Jitendra Report 2

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Kanti Bijlee Utpadan Nigam Limited, (formerly known as Vaishali Power

Generating Company Limited): To take over Muzaffarpur Thermal Power Station

(2*110MW), a subsidiary company named ‘Vaishali Power Generating CompanyLimited (VPGCL)’ was incorporated on September 6, 2006 with NTPC contributing

51% of equity and balance equity was contributed by Bihar State Electricity Board.

This company was formed to renovate the existing unit and run the plant. The

second unit has been successfully re-synchronized on October 17, 2007 after 4 years

of being idle. The company was rechristened as ‘Kanti Bijlee Utpadan Nigam

Limited’ on April 10, 2008.

Bharatiya Rail Bijlee Company Limited (BRBCL): A subsidiary of NTPC under

the name of ‘Bharatiya Rail Bijlee Company Limited’ was incorporated on

November 22, 2007 with 74:26 equity contribution from NTPC and Ministry of

Railways, Govt. of India respectively for setting up of four units of 250 MW each of

coal based power plant at Nabinagar, Bihar. Investment approval of the project was

accorded in January, 2008.



24

JOINT VENTURES

S.NoName of the JointVenture Company

Date of Incorporation

Promoter’s EquityHolding as on

31.3.2008Area(s) of Operation

1. PTC India Limited 16.04.99

NTPC 5.28%NHPC 5.28%PFC 5.28%Power GridCorp 5.28%

Trading of power,import/export of powerand purchase of powerfrom identified private

power projects andselling it to identified

SEBs/others.

2.Utility Powertech

Limited (UPL) 23.11.95

NTPC 50%RelianceInfrastructureLtd.

50%

To take up assignmentsof construction,

erection andsupervision in power

sector and other sectorsin India and abroad.

3. NTPC-SAIL Power

Company Pvt. Ltd.08.02.99

NTPC 50%

SAIL 50%

To own and operate acapacity of 564 MW as

captive power plantsfor SAIL’s steel



25

manufacturing facilitieslocated at Durgapur,Rourkela and Bhilai.Another unit of 250

MW is expected to be

commissioned shortly.

4.NTPC-AlstomPower ServicesPrivate Limited

20.09.99NTPC 50%Alstom PowerGeneration AG

50%

To take up Renovation& Modernization

assignments of powerplants both in India and

abroad.

5.NTPC Tamil NaduEnergy Company

Ltd.23.05.03

NTPC 50%Tamil NaduElectricity

Board

50%

To set up a coal-basedpower station of

1000MW capacity, atVallur , using Ennore

port infrastructurefacilities. The

construction work atsite is under progress.

6. Ratnagiri Gas andpower Pvt. Limited

08.07.05 NTPC 28.33%

To take over andoperate gas based

Dabhol Power Projectalongwith LNG

terminal. NTPC’sshareholding is to berevised to 32.88%.

7.Aravali Power

Company PrivateLtd.

21.12.06

NTPC 50%

IndraprasthaPowerGeneration Co.Ltd.

25%

HaryanaPowerGenerationCorp. Ltd.

25%

To set up coal basedpower Project of 1500MW (3x500 MW),inJhajjar District of

Haryana. NTPC wouldalso operate and

maintain the station onManagement Contract

basis for at least 25years.

8. NTPC-SCCL GlobalVenture Pvt. Ltd.

31.07.07

NTPC 50%SingareniCollieriesCompany Ltd.

50%

To jointly undertakethe development and

operation &maintenance of coal

Blocks and integratedcoal based power

projects in India andabroad.

9.Meja Urja Nigam

Private Limited02.04.08

NTPC 50%

Uttar PradeshRajya Vidyut 50%

To set-up a power plantof 1320 MW (2X660

MW) at Meja Tehsil orany other suitable site



26

UtpadanNigam Limited

in Allahabad district inthe state of UP.

10. NTPC BHEL PowerProjects Pvt Ltd. 28.04.08

NTPC 50%Bharat HeavyElectrical Ltd 50%

To carry outEngineering

Procurement andConstruction (EPC)

activities in the powersector and to engage in

manufacturing andsupply of equipment forpower plants and otherinfrastructure projectsin India and Abroad.

11. BF-NTPC EnergySystems Limited 19.06.08

NTPC 49%Bharat ForgeLimited 51%

To establish a facility totake up manufacturing

of castings, forgings,fittings and highpressure piping

required for powerprojects and other

industries, Balance of Plant (BOP) equipment

for the power sector

12.

Nabinagar Power

GeneratingCompany PrivateLimited

09.09.08

NTPC 50%NTPC BiharStateElectricityBoard

50%

To set-up a coal basedpower project havingcapacity of 1980 MW

(3X660 MW) andoperation &

maintenance thereof atNabinagar in district

Aurangabad of State of Bihar.

13. National PowerExchange Limited

11.12.08

NTPC 16.67%NHPC 16.67%PFC 16.66%TCS 50%

To operate a PowerExchange at National

level.



27

FUTURE CAPACITY ADDITIONS

NTPC has formulated a long term Corporate Plan upto 2017. In line with the Corporate Plan,

the capacity addition under implementation stage is presented below:

S.No PROJECT STATE FUEL MW1. Kahalgaon-II (3X500) Bihar Coal 5002. Sipat I (3 x 660) Chhattisgarh Coal 19803. Barh I (3 x 660) Bihar Coal 19804. Korba III ( 1 x 500) Chhattisgarh Coal 5005. Farakka III ( 1 x 500) West Bengal Coal 5006. NCTPP II ( 2 x 490) Uttar Pradesh Coal 9807. Simhadri II ( 2 x 500) Andhra Pradesh Coal 1000

8.Indira Gandhi STPP- JV with IPGCL &

HPGCL ( 3 x 500)Haryana Coal 1500

9. Vallur I -JV with TNEB ( 2 x 500) Tamilnadu Coal 1000

10.Nabinagar TPP-JV with Railways (4 x

250) Bihar Coal 1000

11. Bongaigaon(3 x 250) Assam Coal 750

12. Koldam HEPP ( 4 x 200)HimachalPradesh

800

13. Loharinag Pala HEPP ( 4x 150) Uttarakhand 60014. Tapovan Vishnugad HEPP (4 x 130) Uttarakhand 52015. Mauda ( 2 x 500) Maharashta Coal 100016. Barh II (2 X 660) Bihar Coal 132017. Vindhyachal-IV (2X500) Madhya Pradesh Coal 100018. Rihand III(2X500) Uttar Pradesh Coal 1000

Total 17930



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Business Model of NTPC

Business model of NTP C has been formed based on the strategiesof NTP C. This included:

1. Cost efficiency i.e. providing power at reasonable prices so that they could provide power toall in need.

2. Eco friendly system: Driven by its commitment for sustainable growth of power, NTPC hasevolved a well defined environment management policy and sound environment practices forminimizing environmental impact arising out of setting up of power plants and preserving thenatural ecology.

3. Efficiency improvement includes both improvements in the existing process and throughimprovement in the technology used to increase the productivity of the company. Research &Development Centre is ISO 17025 accredited and provides high end scientific services to allthe company’s stations as well as many outside stations resulting in improving availability andreliability of stations by providing condition assessment, failure analysis, solving andanalyzing specific problems, and helping our stations in increasing the availability and

reliability of their units.4. Technology enhancement i.e. to stay in competition they have to continuously enhancetheir technology.



29

SWOT ANALYSIS OF NTPC

STRENGTHS OF NTPC:

The company has kept with itself sufficient liquid funds to meet any kind of

cash requirement.

Efficient working capacity of plants.

Efficient and timely completion of projects.

A minimum risk factor.

Best-integrated project management systems.

Company with an excellent record and high profits.

An early starter-more than 30 years experience in power sector.

Highly motivated and dedicated workers and officers- no industrial relations

problem.

Excellent growth prospects with significant additions, modifications and

replacements.

Employee-friendly personnel policies.

Low project cost of NTPC’s plants.

WEAKNESSES OF NTPC:

Depleting raw materials.

Some of the Plant have become old and need investment in Renovation &

Modernization .



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OPPORTUNITIES:

Demand and supply gap.

Upcoming hydro and nuclear sector.

Huge opportunity in consultancy services.

THREATS TO NTPC:

Rising prices of raw materials

Huge competition from SEB’s, Reliance Energy, Tata power and other Private

Development. Coming up of other sources of power.

Huge Capital requirement for expansion, diversification, horizontal & vertical

integration and R & M.



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FINANCIAL ANALYSIS

INTRODUCTION

Financial analysis refers to an assessment of the viability, stability and profitability of a

business, sub-business or project. It is performed by professionals who prepare reports using

ratios that make use of information taken from financial statements and other reports. These

reports are usually presented to top management as one of their bases in making business

decisions. Based on these reports, management may:

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 equipments in the production of its

goods;

Issue stocks or negotiate for a bank loan to increase its working capital .

Other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

GOAL

Financial analysts often assess the firm's:

1. Profitability - its ability to earn income and sustain growth in both short-term and long-

term. A company's degree of profitability is usually based on the income statement, which

reports on the company's results of operations.

2. Solvency - its ability to pay its obligation to creditors and other third parties in the longterm.

3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate

obligations;

.4. Stability - the firm's ability to remain in business in the long run, without having to sustain

significant losses in the conduct of its business. Assessing a company's stability requires the



32

use of the income statement and the balance sheet, as well as other financial and non-

financial indicators.

Comparing financial ratios are merely one way of conducting financial analysis. Financial

ratios face several theoretical challenges :

They say little about the firm's prospects in an absolute sense. Their insights about

relative performance require a reference point from other time periods or similar firms.

One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least

two ways. One can partially overcome this problem by combining several related ratios to

paint a more comprehensive picture of the firm's performance.

