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A STUDY ON INVENTORY & STORE MANAGEMENT AT IVRCL LTD., HYDERABAD KOILSAGAR LIFT IRRIGATION SCHEME PROJECT

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

By M.CHAITANYA Regd .No: 225911672049

Under the guidance of Mr.B.NAGARAJU DEPARTMENT OF FINANCE SRI GIRI COLLEGE OF MANAGEMENT (Affiliated to Osmania University) MEDCHAL,R.R(DIST)

A STUDY ON INVENTORY & STORE MANAGEMENT AT IVRCL LTD., HYDERABAD KOILSAGAR LIFT IRRIGATION SCHEME PROJECT

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

By M.CHAITANYA Regd .No: 225911672049

Under the guidance of Mr.B.NAGARAJU DEPARTMENT OF FINANCE SRI GIRI COLLEGE OF MANAGEMENT (Affiliated to Osmania University) MEDCHAL,R.R(DIST)

DECLARATION
This project report Inventory Management, done and submitted to the University is an original work carried out by me and is not submitted to any other university or Institution for the award of any Degree/Diploma/Certificate or published any time before. The findings of this report are based on the information collected by me during the study period.

Name & Address of the Student M.CHAITANYA (MBA FINANCE) Regd .No: 225911672049

Signature of the student

ABSTRACT

Stock control is the operation of continuously arranging receipts & issues so that stock balances are adequate to support the current rate consumption with due regards to economy. It is the mean by which material of the correct quantity & quality is made to be available as & when required in storage & ordering costs, purchase price & work in economy. It is imperative to manage efficiently & effectively in order to avoid unnecessary investments in them. The study pattern used in this study is face-to-face interaction. Most of the data has been gathered from stores department of the company. The various aspects covered during the interaction phase was need & features of inventory control. An attempt is made to cover each & every macros of functioning of inventory cell.

ACKNOWLEDGEMENT
Im grateful to Dr B.VENKAT REDDY, Principal, Sri Giri College of Management, for his blessings and encouragement through out my course of study.

I would like to extend my sincere thanks to Mr. B.NAGARAJU Asst. Professor, Sri Giri College of Management for his co-operation and valuable suggestions and extend my gratitude to all staff members of our MBA department, who either directly or indirectly assisted me in this project work.

I am thankful to MR.M.Mohan Reddy (Sr.AGM) & and my sincere Thanks to MR.MLN Babu (Accounts & Stores head). I would like to express my deep sense of gratitude & thanks to all Seniors & staff members of IVRCL Ltd., (KLIS Project, Marikal (Vill), Mahabubnagar (dist.), Andhra Pradesh) for their kind support and cooperation which helped me in gaining lots of knowledge and experience to do my project work successfully.

TABLE OF CONTENTS

Chapter No:

Title

Page No:

1 2 3 4

Abstract Introduction Objective of the project Review of Literature

04 08 12

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a) Definition of Material Management

20
b) Objective of the Material Management

20
c) Function and scope of Material Management

22
d) Selective Inventory control, classification

5 6

Stores Management Data Analysis &Interpretation

a) Activities of Stores department

43 46 48 48

b) Quality objectivities of materials

51
c) Responsibilities & Authorities of personnel

53
d) Procedure for requisition of materials

56
e) Procedure for receipt of materials

63
f) Procedure for storage of materials

64
g) Procedure for issue of materials

71
h) Procedure for periodic verification of quality deterioration of stores material

72
i) Procedure for material handling

73
j) List of equipments and measurement devices in store area

73
k) Procedure for maintenance of safety

74
l) Procedure for maintenance of quality records

75
m) Procedures for collecting and disposal of waste material n) Procedure for disposal of waste material

75 79

o) Training need for the departmental personnel

81
p) Management information systems

84
q) Master list of formats

7 8 9

Findings & Suggestions Conclusion Bibliography

85 86 87

INTRODUCTION
Inventory management occupies the most significant position in the structure of working capital, Management of inventory may be defined as the sum of total of those activities necessary for the acquisition, storage, disposal or use of materials. Inventory is one of the important component of current assets. Inventory management is an important area of working capital management, which plays crucial role in economic operation of the firm. Every enterprise needs inventory for smooth running of its activities. It serves as a link between production and distribution process. There is, generally, a time lag between the recognition of a need and its fulfillment. The greater the time lag, the higher requirements for inventory. It also provides a cushion for future price fluctuations. In a complex industry like IVRCL Limited it studied clearly of how the thing are being performed and what is the real impact of these on industry and how effectively the inventory is utilized is interested to be known by researcher because of its great significance in the research. Inventory can be referred to as sum of the value of raw materials fuels and lubricants, spare parts, maintenance consumables, semi processed materials and finished goods, stock at any given point of time.

In large companies inventory place a most significant part of the current assets. The business has about 15 to 30% of inventories in total assets.

Inventory is composed of assets that will be sold in feature in the normal course of business operations. The assets which firms stores as inventory is anticipation of need are raw materials, work in progress and finished goods.

What is inventory?

Inventory means stock of materials control means regulate or check Inventory (dictionary) meaning is list of stock goods. Scientific definition of inventory is idle recourse of any kind having economic value. Inventory is detailed list of moveable goods which gives the quantity and value of each

items or moveable goods with quantity and value.

From material management angle inventory is stock to meet future demands of

production, repairs, maintenance and construction. Inventory is defined as the sum of the value of (stock at any point of time)

a) Spare parts b) Fuels & Lubricants c) Consumables & Tools f) Raw materials g) Work in progress Inventory Inventory control basically deals with

a) When would an order be placed (order level) b) How much should be ordered (order quantity) c) When to order d) How much to keep in stock without effecting consumption

What is need of Inventory?

To improve inventory management techniques it is necessary to maintain inventory with minimum investment (Blockage) but consistent with adequate service level.

Why control Inventory?

Materials account for 50% of the cash outflow of most organizations. Inventories are the single largest asset in balance sheet in many companies. The finance manager considers inventory as locked-up but the users always claims for more capital, complaining of stock out. Inventory has to be controlled in order to optimize the cost of acquiring the items. An important factor to be considered in controlling the inventories is to reduce the lead-time concept. Application of scientific techniques in inventory control increases the morale of young executives.

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TYPES OF INVENTORY

1. AUTO INDENTING/STORES/ROL/ROQ ITEMS

This activity decides when inventory replacement is required and calculates inventory replacement quantities. This category of

a) b) c) d) e)

Regular consumption items Fast moving items Huge consumption annual movement items Multi-user department items Generally low value and low lead time items

2.

SURPLUS INVENTORY

Items which do not have immediate use, but they have a usage in future. These items are in excess of the units storage norms and are not likely to be used within a reasonable period.

3 ZERO VALUE/CHARGED OUT ITEMS

Zero value items are items which have been returned by the user department or charged with new equipment to stores. These items are reusable. The value was booked against first consumption. Hence returned goods to stores do not carry any value. However, only the quantity should be included in the stores ledger.

These items should be separately stored. The charge of the same should be considered only for PARTA/Budgeting/MIS purpose.

What is mean by Inventory Control?

Systematic procurement, location, storage and recording in such a way that desired degree of services to operating shops at minimum ultimate cost.

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a) b) c) d) e)

What is mean by large inventory?

Tie-up large amount Deterioration Damaged Obsolesce Increased overhead

When to control the inventory?

Positive approach is to control the inventory from beginning stage (procurement stage or PR stage).

Inventory is harder to move with longer it sits Increase in 20% sale = Reduction in 5% inventory so our aim should be to reduce the inventory. Inventory accounts are a) price (required negotiation) b) Service Level (% of demand fulfilling) c) Lead time (time required from feeling need to availability).

WHY ORGANIZATION CARRIES INVENTORY

Business constraints : Government regulations, monopoly of supplier minimum quantity to accept, material availability in seasonal only. Transportation cost, once good will.

Buying in large quantities

Most of firms offer quantity discount of buying in large Quantities.

Accuracy

Accuracy timeliness is critical factors, material control activities, include determining needs.

Hedge against long

Organization carry inventory to protect against possible loss of or uncertain lead time production against long and uncertain lead time.

Safe guard against

If material is scarce-move stock is kept.

OBJECTIVES OF THE PROJECT

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12 TO GET A PRACTICAL INDUSTRIAL EXPOSURE THE TASK IS TO ANALYZE THE STORES MANAGEMENT OF IVRCL LTD. & TRACE OUT THE DRAWBACK OF THE CURRENT SYSTEM & GENERATING AN IDEA TO TOUCH HIGHER LEVEL OF COMPETENCY IN CONTROLLING THE INVENTORY. TO ANALYZE THE CURRENT ERP SYSTEM IN MANAGING THE INVENTORY TO ANALYZE THE MAJOR TO MINIMIZE THE INVENTORIES AND KEEP SURPLUS & OBSOLETE ITEMS TO MINIMUM KSLIS. TO ANALYZE THE INDUSTRIAL SUFFICIENCY IN MANAGING THE INVENTORY. TO ANALYZE THE MATERIAL REQUIREMENT PLANNING PROCEDURE. TO ANALYZE THE CURRENT PROCEDURE OF VENDOR DEVELOPMENT & RATING TO ANALYZE THE LATEST MATERIAL HANDLING SYSTEM AND METHODS TO ANALYZE THE QUALITY & QUINTITY OF MATERIALS IMPLEMENTATION TO IMPLEMENTATION OF INVENTORY PACKAGE TO WELL TRAIN ELECTRONIC SYSTEM HADLING TO KNOWN THE COMMUNICATION AND MIS (MANAGEMENT INFORMATION SYSTEM).

METHODOLOGY OF THE STUDY:

The study is based on both primary and secondary data. The primary data has been collected through study of reflecting inventory management practices of IVRCL LTD. The collected data is tabulated and suitable interpretation had been made by considering the data collection through secondary data like annual reports purchase registers, storage records of the organization.

LIMITATIONS OF THE STUDY:

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The study has the following limitations: 1. 2. The limitations of ratio analysis can be applicable of the study. There may be approximation in calculating ratios and taking the figures from the annual reports.

Company Profile:
Name of the Company : IVRCL LIMITED

Established Year

: 1987 : MIHIR, 8-2-350/5/A/24/1B, Road No.2, Banjara Hills, Hyderabad -500034 Andhra Pradesh.

