15202101 Sip Report3

Understanding The Procurement Process Of Utkalika & Preparing The Procurement Manual

1

“Understanding The Procurement Process Of Utkalika (OSCHC)

&

Preparing The Procurement Manual”

Name-Priyadarshi Das

Roll no- 15202101

MBA:- (2015-2017)

Faculty Guide : Corporate Guide:

Prof. Subrat Sarangi Mr. Adityanarayana Jena

KIIT UNIVERSITY MANAGER,(Finance)

BHUBANESWAR OSCHC LTD. BHUBANESWAR

SCHOOL OF MANAGEMENT, KIIT UNIVERSITY

BHUBANESWAR-751024


2

I. Certificate Of corporate Guide

TO WHOM SO EVER IT MAY CONCERN

This is to be certify that PRIYADARSHI DAS, a student of KIIT School of Management,

Bhubaneswar, bearing Roll No. 15202101, undertook a project on "Understanding The

Procurement Process At Utkalika & Preparing The Procurement Manual "at

Utkalika(Odisha State Co-operative Handicrafts Corporation Ltd.), Bhubaneswar from 2nd

May2015 To 2nd July 2015

He has completed the project under the guidance of Mr. Adityanarayana Jena,

Finance Manager, UTKALIKA(OSCHC LTD.), Bhubaneswar. He is a sincere and hard working

student with pleasant manners. We wish all success in his future endeavours.

Mr. Adityanarayana Jena

Finance Manager

O.S.C.H.C LTD


3

II. Certificate Of Faculty Guide

This is to certify that this project report titled "Understanding the Procurement Process at

Utkalika & Preparing the Procurement Manual" is an original work of Mr. Priyadarshi Das

executed under my supervision.

Prof. Subrat Sarangi

School Of Management

KIIT University


4

III. Declaration

This is to declare that I have carried out this project work myself as apart fulfilment of MBA

program at School of Management, KIIT University under the guidance of Prof. Subrat

Sarangi. The work done is original and has not been copied from anywhere else and has not

been submitted to any other University/Institute for an award of any Degree/Diploma.

Priyadarshi Das

15202101

KIIT School Of Management


5

IV. Acknowledgement

I am grateful to Mr. Adityanarayana Jena, my corporate guide at Utkalika (OSCHC Ltd.)for

not only providing me the opportunity to work in the field of operations of Utkalika in

procurement department but also for extending all support, that I needed in order to successfully

complete my project. My sincere appreciation also goes to Prof. Subrat Sarangi who guided

me at each step of for successfully completion of this project work. I would also like to express

my gratitude to Mrs.Gayatri Pattnaik Managing Director OSCHC Ltd. for her regular

guidance. Last but not the least,my sincere thanks to all the branch managers, suppliers &

officials for their co-operation by way of providing me the important data which was vital for

completion of this project.

Priyadarshi Das

15202101

KIIT School Of Management


6

INDEX

Contents Page No.

1.0) Executive Summary 7-8

2.0) Introduction 9-11

2.1 )Utkalika (OSCHC LTD.) Industry- An Overview 9-10

2.2) Company Profile 10

2.3) Vision Of Utkalika(OSCHC LTD.) 11

2.4) Mission Of Utkalika(OSCHC LTD.) 11

3.0 )Objective 12

3.1 )Scope Of The Study 12

4.0 )Literature Review 12-16

5.0) Methodology 17

6.0)Findings: 17

6.1) Existing Procurement Policy At Utkalika 17-18

6.2) The Procurement Manual 19-84

7.0)Discussions 85

8.0)Recommendations 85-86

9.0)Conclusion 86

10.0)Bibliography 87

11.0)Annexure

Process Maps using MS-VISIO

88-91


7

1.0) Executive Summary

The project was conducted in order to "Understand The Procurement process of Utkalika

(OSCHC Ltd.) & Preparing The Procurement Manual”.

Company Profile and Background

Utkalika (Odisha State Co-operative Handicrafts Corporation Ltd.) is Co-operative society or

organization of Odisha which is funded & controlled by the Government Of Odisha. Its main

aim is to promote handicraft & art textiles products of the artisans of the state on commercial

basis. It has 14 sales branches all over India along with the Exhibition sales where both the

handloom & handicraft products of the artisans/weavers of Odisha are sold.

Project Details

The project assigned was to understand the procurement process of UTKALIKA & preparing the

Procurement Manual. This project held a greater importance for the company as it involved

preparing the procurement manual, which is one of the most important documents for the

company which streamlines the process of procurement & provides the guidelines for effective

procurement process.

Responsibilities and Expected Outcome

The particular project involved understanding the procurement process of Utkalika in the 1st

place which required getting to know the perception of various suppliers about the existing

procurement process of the company. Data collection included collecting various documents

related to procurement like Purchase order form, Indent form, Tender enquiry form etc. also it

required getting to know the company’s sourcing of items inside out. It also included mentioning

all the processes associated with the procurement process through process maps using MS-

VISIO Last but not the least it required preparing the most vital document of all The

Procurement Manual data which would not only improve my knowledge base but also provide

the company with a document which will guide the company in streamlining its procurement

process for effective procurement.


8

Impact Of The Effort

The success of my project would ensure the implementation of effective procurement/purchase

process of Utkalika. The project will guide the company’s officials involved in procurement to

streamline the process of procurement and establish a set of generalised principles for this

process to meet the industry’s best practice. I was appreciated for the hard work that I had put in

over the last two months by moth my Corporate Guide & Faculty Guide.

Learning and Key Takeaway

I learnt how real purchase/procurement process happens in a company. I learnt about the various

ways of procuring an item or no. of items. I learnt how various important processes work like

B2B tendering, Material purchase requisition, Consignment purchase, supplier selection etc. Last

but not the least I prepared one of the most important documents of the company i.e. the

Procurement manual.


9

2.0) Introduction

2.1) UTKALIKA (OSCHC LTD.) INDUSTRY- An Overview

The role of professionals in management has assumed special importance in the present

day business world. However mere theoretical knowledge is not enough for success of a

business. There should be real life experience and deep understanding about company’s need for

Procurement Process & its related activities. In the current study to emphasize this aspect, the

system of project work has been introduced. This project consists of 2 month practical training in

UTKALIKA(OSCHC LTD.) , Bhubaneswar.

The Orissa State Co-operative Handicrafts Corporation (Utkalika) is an apex level

cooperative society registered under cooperative society Act-1962. UTKALIKA(OSCHC LTD.)

is one of co-operative society of Odisha Government situated at Bhubaneswar.

The Odisha State Co-operative Handicrafts Corporation Ltd. is a commercial

organization. Its main aim & ambition is to promote handicraft & art Textiles products of the

artisans of the state on commercial basis.

A suitable Marketing & Procurement Policy is to be devised to co-up with present market

system.

There are 15 sales branches of Utkalika

1. Market Building Branch BBSR(UTK01)

2. Airport Branch BBSR(UTK02)

3. Cuttack Branch(UTK03)

4. Rourkela Branch(UTK04)

5. Puri Branch(UTK05)

6. Jeypore Branch(UTK06)

7. Sambalpur Branch(UTK07)

8. Pipili Branch(UTK08)

9. New Delhi Branch(UTK09)

10. Kolkata Branch(UTK52)


10

11. Pune Branch(UTK53)

12. Hyderabad Branch(UTK54)

13. Mumbai Branch(UTK55)

14. Bangalore Branch(UTK56)

15. Exhibition Branch(UTK95)

UTKALIKA(OSCHC LTD.) is the 2nd highest revenue generating handicrafts & handlooms

company in the state with the largest artisans & weaver network.

2.2) COMPANY PROFILE:

Odisha State Co-operative Handicrafts Corporation, Utkalika, started in 1965..Its

affiliated to Stare Co-operative Societies provide a Co-operative organizational setup for

promoting handicraft & art textiles products of the artisans of the state on commercial

basis.

UTKALIKA(OSCHC LTD.) is organizing marketing facilities for the artisans of the rural

Odisha and hence giving them incentive to produce more products.

Its aim is to serve the poorest of the poor artisans and weavers of Odisha.

UTKALIKA(OSCHC LTD.) is the practicing high ethical standards in its business .


11

2.3) VISION OF UTKALIKA (OSCHC LTD.)

“TO BE A PREMIER HANDICRAFTS ORGANIZATION OF THE COUNTRY.”

2.4) MISSION OF UTKALIKA (OSCHC LTD.)

Short term goal

i.) Sale target of Rs 25.00 crores for the year 2015-2016.

ii.) Complete automation of Business turnover.

iii.) Rs 50.00 crores operational profit by the year 2019-20.

iv.) All accumulated loss to be squared up by the end of 2019-20.

v.) To achieve ratio of sales Handicrats:Handloom 60:40.

More no of co-op. Societies are to be empanelled to become member societies of the

corporation.

As per the sale target there should be stock hoarding capacity of the branches to make

successful roll-over twice in a year which means the stock hoarding should be 50% of the

target.

There should be a flexibility mark-up policy of different mark –up for different crafts.

Planning of rebate/discount structure basing upon the festive occasion.

Properly codified of the stock with inventory management.

Annual clearance sale with high percentage of discount policy to be adopted by the way

of age tracking of the items.

Opening of New sales outlets.

Regularly launching of new items for sale at outlets.

Sale outlet must be renovated & proper display to attract the customers.

Quick distribution of stocks to branches as per their indent.


12

3.0) Objective

To understand the procurement process happening at Utkalika(OSCHC Ltd.).

To find out the perception of the suppliers about the purchase process of Utkalika through

supplier visits.

To streamline the procurement process into various parts mentioning each part clearly and

mentioning all the process through process maps using MS-VISIO.

To prepare the generalized Procurement Manual for Utkalika..

To introduce the new tendering concept in the manual.

3.1) Scope Of The Study

This study is a part of the summer internship for duration of 2 months that started on 2nd May

2015 and completed on 2nd July 2015. The project was carried out in the premises of the Head

office of Utkalika in Bhubaneswar. Project work involved day to day interactions with the

procurement officials and frequent interactions with the suppliers.

4.0) Literature Review

In the age of technological advancement Logistics and supply chain managers

are looking for ways to drive more value from their purchasing and procurement operations.

Whether it may be pressure from demanding customers, the emergence of lower-cost

competition from global sources, or the complexity of supply chains, executives are finding that

the time-honoured emphasis on low- cost purchasing just isn’t cutting it anymore.

As a result, the topics of purchasing, procurement, and strategic sourcing are all receiving

considerable attention as organizations try to improve the overall efficiency and effectiveness of

their supply chains.