Seasonal factors may prevent year-end values from being representative. A ratio's values

may be distorted as account balances change from the beginning to the end of an

accounting period. Use average values for such accounts whenever possible.

Financial ratios are no more objective than the accounting methods employed. Changes in

accounting policies or choices can yield drastically different ratio values.

They fail to account for exogenous factors like investor behavior that are not based uponeconomic fundamentals of the firm or the general economy.



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FORMAT OF FINANCIAL ANALYSIS AT NTPC :

INR Million

S.No. Particulars YEAR YEAR YEAR

1 Turnover

2 Profit After Tax

3 EBIT

4 Share Capital

5 Reserves & Surplus

6 Net Worth

7 Capital Employed

8 Net Profit Ratio (%)

9

RONW (%) (EAT /

NW)

10

ROCE (%) (EBIT /

CE)

S.No. Particulars

1

Average Turnover for preceding 3 financial years

(million INR)



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2

Net worth as a percentage of Share Capital as on

last day of preceding financial year (%)

TURNOVER INR Million


1 Sales & Services

2 Total Turnover

SHARE

CAPITAL INR Million


1 Share Capital

RESERVES

& SURPLUS INR Million


1 General Reserve

2 Share Premium

3

P & L Account

Balance

4 Less Misc. Exp.

5

Total Reserves &

Surplus



35

CAPITAL

EMPLOYED INR Million


1 Net Block

2 Net Current Assets

3

Total Capital

Employed

PAT & EBIT INR Million


1 PAT

2

Provision for

Taxation

3 Interest

4 EBIT



36

FORMULA'S:

1) NET WORTH = SHARE CAPITAL + RESERVE & SURPLUS

2) CAPITAL EMPLOYED = NET BLOCK + NET CURRENT ASSET

3) NET PROFIT RATIO = PROFIT AFTER TAX * 100

TURN OVER

4) RONW % = PROFIT AFTER TAX * 100

NET WORTH

5) ROCE % = EARNING BEFORE TAX & INTEREST *100

CAPITAL EMPLOYED

Abbreviation:

RONW = RETURN ON NET WORTH

ROCE = RETURN ON CAPITAL EMPLOYED



37

A financial statement analysis consists of application of analytical tools and techniques to the

data in financial statement in order to derive from these measurement and relationships that

are significant and useful for decision making.

Financial analysis can be used as the preliminary screening tool in selection of stock in

secondary market .It can be used as a forecasting tool of future financial condition and

results. It may be used as a process of evaluation and diagnosis of managerial, operating, or

other problem areas.

The principal tool for the analysis of financial statement is RATIO ANALYSIS.

RATIO ANALYSIS

A ratio gives the mathematical relationship between one variable and another. Ratio analysismainly helps in valuing the firm in quantitative terms.

Financial tools that help in ratio analysis are as follow:

(1) Liquidity Ratio(2) Activity or Efficiency Ratio

(3) Profitability Ratio

(4) Capital Structure of leverage ratio

(5) Investment Analysis ratio



38

COMPARATIVE ANALYSIS BETWEEN NTPC LTD AND TATAPOWER

Financial Analysis of NTPC AND TATA POWER

Ratio Analysis

Liquidity Ratio:

These ratios are calculated to ascertain the short term liquidity of the organization.

(1)Current Ratio:

Current ratio is the ratio of total current assets compared to total current liabilities. Current

ratio of the firm measures its short-term solvency i.e. its ability to meets short term

obligation.

Ideally a company should have > 2:1 current ratio its shows that company has enough funds

to meet its short term obligations. Higher the ratio better it is for company as it enhances the

liquidity position of the company and builds creditors and investor’s trust.

For NTPC:

YEAR 2009 2008 2007

current ratio

(CA/CL)

3.22 3.16 2.56



39

Illustration

As we see from 2009 to 2007 the current ratio of the company is increasing from 2.56 to

3.22. The overall current assets of the company are always greater than current liabilities

which show that firm has always enough funds to meet its day to day obligations.

For TATA POWER:

YEAR 2009 2008 2007

current ratio(CA/CL) 2.19 2.30 2.25

Illustration

For TATA POWER also the ratio is increasing from 2007 to 2008 but it decreases in 2009.

Hence the company doesn’t perform well in 2009 but as the ratio is greater than 2:1 it can

still meet its day today obligations.

(2)Quick Ratio:

It measures the instant debt paying capability or company’s ability to pay unexpected demand

for working capital. This ratio establishes the relationship between quick or liquid current

assets and current liabilities. The higher the ratio, the better is the position of the company.

For NTPC:

YEAR 2009 2008 2007

quick ratio(QA/CL) 3.33 2.80 2.14

Illustration

As we see the increasing trend in the quick ratio from 2.14 to 3.33 in the observed years so

this shows that company keeps enough liquid funds to meet its unexpected cash requirements

or obligations. For NTPC it shows that it can meet need for funds easily.



40

For TATA POWER:

YEAR 2009 2008 2007

quick ratio(QA/CL) 1.85 2.07 1.92

Illustration

The quick ratio is always greater than 1:1 in case of TATA POWER so it implies that the

company is trying to increase its liquid funds so that it can meet its need for funds easily.

However, its performance in 2008 is not good as compared to 2007 but as the ratio is greater

than 1:1, it can meet its need for funds.

Solvency Ratios

(1)Debt- equity ratio:

This ratio indicates the relative proportion of debt and equity in financing the assets of a firm.

It reveals the relationship between internal and external sources of funds of a company.

Total long term debts refer to the total outside liabilities i.e. short term and long term loans.

Net worth mean total paid up amount of equity and preference share capital plus the total or

accumulated amount of reserves and surplus.

This ratio plays important role in analyzing the long term solvency of a company. It indicates

the firm’s capacity to pay long term debts and procure additional loans and informs whether

the firm is following the policy of trading on equity.

For NTPC:YEAR 2009 2008 2007

debt equity

ratio(Debt/equity) 0.59 0.50 0.45

Illustration

Debt Equity Ratio is also consistent and there has been not much variation in this ratio over

the years it was 0.45 in year 2007, 0.50 times in year 2008 and 0.59in year 2009. But, it is



41

slowly and steadily rising each financial year. This ratio shows that the long term solvency of

the firm is sound enough it has good capacity to pay its long term debts which make it easy

for it to procure funds from the market easily due to its long term solvency ratio.

Special issues relating to NTPC: Recently Government of India has prescribed the debt

equity ratio for funding the power projects in the ratio of 70:30 excepting for special projects.

This will affect the debt equity structure of the company .

For TATA POWER:

YEAR 2009 2008 2007

debt-equity

ratio(Debt/equity) 0.40 0.67 0.55

Illustration

As observed by the values above we infer that the value of equity is larger than debt in the

year 2009 so the long term solvency of the company is good and has a larger safety of margin

for creditors since owner’s equity is treated as margin of safety by creditors and vice versa.

(2)Interest coverage ratio:

This ratio measures the debt servicing capacity of the firm and particularly when payment of

fixed interest on long term loans is concerned.

The higher the ratio the more is the interest paying capacity of the firm and safety margin

available to long term creditors. The low ratio indicates that the firm is using excessive debt.

The investors can forecast the financial risk by comparing interest coverage ratio withstandard ratio of the industry.

For NTPC:

YEAR 2009 2008 2007

interest coverage

ratio(PBIT/Interest) 6.70 5.79 4.75



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Illustration

As I see interest coverage ratio has increased from 4.75 times in the year 2007 to 5.79 in the

year 2008. But in the year 2009 it has increased to 6.70. This shows that firm can meet its

long term interest obligations on time as and when they arise. This is utmost important for

interest bearing securities which improves the overall credit rating of the organization.

For TATA POWER:

YEAR 2009 2008 2007

interest coverage

ratio(PBIT/Interest) 6.60 3.82 5.05

Illustration

As I see the ratio in the year 2007 was 5.05 and in 2008 it decrease to 3.82 but in 2009 it again

increase to 6.60. This means its interest payment capacity decreased in 2008 but it increased in

2009.

(3)Proprietary ratio

The objective of computing this ratio is to find out how the proprietors have finance the

assets. This ratio indicated the extent to which the assets of the firm have been financed out

of proprietor’s fund.

For NTPC:

YEAR 2009 2008 2007

proprietary

ratio(shareholder's

fund/ total assets) 66.70% 66.65% 72.79%



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Illustration

Proprietary ratio for the company indicates that on an average 68.71% of the assets are

purchased out of shareholder’s fund.

For TATA POWER :

YEAR 2009 2008 2007

proprietary

ratio(shareholder's

fund/ total assets) 72% 53.13% 55.97%

Illustration

The general financial position of the company is good as the ratio is above 50%. So the assets

can be within the shareholder’s fund i.e. larger safety of margin as discussed above.

Activity Ratio:

(1)Capital turnover ratio

Capital turnover ratio determines the efficiency with which the capital employed is utilized. It

indicated firm’s ability to generate sales per rupee of capital employed. In general higher the

ratio the more efficient the management and the utilization of capital employed. A too high

ratio may indicate the situation of overtrading. If capital turnover ratio is lower than that

required reasonably and vice a versa.

For NTPC:

YEAR 2009 2008 2007

capital turnover

ratio(net sales/ capital

employed) 0.62 0.58 0.51

Illustration

As power sector is capital intensive sector and returns start after a gap of time so the blocked

capital can’t be used for revenue generation for that particular time period. So here capital



44

turnover ratio is smaller. Here the ratio increases from 2007 to 2009 showing better

management and better utilization of capital employed from 2007 to 2009.

For TATA POWER:

YEAR 2009 2008 2007

capital turnover

ratio(net sales/ capital

employed) 0.88 0.77 0.93

Illustration

This ratio indicates the efficient utilization of capital and liquidity and profitability position

of the business in the year 2009 as compared to 2008.

