scrutin0

>) SENDING o& ENQUIR+JINVITATION TO BID: EnDuir0 can /e done

/0 t#o t0pesF

I% +ing!e stage

II% T#o stage

+INGLE +TAGEF +ing!e stage is fo!!o#ed #&en t&ere is no or .er0 fe#

c&ance of tec&nica! de.iation% 9ere t&ere is no restriction on supp!ier or

.endor% T&is enDuir0 is done in case of nonproprietar0 ite$s%

T8O +TAGEF T#o stage enDuir0 is fo!!o#ed #&en t&ere is $ore c&ances of

tec&nica! de.iation% T&is enDuir0 is done in case of proprietar0 ite$s%

Ite$s can /e c!assified in to t#o categories "eeping in .ie# t&e purc&asing function H

• P&o2&1&8 17: T&ese are t&ose ite$s e%g% spares #&ic& &a.e to /e

/oug&t fro$ particu!ar supp!ier or .endor%

• No2&o2&1&8 17: T&ese are t&ose for #&ic& t&ere is no restriction

on .endor%

EnDuir0 is sent in order to "no# t&e prices and ot&er ter$s and conditions of .endors%

:idding can /e done in t&ree #a0s

I. P&o2&1&8 31''1


64/170

III. P&77 '&JO2 31''1


65/170

it is de!i.ered to t&e indenter% Nor$a! pa0$ent is done after 3 da0s fro$ t&e receipt

or acceptance of $ateria!%

9) Follo@ /2 'o 6o& 5&8 o&'&: It $a0 /e regarding de!a0 in supp!0 c&anges

in price defecti.e or da$aged ite$s supp!ied etc% ,or e.er0 indent a separate fi!e is

opened and correspondence goes on% ,or e.er0 step reco$$endations of indenter

$anager ,*A $ateria!s $anager * genera! $anager are soug&t% In case of

da$aged input $ateria!s t&e store does not accept t&e $ateria!s% A reection report is

prepared in case of da$aged ite$s%

PA+MANT AGAINST PURCHASE:

T&ere are .arious $odes of pa0$ent t&roug& #&ic& pa0$ent is doneF

=<


MEERUT


66/170

$. A'5 28 o 7/22l1& :

If /ot& t&e parties are agreed upon ad.ance pa0$ent t&at is specifica!!0 pro.ided

in t&e contract order on!0 t&en ad.ance pa0$ent is gi.en% T&e ad.ance pa0$ent to

contractors s&a!! /e $ade against su/$ission of /an" guarantee in t&e 6erfor$a

pro.ided /0 I,,CO% Ad.ance pa0$ent against inde$nit0 /ond s&a!! not /e re!eased as

pro.ided in t&e purc&ase procedure%

". F/ll 28 J 90 o 9> 28 :

In case t&e ter$s of pa0$ent pro.ide for fu!! pa0$ent or part pa0$ent against

dispatc& docu$ents t&roug& /an" t&e supp!ier #i!! /e negotiating t&e docu$ents t&roug&

t&e /an"ers% After t&e docu$ents are recei.ed /0 t&e /an"ers t&e0 are for#arding /an"

inti$ation a!ong #it& a cop0 of t&e purc&ase order to ascertain t&at t&e in.oice is raised

for t&e $ateria! ordered and confor$s to t&e ot&er ter$s and conditions of purc&ase

order%

After t&e inti$ation fro$ t&e /an" is recei.ed t&e in.oice of t&e supp!iers #i!! /e

scrutinied /0 t&e ,inance and Account 4epart$ent for t&e fo!!o#ing

i% 6urc&ase order nu$/er

ii% 8&et&er $ateria!s supp!ied are as specified in t&e purc&ase

iii% 8&et&er $ateria!s supp!ied are as specified in t&e purc&ase order%

i.% uantit0 supp!ied%

.% 6rice /asis #&et&er ,%O%R% or Ex#or"s

.i% 8&et&er excise dut0 sa!e tax and ot&er taxes are as per t&e order%

.ii% 8&et&er /an" c&arges are c!ai$ed as per t&e purc&ase order%

.iii% Ot&er ter$s and conditions of t&e purc&ase order%

==


MEERUT


67/170

ix% 4ocu$ent #it& /an" for retire$ent s&ou!d &a.e consignee cop0 of GR%

8&ere t&ere is de!a0 in supp!0ing t&e $ateria! and t&e pa0$ent t&roug& /an" is

@J to @


MEERUT


68/170

DELA+ IN DELIVER+

In an0 contract t&e ti$e and date of t&e de!i.er0 is t&e essence of t&e contract% In

