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A

PROJECT REPORT

ON

STUDY OF PURCHASE PROCEDURE OF PATSONS METALLICS PVT.LTD.

MANUFACTURING COMPANY

SUBMITTTED BY

MR. MOHAN BIHARILALJI PANDEY

IN FULFILMENT OF MASTER OF BUSINESS ADMINISTRATION

GUIDE

PROF. SHIVANAND SANMATH

SUBMITTED TO

UNIVERSITY OF PUNE

THROUGH

ASM’s INSTITUTE OF INTERNATIONAL BUSINESS RESEARCH

PIMPRI, PUNE-411018

YEAR

2011-2013

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DECLARATION

I MR MOHAN PANDEY CERTIFIES THAT THE PROJECT WORK ENTITLED “PURCHASE PROCEDURE OF MANUFACTURING COMPANY.

IN AN ORIGINAL ONE AND HAS NOT BEEN SUBMITTED EARLIER TO THE UNIVERSITY OF PUNE OR TO ANY OTHER INSTITUTION FOR FULFILLMENT OF THE REQUIREMENT OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA)

DATE:

PLACE:

MOHAN PANDEY

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ACKNOWLEDGMENT

THIS IS THE GOLDEN OPPORTUNITY FOR THE MANAGEMENT STUDENTS DOING RESEARCH METHODOLOGY AND PROJECT WORK IN MANAGEMENT FIELD.

I WOULD LIKE TO EXPRESS MY GRATITUDE AND THANKS TO WARDS ASM’S IIBR COLLEGE FOR GIVING ME AN OPPORTUNITY TO UNDERTAKE THIS PROJECT UNDER THE GUIDANCE OF PROF SHIVANAND SAMNATH FOR HIS WHOLE HEARTED CO-OPERATION AND TIMELY GUIDENCE IN SUCCESSFUL COMPLETION OF THIS PROJECT .

I WOULD LIKE TO TAKE ALL THOSE WHO HAVE GIVEN ME VALUABLE SUGGESTIONS, SUPPORT AND INSTRUCTIONS IN MAKING THIS PROJECT SUCCESSFUL.

SPECIAL THANKS TO MR DEVDAR SIR (PURCHASE MANAGER AND NILESH SIR FINANCE MANAGER, PATSONS METALLICS PVT.LTD) FOR HIS GUIDENE AND SUPPORT.

LAST BUT NOT LEAST I WOULD LIKE TO THANK ALL MY FRIENDS AND ESPECIALLY MY FAMILY FOR HELPING ME IN THE COMPLETION OF THIS PROJECT.

THE COMMENTS AND OPINION SUGGESTING ANY FURTHER IMPROVEMENT IN THE PROJECT WILL BE HIGHLY APPRECIATED.

MOHAN PANDEY

MBA II (FINANCE)

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TABLE OF CONTENTS

Serial No Particulars Page No

1 EXECUTIVE SUMMARY 6

2 SCOPE AND NEEDS OF THE PROJECT 7

3 OBJECTIVE OF THE PROJECT 8

4 INTRODUCTION 9-13

5 ORGANIZATION PROFILE 14-30

6 RESEARCH METHODLOGY 31-33

7 PURCHASE PROCEDURE & RELATED TOPIC 34-43

8 FINANCIAL ANALYSIS 44-55

THEROTICAL OBSERVATION PRACTICAL OBSERVATION

9 DATA INTERPRETATION AND ANALYSIS PURCHASE PROCEDURE 56-73

10 CONCLUSION 74-75

11 FINDINGS 76-78

12 LIMITATIONS 79-80

13 RECOMMENDATION 81-83

14 BIBLOGRAPHY 84-85

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EXECUTIVE SUMMARY

The Company being established as PATSONS METALLICS PVT.LTD. (PMPL) Incorporated in 2011, PMPL is the flagship company of the PATSONS group. The company has a sizable presence in Domestics markets.

Today PMPL is an acknowledged leader in the manufacturing of Metallic’s product CI and SGI Castings, Valves and Specials and Fittings for Water Works.

. My Project is The Purchase Procedure of Manufacturing Company. The study was conducted at the head office of Patson Metallic’s Pvt.Ltd. (PMPL), LATUR

The project was of two months duration. During the project I interviewed the executives & staff to collect the data, & also made use of company records & annual reports. The data collected were then compiled, tabulated and analyzed. Purchase Procedure is the very important part in the manufacturing company. Management due to Investments in current assets represents a substantial portion of Total investment.

Some the points to be studied under this topic are:-

How to purchase of raw material at a right time.

What should be the firm’s purchase policy?

How to & when to pay the creditors of the firm?

How much to invest in Raw materials? By studying about the company’s different areas I came to know certain things like Financial Analysis is more than one but it does not mean that Company has excessive control.

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Scope and Need of Study:-

Purchase procedure is widely used in the entire organization. The scope of this is limited to the study of purchase procedure and different types of Assets of Patsons Ltd. The study of includes the comparisons of raw material requirements for the period of under review.

The study was conducted at “PATSON LTD.LATUR”. The duration of

the study was confined to about 60 days. In this duration of the study is based in the data collected and the financial for last 2 years financial year and role of purchase manager when finished the material in the company. So some points are included.

1) It covers study of records maintained by the purchase department of the (PMPL). 2) It includes examination of forms reports used by the factory. 3) It covers study of various techniques of purchase procedure applied in the PMPL

organization

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Objective of the project:-

1) To identify the financial strengths & weakness of the company.

2) Through the Purchase procedure and understand the profitability of the company. 3) Evaluating company s performance relating to financial Analysis. 4) To know the purchase procedure positions of the company with the help of purchase to the right

material in the company. 5) To find out the utility of financial position and observation to determining the financial capacity

of the firm. 6) To understand the concept of Purchase procedure of the Manufacturing company. 7) The Study of Purchase Procedure manufacturing company and the Patsons metallic’s it is a analyzing the nature of the market. The regulations and the governing factors of the Patsons group. 8) The project is on Purchase Procedure of company and the project is undertaken to study of the purchase procedure of manufacturing company. Adopted by Patsons Metallic’s Pvt.Ltd. (PMPL).

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INTRODUCTION

CONTENTS

History of PATSONS Group History of Manufacturing Company

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HISTORY OF PATSONS GROUP:-

The Patsons Group commenced operations in the year 1980 at Latur in Marathwada region of Maharashtra. The history is the story of human spirit and exceptional efforts to realize an appreciated dream of building a full- fledged industry starting from virtually nothing. The group was founded by Shri Annasaheb Patankar, young, dynamic and talented technologist coming from upright middle class family of freedom fighters. Annasaheb after completing his technical education could have easily opted for a prestigious government post, but instead, he decided to start a new business to help the economically backward farmers to get gainful and respectable employment opportunity. His dream was to build a strong technology based industrial unit to serve the interests of poor farmers and landless laborers to make available gainful employment, in the industry sector.

By complete hard work, total integrity, respect for the individual, keen business acumen, technical expertise, innovative approach and outstanding team building magic, there was no wonder that the sapling he planted, very soon became a striving industrial group. Later his worthy bright sons Kamlesh and Mangesh joined him in 1995 and in the short period of less than 15 years the father - sons team has made what Patsons Group is today. A grand shining success admired by one and all. A benchmark of excellence and business leadership.

PATSONS METAL UDYOG:-

Patsons Metal Udyog had its beginning in the form of a small C.I. foundry basically manufacturing CI castings for sister company Patsons Valves & Engineering Industries. The foundry was shifted to MIDC area Latur in the year 1985 and bigger size Cupola, Balancing Equipment and Comprehensive Test and Inspection Facility was added to make it a full size foundry unit for making CI Castings in the range of 1 Kg. to 1000 Kgs.

In the year 2007 the Patsons Group decided to expand and modernize the foundry business and enter the Automobile Casting area to meet the exacting and demanding need of the Automobile Castings business. This was done to meet the needs of fast expanding Automobile business in India.

With this in view Patson Metallic’s Pvt. Ltd. easy formed. The unit is now operational since March 2011. Patsons Metallic’s Pvt. Ltd is a modern state of the art 10,000 Tons per annum capacity Induction Furnace based foundry unit, having automatic sand plant of 100 Tons per day capacity, molding line, semi automatic pouring line, 500 Kg. capacity dual track induction furnace, efficient and high productive fettling facility, pattern shop and integrated test and inspection facility.

The plant is capable to produce C.I .and S.G.I. castings in the weight range of 1 Kg. to 1000 Kgs. The entire facility is housed in the first class construction factory buildings with total area of 3000 square meters. The manufacturing team includes highly experienced foundry professionals with vast experience in similar foundries.

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PATSONS GROUP OF INDUSTRIES:-

1980 :- GROUP FOUNDED

1985 :- START OF VALVE MANUFACTURE.

1995 :- PATSON VALVES PVT LTD & ENGG.INDUSTRIES.

1998 :- PATSON METAL UDYOG.

2002 :- BIS CERTIFICATION FOR VALVES.

2004 :- ISO 9001-2000 CERTIFICATION.

2005 :- FOUNDED ANKIT MARKETING.