Purchasing:-The transactional function of buying products and services. In a business setting,

this commonly involves the placement and processing of a purchase order. Typically, this

activity follows the conduct of a formal sourcing process.


13

Procurement:-Refers to the process of managing a broad range of process that are associated

with a company’s need to procure goods and services that are required to manufacture a

product(direct) or to operate the organization(indirect).Example activities within the

procurement process include product/service sourcing, supplier selection, price negotiation,

contract management, transaction management and supplier performance management.

Strategic Sourcing:- Essentially, the strategic sourcing process is broader and more

comprehensive than the procurement process. Strategic sourcing takes the process further,

focuses more on supply chain impacts of the procurement and purchasing decisions, and works

cross-functionally within the business to help achieve the organization’s overall business goals.

Item Procurement Importance Matrix

Distinctives

High risk, low value

Engineered items

Criticals

High risk,High Value

Unique Items

Items critical to final product

Generics

Low risk,low value

Office supplies

MRO Items

Commodities

Low Risk ,high Value

Basic Production items

Basic packaging

Logistics Services

Importance Of Procurement Policy

All organisations, however big or small should have a procurement policy; a statement defining

what they will and won’t buy, how they’ll buy it and from whom. In many organisations the

policy will be made up of unwritten rules that everyone is aware of that no one would contravene

but the employees and management could do better if they consciously sat down and defined the

policy. In some organisations the procurement policy will be limited to doing a credit check on a

potential supplier. That’s a good start but there’s so much more that could improve the

procurement process.


14

The process of defining your organisation’s procurement policy should involve getting together

the people who make buying decisions and deciding on what are the important criteria for your

organisation. There will be some criteria that should be generic to all organisations. Sandy

Duncan MCIPS, Head of EMS Product Development at Santia Consulting Ltd, defines three sets

of criteria against which you should test suppliers:

1. Are the suppliers cowboys and would you let them through the door let alone do business with

them? You need to establish whether suppliers comply with regulations and standards as a

baseline criterion.

2. Are the suppliers financially sound? Are they going to be around to fulfil your contract and

beyond?

3. Once the baseline criteria have been established, you need to make sure that the supplier you

do business with is the best performer out of the competition.

However, some criteria used for testing suppliers will differ significantly between organisations.

For example for some organisations the main deciding factor will be price. For others price will

be important used in conjunction with a quality standard. For some organisations, price and

quality will be tempered with a commitment to fair trade or sustainable and green procurement

principles.

The damage that can be caused to a business by doing business with the wrong supplier can’t be

underestimated. The wrong supplier could mean the dodgy supplier who acts in an unscrupulous

manner, the supplier who goes out of business before fulfilling the contract, the supplier who

simply can’t keep up with day to day quality and performance standards. All of these outcomes

could be disastrous for your business.

Once you have involved the people from across your organisation that make buying decisions

and decided on what are the important criteria for your organisation in procurement, you need to

implement the criteria. This might be one of the hardest parts of any procurement policy in an

organisation as it involves a cultural change for many employees. Employees might have been

used to buying whenever they wanted from whomever they wanted. However, employees need

to be persuaded that channelling purchases through a predefined process will save the

organisation time, money and could ultimately save the organisation’s reputation one day.


15

Procurement planning is the process of deciding what to buy, when and from what source.

During the procurement planning process the procurement method is assigned and the

expectations for fulfilment of procurement requirements determined.

Procurement Planning is important because:

1. It helps to decide what to buy, when and from what sources.

2. It allows planners to determine if expectations are realistic; particularly the expectations of

the requesting entities, which usually expect their requirements met on short notice and over a

shorter period than the application of the corresponding procurement method allows.

3. It is an opportunity for all stakeholders involved in the processes to meet in order to discuss

particular procurement requirements. These stakeholders could be the requesting entity, end

users, procurement department, technical experts, and even vendors to give relevant inputs on

specific requirements.

4. It permits the creation of a procurement strategy for procuring each requirement that will be

included in the procurement plan. Such strategy includes a market survey and determining the

applicable procurement method given the requirement and the circumstances.

5. Planners can estimate the time required to complete the procurement process and award

contract for each requirement. This is valuable information as it serves to confirm if the

requirement can be fulfilled within the period expected, or required, by the requesting entity.

6. The need for technical expertise to develop technical specifications and/or scope of work for

certain requirements can be assessed, especially where in-house technical capacity is not

available or is non-existent.


16

7. Planners can assess feasibility of combining or dividing procurement requirements into

different contract packages.

The Procurement Plan is the product of the procurement planning process. It can be developed

for a particular requirement, a specific project, or for a number of requirements for one or many

entities in the public or private sectors.

The Procurement Manual is important because:

1. It lists all requirements expected to be procured over a period of time.

2. From it the procurement schedule is developed, which establishes the timelines for carrying

out each step in the procurement process up to contract award and the fulfilment of the

requirement.

3. It allows for the consolidation of similar requirements under one contract or the division of a

requirement into several contract packages for economies of scale.

4. From the number of requirements on the procurement plan, the procuring entity can

determine beforehand any need for additional staffing, including external assistance for the

purpose of completing all procurement requirements listed on the procurement plan.

5. It allows for the monitoring of the procuring process to determine how actual performance

compares with planned activities, and thus to alert the pertinent departments and adjust the

procurement plan accordingly.

6. It enhances the transparency and predictability of the procurement process.


17

5.0) Methodology:

The methods which are involved in this project are data collection, manual drafting etc.

The primary data about the procurement at UTKALIKA was collected from the various suppliers

through no of supplier visits & various procurement officials. The secondary data was collected

from various documents like supplier registration form, indent form, tender enquiry form etc.The

process maps were drawn using MS-VISIO engulfing the processes.

6.0) Findings:

6.1) Existing Procurement Policy At Utkalika:

Procurement plan is the key plan of the corporation which should be prepared in such a manner

by which Corporation could able to achieve its goal.

Quality procurement is a vital in a business organization like us which not only marketed the

products of the various artisans inside the state but also in outside of the state & abroad. Besides,

this corporation also took the responsibility for keep up alive the languishing crafts of the state.

The Corporation is affecting business/Procurement in different ways.

1. Direct Purchase Through Tendering

2. Consignment Purchase

3. SIS Purchase

4. Exhibition Purchase

5. E-Marketing Purchase

On the above categories purchase is being done through direct & indirect. Indirect

procurement should against consignment, SIS & Exhibition purchase, where purchase formalities,

price decision & revision of purchase price is not required. On the other hand in direct purchase

the purchase formalities are required, such as price fixation, quality, stock entry coding system

etc.


18

To achieve the target, the procurement policy is to be strengthened by adopting following

process.

i) Purchase order is being raised in favour of concerned enrolled

artisans/societies/SHG/SSI.

ii) On arrival of stocks storekeeper/store manager expert of concerned craft should

verify the quality & specification.

iii) Procurement is being made centrally at the head office level as per the indent

quarterly/Time bound/Special indent of the branches.

iv) Procurement Committee to be constituted taking experts in the concerned crafts

for quality & fixation of new price.

v) Appointment of Designer –cum-quality manager.

vi) Proper coding, supplier code for easy tracking of items.

vii) Proper physical arrangement for stock keeping.

viii) Introduction of age tracking system for all products.

ix) Procurement network should be enlarged through empanelment of

societies/SHGs/SSIs/artisans.

x) Special tribe should be taken for procurement of items from state.

xi) All the products should be codified with narration of items while despatch to

branches.

xii) Introduction of New items.

xiii) All the branch managers are advised to submit the customers’ comments quarterly

which will be taken care by the store manager during the next procurement.

xiv) Sound procurement policy with flexibility in purchase. Procurement to be made

as per the demand/indent of the branch so that unwanted procurement could be avoided.

xv) A price list of products of crafts is maintained at store, Account & Audit section.

xvi) Category wise of supplier in three grades i.e. ‘1’, ‘2’ & ‘3’ basing upon specific

criteria.

xvii) Criteria/Norms to be fixed for enrolment of suppliers, its fee & disqualification of

suppliers.


19

6.2) The Procurement Manual

Preface

The procurement manual provides the essential information and brief step –by-step

procedures for procurement both handloom & handicraft items for Utkalika(Odisha State Co-

Operative Handicrafts Corporation).This document is intended to guide the procurement

officials directly involved in the procurement activities. It also intends to help in

understanding the procurement process and to achieve uniformity in procurement process

followed by Utkalika(OSCHC).the rights and obligations of the purchaser and the suppliers

will be governed by various ways like tender documents and by contracts signed by the

suppliers with the company not by the guidelines in this document.

However the procurement manual is only a guideline document and the procurement of all the

items pertaining to Utkalika(OSCHC) will be carried out by this document. But exceptional

cases are always considered where special procurement takes place when there is sudden

requirement.

To achieve the better acceptability of the manual and to understand the difficulties at

organization level, draft procurement manual should be sent to all the departments of the

organization and various sales branches for their comments & suggestions. After

consideration of all the suggestions and doing corrections it should be sent to the Managing

Director for approval.


20

Chapter 1

Introduction

1.0 Introduction

This manual lays down the procedure and guidelines for procurement of handicrafts &

handloom items for Utkalika (Odisha State Co-operative Handicrafts Corporation).The

objective is to streamline the procurement activities of the organization & to acquaint various

departments of the organization with the procedure so as to enable them to work in close

coordination with the procurement department for procuring right quantity and quality of

materials at the right time, and right price from the right source with minimum investment in

materials Inventory.

However, if any deviation to the procurement manual and the laid down procedures therein is

considered essential for exceptional cases of procurement, specific approval of the Managing

Director need to be obtained.

1.1 Procurement function

The procurement function starts with the raising of indent by the concerned sales

branches. After approval by the competent authority, the indent gets converted into

MPR(Material Purchase Requisition) and sent to purchase department for initiating purchase

action. Depending on the type of indent, its value and nature of the items indented, purchase

department initiates action to issue tender inquiry. After receipt of same is evaluated,

negotiation if required is conducted and order is placed after approval of the competent

authority with concurrence of finance. The order is followed up till the completion of delivery


21

of the items and file is closed for the respective period. There is an another way in which

Utkalika (Odisha State Co-operative Handicrafts Corporation) procures the required items for

them i.e. the consignment purchase system where some underprivileged suppliers whose

annual income is very less (< Rs2,00,000) are encouraged to provide their manufactured items

to the company on a consignment basis. This type of procurement is also one of the CSR

initiative taken up by Utkalika(OSCHC). This serves the motto of the company i.e. serving the

poorest of the poor artisans of Odisha.