(2)Fixed assets turnover ratio

This ratio expresses the relationship between fixed assets (less depreciation) and net sales or

cost of goods sold. This ratio measures the efficiency and profit earning capacity of the firm.

The higher the ratio the greater is the intensive utilization of fixed assets. Lower ratio means

under utilization of fixed assets and excessive investment in these assets.

For NTPC:

YEAR 2009 2008 2007

fixed assets turnover

ratio(net sales/ net FA) 1.42 1.27 1.16



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Illustration

Fixed Assets Turnover indicates that NTPC in the year 2009, for every 1 rupee in fixed assets

generate 1.42 in sales. It shows intensive utilization of fixed assets. Indicates the profit

earning capacity of the company is very high.

For TATA POWER:

YEAR 2009 2008 2007

fixed assets turnover

ratio(net sales/ net

FA) 1.97 1.56 1.51

Illustration

The fixed asset ratio for TATA POWER is increasing in the observed years which show that

there is continuous improvement in the utilization of fixed assets.

(3)Working capital turnover ratio

This ratio establishes relationship between net working capital and net sales. This ratio is

used to assess the efficiency with which the working capital is being used in the business.

A high working capital ratio indicates efficient management of working capital or over

trading i.e. low investment in working capital and more profits. Low working capital turnover

ratio implies under trading i.e. funds are not being utilized efficiently.



46

For NTPC:

YEAR 2009 2008 2007

working capital

turnover ratio(net

sales/ net WC) 2.10 2.15 2.79

Illustration

Working Capital Turnover Ratio indicates the proper management of the working capital in

the firm which is required for the day to day operations of the firm. As observed the Ratio

here is in decreasing trend so it is subject of worry for NTPC as the working capital is not

being utilized efficiently or there is minor deteriorations which partially due to recent

adoption of a number of JV companies by NTPC and also take over of smaller power plants.

For TATA POWER:

YEAR 2009 2008 2007

Working capital turnover ratio

(net sales/ net WC) 2.91 2.06 2.74

Illustration

In year 2007 the working capital ratio was 2.74 i.e. the working capital was utilized

efficiently but in 2008 there is decrease in the ratio to 2.06 and further in 2009 the ratio

increase to 2.91. This means in 2008 the company was not able to utilize its funds efficiently

but in 2009 due to proper management of working capital the funds are utilized properly.

Profitability ratios:

(1)Net profit ratio

This ratio measures the relationship between net profit and sales of a firm. Net Profit is the

excess of revenue over expenses during a particular accounting period. The net profit ratio isdetermined by dividing the net profit by sales and expressed as percentage.



47

This ratio is the indication of overall profitability and efficiency of the business. A high net

profit ratio would only mean adequate returns to the owners. It also enables a firm to

withstand in cut throat competition when the selling price is declining or cost of production is

rising. A low net profit ratio on the other hand, would only indicate inadequate return to the

owners.

For NTPC:

YEAR 2009 2008 2007

net profit ratio(PAT/

net sales) 20.00% 21.06% 21.80%

Illustration

Net profit of NTPC Ltd is showing a decreasing trend from 2007 to 2009 that shows the

decreasing trend of returns of NTPC Ltd and also the decreasing trend of its ability to survive

in the cut throat competition.

For TATA POWER:

YEAR 2009 2008 2007

net profit ratio(NP/

net sales) 2.4% 6.3% 5.1%

Illustration

As the net profit ratio is decreasing from 2007 to 2009, the company needs to work upon its

operational efficiency.

(2)Operating Profit Ratio

This ratio establishes the relationship between operating profit and net sales. It is also defined

as the ratio of profit before depreciation, interest and tax to total turnover. Operating profit

means the net profit arising from the normal operations and activities of the business without

taking account of extraneous transactions and expenses purely financial nature.



48

This ratio indicates the net profitability of the main business i.e. operating efficiency of a

firm. The higher the operating ratio the better would be the operational efficiency of the firm.

A higher operating profit ratio means that a firm has been able not only to increase its sales

but also been able to cut down its operating expenses

For NTPC:

YEAR 2009 2008 2007

operating profit

ratio(operating

profit/net sales) 32.53% 33.03% 31.35%

Illustration:

As the operating profit ratio is increasing from 2007 to 2009 it shows that not only the

operating efficiency of the company is improving but also its sales are also increasing with

the decrease in its operating expenses. But in the year 2009 this ratio is decreasing which

shows that the company needs to work on its operating efficiency so as to improve its sales

and to decrease its operating expenses.

For TATA POWER:

YEAR 2009 2008 2007

operating profit

ratio(operatingprofit/net sales) 15.83% 15.34% 18.42%

Illustration

As this ratio measures the rate of net operating profit to sales and there is decrease from 2007

to 2009 and then increase in 2008. For the profitability and soundness of the company we

have to further analyze the balance sheet and profit and loss account of the company.



49

(3)EPS (Earning per Share)

The rate of dividend on shares depends upon the amount of profits earned by the firm.

Whatever profits remains, after meeting all expenses and paying preference share dividend,

belongs to equity shareholders.

This is a popular ratio as it measures the profitability of a firm from owners’ standpoint. The

higher the ratio the greater would be the market price of a company’s shares or vice versa.

For NTPC:

YEAR 2009 2008 2007

Earning per share(EPS) 8.99 8.33 7.06

Illustration

As it is inferred from the observed value above that there is increase in the equity

shareholder’s fund as a result of retained earnings without any change in numbers of

outstanding shares. So the dividend paying capacity of NTPC has increased. Also considering

the gradual improvement of the operation and turnover, the EPS is expected to improve

further.

For TATA POWER:

YEAR 2009 2008 2007

earning pershare(EPS) 38.64 34.02 29.03

Illustration

This ratio helps in evaluating the prevailing market price of share in the light of profit earning

capacity. The more the EPS better is the performance and prospects of the company. This

also implies that share price is higher for investors.



50

COMPARISON OF NTPC WITH TATA POWER

Liquidity

The basic objective of working capital is to provide adequate support for the smooth

functioning of the normal business operations of the company. The quantum of investment in

current assets has to be made in such a manner that it not only meets the needs of the

forecasted sales but also provides a built in cushion in form of safety stocks to meet

unforeseen contingencies.

Working Capital at NTPC is always greater than 2 in all 3 years for which data has been

analyzed indicating that NTPC never really face a major problem in meeting its short-

term liabilities, but this is not in case of Tata powers .

Profitability

NTPC AND TATA POWERS follows the Aggressive Approach in which the firm goes for

fewer investments in current assets, thus leaving more amounts of funds for investment

in more profitable ventures. This approach imparts greater PROFITABILITY to the

company. An ideal policy would be the moderate policy, which strikes a balance

between the two approaches.

Solvency

The solvency ratio measures the size of a company's after-tax income, excluding non-cash

depreciation expenses, as compared to the firm's total debt obligations. It provides a

measurement of how likely a company will be to continue meeting its debt obligations.

Debt is low for TATA Power as compared to NTPC. Both the companies can meet the

interest payments obligations easily and more than 50% assets are from shareholder’s funds.



51

Activity

Activity ratios are that ratios which measure a firm's ability to convert different accounts

within their balance sheets into cash or sales. Both the companies (NTPC and TATA Power)

are typically trying to turn their production into cash or sales as fast as possible because this

will lead to higher revenues.

Such ratios are frequently used when performing fundamental analysis on different

companies. I observed that the power sector as a whole is more capital intensive sector

therefore capital is blocked in projects whose returns came after a period of time.

(Approximately 5 years).

PROCUREMENT AT NTPC

rocurement is the acquisition of goods and services for the direct benefit or use

of the governments, corporations or individuals generally via, but not limited to,

a contract. A key question in procurement is what to buy, given a limited

budget. Procurement involves a bidding process to purchase a given product or

service. The project is aimed to study and understand the process of tendering used for

procuring different plant equipment packages, from various bidders. Procurement at NTPC is

initiated on the basis of approved indents/requisitions indicating budget and project estimate

provisions. The contract services/materials management services receive the

requisition/indent for the procurement of materials/equipment/services duly approved by the

competent authority and then plan and organize the procurement action. Normally an open

tendering system for procurement is adopted during construction stage of a project. However,

P



52

depending on the circumstances and the requirements, limited tendering or single tendering

system is also adopted in specific cases. Following are three types of tenders:

Types of tenders

Based on the materials classification and Delegation of Powers (DOP) handbook of

NTPC, following three types of tendering is adopted in NTPC:

Fig-6: Types of Tenders

(a) Open Tender:

Procurements of value Rs 15 lakh and above must be done through open tendering, as it

involves a lot of cost and time. Open tender is accessible to all known reliable and proven

sources of particular equipment/ material. For the above purpose, advertisement is given

in two or more newspapers of all India repute in addition to one or more local

TYPES

OF

TENDERS

OPEN

TENDER

LIMITED

TENDER

SINGLE

TENDER



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newspapers, where the work is to be executed. However, in case of Empanelment, a pre-

qualification process of invitation for bids will take place, only once in every three years,

by advertising in newspapers as stated above. Empanelment is done in case of award of

contract for Environmental Impact Assessment (EIA), Flora-Fauna study etc. The criteria

for pre-qualification will inter-alia consist of past performance, financial soundness,

technical competence, organizational capability etc., but for the items valued less than 15

lakh, the pre-qualification can be done on the basis of data available in trade journals,

manufacturer’s directory or approved vendors list of state government and central

government. For new ventures, methodology of Expression of Interest (EOI) is adopted

and by means of advertisement, new bidders are invited to provide their credentials and

based on it, short listing of appropriate bidders is done.