t&e e.ent of de!a0 in t&e execution of t&e order /e0ond t&e date of de!i.er0 as stipu!ated

in t&e order t&e proect aut&orities $a0 ta"e fo!!o#ing actions H

1% Accept de!a0ed de!i.er0 at price reduced /0 a su$ eDui.a!ent to %< J if t&e .a!ue

goods not de!i.ered for e.er0 #ee" of de!a0 or part t&ereof !i$ited to a $axi$u$

of


69/170

IMPORTED MATERIAL

Materia!s procured $a0 /e eit&er indigenous or i$ported% ,or $aor proects t&e

foreign contracts are nor$a!!0 fina!ied at &ead office !e.e! and pa0$ent against t&ese

contracts are $ade /0 t&e concerned unit% Orders are a!so p!aced /0 t&e unit direct!0%

6a0$ent is $ade to t&e foreign part0 /0 de/iting to t&e appropriate ad.ance account% If

t&e pa0$ents are $ade t&roug& LC against docu$ents t&e sa$e s&a!! /e de/ited to

ad.ances to foreign supp!iers account% On receipt of $ateria! at site proect engineer

s&a!! accept t&e $ateria! and initiate for preparation of 4C+R(+R(% After recei.ing

4C+R(+R( proect accounts #i!! c!ear t&e supp!iers ad.ance account for $ateria!%

C!earing and &and!ing of i$ported $ateria! is t&e responsi/i!it0 of $ateria!

depart$ent on t&e arri.a! of s&ip t&e $ateria!s #i!! /e c!eared #it& reference to t&e

in.oices and /i!!s% ,or an0 s&ort !anding or /rea"age /et#een t&e port of dispatc& and

port of destination c!ai$ action s&a!! /e ta"en /0 t&e$%

=@


MEERUT


70/170

MATERIAL CODING

It is .er0 t0pica! for t&e e.er0 organiation to $aintain t&e stoc" ite$s in case of

!argenu$/er of ite$s% It #i!! /e .er0 t0pica! to identif0 t&e$ at t&e ti$e of reDuire$ent%

+o t&e ite$s are coded to a.oid confusion% ,or t&e coding of $ateria!s t&e account person

assigns code for e.er0 ite$ of store% T&us e.er0 ite$ &as a code t&at is ca!!ed its $ateria!

code%

Materia! coding faci!itates t&e account persons and store $anager to $aintain t&e

transactions of t&e ite$s #&et&er of recei.ing or of issuing%

E.er0 ite$ $aintained /0 its code in t&e stoc" as #e!! as in t&e store accounting

section% T&e ite$$ateria! code re$ains sa$e in stores and accounting section% 8&ene.er

a transaction is done in store for t&e in.entories t&e fu!! detai!s of t&at transaction is send

to store accounting section a!so /ecause t&e co$puters of stores and accounting section

are connected t&roug& Loca! Area Net#or"% LAN

In t&is #a0 it is .er0 co$forta/!e tas" to $aintain t&e in.entories on t&e in.entor0

soft#are #it& t&e &e!p of $ateria! coding%

A'5


71/170

CODING

T&ere are different t0pes of coding t&at are as fo!!o#sF

aN/&17 Eac& ite$ is gi.en a nu$/er%

9Al2;317 Eac& ite$ is denoted /0 a co$/ination of a!p&a/ets% If t&e a!p&a/et

se!ected indicates t&e in.entor0 sound #&en it is pronounced it is "no#n as

$ne$onic s0ste$% T&is &e!ps in re$e$/ering t&e codes%

+Al2;/&17 It is a co$/ination of a!p&a/ets and nu$eric code%

dD1l S877 It is /asica!!0 a nu$eric s0ste$K su/group $a0 /e indicated /0

deci$a!s%

In I,,CO $" '1


72/170

P1< D172;