1.2 Guidelines

i. Since the purchase orders are basically contracts, the relevant provisions of the Indian

Contracts act, arbitration act, sales of goods act and all other laws and statues of land are

applicable to contracts entered into by Utkalika(OSCHC) with suppliers.

ii. Managing Director will issue guidelines as to which items will be procured centrally. All other

items will be purchased by the procurement department.

iii. Amendments and modifications of procurement manual can only be made with Managing

Director’s approval.

Iv. Power to interpret the provisions in this manual or to decide specific cases of procurement in

variation to specified procedural provisions of the manual with reasons/justifications recorded

in writing will rest with the Managing Director.

v. Financial limits/provisions in this manual whenever in conflict with the delegation of powers,

provisions, under the latter will apply unless otherwise approved by competent authority.


22

CHAPTER 2

Materials Planning

2.0 Based on the requirement & planning for the various quarters/months detailed budget

estimate for procurement of both handloom & handicraft products/items are to be prepared at the

unit level i.e. the store level and submitted for approval of the competent authority. After

approval, the details of allocation are communicated to various sales branches for planning the

indents for procurement. Indents are to be raised from time to time taking the available stock;

orders in process/in hand & lead time into consideration. Indents of some items are raised by the

head office. indents are to be made in standardized computer format. Indents are to be placed

before the screening committee which will generally sit after all the indents are received from

various sales branches. Screening committee will be chaired by the Managing Director and will

have all the branch managers of various sales branches and finance manager. The screening

committee will examine the indents with reference to stock in hand, pending purchase orders,

pending indents, pattern of previous indents and pending MPRs, last 3 years consumption pattern

and procurement lead time. Except for long delivery items, indents for other items shall not be

cleared normally if stock in hand, pending P.O. Quantity, pending indent quantity & MPR

quantity taken together exceed the highest of last 3 years annual consumption..Proper

justification has to be given for items not falling under normal category. Indent is to be approved

by the competent authority after budget allocation and clearance of the screening committee.

Indents of highest grossing items are not to be placed before the screening committee but to be

directly submitted to the authority through finance department for approval. The approved indent

in triplicate copies sent to procurement department, the supplier & the sales branches from which

the indents came from. The procurement department (for both HC & HL) scrutinizes the indents

for its completeness and incase any deficiency or deviations, sends the indents to the respective

sales branches for clarification. Complete indents & the indents after clarifications from the

respective sales branches are converted into MPR after allocation of computerized indent code

number. Then 3 copies of the computerized indents are made then one of them is sent to the


23

supplier of the respective items and two copies will be retained with procurement department for

procurement action & finance department for incurring the finance after the supply is complete.

However for some antique items/new designed items/new to the market products/urgently

required items both for HC & HL procurement planning is to be done by the procurement

department of both the divisions. Considering the requirement & screening committee’s decision

detailed proposal of the quantity to be procured. After the concurrence of finance by the finance

department approval for this procurement is obtained. Then the procurement of these items are

done by the procurement department as like the general items procedure.

Purchase of the items are to be planned in such a way that the procurement department gets

sufficient time to invite tenders (excluding the consignment items purchase) and place order and

at the same time the inventory is maintained at optimal level to cater the normal needs for the

ongoing period.

Type Bid System

Emergent Tender Single Bid

Single Tender Single Bid

Limited Tender Type 1 Single Bid

Limited Tender Type 2 Two Part Bid


24

CHAPTER-3

Mode Of Purchase

3.0 There are 3 type of procurements which are followed in Utkalika(OSCHC) i.e. direct

procurement from the suppliers, through SIS and through consignment. Corporation is

maintaining a credit purchase system. Procurement is being made centrally at the head office

basing upon on the quarterly indent/time bound indent/special indent submitted by the branches.

3.1 Direct Procurement from the suppliers is done through tendering method. There are no of

tendering methods which are used in this method. Tendering process takes place for both the

divisions separately with separate set of suppliers in bidding process.

3.1.1 Single Tender

Single tenders are those tenders where enquiry is issued to s single supplier. Single tenders are

considered under the following cases:

(i) Proprietary purchase from original items suppliers or his sub-suppliers and exclusive

distributor for items which are made or produced or distributed by one having

exclusive contract with the company.

(ii) Standardized product, where for reasons of quality & uniformity, Utkalika(OSCHC)

has decided to procure a particular brand of a product. However such items shall be

reviewed by the company from time to time.


25

In the above cases, quotations are to be obtained either directly from the manufacturer/artisans or

his/her contractor or his agents/authorized distributor/subsidiary of the items are not marketed

directly by the artisans/weavers/manufacturers.

3.1.2 Limited Tenders Or Closed Tenders

Limited Tenders are those tenders for which the enquiry is issued only to a limited number of

prequalified/shortlisted approved manufacturers/artisans/firms. Normally, such enquiries are

issued to the firms which are registered with the company for the subject items or coded items.

According to this coded items the suppliers are coded too in regards with their respective item

code. However enquiry can be issued to other firms/suppliers/artisans which are considered

suitable for the purpose.

Limited tender enquiries are to be issued for items whose specification and source of supply are

known. The number of parties to whom limited tender enquiries are to be issued may be decided

depending on the nature of the purchase. If a single tender offer is issued or a single offer is

found technically suitable against a limited tender enquiry, such tender is also to be treated as a

case of single tender.

3.1.3 Repeat Order:

Repeat orders are those orders which are placed on the suppliers at the same terms and

conditions of the previous order except for the quantity and delivery. Repeat orders can be

considered only if there is no downward movement of the prices. Repeat orders can be placed

within or after 1 month of the placement of original order. Repeat orders can be placed if the

original order has been placed through competitive tendering to the supplier who has won the

tender. However for ease of delivery and urgent requirements, the items which have been

purchased from single source, repeat order can be placed. The total item value under repeat order


26

shall not exceed 100% of the original order item value. Subject to above, repeat order can be

approved by the authority who has approved the original order.

In exigencies a second repeat order not exceeding the original order item value can be placed

recording sufficient justification with the approval of higher authority. For cases where original

order placement have been approved by the Managing Director.

3.1.4 Rate Contracts:

A rate contract is a contract for supply of registered items at specific rates during the period

covered under the contract. Rate contracts can be for an estimated quantity to be supplied during

the period of contract or can be a running contract against which orders are placed to supply

specified quantities at different point of time as per the requirement at the rates, terms and

conditions of the contract. The rate contracts are to be concluded preferably with the

manufacturers or their sole agents/distributors through negotiation.

3.1.5 Petty Purchase:

All petty purchases (as per value limits defined in the delegation of powers can be made by the

concerned procurement head of the 2 divisions with or without financial concurrence as the case

may be, subject to non-availability certificate from the sales branches in accordance with the

delegation of powers(DOP).


27

3.1.6 Emergency Purchase:

Emergency purchases are those purchases which are required to meet urgent requirements of the

company. Emergency purchase items are firstly notified by the sales branches to the head office

with proper explanation of requisite reasons also with the specified indents. Upon arrival of these

indents they are reviewed by the 2 procurement heads of the 2 divisions. After their approval

either the indent is verified or rejected and then the indent is sent to the Managing Director for

approval. After the approval from the Managing Director the indent is sent to finance department

for concurrence of finance. These purchases are generally direct purchases. Sometimes these

purchases are done through consignment basis. Such direct purchases will be adjusted against

annual budget of respective departments. All emergency purchases and issues will be recorded in

the day book of the department. Monthly report for all emergency purchases is to be submitted

by the procurement heads of the 2 divisions to

i) the finance department

ii) the Managing Director’s record

Emergency purchases above the ceiling limit provided in the delegation of powers are to be mate

by the procurement heads of the 2 divisions only against respective indents received from the

sales branches.

Depending upon the nature of the emergency any one of the following modes of the purchase

can be adopted.

i) Consignment purchase from underprivileged artisans/suppliers

ii) By hand collection of sealed offers through limited tender enquiry.


28

iii) By committee purchase through spot limited tender enquiry. The committee will have

at least two members of respective divisions Finance Manager and procurement head.

iv) If the item(s) is (are) proprietary or standardized or from single source, quotation may

be through E-mail/postal enquiry.

v) Through limited tender enquiry.

3.1.7 Import Substitution And De-Proprietarisation:

For import substitution and de-proprietarisation, single/limited tendering mode will be adopted

and orders can be placed on more than one party on trial basis at different rates after negotiation

and with the approval of the competent authority till one or more parties successfully develops

the item(s).However ,the landed unit rates of trial order should normally not be more than that of

the proprietary supplier. In case one party develops, the items(s)( and his offer is technically and

commercially acceptable, the party’s product will be treated as acceptable substitute until other

parties are developed. Once more than one party is developed, purchases shall be made through

limited tendering process by floating tenders to the developed supplier as well as to the

proprietary supplier.

3.1.8 Mode Of Tendering & Short Listing Of Suppliers/Vendors:

At the time of submitting indents/proposals for administrative approval, mode of tendering &

bidders list shall be proposed for approval of competent authority as per DOP.

Short-listing of vendors will be jointly done by the concerned indenting officer ( may be the

branch sales heads) & procurement heads of both the divisions, with number of parties in words

duly signed by the concerned officials, in the office of Managing Director before the indent is


29

submitted to the screening committee for approval. While short-listing the vendors, concerned

officers will consider the following:

I) Producing capability for the items required

II) Dealership status in case of the contractor or the dealer.

III) Financial capacity to execute the order.

IV) Past performance in case of old vendor & credentials in case of the new vendor.

V) Black-listing/suspension/banning orders of Utkalika(OSCHC) other companies and

government

VI) Is the vendor had previously adhered to the deadline of delivery.

VII) Equitable distribution among all registered capable vendors.

VIII) Availability of alternative sources/substitutes in case of single tender.

3.2 E-Procurement :

E-procurement and E-sourcing refers to the use of electronic capabilities to conduct

activities and processes relating to procurement and sourcing.

3.2.1 Utkalika(OSCHC) procures no of handicrafts & handloom items which are generally sold

through E-Commerce platform. The software solution partner of the company provides

various analytical tools via SAAS to the company to procure items through the E-channel

like RFI/RFQ/RFP management, online negotiation tools, collaboration tools etc. which

helps the company in many aspects like reducing paper-works, reducing the sourcing

time, lower cycle time, and improved communications.