(b) Limited Tender:

Limited tender is a tender, where instead of sending bid enquiry to all the possible

vendors through newspapers, a limited number of vendors are intimated through post or

fax. But, a limited tender may be invited only for the procurement worth less than Rs. 15

Lacs. In case of a limited tender, minimum of four bidders are invited to quote the prices

for the required equipment/materials/services and these four bidders must be from the

approved list of vendors mentioned in the open tender. However, a limited tender is a

special case and cannot be issued without proper explanation and requirement. In case of

urgency& exceptional cases, items worth more than Rs.15 Lacs may also be procured

though a Limited Tender Enquiry (LTE), with authorization of competent authority and

the reason must be recorded in the indent documents/note sheet. Further, as per the

circular No. 265/2007 the selection of vendors are to be done through a screening

committee before approval by the competent authority.



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(c) Single Tender:

Where procurement is made by contacting only a single source on grounds that the item

to be procured is of a proprietary nature or on account of standardization or on grounds of

urgency of requirement, it will be treated as a single tender. In case of proprietary items, a

certificate to that effect has to be issued by the indenter at appropriate laid down levels in

each case. Orders on basis of single tender will be issued with the approval of General

Manger or any competent authority to which powers are delegated. However, a Single

Tender Enquiry (STE) is to be done only on exceptional cases and is not encouraged by

NTPC.

IMPORTANCE OF PROCUREMENT

Materials constitute a very significant proportion of total cost of finished products in most of

the manufacturing industries. It estimated that near about from 40% to 70% of total

production cost is related to material only. So control over material is very essential for any

organization.

The importance of Procurement may be summarized as follows:-

Availability of materials: There should be a continuous availability of all types of

materials in the factory so that the production may not be held up for want of any

material. Minimum quantity of each material is fixed to permit production to move on

schedule.

No excessive investment in materials : There should be no excessive investment in

stocks. Investment in materials must not tie up funds that could be better used in other

activities. For this purpose, a maximum quantity is assigned to each item of material

above which stock should not be exceeded. So there should be no over stocking of

materials because that would result in loss of

Interest charges



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Higher godown charges

Deterioration in quality

Losses due to obsolescence

Reasonable price: Materials should be purchased at the reasonable price. Quality is

not to be sacrificed at the cost of lower price. The material purchased should be of

that quality alone which is needed.

The price paid should be the minimum possible otherwise the higher cost of the

finished products would make the products would make the products uncompetitive in

the market.

Minimum wastage: There should be minimum possible wastage of material while

these are being stored in the godowns by storekeeper or used in the factory by the

workers. Wastage should be allowed up to the certain level known as normal level of

wastage and it should not exceed that level.

Risks of spoilage and obsolescence : Material must be avoided from it. For this

purpose a maximum quantity of each material is determined and a proper method of

issue of material is followed. The materials received earlier should be issued earlier.

Information about availability of materials: It should be made continuously

available to the management so that planning of production may be done. The

storekeeper can supply this information because he keeps an up to date record of

every item of stocks under a proper system of material control.

Supply of material at right time: Procurement assures the required need and to

demand or fulfill at the right time from the right place so as to utilize all the resources

and none of them are kept idle.



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Japanese concept : Another common procurement issue is the just in t ime delivery, a

JAPANESE CONCEPT.

Other important : -

1) To stoppage the wastage of materials.

2) To maintain the flow of production.

3) To stoppage the theft of material.

4) To reduce the cost of storage.

5) Wastage during the process of manufacture should be the minimum possible.

VARIOUS PACKAGES AT NTPC

NTPC develops power plants across India and each plant requires huge investments in form

of time and money. For this purpose NTPC divides its work into different packages for each

power plant. Tenders are floated for each package for the purpose of erection of power plant

instead of the whole project being given on turnkey basis to a single bidder. These packagesare distinguished on the following basis:

Corporate Packages

Regional Packages

Site Packages

Details of some of the above packages are given below:

CORPORATE PACKAGES

MECHANICAL PACKAGES

1 Steam Generator with Electrostatic Precipitator

2 Steam Turbine Generator Package

3 Station piping

4 Ventilation System

5 Air conditioning System6 Fire Detection and Protection System



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7 Ash Handling System Package

8 Coal Handling Plant

9 Pre-Treatment Plant

10 DM Plant & CW Treatment System

11 Condensate Polishing Plant

12 CW System Equipment Package

13 Cooling Towers

14 Make up Water Pipes

ELECTRICAL PACKAGES

1 Power Transformers

2 Outdoor Transformers

3 Generator Busducts & Associated Equipment, MV Busducts

4 MV Switchgears

5 Lt Switchgears And Lt Bus Ducts

6 Electrical Equipment Supply & Erection Package

7 Switchyard Package

C&I PACKAGES

1 Station Control and Instrumentation

2 Instrumentation Cables

CIVIL PACKAGES

1 Site Leveling & Infrastructure Works Package

2 Main Plant & Off Site Civil Works Package

3 Chimney and Chimney Elevator

4 Ash Dyke Package

5 CW and Make Up Water System Civil Work Package

6 Railway Siding and S&T System



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CONSULTANCY PACKAGE

REGIONAL PACKAGES

1 Ash Water Recirculation System

2 Ht Power Cables

3 1.1 KV Power Cables

4 Control Cables

SITE PACKAGES

SITE PACKAGES ASSOCIATED WITH PLANT

1. Survey

2. Geotechnical Investigation

3. Workshop & Lab Equipment

4. Drinking Water Pipeline To Township

SITE PACKAGES ASSOCIATED WITH TOWNSHIP

1. Township site leveling and land development

2. Construction of Residential Quarters and associated

3. Misc. works

Each package consists of works that has to be completed according to the schedule,

developed at the planning stage of the project. Tenders are floated for award of contracts for

each package through the sale of bidding documents. The last date of receipt of bids is also

mentioned in the advertisements, as well as at the time of sale of bidding documents. The

bidders duly fill the bidding documents according to the specifications laid by NTPC andsubmit their bids before the last date along with Bid Security and Certificate of Compliance

to Important Conditions in separate sealed envelopes.



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PROCESS OF PROCUREMENT

Process of Procurement

CONTRACT PACKAGING

PREPARING A COST ESTIMATE

NOTICE INVITING TENDER

BID OPENING

BID EVALUATION

APPROVAL & AWARD OF

CONTRACT



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1) CONTRACT PACKAGING

Contract packaging is the first step of procurement for a project. The total project work is

broken into smaller well-defined packages. This is done with the view to optimize the

number of contracts to be handled for the better planning, co-ordination and implementation

of the whole project and at the same time to execute the project at an optimum cost to the

organization. The development of contract package list for a project is done jointly by

Engineering, Contracts, and Corporate Planning and Finance functions of the organization.

The contract package, being extremely vital for a successful project implementation, is

approved by the highest corporate level authority. A feasibility report is also prepared for a

project, which contains all the details of the various equipment systems and services

required.

2) PREPARING A COST ESTIMATE

Cost estimation is the most important financial activity in the process of budgeting and

procurement. Further, Cost Estimate is the basis of Award and correctness & accuracy of the

estimate is of utmost priority and in turn, ensures procurement at lowest possible prices.

Whenever NTPC procures some material, it also specifies how it intends to finance the

package through External Commercial Borrowings (ECB), internal and other sources. The

procurement of the first kind i.e. ECB requires financial clearance from the Finance

(Concurrence) department. For this purpose, cost estimation is done before forwarding the

indent document to the finance department. The methods of cost estimation, which are used

by NTPC, are:



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(a) Historical cost method:

In this method, the Cost Engineering department at NTPC utilizes the latest cost incurred for

similar kind of project. For example, if the cost estimate has to be prepared for new thermal

power plant, the latest executed thermal power plant rates will be used for estimation. Hence,

the rates so obtained are very near to the actual rates that might be prevalent in the market at

that point of time. But, to smoothen the effect of inflation and various other financial

components in the prices at the time of the execution of that project, an escalation factor is

used. All the prices of the previous projects are multiplied by this factor and a very close

estimation of market rare is thus obtained.

(b) Market Rate Method:

Market rate method is used for the procurement of equipments that are not in very large

numbers and value. In this method, once an indent is prepared, some of the vendors registered

at NTPC or listed in trade journals are sent a request for quoting the prices of particular

equipment. This enquiry is not a tender and the rates provided by the vendors are not a part of

the bid. After the information is received, the rates quoted by various vendors are compared

and the lowest quoted price is taken as base rate for calculations. However, if the difference

in the price quoted by two vendors is reasonably high, an average of the two may be taken as

the base. However, 10% discount is considered in the budgetary offers.

3) NOTICE INVITING TENDER

The next step is to invite various bidders to bid for the required package. The Notice inviting

tender (NIT) is published in various leading national newspapers as per guidelines and

procedures. Copies of NIT are also sent to the bidders who have evinced interest in supplying

similar equipments or services in the past. In case of procurements funded by external



62

funding agencies following international competitive bidding procedures, the NIT is also

published in the Indian trade journal and a copy of NIT is sent to each of the embassies/ high

commissions of members countries of the funding agency. In the NIT, time, date and venue

of bid opening, amount of bid security etc. is mentioned and only a specific part of

Qualifying Requirements (QR) is published. However, the bidding documents stipulate the

complete and detailed QR specific requirements to a particular contract package. Such

qualification criteria include the financial status of a bidder (manufacturer or project

executing agency), technical requirements to be fulfilled etc. NTPC invites sealed bids in two

stages i.e. Stage- I: Techno Commercial Bid and Stage- II: Price Bid or both simultaneously.

For Hydel and wind power projects, bids are invited in separate stages, whereas in case of

thermal power projects, bids are invited simultaneously. All bids must be accompanied by

Bid Security of a particular amount in a separate sealed envelope. Any bid not accompanied

by an acceptable bid security in a separate sealed envelope shall be rejected by NTPC as

being non-responsive and returned to the bidders without being opened.



