ON
ITS IT IMPLEMENTATION
COMPLETED AT
IN PARTIAL FULFILLEMENT OF
MBA (FINANCE)
FROM
ON
I wish to express my sincere thanks to National Thermal Power Corporation for allowing me to
work in an open and free manner in their organization. I am also thankful to my project guide,
Mr.PRAVEEN KUMAR, -“FINANCE DEPT”, NTPC KAHALGAON, for his continuous support
through out my project work without which the true and accurate understanding of the project
would not have been possible.
I am deeply indebted to my teacher Prof. V.N RAI who consistently guided and, advised me during
my project work .As well as the person that guided us in our first industry visit
And taught as how to see and work in any organization .
Table of Contents:
1. Introduction
2. Company Profile
2.1. Vision
2.2. The Operation
2.3. NTPC today
2.4. Performance highlights 2007-08 & Q1 2008-09
2.5. Business opportunities
2.6. Way forward
2.7. Challenges & strategies
2.8. An investment profile
3. Stores(Inventory) Management System
3.1. Introduction
3.2. Stores Function
3.3. Tasks involved in Stores Function
3.4. Organization structure for stores section
4. Goods Receipt
5. Goods clearance and dispatch group
6. Goods inspection and inverd group
7. Custody
8. Reciept and Issues
9. Warehousing and storage
10. Material Planning and Inventory Control
11. Policy Planning and Monitoring for Materials management
12. Computerization
13. Findings
14. Recommendations
15. Conclusion
16. Limitations
17. Bibliography
Introduction
The objective of this Summer Training is to study the operations of inventory Stores
Department of NTPC in light of System Application & Designing (SAP).
The Public Sector behemoth has been in the field of Power Generation and Management
for the past 30 years. NTPC is the Sixth largest thermal power generator in the World and
the Second most efficient utility in terms of capacity utilisation based on data of 1998.
National Thermal Power Corporation Limited (NTPC) is the largest thermal power
generating company of India. The public sector company was incorporated in the year
1975 to accelerate power development in the country as a wholly owned company of the
Government of India. At present, Government of India holds 89.5% of the total equity
shares of the company and the balance 10.5% is held by FIIs, Domestic Banks, Public and
others.
Within a span of 30 years, NTPC has emerged as a truly national power company, with
power generating facilities in all the major regions of the country. Based on 1998 data,
carried out by Datamonitor UK, NTPC is the 6th largest in terms of thermal power
generation and the second most efficient in terms of capacity utilisation amongst the
thermal utilities in the world.
This public sector company Has a net worth of Rs. 526.4 billion which has Power
addition of 1,770MW.
Recently, company also commissioned 250MW of Bhilai JV, taking its total capacity to
29,394MW.
Its cost of power at Rs1.52 per unit is amongst the lowest. It aims to reach a capacity of
50,000 MW by the end of FY12. It also intends to venture into related areas like coal-
The Vision
The vision of the company states the fundamental purpose of their existence viz:
“To be one of the world’s largest and best power utilities, powering India’s
growth”
The values of the company provide the essential and enduring general guiding
principles in the way it conducts itself in realizing the vision through COMIT.
• Customer Focus
• Organizational Pride
• Mutual Respect and Truth
• Initiative and Speed
• Total Quality
NTPC has set new benchmarks for the power industry both in the area of power
plant construction and operations. It is providing power at the cheapest average tariff in the
country. With its experience and expertise in the power sector, NTPC is extending
consultancy services to various organisations in the power business.
NTPC was among the first Public Sector Enterprises to enter into a Memorandum
of Understanding (MOU) with the Government in 1987-88. NTPC has been placed under
the 'Excellent category' (the best category) every year since the MOU system became
operative.
Recognising its excellent performance and vast potential, Government of the India
has identified NTPC as one of the jewels of Public Sector ‘Navratnas’- a potential global
giant.
Some important highlights of the Company’s performance during the year 2003-04
are:
installd capacity of 29,144MW, generating ~28% of the electricity in the country. Its cost
of power at Rs1.52 per unit is amongst the lowest. It aims to reach a capacity of 50,000
key points
• One of the three largest Indian companies with a market cap of
more than Rs.