A!! pac"ing /oxing and protection s&a!! confor$ to t&e specification or

reDuire$ents of t&e order% T&e supp!ier s&a!! /e &e!d !ia/!e for t&e da$age or /rea"age of

t&e goods due to defecti.e or insufficient pac"ing% It #i!! /e according to ter$ and

conditions t&at are gi.en a!read0 in t&e for$at%

A!! goods s&a!! /e dispatc&ed /0 rai!road freig&t paid and t&e rai!#a0 receipt!orr0

receipt s&a!! /e posted to t&e concerned officer of I,,CO%

DOCUMENT REQUIRED FOR THE DISPATCH OF GOODS

,o!!o#ing docu$ents are reDuired for t&e dispatc&ing of $ateria!sF

C&a!!an 3 copies

6ac"ing !ist 3 copies

Test certificate 3 copies

Rai!#a0 Lorr0 Air 7 copies

Consign$ent note

>2


MEERUT


73/170

I721o o6 M&1l

T&e $ateria! depart$ent s&a!! coordinate #it& ot&er depart$ents and arrange

inspection of $ateria! at .endors s&op prior to dispatc&% Inspection of $ateria!s in ot&er

cases s&a!! /e carried out on receipt of $ateria!s at site% On!0 $ateria!s t&ose c!eared /0t&e inspection #i!! /e ta"en on c&arge in stores% T&e person inspecting t&e $ateria! #i!!

sign

on t&e stores receipt .ouc&er in to"en of &a.ing inspected and accepted t&e $ateria!%

Genera!!0 indenter is ca!!ed upon for t&e inspection of t&e $ateria!%

+o$eti$es inspection is done at t&e gate of I,,CO% On!0 after inspection $ateria!

enters into t&e store% If t&ere is an0 da$age in t&e $ateria! or t&e0 are insufficient in

Duantit0 t&en reection report is prepared% Its copies are distri/uted a$ong a!! t&e parties

#&ic& are in.o!.ed in it%

D3


MEERUT


74/170

!odge t&e pro.isiona! c!ai$ #it& t&e under#riters and pass on t&e re!e.ant papers to

t&e finance * accounts depart$ent for !odging $onetar0 c!ai$%

In respect of transit insurance c!ai$s /i!! section #i!! pass an adust$ent

Entr0 de/iting 'c!ai$ reco.era/!e account- and credit t&e 'Ad.ance to

(endors account-% After t&e adust$ents t&e /i!! section sent t&e cop0 of ourna!

.ouc&er a!ong #it& a!! necessar0 detai!s suc& as 6%O% No% MRR No% Duantit0 and

.a!ue na$e of t&e supp!ier to t&e insurance section for fo!!o#ing up t&e c!ai$ #it&

t&e insurance co$pan0%

8&ere t&e responsi/i!it0 for s&ort supp!0 or da$ages in transit is of t&e supp!iers t&e

$ateria! depart$ent s&ou!d ta"e up t&e $atter #it& t&e supp!ier for arranging

rep!ace$ent% A report is prepared in t&is case% Its copies are sent to t&e supp!ier

purc&ase depart$ent and finance and account depart$ent%

Ao/1< o6 R@ M&1l7

:ased on t&e proected consu$ption reDuire$ent of ra# $ateria!s t&e

procure$ent action is ta"en /0 t&e co$$ercia! depart$ent at t&e &ead office #&ic& is in

4e!&i%

4escri/ed /e!o# is t&e accounting reDuire$ent of $aor ra# $ateria!%

I2o&' P;o72;o&1 1' ' Ao1

T&e consign$ent of p&osp&oric acid and A$$onia are recei.ed at 5and!a and t&e

$ateria! actua!!0 recei.ed is .a!ued at t&e contracted cost * freig&t price%

>7


MEERUT


75/170

8&ere free on /oard ,O: price is agreed t&e ocean freig&t e!e$ent is !oaded

separate!0% A!! connected expenditure !i"e custo$s dut0K &and!ing c&arges etc% are a!soinc!uded in in.entor0 .a!uation%

T&e .a!uation of in.entor0 at t&e $ont& end is to /e $ade on t&e /asis of exc&ange

rates pre.ai!ing on t&e !ast da0 of t&e $ont&% T&e difference if an0 /et#een t&e

pro.isiona! rate and t&e actua! pa0$ent rate s&a!! /e c&arged off to t&e consu$ption

account if t&e $ateria! is a!read0 consu$ed%

T&e account depart$ent a!so ensures t&at a!! c!ai$ supp!iers for s&ortage are

/oo"ed on $ont&!0 /asis and necessar0 on Duarter!0 /asis for t&e pending c!ai$s%

I'1<


MEERUT


76/170

N/&l G7

5a!o! 6&u!pur and Aon!a p!ant consu$e as feed stoc" and fue!% As per t&e contract

#it& ONGC gas is supp!ied to I,,CO at t&e price fixed /0 Go.t% of India fro$ ti$e to

ti$e%

T&e $eters pro.ided at t&e in!et point in t&e p!ants are t&e /asis for $ont&!0 /i!!ing%