63

4) BID OPENING

Bid opening is the next step in procurement process. Tenders are opened on the due date and

time mentioned in the NIT. If the date mentioned is declared holiday, the next working day

will be considered as the opening date, but the time will remain the same. These sealed bids

are opened by a committee nominated by the tender committee members from the respective

departments at the time indicated in the invitation to tender, in presence of representatives of

the tenderers, who wish to attend and a representative of Finance. When bids are opened, the

names of all present tenderers would be read out for the benefit of the bidders present and

where feasible, the various price schedules from the Grand Summary Price Schedule

(Schedule 5) are read out. Any omission or irregularity such as absence of signature of a

tenderer, absence of earnest money deposit, references etc. may be pointed out on the

document itself and is signed by the nominated bid opening committee.

5) BID EVALUATION

The process of evaluation of bids begins with an examination of the bids in order to

determine:

1. Acceptance of all Qualifying Requirements.

2. Acceptability of bid security furnished by the bidder.

3. Completeness of bid and correctness of signature.

4. Computation of arithmetical errors in the bid price schedules.

5. Stated deviations from the bidding conditions, which might reflect on the substantial

responsiveness of the bid and justify its rejection.



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The detailed evaluation is carried out only for bids, which are substantially responsive. Bid

evaluation considers price and other factors in a transparent manner and in accordance with

the stipulated evaluation criteria stated in bidding documents such as cost compensations for

the deviations from the bidding conditions taken by the bidders, differential price factors for

guaranteed parameters etc. In case of procurement under international competitive bidding

procedures, the bid price is converted into a single currency i.e. in the Indian National Rupees

(INR). If the bidder wishes to pay a combination of amounts in different currencies, it may

quote its price accordingly, but use not more than three foreign currencies. The foreign

currencies in which the bid prices are quoted should be converted into INR by applying SBI

bill selling rate on bid opening date.

Once the lowest evaluated bidder is selected as above the next step is to determine whether

the qualification requirement as stipulated in bidding documents are met and whether the

bidder in question is capable to successfully execute the contract. An affirmative

determination of the above is pre-requisite for award of contract to the bidder. In case the

lowest evaluated bidder does not meet the above requirement, the similar determination is

done for the next lowest bidder. If the bidder also fails, the process is continued, until the

lowest evaluated and qualified bidder is chosen.

6) APPROVAL & AWARD OF CONTRACT

A Tender Committee is formed to decide on the award of contract valuing 2 lacs and above.

The members of Tender Committee at appropriate level shall consist of representatives each

from Indenting, Procurement/Contracts and Finance department. NTPC determines to its

satisfaction whether the Bidder selected as having submitted the lowest evaluated responsive

bid is qualified to satisfactorily perform the contract in terms of the qualifying requirements



65

stipulated in Bid Data Sheet. The determination will take into account the Bidder’s financial,

technical and production capabilities, in particular to its contract, work in hand, future

commitments and current litigation. It will be based upon an examination of the documentary

evidence of the Bidder’s qualifications submitted by the Bidder in Attachment 3 to the bid, as

well as any other information, as NTPC deem necessary and appropriate. An affirmative

determination will be a prerequisite for award of the contract to the Bidder. A negative

determination will result in rejection of the Bidder’s bid, in which event; NTPC will proceed

to the next lowest evaluated bid to make a similar determination of that Bidder’s capabilities

to perform satisfactorily. “The bidder which satisfies all the qualifying requirements and

offers the least price is awarded the contract”.

PROCEDURE FOR INTENDING



66

For the purpose of indenting, material planning is required. It is nothing but classifying the

materials

into various categories to facilitate a speedy and efficient procurement. In this process all the

materials which may be required at any of the NTPC projects or offices are classified in to

five major categories and their procurement is to be done on the basis predefined for them.

1.Stock item (Automatic Recoupement items/AR)

2.Insurance Items (I)

3.Unit Replacement item (UR)

4.Capital Item (P)5.Other non-stock items (Not falling under any of the above category)

6.But since this classification is very vague and unspecific, a further classification is done to

exercise selective control over all Material Management activities. This classification is

known as the ABC analysis.

IDENTIFICATION OF RESPONSIBILITIES:

NTPC being a utility organization with projects located away from the corporate office, has

divided the responsibility of contracts management, both pre-award and post award, between

the corporate office and project site.

A contract management function as an independent specialized techno commercial function

to meet the overall corporate objective in the area of project procurement has been in place

since inception as a department named as “Corporate Contracts” within the organization

structure of NTPC. The ‘Corporate Contracts’ procures plants/ equipment and services for its

projects, which are characterized by adherence to the procurement of external funding

agencies, factoring of long process owner for award of all such contracts including high value

civil works, its monitoring and post award follow up till the delivery of equipment from the

suppliers works till the closure if the contracts. The Corporate Contracts division is the

receipt and installation of the plant and equipment and its execution is the responsibility of

the project site.



67

There are a number of other small value contracts with lesser of engineering coordination,

whose pre-award and post-award contracts are handled by the project sites. The principles

and guidelines followed for these site contracts are similar to those applicable for the

Corporate Contracts.

In view of the complexity involved in the construction of thermal generation projects, the

Contracts Management Systems calls for further sharing of responsibilities for specialized

functions such as Engineering, Finance, Cost Engineering, Quality Assurance, and Inspection

at Corporate Center and Erection, Site Finance, Field Quality Assurance etc. as the Project

Site.

CONTENTS OF A BIDDING DOCUMENT

The facilities required, bidding procedures, contract terms and technical, requirements are

prescribed in the bidding documents. The bidding documents include the following sections:

Section I – Invitation for Bids (IFB)

Section II – Instructions to Bidders (ITB)

Section III – Bid Data Sheet (BDS)

Section IV – General Conditions of Contract (GCC)

Section V – Special Conditions of Contract (SCC)

Section VI – Technical Specifications and Drawings (TS)

Section VII – Forms and Procedures (FP)

Documents Comprising the Bid

The bid submitted by the Bidder shall comprise the following documents:

1. Bid Form duly completed and signed by the bidder, together with all Attachments

2. Price Schedules duly completed in all respect by the bidder.



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3. The bid shall also contain necessary details of the Equipment and Mandatory Spares to

be imported from Associate/Collaborator by manufacturer or bidder

Each Bidder shall submit with its bid the following attachments:

(a) Attachment 1: Bid Security

A bid security shall be furnished in a separate sealed envelope. Bids not accompanied by the

requisite bid security in a separate sealed envelope, or bids accompanied by bid security of

inadequate value, shall not be entertained and in such cases, bids shall be returned to the

bidders without being opened.

(b) Attachment 2: Power of Attorney

A power of attorney, duly authorized by a Notary Public, indicating that the person(s) signing

the bid has/have the authority to sign the bid and thus that the bid is binding upon the Bidder

during the full period of its validity.

(c) Attachment 3: Bidder’s Qualifications

The Bidder shall provide satisfactory evidence that he and/or, where applicable, his

collaborator/associate/partner(s) of Joint Venture:

Is a manufacturer, who regularly manufactures equipment of the type specified and/or

undertakes the type of work specified and has adequate technical knowledge and relevant

experience for the works covered in the bidding documents.

Does not anticipate a change in ownership during the proposed period of execution of

work (If such a change is anticipated, the scope and effect thereof shall be defined).



69

Has adequate financial stability and capability to meet the financial obligations pursuant

to the Works covered in the Bidding Documents. (The Bidders should submit five (5)

copies of their profit & loss account and balance sheet for the last five (5) years).

Have adequate design, manufacturing and/or fabrication capability and capacity available

to perform the work within the time period specified.

Has an established project management organization covering the areas related to

engineering of equipment/systems, interface engineering, procurement of equipments and

the necessary field services required for successful construction, testing and

commissioning of all the power plant equipments and systems covered in the scope of

work for the package.

Has established quality assurance systems and organization designed to achieve high

level of equipment/system reliability, during manufacturing and/or fabrication and field

installation activities.

A company formed by the merger of two or more companies or divisions of such

companies engaged in supply and installation of power generation equipments can also

participate provided the constituent companies or divisions before merger individually or

jointly meet the stipulated qualification requirements fully.

(d) Attachment 4: Eligibility and Conformity of the Facilities

Documentary evidence that the facilities offered by the Bidder in its bid or in any alternative

bid, (if permitted) are eligible and conform to the bidding documents. The documentary

evidence of the eligibility of the facilities shall consist of a statement on the country of origin

of the plant and equipment offered, which shall be confirmed by a certificate of origin issued

at the time of shipment.

Attachment 4A: Special Tools and Tackles



70

The bidder shall provide the details regarding Special Maintenance Tools and Tackles. The

cost of these Tools and Tackles shall be included in the Bid Price.

(e) Attachment 5: Subcontractors Proposed by the Bidder

The Bidder shall include in its bid details of all major items of supply or services that it

proposes to purchase or sublet, and shall give details of the name and nationality of the

proposed Subcontractor, including vendors, for each of those items. Bidders are free to list

more than one Subcontractor against each item of the facilities. Quoted rates and prices will

be deemed to apply to whichever Subcontractor is appointed, and no adjustment of the rates

and prices will be permitted.

(f) Attachment 6: Deviations

Deviations, if any, from the terms and conditions of Bidding Documents or Technical

Specifications shall be listed only in Attachment 6 to the bid. The Bidder shall also provide

the additional price, if any, for withdrawal of the deviations. Except for the deviations listed

in Attachment 6, the bid shall be deemed to comply with all the requirement in the bidding

documents and the bidders shall be required to comply with all such requirements of bidding

documents and technical specifications without any extra cost to NTPC irrespective of any

mention to the contrary, anywhere else in the bid, failing which the bid security of the Bidder

may be forfeited.