30

The no. of suppliers who are registered in this portal is very less as of now but is

expected to grow in the near future. At the time of online payment to the suppliers via a

confirmation mail the forms of registration regarding the E-procurement are sent to the

existing suppliers. After registration these suppliers are selected for the E-commerce

business of Utkalika(OSCHC) through various E-commerce websites. When E-

commerce orders come through various portals then these suppliers are notified via auto-

generated mail, the supplier who provides the item early in the race with regulated price

is selected for the race rather than tendering process. In E-Procurement

3.3 Consignment Purchase:

This kind of purchase is generally for the category 3 suppliers, underprivileged

artisans/weavers. Both handloom & handicraft items are purchased from the above

mentioned suppliers on a consignment basis. Special tribes’ artisans/weavers are taken

care of in this kind of procurement. Special discounts are given to these special tribe

artisans/weavers.

3.4 SIS Purchase

SIS stands for shop-in-shop. In this method of purchase the supplier who cannot own a

shop to sell his/her goods due to financial problems or some artisans/weavers who wants

to showcase their new products to the customers but does not find requisite amount of

finance to own a shop are invited to sell their products in the premises of the various sales

branches itself where they are given a special area in the branch premises to sell their

product. For this kind of purchase they have to first register with the company proving the

stipulated amount decided by the company itself. After registration & payment by the

interested & needy suppliers, the company chooses various suitable suppliers from the list

of suppliers to provide them the SIS facility. For any SIS sale the suppliers have to give a

certain percentage of earnings to the company.


31

3.5 Types of Suppliers

Utkalika (OSCHC) categorizes its various suppliers on the basis of their annual income,

amount of goods sold in a year, size of the firm etc.

There are generally 3 category of suppliers which are listed below:

Category Annual Income Peoples In The Firm

1 >Rs10,00,000 >50 or 30-50

2 Rs2,00,000-Rs 5,00,000 10-30

3 <2,00,000 <10


32

Chapter 4

Tendering Procedure

4.0 Bid System

Single part bidding or two part bidding system can be adopted for limited tendering. Single

part bidding shall be done for limited tenders when procuring items, whose technical and

commercial conditions are well defined and known to the bidders. If technical &

commercial; conditions are such that specific confirmations are required from the bidders

two part bidding shall be allowed. There cannot be standard bid formats for two part tenders

since terms and conditions will vary from case to case. Hence Techno-commercial bid

formats are to be prepared separately for each case.

The objectives of the two part bidding are as follows:

I) To select only techno-commercially acceptable bidders.

II) To ensure that the price does not influence ordering decision at the cost of quality. In

two part bidding, the tenderers are to be advised to submit two separate sealed covers

i.e. techno-commercial bid and price bid, duly super scribing the relevant bid title.

Both the covers arte to be kept inside one cover which shall also to be sealed and

submitted on or before the date and time fixed for opening the tender.

4.1 Tender fees:

A tender fee to be fixed on case to case basis but not exceeding Rs 500/-(rupees five hundred)

only inclusive of taxes. The tender fee specified will not be applicable to the category 3suppliers

or the agencies which have government of Odisha undertakings and others for which specific

exemption has been granted by Utkalika(OSCHC).The tender fee is to be deposited through

demand draft/pay orders/online payment in favour of Utkalika(OSCHC).


33

4.2 Earnest Money Deposit:

Bidders may be asked to deposit Earnest money as per the slab given below:

Sl. No.

Estimated Value Work

EMD Amount(Rs.)

1 Upto Rs 20,000 Rs 200.00

2 Rs 20,000-40,000 Rs 400.00

3 Rs 40,000-60,000 Rs 600.00

4 Rs 60,000-80,000 Rs 800.00

5 Rs 80,000-1,00,000 Rs 1,000.00

6 Rs 1,00,000-1,20,000 Rs `1,200.00

7 Rs 1,20,000-1,50,000 Rs 1,500.00

8 Rs 1,50,000-2,00,000 Rs 2,000.00

9 Rs 2,00,000-2,50,000 Rs 2,500.00

10 Rs 2,50,000-5,00,000 Rs 5,000.00

11 Rs 5,00,000-10,00,000 Rs 10,000.00

12 Above Rs 10,00,000 Rs 12,000.00


34

The category 3 suppliers, government agencies, SSI govt. units and other firms who have been

granted specific exemption by Utkalika(OSCHC) are exempted to pay the EMD. In all other cases i.e.

for both category 1 & category2 suppliers EMD is mandatory & which shall not be asked to the

bidding firms before bid submission. However in some specific cases EMD can also be asked .with

the approval of the authority. The EMD may be submitted either in the form of Demand draft/Pay

Order/Online Payment in favour of Utkalika(OSCHC).The EMD will be returned to all the

unsuccessful bidders immediately after finalization of the order and its acceptance by the successful

bidder. The EMD of the successful bidder will be returned after they accept the order and submit

security deposit or contract cum performance bank guarantee, as the case may be. If the successful

bidder accepts the order but fails to submit the security deposit the EMD will be forfeited.

4.3.1 Security deposit:

In specific cases, security deposit may be asked with approval of competent authority. In those cases

interest free security deposit of 5% of the contract value is to be submitted by the successful bidder

either in the form of demand draft/Pay order in favour of Utkalika(OSCHC)which shall be valid for a

period of 6 months including claim period of 3 moths beyond the committed delivery period towards

fulfilment of obligations in the purchase order. Security deposit shall be returned to the supplier after

successful execution of the order subject to recovery of claim, if any.

4.3.2 Contract-Cum-Performance Bank Guarantee:

Wherever considered necessary the supplier will be asked to submit a composite contract-cum-

performance bank guarantee for 10% of the contract value as per Utkalika(OSCHC)‘s format, which

will led towards successful execution of the contract and order delivery. The bank guarantee shall

remain valid till expiry of the guarantee period excluding the claim period of three months. In all such

cases security deposit requirement shall not be applicable.


35

4.3.3 Subject to any deduction which Utkalika(OSCHC) is authorized to make contract-cum-

performance bank guarantee shall be released after satisfactory execution of the contract. On the

breach of the contract by the supplier, contract cum performance bank guarantee shall be forfeited

whether or not the company has suffered a loss on this account and purchase order will be rescinded.

Forfeiture of contract cum performance bank guarantee does not prejudice Utkalika(OSCHC)’s rights

top make risk purchase and recover damages on account of such risk purchases. However credit may

be given for the contract cum performance bank guarantee forfeited in appropriate cases.

4.4 Classification Of Tenders:

4.4.1 Regular Tenders:

Tenders received on or before due date and time of tender submission will be treated as regular

tenders.

4.4.2 Delayed Tenders:

Delayed tenders are those tenders which have been posted before due date and time submission of the

tender, but are received after the due date and time of submission of the tender. In such cases, the

cover shall be initialed by the official opening the tender and kept with other tenders. Such tenders

may be considered with approval of the competent authority if the number of regular tenders are less

than required number provided the date of posting is prior to opening of tenders and clearly

identifiable from the postal stamping of the cover However, if the authority feels that number of

regular tenders received are not adequate considering the nature of the item or circumstances of the

case, he may approve opening of delayed tenders giving the reasons for doing so.


36

4.4.3 Late Tender:

Late tenders are those tenders which have been actually posted or delivered and received after the due

date of tender submission. Such tenders shall not be considered.

4.4.4 Unsolicited Tenders/Offers:

Following Tenders/offers are called unsolicited Tenders/offers.

I) Tenders /offers received from parties to whom tender papers were not issued/sold.

II) In other cases, tenders/offers received from parties to whom enquiry has not been sent, except

those to whom the enquiry has been forwarded by the addressee to quote on their behalf.

III) Suo moto revised tenders/offers submitted by bidders after opening of bids. This applies to

both techno-commercial and price bids in case of two part bidding.

IV) Un-called for tenders/offers submitted by bidders after negotiation.

Such tenders shall not be considered.

4.5 Dispatch & Receipt Of Tenders:

While tender enquiries can be sent through Post/E-mail/SMS, the acceptable mode of receipt is

through post or deposit in the prescribed tender box only except where enquiry has been issued to a


37

single supplier in which E-mail mode is also acceptable. Tenders Issued and received are to be

entered in the tender register chronologically specifying the date and time of the receipt.

4.6 Opening Of Tender:

As far as possible the tenders are to be opened on the due date and time specified. If the tenders are

not opened on the due date and time specified, specific approval of the competent authority is to be

taken furnishing reasons for extending the date of opening. In case of two-part tendering the techno-

commercial bid will be opened first and after Techno-commercial evaluation the price bids of only

acceptable bidders will be opened. Price bids of single part tender and techno commercial bids of two

part tender will be opened without financial concurrence and approval provided number of bids is

equivalent to number of enquiries sent or not less than required. However price bids of two part

tender will be opened after approval of the competent authority. In two part tenders if any tender(s)

is(are) received in composite form, the same shall be re-sealed by representatives of both procurement

departments and finance department immediately after opening. Such bidders will be asked to submit

separate sealed Techno-commercial bids, without any altercation/modification to the techno-

commercial conditions, for evaluation. All the tenders received shall be serially-numbered and signed

in all pages by the authorities of both financial and procurement department. Any over-writing or

corrections on the tender shall be encircled and initiated by both the persons with date.


38

Chapter-5

Evaluation Of Tender

5.0 Single Part Tender:

Technical evaluation will be done by the indenter & commercial evaluation will be done by the

company’s procurement department. In case of single part tender involving more than one

supplier/vendor, no technical/commercial deviation which may have price impact shall be allowed. In

the event of any bidder taking such deviation, their offer shall be liable for rejection. the evaluation

should be done based on conditions given in the tender without asking for clarification which may

have price impact.

5.1 Two Part Tender:

Techno-commercial evaluation shall be done by the authorized committee as per delegation of

powers. A separate technical committee may be constituted by the M.D..Of the company for

technical evaluation wherever necessary.

During evaluation, if any technical or commercial clarifications are required the same shall be

obtained through correspondence or discussions with tenderers. The proposals for acceptance of

techno commercial bids, shall be prepared by the committee appointed by the M.D. and approved by

the authority before opening of bidding. Price bids of only techno-commercially acceptable parties

will be opened.

Where no committee is required as per DOP, the indenter i.e. the various branch managers will

scrutinize technical aspects and based on technical recommendation, Finance department will


39

examine the commercial aspects, obtain clarifications, if required and process the case for approval of

the authority for opening the price bids.

5.2 After opening of the price bids a comparative statement with pre-fixed technical/financial

loading if any will be prepared by the pro0curement department and checked by the financial

department. The person preparing/checking the comparative statement shall sign on the comparative

statement as token of their having prepared/checked the comparative statement.