• 1621 billion +
• Mcgraw-Hil companies)
1. Capacity Growth
2. Physical Performance
3. Commercial Performance
4. Financial Performance
5. Fuel supply
5. Others
Capacity growth and Funding Tie-up
2007-08
• Achieved highest ever capex of Rs. 86.21 bln
• Forex loans for USD 480 million tied up Placed Bonds of Rs. 10
bln.
ongoing projects
to Rs. 1 trillion
Other key highlights (April to
July)
• A Joint Venture Company (JVC) formed with Uttar Pradesh Rajya
Vidyut
COMPANY’S BALANCE
SHEET.
Audited Financial Results for the Year
ended 31st March 2009
(Rs./Lakhs)
1 2 3 4 5 6 7 8
2 Expenditure
8 Exceptional - - - - - -
items
10 Tax Expenses: -
12 Extraordinary - - - - - -
Items (Net of
tax expenses)
14 Minority - - - - (10) -
Interest in
Consolidated
Profit
20 Earning per
share - (EPS in
Rs.)
24 Public -
Shareholding
(a Number of 865830000 865830000 86583000 865830000 86583000 865830000
) shares 0 0
25 Promoters -
and Promoter
Group
Shareholding
(a Pledged/
) Encumbered
- Number of - - - - - -
Shares
- Percentage - - - - - -
of share (as
% of the
total
shareholdin
g of
promoter
and
promoter
group)
- Percentage - - - - - -
of share (as
% of the
total share
capital of
the
company)
(b Non-
) encumbered
Quarter Quarter
Year Year Year Year
Sl Particula ended ended
ended ended ended ended
. rs 31.03.200 31.03.200
31.03.200 31.03.200 31.03.200 31.03.200
9 8
9 8 9 8
(Unaudite (Unaudite
(Audited) (Audited) (Audited) (Audited)
d) d)
1 2 3 4 5 6 7 8
1 Segment
Revenue
(Net
Sales)
2 Segment
Results
(Profit
before
Tax and
Interest)
Less
3 Capital
Employed
(Segment
Assets -
Segment
Liabilities
)
• The GDP grew at 8.7% during fiscal 2008 and growth projection
for fiscal 2009 in
2027
Kwh by 2012
2. Land Acquisition
4. Regulatory Environment
5. Fuel security
7. Competition
8. Financial viability of Customers
• company’s strengths,
• challenges
Land Acquisition
Strategy –Well laid down CSR and R&R Policies
• The welfare of project affected persons and the local population
around NTPC
policies
• The company has also taken up distributed generation for remote
rural areas
emissions
world’s average
Ash mound formation for the first time in Asia in NTPC’s Dadri Plant
An investment profile
Company description
NTPC is the largest power generator in India with installed capacity of 29,144MW,
generating
~28% of the electricity in the country. Its cost of power at Rs1.52 per unit is amongst the
lowest. It
aims to reach a capacity of 50,000 MW by the end of FY12. It also intends to venture into
related
areas like coal mining, distribution, transmission, merchant sales, gas exploration, etc.
Efficiency incentives results in ROE from core business at 21% vs 14% permitted by
CERC.
The staff used to make the researcher understand each and every module of the
software so developed and its significance in respect of the Stores Operations. Stores
operation involves multidimensional activities including clearance and dispatch of goods,
inspection and inward movement of materials, claims and settlement, receipt, stocking,
issue, preservation, safety and security of materials, indenting for recoupment,
disposal of scraps etc. The details of each and every function are given later in the report.
The meetings used to take a lot of time and one would have thought that it would
take even over 6 weeks to know all the operations of the Stores Department of NTPC.
Each functioning of the dept. is held up with lot of intricacies and detailing. There
is lot of check and balances kept in place which at times hinder the faster functioning of
the processes involved.
The project also entailed a visit at one of the NTPC plant as Faridabad. It is a gas
based power plant having installed capacity of 432MW.I was able to look much deeper
into the actual functioning and the operations of the corporation.
STORES MANAGEMENT SYSTEM
Introduction
Today, NTPC has an installed capacity of 23,749MW, and generates more than one
fourth of the Total Generation of the entire country. Further, NTPC has an ambitious
growth plan to become 56,000 MW plus power company by the year 2017 AD.
Around 50,000 items of various nature are handled by Stores in a typical NTPC
Coal based station. Inter departmental linkages also need to be established to ensure
continuous availability of material to the user and thereby improve the plant availability.
The Stores of an industrial set-up is considered as a measuring point to judge the
effectiveness of Material Management Services.
STORES FUNCTION
Site Stores is to execute their job in line with over all policy and guideline framed by
Corporate Materials Management Group with a view to have integrated approach and
adoption of uniform practices.