Attachment 6A: Certificate Regarding Acceptance of Important Conditions

Bidders are required to furnish a certificate indicating their compliance to the provisions, duly

signed and stamped by the bidder, in a separate sealed envelope. Any bid not accompanied by

such certificate in a separate sealed envelope shall be rejected by NTPC and returned to the

Bidder without being opened.



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(g) Attachment 7: Alternative Bids

Bidders wishing to offer technical alternatives to the requirements of the bidding documents

must first price the NTPC’s design of the facilities as described in the bidding documents,

and shall further provide all information necessary for a complete evaluation of the

alternatives by the NTPC, including drawings, design calculations, technical specifications,

breakdown of prices, proposed installation methodology and other relevant details. Only the

technical alternatives, if any, of the lowest evaluated bidder conforming to the basic technical

requirements shall be considered by the NTPC.

(h) Attachment 8: Local Representation

If a foreign bidder has engaged an Indian agent, it will be required to give the following

details in its bid as per the format enclosed in the Bidding documents:

The name and address of the local agent;

What Service the agent renders; and

The fixed amount of remuneration for the agent included in the offer.

(i) Attachment 9: Deemed Export Benefits

The CIF (Cost of Insurance & Freight) value of import content in the Ex-works (India) price

quoted in Schedule-2 of the bid, if any, shall be necessarily declared by the bidders in

Attachment-9 to the bid. The relevant certificate for claiming the deemed export / custom

duty benefits shall be issued on the aforesaid declaration basis only. In case, no such import

content is envisaged in the bid or the CIF value of import content to be declared is zero, the

bidder shall indicate "NIL" against the CIF value of import content. In case where no value is

indicated by the bidder against the CIF value of import content in Attachment -9 or statement

/ any declaration like 'later', 'to be furnished later', 'NA' etc. are indicated by the bidder, in



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such cases the CIF value of import content in the bid shall be considered as "NIL" for the

purpose of evaluation of bids and issuance of relevant certificate for claiming the deemed

export / custom duty benefits

Attachment 9A: Customs Duty Benefits for Import of Construction

Equipment

Declaration regarding the Customs Duty Benefits, for Import of Construction Equipment

Considered in the bid.

(j) Attachment 10: Functional Guarantees

The declaration on the guaranteed parameters and declaration on demonstration parameters as

per NTPC's format.

(k) Attachment 11: Erection Tools and Tackles

List of Erection Tools and Equipments which the bidder proposes to bring to site in case the

contract is awarded to him.

(l) Attachment 12: Technical Data Sheets

Technical Data Sheets duly filled in as per the NTPC's format.

(m) Attachment 13: Bought Out Items

Details of bought out items to be directly dispatched by the sub-vendor(s) to site.

(n) Attachment 14: Quality Assurance Programme

Details regarding the overall quality management & procedures which the bidder proposes, to

follow during various phases of execution of the contract.



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(o) Attachment 15: Additional Information

Any additional Information which the bidder wishes to provide in his bid.

(p) Attachment 16: Milestone Schedule

Details regarding the timing & sequence of all key activities necessary for successful

completion of the facilities and giving the important milestone as per NTPC's format.

(q) Attachment 17: Price Adjustment Data

Details regarding Price Adjustment as per NTPC's format.

(r) Attachment 18: Equipment and Mandatory Spares to be imported

from Associate/Collaborator

Details of Equipment (including type test) and Mandatory Spares to be imported from

Associate/Collaborator by the Manufacturer or the bidder, as per NTPC's format.

(s) Attachment 19: Electronic Fund Transfer Authorization Form

Electronic Fund Transfer Form duly filled in as per NTPC's format.

(t) Attachment 20: Declaration on Fraud Policy

Form of Acceptance of Fraud Policy duly filled in as per NTPC's format.

The Bidder is expected to examine all instructions, forms, terms, specifications and other

information mentioned in all the sections as well as attachments stated above in the bidding

documents. Failure to furnish all information required by the bidding documents or



74

submission of a bid not substantially responsive to the bidding documents in any aspect will

be at the Bidder’s risk and may result in rejection of its bid. The Bidder is advised to visit and

examine the site where the facilities are to be installed and its surroundings and obtain for

itself on its own responsibility all information that may be necessary for preparing the bid and

entering into a contract for supply and installation of the facilities. The costs of visiting the

site shall be at the Bidder’s own expense. The Bidder and any of its personnel or agents will

be granted permission by NTPC to enter upon its premises and lands for the purpose of such

inspection, but only upon the express condition that the Bidder, its personnel and agents will

release and indemnify NTPC and its personnel and agents from and against all liability in

respect thereof and will be responsible for death or personal injury, loss of or damage to

property and any other loss, damage, costs and expenses incurred as a result of the inspection.

PRICE SCHEDULES

Bidders shall give a breakdown of the prices in the manner and detail called for in the Price

Schedules. Separate numbered Schedules shall be used for each of the following elements.

The total amount from each Schedule (1 to 4) shall be summarized in a Grand Summary

(Schedule 5) giving the total bid price(s) to be entered in the Bid Form. The Bidders shall

present their prices in the following manner:

Schedule No. 1 - Plant and Equipment including Type Tests charges and Mandatory

Spares Parts supplied from Abroad

Schedule No. 2 - Plant and Equipment including Type Tests charges and Mandatory

Spares Parts to be manufactured within Employer's (NTPC) Country.



75

Schedule No. 3 - Local Transportation including port handling, port clearance, port

charges, Inland transit Insurance and other local cost incidental to delivery of Plant &

Equipment and Mandatory Spares.

Schedule No. 4 - Installation Services including Erection Works, insurance covers other

than inland transit insurance and other services.

Schedule No. 5 - Grand Summary (Schedules Nos. 1 to 4)

Schedule No. 6 -Recommended Spare Parts

Schedule No.7 -Taxes and Duties, applicable on Ex-Works (India) Price Component

(Schedule-2) in respect of direct transaction between the Bidder and Employer (NTPC),

not included in Bid Price.

Schedule No. 8A - Break up type test charges quoted in Schedule-1

Schedule No. 8B - Break up type test charges quoted in Schedule-2

Schedule No. 9 - Unit Adjustment rates.



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E- PROCUREMENT

E-PROCUREMENT is very important to achieve e-governance and for applicability of

uniform procurement process to all units. It has the ability to reduce procurement cost by

reduction in lead time, reduction in transaction cost and cycle times etc. E-procurement also

helps in building collaborative relationship with suppliers. It enables greater transparency;

implements best practices, and increases the vendor base. It also reduces the possibility of

cartel formation and generates reasonable competition. It helps to achieve savings in

administrative and process cost. E-procurement enhances the security and it is also a step

towards ERP systems for the organization.



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CONCEPT AND SCOPE

E-procurement is purchase and sale of supplies and services and management of procurement

process over Internet. Manual tender processes can be long and cumbersome, often taking

three months or longer, which is costly for both buyer and supplier organizations. E-

Tendering replaces these manual paper-based tender processes with electronically facilitated

processes based on best tendering practices to save time and money. Through E- Tendering,

NTPC is able to manage the tenders coming in, with all tenders stored in one place. It can cut

and paste data from the electronic tender documents for easy comparison in a spreadsheet.

Suppliers' costs in responding to Notice Inviting Tender (NIT) are also reduced as the tender

process cycle is significantly shortened. E-tendering offers an opportunity for automating

most of the tendering process: from help with preparing the tender specification; advertising,

to tender evaluation and placing of the contract.



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E-PROCESS WORKFLOW

Fig-8: Process of E-procurement

The process of e-procurement shall be taken up at Contracts & Materials (C&M) department

after receipt of the requisition or the indent. The indent duly approved by the competent

authority, as per Delegation of Powers (DOP) handbook of NTPC, is a pre-requisite to

initiate e-procurement action. Once the indent is approved, the C&M department then plan

and organize the procurement action.

In case of open tender contract valuing 2 lacs and above, a Tender Committee is formed for

preparation and approval of Qualifying Requirements (QR). Then, various bidders are

invited online to bid for various packages. A Notice Inviting Tender (NIT) is published

R R ee gg iiss tt rr aa tt iioo nn oo f f iinn dd ee nn tt

Check forvalue / type

PP rr oo pp oo ss aa ll f f oo rr f f lloo aa tt iinn gg oo nn -- lliinn ee tt ee nn dd ee rr tt hh rr oo uug hh

R R ee llee aa ss ee TTee nn dd ee rr tt hh rr oo uu gg hh ee --

TC nominationIndentor &

OOnn lliinn ee PP R R EE BBII DD tt ee cc hh nn iiccaa ll cc llaa rr iif f iiccaa tt iioo nn

Online BID

OOnn lliinn ee tt ee cc hh nn iicc aa ll BBII DD

Offline EMDsubmissions

NNoo mm iinn aa tt iioo nn oo f f QQR R cc oo mm mm iitt tt ee ee aa nn dd

A A pp pp rr oo vvaa ll oo f f QQR R

TTee cc hh nn iicc aa ll ee vvaa lluu aa tt iioo nn uu ss iinn gg oo nn lliinn ee OOnn lliinn ee qq uu ee rr iiee ss f f rr oo mm iinn dd ee nn tt oo rr ,, tt ee cc hh nn iicc aa ll

cc llaa rr iif f iicc aa tt iioo nn tt oo & & f f rr oo mm



79

online on NTPC’s E-procurement portal. The interested bidders can purchase the tender

document of the required package, by sending a demand draft or a cheque of the required

amount, as mentioned in NIT, in favour of NTPC. Once the payment is received, a login id

and password is given to the bidder to view and download the tender document.