Meter reading is carried out oint!0 /0 ONGC GAIL and I,,CO representati.es% T&e

unit sends t&e e$ai! to &ead office for $a"ing pa0$ent to ONGC GAIL after due

certification of /i!! /0 t&e &ead of tec&nica! depart$ent a/out Duantit0 of gas recei.ed%

N2;;

Nap&t&a is supp!ied /0 IOC against ad.ance pa0$ent ter$s% T&ere are excise dut0

concessions a.ai!a/!e for t&ese ite$s pro.ided t&e0 are consu$ed for $anufacture of

ferti!isers% Accounts depart$ent in coordination #it& production depart$ent s&a!! ensure

t&at a!! t&e excise dut0 reDuire$ents are fu!fi!!ed t&at t&e dut0 concessions are fu!!0

a.ai!ed% T&e in.entor0 is .a!ued /ased on t&e Duantit0 recei.ed as per MRR recei.ed

fro$ production depart$ent on $ont&!0 /asis% T&e price pa0a/!e to IOC for nap&t&a is

fixed /0 t&e Go.t% fro$ ti$e to ti$e% T&e nap&t&a is supp!ied /0 IOC fro$ its refiners

!ocated at Mat&ura 5o0!i :R6L 6anipat * :agoun to 5a!o! 6&u!pur * Aon!a units%

Cl877 R717

T&e Cata!0sts * Resins are produced /0 t&e $ateria! depart$ent at t&e p!antK on t&e

receipt of t&e $ateria! t&e in.entor0 is .a!ued at t&e agreed price% ,or Cata!0sts * Resins

#&ere I,,CO &as poo!ing arrange$ent #it& ot&er co$panies t&e $ateria! recei.ed is

ta"en to in.entor0 at t&e actua! price paid and eDui.a!ent a$ount is credited to '$ateria!

recei.ed on !oan account-%

>=


MEERUT


77/170

T&is entr0 #i!! /e re.erse #&en t&e $ateria! is procured /0 I,,CO and rep!enis&ed

for return of !oan% T&e in.entor0 and consu$ption account t&en s&a!! /e accounted at t&eactua! procure$ent price%

>>


MEERUT


78/170

STORE SECTION

+tore of an0 organiation is of .ita! i$portance% It is t&e responsi/i!it0 of stores to

recei.e t&e $ateria! reDuired /0 t&e organiations operations to "eep it proper!0 * to

issue it as #&en reDuired% T&e stores are di.ided in t#o su/sections for greater f!exi/i!it0

!i"e receipt and custod0 section% In I,,CO t&ere are t#o stores%

a% +tore A for Aon!a1 t&is store contains t&at spares #&ic& are used /0 Aon!a1

/% +tore : for Aon!a2 unit% it contains $ain!0 cata!0sts used /0 Aon!a2

+tore &as t&e fo!!o#ing #are&ousesF

• Main +tore

• Ce$ent godo#n

• 6etro! 6u$p

• Ca/!e 0ard

• C&e$ica! godo#n

• 6aint godo#n

• 64IL store

A% RECEIPT SECTION -

T&is section is responsi/!e for recei.ing t&e $ateria!s and inspecting t&e$% T&e

process in.o!.es fo!!o#ing steps%

1 T&e docu$ent regarding t&e $ateria! $a0 /e sent to t&e stores purc&ase

concerned depart$ent% :ut u!ti$ate!0 t&e0 &a.e to /e send to stores%

T&e docu$ents $a0 /eF

Goods receipt rai!#a0 receipt c&a!!an

>?


MEERUT


79/170

,or$ 3?

Excise dut0

To!! tax

2 T&e particu!ars of t&e docu$ent are noted in t&e carrier receipt register CRR%

3 After t&e entr0 in t&e register t&e docu$ent is gi.en to an agent ter$ed as

&and!ing contractor% 9e #i!! co!!ect t&e $ateria!%

7 Consign$ents cases are intact% If not &e #i!! as" for open de!i.er0% T&en &e &as to

de!i.er t&e goods to stores% In case of da$age &e &as to gi.e a certificate% +o$e

consign$ent $a0 recei.e #it&out docu$ent i%e% door de!i.er0 and is so$e cases it

$a0 /e face to face de!i.er0%

@


MEERUT


80/170

B) CUSTOD+ SECTION -

T&is section is responsi/!e for proper "eeping of $ateria!s and issuing t&e$ #&en

reDuired /0 different depart$ent and contractors% T&e $ateria! recei.ed &ere is first

c&ec"ed as per +R( for e.er0 $ateria! t&ere is a card% T&ese cards are !ocated in /insaccording to code of $ateria! is recei.ed in custod0 t&e card infor$ation is updated%