2009 :- FOUNDED PATSON PRESERVED VEG.PVT.LTD

2010 :- FOUNDED PATSONS METALLICS PVT. LTD.

2010 :- PATSONS AGRO EXPORT PVT LTD.

PATSONS INVESTMENT HAS INVESTED THE RS IN A PLANTS:-

YEAR RS IN LAKHS

2007-2008 153

2008-2009 105

2009-2010 117

2010-2011 319

2011-2012 324

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About us

The US $ 2 Million Patsons Group is one of the India’s fast growing business groups. The group has business interests in diverse areas including Preserved Vegetables. CI and SGI Castings, Valves and Specials and Fittings for Water Works, Infrastructure Development and Higher Education.

Group companies include

FOOD PROCESSING PATSON PRESERVED VEGETABLES PRIVATE LIMITED PATSON AGRO EXPORT PRIVATE LIMITED CASTINGS PATSONS METALLICS PRIVATE LIMITED PATSONS METAL UDYOG VALVES & FITTINGS PATSONS VALVE & ENGINEERING INDUSTREIS PATSONS VALVES PROJECT & INFRASTRUCTURE NATIONAL COMMUNICATION NETWORK MARKETING ANKIT MARKETING SERVIC ES EDUCATIONAL VISHWABHARATI ACADEMY’S COLLEGE OF ENGINEERING

As a part of the major expansion and modernization program, the group has expanded the operations in India and also developed a global foot print.

Across the Patsons Group social responsibility sharing is a valued objective with keen and significant involvement in environment development and community enrichment activities.

Ably led by managing director Mr. Kamlesh Patankar Group emerges as a focused organization building on its strengths to enhance value for the stake holders.

Chairman and Chief Executive Officer

Kamlesh Patankar is CEO of Patsons Group Kamlesh began his education at the prestigious Shri Bankatlal English School at Latur. Imbibed a liberal secular education based on the ideas of equality and freedom. After graduating in Metallurgical Engineering from Pune University in 1992, he received valuable work experience at Cummins India, well known Multinational Corporation based in Pune. He joined the business founded by his father Shri Annasaheb Patankar in the year 1995. He learnt the intricacies of business operations under the watchful and encouraging

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guidance of his father. Very soon, he mastered the working of the business and by the age of 41 today, steered the group to commanding heights of glory and growth.

By virtue of his grand vision, insistence on quality, hard work, inspiring leadership and integrated approach, he led the group from success to success. Today, thanks to his contribution, Patsons Group has developed in to a multi product, multi division organization having a significant foot print in the International market for Preserved Food Products and domestic area Patsons Metallic’s pvt ltd.

His enterprising spirit, innovative ideas, friendly nature, democratic principles and positive, proactive approach coupled with people centric management style has won him a place in the hearts of his customers, employees, friends and associates. He is a great team builder and believes that what the organization today is the work of his employees and acknowledges this fact very candidly at every opportunity. His greatest ability and strength lies in his relentless insistence on continuous improvement, facing any difficulty with total courage and rational problem solving approach and working with ease and warmth with people who are senior in age, experience and knowledge. He is a keen observer with a phenomenal photographic memory and computer like recall. Many times it is acknowledged by his associates and employees that even before a problem is fully explained to him; he comes out with a perfect wonderful solution. Definitely, legendary sixth sense is active in his case.

Patsons Group Corporate Mission Statement:-

To be responsible and ethical corporate citizen while offering best quality products and services to our valued Indian and Overseas customers. To develop growth oriented cooperative democratic work culture for vendors, employees and associates. To share our social responsibility to achieve healthy growth coupled with stability and profitability

To achieve the above To become one of the fast growing transnational business groups To become a group that is recognized as the group that values quality, relations, performance,

integrity and innovative spirit. In our business we will Continuously seek opportunities for growth, to be a leader in the domestic market Establish a significant global presence. Use technology as the tool for growth. We will be recognized for our people centric ethos, excellent relations with business partners,

and pleasant work culture. We will be respected for being a good corporate citizen.

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ORGANISATION PROFILE

(PATSONS METALLICS PVT. LTD. (LATUR))

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Name of the organization : - Patsons Metallic’s Pvt.Ltd.

Address of the factory :- B-10/2, Addl. MIDC, Harangul,

District - Latur – 413531

Maharashtra, India

Tel & Fax : - 00-91-02382-220885 & 220886

E-mail :- patsonslatur@gmail.com

Web Site : - www.patsonslatur.in

Type of Organisation : - Manufactures of casting (CI &SG IRON)

Area of organization : - 7447 sq ft.

Manpower :- 100

Turnover (sales) :- 3.24 cr (above)

Share Capital : - 2000000 shares

Banker : - Bank of Maharashtra ( latur branch)

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Patsons Metallic’s Pvt. Ltd:-

History:-

PATSONS METALLICS PVT.LTD.:-.

The Patson Metallics Pvt. Ltd. it is a easy formed company. The unit is now operational since March 2011. Patsons Metallics Pvt. Ltd is a modern state of the art 10,000 Tons per annum capacity Induction Furnace based foundry unit, having automatic sand plant of 100 Tons per day capacity, molding line, semi automatic pouring line, 500 Kg. capacity dual track induction furnace, efficient and high productive fettling facility, pattern shop and integrated test and inspection facility.

The plant is capable to produce C.I .and S.G.I. castings in the weight range of 1 Kg. to 1000 Kgs. The entire facility is housed in the first class construction factory buildings with total area of 3000 square meters. The manufacturing team includes highly experienced foundry professionals with vast experience in similar foundries.

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COMPANY PROFILE:-

INTRODUCTION:-

The Patsons Metallics Pvt Ltd., promoted with advancement of technology, will be one of the India’s largest industrial groups, engaged primarily in manufacture of various CI & SG Grade Castings to meet the domestic and international markets. Adding on new ventures, expanding capacity and diversifying products, the unit total production of Castings will be around 5000 metric tons per annum.

Patsons Metallics Pvt Ltd. Are putting up a state of the Art Foundry to cater to the need of OEM’s and replenish market. We also strive to conduct continuous up gradation in line with latest technological development.

Location and Infrastructure:-

The unit is situated at Latur Addl MIDC Area, Latur District Latur just 2 Kms away from Latur Airport. All vital modes of communication namely, Telephone, Facsimile, E-Mail, Intranet, Satellite Communication etc., are easily accessible from the city of Latur. Other facilities like Banking, Transport etc.

Quality Assurance:-

The Quality is synonymous to products. In fact, we cast quality and confidence to its valued customers. The Quality Assurance Department with separate heads for each sphere of activity such as Chemical Analysis, Physical Testing, Visual and Dimensional Inspection, Non-destructive testing, Packing and Dispatch.

Exports:-

A wide range of items are likely to be exported regularly world-wide to USA, UK, Germany, Italy, Denmark, South Africa, Japan, Singapore and Middle East Countries.

Marketing Network:-

Marketing operations are to be carried out across the country, by a wide network of marketing offices, to cater the needs of domestic and upcountry market in major towns and cities of India.

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Manufacturing and Design Unit:

Patsons Metallics Pvt Ltd Is fully equipped manufacturing unit and design unit and has an appreciable production capacity. This unit is fully equipped with latest machines, equipments, and tools to manufacture our product range. Different machines are installed in our production unit which includes:

A) Medium Frequency Induction Melting Furnace. B) Sand Reclamation and preparation plant. C) Pneumatic Squeeze Jolting Pin Lift Moulding Machines. D) Pouring Ladles. E) Shot Blasting Machine. F) Compressor. G) EOT Crane. H) Workshop Machine. I) CNC Vertical Machining Center. J) Spectrometer. K) Physical Quality Testing Machines. L) Metallurgical Microscopes.

This unit is fully supported by an in-house design unit. It develops the designs for company products based on market as well as company customer’s requirements. After the finalization from our design unit, the product designs are used to produce the products.

The Patsons Metallic’s Pvt Ltd. offers full-service capability in casting design assistance for new products from concept through prototype and final production phases and company team of experts in metallurgy, production, pattern design and quality control assures quality castings. Computerized customer service and production scheduling provide current order status and prompt deliveries and focused on responsiveness to your needs through short cycle times, on-time deliveries and consistent quality.

500 KVA High Tension line installed with Express Feeder

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Quality Policy:-

This unit is fully supported by an in-house design unit. It develops the designs for our products based on market as well as our client’s requirements. We are committed to furnish only the quality products to our clients. We implement prescribed quality strategy in our organization. The strategy is fully in conformity with established cutting edge technology. It is implemented exhaustively through every stage of our products, production and delivery.

It is ISO 9001-2008 Certified Unit for manufacture and supply of castings, automotive parts.

Laboratory and Testing facilities:

Spectrometer –State Of the Art 26 Element Germen make Spectrometer.

Traceability:

The Quality Team supervises the Quality Assurance and Quality Control aspects along with the entire process system by identifying and associating with quality circles. We ensure 100% tractability for the products.

Occupational Health and Safety:

The organization committed to Occupational Health and Safety of the workers and shop floor staff ensure strict adherence to body protective wears and covers for moving parts. The workers are constantly educated upon the important of health and safety through displays and safety tips.