Clarifications regarding QR or any other technical queries in the document are resolved

online through e-mails, message chart boards etc. Based on the clarifications to the bidders,

if required, the tender committee may issue the necessary amendments. These amendments

shall be automatically forwarded to all the vendors who have downloaded the documents.

The bidders shall prepare the bids online. Till the time they are submitting their bids, they

shall be saving the bids at the server under their Digital Certificate.

Bidders are then required to submit and upload their bid online prior to a pre-defined date

and time, as mentioned in the NIT, on the NTPC’s e-procurement website based on the

tender requirements defined in the tender documents, viz:

Qualifying Requirements documents,

EMD details

Technical data sheets and Commercial bid etc.

However, the Earnest Money Deposit (EMD) / Bid Security of a particular amount, have to

be submitted offline in a separate sealed envelope. Any bid not accompanied by an

acceptable bid security in a separate sealed envelope shall be rejected by NTPC as being

non-responsive and returned to the bidders without being opened.

Once the bids are uploaded by all the bidders, neither any bidder nor any employee of NTPC

can access the server prior to bid opening date and time. At the time of bid opening, using

individual digital certificates & passwords, the tender committee shall open the EMD



80

documents first, then the qualifying requirement details shall be opened, followed by the

Technical bid opening and the technical data sheets and the deviation statement – technical.

The commercial price bids of only those bidders who are meeting QR and are

TECHNICALLY acceptable, and have submitted the necessary EMD will be opened on later

date by the tender committee. On the date of price bid opening, a comparative statement of

bid price schedules is automatically generated online and only the members of tender

committee have access to both the quoted price and ranking of each bidder. However, each

bidder can only view the rankings and not the quoted price of other bidders.

e- procurement workflow chart for a tender……..annexure-II

S.No

Steps Proposed /suggested action

1. Defining work flow To be configured by the SERVICE PROVIDER and to be followed uniformly by thepurchase groups while following electronic tendering e-procurement.

2. Appointment of Service provider Service Provider by Corporate Centre

3. e-tendering as aEVENT

Is broadly defined in following segments

a. e-procurement pre-requisites … includes setting of software and buyercum supplier Training.

b. Pre-event … items identifications, specifications, etc

c. Event .. On-line tendering including Auctions & reports

d. Post-Event. .. Post auction Item rate and Archive reports,

4 Features of the process



81

4.1 Hoisting of Tender Documents

Hoisting of Tender Documents by TC using Digital Certificate On line

Allowing Downloads to Bidders. By providing pass words On line

Submission of EMD Off line

Verifying of EMD Details Off line

Submission of BIDs On line

4.2 Tender Opening

Bid opening by TC. Using Individual Digital Certificates & Pass Words On line

Opening of Technical Bids Online

Evaluation of tech Bids. Online

Technical Clarifications Online

Approval of Technical Bids & short listing of bidders Off line

4.3 Opening of Price Bids

Arriving at Technical Loading Off line

Incorporation of Loading Logic Online

Opening of Price Bids Using Individual Digital Certificates & Pass Words. Online

4.4 Conducting of REVERSE AUCTION with lowest bid price as the openingprice

Reverse Auction A process technique which allows prospective buyers tolist any item(s)5 they wish to buy, and the sellers bid to provide the bestprice , Suppliers Competing, can be from anywhere in the world…justneed to have Internet access. . ‘Reverse’ in nature…Because prospectivesellers bid the price DOWN as they compete for the work and the Prices Spiral Down, the process is More Consumer Oriented and is Mosteffective after Technical evaluation.

Online



82

1

Defining tendering

procedures

Procedures shall be similar at all the plants, process designed by CMM based

on various experiences gathered from Pilot e procurement projects carriedout at Corporate Centre and various plants.

2 Mode of tendering Short listing of vendors shall be based on mode of tendering, viz

Restricted tender or Limited Tender Open tender

In case of open tender case. Short listing will be done through qualifyingrequirements.

3 Nomination of TenderCommittee

Tender committee shall be nominated in advance and shall be associatedwith the tender from preparing of tender documents, auction rules, securityaspects and finalization of tender, as per the strategy agreed upon.

4 Defining tenderdocuments

The broadly following sections should be part of a tender document.

1. Qualifying requirements in case of open tender.2. Bill of materials3. Instructions to bidders.4. General purchase conditions5. Proforma of bank guarantee towards EMD6. Quality plan format7. Reverse Auction Rules.8. Technical Data Compliance Sheets.9. Bid Price Schedule10. Statement of deviation

Defining auction rules Auction rules shall be incorporated in the tender document and madeknown to vendors at the time of tender release.

However, the strategies shall be finalized before Price bid opening date isannounced.

5 Apply & issue of digital certificates

Apply and Receive the digital Certificate form the certifying authorities forthe tender committee members.

Certifying authorities are TCS, Safescrypt, MTNL, n-code solutions.

Service Provider may also render assistance through sub-CA.

6 Generating of Generated by SERVICE PROVIDER and re-fixed by the digital certificate



83

passwords. holders.

7 Defining of Servertiming of clock

The server time of e-procurement portal / site shall be ensured beforerelease of tender document.

8 Hosting of tenderdocuments

Tender documents to be electronically released by the Tender Committeefor hosting at the e-procurement portal.

Release andUploading of documents

The tender documents defined above shall be released and uploaded on e-procurement portal (in association with Service Provider) by the TenderCommittee under their Digital Certificate and Pass Words

9 Defining TenderSchedule

Tender Schedule is as below: -

S.No. NTPC Stage Contractor Stage SERVER date & time Envelopes

Start Expiry

1. Release Tender - Pre-Qualifying,

Technical sheets BidCommercialrequirements,

Bid price Scheduleetc.

2. - TenderDownload

3. - Bid Preparation

4. Close for Bidding -

5. - Bid Submission For details refer PARA – 22.0

6. Bid Opening -

7. Reverse Auction -

8. Item Rate form Item Rate form

9. View Item Rate Form - -Do-

10. Tender Award -

10 Allowing download of Tender Document

In case of Open Tender documents will be allowed to be downloaded by allthe vendors who are registered / enrolled at the portal.

In case of Restricted/ Limited Tender, only those authorized by NTPC at thetime of the Tender release.

In case of Open tender pay for tender documents either through online



84

payment or shall send this payment to NTPC or through DD directly to NTPCrespective plant. Or along with EMD before bid opening

11 Clarification on tenderdocument on line

If required, Vendors shall seek on line clarifications on released document,TC shall respond and issue the clarifications on-line to the queries, thesequeries shall be on ONE to MANY basis. The reply to the query shall beautomatically forwarded to all the vendors who have down loaded thedocuments.

12 Amendments Based on the clarifications to the Vendors, if required TC may issue thenecessary amendments, these shall be on ONE to MANY basis. Theamendment shall be automatically forwarded to all the vendors who havedown loaded the documents and shall be available for down load too.

13 Preparation of bids online

Vendors shall be preparing the bids on line. Till the time they are submittingtheir bids, they shall be saving the bids at the server under their DigitalCertificate also using PKI for encryption & decryption for ensuring theconfidentially and security of the bids.

14 Submission of bids online

Vendors shall have to submit bids online on the NTPC, e-procurementwebsite

15 UP – Loading of bids All the vendors shall upload their bids on the NTPC, e-procurement websitebased on the tender requirements defined in the tender documents, viz

Qualifying Requirements documents, EMD details Technical data sheets and Commercial bid etc.

16 Submission of EMD –off-line

All the vendors shall send the EMD in acceptable form to NTPC directly andshould reach to tendering authority on or before bid opening date.

Any Special treatment to be allowed foe EMD should be clearly brought outin the Tender documents.

17 Submission of EMD –on line

The copies of the EMD details shall be uploaded on the website. In case of vendors who are exempted from submitting EMD, the necessary documentsshall be uploaded on the website.

18 Opening of BIDS – online

Applying individualdigital certificates

& Pass words

By

At the time of bid opening, tender committee shall open the EMDdocuments first, Then the qualifying requirement details shall be opened,followed by the Technical bid opening and the technical data sheets and thedeviation statement – technical.

TC using individual digital certificates & pass words shall open theelectronic tender box consisting of

1. Envelope-1 …containing EMD details



85

Tender Committee 2. Envelope-2 …containing Qualifying requirements

3.Envelope-3…containing Technical details & data sheets.

4. Envelope-4 …containing Technical deviation details.

5. Envelope-5 …containing bid price schedule . The commercial bids of only those vendors who are meeting QR and areTECHNICALLY acceptable, and have either submitted necessary EMD orsubmitted necessary documents for EMD exemption will be opened on laterdate by the tender committee

19 Opening of

EMD

Envelope-1

Tender committee shall Open the EMD Details and compare and verify withthe physical details of EMD received.

Where ever EMD has been found OK, proceed further

20 Opening of

QR

Envelope-2

Tender committee shall Open the QR Details for those vendors whose EMDis OK.

QR

Verification

This is a on line activity and Tender Committee will verify QR using individualdigital certificates

QR

Clarification

This is a on line activity and If required TC will seek on-line clarifications forQR deficiencies

21 Opening of technicalBids envelope-3

Tender committee shall Open the Technical bids, using individual digitalcertificates

Opening of datasheets envelope-4

Tender committee shall Open the Technical deviation details, usingindividual digital certificates

On line evaluation of technical bids

TC will evaluate the bids on line based on the exception technicalcomparative sheets generated by the system.



86

On line technicalclarifications

TC will seek on-line clarifications if required, from the individual vendor.These clarifications shall be on one to one basis and shall be sought on-lineonly.

22Arriving at technical

loading off line Based on the technical clarification furnished by the vendors, and thedeclared deviations (if any) arrive at the technical loading is required interms of money value.