Address of Head Office

Address of Regd. Office

: M-22/3RT, Vijayanagar Colony, Hyderabad 500057 Andhra Pradesh

Address of KSLIS site Office

: IVRCL LTD., Koilsagar Project, Nr.Rice Mill, Raichur Road, Dhanvada Mandal, Marikal 509351 Mahabubnagar (Dist.).

Contact No.s

: Site Office: 08506-288667

Web Sites Site Mail Ids

: www.ivrcl.com

: koilsagarst2@ivrinfra.com koilsagarst1@ivrinfra.com ivrcl.koilsagar@rediffmail.com.

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14 Major Divisions in IVRCL LTD. : Power Division, Water Division, Irrigation Division, Buildings, Electrical, Roads & Industrial plant Projects. KSLIS Project Value : 360.18 Crores

In charge Of the Project site :

Mr. M .Mohan reddy (Sr.AGM)

HOD of Stores

Mr. MLN Babu (Stores/Accounts In-Charge

Types of Materials under main stores

1) BHEL Pumps Materials, Cement, Steel, Aggregate & Sand etc 2) Spares of Mechanical Items 3) Consumable items.

IVRCL LIMITED COMPANY:

In Words of Mr. E.Sudhir Reddy, Chairman & Managing Director:

Way back in 1987 when we formed IVRCL, the infrastructure industry in India was in its infancy. We were clear in our minds then, that we did not intend to build just another infrastructure company. We wanted to be different. The also ran tag was certainly not for us. Looking back, I can say, at the risk of sounding immodest, that we not only dreamed big, our dream has always been different. Confident of our competitive advantage, strong project management skills, excellent prequalification credentials, integrated execution capabilities and high-quality human resources, we will continue to lead the way. But more than business success and growth, what we truly welcome is the opportunity to improve the human condition. We continue to measure success not by the figures we reach, but by the lives we touch.

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15 As India boldly moves forward to chart out its economic destiny, IVRCL is committed to be being a partner in progress. As always arousing hope and confidence by blazing new trails and living up to our promise that WE MAKE IT HAPPEN!

Project details of Koilsagar Lift Irrigation Scheme under Construction by IVRCL ltd., Company

The KSLIS Project in its entirety envisages lifting of water from the fore shore of Jurala Project to a total Height of 120M(viz) 58M in first stage and 62M in second stage and installation of 4 Nos. of 7.5 MW heavy duty pumps and motors. In the Process of completing the scheme works the magnitude of work involved is as detailed below.

Name of Canal Main Canal length Tunnel Length Delivery Pipe line Distributory Net Work Pumps & Motors

Stage-1 21.280Kms 7.949 Kms 220 RMT ---2 Nos of 7.5MW (Francis Turbine)

Stage-2 19.105 Kms 4.152 Kms 225 RMT --2 Nos of 7.5MW (Francis Turbine) ----

Total area involved 40.385Kms 12.101 Kms 445 RMT 182.450 Kms 4 Nos of 7.5MW (Francis Turbine) 50,250 Acres

Ayacut benefited

----

In Koilsagar lift irrigation Project constructed to irrigate an

ayacut of 12000Acres, in

Mahaboonagar (dist.) Andhra Pradesh, ayacut has not fully developed. It is now proposed to lift water from fore shore of Jurala project in two stages to a total lift of 120m with 4 Nos. of Pumps of 10,000HP reach and to fill up the Koilsagar Project to stabilize the ayacut of 1200 Acres including a gap ayacut of 7500 Acres and to irrigate an additional 38250 Acres bringing the total to 50,520 Acres under the project at a quoted valve of Rs 360.20 Crores. In this process operation such as detailed investigation two tunnels of total length of 10.16 Kms, two pump houses, two surge pools, excavation of approach and gravity canal, CM & CD works, fixing of pressure mains and excavation of net work of distributory system is required to be done under the contracts. This Project work is in progress under the Company IVRCL Ltd.

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Flow Diagram of KSLIS Project Phase I & II

Fig No. 6

Details of KSLIS-1(Phase-1) Project: 1) Approach Canal Length 6.100Kms. 2) Pump House-1 Static Head 59m. 3) Pump House Motors Cap 7.5 MW 4) Gravity Canal Length 15.180Kms. 5) Tunnel length - 6.907 Kms. With 4.0m Dia. 6) Shape of Tunnel D-Shape 7) Delivery Pipe line 0.220Kms.

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Details of KSLIS-2(Phase-2) Project:

1) Approach Canal length 4.925Kms. 2) Pump House 2 Static Head 60m. 3) Pump House Motors Cap 7.5MW 4) Gravity Canal Length 14.100Kms. 5) Tunnel Length 3.400Kms with 4.0m Dia. 6) Shape Of Tunnel O-Shape. 7) Delivery Pipe line 0.320Kms. with two Rows 8) Left Canal Length 28.3Kms. 9) Link Canal Length 13.35Kms. 10) Right Canal Length 30.300Kms.

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REVIEW OF LITERATURE

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MATERIAL MANAGEMENT
Definition: We can define materials management as the function responsible for the coordination
of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to maintain possible economy in the project.

OBJECTIVE OF MATERIAL MANAGEMENT:

Primary Objective of materials management 2. Low Prices- to be lowest includes transportation: enhances profit 3. Low cost acquisition and possession- reduced handling and storage costs. 4. Continuity of supply alternative, captive suppliers, flexible suppliers 5. Low payroll costs- Low operation costs of stores personnel 6. Favorable supplier relations- supplier development. Secondary Objective of materials management
1 .Economic make-buy-Coordinating and assisting other departments in Make-Buy Decisions.

2 Interdepartmental Harmony- Success of materials management department depends on

the success of other departments. Hence relations are to be harmonious.

Materials Management Functions

1) Material Planning and programming: The Planning and controlling function are inventory management, production planning and scheduling.

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2) Purchasing And Outsourcing : This includes selection of source of supply, finalization of

terms of purchase, placement of purchase orders, follow-up, Maintenance of smooth relation with suppliers, timely arrangement of payment to suppliers, evaluating and rating suppliers.

3) Stores & Warehousing : This Involves physical control of materials, preservation of stores,
minimization of obsolescence and damage through timely disposal and efficient handling, maintenance of store records, proper location and stocking.

4) Codification: It is a process of representing each item by a number, the digit of which

indicates the group, the type and the dimension of the item.

5) Inspection & Quality Control: Inspection involves critical appraisal involving examination,
measurement, testing, gauging and comparison of materials with relevant standards and make to suit our requirement.

6) Cost reduction through value analysis: Organized cost reduction analysis by which accountants analyze costs in products or procedure, the ranking of their elements in a descending order of magnitude and in informed challenge to each, starting with the most important.

7) Disposal of surplus/ obsolete material: It means final placement or riddance of wastes, excess, scrap etc., under proper process and authority with no intention to retrieve. Disposal may be accomplished by abandonment, destruction, internment, incineration, donation, sale, etc.

8) Distribution: Distribution means movement of goods and services from the source through the distribution channel, right up to the final user.

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INVENTORY CONTROL
A) To minimize idle time caused by shortage of inventory and non-availability of inventories as per requirement. B) To keep down capital investment in inventories, inventory carrying cost and obsolescence losses. C) Physical verification of inventory items.

CAUSES OF HIGH INVENTORIES AT KSLISP

A) B) C) D) E) F) Variety of equipments Project surplus High lead time/sources of supply are to for flung Modification/improvement in design system Obsolescence of machinery Rate inflections (increased)

ABC Analysis is best tool to control the inventory which means

Avoid, Bluff, Confusion Always, Better, Control

If inventory is not controlled properly:-

It is an idle resource It can wipe out due profit If effects quality (stock makes work careless handing) It is not buffer (thing to exchange) It is not an asset (properly to pay claim) It never optimized (wish or desired) It not only occupies space but also the mind 21

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It will not start earring It gathers dust Move inventory carrying cost is spend on it

SELECTIVE CONTROL
WHY SELECTIVE CONTROL?
Literally thousands of items are kept in inventory by various organization. Periodic reviews of inventories of these items have to be under taken for effective inventory control. The under-lying idea of such reviews is to keep stocks at a low but at the same time keep the service percentage high. The problem is how to review such a large number of items. Is it necessary to have the same type of control for each and every item? An equally critical analysis of all items is very expensive and time consuming. Selective control of items with references to particular function under examination is the solution. Items should, therefore, be classified so that the more important amongst them receive greater attention.

CLASSIFICATION METHODS

Various methods of classification are adopted as shown below:-

Sl.No. 1.

Title ABC

Function Annual usage value of items

2.

XYZ

Inventory holdings of items

3.

HML (High, Medium, Low)

Unit prices of items

4.

VED (Vital, Essential, Desirable)

Criticality of items- Particularly Components and spares

5.

FSN (Fast moving, Slow moving, Non-moving)

Consumption pattern of the items Problems in procurement 22

23 6. SDE ( Scare, Difficult, Easy to produce) 7. SOS (seasonal, off seasonal) Availability whether in particular season or in all seasons. Sources of availability

8.

GOLF (Government, Ordinary, local, Foreign

Shelf life of items

9.

Age Analysis

SELECTIVE INVENTORY CONTROL SYSTEM

Selective inventory control system means that we have various different methods of inventory control from item to item and this differentiation should be on selective basis. The importance of materials can be due to its cost, its criticality, its availability and its consumption. There are a number of methods available for selective control of a inventory. Selective control can be into eight types:

ABC Classification:
ABC Stands for always better control or avoid bluff confuse. This method is based on annual consumption value, which is obtained by the multiplication of the unit price by the annual consumption quantity. For example, on an adhoc basis, the items accounting for an annual consumption value of more than Rs. (one) Lacs may be classified as A category and below Rs. 10000 may be the c category and in between these items will be the B category. A Items: are the top 10% of the items and accounts for 60% of the consumption value. B Items: are the next 30% of the items and accounts for 30% of the consumption value. C items: are the next 60% the items and accounts for only 10% of the consumption value.

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H.M.L CLASSIFICATION
H.M.L stands for:

H- High cost items (all unit cost) M- Medium cost items (all unit cost) L- Low cist items (all unit cost) Unit value is the criteria in HML classification.