Environmental Protection:

As an environmentally responsible company, we comply with the environmental regulations advocated by the Government. As a result we have been provided with necessary Pollution Clearance Certificate.

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0

10

20

30

40

50

60

70

80

90

April May June July Aug Sep Oct Nov Dec Jan Feb

RS

MONTHS

Sales( in lakhs)

FINANCIAL GROWTH PATSONS METALLICS PVT.LTD.

COMPANY SALES, WHEN COMPANY STARTED:-

MONTHS APRIL MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB

RS IN LAKHS 45 48 50 52 60 65 50 65 80 85 88

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30%

20%

5%

15%

10%

20%

Manpower distrubution production finance marketing die maint M/C Maint logistics

Manpower distribution in the company:-

production finance marketing Die maint

M/C Maint

logistics

30% 20% 5% 15% 10% 20%

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Company ISO Certification:-

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Organizational chart. (Role and Responsibilities):-

M.D.

(Mr.Kamlesh Patankar)

Director

(Mr.Anil Kulkarni)

Manufactured Head Quality Sales Purchase Finance HR Development

(D.J.Bhagat) (R.K.Kulkarni) (shrikant) (Deodhar) (Gujar) (Lakade) (Kulkarni)

Produ.Incharge Maintenance ( store)

(R.K.Kulkarni) (D.R.Kulkarni) Quality sys.

(Melshetti) (Khatade)

(Chavan) (Gujar)

Mould+ Melt Core Fetling

Sand plant + (Randive) (Waghmare)

(Deshpande) Dispatch

(Navgire)

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COMPANY PRODUCT:- Bajaj Break Drum:-

The bajaj break drum it is manufacture product and this product manufactured patsons metallics, and this product used to bajaj motor cycle.

50 – Gate:-

50- gate it is a motor product means use to agriculture unit.

Standard: 1. Design and Manufacture: DIN, ANSI, BS, JIS etc. 2. Face to Face: DIN, ANSI, BS, JIS etc. 3. End Flange Dimensions: DIN, ANSI, BS, JIS etc. 4. Nominal Pressure: Class 125lb, 250lb, 1.0Mpa, 1.6Mpa 5. Pressure test : API 598 ISO5208

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150 – Gate:-

A) Comprehensive Service B) Model Number: Class 150

200 – Gate:-

Features: * Rust resistant * High performance * Rugged construction

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280 Motor Frame:-

Motor frame it is a mention that motor structure this motor structure used to all manufacturing company and this product make to this company. The process about this material firstly used to casting and infection about the material.

Standard Features

1. Output: 11 up to 280kW 2. Multivoltage – (220-240/380-415//440-460V or 380-415/660-690//440-460V) 3. Open Drip Proof (ODP) 4. EFF2 Improved Efficiency 5. Cast iron frames (160M up to 280S/M) 6. Mounting: B3R 7. Degree of Protection: IP23 8. Squirrel cage rotor/Aluminum die cast 9. Stainless steel nameplate AISI 316 10. Class F insulation 11. Continuous duty - S1 12. Ambient temperature: 40°C, 1000 m.a.s.l. 13. Regreasing system from frame 225 and above 14. Thermistors (1 per phase) 15. Metric thread cable entries in terminal box 16. Suitable for Inverter Duty applications* 17. Paint color: RAL 7022

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COMPANY VALUED CUSTOMERS:- Company supply castings to the valued customers in the automobile, machinery, machine tools, general engineering, and valves industry throughout the country.

Some of the company Major customers are

• Mayur Valves

• Indian Valves Company

• Alfa Hydrotech

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The Company Business relations for the following customers are under process:-

Mahindra Ashok Leyland

Eicher Premium Transmission

TACO Boston Gear

Thermax LHP

Rieter Cummins

Atlas Copco Piaggio

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HISTORY OF MANUFACTURING COMPANY:-

In its earliest form, manufacturing was usually carried out by a single skilled artisan with assistants. Training was by apprenticeship. In much of the pre-industrial world the guild system protected the privileges and trade secrets of urban artisans.

Before the Industrial Revolution, most manufacturing occurred in rural areas, where household-based manufacturing served as a supplemental subsistence strategy to agriculture (and continues to do so in places). Entrepreneurs organized a number of manufacturing households into a single enterprise through the putting-out system.

Toll manufacturing is an arrangement whereby a first firm with specialized equipment processes raw materials or semi-finished goods for a second firm. Manufacturing started during 5000 – 4000 BC. Wood work, ceramics, stone and metal work. The Steel Production 600-800 AD. The Industrial Revolution 1750 AD: Machine tools run by invention of steam engine and the Mass Production and Interchangeable Parts in the system of computer controlled machines 1965.

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INTRODUCTION OF MANUFACTURING:-

Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing other, more complex products, such as aircraft, household appliances or automobiles, or sold to wholesalers, who in turn sell them to retailers, who then sell them to end users – the "consumers".

Manufacturing takes turns under all types of economic systems. In a free market economy, manufacturing is usually directed toward the mass production of products for sale to consumers at a profit. In a collectivist economy, manufacturing is more frequently directed by the state to supply a centrally planned economy. In mixed market economies, manufacturing occurs under some degree of government regulation.

Modern manufacturing includes all intermediate processes required for the production and integration of a product's components. Some industries, such as semiconductor and steel manufacturers use the term fabrication instead.

The manufacturing sector is closely connected with engineering and industrial design. Examples of major manufacturers in North America include Corporation, General, and Pfizer. Examples in Europe include Volkswagen Group, Siemens, and Michelin. Examples in Asia include Toyota, Samsung, and Bridgestone.

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RESEARCH METHODOLOGY

Data Sources Research Instruments Data Analysis

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RESEARCH & METHODOLOGY

Research as a process involves evaluating data, deriving inference and conclusions after careful testing; a good research design is flexible, relevant, efficient, economical and focused. The Research and Methodology consists of following methods:

1 Data Sources

2 Research Instruments

3 Data Analysis

1. Data Sources:

Almost to be taken during collecting data. The results obtained from the analysis would then be properly interpreted and policy decisions were to be taken. Hence if data was in accurate and inadequate, the whole analysis could be faulty and the decisions taken would be misleading. Hence to avoid this data must be collected accurately. The data can be collected from primary as well as secondary sources. Primary sources in simple term can be stated as, the one that itself collects the data. While Secondary sources is one that makes data available through some other agencies.

Primary Data :-

The Different methods of collecting Primary data are

Direct Personal Interview Information from correspondents related to Company Discussion with the concerned persons related to objective of company By referring the books in support to theory

Secondary Data:-

Secondary Data was useful for Findings and Analysis of the Project Collected from the Annual Report.

I also had to refer various magazines and newspapers related to Purchase Procedure of Manufacturing Company.

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2. Research Instrument:-

The research instruments were the annual reports of the company of various years. The analysis was done by comparing the figures of expenditures of the year in

consideration. The previous year so as to observe purchase procedure of the company.

3. Data Analysis:-

Having gathered all the data or information from all sources both primary and secondary, we analyze this data carefully proceed to draw conclusion from all this we need to correctly. While analyzing the data we may need to use certain statistical tool.

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Purchase Procedure and Related Topics

Introduction Purchase of Materials Purchase Requisition Selection of Suppliers Preparation & Execution of Purchase Order Receipt & Inspection of Material

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Purchase Procedure and reelected topics:-

Introduction:-

Purchasing refers to a business or organization attempting for acquiring goods or services to accomplish the goals of the enterprise. Though there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly between organizations. Typically the word “purchasing” is not used interchangeably with the word “procurement”, since procurement typically includes Expediting, Supplier Quality, and Traffic and Logistics (T&L) in addition to Purchasing.

If a concern can afford it, there should be a separate Purchase Department for all purchases to be made on behalf of all other departments. Purchasing should be centralized i.e. All purchases should be done by the purchasing department except for small purchases which may be done by users departments.

However, there is no advantage in centralized purchasing. If materials and stores required by different plants.

Materials Purchase Department in a business house is confronted with the following issues :-

a) What to Purchase? b) When to Purchase? c) How much to purchase? d) From where to purchase? e) At what price to Purchase?

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MATERIALS: -

Materials are the real resources and basic inputs used for manufacturing a product. Usually the term ‘Materials’ means and includes all raw materials, fabricated parts and subassemblies. Raw materials are materials that are in their original, crude unprocessed and raw form.

Material control relates to both direct and indirect materials.

Direct materials are these, which enter into and form part of the product & include:-

A) All materials specially purchased for a job order or a process. B) All materials issued from the stores against a particular job order, number or process. C) All components or assembly parts purchased for use in the jobs and process directly D) All materials or processed materials transferred from one process or operation to the

other. E) All primary packing materials such as Poly Bag, Gunny Bag, Cardboard Box etc.

Indirect materials are those, which cannot be traced as a part of the product, such as : -

A) Consumable store used in the operation. B) Lubricating Oil, Grease, and Fuel Oil etc. C) Tools, Jigs & Fixtures etc. D) Sundry Stores of small value like cotton waste. Broom Stick etc.

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Purchase of Materials :-

Materials constitute a very significant proportion of total cost of finished product in most of the manufacturing industries so, there should be proper separable department i.e. purchase department for purchase of materials in proper manner.