5.3 Revised Price Bids:

Revised price bids are acceptable in following situations only in two-part tenders and that too before

opening of the priced bids.

i) Validity of the offer has expired.

ii) Revision in price by the bidder to withdraw deviation to conditions during techno-commercial

discussions.

iii) Post Tender change in specifications/terms and conditions has been asked for during the

validity period. However in case of minor changes sought in specifications, only

corresponding price implications will be allowed.

iv) Revised Price bids can also be called in sealed bids from all technically and commercially

acceptable bidders, as the case may be, when there is perceptible downward trend in market

condition during process of evaluation subject to financial concurrence and approval of

competent authority.


40

CHAPTER-6

Negotiation

6.0 Negotiation shall be exception rather than rule & shall be resorted to if anyone or

combination of the following situations exist; and subject to guidelines issued by the company

from time to time.

i) Lowest price or price quoted by the single bidder is unreasonably higher than the

last purchase price.

ii) Price quoted by the single bidder for the first time purchases is unreasonably higher

than the estimated price.

iii) Sudden change in government policies and market rates of the items during the

period of tender finalization.

iv) Terms and conditions quoted by the bidder are not as per the tender and better

terms can be negotiated.

v) When more than one source is required.

vi) The bidders are suspected to have formed ring & quoted unreasonable rates.

6.1 When one source is adequate, negotiation will be held with the L1 bidder only

6.2 When more than one source is required or the lowest bidder has not offered for the full

tender quantity, negotiation will be held first with L1 bidder to freeze the acceptable L1

price. The frozen L1 price is then to be offered to all the technically acceptable bidders in

order of their position till the entire quantity is covered. After considering at least 10% higher


41

quantity for the l1 bidder provided he has offered for such quantity and is considered

acceptable, the remaining quantity will be distributed among bidders (who have matched L1

price) in order of bid status till the required numbers of sources/quantities are met. If required

number of sources/quantities could not be met even with above and uncovered quantity can

not be kept in abeyance till the next tender. Then negotiation will be held with the lowest

bidder who have not matched the L1 price to bring down the price to the extent possible and

order can be placed on them at that differential negotiated price with due approval of the

competent authority.

6.3 As per policy of the company, in a tender where category 2 & 3 suppliers are participating,

they are otherwise acceptable and none of them is the lowest bidder,25% quantity may be

offered to them at L1 rates. However, this percentage can be altered by the competent

authority depending on the performance, need & market conditions.

6.4 The negotiation shall be held by the designated committee as appointed by the MD,

Utkalika(OSCHC).

6.5 After negotiation, the proposal shall be submitted by the committee for financial

concurrence/approval of the competent authority.


42

Chapter-7

Cancellation of Tender

7.0 Tenders may be cancelled under the following circumstances

i)Where there has been change in the indent specifications.

ii)When the items required are present in stock after physical inventory verification.

iii)Where tender received for the required items do not fulfil the required specifications

laid down in the Tender notice even after techno-commercial clarification.

iv)Where the prices quoted appears to be unreasonably high or ring prices seem to have

been quoted and there is a possibility of getting lower rates.

v)Where there is sudden slump in the price of the items in question after opening of

tenders.

vi)The requirement ceases to exist.

vii)Any other reason in interest of the company.

7.1 Reasons for cancellation of tender shall be recorded and approval to be taken from the

competent authority i.e. the Managing Director with concurrence of finance.


43

CHAPTER -8

Ordering

8.0 Placement Of Purchase Order :

After the indent verification the purchase orders are placed. Purchase order shall be placed

strictly in accordance within the validity period.

Purchase orders are created for various products which are to be bought by the company in

respective quarters. In order to create a valid contract, reference of relevant documents and

correspondence shall be embodied on Purchase order and the Order shall be signed “For and

on behalf of the company” by the procurement officer. The purchase order is generated in

standardized computer format mentioning the items which are required & how many are to

be purchased at what price as per the tender prices. the purchase order shall be sent in

duplicate to the selected supplier and the selected supplier shall be advised to send the

duplicate copy duly signed as the token of acceptance by online sources or offline sources

like post, courier etc which should reach the head office of the company in maximum 7-8

days. But for underprivileged artisans/weavers/suppliers who have been given purchase order

based on their capacity only will have a maximum of 10-12 days to send their letter of

acceptance, falling which the order will be deemed to have been accepted by him/them.

Copies of purchase orders shall be sent to the finance, stores and other departments.

Pre-printed purchase order form as per format given in this manual shall be used for all

handloom/handicrafts items purchases. Special terms and conditions wherever required shall

be incorporated in the purchase order. Similarly if any of the printed terms and conditions are

not applicable, the same shall be deleted. Purchase order forms for specific rare items which

are decided to be bought by the company for various quarters shall be drafted on case basis

as per requirement. All the conditions/printed terms shall form part of all copies of purchase

orders.


44

8.1 Amendment To Purchase Order:

Amendment to purchase orders can be issued if acceptable to both the parties. All

amendments involving financial implication shall have to be concurred by Finance and

approved by the competent authority.

8.2 Delivery & Maintenance Of Record At Store

Delivery of items is made by the supplier in various ways like courier, coming to the office

with the products, freight etc. After receipt of products at store, proper stickering will be

made with code No. of items. Issue to concerned branches after adding prevailing mark-up

challan. Stock entered in to stock register items, code wise and deduct as per challan.

8.2.1 Coding Process

IN 16 E 001 SS019

New Year Month Supply Craft code with item code

8.2 Delivery Extension:

The date of delivery is always specified along with the purchase order. The supplier is

expected to deliver the item within the stipulated. If the reason of delay is not attributable to the

supplier and the company has not suffered any loss, delivery extension without liquidated damage

or price reduction schedule, as the case may be, may be granted with the approval of the competent

authority without financial concurrence. In other cases, delivery extension shall be granted with or

without LD/PRS, full or part, with financial concurrence & approval of competent authority.


45

CHAPTER – 9

Registration Of Suppliers

9.1 In order to have dependable sources of supply of required items of right quality at the

appropriate time, suppliers will be registered after ascertaining certain basic facilities

available with them. Performance of such registered suppliers shall be reviewed from

time to time.

The list of registered suppliers shall be kept up to date by the company by including any

additions in the list or removing or blacklisting names of such suppliers whose

performance & items delivery are not found up to the mark. Company will maintain the

following two lists:

a) Supplier’s priority list indicating the items.

b) Items list indicating the name (s) of suppliers.

Company will circulate the up to date list of registered suppliers together with the list of

items for which they are registered to all the sales branches for their information and

guidance. This list is to be circulated no of times in a year.

The names of suppliers added/deleted to/from lists should be circulated to all the sales

branches as and when they take place.


46

9.1.1 Registration Of Suppliers For Items

i) For both handloom & handicraft items suppliers are registered through their

respective departments, full details of valid approval shall be noted against each

supplier.

ii) Both handloom & handicraft products have various sizes and various dimensions. A single

type of product can have no of different sizes & dimensions. In this case company decides to

have more than one supplier for the same item and floats online & offline registration forms

for various suppliers.

iii) After registering themselves through either online or offline portal company checks for

their requisite credentials and intimates them about the meeting with the selection team

mentioning date, address and type of product to carry with themselves.

iv) After the selection committee’s verification of the credentials the supplier(s) is (are)

selected and enrolled in the list.

9.2 Constitution Of Selection Team

A Selection Team exclusively for the purpose of registration of vendors/suppliers shall

be constituted by Utkalika(OSCHC). The Team shall consist of the following members:

a) Head of Purchase Department/Department of Handlooms.


47

b) Head of Purchase Department/Department of Handicrafts.

c) Manager of Finance Department.

d) Quality control Manager

The above Committee be formed with the approval of the Managing Director,

Utkalika(OSCHC), as the case may be.

The terms of reference of the selection team will be as follows:

The Team will check the products of the certain supplier when he/she/it comes with

his/her/its products to the premises of company if necessary, and obtain and ascertain

the following:

i) Bank reference : If necessary, confidential report will be obtained from the

Bankers concerned regarding the financial standing of the suppliers, as well as

the limits upto which they can be entrusted with order. Balance Sheet and

Income Statements may be verified also. The financial standing should be

based on the average 50% turnover of the similar item on preceding three

years.

ii) Capacity Verification : Report may be submitted after inspection of the firm’s

factory/workshop/go-down, if necessary, in order to ascertain their capability and

capacity as manufacturers/stockists, mentioning the details of the workshop


48

facilities, testing and quality control facilities, covered and uncovered space of

workshop, etc. and giving clear opinion whether they have the ability to

manufacture of the items as per specifications or not and their annual

manufacturing capacity and the annual turn over. To satisfy about the ownership

of factory/workshop/godown, etc. of the applicant firm, Rent Receipt, Electricity

Bill and Corporation/Municipality Certificate, etc. should also be verified.

iii) Tax Clearance Certificate: The firms will be asked to furnish Permanent

Income Tax Account No. They should also submit Sales Tax Registration

Certificate.

iv) Documents: All documents as required in the application form such as proof of

ownership certificate, memorandum and articles of association in the case of

Limited Companies, as the case may be, will be obtained from the firms for

record.

v) Technical assessment: This should be based on technical literature provided

by the firm and also on inspecting their office & workshop premises to get

satisfied in regard to technical competency of the firm for manufacture of

various items as detailed by them in the technical literature.

9.3 Procedure For Registration

9.3.1 (a) Indigenous manufacturers who own factory/workshop of their own and are, in the

opinion of the inspecting officers, capable of producing materials of the required

standard shall be registered. Inspecting team will be formed as per clause above.


49

(b) Sole Agent/Distributors in the case of imported stores and stockists in case there

are no agents/distributors in the locality for any particular type or class of items

shall also be registered. Their premises shall be inspected by the team before

registration.

(c) For Indigenous Items, where the manufacturers do not directly market their

products, Distributors, Authorized Dealers or Sole Agents can be considered

for registration under special circumstances.

For (b) & (c), a certificate from the original manufacturer should be obtained

to get satisfied about the bona-fide of such Distributors/Agents etc.

(d) SSI units registered with the Director of Industries of State Government will

also have to apply for registration and registration will be considered if they are

found capable of producing materials of the required standard on inspection of

their factory/works.

(e) There are also suppliers whose annual income is very less & they produce

items in few numbers but as per the government policy they have to be

registered under category 3 suppliers. Most of their items are purchased on the

basis of consignment.

(f) No security money will be charged for registration of the suppliers who are

registered under category 3.

(g) SSI Units registered with the Directorate of Industries of State Government

located in the State where there are workshops of the Company shall be

exempted from depositing security money.