INTRODUCTION
This section initiates all prerequisites in smooth transfer of materials on its arrival
to the custody section. This section is responsible for getting the goods cleared from
different transporting agencies. On receipt of the materials, Unloading Report (UR), MIS
cum SRV are prepared, goods get inspected and finally handed over to the custody section.
This section also raises discrepancy and rejection memos whenever damages,
rejections and shortfalls are noticed and deals with the concerned authorities which
includes Insurance Companies, Transporters, Suppliers etc. and makes settlement of
claims.
This section is further sub-divided into three functional groups for monitoring and
control:
FUNCTIONS.
The function of Clearance and Dispatch group is to arrange receipt of goods and transfer
the same to GIIG and performs the following activities in general.
A. To receive Documents.
i) Receipt of Purchase Order and Amendments:
A hard copy of P.O and subsequent Amendments if any will be received from
purchase section and the same will be kept serially purchase order-wise. The P.O is
also available On-line in the Computer. GCDG can view the Purchase Order and
Amendments to track the supply position.
ii) Receipt of Despatch Documents:
GCDG shall receive despatch document from various internal / external Agencies
e.g.Purchase, Finance (Received through Bank) or directly from Supplier for door
delivery /advance intimation.
FUNCTION
After receipt of material from supplier and prior to taking the same in stock, GIIG is
responsible for the following activities:
A. To receive material from Goods clearance and despatch Group
i) On arrival of material from cartage contractor / GCDG, consignment will be
checked with respect to Unloading Report.
ii) After necessary checking of the consignment material will be received and
copy of UR to be returned to cartage contractor / GCDG duly acknowledged.
INTRODUCTION
Being one of the most important sections of Stores Management System , it consists of
various Custody cells which look after Stockyard / Godowns having different group of
items such as general stores, Oils, Lubricants & Chemicals, Steel & Cement, Spares for
specific installation / unit, Construction Stores for Electrical, Mechanical and C & I items,
Scrap & surplus etc.
Activities of each custody cell consist of the following:
i) Receipt and Issue.
ii) Warehousing and Storage.
iii) Preservation.
iv) Stock Verification.
v) Scrap and surplus Management.
RECEIPT & ISSUE
FUNCTION
Stores custody section is responsible for receipt, custody, storage and issue of
materials. The major functions of this section are:
Documents to be Raised
MTN
Regularisation of Stores Requisition cum Issue Voucher (SRIV)
& MIS cum SRV
SIV (for loan to other organisation)
Documents to be Received
FUNCTIONS
A. Safe custody of all materials (Stores and Equipment) warehoused in the Project Site /
Power Station.
B. The correct tally of materials with the Kardex, or on computer ledger.
C. Correct preparation and posting of all initial documents in the available On-line system.
Incase of the On-line system gets down the above document should be maintained
manually and the same should be re-entered into the On-line system whenever the system
is available.
D. Periodical identification of Materials in stock (likely to become inactive) and
declaration of the same as "Surplus for Sale".
STORING ARRANGEMENT
The stock statement maintained by each project / station should be distributed among
different enclosures (i.e. "Yards" or "Godown") and are provided with proper handling
facilities and modes of access appropriate to the size, shape and weights of the material
stocked. Each Yard or Godown shall cover almost all the items in a Main Group of the
Material Codification System. Each Yard / Godown or the sub-section of the Yard /
Godown that can conveniently be locked and secured and operated by a custodian.
Stores Layout
Uniformity is maintained regarding the layout of stores and especially for Covered Sheds
so that the godowns are all in one identified place and the inward / outward movements
become smooth. "O&M stores Building" is established near the "Main plant". This
provides better area coverage, compact warehousing, quick facility of handling equipment,
tight security, less kg-km. movement per day, etc. The sheds are to be grouped broadly as
under to take care of the major material classes:
The Layout for Better Space utilization and Dual entry/Exit Points
Bin Management
A blueprint of total Bin availability and it's geographical coordinate and lane no.
related to item code, main group etc. is required. Hence a graphical sketch of inside
arrangement is drawn based on "Grid" concept and accordingly each station is codified
logically. The rows and columns in each lane shall be drawn based on "Grid" concept and
accordingly each station shall be codified logically. The rows and columns in each lane are
designed by way of linking "Item Code Main group". It is further divided into odd and
even no. basis to facilitate quick access and identification. A Master Chart is displayed just
at the entrance of Stores Main gate to project an overall inside distribution pattern of
stocking points.