Purchase of Material Include:-

a) Purchase of Material at right quantity. b) Purchase of Material at right quality. c) Purchase of Material from right source. d) Purchase of Material at right time.

Purchase Department follows purchase procedure in proper manner and kept cost of purchase to minimum.

Purchase Department should take into consideration following points regarding control of materials cost and total cost:-

a) The exact quality of specification of materials required should be determined according to the required quality of the finished product. If too superior quality of material were purchased, it would mean higher cost due to high prices, if the quality of materials is too low; the product will be inferior quality.

b) The price paid should be the minimum possible otherwise the higher cost of the finished products would make the product uncompetitive in the market.

c) There should be no interruption in the production process for want of materials and stores including small in expensive items like lubricating oil for a machine. Sometimes there out of stock situation may lead to stoppage of machine.

d) There should be no over stocking of materials because that would result in lost of interest charges, higher godown charges, deterioration in quality and losses due to Obsolescence.

e) Purchase department & stores department should properly coordinate. Wastage & losses while materials are in store should be avoided as for as possible.

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Objectives of System of Material Control :-

a) Ensuring that no, particularly production, suffer from interruption for want of materials and stores. It should be noted that this requires constant availability of every item that may be needed however small its cost may be.

b) Seeing to it that all the materials and stores are acquired at the lowest possible price considering the quality that is required & considering other relevant factors like reliability in respect of delivery etc.

c) Minimization of the total cost involved both for acquiring stock and for holding them. d) Avoidance of unnecessary losses & wastages that may arise from deterioration in quality due to

defective or long storage or from Obsolescence. e) Maintenance of proper records to ensure that reliable information is available for all items of

materials & stores that not only helps in detecting losses and pilferages but also facilitates proper production planning.

Purchase Department & Requirements of Material Control:- a) Proper Co-ordination of all Departments involved Viz Purchase, Finance, Receiving Inspection,

Storage, Accounting and Payment. b) Determining purchase procedures to see that purchase are made after making suitable

enquiries, at the most favorable terms to the firms. c) Use of standard form for placing the order, noting receipt of goods, authorizing issue of

material etc. d) Preparation of budgets concerning materials supplies and equipment to ensure economy in

purchasing and use of materials. e) Operation of a system of internal check so that all transaction involving materials, supplies and

equipment purchases are properly approved & automatically checked. f) Storage of all materials & supplies in a well designate location with proper safeguards. g) System of perpetual Inventory & stock taking in proper manner. h) Maintenance of all required records books, accounts in proper manner. i) Regular reports of materials purchased issued from stock, inventory balances, absolute stock,

goods returned to vendors, defective units.

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To overcome above listed issues, the purchase department follows the procedure involving following steps:-

a) Receiving Purchase Requisition b) Exploring the sources of materials supply and selecting suitable material suppliers. c) Preparation & execution of Purchase Order. d) Acquisition Process. e) Receipt & Inspection of Materials.

a) Receiving Purchase Requisition :-

Since the materials and stores purchased will be used by the production departments. There should be constant Co-ordination between the purchase and production department. Purchase Requisition is a form used for making a formal request to the purchase department to the purchase material. This form is usually filled up the storekeeper for regular materials and by the departmental head for special materials (not stocked as regular items). The requisition form is duly signed by either works manager or plant superintendent, in addition to the one originating it. It should be gone through periodically so that necessary deletion and addition may be made. If there is any change in the rate of consumption per week, the purchase department should be informed about the new figures. Once a item has been include in the standard list, it becomes the duty of purchase department to arrange for fresh supplies before existing stock are exhausted. But if the production department requires some new material, it should make out an indent well in time and send it to the purchase department for necessary action. Control over buying - for control over buying of regular store material it is necessary to determine their maximum, minimum, reorder level and economic order quantities and various levels constitutes an adequate safeguard against improper indenting of regular materials. In respect of special materials, required for a special order or purpose, it is desirable that the technical department concerned should prepare material specifications list specifying the quantity, size and order specifications of materials to be drawn from the store and those to be specially procured.

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b) Exploring the sources of materials supply and selecting suitable material suppliers:-

A source for the supply of each material may be selected after the receipt of the Purchase Requisition. Purchase department in each business house usually maintains a list of suppliers for each group of materials, required by tier concern. At least three quotations are involved from such suppliers. On the receipt of these quotations a competitive quotations are prepared. For selecting material suppliers the factors which the purchase Department keeps in its mind are Price, Quantity, Quality, Offered, Time of Delivery, Mode of Transportations, Terms of Payment, & Reputation of suppliers etc. In addition to the above listed factors purchase manager obtains the necessary information from the statement of Quotations, past records, buyer guides etc. for finally selecting suppliers.

c) Preparation and Execution of Purchase Order:- Having decided on the best quotations that should be accepted, the purchase manager or concerned officer proceeds to issue the formal purchase order. It is a written a request to the supplier to supply certain specified materials at specified rates and written a specified period. Copies of purchase are sent to:-

1) Supplier 2) Store or the order indenting Department 3) Receiving Department and 4) Accounting Department

A copy of purchase order, along with relevant purchase requisitions, is held in the file of the department to facilitate the follow-up, of the delivery and also for approving the invoice for payment.

Purchase order includes its number, date, party name, description of material, quantity, rate, amount, terms of payment, mode of delivery, terms of insurance and tax authorized signature etc.

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D) Acquisition Process:- The revised acquisition process for major systems in industry and defense is shown in the next figure. Then the purchase has to clear all the materials. The process is defined by a series of phases during which technology is defined and matured into viable concepts, which are subsequently developed and readied for production, after which the systems produced are supported in the field.

The process allows for a given system to enter the process at any of the development phases. For example, a system using unproven technology would enter at the beginning stages of the process and would proceed through a lengthy period of technology maturation, while a system based on mature and proven technologies might enter directly into engineering development or, conceivably, even production. The process itself includes four phases of development.

e) Receipt and Inspection of Materials:-

Under every system of stores organization a distinction of made between the function of

receiving and storing, so that each acts as a check on the order.

The receiving department or section is responsible for taking charge of the incoming materials, checking and verifying their quantities, inspecting them as regards their grade, quantity or other technical specifications and if found acceptable, passing them on to the stores. In large organization a special inspection wing is often attached to the receiving

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department and where it is not so technical appraisal of the incoming supplies is carried out by the general inspecting staff. In case the quality is not the same as ordered, the goods are not accepted. If everything is in order and the supply is considered suitable for acceptance, the receiving departments prepare a receiving reports and materials inward note or goods received note. It is prepare in quadruplicate, the copies being distributed as under: a) First copy is sent to purchase Department for varying supplier bill for payment. b) Second copy is sent to the Stores Department or the department indents the material. c) Third copy is sent to the Stores Ledger Clerk in the cost department. d) Fourth and last copy is retained for use by the receiving department.

A good plan would be that the receiving clerk sends all the three copies (meant for others) along with the materials to the materials to the Stores or Department that placed the order. The materials are physically inspected and the particulars therefore as recorded in the receiving reports are verified. If the quantity and the Quality are in order, the delivery of same is accepted and copies of the reports are signed, two copies of reports are forwarded to the purchase department and the third is kept on the file as documentary evidence of the quantities of received for storage or use, as the case may be. The Purchase Department in turn, enters the purchase price and forwards one copy to the Account Department and the second to the Cost Department.

Goods received include its Number, Date, Party Name, Order No., Quantity, Code, Description, Amount, and Charges if any, Authorized Signature of Inspector, Receiver & Store Keeper etc.

Material Outward Return Note :-

Sometimes materials have to be returned to supplier after these have been received in the factory. Such returns may occur before or after the preparation of the receiving reports. If the return takes place before the preparation of receiving report, such materials obviously would not be included in the account books would be necessary. But if the material is return after is entry in the receiving report, a suitable document must be drawn up in the support of the credit entry so as to exclude from the stores of the material amount the value of the materials returned back. This document usually takes the form of a material outward return note.

The Material Outward Return Note is drawn up by the stores or the dispatch department. Five copies of it are usually prepared, two copies for the supplier (one of which is to be sent back by the supplier after he has signed the same). One for Store, one for Cost (Store) Ledger & one copy to be retained in the Material Outward Return Book.

Material Outward Return contains its number, date, item description, quantity, reason for return of material etc.

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Sometimes material it is transferred from one department to another, the surplus material arising on a job or other units of production may sometimes may be unsuitable for transferable to stores because of

its bulk, heavy weight , brittleness or some such reason. It may however be possible to find some alternative for some other job instead of returning it to the storeroom.

It must be stressed that generally transfer of material from one job to another is irregular, if not improper; in so far it is not conductive to correct allocation and control of material cost of jobs or other units a production it is only in the circumstances envisaged above that such direct transfer should be made, at the time of materials transfer a material transfer should be made, at the time of material transfer. A material transfer note should be made in duplicate, in the position of the copies of this note being are follows:-

One copy for the cost department & one copy for the department making the transfer.

No copy is required for the store as no entry in the store records would be call for the Cost Department would use its copy for the purpose for making necessary entries in the Cost Ledger Account for the jobs effectively.