9.3.2 Application from the supplier shall be received in the prescribed form to be obtained by

them on payment of Rs.100/- per set from the head office or sales branches in Odisha.


50

The payment of Rs.100/- shall be made in the form of Crossed Demand Draft/Postal

Order/Cash Payment/online payment and/or as may be decided by the company from

time to time.

This application may be submitted by the suppliers against an advertisement issued by

for development of new sources of supply. On receipt of the application in the Purchase

Department the registration section will scrutinize all the particulars given therein. If the

replies given to various questions indicate that the firm is not suitable for registration,

there will be no necessity for undertaking inspection of its premises or works and the

registration will be refused straightway. This registration exercise may be done

intermittently throughout the year.

9.3.3 (i) On receipt of all reports, each case will be examined in the registration section and

decided on its merits. Approval of the competent authority will be obtained for the

registration or refusal of registration to the firm.

(ii) Verification Of Documents:

All documents like SSI registration certificates, License, Government undertaking

approval etc. must be self-attested by the firm during submission. The concerned

officer will verify them with the original before registration is granted. Name of the

Officer who will verify such document should be indicated.

The registered firms will have to keep a standing deposit of Rs.5,000/- with

Utkalika(OSCHC) as the case may be in the form of Cash/Bank Draft. Keeping in

view the quantum of quarterly procurement, the amount of standing deposit may be

increased further.


51

9.3.4 Period Of Registration:

Initially, all firms shall be registered for a period of two years only and registration shall

be renewed for another one year till reports are received on their performance. After

that registration on expiry may be renewed for a period of THREE YEARS, if the

reports are satisfactory.

9.3.5 In the case of State Govt. Units/Government undertakings registration shall be granted

based on the information received in their applications. The registration shall be given

for a period of SEVEN YEARS and renewed thereafter for similar period.

9.4 Registered Firms must submit Income Tax Clearance Certificate every year, failing

which their registration will stand invalid.

9.5 Removal Of Firm From The List Of Approved Suppliers:

Performance Monitoring:

The performance of each registered firm shall be monitored on a continuous basis

throughout the year by the concerned Head of Technical Dept. who shall submit

quarterly reports to the Purchase Department four times a year at the end of every

quarter, who in turn will note it during finalization of orders as well as for continuous

monitoring.

9.6 Deregistration Of Firms:

Any firm may be deregistered and its name removed from the approved list if

considered necessary by the competent authority, without communicating any reason to

the concerned firm. The action may be taken for any of the following conditions.


52

(a) If the Techno-Commercial Performance of the firm is found to be consistently

unsatisfactory over a period of time against orders placed on them or, after

carrying out vendor rating, the firm has been classified into Group D for two

consecutive years. Whenever a firm is classified as D category on vendor

rating, it should be informed accordingly and also be warned of the

consequences of being classified into Group D for two consecutive years.

(b) If any firm fails to supply materials against a valid purchase order for any

reason whatsoever.

(c) If any firm continuously resorts to submission of ambiguous and misleading

offers and/or resorts to submission of post tender modifications to undermine

the process of decision making.

(d) If any firm adopts any unethical commercial practices repugnant to normal

business practices. Deregistration/removal from the approved list shall be

completed with the approval of the Head of Purchase dept. of OSCHC as the

case may be.

(ii) In the event of deregistration/removal from the approved list, the sales

branches of the company Utkalika(OSCHC) are to be informed.

(iii) No firm once deregistered/removed from approved list will be

reinstated without the approval of the Managing Director.


53

9.7 Vendor Rating :

Selection of vendors/sources with a consistent record of maintaining adequate standards

in respect of quality of products and reliability in supply is an important step in having a

flexible procurement system. Introduction of an objective assessment of Vendor

Performance is therefore, considered necessary towards achievement of this objectives.

Vendor performance may be evaluated on the following three major parameters:

1. Quality

2. Delivery

3. Price

In order to implement a Vendor Rating System, data has to be collected in regard to

performance with respect to various parameters, such as price, quality and delivery

against each order placed on different Vendors. This should necessarily involve the

active support of the user Department. The Vendor Rating System can be adopted only

after head office clarifies its merits.

9.7.1 Quality Performance :

It can be measured by the ratio of quantity of materials supplied as per specifications

against total quantity of supply. The quality performance index can be obtained by the

following rule :


54

Quality Performance Index (QPI)

={(𝑄𝑎+ 0.5 ∗ 𝑄𝑟) ∗ 100}

𝑄𝑠

Qa = Quantity accepted as per specifications

Qr = Quantity accepted after replacement

Qs = Quantity supplied

If any material/equipment has been accepted after

Rectification/repair/replacement weight-age should be taken as 50%, instead of 100%.

9.7.2 Delivery Performance

If the supply is delayed beyond contractual delivery period, the company may suffer loss

due to machine down time etc. Hence this aspect has to be given due consideration. The

delivery performance index will be obtained as per the following rule :


55

In case of completed supply

Delivery Performance Index (DPI)

= [(𝑄𝑎

𝑄𝑐) + (

𝑄𝑏

𝑄𝑐) ∗ (

𝑇𝑎

𝑇𝑐)] ∗ 100

Where

Qa = Quantity supplied in Time

Qc = Quantity Ordered

Qb = Quantity supplied beyond original delivery period

Tc = Original delivery period in days

Ta =No. of days taken to complete supply, including delayed supply.


56

In case of incomplete supply, after expiry of extended delivery period

Delivery Performance Index (DPI)

= [(𝑄𝑎

𝑄𝑐) + (

𝑄𝑏

𝑄𝑐) ∗ (

𝑇𝑎

𝑇𝑐) ∗ 0.5] ∗ 100

Ta = No. of days taken upto the last delivery dame

Here the index is given 50% weight-age as the delivery is not completed even after

extension of delivery period.

9.7.3 To judge the price performance of a vendor, price reliability is an important criterion.

The Price Performance Index may be obtained by the following rule :


57

Price Performance Index (PPI)

= [2 − (𝑄𝑝

𝑂𝑝)] ∗ 100

Qp = Quoted Price

Op = Ordered Price

If the PPI is less than Zero, the value will be taken as Zero. Thus the vendor who has

been awarded with the order at quoted rate will score the maximum index of 100 and

other vendors will score lower indices. Vendors quoting twice or more will score zero.

9.7.4 Composite Index :

Composite Index will be obtained by giving weight-age to the above three performance

parameters as below :

Quality

Performance

40%

Price Performance 40%

Delivery

Performance

20%

The Composite Index of Performance will be obtained by applying the following rule:

Composite Performance Index = (0.4xQPI + 0.4xPPI + 0.2xDPI)


58

9.8 Classification of Vendors :

From the above rules, it may be seen that a vendor may score a maximum of 1000

points as its Composite Performance Index (CPI). Based on the average CPI, calculated

over a period of at least one year for all orders placed on the particular vendor, the

vendors may be classified into four different groups:

GROUP

a) Vendors scoring an average CPI of 80-100 A

b) Vendors scoring an average CPI of 50-79 B

c) Vendors scoring an average CPI of 30-49 C

d) Vendors scoring an average CPI less than 30 D

9.8.1 Preference may be given to ‘A’ Group vendors, in distribution of order quantity,

when orders are placed. The actual quantum of preference will be decided by the

Tender Committee.

9.8.2 A vendor who is classified in ‘D’ Group for two consecutive years should either be de-

registered or removed from the approved list for sending limited tender enquiries. If

they participate in an advertised tender in 2 cover system, their prices bids should not be

opened. In all other cases, their offer should not be considered.

9.8.3 Vendor rating guidelines as approved by OSCHC should be followed for procurement of

all types of items of both handlooms and handicrafts


59

9.8.4 Notification of performance to vendors:

All registered/enlisted/regular vendors should be apprised of the methodology of vendor

rating. They should also be apprised of their Composite Performance Index every year

to encourage them to improve upon their rating.

9.8.5 Progressive Implementation:

In a organization like OSCHC obtaining accurate and documented information about

delivery, acceptance of products/items etc. from various units is a time consuming job.

An extensive data-base preferably in a computerized environment has to be developed

in a progressive way by the Purchase Department of the company to effectively

implement a vendor rating system detailed above.

However, for certain items a list of vendors may be drawn, who may be brought under

the vendor rating scheme at the first instance. The system may be extended to other items

of lesser criticality progressively thereafter.

For items, where performance can measure in number of days of working, a ranking

system based on number of hours of working of the products supplied by various

vendors in last one year may be developed. The performance details should be obtained

from the HOD of the concerned technical departments.

9.8.6 Interaction with the suppliers

Purchase department Executives will have discussions with the suppliers on technical

matters to mutually update each other’s knowledge on the latest developments/value

engineering efforts regarding their products.


60

9.9 Penal Action Against Suppliers:

9.9.1 Blacklisting of Business:

If the performance of any supplier is found to be unsatisfactory, or if the conduct of the

supplier(firm) is under suspicion, or in the event of any breach of the conditions as

stipulated in the general terms and conditions of the supply contract, committed by the

supplier or a partner of the supplier, the competent authority (MD of OSCHC as the

case may be) may consider whether such default on the part of the supplier,

consequence of breach or the allegations are of a serious nature and whether pending

full examination/ investigation, it would be advisable to continue business dealing with

the firm. If the competent authority decides that it would not be in the interest of the

Company to continue such business, pending full investigation/examination, it may

cease business dealings with the firm. The order of blacklisting should specify whether

all subsisting Contracts/Supplies are ceased for the time being or whether the order

relates to specific Contracts/Supplies. The order of blacklisting would operate for a

period of not more than six months unless withdrawn earlier.

The competent authority of OSCHC can suspend the entire business dealings covered

under the existing contract in whole or any part thereof any time by giving the supplier

notice in writing of such effect and the anticipated duration of such suspension, as per the

relevant clauses and sub-clauses of the general terms and conditions of supply of stores

of contract.

The concerned department of the company should ensure that the final

examination/investigation of the case is completed well within period of six months or

within the anticipated duration of blacklisting/suspension order notified to the supplier

firm whichever is earlier.

9.9.2 The order of blacklisting must be communicated to all the departments as well as the

sales branches of OSCHC as the case may be. Copy of the order of blacklisting relating

to any supplier must be forwarded to the various departments as may be necessary. The

purchase department on receipt of any such suspension/blacklisting order will ascertain


61

the performance of the firm where the firm is supplying stores under any other contract.

On examining the investigation report, OSCHC will decide whether the blacklisting

order issued by the company will stand for further period or not or even to suspend the

business dealings with the firm.