V.E.D CLASSIFICATION:
VED stand for V- Vital E- Essential D- Desirable

S.D.E CLASSFICATION:
S scare items which are not easily available in the market D Difficult items-which are non available in the market E Easy items- which are easily available in local market.

G.O.L.F CLASSIFICATION
G.O.L.F stands for Government open market local market- foreign sources. Materials are classified according to nature of suppliers.

F.S.N CLASSIFICATION
F-S-N stands for F Fast moving items having consumption at least once in a year. S slow moving consumption in alternative year. N Non-moving consumption in least 5-6 years.

X.Y.Z CLASSIFICATION:
X Item is those items whose value is high while Z items are those items whose values are low. Understandably Y items fall in between two categories. 24

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S.O.S CLASSIFICATION
Some of items required are seasonal in nature and require special purchasing and stocking strategies. Many commodities especially of agricultural origin and seasonal in character have to be purchased at the best time. Operation research techniques would have to be used to obtain optimum results. The inventory system will have to balance between holding costs and lower prices at which it will be available.

IMROVEMENT IN INVENTORY TURN OVER RATIO PROJECT

AN INTRODUCTION TO INVENTORY TURNS OVER RATIO:

Inventory turn over ratio is defined as the ratio of annual consumption value divided by average inventory holdings. This ratio is also called efficiency indicator. Hence, higher the inventory turn over ratio the better is financial out look and system is considered more efficient. There is considerable scope for improvement in the sphere.

Inventory turn over ratio= Annul issues in Rupees. /Average inventory in Rs. Express as percentage the ratio is to multiplied by hundred. This ratio is called efficiency indicator

Case 1 Suppose an organization requires material worth Rs. 12 crores annually.

If purchased in 1 Lot and consumption is 1 crores per month. Average inventory holding will be = 6.5 crores

Inventory turn over ratio will be 2 approximate.

Case 2 Suppose an organization requires material worth Rs. 10 crores annually.

If purchased in 2 Lots and consumption is 1 crores per month. 25

26 Average inventory holding will be = 2.5crores Inventory turn over will be 4 approximate In second case capital locked up has reduced from 5 to 2.5crores and inventory turn over ratio increased to 4 from 2. It shows in second case released capital becomes available and organization has a) Borrow less capital. b) Less interest charges c) Fewer inventories carrying cost

Hence, higher the ITOR the better is financial out look and system is more efficient.

How to improve inventory turn over ratio.

A. Efficient reduction of inventories. B. Discourage flabby inventory due to poor maintenance. C. Discourage Profit-making inventory held with speculative. D. Reduction in critical & non-critical items lying in stock since long period. E. Identification of obsolete/ surplus items and their disposal/utilization. ITOR in most of industries in India is around = 2

Most efficient one in India is around =3

ITOR in abroad-developed countries is between 6 to 8. Our target for FY, 2006-07 is => 4

\
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PURCHASE MANAGEMENT
The Purchase is a main activity in the area of Materials Management. It is the most important function in any organization this is the place where money is spent out of the Organization .it decides the profitability of the company. It is studied that one percent saved in the purchase function improves the profit of the company as mach as 2 to 3 percent.

PRINCIPLES OF PURCHASE
Principles of Purchasing can be called by 7Rs. They are as follows:

1) Buying the materials at right price. 2) Buying materials of right quality. 3) In the right quantity. 4) At the right time. 5) From the right source. 6) At the right place. 7) With right mode of transport.

PURCHASE SYSTEMS:
We can classify the systems in the following manner:

1. Pre-Purchase system; 2. Ordering system; 3. Post-Purchase system.

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28 A diagram indicating these in below EXHIBIT 1.1 PURCHASE PARAMETERS

RIGHT PLACE OF DELIVERY

RIGHT MATERIAL Value analysis Standardization

RIGHT QUALITY Rejections and specifications

Price communication
RIGHT SOURCE Vendors rating Purchase research

RIGHT ATTITUDE

Training SWOT analysis Material Intelligence

RIGHT QUANTITY EOQ and Inventory models

RIGHT CONTRACTS Legal aspects

RIGHT TRANSPORTATION

Cost analysis of transportation and logistics

RIGHT TIME Re-order point Lead time analysis

RIGHT PRICE Negotiation learning curve

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ENTERPRISE RESOURCE PLANNING

ERP stands for enterprise resource planning. It is a software solution that helps companies to gain competitive edge by in integrating all business process and optimizing the resource available. The traditional application system treats each transaction separately. It is built around strong boundaries of specific function that they are meant to cater to. ERP stops treating these transaction separately as stand alone activities and consider them to be part of inter linked processes that make the business. An ERP system stores data generated as a result of diverse transaction that are confined to any departmental or functional boundaries, but are rather integrated to be used by multiple user, for multiple purpose and at multiple places. ERP should not be mistaken as a magic tool that can transform anything overnight. Its successful implementation is a long journey towards enterprise excellence. To support such a diverse system, companies need sophisticates information technology infrastructure and other important enabling tools like workflow, workgroup, Groupware, internet, intranet, Data ware housing etc, these entire components together from ERP backbone.

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ERP SYSTEM IN IVRCL LIMITED

Today business is become an ever-changing phenomenon due to Large-scale production facilities, new product development, technology up gradation, sales strategy, capacity utilization, capacity expansion changing business scenarios, mergers & acquisitions and opening of economics. These increasing business complexities warrant fast response, which in turn requires data. The organization needs to proactive and plan ahead of time. To do business optimization, IVRCL on hand requires tools such as extended ERP including and Visual Fox Pro application, and on the other hand, needs to change itself to a learning organization focusing on its people, skills core competency culture and practices.

INVENTORY & ACCOUNTS PAKAGES IN IVRCL LTD:

In IVRCL LTD., Company follows the Inventory and Accounts Packages like SAP model. It is totally design on Visual Fox Pro software.

In this package inventory have so many options which are related to materials transaction. 1. 2. 3. 4. 5. 6. Masters Transactions Reports Accounts Approval Physical Verification Utility 30

31 7. 8. 9. 10. System Controls Change F.Y (Finance Year) Log off Exit

In this each have different fields.

Masters: In Masters Options we have Unit of Materials like Nos., Kgs, MT, Pkt, Roll, Lots, Bags, Ltrs, Cum, Cufts & Mtrs. Here one can select the materials unit as per the type of description of material. In Masters Option Materials are classified into two types one is Consumable & other is Assets. In IVRCL Company materials are taken in digits system like consumables taken by 1 series and assets are 2 series. For consumables they divide the materials as :

1. Material Main Group (1001) 4 digits 2. Material Sub group (001) 3 digits

3. Material Sub-Sub Group (00001) 5 digits. Total 12 digits for each material. Similarly Assets also same as start with 2 digit. Transaction: In transaction first prepare the purchase order and then we have inward option thereafter we raise the MRN (Material Receipt Note) against the PO then give MRN approval.

Once MRN is approved in package these materials directly enters into stock statement and then only we raise issue note of that material. In this package materials are issued in FIFO (First In First Out) method.

Debit notes also issued through issue note by mentioning debt rate as per the Sub contractor Work in the cases where the sub-contractor rates are inclusive of cost of material. Aggregate materials are also similarly to common materials but here we have to enter Trip sheet vehicle wise. Apart from aggregate, in this option only. Sand, Metal & Boulders are also to be booked

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32 Reports: In this option we can see view of all transaction like:

1. Purchase Details, 2. MRN Details, 3. Supplier wise Material receipt, 4. Issue note details,

5. Debt note details and 6. Closing stock statement.

Accounts Approval: After completing all entries, accounts approval is given to the entries. After this approval, the Store inventorys details will be posted into Accounts package.

Physical Verification: Here we will observe details of closing stock details. The physical verification has to be done periodically to arrive at the correctness of inventory

Utility: This option is for Package control.

System Control: This option is for user permission settings. Change F.Y: Here we use this option for viewing cumulative/previous financial years details. Log Off: This is to Log off of present running year.

Exit: Come out from package (Close)

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FINANCIAL ANALYSIS (INVENTORY)

Introduction:
Inventories are viewed by most of the business world as a large potential role and not as a measure of wealth as was prevalent in old days. The inventory stocked in excess of demand may lead to blockage of funds for a longer duration until the excess stock is consumed. There is a constant fear in the minds of business because of uncertainty in the market situations, whether to stock or not to stock, rather monitor the market, optimization of resource through proper inventory control becomes one of the major challenges for the material manager in every organization. Widening gap between theory and the practice has become remarkable phenomena in the age of science and technology. When the frontiers of knowledge are widening and the theory is developing at fast rate, the practice is lagging far behind. This is probably true about all branches of knowledge and especially true for inventory management area. The material function in Construction field has a direct importance as every area related to field. Inventories play essential and pervasive role in the construction field.

INVENTORY ANALYSIS

Problems studied
In the study, efforts have been made to conduct a details analysis of inventory management functions in the IVRCL LTD. KSLIS Project-II. For this purpose detailed research has been conducted as under:

1. The Package system in which was in design in Visual FoxPro was studied in detailed. 2. Existing purchase system of the Board was observed. In which organization structure of procurement department, purchase policies, records relating to purchases were analyzed.

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34 3. Detail organization structure of stores of Controller of stores department, were studied. Inventories held in the stores, their receiving, issuing procedures, techniques of stores control adopted by the board were analyzed. 4. Treatment given to wastages, spoilage and dead inventory by the stores were taken. 5. Existing system of inventory control adopted by the board was studied. 6. New inventory control technique applied to improve the efficiency of material management department and to reduce cost of inventory.

Research Methodology
The relevant data and information have been collected from primary as well as from secondary sources. For collection of information software, pertaining to raw-material management general and purchase control as well as stores control. Level employees of the materials management services, IT, Central stores (Receipt & Issue), Human Resource Development, Finance & Accounts department of KSLIS-II. Direct interviews were also from the concerned department, of the board. This helped together actual prevailing conditions of purchasing, maintaining and controlling of materials/components. Moreover the site was also visited many times to study the inventory management systems in KSLIS II (Koilsagar lift Irrigation scheme stage-II).

PARTA SYSTEM
INTRODUCTION

INSURANCE PARTA SYSTEM was introduced by IVRCL LIMITED Company. It is setting targets for revenues and expenditures and comparison of actual against set standards. It is generally prepared for one financial year, but when there is any substantial hike in prices of raw materials and other expenses, It can be revised accordingly. Monthly variances in the expenses and the revenues are disclosed in the monthly MIS (Management Information System) report and measures are taken accordingly.