Material Transfer Note contains its number, date, transfer department, transferee department, item number, particulars, rates, authorized signature etc

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FINANCIAL ANALYSIS

Theoretical Background Practical Background

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As per International Accounting System (IAS)1, a complete set of financial statement includes the following components:-

a) A Balance – Sheet which is prepared on a particular day, shows the financial position on that date.

b) An Income statement or Profit and Loss Account, which shows the amount of profit or loss for a particular accounting period.

c) A statement showing either, (a) all changes in equity or,(b) changes in equity other than those arising from capital transactions with owners and distributions to owners. Equity represents the amount contributed by owners.

d) A cash flow statement and e) Accounting policies and explanatory notes.

Explanatory notes provide clarification and additional information which facilitates analysis of the financial statements In India, financial statements do not include a separate statement showing changes in equity.

The following concepts of conventions are followed in the preparation of financial statement

Concepts Separate Entity concept Double Entry Going concern Monetary value concept Matching concepts Accounting period concept

Conventions: Conservation Consistency Disclosure

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FINANCIAL ANALYSIS:-

Financial analysis (also referred to as financial statement analysis or accounting analysis or Analysis of finance) refers to an assessment of the viability, stability and profitability of business, sub-business or project

It is performed by professionals who prepare reports using ratios that make use of information taken from financial statement and other reports. These reports are usually presented to top management as one of their bases in making business decisions.

Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives

in the conduct of its business.

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FINAL ACCOUNT:- a) TRADING ACCOUNT b) PROFIT & LOSS c) BALANCE SHEET

a) TRADING ACCOUNT:-

Trading Account is prepared to find out the gross profit and in turn the percentage of gross profit is the excess of sales price over cost or purchase price of goods. Here cost/purchase price does not mean the price paid for goods to the supplier of goods but it also considers all incidental expenses incurred till the goods are received and made saleable, such as carriage/freight on purchases, wages paid to workers, customs duty, and octroi, packing and forwarding charges. However, expenses incurred on sale are not taken in the Trading A/c.It is already seen that the goods account is split up into four separate accounts.

1) Purchases account to record both cash and credit purchases of goods. 2) Sales account to record cash as well as credit sales of goods. 3) Purchases returns or returns outwards account to record the goods returned

out of the goods purchases. 4) Sales returns or returns inwards account to record the goods returned by the

customers out of the goods sold to them. Similarly for the goods remained unsold i.e. the goods on hand at the end of the trading year a separate ‘stock account’ is opened. The Stock at the end of the year is termed as ‘closing stock’. As this stock is on hand at the beginning of the next year it becomes the ‘Opening Stock’ it means closing stock of the last year forms the opening stock of the current year. A trader prepares a trading account to ascertain the result of buying and selling of goods i.e. Gross Profit or Gross Loss. gross profit Is the excess of selling price over the cost price of the goods sold i.e.

b) PROFIT& LOSS ACCOUNT:-

Trading a/c shows only Gross Profit. It does not take into consideration expenses incurred to conduct the business, such as administrative or management expenses, ( like staff salaries, office expenses, rent, rates, taxes, insurance, telephone, lighting, repairs of building, furniture, machinery etc, depreciation) selling and Distributions expenses ( like carriage outwards, salesman’s salaries, advertisement, discount allowed, bad debts, delivery van expenses etc.) and financial expenses ( like interest paid, legal charges etc.)

Net Profit: All incomes and gains, such as interest, commission, discount etc. received, profit on sale of asset etc. are added to the Gross Profit: from this total income, all administrative

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c) BALANCE SHEET:-

All nominal accounts are closed by transferring their balances to the Trading and profit and loss account. But real accounts and personal accounts are closed by carrying forward balance for next year. These balances are grouped in a separate statement called Balance Sheet. Thus, Balance Sheet is a statement of the Ledger balances remaining after having the Nominal accounts closed by transferring them to the Trading and Profit and Loss Account.

The balance sheet has also two sides; but they are not headed as ‘Dr’ and ‘Cr.’ Sides because the balance sheet is a statement and not an account. The Left-hand side is headed as ‘Liabilities’ and the right-hand side is headed as asset. All real accounts and the personal accounts with debit balances are shown on the ‘ assets’ side, where as the personal accounts having credit balances , including capital a/c, are shown on the ‘ Liabilities’ side. The balance sheet is, therefore, defined as a statement of assets and liabilities. Since the balance sheet is not an account, there is no ‘To’ or ‘By’ proceeding the names of the Accounts recorded in the Balance sheet.

Real accounts and personal accounts are closed by carrying forward balances as shown below & these balances are shown in the balance sheet as stated above.

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PRACTICAL OBSERVATIONS:-

FINANCE DEPARTMENT:-

Finance Department of (PATSONS METALLICS PVT.LTD). Is a composite department catering of the following functions:-

a) FINANCE: - Procurement, Management and Utilization of Finance.

b) ACCOUNTS: - Accounting of Income, Expenditure and Assets and Liabilities of the company.

c) COST BUDGETS-MIS: - Costing of products, purchase procedure and profitability Improvements.

Finance Department of PATSONS METALLICS PVT.LTD Comprises of the following sections to distribute the total workload:-

BILL SECTIONS ESTABLISHMENT SECTION MISCELLANEOUS WORKS SECTION PURCHASE SECTION CASH SECTION ASSET/ PROJECT ACCOUNT SECTION FINANCE SECTION MIS-BUDGET SECTION STORES ACCOUNTING SECTIONS BOOKING SECTIONS AUDIT SECTION COSTING SECTIONS

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PATSONS METALLICS PVT.LID

INCOME AND EXPENDITURE ACCOUNT

For the year ended 31st march 2012

Particulars Rs. Ps. Rs. Ps.

31/03/2011 31/03/2012

A) INCOME:

Sales 83750.00 43540180.67

Other income 0.00 37471.00

Total 83750.00 43577651.67

B) EXPENDITURE:

Materials Consumed 79726.17 28938675.90

Expenditure on personnel 0.00 1580680.00

Operating & admin. Expenses 0.00 1906288.92

Finance expenses 0.00 6287974.94

Statutory expenses 0.00 85900.00

Depreciation 0.00 4193692.00

Total 79726.17 42993211.76

Net profit for the year 4023.83 584439.91

Less: provision for Taxation – Deferred Tax 0.00 0.00

Loss after Tax Carried to Balance sheet 4023.83 584439.91

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PATSONS METALLICS PVT.LTD

BALANCE SHEET

As on 31st march 2012

Particulars Rs Ps Rs Ps

Schedule A – Share Capital

Authorized:

2000000 Equity Shares of Rs 10.00 each 20000000.00 30000000.00

Issued subscribed and paid Up Capital

2469793 Equity Shares of Rs 10.00 each 0.00 24697930.00

Issued Application Money Received

1499000 Equity shares of Rs.10.00 each 14990000.00 0.00

14990000.00 24697930.00

Schedule B – Loans & Advances

a) Secured loans 35442967.00 47860430.10

-from a bank

-Term Loan-Bank of Maharashtra,Latur 27277504.00 31926601.65

Cash credit- bank of Maharashtra, latur 8165463.00 15933828.45

b) Unsecured loans 3451314.00 1430000.00

- from Directors 2951314.00 0.00

- from shareholders 500000.00 1430000.00

Total 38894281.00 49290430.10

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Particulars Rs Ps Rs Ps

SCHEDULE:- CURRENT ASSETS:

Inventories 3580817.83 18444861.00

(At Lower of Cost or Market Value)

- Finished Goods 0.00 0.00

- Raw Materials 3580817.83 18444861.00

Deposits 367961.00 342961.00

Vat Tax MVAT Deposit 25000.00 0.00

Water Deposit MIDC 6750.00 6750.00

MSEB Deposit 336211.00 336211.00

Sundry Debtors (Unsecured Considered Good) 96996.00 9314484.71

Due for under Six Months 96996.00 9314484.71

Due for under Six Months 0.00 0.00

Cash and Bank Balances:

Balances with Nationalized Banks-

- In Current Accounts

- Canara Bank, Camp, pune 0.00 5000.00

- Bank of Maharashtra, latur 54477.00 -28779.48

Balances with Non –Scheduled Banks

- In Current Accounts

Poornwadi Nagrik Sah.Bank Ltd. 2377.00 - 11016.00

Cash on Hand 116941.00 35872.00

173795.00 1076.52

Total 4219569.83 28103383.23

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Particulars Rs Ps Rs Ps

31/03/2011 31/03/2012

SCHEDULE:E- LOANS AND ADVANCES: 4863928.00 3307515.00

(Unsecured , Considered Good)

Advances recoverable in cash-

- or in kind for value to be received 4863928.00 3307515.00

SCHEDULE:F – C.L &PROVISIONS

CURRENT LIABILITIES 1518069.00 4144677.00

Sundry Creditors –Capital Goods 1293274.00 218341.00

Sundry Creditors- Raw Material 180578.00 3713577.00

Sundry Creditors – Services 44217.00 212759.00

PROVISIONS

TDS Payable 155932.00 78213.00

Excise Duty 0.00 93596.00

Light Bill Payable 0.00 711310.00

PF Payable 0.00 130640.00

Water Bill Payable 0.00 3703.00

Vat Payable 0.00 522126.15

Total 1674001.00 5684265.39

SCHEDULE:G – MISCELLANEUS ASSETS

Preliminary Expenses 250000.00 200000.00

During this period 250000.00 250000.00

Less-Amortised in this year 0.00 0.00

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Duties and Taxes 1938470.00 1938470.00