PRECAUTIONARY MEASURES DURING RECEIPTS
During any Receipt of Materials in custody Section the following precautionary measures
are to be taken invariably.
a. The relevant vouchers must accompany all receipts of material. The quantity of
materials must be carefully checked with the particulars given in the vouchers.
b. A broad comparison is to be made w.r.t. colour, appearance and other visual
characteristics of such receipts with the stocks available under the same material
code number. In case of significant discrepancy, the same is to be brought to the
notice of authorised signatory before acknowledging the receipts.
c. In case of materials recovered in the Yard without documents or otherwise,
adjustments should be done using Stock Verification Sheet (SVS).
d. When an assembly in stock is disassembled and put into stocks as components, this
involves the preparation of a certified (adjustment) SRIV and SRVs subject to
approval from Head of user department.
MATERIALS PLANNING AND INVENTORY CONTROL
OBJECTIVE
INTRODUCTION
1. Planning & Budgeting of Resource Requirements for Materials & Contract Services.
2. Orientation of Manpower & review of Organization Structure.
3. Fixation of Lead time for various activities (as below) at purchase and Stores Section
i) Purchase Indent to Purchase Order (activity wise)
ii) Receipt of GR to Preparation of SRV (activity wise)
4. Benchmarking of Activities
5. Preparation of ISO Policy & Procedures.
6. Ensure Implementation of ISO Policies & Procedures strictly.
7. Review of Work Flow Systems and Lead-time.
8. Arrangement of Monthly Review Meeting & Generation of MIS for review meeting.
9. General Administration Related to Tender Opening, Data Systems and Co-ordination
with other Deptt. for policy decision.
10. Interaction with Corporate Materials in regard to Systems & Procedures, Manpower
Planning etc.
11. Regularization of the deviation from the laid down policies and procedures if any due
to local abnormalities.
12. Co-ordination with different wings of inventory management towards timely
accomplishment of the tasks assigned under the policies framed by this group.
COMPUTERISATION
The complete on-line systems are available and are interlinked with interface functions
now all data are live and State-of-the-Art information is availabe at everybody's doorstep.
The operative system is popularly known as "OLIMFAS" i.e. On Line Integrated
Materials, Finance & Accounting System. It has its various features and very useful from
the user's angle to handle large volume of Data and its interpretation.
B. LR/RR Details
When LR/RR is received from the vendor, the Goods Receipt Section invokes the
LR / RR details through this module and regular printouts are taken for maintenance of LR
/ RR register. However if documents are received from Bank then Finance department
feeds the details of LR/RR into the system.
C. Unloading Report
Freight payment details which NTPC is incurring from various premises to local
transport companies is taken care of through this module. Unloading report is generated in
the Receipt Section of Stores Department.
F. Material Return Note (MRN) :
This module is used for return of only new material. This module has following 7 (seven)
sub modules:-
vi) View
G. Material Transfer Note (MTN):
MTN is prepared in case of inter project transfer of material. MTN has the following sub
modules.
i) MTN Preparation:
The Custody cell shall access this module and shall generate MTN list of material
those are identified & declared as surplus/sparable material by Competent authority.
Further processing will be as per norms like number of copies, where to send etc.
v) Updating by Finance:
This option is used for updating / correction of above mentioned fields.
viii) View
H. Adjustment Voucher:
This module has following sub modules:-
i) Voucher Preparation:
Adjustment voucher is prepared in stores / Finance Department. Stores will prepare
voucher for quantity adjustment whereas Finance will prepare / update for value only. This
voucher will be prepared to take care of any mistake which might have occurred during
pricing or due to shortages / damage in stores. Provision is made to feed Receipt and Issue
Adjustment through one adjustment voucher only. Adjustment voucher is not priced
through computer.
ii) Printing: A printing of Adjustment voucher can be taken through this option.
iv) Updating by Finance: Finance shall update NA, Account head, project code, cost
centre, if applicable.
L. Yearly Processing:
This option is to be operated if more than one PSL is being maintained for a project /
station.
After final processing of all PSL's for the year is completed.
M. Sub-store Accounting:
This option provides for accounting / printing of left out materials in sub stores.
The option is to be operated by the EDP department only.
N. Rejection Module:
This module is basically monitoring status of Discrepancy / Rejection during
Receipt / Inspection stages etc. This module has following 11 sub modules :
i) Create New Discrepancy / Rejection:
This option provides for feeding pending Discrepancy / Rejection data at the stage
of starting this module. Upon entering MIS no. and date by user, system will pick up
Discrepancy / Rejection details automatically. It simply needs to save this information.
ii) Settle Rejection by Rectification:
Rectification information to be fed and system will generate MIS no. and Date. For
such cases MIS not to be generated through MIS cum SRV module.