8&en so$eone #ants to issue certain $ateria! &e &as to fi!! t&e store issue .ouc&er

+I(% Once t&e ite$ is issued again infor$ation is updated in t&e "ardex% 8&en a

particu!ar part is returned t&en t&is recei.ed in stores /0 interna! stores return .ouc&er

I+R(% After issuing t&e $ateria! t&e nu$/er of issue and t&e Duantit0 issued is noted in

+I( contro! registers%

Custod0 section ta"es care of spares%

SPARES H

A/out 3=?7? spares of Aon!a Unit1 are &oused in store and 1>>@@ spares of Aon!a

Unit2 are &oused in store% +pares &a.e /een c!assified p!ant #ise% T&e first digit of t&e

code of ite$ is nu$/ered according to gi.en criterion

A$$onia

Urea

6roduct &and!ing

6o#er

+p% EDuip$ents

Genera! ite$s

?


MEERUT


81/170

In I,,CO in.entor0 is di.ided into t#o t0pesFi% Genera! and

ii% +pares

Genera! are t&ose inputs #&ic& can /e used at .arious sites as #ire pipe etc%

+pare are t&ose inputs #&ic& are specific to a particu!ar p!ant and are of particu!ar sie%

A:C CLA++ 8I+E LI+T O, 69)+ICALL) (ERI,IE4 ITEM

AONLA UNIT 1

V&161'

1 ;

8&

A Cl77 B Cl77 C Cl77 Ul77161' Tol

G&l S2& G&l S2& G&l S2& G&l S2& G&l S2&

21 1 1

212 > 1 > 1

223 3 = 3 =

27< 22 2 ?323 13?1 ?37< 171

22 122 3> 3= >>< 2=31

Tol $=# #0= >>0 # $*09! $*=$ >"= $!* $!=0# $9>##

?1


MEERUT


82/170

A:C CLA++ 8I+E LI+T O, 69)+ICALL) (ERI,IE4 ITEM+

AONLA UNIT2

V&161'

1 ;

8&

A Cl77 B Cl77 C Cl77 Ul77161' Tol

G&l S2& G&l S2& G&l S2& G&l S2& G&l S2&

212 11 2>1 23 3@3 313 ==7

223 2 11 2 11

27< 2>13


83/170

Tol $=# =9 =*! 9! >!0= 90>> $=9 $$$> *=#= $$#>*

ACCOUNTING FOR STORES

Genera! Out!ine of stores ,unctionF

a% T&e aut&orit0 of receipt store and issue of a!! $ateria! is centra!ied in t&e

$ateria!s depart$ent su/ect to exception in per$itted in certain cases% In certain

cases a no$ina! stoc" of fe# consu$a/!e ite$s can /e per$itted #it& uses

depart$ents suc& as $aintenance !a/orator0 and ad$inistration depart$ent for

$eeting e$ergencies% In addition certain c&e$ica!s are per$itted to /e stored in

production depart$ent due to t&e operationa! needs%

/% T&e aut&orit0 of storage of pac"ing $ateria!s !i"e /ags is .ested #it& /agging

depart$ent% T&e /agging depart$ent recei.es t&e $ateria! gets it inspected in

!a/orator0 issued t&e sa$e for product /agging and $aintains t&e stoc"s%

c% Maintenance of records for a!! Duantitati.e transaction of pac"ing $ateria! is t&e

responsi/i!it0 of /agging depart$ent% +i$i!ar!0 t&e ra# $ateria!s are &and!ed /0

production depart$ent #it& a!! responsi/i!ities in respect of Duantit0 accounting%

F/1o7 o6 So& Ao/1< S1o

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T&e section dea!ing #it& accounting of stores in t&e finance depart$ent s&a!!