Vat on Capital Goods 1100930.00 110930.00

Vat on Raw Material 78070.00 78070.00

Excise Duty on Capital Goods 615228.00 615228.00

Excise Duty on Raw Material 144242.00 144242.00

Total 2188470.00 2138470.00

SCHEDULE OF FIXED ASSET

Particulars Cost Mar 11 Additions sale/ Cost mar 12 Acc Dep Opg net

Deletion mar11 Block

Land 10113400.00 10000.00 0.00 10123400.00 0.00 10113400.00

Building 13000000.00 0.00 0.00 13000000.00 0.00 13000000.00

Plant &Machinery 20160148.00 6416990.00 0.00 26577138.00 0.00 20160148.00

Computer Systems 0.00 20477.00 0.00 20477.00 0.00 0.00

Electrical Fittings 974009.00 122608.00 0.00 1096617.00 0.00 974009.00

Furniture & Fixture 42781.00 0.00 0.00 42781.00 0.00 42781.00

Software 0.00 45000.00 0.00 45000.00 0.00 0.00

Total 44290338.00 6615075.00 0.00 50905413.00 0.00 44290338.00

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Interpretation: This table shows the Income and expenditure and balance sheet for the last 1 years i.e. for years 2011-2012.The income and expenditure show the expenses and income last one year. The

company balance sheet show the reputation in the market and the fixed share devoted that income.

ANALYSIS OF THE BALANCE SHEET YEARLY GROWTH:-

Particulars

year

2011

year

2012

sales

income

expenditure

fixed asset

fixed liabilities

net profit

83750

0.00

79726

38894281

1674001

4023

43540180

37471

42993211

49290430

5684265

584439

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DATA INTERPRETATION AND

ANALYSIS OF PURCHASE PROCEDURE

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Data interpretation

Mr. Devadar a purchase manager of (Patsons metallic’s pvt.ltd. has given me following information relating to purchase procedure of the company.

Companies have three important department, vendor development department, and quality Assurance Department which are mainly responsible for purchase of material.

Purchase Department is responsible for purchase of raw material, Consumable, capital goods.

Vendor Development Department is responsible for material order by them on labour charges payments i.e. raw material is provided by company to vendor for producing components .company makes payments to vendor for labor charges given by Vendor Development Department.

Quality Assurance Department is responsible for quality of material purchased. This department is responsible for selection of supplier also.

Purchase Procedure:-

1. Purpose:- This procedure ensures that requirement of purchase of product affecting quality are clearly communicated to suppliers.

2. Scope:- This procedure applicable for all units of PATSONS METALLICS PVT.LTD. This procedure covers the generation of purchase indent/requirement from user department. Issuing of purchase order.

3. Responsibility:- The purchase responsibility control to the head of patsons metallic’s pvt.ltd.

4. Procedure:- 1) Purchase of General Items/ Machinery Spares.

a) Raising of purchase indent. b) Required material shall be indented by user department through purchase indent duly

authorized by concerned departmental head. c) The purchase indent shall be issued to purchase Department through Stores

Department.

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2) Calling of quotations:- a) Purchase may call quotations from Vendors who are in the approved Vendor list. In case

of material is not available with approved vendors.

b) After receipt of quotation a for new material permission by taken shall be prepared by purchase department with chairman/M.D/Director, which shall contain following information as required.

Basic Price Discount Packing & Forwarding Details Taxes, Duties & Freight Details Delivery Schedule Product Specification

c) By referring comparison chart, Chairman/Managing Director/Director shall be deciding the

vendors with whom the order shall be placed.

d) Purchase section shall prepare the purchase order by referring approved comparison chart and purchase indent & purchase head review the same and forward to chairman/M.D for his approval.

e) In case of single source suppliers urgent purchases or purchases having any specific requirement regarding quality, make etc. purchase Head shall obtain approval of M.D./Director for purchasing without comparison chart

B) RAW MATERIAL PURCHASE:-

a) Purchase head shall receive the monthly requirement for raw material from PPC (Production Planning & control) department in the form of Raw Material Requirement Report.

b) The raw material required for developments items; MDT Leader (Multi Disciplinary Team) shall raise the requirement through inter Office Memo with detail specification (e.g. grade, size, Qty etc) through Production Planning & control Department.

c) PPC Department shall submit he requirement to purchase department for further processing.

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d) By referring the stock in hand, pending purchase order etc. Purchase Head shall decide the quantity of raw material to be ordered. Refer work out statement form and based on that the scheduling

Shall be decided & communicated to Vendors/Suppliers. The same shall be monitored by Purchase Head for 100% on time delivery.

e) Change in Schedule:-

In case of change in schedule the purchase Head shall intimated well in advance the same to the supplier via correspondence.

C) PLACING OF ORDER FOR RAW MATERIAL:-

a) The rates are negotiated by purchase Head and M.D. directly with raw material vendors from time and the negotiated rates comparison chart shall be approved by Chairman.

b) Purchase Department shall refer approved comparison chart and prepare purchase order.

c) The Purchase order shall be reviewed for its adequacy of information by Purchase Head.

D) EMERGENCY PURCHASES:-

In case of urgent material requirement, Purchase Head shall purchase the required material from other suppliers on trial order basis by verbal communication with chairman. Purchase Head shall raise the Purchase Order as trial and same shall informed to quality assurance head before material receipt. In these cases also the material testing shall be done as per Raw Material Quality Plan.

E) REPEAT ORDER:-

In case the same material is required by the indenter then purchase Department refer the price list and validity of rates quoted and if it is valid, he shall place repeat order with that supplier. These cases take care of avoiding calling quotation again.

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F) PURCHASE ORDER:-

A) Purchase Order shall indicate the following as appropriate:-

Purchase order No./Date Indent Number Suppliers Name, Code No.etc. Process to be carried out. Part No./drawing No. with pertinent issue status Requirement of Certificates for the Restricted and Toxic and hazardous

Materials. Quantity Unit Price Place of Delivery Delivery schedule Mode of transport Quotation No.& date Discount Other instruction required for specific components. Mode of Insurance Payment terms Description of Goods Packaging & forwarding Excise / Sales Tax Freight Octroi Inspection Requirements Test Certificates (if required) Quality Plan (if required)

B) Scheduling of Vendor / Subcontractor shall consider the following parameters before placing purchase order / schedule to the Vendor / subcontractor.

Vendor / Subcontractor capacity with the requirement Cycle Time required to Produce Transportation Mode

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Availing of Material to be sent to vendors in stock at PATSONS METALLICS PVT.LTD. And at Vendors / Subcontractors end. Any other resources required, like tooling’s, Gauges, Advance payments as per Contract etc

C) Purchase order shall be issued to the Vendors / Subcontractors by purchase Department and copies of the same shall be distributed to Account Head and Stores Department Shall be via. Purchase Order Intimation in case of miscellaneous items.

D) Inspection of Purchase Product:-

In case of raw material, the material shall be inspected by Incoming Inspection engineer as par Quality plan For Raw Material. In case of material Other than above the same a shall be inspected by the indenter and the remark regarding acceptance or rejection shall be put on the Goods Inward Note itself.

Corrective Action at Subcontractors end :-

In case of any major problem / Nonconformity with respect to the raw material same shall be communicated to the supplier. Purchase Head shall ask for corrective and preventive action from supplier.

In case inferior quality material supplied by supplier, material is rejected by issuing goods rejection note to the supplier and material is return to the supplier.

After extending control over Vendors / Subcontractors, the list of approved Vendors shall be updated immediately and the same shall be reviewed in a six month.

In case of non-availability of indented material, Purchase Head shall consult concerned departmental head for the alternative material before issue of purchase order to the Vendors.

E) Confirmation of Order Conformance:-

Purchase head shall confirm the order conformance by keeping verbal or written communication with the vendors.

F) Purchase Order Amendment:- The indenter shall inform the purchase Head via interdepartmental note, the

amendments or changes as regards the specifications or quality or any other parameters immediately so that corrective action shall be taken before material reaches to the works.

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G) Open Purchase Order:- In case the quantity required is not fixed then Purchase Head shall issue open Purchase Order where the rate and validity remain unchanged only quantity required shall be informed to supplier via correspondence time to time. In case quantity required is fixed specific purchase order is issued by purchase head to the supplier.

H) Proforma Invoice:- In case of certain purchases if the Vendor Insists advances payment, the

purchase head shall obtain proforma invoice Vendor.

Proforma invoice shall be reviewed by purchase Engineer Referring to the terms and conditions and modvat terms as mentioned in Purchase Order.

Proforma Invoice shall be sent to Account Head for arranging the payment to the Vendor.

Purchase Engineer shall insure that the Original Invoice is submitted by the Vendor after receipt of payments.