9.9.3 If it is felt necessary to impose suspension of business dealing with the firm,

Utkalika(OSCHC) with the approval of Managing Director will put forward a suspension

notice to the firm with copies to all sales branches.

9.9.4 During the period of blacklisting, the competent authority may review the order of

blacklisting on receipt of a representation from the firm, if any. If the competent

authority considers in the light of its review that the order may be revoked, it may do so.

Order revoking the blacklisting order should be communicated to the firm with copy to

all concerned.

9.9.5 However, if full investigation/examination is not completed within six months and the

competent authority considers that blacklisting order should continue beyond that

period, the firm may be issued a show cause notice by the competent authority giving

21 days time to furnish a written statement of defense. If the reply is not satisfactory,

the blacklisting period beyond six months may be extended till the full investigation is

completed. However, it must be ensured that the investigation/examination of the case

is not delayed indefinitely. Extension of blacklisting period beyond one year should

have the approval of the authority.

9.10 After full investigation of the matter is completed, OSCHC will take the following

actions

i) If the facts and evidences justify any penal action against the firm as detailed at

para 9.9.5, such action should be taken.

ii) Otherwise, the suspension order should be revoked forthwith, under intimation

to all concerned.

For further actions the relevant stipulations contained in the relevant clauses of the

General terms & conditions of the supply order/contract will prevail upon.


62

9.11) Banning Of Business:

Banning of business should be considered in the following cases:

i) If the Directors, Proprietors, Employees, Partners of any Representative of the firm

is/are found guilty of offences involving any security consideration including loyalty

to the State, in connection with business dealings with OSCHC.

ii) If the Director, Proprietor or Partner, Manager or any Representative of the firm is

convicted by a court of law for offences in relation to its business dealing with any

State Government/Central Government or any Public Sector Undertaking or any

private company.

iii) If there are strong reasons to believe that the Directors, Proprietors, Managers or any

Representative of the firm has/have been guilty of malpractices such as bribery,

corruption, fraud, substitution of tenders, interpolation, etc.

iv) Wilful suppression of facts or furnishing or wrong information or manipulated or

forged documents by the firm or using any other illegal/unfair means.

v) Drawing double payment or submitting invoice for double payment for the supply

of same materials or carrying out the same job/work.

vi) Supplying defective items and failure to replace the defective items even after

reasonable extension is given to the firm for rectification/replacement of the

defective materials or carrying out defective/poor quality job, not conforming to

specifications of the contract and failure to rectify it within the stipulated time.

vii) Failure to pay legitimate dues to OSCHC including dues arising out of Risk

Purchase and when OSCHC is satisfied that this is not due to any reasonable

dispute which would attract proceedings in arbitration or a Court of Law.


63

viii) Commission of economic offence like evasion of Excise Duty, VAT, Customs

Duty, or any other legitimate taxes, levies, duties, etc. imposed by the

Government or local authorities etc.

ix) Continued and repeated failure to meet contractual obligations.

x) Revision of price and terms of offers within the validity period of the tender on a

habitual basis, in order to undermine the decision making process.

xi) Canvassing and lobbying to get undue favour from the Company.

xii) Formation of price cartels with other suppliers/contractors with a view to

artificially hiking the prices.

xiii) Any other misdeed which may cause financial loss or commercial

disadvantage to the Company.

Approving Authority For Banning:

MD of OSCHC is the competent authority to order banning of business with a firm. For

banning of business with OSCHC approval is to be accorded by MD and all the other

sales branch heads or mangers.

9.13 Period Of Banning:

The period should be a minimum of one year and should be decided based on the

gravity of the offence and the quantum of loss suffered by OSCHC.


64

Copies of all orders of banning of business issued by OSCHC must be forwarded to

and all other sales branches of OSCHC for actions as may be considered necessary.

Procedure For Banning:

Any proposal of banning of business should be put up by the concerned executive of the

purchase Department to the Head of the Department along with all relevant documents.

The HOD, in turn, will have the case investigated, if necessary with the assistance of

various departments and submit the case with his recommendation to the competent

authority i.e. MD of OSCHC.

In case the competent authority decides that action against a firm is called for, it may

recommend issue of a notice to the firm asking it to show cause why it should not be

banned for a specified period in view of the allegations against it. Details of the

allegations/charges may be appended to the show cause notice and the firm should be

asked to submit within 21 days a written statement of defense. All the correspondence

with the firm may be made by registered post. The show cause notice should be sent by

the HOD of the purchase Department.

On receipt of a reply of the show cause notice or where no reply is received, the

HOD may put up a proposal for either –

i) Exonerating the firm if the statement of defense of the firm is found to be satisfactory

and the charges framed against the firm are not substantiated.


65

ii) Banning of business dealings with the firm for a specified period.

On receipt of the order of banning of business with any firm OSCHC head office will

consider whether the offence committed by the firm is serious enough to warrant banning

of business with the firm forever. For this purpose the contracts/supplies with other firms

will have to be examined by the co-operative Handicrafts society.. It is decided to resort

to banning of business of the firm with OSCHC, a fresh show cause notice will have to be

issued to the firm giving it reasonable time to reply to the notice. Thereafter, the usual

procedure for banning of business is to be followed and a final order is to be issued with

the approval of Chairman, of the co-operative society.

Any copy of the order of banning of business received must be put to MD,OSCHC

within period of 30 days indicating whether further action is to be taken on the same.

This time limit is to be observed strictly.

If the competent authority, after going through the proposal of the HOD of purchase

department, decides to ban business dealings with a firm, an order to that effect should

be issued to the firm. The order imposing banning on the business dealings with the

firm should specifically mention whether the ban would extend for longer periods

because it is decided to do so and also the period of banning in number of years.

Copies of the order of the competent authority banning business dealing with any firm

should be sent to all managers of the sales branches concerned and during the period of

banning, no business dealing can be entered into with the firm. As far as possible, the

existing on-going contracts may also be terminated after observing the formalities

regarding termination as stipulated in the contracts.

If after an order is issued banning business with a firm, the firm comes up with any

appeal or representation seeking withdrawal or any modification of the order, the matter

should be decided under the order of Managing Director Utkalika(OSCHC).


66

UTKALIKA

EMAIL:

TEL.NO:

MOB.NO:

FAX NO(if applicable)

Supplier Registration form

TICK THE BOX FOR WHICH KIND OF ITEMS YOU ARE APPLYING

HAND-LOOMS HANDICRAFTS

A.General:

1.Name of the Firm/Supplier/Artisan/Weaver:

2.Regd.Office and Address:

Telephone No:

Mobile No:

Email:

Fax No(if applicable):

3.Branch office & Address(if any):

Telephone No:

Mobile No:

Email:



67

4.Factory or Workshop Address(if any):

Telephone No:

Mobile No:

Email:


5.Name & Address of the Contact person:

Telephone No:

Mobile No:

Email:


6.Nature of the business(please tick mark)

Govt.Sector Private

Organization

Proprietorship Co-operative

society

Partnership Underprivileged

Artisan/Weaver

7. a)Status of company: Manufacturer/Mfgr’s Agent/Authorized Dealer/Stockist/Trader

If any other please specify

b)SSI or not: YES/NO

8. a)Items for which

Registration is sought:

b)List of items manufactured :

(Enclose product catalogue)


68

9. List of important Clients:

(attach the proofs)

10. Annual Turnover for past 3 years:

11. Capital Employed:

B. Technical & Quality

12. Manufacturing Facilities:

(Attach details of Equipments used,

Capacity, year of manufacture)

13. Are your products are certified : YES/NO

By any organization before

(ex-BIS std)

14. Do you have your own systems to: YES/NO

Check quality of your products

C. Commercial:

15: Your Banker’s Name & Address:

(attach solvency certificate)


69

16. Bank Account No:

17. IFSC Code

:

18. Have you been assed for income tax: YES/NO

19. CST/ST Registration No. and Date (if any):

20. Do you have any Sister Concerns: YES/NO

If Yes Then

i)Name:

ii)Address:

iii)Phone/E-mail/Mobile

iv)Range of Products


70

INDENT

INDG/IMPORT REVENUE/CAPITAL

INDENT NO MPR NO.

DATE DATE

DEPARTMENT HL HC MATERIALS REQD.

BY

INDENTOR NO.OF ITEMS

GEN/PROP/STAND NORMAL/EMERG.

JUSTIFICATION

RECOMMENDED

SUPPLIERS

REMARKS

Understanding The Procurement Process of Utkalika(OSCHC) & Preparing A Procurement Manual

71

ACTIVITY

ISSUE

OF

ENQUI

RY

OPENIN

G OF

TENDE

R

TECH.

EVALU

ATION

PROPO

SAL

CONC

URRE

NCE

APPRO

VAL

ORDE

R

DELIVE

RY

SCHEDULE

ACTUAL

CC QR YEAR ALLOCATED COMMITTED ESTIMATED

VALUE

BAL.VALUE

Indentor Procurement Head Screening Committee


72

Sl NO ITEM CODE &

DESCRIPTION

UOM QUANTITY Estimated

value

Last P.O.

Rate

Last P.O.

No.& Date


73

Sl No. Item

Code

UOM Stock

Qnty

Pending

Indent

Qnty.

Current Year

Consumption

2nd Year

Consumption

Last Receipt

Date

Indent

Qnty

Pending

P.O.

Qnty.

Pending

Mpr Qnty

Last Year

Consumption

3rd Year

Consumption

Last Issue

Date


74

TENDER APPROVAL FORM FOR MODE OF TENDERING & BIDDERS LIST

1.Description of the item of bid:

(specify the item code)

2.Division:(tick the appropriate box)

Hand-looms Handicrafts

3.Indent No.& Date:

4.Indent value: Rs

5.Indentor:

6.Type of Indent:(Tick the appropriate box)

Normal Emergency

7.Mode of Tendering:(Tick the appropriate box)

Proprietary

Standardised

Single Tender

Limited Tender


75

8.Bidders list:

Indenting Officer Procurement head Finance manager

Managing Director


76

PURCHASE ENQUIRY

UTKALIKA

E-Mail:

Tel.No: Mobile No-

To Please send your sealed

quotation in duplicate as per

terms and conditions overleaf

for the following items.

Enq.No.

Date:

Due on:

DELIVERY REQUIRED

BY________________

Sl.No. Item Code &

Description

Unit Quantity

For & on behalf of

Odisha State Co-operative Handicrafts Corporation


77

Standard Terms And Conditions Of Enquiry

1. Bidders are requested to quote their best prices considering the fact that price negotiation, if

required, may be held with the lowest tenderer only.