34

35 PREPRATION OF PARTA

CAPACITY (Concrete/Metals from batching plant & from Crusher) For preparing a PARTA, first of all target is to be set of for batching plant as to the quantity of concrete is produced by the plant. Presently KSLIS Project is having 2 concrete Batching

plants and one stone crusher and their capacities are taken more than their rated capacity in PARTA.

Major Consumables Items:

CEMENT:

Cement is basic raw material for producing concrete. In this project mainly 43 grade Ordinary Portland cement is exclusively used. This grade of cement is being used as per the relevant provisions of contract agreement due to its fast setting time of concrete.

OILS:

Here Major Consumption of oil is HSD (High speed Diesel) and is being procured in bulk quantities for various types of machinery, heavy/light vehicles, DG Sets, Compressors etc. This item is classified as A Class item along with other major materials viz; Cement, reinforcement Steel, structural steel, aggregates, sand, dust and boulders.

STEEL:

This is one of the major materials for this field which is used in concreting works of various locations such as; Pump house, Building, Bridges, tunnels lining & main structures in Project. The definition of RCC i.e. reinforced cement concrete means containing of reinforcement steel in all concreting works.

35

36 AGGREGATES:

The another major component of concrete works is crushed aggregates which is also termed as Metal. Normally two sizes i.e. 20 mm & 12 mm metal is being used in RCC works as per specifications laid down in the relevant standards.

MOTORS & PUMPS:

A number of electrical and diesel driven water pumps are purchased for this project to effectively drain out the accumulated water in various locations of canals due to seepage or rains etc and the capacity of such pumps are ranging from 1.00 HP to 50 HP of different makes. To maintain the pumps in running condition all the time, several spare parts are being procured from time to time. This is one of the important item for execution of canal works.

STORES & SPARES

PARTA for stores spares consumption and operation are fixed for normal as well as shut down. Store consumption is calculated by concerned engineers comparing the previous year

consumption & looking into the life span of spares. Continuous efforts are made to reduce the consumption of store & spares through residual life studies & by improving life period of stores & spares.

SALARY / WAGES & FRINGE BENEFITS

For controlling manpower expenditure time to time manpower studies are conducted through engineers and concerned officials. Salary & Wages PARTA is based on MANPOWER & AVERAGE SALARY. In the wages entire benefits such as PF (PROVIDENT FUND , BONUS & MEDICAL ALLOWENCES etc., which forms about 42-45% of total wages in evaluated in PARTA.

36

37 MERITS OF PARTA SYSTEM It is the main tool for planning and budgeting. It helps the management in monitoring the day-today affairs of the company It is a tool for motivation to employees for achieving the targets. It helps in assessing the overall performance of the unit. It helps in financial working i.e. alluring any expenditure or curtailing any expenditure or taking any new project etc. It helps in monitoring the cost, as targets are well defined therefore the project as well as staff try to improve their efficiencies. It helps in reducing the variances. It helps in taking decision regarding payment of advance taxes etc. Since KSLISP is under Captive of IVRCL LTD., this PARTA system helps in planning the PARTA for its parent unit i.e. IVRCL LIMITED Company.

DEMERITS OF PARTA None

LIMITATION OF PARTA It is very difficult to anticipate the execution activities in advance. It has a bearing of certain government and legal regulation so it is very difficult to precisely project any price etc.

SUGGESTION Use of Zero base budgeting method.

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38

SUPPLY CHAIN MANAGEMENT AT KSLIS PROJECT

PRELIMINARY PURCHASE REQUISITION

Experience has proved that no inventory control mechanism can be effective and fruitful unless material procurement is controlled and regulated at the very procurement plan stage itself.

At KSLIS project, planning & maintenance department prepares the preliminary purchase requisition in the proposal from (rough/hand written) and send it for review to the inventory control cell. This purchase requisition motions the type of spares or consumables and its criticality in terms of purposed to be procured. The inventory control cell first determines the PR value on the basis of last procurement rate or quotation and assigns system material code. It also supplements information in respect of: Stock in stores Pending PR quantity with expected delivery Consumption pattern for past 2-3 months, and Delivery schedule, suitability, considering consumption plan

The planning engineer associated with the inventory control cell ascertains availability of material or its equivalent with other departments and gets same spares for use. He also explores possibility of using alternative material which may available in stock or purchase value of which would be comparatively lower.

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39

MANAGEMENT INFORMATION SYSTEM

Inventory control cell prepares following monthly MIS report: o Comparative stock statement under-critical, non-critical items identifies increase/reduction vis--vis previous months consumption. o Statement on specific items with details, which contributed to increase in the inventory in the particular month along with further consumption plan. o The above report is discussed amongst the HODs during MRP (monthly performance review meeting). These are discussed with the Project-inCharge during review meetings.

and

Inventory control cell also prepare following quarterly report

Stock summary statement Physical verification of Major & consumable items (ABC Analysis) Vehicle Performance Report Age analysis of spares & other material.

PERIODIC (ANNUAL) REVIEW FOR REGULAR ITEMS

In case of high & regularly used items, data is collected about their consumption in previous months, and compared to the quantities projected by the user department. The entire

requirement for is consolidated and after deliberation, the composite quantity with phased deliveries is communicated to the purchase department for placement of monthly, quarterly, annual/bi-annual orders. Items covered under the above exercise include:

39

40 Cement of required grades Reinforcement Steel of various dias (8mm, 10mm, 12mm, 16mm, 20mm & 25mm) Various sizes of Aggregates, Sand, Bricks, Dust and Boulders etc HS diesel, oils requirement for maintenance for vehicles, machinery etc Structural steel such as ; Ms plates, Ms sheets, Ms Pipes & Scaffolding materials which are required for staging/scaffolding for construction of buildings & brides etc All spares & consumable items.

Based on the ABC analysis, consumable regular items are reviewed and their ROL/ROQ is revised annually. In certain cases if there is a departure from the norms/practices, ROL/ROQ are reviewed and revised midterm ROL/ROQ formulated for auto-identified by the stores department, cover the following major consumable groups: Cement capsules Valves, curing pipes Wooden Runners Bolts & Nuts Electrical Materials Welding electrodes Oils & Gases & ect.

FUNCTION FEATURES OF MATERIALS MANAGEMENT AT KSLIS PROJECT:

PURCHASE DEPARTMENT

The method of purchase can be subdivided into four methods:

Comparative bids Annual rate contract Proprietary items Repeat orders

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41

The Purchase department work involves: Making purchases Vendor development & Rating Product development Marketing development

PROCEDURE OF VENDOR DEVELOMENT:

Discussion with original manufactures Enquiry floatation Negotiation & Order placement Sample analysis & approval Review & registration.

By information / Application from Manufactures & Vendor for enlistment Security of information Identifying or areas of vendors development Scrutinizing the reference Selected vendors send vendor assessment form Vendor evolution Enquiry floatation Review & registration

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42

STORES MANAGEMENT
Stores play a vital role in the operation of the company. It is direct touch with the user department in its day-to-day activities. The most important purpose served by the stores is to provide uninterrupted service to the executing agencies. Further, stores are often equated directly with money, as money is locked up on the stores. The functions of stores can be classified as follows:

1.

To receive raw materials, components, tools, equipments and other items and accounts for them.

2. 3.

To provide adequate and proper storage and preservation to the various items To meet the demands of the consuming departments by proper issues and accounting for the consumption.

4.

To minimize obsolescence, surplus and scrap through proper codification, preservation and handling.

5.

To highlight stock accumulation, discrepancies and abnormal Consumption and effect control measures.

6.

To ensure good housekeeping so that material handling materials Preservation, stocking, receipt and issue can be done adequately.

7.

To assist in verification and provide supporting information for Effective purchase action.

In India, owing to stiff supply positions, 4 to 6 months inventories are not uncommon and, in fact, for certain imported items, it could be as high as 24 months stock. In this context, stores management assumes greater importance.

COST ASPECTS AND PRODUCTIVITY

Costs involved in stores can be analyzed under two heads, Viz; fixed and variable. Fixed costs are to be incurred irrespective of the utilization of the space of the stores. They include money

42

43 spent on land and buildings, interest on rent, repairs, maintenance; insurance, etc. Variable costs vary with the volume of throughput. They consist of handling costs, damages, deterioration obsolescence, etc. Obviously, when the throughput or the volume of goods handled is high, the total cost per unit comes low. This should be the aim of the stores manager in order to optimize the costs in stores.

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44

DATA ANALYSIS AND INTERPRETATION

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45

IMS OPERATIONAL MANUAL STORES DEPARTMENT

Stores Department in IVRCL LIMITED

OVERVIEW

IVRCL Infrastructures & Projects Ltd., a Hyderabad based company, is one of the fastest growing constructions company in the country. It is a Engineering , procurement, constructions and maintenance company, executing infrastructures projects and operating in five domains, that is, water & environment, irrigations, power, buildings & industrial structures and transportation and executing the projects in all most all states of India and even abroad in other countries i.e. Srilanka, Dubai, Kenya & Nepal etc.

The materials form about 60% of the cost of any project. Hence materials functions are an important one in executing projects timely and more economically. The important activities and functions of the STORES DEPT are covered in the subsequent chapters.

The stores department, which is based at project site, is part of the administration function to serve the project department for timely execution of the project.

The stores department initiates purchase requisitions for locally available materials, to maintain the user specified minimum stock levels / reorder levels. The stores department also indents materials, as per approval note of project manager.

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46 The stores department also performs storage and issue of all types of materials which are required for the execution of the project. The storage areas for maintaining stocks of various materials are separately earmarked, depending on the type of materials stored. Manual as well as mechanical means are employed for smooth movement of materials.

An inventory package system has been implemented for overall process for the stores department.

ACTIVITIES OF STORES DEPARTMENT

Planning of materials

Receipt of materials

Inspection of materials

Handling and storage of approved materials

Return / Replacement of rejected materials

Issue of materials

Transfer of surplus stores to other sites where there is a requirement

Disposal of obsolete items and non-moving scrap.