4. The heavy items should be kept in its location area assigned so.
5. The software should be enhanced with a aim of reducing the redundant paper work
which is still prevalent in the system.
6. The software should be made to appear more user friendly by having a GUI
(Graphics User Interface).
7. The faults can be corrected by frequent intervention by the head office by
conducting system audits.
8. The software is now being transferred to oracle in a phased manner. The oracle is
coming up to give support for enhancing the existing software for the company.
9. The authentication till date is only via user name, password only. Using Biometrics
and Smart Cards can further enhance the security of the system.
10. For working with the other companies NTPC can employ Digital Certificate and
Signature for the transactions to happen faster. At present some transactions take a
lot of time to go through to completion.
Conclusion
The project the researcher had undergone a deeper understanding of the company. That
included knowing the corporate culture of the company.
The researcher gained the first-hand experience of the culture and pace of one of the
“Navratnas” of India. It also helped him to learn from the managers who were managing of
such a huge size and understanding how the different department in the public sector
behemoth interact with each other to increase the overall productivity.
Te researcher gained knowledge of the jargon, the magazines employees read, the valued
outcomes, the practiced cultural values, the performance measures, and the other real
details that define a career in NTPC.
The researcher spent the first two weeks on the summers in a full-throttle learning mode,
learning the nuts and bolts of how NTPC delivers its services. By summer's end, he could
draw and explain NTPC Stores Department’s Management Workflow with ease and
understand the supported physical architecture - in sufficient depth to lead a discussion
with the higher authorities on the improvement of the existing structure..
The researcher worked in the EDP. Six weeks a lot less time to undergo a project in the
organization such as NTPC. A bigger constraint was the less number of employees of the
researcher’s age. Apart from some other students undergoing training at NTPC, the
average age of the people whom the researcher interacted during the project was above 40
years.
The researcher was able to observe the working environment of NTPC and find that the
employee satisfaction was high even though it is Public Sector Company. The employees
were very cordial and receptive to any problem/query faced by the researcher. It seemed
deservedly enough that NTPC has been rated among the top ten "Best companies to work
for in India" by Mercer HR Consulting-Business Today Survey 2004. This is the second
consecutive year that NTPC has appeared in this prestigious list. Besides, NTPC is also the
only PSU among the top ten companies. The survey was conducted on the basis of five
attributes such as HR Metrics, HR Processes, Employee Perception, Stake holder
Perception and Attrition on a weighted scale to arrive at a total score for each company
surveyed.
There were also times when the employees at times were reluctant to divulge certain
information from the researcher. The information was withheld on the pretext of it being
confidential.
There was a weekend off in the NTPC. The researcher felt that at least Saturdays the
corporate office should have been opened so that more amount of time would have been
devoted towards the learning and understanding of the project.
In the entire project gave a combination of healthy exposure to the working of the NTPC.
The summer training was a good experience of using the theoretical knowledge in real life
situations. The training helped in getting an opportunity to do some meaningful work in
the industry.
The researcher met and worked with other undergraduates, engineers, General Manager
and deputy general managers, operating staff store managers and keepers.
The summers at NTPC also brought the researcher into contact with experts in a wide
variety of functional areas - from engineering to marketing to sales. The view from the
inside, as an individual contributor or a manager within an operating company, is very
different from an outsider’s view.
The chance to spend 6 weeks living and working hard within an operating company was a
valuable real-world counterpart to the classroom work of the school year.
LIMITATIONS
1. The humungous organization like NTPC itself. It is so huge that to understand and
study each and every aspect of its functioning will require more than six weeks.
2. The project required to go through various sites of NTPC. Again due to apathy of
time and the disparate locations of the power plants( at different parts of the
country) ,this was curtailed.
3. The Computer at the NTPC Noida center were few , therefore I had to work on a
old PC(an x86) whose screen flickered continuously and the processing speed was
excruciatingly slow. This hampered the speed of my work as it was quite a strain to
the eyes while working on such a computer.
4. The time was sometime wasted when the certain officials were not available when
required. Things moved faster only after the interference of my guide, Mr. Ashok
Kumar.
5. There was regular apathy of the govt. officials at the people working at the plant.
6. The average age of the employees whom the researcher met was above 40 years
and this seemed to be a constraint at some times.
Bibliography