Accounts Head shall verify and compare the contents in purchase order with delivery challan concentrating especially on freight and weight/ quality and shall inform action taken in relevance with debit or credit to Purchase Department through Inter Office Note.

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I) Records:- a) Purchase Indent b) Purchase Order c) Approved Subcontractors list d) Approved Vendor list e) Purchase Order Amendment f) Purchase Order Intimation g) Raw Material Work Out Statement h) Vendor Assessment Form

Quality System Procedure (Purchasing):- 1.0 Purpose :-

This procedure insures that the organizations suppliers shall have required capability and quality to supply material and services.

2.0 Scope:- This procedure is applicable for all units of PATSONS METALLICS PVT.LTD. This procedure covers the assessment of Vendors and suppliers & maintaining the Records.

3.0 Responsibility:- Vendor Department Quality Assurance Head Purchase Head.

4.0 Procedures:-

1) Categories of Incoming Material:-

All Incoming material shall be categorized as:- A-1 Raw Material in Metal Form A-2 Hardware for Sub-assembly received from Vendors. A-3 Sub-assembly components received from Sub-contractors

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2) Basis of Approval of Raw Material Suppliers( Category A-1 Material):-

The criteria for the selection of suppliers are follows:-

Minimum third party registered to ISO 9001:2008 OR Customer Approved / Recommended Suppliers OR Traders who supplies steel of minimum ISO 9001:2008 certified

casting manufactures.

Purchase Head and Quality Assurance Head shall visit to supplier and carry out the assessment to verify that supplier can meet our requirements.

The name of every newly introduced supplier shall be included in provisionally approved list, then shall be given trial order by putting “Trial Order” stamp on purchase order. The lot size may be preferably 10 tons and shall be supplied in minimum 3 consecutives lots viz Tons, 3 Tons and 5 Tons only. After satisfactory performance of two consecutive deliveries his name shall be included in Approved Vendor List.

List of provisionally and Approved Vendors Shall be Maintained and updated time to time by purchase Head and the copy of the same shall be issued to Quality Assurance Department.

3) Basis of approval of category A-2 material Suppliers:-

The criteria for Selection of Suppliers:- Minimum third party registered to ISO 9001:2008 OR Customer approved / recommended supplier OR Traders who supplies material of minimum ISO 9001:2008 certified

manufactures OR Traders who supplies material of renowned brand and has a good

reputation for quality and delivery of PATSONS METALLICS PVT.LTD. The assessment is carried out by the team, which shall include representative of

Quality Assurance and purchase Head. The details of assessment shall be referred from Sub-contractors assessment form.

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4) Basis of approval of A-3 material suppliers:-

Minimum third party registered to ISO 9001-2008 OR Customer approved / recommended supplier OR Vendor Development head and quality Assurance Head shall visit to

supply and carry out the assessment to verify that supplier can meet companies requirements.

5) The name of every newly introduced sub-contractor shall be included in provisionally approved sub-contractors list, and then shall be given trial order by putting “Trial Order” stamp on purchase order. Through the quantity in small batches. After evaluating the performance of 2/3 consecutive lots, if found satisfactory the sub-contractor shall be informed to complete the remaining quantity. Then his name shall be transferred from provisionally approved list to approved sub-contractor list.

6) List of provisionally & approved sub-contractor shall be maintained and updated time to time by

vendor development head and the copy of the same shall be issued to Quality Assurance Head.

7) Basis of approval of category (B) & (C) item Vendor:- Vendors which are reputed in market shall be directly included in approval Vendors

List without assessing them. Every newly introduced Vendor other than reputed shall be given a Trial Order.

After satisfactory performance of two consecutive supplies his name shall be included in Approved Vendor List till than his name shall be included in provisionally approved vendor list.

In case of the items which are purchased from dealers & shopkeeper from open market, these shall be no necessity of assessing them, but market alternative make of the items shall be indicated in purchase Order.

These shall be no necessity of vendor approval in case of one time procurement. Selection for Metallurgical Test laboratories and Calibration Agencies shall based

on ISO approved certification and the scope of certification. Their name shall be directly added in approved vendor list without assessing them.

5.0 Periodical Rating:-

5.1 Quality Rating:-

Monthly quality rating for approved sub-contractors like the category of A-1, A-2, A-3 and which are performing special process shall be calculated and issued to respective department for decision making by Quality Assurance Head.

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Monthly Quality Rating shall be calculated as mentioned below:- QR= Q1+0.5 Q2+0.3 Q3+O.5 Q4 Q × 100

Where.

QR= Quality Rating

Q1= No. of lots/Component fully accepted

Q2= No. of lots/ Component accepted under deviation and/ or rejected.

Q3= No. of lots/ Component rejected during production.

Q4= No. of lots/Component returned from customer.

Q5= Total No. of lots/Components received.

5.2 Delivery Rating:- Monthly delivery rating for the sub-contractors performing special process,

category A-2 and A-3 shall be calculated by Vendor Development Head for each schedule once in a month.

Monthly delivery rating for the category A-1 shall be calculated by Purchase Head for each schedule once in a month.

Delivery rating shall be calculated as mentioned below:-

D.R= No. of lots received within schedule

No. of lots Scheduled ×100

5.3 Overall Rating:- Overall Rating shall be calculated as mentioned below:-

For Raw Material Suppliers (By Purchase Department)

O.R. % = [Q.R. × 0.6 + D.R. × 0.3 + Price Factor × 0.1] × 100

Where,

O.R. = Overall Rating

Q.R. = Quality Rating

D.R. = Delivery Rating

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Purchase shall give Price Factor as 1.0 for lowest price supplier and reduced by 1.0 to higher & higher price supplier.

Example of Calculating Price Factor:-

Supplier A B C D

Price (in Rs.) 3000 2900 2800 2700

Higher Lower

Price Factor 0.7 0.8 0.9 1.0

A B C D

PRICE 3000 2900 2800 2700

PRICE FACTOR 0.7 0.8 0.9 1

0

500

1000

1500

2000

2500

3000

3500

PRIC

E

SUPPLIR

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22%

22%

20%

19%

17%

Overall Rating

Excellent

Good

Must Improve

Poor

Very Poor

5.4 For A-3 Category Supplies ( By Vendor Development Department) O.R= (QR × 0.6 = D.R. × O.4) Where, O.R.= Overall Rating Q.R.= Quality Rating D.R.= Delivery Rating

5.5 Grading Index for Overall Rating shall be as follows:-

Grade Points Comments Points converted to Percent A 96 and above Excellent 22% B 91 to 95 Good 22% C 86 to 90 Must Improve 20% D 76 to 85 Poor 19% E Below 75 Very Poor (Delist) 17%

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5.6 Purchase Head / Vendor Development Head shall consolidate the Quality Rating, Delivery Rating & overall-rating for the suppliers of categories A-1 and A-3 respectively and this data can be submitted in management review meeting. Vendor Development Head and purchase Head Shall inform to concerned suppliers and utilized this data for pacing of Purchase Orders and schedule. Suppliers having overall rating below 75% shall be informed consecutively in 3 months to improve the quality and delivery by purchase head and vendor development head respectively even then if not improved, then shall be de listed.

5.6 Supplier’s wise rating of all above categories shall be displayed as visual control after every revised- rating report preferably every month.

6.0 Assessment of Transporters:-

6.1 In charge dispatch shall assess a transporter by referring form no. SLS/03, transport assessment form and update the list time to time and same shall be available within charge the dispatch.

6.2 No need to assess the transporter if customer supplies it. But it shall be included in list of

approved transporter and clearly mentioned as ‘Customer Supplied’

6.3 Dispatch in charge shall keep periodic check by considering following point:-

Availability of vehicles whenever required Protected roof for material Precaution above damage Accident and damage record etc

7.0 Periodic Re-assessment of suppliers:-

Re-assessment of suppliers shall be carried out every month to update the information at PATSONS METALLICS PVT.LTD.

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8.0 Periodic Evaluation of Suppliers:- Vendor Development shall prepare the monthly plant for A-3 category suppliers audit an accordingly prepare the schedule for audit. Patsons Group of Industries trained auditors will take this audit and reports are maintained by Vendor Development Head. Periodic evaluation of major suppliers shall be carried out as:-

a) For Special Process Suppliers: - After every three months. b) For brought out items Suppliers:- yearly

If any non-conformance observed during this audit, auditor should ask for action plan to supplier and submit it to Vendor Development Head along with audit report for further follow up.

9.0 Suppliers QMS (Quality Management System) Development:- The suppliers who are manufacturing press parts for PATSONS METALLICS will be developed to implement QMS (QUALITY MANAGEMENT SYSYTEM) as per these technical specifications in following stages. Suppliers are expected to comply fully with these technical specifications within a period.

10.1 Objective of Vendor Cluster:-

It is time bound activity for improvement of company suppliers. All suppliers must have at least ISO 9001-2008 Certification. Good Housekeeping and 5 score must be greater than 75% Training and Implementation Techniques like Kaizan, Poka Yoke etc. for continues

Improvement. Delivery Rating must be 100% Delivery Rating must be 75% Space Utilization through continues 1S, 2S activities. Proper Storage Material at each Stage. Machine up Keeping through Timely Maintenance. Availability and Calibration status of Instruments. Properly Defined Inspection Methods at all Stages.