Reconciliation of major materials

MIS Reports (Management information System)

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47

Quality objectivities of materials:

To achieve optimum inventory by proper planning and control, initiating actions to make materials available i.e. RIGHT QUANTITY IN THE RIGHT PRICE AT RIGHT PLACE AT RIGHT TIME IN RIGHT QUALITY AND FROM RIGHT VENDOR. Also initiates action for proper storage and issue of materials to meet the requirement of project site for uninterrupted construction activities.

The main objectives and their measurements of Stores are given below:

S.N o.

Key Result Area (KRA)

Objectives Defined Control inventory

Target

Measurement Frequency

Record / Reference

01

Optimum Inventory

turnover ratio (Annual Consumption/Average Inventory)

>10

Every quarter

Data Sheet

Preparation of 02 Material Receipt Notes

Max. within 3 Control time taken for preparation of MRNs days from the date of receipt of material Fixed Assets Nil Control difference in Book stocks vis--vis Actual stock A Category <1% B Category <3% C Category <5% Every quarter Every month Every quarter Annually Data Sheet Every month Data Sheet

03

Inventory Reconciliation

04

Loss of Material

Storage loss not to exceed

5% of average value of

Six months

Data Sheet

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48 inventory 05 Training No. of training sessions in a year Maintain good store 06 Safety keeping and material handling methods in order to control accidents Zero Every month Not less than 2 Annually Data Sheet

Incident /Accident Report

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49

Responsibilities & Authorities of personnel

I. HEAD & SUB-HEAD STORES: Corporate & Division Office

RESPONSIBILITIES:

1) To look after overall control of all site stores for better planning, storage, issue of materials, monitoring and maintaining records and reporting to HOD, (Accounts), Head office.

2) To maintain optimum level of Inventories i.e. to minimize Inventory carrying costs.

3) Reconciliation of major materials i.e. Quantity of materials issued, quantity used (theoretical) and balance quantity lying at the contractor area.

4) To initiate action for minimization of wastes and to reduce obsolescence, dispose off nonmoving scraps and obsolete items.

5) To facilitate better utilization of surplus stores of one site by effecting stock transfer to other site where there is a requirement.

6) To ensure timely arrangement of need based skilled manpower requirement for various sites and to take proper action, either to transfer from one site where there is excess staff to other site or recruit to fill the vacancies as per requirement.

7) To appraise the performance of the staff working in the department and to provide training on a continuous basis to afford managerial skills as per need and necessity. . 8) To co-ordinate with Regional offices, Divisional offices and Project sites for better utilization of materials in order to reduce inventories. 49

50

9) To coordinate with accounts, planning, regional inventory controller, mechanical department etc, for timely arrangement of information to the Management

10) To provide timely arrangement of information for finalization of accounts and compliance of Audit reports.

11) To ensure implementation of inventory package in all the sites and to obtain and maintain stores data through package.

12) To ensure good house keeping and safety in all sites stores

AUTHORITIES:

Head (stores) is suitably authorized to discharge the above responsibilities

IV. SITE STORES IN-CHARGE: RESPONSIBILITIES

1) To look after over all site stores functions and rendering reports to Regional / Divisional Inventory Controller, functionally and reports to project manager, administratively.

2) To receive materials, accept, storage, proper handling and issue of materials to project site and their proper recording and documenting on daily basis.

3) To take physical stock of fixed assets (F) and (A) category items, at the end of every month.

4) To ensure reconciliation of all major materials and Fuel along with planning engineer/mechanical department and timely submission of reports to H.O.

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51

5) To arrange material receipt notes (MRN) to accounts department on daily basis.

6) To ensure timely arrangement of the required information for finalization of accounts and attending to audit observations.

7) To return rejected materials to suppliers as per advise of purchase department.

8) To identify surplus material and inform Regional / Divisional Inventory controllers from time to time, for taking appropriate action.

9) To claim insurance for transit damage.

10) To maintain good house keeping and safety in the department. . 11) To ensure adequate and appropriate fire fighting equipment and positioned in all storage places.

AUTHORITIES:

Site store In-charge is suitably authorized to discharge the above responsibilities.

PROCEDURE FOR PROCESSING PURCHASE REQUISITION (PR)

Purpose

: The purpose of this procedure is to define the method for

PR

Processing, so as to ensure that purchased material confirms to specifications.

Scope

: This procedure covers for all items which are directly Execution of the project.

required for

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52

Reference

: QSM: 7.4: 7.4.2 of ISO 9001: 2008

Method

Part - I - Indents initiated by Site Project Department:

1.1

For materials planned through the B O Q (BILL OF QUNTITIES) process, the B O Q document itself shall initiate the PR Processing initiate the purchase requirement. activity. The project Manager at site shall

1.2

The PR shall be raised in manually prepared document which contains full information clearly describing the material required including material specification, quality, and necessary. The PR shall also confirm

metallurgy and envisage of performance whenever

material code, UOM, delivery schedule and priority in terms of quantity, budget provision, providing local market rate and stock available at stores on that date etc.,

1.3

For PRs for bulk purchases shall be sent to purchase department at H.O. or R.O. duly signed by project manager and stores in charge at least 15 days in advance of

material requirement date. No indent for bulk purchase should be processed at site without prior approval of H.O.

1.4

The project Manager should also give firm commitment to H.O. indicating the date by which the required funds will be remitted for the purpose. The confirmation is to be sent to H.O. along with purchase requisitions. No action for purchase will be taken by H.O. without the receipt of PR duly signed by the project manager.

Part II Indents initiated by site stores department:

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53 2.1 For regularly required materials, the re-order level shall trigger the PR raising quantity. The minimum levels and re-order levels of materials shall be given by planning in-charge duly approved by project in-charge.

2.2 Based on minimum level and re-order levels. Site stores department shall raise material requisition for procurement of materials and PR shall be forwarded to R.O/ H.O.

2.3 The Indenter should specify clearly the delivery schedule of materials in the purchase requisitions. In case the materials required are not independent for execution of particular job, the Indenter has to specify that all materials are required and received at one point of time

2.4 For all small purchases, the PR should be sent to local purchase after duly approved by project manager at site for procurement

2.5 In case of locally available materials, stores should maintain low stocks in order to reduce inventories Part III - For Plant & Machinery / Scaffolding materials.

3.1

Project Manager shall forward requisition to H O addressed to Head (Mechanical) with a copy to Purchase Department and Planning Section.

3.2

No Machinery/shuttering materials should be shifted to other sites without release order from Head Office.

written

3.3

Purchase department shall initiate action for procurement after getting clearance from Head Office.

3.4

Before hiring any machinery for site, consent should be taken from Head (Mechanical) so as to ensure that our own machinery does not remain idle.

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RECORDS:

Record Name/Format No. Purchase Requisition IVRCL/DOC/ST/01

Approving Authority Project Manager/ Head (Site)

Retention Period 3 Years

Filing Sequence Manually Generated

PROCEDURE FOR RECEIVING THE MATERIALS AT STORES AND ITS INSPECTION:

PURPOSE

: The purpose of this procedure is to define the method of receiving materials into stores and initiating inspection activities.

SCOPE

These procedures covered for all items which are Directly required for execution of the project.

REFERENCE

QSM: 7.4: CL 7.4.3 of ISO 9001: 2008

RESPONSIBILITY

Stores in charge at site.

METHOD:

1.0

Receipt of materials in stores: Materials are received from Suppliers, Head office and other sites, Clients supply, Returns from the works at site, and returns from the Sub Contractors at site.

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55

1.0

RECEIPT OF MATERIALS FROM SUPPLIERS: All types of materials received at site should under go SECURITY REGISTRATION in accordance with the applicable procedure.

1.1

1.2

After receipt of materials and delivery documents at the stores, the stores in-charge should verify the delivery documents of the following:

- Security inward stamp - Correctness of material w.r.t purchase order - Correctness of quantities w.r.t purchase order/ delivery documents. - Physical condition of the material

1.3 After verification, all the materials should be entered in a Register which is known as MATERIAL INWARD REGISTER (Format: IVRCL/DOC/ST/ 02). The material

received in the stores should be recorded date wise serially in this register in detail. A separate INWARD REGISTER has to be maintained for recording various Raw Materials such as Aggregate, Dust, Sand, Boulders etc materials received in serial order as per Trip Sheet numbers.

1.4 On receipt of materials at site from the suppliers, intimation has to be given to the indenting section for carrying out inspection of material. If the inspecting officer is satisfied that the supply is in accordance with P.O, recommends acceptance of the material. 1.5 There after, the stores in-charge should get system generated MATERIAL RECEIPT NOTE (MRN), (FORMAT: IVRCL/DOC/ST/03), noting down the reference to purchase order, suppliers invoice / challan no. & date, Description of material, quantity received,

accepted, rejected value etc., The MRN has to be signed by the stores in-charge, Inspecting

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56 officers and the Project Manager in token of acceptance of material. The serial number of MRN is system generated and the MRN should be prepared strictly in the serial order of inward entry in the material inward register. The copies of MRNs are to be given on need based to Purchase Department of HO/Site, Accounts Department and Stores Department. 1.6 The Stores in-charge should ensure that MRNs are prepared for all material received at the site and no material delivered at site left unaccounted at the end of the month, except in the case of rejections. The above procedure for preparations of MRN would apply to all materials received from the supplier other than aggregates like sand, bricks, metal,

boulder for which separate procedure is laid down as mentioned below.

2.0

Aggregates (BRICK, METAL, SAND, BOULDER etc).

2.1 On arrival of truck load of aggregates at site, responsible store / engineers should take the measurements of each load of materials and unloaded at stores stock yard.

2.2 TRIP SHEET: A trip sheet in triplicate has to be prepared recording the details of carrier no. Supplier name. Description, Quantity The trip sheets should be signed by the Engineers and stores in-charge and obtain the acceptance of the supplier or his representative in all the copies of the Trip Sheets. The duplicate trip sheet will be handed over to the suppliers in token of receipt of materials.

2.3 All the trip sheet books will be machine numbered and trip sheets will be continuous machine serial numbers. Trip sheet book should be used in serial order.

2.4 BILLS FOR AGGREGATES: The sites would prepare statement for bills every fortnight for aggregate materials received between 16th to end of the month within 5th of the following month and 1st to 15th before 20th of the month, enclosing all original trip sheets of the respective materials.

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57 2.4.1 The supplier should submit bills duly signed along with above statement and original trip sheets and the project manager should certify that the materials have been received and the claim is recorded in the stores.