&a.e fo!!o#ing functionsF

1% Accounting of receipts issues return and transfer of $ateria!s%

2% Accounting of i$ported $ateria!s for capita! #or"s and operations%

3% Associating #it& stores section for stoc" .erification%

7% (a!uation of stores ite$s s&ou!d do on #eig&ted a.erage /asis%

R12 JI77/7J R/&7 T&76& o6 M&1l7

a T&e second cop0 of t&e $ateria! recei.ing reports after pricing s&a!! /e passed on

to t&e stores accounts sections to scrutinied t&e sa$e #it& reference to store ite$

code Duantit0 of $easure etc% and process it for accounting of receipt of $ateria!s%

After issue return of $ateria!s issue section of stores depart$ent arranges data

entr0 on t&e dai!0 /asis% C&ec"!ist processed is sent to stores accounting section

for scrutin0 in respect of store ite$ code cost ser.ice code expense code and

unit $easure etc%

/ T&e corrections and financia! and financia! adust$ents are $ade to arri.e at fina!

c&ec" !ist after scrutin0 of fina! c&ec" !ist entr0 in priced store !edger is to /e

processed% T&e section s&a!! ensure t&at a!! receipts issues and returns transfer

.ouc&er raised /0 t&e stores section are fina!!0 posted in t&e price store !edger%

c ,or c!earance of i$ported $ateria!s a$ount deposited for custo$ dut0 in t&e 64

account etc% +&a!! /e c!eared against indi.idua! MRRs on receipt /i!! of entr0

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d T&e issue notes s&a!! /e priced on t&e #eig&ted a.erage rate /asis after accounting

t&e !ast receipt of $ateria!%

e After ascertaining t&e nature of expenditure t&e o/ for #&ic& $ateria! is issuedK

an appropriate account code s&a!! /e gi.en in accordance #it& t&e c&art of

account%

f In case of $ateria! !i"e stee! p!ates etc% #&ere $ateria!s are recei.ed on actua!

#eig&t /asis and t&e issues are accounted are on t&eoretica! #eig&t /asis as per

sectiona! $easure$ents t&e Duantit0 accounting s&a!! /e "ept on #eig&t /asis%

T&e difference in Duantit0 in #eig&t /asis if an0 s&a!! /e adusted to re.enue

capita! account as t&en case $a0 /e in consu!tation #it& consu$ing depart$ent

in case t&e s&ortage is $ore t&an t&e consu$ption nor$s t&e sa$e s&ou!d /e

reco.ered fro$ t&e contractor%

g ,or a!! issue notes re!ating to #or"s contracts one cop0 of t&e price issue notes$a0 /e sent to t&e #or" accounts section to ena/!e t&e$ to de/it t&e contractors

account% A $ont&!0 a/stract a!so /e prepared and passed on to #or"s accounts

group for c&ec"%

& 4etai!s for receipts and issue of $ateria!s recei.ed issued on !oan s&a!! /e

$aintained /0 t&e store account section !oan transactions s&a!! /e appro.ed /0 t&e

co$petent aut&orit0% It is t&e responsi/i!it0 of $ateria! depart$ent to ta"e action

to sDuare up t&e transactions #it&in t&e reasona/!e ti$e%

i Inter unit transfer of $ateria! s&a!! /e accounted at cost /asis freig&t and ot&er

incidenta! c&arges s&a!! /e /orne /0 t&e transferee unit%?<


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Materia!s issued to contractors s&a!! /e priced at t&e $ont&!0 #eig&ted a.erage

rate and de/ited to $ateria!s issued to contractors account% T&e accounting for t&e

difference /et#een issue price and reco.er0 price pro.ided in t&e contract s&a!! /e

c!eared /0 t&e accounts section dea!ing #it& t&e #or"s% Reco.er0 s&ou!d /e

predefined /asis and $ust /e unifor$%

" ,or $ateria! returned to stores return note s&a!! /e priced /0 t&e stores accounting

section at t&e sa$e rate #&ic& it #as issued and t&e (a!ue s&a!! /e de/ited to t&e

re!e.ant code of stores and spares parts in.entor0 accounts /0 credit to t&e cost

center o/ nu$/er #&ere t&e $ateria! is recei.ed /ac"% T&e return note s&a!! /e

priced on t&e /asis of t&e origina! issue reDuisition against #&ic& t&e $ateria! #as

dra#n if suc& reference is a.ai!a/!e ot&er#ise t&e sa$e s&ou!d .a!ued at t&e

pre.ai!ing a.erage $ont&!0 rate app!ica/!e to t&at $ateria!%

! No $ateria! s&a!! /e transferred to one card to anot&er card #it&out gi.ing proper

infor$ation to t&e stores account section% +uc& transfers s&a!! /e $ade /0 $eans

of a transfer .ouc&er on receipt of suc& transfer .ouc&er and pass adust$ent

entries /0 de/iting and crediting respecti.e accounts%

$ Under t&e $ec&anied s0ste$ of store accounting a!! docu$ents suc& as MRRs

issue notes return notes and transfer .ouc&ers s&a!! /e sent to t&e E46 section

after exercising t&e prescri/ed c&ec"s% T&e E46 section s&a!! prepare t&e a!!