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10.2 Procedure for activities of Vendor Cluster:-

Appoint one-trained Councilors for each supplier as a Mentor. The Mentor will be responsible for improvement at that supplier. He should visit suppliers works as and when required or at least once a week. He should audit supplier’s plant with above objectives and find out scope for all

improvement at that suppliers plant. Discrepancy if any should be highlighted and reports to concern supplier.

He should guide the suppliers to solve the discrepancies or to minimize the observed gap to achieve the goal.

Take corrective action plan from supplier. Follow up audit is taken as per plan given. Weekly audit reports shall be submitted to Vendor Development Head. Cluster members shall the improvements through monthly visit among them.

10.3 Records:-

Road Map Weekly Review Reports Consumption Reports Supplier Feedback and Coordinator Assessment Form. Audit Check Sheet.

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Vendor Development Head – Purchase Procedure:-

1.0 Purpose:- This Procedure ensures that requirements of Purchase of Product affecting quality are clearly communicated to sub-contractors.

2.0 Scope:- This procedure is applicable to all Patsons Group. This Procedure is a cove the generation of purchase indent/requirements, issuing of purchase order and ensuring 100% on time delivery from sub-contractors.

3.0 Responsibility:- The responsibility covers to the Vendor Development Head.

4.0 Procedure:-

4.1 Purchase of Bought Out Components:- Vendor Development Head shall receive the monthly dispatch plan from PPC

Department. By referring the stock in hand and pending scheduled quantity to be received, Vendor

Development Head. Shall decide the supply quantity to be ordered. The same shall be communicated to the sub-contractor through the schedule letter.

4.2 Purchase of Sub-Contracted Items:-

Vendor Development Head. Shall receive monthly production plan from the PPC department of each unit.

Based on the above the requirements to be communicated to the Sub-Contractor through planning schedule.

Based on the above fluctuations in demand from the customer, the amended quality shall be informed to the Sub-Contractor accordingly by Vendor Development Head.

4.3 Placing of Purchase Order:-

Vendor Development Head shall have a list of approved Sub-Contractors. Vendor Development Head shall prepare the Purchase Order. The Purchase

Order shall be reviewed for its adequacy of information by Vendor Development Head.

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4.4 conformation of Order Conformance:-

Vendor Development Head shall confirm the order conformance by keeping verbal or written communication with the vendor.

4.5 Purchase Order Amendment:- a) The purchase Order Amendment shall be done in the following case.

Change in technical Specification Commercial Terms.

b) Vendor Development then shall issue an amended Purchase Order to the Subcontractors vide Purchase Order Amendment Form and shall confirm Subcontractors capability to supply as per the Amended Purchase Order

5.0 Records:-

a) Customer Complaint Form

b) Planning Schedule

c) Approved Subcontractors List

d) Production Planning

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CONCLUSION

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CONCLUSION:-

1. The patsons in the latur city it has stay down last 30 years, so the procedure purchase handles to purchase manager.

2. I had learned the characteristic feature and roles of a manager in a manufacturing industry.

3. And also I learned that how the managers are handling their people and their

business to give a good result in their business to achieve the goal of the company.

4. In concluding it can be argued that essential work under purchase manager that

the purchase procedure of the company was offer inconsistent information.

5. The conservative method approach and understate the fixed asset and to make the profit after finishing a production in the company.

6. Approach and capitalize expenditure in the company.

7. The patsons metallic’s it is a upcoming and booming industry in the

manufacturing field and casting and iron.

8. It can be said that overall financial position of the company is normal. Company should stretch the credit period given by the suppliers. Company should take steps towards the efficient and effective management of financial analysis.

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FINDINGS PATSONS METALLICS PVT.LTD.

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9. PURCHASE PROCEDURE OF THE COMPANY

A) FINANCE DEPARTMENT:- The patsons metallic’s it is highly established company in latur area but the main thing a Purchase Procedures of the Telephones. The site is situated at MIDC Latur. All the works at the site is done independently. Although there are only 10 lines available, all the vendor departments are given extension nos. people use these lines officials work it is good but these officials calls.

B) MATERIALS DEPARTMENT:- The purchase procedure steps taken by materials department are as follows:-

a) As said earlier the procedure of procurement of material is laid down by purchase department, hence there is check over each and every transaction. Thus there are no chances of mistakes and frauds.

b) The policy followed here is hand to mouth technique. Hence materials are

purchased only as per requirement and so whatever is purchased is consumed by the respective consuming section. This helps in reducing inventory-carrying cost and also has control over money blocked in the form of stock, which could be used for alternative purposes.

c) Inventory control techniques like ABC analysis and HML Analysis is used to which results in purchase procedure.

d) As non-moving and slow-moving items are treated specifically, there is control on

purchase procedure.

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C) PRODUCTION DEPARTMENT:-

The Purchase Procedure followed in production department are as follows:- a) Testing each and every process involved in the production and recording fallacy, if any

help having to purchase procedure. b) The bulk formulations are produced according to the capacity of the machinery. This

ensures maximum utilization of available resources thus resulting in minimizing purchase procedure,

c) All the raw materials are mixed in correct composition in the production of respective drugs. Thus the quality is maintained. This helps in minimizing rejections resulting into lower losses.

D) MARKETING DEPARTMENT:-

a) Budgets are prepared and the actual figures are compared with the budgeted ones. The purchase procedures are maintained.

b) Proper incentive schemes are framed for the marketing personnel which would be helpful achieving the targets of the company is reasonable and it fetches adequate returns to the company.

E) PERSONNEL DEPARTMENT:-

a) As per statutory requirement the company has to appoint apprentices. They are appointed for fixed period. They are given complete practical and theoretical training. Apprentices involve in work which is supportive help to regular employees.

b) The overtime for general shift workers has been reduced to great extent thus

bringing control on labor cost. In this way there is optimum utilization of labour by making them complete their work within allocated time.

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LIMITATIONS

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LIMITATIONS:

The time frame of two month for the study is limited

Some information was “Purchase Procedure and so a few thing were taken as per the

guidance of the Purchase Manager without verifying the correctness of the information.

Any change in government policy and market movement will effect the Purchase of Raw

Material.

Practically difficult to data collection.

Time consumable process for collecting data.

Source of data not more reliable than the actual practice.

Project data not fully reliable but it helps for understand the purchase procedure and process of

company business. And other things for taking purchase procedure and observation of financial

analysis.

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RECOMMENDITIONS

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1. Budgets:- Budgets are good management tools. It is difficult to follow Purchase Procedure in general, to develop a budget for value, Quantity of Goods to be purchase in proper manner. Purchase Officer after making detail study prepares Purchase Budget for effective purchasing.

2. Co-ordination of all Departments:- Co-ordination of all departments i.e. Purchase Department, Production Department, Accounts Department, and Finance Department is necessary for proper purchasing of goods / material. Daily reports from production Department, Stores Department regarding material usage, material requirement to purchase Department is necessary for Purchase Control.

3. Setting of standards :- Setting of standards for production and with reference to those standards, setting standards for purchase, the help for proper standards goods can be purchase in accurate manner. If there is any variance in standard performance, and actual performance, purchase officer takes connective action after detail study of variance analysis.

4. Fixing and Authority of Responsibility:-

There should be fixation of authority & responsibility for taking every action regarding purchase. People must be held accountable for following documented procedures. There should have spent of time to document the procedures provide the training and testing.

5. Recording of transaction in proper & timely manner :- Purchase Department should keep all the records up to date in proper manner. Proper filling of all documents is necessary for proper control.

6. Corporate strategic plan:- Purchase Department should consider purchase plan as a plant of corporate strategic plan. All action taken regarding purchase of material should be integrated with corporate strategic planning & objectives.

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7. Attitude:- Following accurate / proper purchase procedure must be an integral part of the attitude of the organization. This attitude must start at the top level.

8. No overstocking & Under stocking of materials:- Purchase Department should take care regarding elimination of overstocking & under stocking of materials. Materials should be purchase be purchase as per requirements of the firm. There should study of all ratios, formulas e.g. Quantity Rating, Quality Rating, Delivery Rating, and Overall Rating, regarding purchase of material. There should not interruption in production process due to non-availability of material. Capital should not be blocked due to overstocking of material.

9. Proper Inspection of Quantity & Quality of Material:- There should be separate & trained department for inspection/examination of purchased goods. Inspection department will make inspection of material as per purchase order. They will check quantity of material, quality of material in proper manner. Rejected goods are returned to suppliers.

10. Employee Training:- It is important to set a training schedule to go through all of the procedures with groups of employees.

11. Monitoring process for compliance:- Any action observed which do not comply with the employee involved.

12. Re-valuate:- There should be regularly re-valuating of process and procedures. Result of Firms Cycle Count.

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BIBLIOGRAPHY

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Websites:

www.wikipedia.com www.patsonslatur.com

Magazines: Business Word Patsons broachers

Financial Daily:

CA financial report.

Books: Manufacturing and Operation Management- L.C.JAMB Production and Operations Management- K.C.Arora. Financial Management- A.P.RAO.

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