2.4.2 Most Importantly, the stores-in-charge should ensure that the supplier of Aggregates, Sand, Dust and Boulders invariably submit us the statuatory payment receipts such as; Royalty and Seignorage etc as per Govt. Rules, or else the stores-in-charge should not entertain the trip sheets until receipt of above payment receipts.

3.0

MATERIALS received from H.O. / other sites.

3.1 For effecting transfer of any material / Asset between site / H.O., a stock transfer note (STN), (Format: IVRCL/DOC/ST/04) has to be prepared by the sending site furnishing full details. The STN should be exported though Inventory package system and a mail is to be given to the receiving site.

3.2 The receiver has to import the STN and acknowledge the receipt of material and also noting discrepancy / shortage / damage will be sent to the materials sending site for their record.

3.3.1 The materials received should be entered in the material inward register and in the stock ledger as per STN. No separate MRN need to be prepared. The STN will serve as MRN.

3.3.2 Most importantly, for shifting the material from one place to other, the prescribed Way Bills as per requirement of commercial tax authorities are invariably be attached with the STNs, to meet transit requirements. To know about the various types of Way Bills, the stores in charge is to inter frequently. act with Taxation Department at Head Office very

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58 4.0 MATERIAL RETURN NOTE FROM WORK SITE/SUB- CONTRACTORS:

4.1 Sometimes surplus materials are returned from work site or by sub-contractor. SRNs are to be prepared for all stock returns and entered in the inventory package system for valuation and giving credit to the party or work concerned for the materials which can be re-used, otherwise, they are to be treated as scrap and entered in scrap stock ledger.

5.0

CASH PURCHASES:

5.1

All cash purchases will be done only after approval of project in-charge.

5.2

No cash purchase amount should exceed Rs.2500/- per each indent/Bill.

5.3

All purchases should be made from registered vendors only having TIN number, that is tax invoice etc.,

5.4

For cash purchases at site, a consolidated MRN may be prepared on daily basis. This need not be prepared supplier wise unlike credit purchases.

6.0

STATIONERY PURCHASES:

6.1

MRN is to be prepared for the stationary purchase, like stapler, ink, pens, punching machine, files, erasers etc,. These items may be entered in a separate stationery register. And issues be made on stationary indent slips authorized by Head of the department.

6.2

Site should order printing of forms at sites as per the requirement.

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59 7.0 DEPARTMENTAL SUPPLIES (CLIENTS): The stores materials such as cement, steel, pipes, bitumens and other material being

7.1

supplied by the client and accountable to them shall be maintained in separate stock ledger in the formats as may be approved by the clients. MRNs should be prepared for the material received from client as per the contract. These materials come either on cost basis or zero cost basis. A separate set of form may be used for receipts and issue and quantity as per the requirement of clients. also for balance

8.0

FIXED ASSETS / CURRENT ASSETS:

8.1

It is a statutory obligations to maintain records for the fixed assets / current assets of the

company in the prescribed format which will facilitate to know the book balance of various assets and their cost, procurement of additional items /new items, proper deployment of assets by effecting inter site transfer of surplus assets, as per requirement of other sites, to work out hire charges / depreciation and cost and to safe guard the properties and maintenance.

8.2 MRN

is to be prepared for all assets purchased by H.O. and at sites.

8.3 should

All the Assets procured by the H.O. sites and received from other sites by be noted in a stock ledger styled as FIXED

transfers ASSETS

LEDGER(Format:IVRCL/DOC/ST/05)

8.4 Inter site transfers of assets should be affected only with prior approval of H.O. On such transfers to other locations, acknowledgement has to be obtained. On effecting the transfer, the Stores-in-Charge should obtain an acknowledgement from the receiving site which in turn should be sent to Head Office for proper accounting in both sites.

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60 9.0 INSURANCE OF ASSETS / TRANSIT CLAIM:

9.1 The site should inform H.O. with full details of such assets which are to be covered by insurance. The insurance of such assets will be done at H.O.

9.2 While fixing policies for vehicles/machineries etc, items sold or discarded should not be included in the policy.

9.3 In case of H.O taken delivery of the materials on behalf of sites and again transferred to the site by separate transfers, and shortages are noticed, the site office should inform H.O. simultaneously and cost of such shortages is to be recovered from the party bills if settled at site, otherwise necessary action would be taken by H.O.

9.4 If the dispatches are covered by transit insurance, claims are to be lodged with the insurance company for transit losses, if any.

10.0

REJECTED MATERIALS:

10.1 In case of any rejection of materials, due to damage or non-confirming to the specifications, the purchase department / site / H.O. should be informed within 2 days, so that they will take up the matter with the supplier to take back the material & replace with good materials or refund the payment if any already made.

10.2.1 All rejected materials are to be entered in a separate stock ledger till they are returned or otherwise disposed off.

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61

RECORDS:

Sl.No

Record Name Format No. Material Inward

Ref No

Approving Authority Site Stores In-charge

Retention Period

Filing Sequence

Register

IVRCL/DOC/ST/02

3 Years

Manual

Material Receipt 2 Note(MRN)

IVRCL/DOC /ST/03

Project Manager

3 Years

System Generated

Stock Transfer Note 3 (STN) IVRCL/DOC/ST/04 Project Manager 3 Years

System Generated

Fixed assets Ledger

IVRCL/DOC/ST/05

Site Store Incharge

3 Years

Manual

Procedure for storage of materials:

PURPOSE: The purpose of this procedure is to define the method for storage of materials in bins stores area / storage yard, after receiving inspection activities.

SCOPE:

This procedure covers for all items which are directly required for execution of the project.

REFERENCE:

QSM: 7.5; CL 7.5.5 of ISO 9001: 2008

RESPONSIBILITY: Site stores in-charge. 61

62

METHOD:

1.0

Purchased materials should be stored and issued for execution of the project after the acceptance of the material by the concerned departments on the material receipt note (MRN)

1.1

After receipt and approval of materials at the site, the stores department should take proper care for their storage in Bins or Racks at convenient places and protect

them from damage, losses, obsolescence etc., and to issue them wherever required for use in the works.

1.2

The materials are to be stored for easy identification of bins to avoid unnecessary delay in locating, and making physical verification of store items easily

. 1.3 Non-Bulk materials and shelf life items received from different consignments should be stored separately to facilitate FIFO issue.

1.4

The rejected materials are to be moved to a designated area and they should not be mixed with approved or accepted materials.

1.5

The site stores in-charge should periodically review the rejected designated area to ensure prompt return of the material back to the suppliers.

1.6

All hazardous materials should be stored separately, as per prevalent statutory regulations. The storage go down should be provided with proper ventilation. Material safety data sheets (MSDS) should be obtained from material suppliers and kept in stores for reference.

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PROCEDURE FOR ISSUE OF MATERIALS

PURPOSE : The purpose of this procedure is to define the method for issue of

materials from storage bin areas/stores yard to project department / subcontractor.

SCOPE

This procedure covers for all items which are directly required for project.

execution of the

REFERENCE

: QSM: 7.5; CL 7.5.1 of ISO 9001 2008

RESPONSIBILITY: Site stores in-charge.

METHOD:

1.0

Materials are to be issued only on a written requisition duly signed by Project in-charge or authorized person by him. This format is known as Material Issue Voucher(Format: IVRCL/DOC/ST/06)

1.1

The issue voucher should contain description, material code, quantity to be issued, and name of the work for which it is required, location / Area, contractor, etc., All shelf life items should be issued on FIRST IN FIRST OUT (FIFO) basis.

1.2

1.3

Issue of materials should be done only from accepted materials lying in stores. No rejected material should be issued.

1.4

The site stores in-charge is authorized to issue materials against materials issue voucher.

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64 1.5 After delivery of materials to the user, acknowledgement has to be taken on both the copies of issue indent. The original copy will be retained in stores and duplicate given to the indenter with materials.

1.6

The site stores in-charge should ensure that no material is issued without properly authorized material issue voucher.

1.7

All the material issue vouchers should be updated into the package system by stores department on day-to-day basis.

2.0

ISSUE OF AGGREGATE MATERIAL:

2.1

As per the requirement of the site Engineer, the stores department shall issue

all

aggregate materials such as Sand, Bricks, Metals, boulders etc., from the stock yard against material issue voucher.

2.2

In order to avoid multiple handling, the aggregate materials shall be directly unloaded at site as per requirement In consultation with Project-in-Charge.

2.3

The stores department has to obtain information from site Engineers about actual issue and theoretical consumption on a monthly basis.

3.0

STOCK TRANSFER NOTE:

3.1

When materials are dispatched from one site to another site, the materials should go with proper STN and also a gate pass in duplicate. One copy of gate pass will be handed over to the party. The security personnel at the gate will check the material being taken out with gate pass. After satisfying, he will affix a stamp CHECKED WITH GATE PASS on the STN and allow the materials to be taken out. The gate pass prevents pilferage, theft from the stores. any

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3.2

Further STOCK TRANSFER NOTE (STN)(Format: IVRCL/DOC/ST/04) is to be exported from Inventory Package, through E-mail. In order to import the document by the receiving site.

3.3

The material receiving site should acknowledge the receipt of material and duplicate copy of challan or e-mail message to sending site.

send

4.0

MATERIALS ISSUED ON COST RECOVERY BASIS TO SUB-CONTRACTORS AND OTHERS:

4.1.1 The materials are issued to sub-contractor or others on cost basis, as per the work order.

4.1.1 A clear indication may be given on issue indent to recover cost. The parties are to be debited at the issue rate along with approved overhead charges.

4.1.2 The site stores in-charge should also make monthly summary of debit notes party wise and recheck with accounts.

5.0

MATERIAL ISSUED FREE BUT ON ACCOUNTABLE BASIS.

5.1.1 The sub-contractor shall draw the materials from stores against issue voucher, at free of cost as per work order conditions.

5.1.2 The sub-contractor shall be responsible for drawing the materials from stores, loading, transportations to the actual work site and unloading, proper storage and security/ safety of materials till the job is completed.

5.1.3 In case of surplus materials or scrap is available, the sub-contractor shall return the surplus material / scrap to stores at their cost.