accounting a/stracts #it& t&e su$$ar0 figures #it& $ont&!0 ourna! entr0% In

addition it s&a!! prepare t&e priced store !edger% Ledger a/stract for a!! ite$s

transacted during t&e $ont& gi.ing t&e opening stoc" receipts issues and past

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c!osing /a!ance s&a!! a!so /e prepared% A cop0 of t&is state$ent s&a!! /e for#arded

to store section for .erification of t&e /in card /a!ances% 4iscrepanc0 if an0 s&a!! /e reconci!ed /0 t&e store section #it& t&e stores accounts section%

n T&e price store !edger /a!ance for eac& categor0 store s&a!! reconci!ed .a!ue #ise

#it& t&e contro! account /a!ance in t&e !edger #&ere.er possi/!e% T&e accounts

section s&a!! dra# out reconci!iation on $ont&!0 /asis% After reconci!iation a

$ont&!0 $ateria! consu$ption state$ent cost center #ise is prepared and

circu!ated to concerned depart$ent /0 t&e 1t&

of fo!!o#ing $ont& for .erification

of its correctness and for $onitoring t&e /udgeted expenditure if an0 discrepanc0

is reported t&e sa$e is adusted in t&e ensuring $ont&%

I7/& o6 So So&7

,or stoc"s of a$$onia nap&t&a genera! stores /ags p&osp&oric acid and finis&ed

products &e!d at p!ants insurance s&a!! /e ta"en to co.er t&e ris"s arising out of fire

exp!osion riot stri"e terroris$ $a!icious da$age eart&Dua"e etc% T&e stoc" of finis&ed

products !0ing at different $ar"eting #are&ouses s&ou!d a!so /e adeDuate!0 co.ered

t&roug& t&e #are&ousing agencies%

According to t&e .a!ue of stores and finis&ed products "eeps on .ar0ing fro$ ti$e

to ti$e insurance s&a!! /e o/tained in t&e for$ of dec!aration po!ic0 #&ere/0 t&e a.erage

dai!0 stoc" for eac& product &e!d during t&e $ont& s&a!! /e dec!ared to t&e insurers in t&e

first #ee" of t&e next $ont&%

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According to t&e dec!aration po!ic0 t&e insured a$ount for eac& product s&a!! /e

stated separate!0% T&e !ia/i!it0 of t&e insurers is !i$ited to t&e insured a$ount% At an0ti$e if it is found t&at t&e actua! stoc" is $ore t&an t&e insured a$ount to a.oid !ess

a$ount of insurance% In case of a dec!aration po!ic0 insurance pre$iu$ is pa0a/!e for

$ini$u$ 3< J of t&e insured .a!ue%

:efore insurance is o/tained .arious categories of stores s&a!! /e re.ie#ed #it& a

.ie# to se!ect suc& ite$s for #&ic& insurance is considered necessar0%

V&1611o o6 I5o&17

T&e officer of stores #i!! coordinate t&e o/ of p&0sica! .erification and t&e

accounts officer in c&arge s&a!! render a!! assistance to ensure t&at t&e p&0sica!

.erification of in.entories is carried out as per t&e po!ic0 and t&e po!ic0 and t&e appro.ed

progra$% T&e store depart$ent #i!! ensure t&at t&e posting in t&e 5ardex are updated

/efore t&e .erification of in.entories% 5ardex contains a!! t&e infor$ation t&at is in t&e

store%

T&e in.entories are c!assified in t&ree categories for .erification purpose%

• Ra# $ateria! * 6ac"ing $ateria!s

• +tores C&e$ica!s * +pare parts

•

,inis&ed products

T&e stoc"s of ra# $ateria!s pac"ing $ateria!s and finis&ed products are to /e

.erified on Duarter!0 /asis /0 an independent sur.e0or /0 t&e societ0% No adust$ents

need /e carried out in t&e /oo"s of accounts un!ess t&e discrepancies in !iDuid ra#

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$ateria!s and so!id ra# $ateria! are in excess of 1J to


90/170

After eac& p&0sica! .erification /0 t&e custodians of in.entories and suita/!e

adust$ent action &as to /e ta"en% It is desira/!e to co$p!ete t&e p&0sica! .erification#or" /0 Marc& e.er0 0ear so t&at reconci!iationadust$ent action can /e co$p!eted