2. Unless otherwise specified all prices quoted must remain firm except for statutory variation in

taxes during contractual delivery period. Any increase in taxes after expiry of the delivery

period will be to supplier’s account. Price variation clauses if any should be clearly quantified

without any ambiguity with ceiling limits.

3. Quotations should be typewritten through specific computerized format and any correction or

over-writing should be initialed. Rates to be indicated both in words and figures.

4. In techno-commercial bids, the bidders should furnish a list of its suppliers chain and a

declaration that such suppliers under the bidder have no interest in any other bidders in respect

of the same tender.

5. No part of the contract nor any share or interest therein shall, in any manner or degree, be

transferred, assigned or sub-let by the seller directly or indirectly to any person, firm or

corporation whatsoever without the consent of in writing.

6. Samples if forwarded shall become property of the buyer i.e. Utkalika(OSCHC).

7. Sealed quotations in envelope super scribing tender enquiry no. and due date of opening must

be sent by registered or speed post or to be dropped in the tender box specified for the purpose.

Quotations received after specified date & time are liable to be rejected.

8. Quotation should be valid for a minimum period which is decided by the authority from the

date of opening of the tender.

9. Complete technical specifications should be sent with tender documents. Offers without

adequate technical specifications/information shall liable to be rejected.

10. Printed conditions on the back side of the offers will be ignored.

11. Unless otherwise agreed, payment shall be made by every 10 th of the succeeding month after

receipt & acceptance. For negotiation of documents through bank, bank charges will be borne

by the supplier.

12. If tenderer is unable to quote against the enquiry, regret letter must be sent. Failure to do so

repeatedly may result in deletion of tenderer’s name from the approved suppliers’ list.

13. If the supplier is giving state sales tax & central sales tax then he/she must provide

VAT number.

14. Unless otherwise specified the items after delivery will be inspected by quality control officer

of OSCHC.It is a stage wise process which takes place after all the orders are received. After


78

inspection Govt.approved ratings are given to various suppliers.

15. Considering urgency and requirement of OSCHC,the delivery schedule should be quoted. For

delay in delivery which is attributable to the supplier, price will get reduced by @1% of the

order value for each week or part thereof; subject to maximum of 5% of undelivered portion.

This system is not applicable to the category 3 suppliers. OSCHC also reserves the right to

procure the items from alternate source3s at the risk and cost of the supplier ,giving 15 days

notice,if the supplier fails to execute the contract as per terms and conditions of the order.

16. OSCHC shall have the right to terminate the contract by giving prior notice without assigning

any reasons thereof. However, in the event of any breach of terms of the contact,OSCHC will

have the right to terminate the contract of the supplier.

17. After quality check if some items are found to be defective, then these items are sent back to the

category 1 & 2 suppliers but are not sent to category 3 suppliers. The defective unsent items are

sold in bulk through clearance sales. For the other two category suppliers money is deducted

after the process from the purchase order.

18. In specific cases wherever stipulated, the successful tenderer shall either deposit 5% of order

value as security deposit or give a bank guarantee for like amount towards security deposit in

OSCHC’s prescribed format from any bank in OSCHC’s approved list of bankers. Security

deposit will be deposited within the prescribed days from the P.O.

19. Item code number mentioned in the purchase order must be written on the item tag and be bar-

coded on the body of the items supplied by the bar-coding officer upon receival.

20. The supplier shall reach with the items on or before delivery deadline day or send a carriage

carrying the items with a representative(s).

21. The tenderer has to comply with the environmental policies of OSCHC.

22. FORCE MAJEURE: Any delay or failure to deliver the items as per the P.O or to perform the

contract by either party caused by acts of god or acts of Government or any direction or

restriction imposed by government of Odisha which may affect the contract or the public

enemies or contingencies like strikes, riots etc., shall not be considered as default for the

performance of the contract or give rise to any claim for damage. Within 7 days of occurrence

and cessation of the event(s),the other party shall be notified. Only those events of force

majeure which impedes the execution of the contract at the time of its occurrence shall be taken

into recognition.

23. In case of any dispute or difference arising out of the contract which cannot be resolved


79

mutually between OPSCHC and the supplier, it shall be referred to a sole arbitrator to be

appointed by the MD,OSCHC. The MD,OSCHC shall communicate/cause to communicate ,a

panel to supplier/OSCHC as the case may be in this regard within 30(thirty) days of notice of

arbitration by the supplier/OSCHC as the case may be, to select any one of them to be

appointed as the Arbitrator. In case Supplier/OSCHC as the case may be has not communicated

its selection as above within thirty days, MD,OSCHC will appoint any one of the persons from

the panel as a sole Arbitrator. The Arbitrator shall give a reasoned and speaking award. The

award of the Arbitrator shall be binding on both the parties. The venue of Arbitration shall be

Bhubaneswar.

The contract shall be governed by and constructed according to the laws in force in India and

subject to exclusive jurisdiction of the courts of Bhubaneswar only.


80

Comparative Statement OF QUOTATION

Indent No & Date______________________ Tender No. & date_____________________

No of Parties Contacted______________________________

Indentor_____________Date Of Opening_____________No.of offers received_________

Sl

No.

Itemcode

Sl No.

MPR

Descripti

on

Qty Un

it

1 2 3 4 5 6

Basi

c

lan

ded

Ba

sic

la

nd

ed

Ba

sic

la

nd

ed

Ba

sic

la

nd

ed

Ba

sic

lan

ded

B

a

s

i

c

la

n

d

e

d

Terms & conditions

1.Price Basis

2.Discount

3.P&F

4.Excise Duty(if any)

5.VAT

6.Freight

7.Payment terms

8.Period of delivery

9.Validity

10.Any other

Prepared BY Checked By Verified By


81

Purchase Proposal Abstract(PPA)

M/s________________________________________________________________________

NIT No._____________________Date________________SSI of Odisha :YES/NO

Sl.No. ITEM No. Description Bid Status Qty. Unit/rate Rs Total price Rs

Inspection:

Delivery Period : Excise Duty(if any):

Price Basis: F.I Total:Rs

P&F: VAT:

Freight: F.I(Net):Rs

Insurance:

Payment:

Prepared Checked Checked

(Purchase) (Finance)


82

E-mail:

Tel No: Mobile No:

To: Order No. & Date:

Your Offer No. & Date:

VAT:

VAT Regd.No:

Dear Sir,

Please supply the items mentioned in the annexure(s) and send the duplicate copy of Purchase Order duly

signed as token of your acceptance. In case of delay in delivery,bill amount shall be reduced by 5% otherwise

payment will not be made.

Total no.of items as per annexure(s) BASIC TO VALUE

Total discount Total Ex.Duty(if any) Pkg.& Fwding. VAT(%)

TAX Other Taxes & levies Handling/misc Spl.discount value Total

P.O.

PRICE BASIS PKG.& FWDING.

VAT EXCISE DUTY(IF ANY)

INSURANCE MODE OF DISPATCH

FREIGHT INSPECTION

PAYMENT TERMS DELIVERY PERIOD

Send bills for payment

For & on behalf of

Odisha State Co-operative Handicrafts Corporation

PURCHASE ORDER


83

ANNEXURE TO P.O. NO.:

Sl

No.

Item Code & Description Units Quantity Unit Rate(Rs) Total(Rs) Discount(%)


84

CHAPTER-11

Payment To The Suppliers

11.0 Payment Procedure

On receipt of bill from suppliers from the store keeper process the bill with proper

stock entry which are duly checked by the concerned assistant manager, submit file

to G.M(Mktg) or managing director for payment by every 10th of the succeeding

month. The bills are checked by accounts section for taking into respective credit

amount and process for payment. Payment is being made through online accounts

transfer basis. Incentive scheme is continuing for distance artisans to compensate

their transport cost to some extent as per distance upon the purchase total bill in

handicrafts. There is a scheduled for allowing such incentive. In case of handloom

2% on the total value is being deducted from the individual artisan’s bill to facilitate

society transaction.


85

7.0) Discussions:

The Procurement Manual was made to address the following gaps or defects in the existing

system.

1. In handicrafts sector the purchase order was prepared twice as the items are not coming as

per the specification mentioning as per the code No., for which clerical work is doubled and

P.O. will be prepared on spot

2. No competitive tendering process for the purchase order.

3. Suppliers are not adhering to the due dat.

4. Less introduction of new items.

5. In case of handloom P.O. indents are intermittent.

6.Supplier network for Handloom & Handicrafts are getting limited.

7. No technical and qualified person both in handloom & handicraft during quality checking.

8.No proper storing facilities for bulk orders and heavy items.

9. Lack of production base for many crafts.

10. Lack of improved transport avenues.

11. Lack of individual packing system.

12.New items are not being supplied by the artisans.

8.0) Recommendations:

As per the manual the following changes are needed for Utkalika.

1. Indent format should be changed.

2. Technical /Qualified/MCM/National Awardees to be retained by the Corporation for

quality checking.

3. Saleable/fast moving items to be purchases both Handlooms & Handicrafts without

waiting indent in advance.


86

4. Competitive tendering Process.

5. Disposal/clearance sale to be taken up every month or at the year end in both the

department respectively.

6. Flexible Mark up may be prepared as per the moving of the crafts.

7. Month wise movement of stocks at branch level should come from the branches.

8. A Procurement Committee consisting of a member from Accounts/Marketing

section/concerned store/Technical person will sit foir Finalization of purchase which

will be approved by managing Director.

9. Criteria to be fixed up of disqualification for supplier.

10. Procurement Network should be extended.

11. Deployment of more staffs at the store.

9.0) Conclusion:

From the project & the procurement manual above I have found that Utkalika’s

Procurement Process is not upto the scratch for competing in national level.Various

processes should be adopted to improve the procurement process.The manual

provided should provide a helping hand in streamlining the procurement process &

making guidelines for effective procurement


87

10.0) Bibiliography

1. www.utkalika.co.in

2. www.utkalika2cc.in

3. Purchase Manual NALCO 2004

4. Contract Manual NAlCO 2004

5. Managing supply chains-A Logistics Approach by JJ Coyle, CJ Langley Jr, RA Novack,

BJ Gibson

6 . Procurement Manual CIL 2010


88

11.0 Process Maps Using MS-VISIO

11.1 Procurement Function


89

11.2 Materials Planning


90

11.3 Bid System

Step3

Step2

Step1 Bid SYSTEM

Single Part Bid Two Part Bid

Techno-commercially Acceptable

Price Does Not Influence Ordering

Decision At The Cost Of Quality


91

11.4 Payment Process