Incorporation of loading logic

Incorporate the loading logics in consultation with Service Provider beforedeciding the price bid opening date.

Ensure the loading logic is incorporated towards the technical loading

23

Assessment of NEW Vendor

In the event of Open Tender, in case a new vendor is meeting the

QR and all technical requirements.

If required the tender committee shall carry out the assessment of thevendor as per laid down procedure and ensure the vendor’s capabilitybefore making final recommendations for opening of their price bid.

24 Short listing\ of Vendors after

technical evaluation

Based on technical evaluation cum QR qualification in case of Open Tender,obtain approval for short listing of Vendor for opening of Price Bid fortechnically qualified vendors.

Define Price Bid Opening Date,

25 Opening of Bid PriceSchedule envelope-5

Defining BOD for price bids opening

On line opening of price bids by TC using individual digital certificates &passwords with the help of Service Provider.

ComparativeStatement

Generate On-line Comparative statement, after completion of Price bidopening.

In case of Reverse Auction option, Decide the opening Price. For reverseauction or else process case for approvals & ordering.

26 Defining

Auction

Rules

Tender committee with the approval of approving authority shall fix OpeningPrice for reverse auction.

Opening price shall either be based on lowest technically acceptable pricereceived at the time of commercial bid opening of the price fixed bycommittee with the approval of approving authority based on estimate andlowest price received.



87

Bid Price: - Reverse Auction shall be held on total bid price derived from theindividual item rates.

Alias Names:- During the reverse auction names of the parties will not be

displayed on the reverse auction portal. Only the rate of L1 bidder shall bedisplayed

To be defined by system Administrator / Service Provider

Rank Option : - The individual vendors shall know their rank only withrespect to the Lowest bid

Bid Decrement : - The minimum increment during reverse auction shall be(Rs. Xxxxx.xx) to be decided by TC depending upon the item beingprocured.

Auction Time :- The reverse auction shall be held for (xx hrs.) from ….. hrs to….. hrs to be decided by TC on case to case basis.

Extension time: - In case of last minute bidding the bidding time shall beextended for (.. minutes ) for infinite no. Of times. Or

Provisions for limited extensions can be also provided on case-to-case basisand to be decided by the TC.

ITEM RATE SUBMISSIONS: -After the successful completion of reverseauction the Lowest bidder shall be informed electronically to submit itemrate form.

27 Reverse Auction date& Time

Setting of reverse auction date in consultation with system administrator /Service Provider by the Tender Committee..

Inform the vendors the date and time of Reverse Auction, whose price bids,have been earlier opened.

28 Conducting reverse

auction

Shall be done in consultation with Service Provider.

29Providing of item wise

break up

by L1 bidder

After completion of reverse auction L1 bidder will submit the item rateswithin 48 hours (2 days) of completion of RA.

The % Reduction of prices achieved during the Auction can be uniformlydistributed over all the items. Or can be evenly distributed among all theitems.

In no case the individual item rate can be revised to higher value thanindicated in the original item rate schedule against which the RA has been

conducted.



88

30 Finalrecommendations

And

Award

After receiving the item rate from the tender committee shall put uprecommendations to the competent authority off line.

After approval of competent authority the order shall be released to the L1bidder as per normal procedure.

31 Contract Agreement To be assigned by NTPC and the L1 bidder off line as per practices

32Training

Training of NTPC personnel

Training of vendors

The tender committee shall ensure that the proper training is imparted tothe participating Vendors.

Service Provider to ensure the same.

33 Archiving & Vaulting Data towards concluded tenders, which has been Logically Completed, shallbe transferred to NTPC Servers for the purpose of Long-term Auditrequirements.

34 Documents to beretained forVerifications

Case file should necessarily contain following document.

1. Purchase indent along with administrative approval.

2. Approved note sheet for resorting to e - tendering.3. Approved note sheet for nomination of Tender Committee.

4. Tender Documents.

5. Tender release schedule.

6. System generated technical data comparative statements.

7. Approved note sheet for technical evaluation / short-listing of vendors / Price Bid Opening.

8. System generated Price Bid comparative statements

9. Down loaded copy of item rate details as per BPS.10. Original Copy of item rate details as per BPS from L1 Bidder.

11. Snap Shots of Reverse Auction.

12. System generated audit trail report.



89

EE--pprrooccuurree mmeenntt pprroommiisseess tthhee f f oollllooww iinngg ggaaiinnss::

NNoo ggeeooggrraapphhiiccaa ll bbaarrrr iieerrss :: ssaa lleess / / mmaarrk k eett iinngg tt iimmee rreedduucctt iioonn,, wwhhiicchh ootthheerrww iissee ssppeenntt oonn pprr iiccee nneeggoott iiaatt iioonnss,, f f oo llllooww uuppss eettcc..,, aass tthhiiss ww iillll lleeaadd ttoo qquuiicck k eerr oorrddeerr f f iinnaa lliizzaatt iioonn aatt oouurr eenndd

1

TTCC mm ee ee tt iinn gg ,, nn oo tt ee ,, pp rr oo pp oo ss aa ll f f oo rr

tt ee cc hh nn iicc aa ll aa pp pp rr oo vv aa ll,, ss hh oo rr tt lliiss tt iinn gg oo f f

A A uu tt oo -- oo pp ee nn iinn gg oo f f pp rr iicc ee BBII DD aa nn dd aa uu tt oo --eneration of CS re orts.

TTEER R oo f f f f lliinn ee

ReverseAuction

FFiinn aa ll TTCC rr ee cc oo mm mm ee nn dd aa tt iioo nn ..

A A pp pp rr oo vv aa ll oo f f TTCC rr ee cc oo mm mm ee nn dd aa tt iioo nn ..

R R ee gg iiss tt rr aa tt iioo nn oo f f PP OO

TToo rr ee llee aa ss ee EEMMDD f f oo rr uu nn ss uu cc cc ee ss ss f f uu ll BBiidd dd ee rr ss .. SSee cc uu rr iitt DDee oo ss iitt f f rr oo mm ss uu cc cc ee ss ss f f uu ll BBiidd dd ee rr ss ..

Release of

Preparation of draft PO /LOA and vetting of the



90

RReedduucctt iioonn iinn VV eennddoorr’’ss ccoossttss aass tthheeyy nneeeedd nnoott tt rraavveell ttoo oouurr oof f f f iicceess && tthheerree iiss nnoo nneeeedd ttoo mmaak k ee tthhoossee ccoommmmuunniiccaatt iioonn ccoossttss

CCoommpplleettee ttrraannssppaarreennccyy iinn tthhee pprroocceessss,, lleeaadd iinngg ttoo ssoouunndd ddeecc iissiioo nnss EEnnhhaanncceess sseeccuurr iittyy

SSaavviinngg iinn aaddmmiinn iisstt rraatt iivvee aanndd pprroocceessss ccoosstt

REVERSE AUCTION

The next step is called a REVERSE AUCTION. It is a type of auction in which the role of

the buyer and seller are reversed, with the primary objective to drive purchase prices

downward. In an ordinary auction (also known as a forward auction), buyers compete to

obtain goods or services. In a reverse auction, sellers compete to obtain business. During a

reverse auction, all the interested bidders log on to the auction site and inputs several quotes,

in multiples of a specified amount, over a 30-90 minute period. These quotes reflect the

prices at which they are willing to supply the requested package. As the bidder can only

view its relative position with respect to other bidders, he bids down the price until the price

quoted by him becomes the lowest of all.

After completion of reverse auction, the L1 bidder (the bidder which quotes the lowest price)

will submit the item rates within 48 hours (2 days) of completion of reverse auction. The

percentage reduction of prices achieved during the auction is uniformly distributed over all

the items. In no case, the individual item rate can be revised to higher value than indicated in

the original item rate schedule against which the reverse auction has been conducted. After

receiving the item rate, the tender committee shall put up recommendations to the competent

authority off line. After approval of competent authority the order shall be released to the L1

bidder as per normal procedure.



91

BENEFITS TO NTPC

Reduced tender cycle-time.

Fast and accurate pre-qualification and evaluation, which enables the automatic rejection

of suppliers that fail to meet the tender specification.

Faster response to questions and points of clarification during the tender period.

Reduction in the labour intensive tasks of receipt, recording and distribution of tender

submissions.

Reduction of the paper trail on tendering exercises, reducing costs to both the

organization and the suppliers.

Improved audit trail increasing integrity and transparency of the tendering process.

Improved quality of tender specification and supplier response.

Provision of quality management information.

RECOMENDATIONS

Price bids should be filled online from various bidders, so that arithmetic accuracy can be

maintained.

Any technical and commercial details in the evaluation reports should be furnished with

proper reference along with the page numbers as mentioned in the bid documents.

Strict instructions should be given to all the bidders to furnish supporting schedules along

with the annual reports, without which complete Financial Analysis cannot be done.

Bidders should be given proper training sessions for filling of bid forms and schedules.

While preparing cost estimate many times, last awarded rates are taken which at times

are quite old. Hence in such cases parallel market rates collection should be insisted upon.



Some times in the bid documents the treatment of taxes and duties in evaluations is not

clearly indicated. This leads to confusion. This aspects needs special care while reviewing

bid documents.

In the Q.R. certain financial parameter like return on net worth etc. are found to be

needing attention as the same has been kept very low and hence there are chances that are

very poorly performing company may enter as contractor.

In case of limited tender enquiry, the list of party needs to be constantly upgraded so that

good parties can find place.

While evaluating a bidder, some time the credentials of bidders are more than 7 year old.

The status of bidder might have changed by this t ime. Hence the status of recent year (last

3 years) is suggested to be considered for checking their credentials.

REFERENCES

Bidding documents

NTPC-Delegation of Powers (DOP)

Tender evaluation reports

NTPC Office Circulars