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66 5.1.4 The sub-contractors are required to submit the reconciliation of materials at every running bill stage showing the theoretical consumption and actual consumption failing which there may be delay in releasing the payment. Any discrepancies found in the reconciliation resulting in losses / wastage beyond actual consumption, the cost of the same should be recovered from the sub-contractors bill.

6.0

MATERIALS ISSUED ON LOAN / RETURNABLE BASIS:

6.1

All materials issued to outside parties on loan/returnable basis or for fabrication or for repairs are to be recorded in a separate register. RETURNABLE MATERIALS REGISTER (Format:IVRCL/DOC/ST/07)

6.1.2 A returnable gate pass (Format:IVRCL/DOC/ST/08) has to be prepared and issued to the party who will surrender the same to the security Personnel at Gate, while taking

the materials out of premises . 6.3.1 Security Persons will check materials and documents for all outgoing materials./ equipments and allow to leave only on conformity.

6.3.2 The site stores in-charge should keep track of the returnable material and necessary follow up is to be done.

6.3.3 When the materials are received back in stores, the same should be checked and if in order, take delivery, otherwise, justification to be given by the returning party or else cost of such material should be deducted.

6.3.4 A note of such returns should be made in the original returnable gate pass as well as loan register against the original entry.

6.3.5 In case of materials not returned by the party, the cost of the material with overhead charges is to be debited to the party.

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67

6.8

Tools & Tackles, personnel protective equipment and measuring instruments shall be issued to all on returnable basis by entering in returnable material register. In case of nonreturn of these materials, the cost of the same shall be recovered from the concerned personnel / contractor.

7.0

ISSUE OF CLIENTS MATERIAL:

7.1.1 When client materials are to be issued to site,

proper record is to be maintained w.r.t.

Receipt of materials, issued and balance quantities in clients account. 7.1.2 It is the responsibility of the stores-in-Charge to verify the quantities of all material issued by clients on monthly basis to avoid any deviation/variation.

8.0

ISSUE OF FUEL & LUBRICATS:

8.1.1 Fuel and lubricants shall be issued to vehicles, machinery, plants & Equipments either directly from nearest fuel filling station or from stores against issue voucher

8.1.2 Fuel issue quantity is to be entered in vehicle Logbook (Format: IVRCL/DOC/ST/09) which will be available the Operator/Driver.

8.1.3 Stores shall maintain a separate register (Format:IVRCL/DOC/ST/10) for fuel issue to each vehicle / equipment.

8.1.4 Stores in-charge has to verify the mileage of each vehicle and any excess consumption of POL is observed, the issue should be brought to the notice of the concerned Engineer immediately.

9.0 9.1

HIRED EQUIPMENT / VEHICLES. The company may hire equipments / vehicles for execution of the project.

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68

9.2

Stores shall maintain separate register for hired materials / equipment deployed at site.

9.3

In case of any issue of spares or fuel to these hired equipment / vehicle, the same may recorded in the HIRED EQUIPMENT REGISTER and the cost of the same shall be recovered from the contractors bills as per Work Order conditions.

10.0

SCAFFOLDING MATERIALS:

10.1

Stores in-charge shall monitor strictly the issue of scaffolding materials and reviewed by project manager from time to time.

10.2

After the use, the scaffolding material should be cleaned and returned to the stores for proper storage.

10.3.1 To preserve the materials whenever required preservatives are to be applied in the threads of outer surface and in the surface of shuttering plates.

10.3.2 The use of shuttering materials as covers to drain / man holes should not be used.

10.3.3 Damaged materials/scrap should be disposed off with approval of H.O and after necessary accounting in the stores ledger.

10.3.4 For disposal of scrap, a minimum of 3 competitive quotations duly covering the statuatory taxes should be obtained and the material will be sold to highest bidder on collecting the amount in advance.

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69 RECORDS:

S.N o

Record Name Format No Material Issue

Ref No

Approving Authority Site Stores InCharge

Retention Period

Filing Sequence

Indent

IVRCL/DOC/ST/ 06

3 Years

Manually

Stock Transfer 2 Note

IVRCL/DOC/ST/ 04

Site Stores InCharge

3 Years

System Generated

Returnable 3 Material Register

IVRCL/DOC/ST/ 07

Site Stores InCharge

3 Years

Manually

Returnable Gate 4 Pass

IVRCL/DOC/ST/ 08 IVRCL/DOC/ST/ 09

Site Stores InCharge Site Stores InCharge

3 Years

Manually

Vehicle Log Book

3 Years

Manually

Fuel/Lubricants/S 6 pares issue Register IVRCL/DOC/ST/ 10 Site Stores InCharge 3 Years Manually

Procedure for periodic verification of quality deterioration of stores material

PURPOSE: The purpose of this procedure is to defined in the method for periodic verification of quality deterioration of stored materials. SCOPE: This procedure covers for all the items which are directly required for execution of the project. 69

70 REFERENCE: QSM: 7.5; CL 7.5.5 of ISO 9001: 2008

RESPONSIBILITY: Site stores in-charge.

METHOD:

1.0

Periodic verification of the quality of stored material should be carried out together with verification of the quantities by stores.

1.1

Periodic quality verification should include, at a minimum the following: Mix up consignments Storage period. Visual characteristics such as rusting of steel, cracking of rubber components, solidification of cement bags etc., Damage / deterioration of the containers / packing or any leakage etc.

1.2

Based on observations on verifications as mentioned above (1.1), the materials are to be retested or inspection to be carried out in case of any deterioration of material to determine as to whether the material is usable.

1.3

After verification or inspection, the materials are not confirming to specifications, those materials are to be moved to a quarantine area and disposed off suitably

. 1.4.1 Observations of periodic quality verification should be recorded in periodic quality verification report including the test report if any.

1.4.2 Site

stores

in-charge

should

initiate

appropriate

counter

measures

and

corrective/preventive actions on the findings of periodic quality verification report.

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71

PROCEDURE FOR MATERIAL HANDLING

PURPOSE

: The purpose of this procedure is to define the method of handling materials.

SCOPE

: This procedure covers for all items which are directly required for execution of the project

REFERENCE

QSM; 7.5; CL 7.5.5 of ISO 9001: 2008

RESPONSIBILITY:

Site stores in-charge.

METHOD

1.0

Various mechanical means such as forklift, trucks, trolleys, loaders, bulldozers wooden pallets wooden sleepers, etc are used, as appropriate, for handling materials.

1.1

Equipments need for handling materials should be kept clean to prevent contamination effect.

1.2

Damage of packaged materials, prevention should be ensured by training of personnel engaged in handling the materials.

1.3

Slings for crane are to be checked before using.

1.4

No person should sit or travel on the mobile crane.

1.5

PPE like safety helmets, Hand gloves and shoes are to be used.

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72

LIST OF EQUIPMENTS AND MEASUREMENT DEVICES IN STORES AREA

PURPOSE

: The purpose of this procedure is to list out the equipment & measurement Devices used in stores area.

SCOPE

: All areas of stores department.

REFERENCE: QST: 7.5; CL 7.5.1 of ISO 9001: 2008

RESPONSIBILITY: Site stores in-charge.

METHOD:

1.0

List of equipments and measurement devices and areas of usage are to be listed.

1.1

Periodical calibrations of the measuring devices are to be carried out.

PROCEDURE FOR MAINTENANCE OF SAFETY

PURPOSE : The purpose of this procedure is to define the method of maintaining safety in the department. SCOPE : This procedure covers the maintenance of safety of personnel, material and equipment in the department.

REFERENCE

QSM: 6.4 of ISO 9001: 2008

RESPONSIBILITY:

Site stores in-charge.

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73 METHOD:

1.0

Suitable Fire extinguishers / Fire hydrants in all storage areas should be maintained.

2.0

Suitable personnel protective wear like nose mask, hand gloves and gum boots should be provided whenever required.

3.0

Safety precautions pertaining to material handling shall be displayed at all required places.

4.0

Safety related matters should be revised periodically and pursued through the department meetings.

5.0

Name of the personnel trained in First Aid should be displayed in different areas of the department for easy accessibility in case of any emergency.

PROCEDURE FOR MAINTAINING QUALITY RECORDS

PURPOSE : The purpose of this procedure is to define the method for controlling the quality records in the department to enable safe maintenance and easy retrieval.

SCOPE

: All the quality records are to be maintained.

REFERENCE :

QSM: 4.2; CL 4.2.4 of ISO 9001: 2008

RESPONSIBILITY: Site stores in-charge.

METHOD 1.0

Quality records required for providing evidence of any activity should be identified in the quality system procedure covering that activity.

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74 2.0 Designated storage area / provisions should be made to protect the records from damage and deterioration.

3.0

Storage provision should be prominently identified.

4.0

The files / storage provision should be legibly labeled so as to permit easy retrieval of the files / records.

5.0

Suitable provision should be made for keeping the old records required for reference.

6.0

Records which are maintained in the computer system should be protected suitably by backups and for data integrity and security.

PROCEDURE FOR COLLECTION AND DISPOSAL OF WASTE MATERIAL:

PURPOSE

: The purpose of this procedure is to define the method for collecting material wastage and their disposal.

SCOPE

: This procedure covers for all wastage items which are generated during the execution of the project.

REFERENCE:

---

RESPONSIBILITY:

Site stores in-charge.

METHOD:

1.0

COLLECTION AND RECORDING OF SCRAP / WASTE

MATERIAL:

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75 1.1 Stores should collect all types of waste materials, such as tor steel, MS steel, SS, GI, Aluminum, Brass, Copper, Rubber, cotton, Plastic, waste oil, wooden and electrical scraps etc., . 1.2 All the receipts of scrap / waste materials are to be recorded in the Scrap Register as per Format (IVRCL/DOC/ST/ 11), on regular basis . 1.3 All waste materials are to be stored separately, without mixing.

1.4

While issuing spares for equipment and electrical items such as bearings, governors, discs, metal etc., the worn out spare parts must be collected by stores.

1.5

The stores in-charge should endorse on invoice of new items that the worn out spare parts have been returned to the stores, hence new items are purchased. Based on this endorsement, the accounts will make payment to the party.

1.5

The worn out spares are to be stored separately and to be issued for re use in case of emergency.

2.0

DISPOSAL OF SCRAP / WASTE MATERIAL.

2.1

The accumulated scrap / waste materials shall be disposed off at least once in a year or earlier basing on the volume of quantity.