#it&in t&e 0ear itse!f%

I&l C;

1 One set of docu$ent for receipts issues and return of $ateria!s s&a!! /e sent to t&e

accounting section of finance depart$ent% :ased on t&ese docu$ents priced store

!edger s&a!! /e prepared for eac& ite$ for stores% T&e $ateria! code nu$/er /et#eenstores and accounts s&a!! /e identica!% T&e priced store !edger s&a!! pro.ide .a!ue of

eac& receipt Issue and return transaction a!ong #it& Duantit0 !edger% T&e Duantit0

/a!ance appearing in priced store !edger s&a!! ser.e as counter c&ec" for accurac0 of

/in card /a!ance in store #&ic& is essentia! for proper functioning of in.entor0 contro!

s0ste$

2 T&e priced store !edger s&a!! not /e $aintained for !arge nu$/er of !o# .a!ue

ite$s suc& as stationer0 $edicines canteen stores etc% in t&is case t&e expenditure

s&a!! /e c&arged to t&e appropriate expense account at ti$e purc&ase% uantitati.e

record s&a!! /e "ept /0 t&e concerned depart$ent and s&a!! /e produced as and #&en

reDuired for audit purpose%

I5o&8 Co&ol

In.entor0 contro! is concerned #it& $ini$iing t&e tota! cost of in.entor0% T&e

t&ree $ain factors in in.entor0 contro! decision $a"ing process areF

a% T&e cost of &o!ding t&e stoc" e%g% /ased on t&e interest rate%

/% T&e cost of p!acing an order e%g% for ro# $ateria! stoc"s or t&e setup cost of

production%

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c% T&e cost of s&ortage i%e% #&at is !ost if t&e stoc" is insufficient to $eet a!!

de$and%

T&e t&ird e!e$ent is t&e $ost difficu!t to $easure and is often &and!ed /0

esta/!is&ing a Sser.ice !e.e!S po!ic0 e% g certain percentage of de$and #i!! /e $et fro$

stoc" #it&out de!a0%

T&e In.entor0 Manage$ent s0ste$ and t&e In.entor0 Contro! 6rocess pro.ides

infor$ation to efficient!0 $anage t&e 6lo@ o6 &1l7 effecti.e!0 /1l1? 2o2l '

/12% oo&'1 1&l 15117% ' o/1 @1; /7o&7%In.entor0 Manage$ent and t&e acti.ities of In.entor0 Contro! do not $a"e decisions or

$anage operationsK t&e0 pro.ide t&e infor$ation to Managers #&o $a"e o& /&

' 1l8 decisions to $anage t&eir operations%

In.entor0 contro! is a s0ste$atic contro! and regu!ation of purc&ase and usage of

$ateria!s in suc& a #a0 so as to $aintain an e.en f!o# of production at t&e sa$e ti$e

a.oiding excessi.e in.est$ent in in.entories% Efficient $ateria! contro! reduces !osses

and #astage of $ateria!s t&at ot&er#ise pass unnoticed%

In.entor0 contro! is t&e core of $ateria! $anage$ent% T&e need and i$portance of

in.entories .aries in direct proportion to t&e id!e ti$e cost of $en and $ac&iner0 and

urgenc0 of reDuire$ents% If $en and $ac&iner0 in t&e factor0 cou!d #ait and so cou!d t&e

custo$ers $ateria!s good not !ie in #ant for t&e$ and no in.entor0 need to /e carried%

:ut it is &ig&!0 unecono$ica! to "eep t&e $en and $ac&ine #aiting and t&e reDuire$ents

for $odern !ife are so urgent t&at t&e0 can not #ait for $ateria!s to arri.e after t&e need

for t&e$ &as arisen%

:ecause $ateria!s constitute a significant part of t&e tota! production cost of

t&e product% T&us cost is contro!!a/!e to so$e extentK proper p!anning and contro!!ing of

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in.entories are of great i$portance% If in.est$ent in in.entor0 #i!! /e $ore t&en t&e

co$pan0 &as to /ear carr0ing cost and t&at finance can not /e uti!ied%

A good in.entor0 $anage$ent po!ic0 s&ou!d ensure s$oot& and uninterrupted

supp!0 #it&out $a"ing unnecessar0 in.est$ent of funds in in.entor0% T&is reDuires t&at

in.entor0 $anage$ent po!ic0 $u

6. Inventory-Management at IFFCO

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Transcript of 6. Inventory-Management at IFFCO