2.2

A minimum of 3 quotations for each category of waste materials, shall be obtained and a comparative statement is to be prepared. All the buyers mentioned in the comparative statement should have valid TIN/PAN.

2.3

A note with details of quantity and expected realization along with comparative statement shall be forwarded to H.O. for approval of Executive Director.

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76 2.4 After EDs approval, the sale order is to be issued in favor of prospective buyer and the full amount of realization should be taken by way of Demand Draft / Cheque.

2.5

After realization of payment for full value, the delivery is to be given to the buyer along with invoice with applicable VAT or CST and TCS.

2.6

This amount is to be accounted for in the respective site / regional office with the support of EDs approval attached.

2.7

One copy of invoice is to be forwarded to TDS section at H.O and the second copy of invoice is to be arranged to the accounts where VAT returns are being filed.

2.8

The above documents are required to be arranged on quarterly basis to accounts department, H.O.

3.0

SALE OF VEHICLES.

3.1

The procedure for sale of vehicles shall also be applicable as per the sale of scrap / waste materials as mentioned in 2.2 to 2.8.

3.2

After making full payment by the prospective buyer, the vehicle is to be handed over with transfer of R.C. Book. The applicable VAT or CST along with C form is to be charged.

3.3

3.4

The sale is to be affected in the fixed assets register by posting of necessary issue voucher.

PROCEDURE FOR CLOSING OF PROJECT STORES:

PURPOSE

The purpose of this procedure is to define the method for closing of

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77 Stores immediately after a project is completed.

SCOPE REFERENCE

: The procedure covers for all stores of the company. : ---

RESPONSIBILITY: Site stores in-charge.

METHOD:

1.0

The site stores in-charge should prepare a list of materials / assets available at site and send the same to H.O. / D.O. / R.O. in advance, through project manager.

1.1

The H.O. / D.O. / R.O. will issue necessary instructions about their transfer to other sites or for their disposal.

1.2

As per instruction of H.O. / D.O. / R.O. Stores has to dispatch material / assets to other sites or disposed off following the procedure.

1.3.1

Major stores records should be properly packed and listed out the important files, and other valuable documents which are to be dispatched to R.O. / D.O. / H.O. or central stores.

1.3.2

All loose items, waste materials and no longer required records etc., which are not useful, should be disposed off with approval of project manager.

1.3.3

All stores in-charge will be relieved only after proper material reconciliation of all major stores items and handing over all records and materials to the nominated persons as per project manager instructions.

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78

TRAINING NEEDS FOR THE DEPARTMENTAL PERSONNEL:

PURPOSE : The purpose of this procedure is to define the training needs of the Personnel of the Department. SCOPE : Training of all personnel in different level working in the department.

REFERENCE: QSM: 6.2; CL 6.2.2 of ISO 9001: 2008.

RESPONSIBILITY: Head (Stores)

METHOD: 1.0 The identified training needs of the personnel working in stores are given, category wise, in the table.

2.0

The training needs should be periodically reviewed.

3.0

Employee should be deputed to suitable training programs, as and when arranged by the H.O. / R.O

4.0

Proper guidance should be given, from time to time, to personnel in job.

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79 TABLE:

Slno

EMPLOYEES CATEGORY Manager (Stores) / Regional &

TRAINING NEEDS - Quality system development and - Managerial development skills. - Implementation of inventory package. - Communication & MIS - Quality system implementation implementation

Divisional inventory controller

Site stores in-charge

- Latest material handling system and methods - Electronic system handling. - Implementation of inventory package. - Employee development program - Quality system awareness

Workmen

- Safety awareness program - Material handling techniques.

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80

MANAGEMENT INFORMATION SYSTEMS

PURPOSE

: The purpose of this procedure is to define the method for timely providing Information to management.

SCOPE

: This procedure covers for all materials which are directly required for Execution of the project.

REFERENCE: QSM: 5.6; CL 5.6.2 of ISO 9001: 2008

RESPONSIBILITY: Site stores in-charge / Regional or Divisional inventory controllers. METHOD: 1.0 STORES MATERIAL RECONCILATION:

1.1

The major material reconciliation is to be carried out on monthly basis by site stores incharge.

1.2

Reasons for deviation, between received quantity and issued quantity, are to be analyzed and reported.

1.3

The details are to be made as per Format (IVRCL/MIS/ST/12).

1.4

The reconciliation of fixed assets are to be carried out, once in a quarter, by stores incharge as per format (IVRCL/MIS/ST/13).

2.0

MAJOR MATERIALS RECONCILATION:

2.1.1 The over all reconciliation of major material is to be carried out monthly basis,

by

stores in-charge/Regional or Divisional Inventory controller and project manager as per format (IVRCL/MIS/ST/14).

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81 2.1.2 Both the stores in-charges and project engineers shall assess the discrepancies.

2.1.3 If any losses observed, the reasons for the losses are to be ascertained and recorded in the register.

3.0

SUB CONTRACTOR WISE RECONCILIATION OF MAJOR MATERIALS:

3.1.1 The major materials issued to sub contractors are to be reconciled, once in a month, by stores in-charge / regional or divisional inventory controllers, and project engineer as per format (IVRCL/MIS/ST/15).

3.2

Project engineer shall obtain and provide to stores in-charge that a statement of quantity issued, quantity used (theoretical) and balance quantity lying at the sub-contractor area duly signed by the project manager.

3.3

Incase of any shortages noticed with sub-contractor, the cost of the materials is to be recovered from the sub-contractor bills.

4.0 BILLED QUANTITIES Vs PAID QUANTITIES:

4.1.1 The statement showing the details of BOQ executed and billed to the client, and payments made to the sub-contractors, on quarterly basis, by Regional/Divisional Inventory controllers, as per format (IVRCL/MIS/ST/16).

4.1.2 Reasons are to be ascertained incase of paid quantities are more than billed quantities.

5.0

STATUTORY REPORTS:

5.1

Stores have to prepare and submit the following statutory reports to accounts department on quarterly basis.

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82 1.Quarterly closing stock statement of stores items

2.Fixed assets statement

3.Quantity reconciliation of major construction materials

4.MRN and PJV Reconciliation statement/extract of MRN Registers

MASTER LIST OF FORMATS

S.No. 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Document No. IVRCL/DOC/ST/01 IVRCL/DOC/ST/02 IVRCL/DOC/ST/03 IVRCL/DOC/ST/04 IVRCL/DOC/ST/05 IVRCL/DOC/ST/06 IVRCL/DOC/ST/07 IVRCL/DOC/ST/08 IVRCL/DOC/ST/09 IVRCL/DOC/ST/10 IVRCL/DOC/ST/11 IVRCL/MIS/ST/12 IVRCL/MIS/ST/13 IVRCL/MIS/ST/14 IVRCL/MIS/ST/15

Document Title PURCHASE REQUISITION MATERIALINWARD REGISTER MATERIAL RECEIPT NOTE (MRN) STOCK TRANSFER NOTE (STN) FIXED ASSETS LEDGER MATERIAL ISSUE SLIP RETERNABLE MATERIAL REGISTER RETURNABLE GATE PASS VEHICLE LOG BOOK FUEL & LUBRICANTS AND SPARES ISSUE REGISTER SCRAP REGISTER STORES MATERIAL RECONCILIATION FIXED ASSETS RECONCILIATION ALL MAJOR MATERIAL RECONCILIATION SUB-CONTRACTOR WISE MATERIAL RECONCILIATION

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83 16 17 18 19 IVRCL/MIS/ST/16 IVRCL/MIS/ST/17 IVRCL/MIS/ST/18 IVRCL/MIS/ST/19 BILLED QUANTITIES VS PAID QUANTITIES QUARTERLY CLOSING STOCK STATEMENT OF STORES ITEMS FIXED ASSETS STATEMENT QUARTERLY RECONCILIATION OF MAJOR CONSTRUCTION MATERIALS MRN AND PJV RECONCILIATION 20 IVRCL/MIS/ST/20 STATEMENT / EXTRACT OF MRN REGISTER

FINDINGS AND SUGGESTIONS:

1. The material issue vouchers are manually prepared and posted into the package at a later date, due to which higher stock values are being relfected. To arrive at exact quantities on day-to-day basis, system generated issue vouchers should be implemented. 2. The major material such as steel & cement are being procured from limited parties. Since the consumption is much more, the supply areas should be widened to have a competitive rate with quality. 3. At times, the cement & steel procured in bulk quantities is not consumed within a short span which is resulting in blockage of funds. This is also reflecting in lesser receipt from clients as the items are not fully executed by utilizing the procured quantities. 4. The cement bags should be opened by cutting on top portion with a blade so that wastage of cement is curtailed and empty bags could become usable for other purposes or can be disposed off if they are in good condition. 5. The raw material such as Aggregates & Sand etc are not properly dumped/ stacked at various locations of site and are scattered in more area than required which is resulting in avoidable wastage. Proper care should be taken for stacking the material within limited space. Special care should be taken during rainy season when the percentage of wastage would be beyond any ones control.

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84 6. The scrap lying at various locations is not being collected and stacked properly, leaving a room for mis-use or theft. The scrap should be periodically collected from all locations and stacked in Main store for proper security and further accountability and also to dispose off them at frequent intervals to lessen the burden as well as to gain income. 7. Periodical maintenance of the machinery, equipments, plants and vehicles is not being done owing to exigencies. However, a reasonable time should be fixed for their maintenance which would increase the capacity of utilization as well as life span.

CONCLUSIONS :
Since execution of project is by utilizing the machinery and manpower,

expected/projected out come can not be achieved owing

to the reasons beyond the

reach/control such as non-availability of required skilled/unskilled manpower and frequent break down of machinery/equipment, non-availability of major material in time or due to natural calamities etc or delay from clients in according approvals and decisions etc duly fulfilling their part of contractual obligations. Hence it is beyond prediction that the project would be completed well within time earning projected margin.

The project, when completed, would extend irrigation facilities to a total ayacut of 50250 acres in Mahbubnagar dist boosting up the cultivation in many villages as well as increasing the economy and life style of farmers.

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BIBLIOGRAPHY

Financial Accounting (By RP Trivedi) Financial Management (By IM Pandey) Fundamentals of Financial Management (By Prasanna Chandra) Detailed Project Report of IVRCL Limited Web sites www.ivrcl.com

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