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INVENTORY MANAGEMENT 1

MATRIX BUSINESS SCHOOL,PUNE

Project Report

SUMITTED BY:

RAVI BHUSAN

Roll No. 10

MATRIX BUSINESS SCHOOL,

PUNE.

Performance Appraisal through Inventory Management with reference to Orient Area


A STUDY ON INVENTORY MANAGEMENT AT ORIENT AREA,MAHANADI COALFIELDS LIMITED

BRAJRAJNAGAR , ORISSA

BY

RAVI BHUSANRoll no – 10

PGDM(FINANCE)2009-11

A project report submitted in partial fulfillment ofRequirement for the degree of

Post Graduate Diploma in Management(PGDM)

SINHGARD BUSINESS SCHOOL(MATRIX)Survey No. 9/1/5, 9/2/4 & 9/1/4 Ambegaon Budruk,

Off Westernly Bypass Road, Near Sinhgad boy's hostel, Pune–411 041



DECLARATION

I here by declare that this Project Reports entitled “ A

study on INVENTORY MANAGEMENT at ORIENT

AREA , MCL , BRAJARAJNAGAR , ORISSA “ submitted

by me under guidance of Dr. J.N.Pol , Director ,

Sinhgad Business School (Matrix), Pune is my own and

has not been submitted to any other University or

Institution or published earlier .

Place: - Orient Area (MCL) RAVI

BHUSAN

Date : -

ROLL NO : - 10

PGDM(FINANCE)



ACKNOWLEDGEMENT

It is a great pleasure for me to acknowledge the assistance and contribution given by large number of individuals to this effort.

First and foremost I wish to express my deepest gratitude to Dr. J.N. POL , Director , Sinhgad Business School( Matrix) , Pune for giving me the opportunity to do this project work . I am in debt to this institute.

My sincere thanks to Shri. U.C.Panda (Area Finance manager) and Shri. U.N.Panda (Dy. Finance Manager), Orient Area , Mahanadi Coalfield Limited (MCL). Whose indispensable guidance, valuable suggestion and immense encouragement during the training period made me possible to make a project report of this magnitude.

I would also like to express my thanks to Shri.J.S.RAO, (Depot Officer, Regional Store), Orient Area. who in spite of his busy schedule help me to get all data and information required for my project report .

I am also equally obliged to express my gratitude to all the staffs of Finance and Store Department of Orient Area, MCL, Brajrajnagar , Orissa , for offering their all kinds of help and encouragement for completion of my Project Report.

RAVI BHUSANROLL NO :- 10PGDM (FINANCE)



Certificate

This is to certify that the project report entitled

“Inventory Management and Finance Department” at

Orient Area of Mahanadi Coalfields Limited, Orissa,

submitted to Finance department. This study is a

bonafied research work carried out by Mr. RAVI

BHUSAN under our guidance and supervision.

We further certify that all necessary help or source of

information as has been availed of in the connection, is

duly acknowledged by them.

During his training period their performance and

behavior are found EXCELLENT.

Mr. U.C.Panda Mr. U.N.Panda



(Area Finance Manager, (Dy. Finance

Manager ,

Orient Area) Orient Area)

CONTENTS

1. EXECUTIVE SUMMARY……………………………………………Page 7

2. VISION & MISSION OF MCL (CIL)………………………………..Page 9

3. INTRODUCTION………………………………………………………Page

10- 48

A. Organizational SetupB. Principles of Store Keeping, Storage, Care & Preservation of Stores.C. Receipt Procedures & InspectionD. Manual Store AccountingE. Stock VerificationF. Issue of StoresG. Local PurchaseH. Disposal ProcedureI. Loss of StoresJ. Return of StoresK. Inventory ControlL. Financial

4. COMPANY PROFILE ………………………………………………..Page 49

5. FUTURE PLAN………………………………………………………..Page 51



6. REVIEW OF FINANCIAL PERFORMANCE……………………...Page 52

7. BIBLOGRAPHY ………………………………………………………Page 53

8. CONCLUSION & RECOMMENDATION…………………………Page 54

1. EXECUTIVE SUMMARY

Inventory is the most excessive assets of a Coal Producing company like Coal

India Limited and also the idle resource. There are various inventory control

techniques such as Economic Order Quantity, Reorder Point, Safety Stock,

ABC analysis, XYZ analysis, FSN analysis, HML analysis, VED analysis, Just

In Time inventory control and many more. Out of all these are some techniques

which are applied for inventory control at Coal India Limited, India.

Coal India Limited, a Nav Ratna Company is the second largest corporate body, Having about 4.60 lakh employees with headquarter at Kolkata, is a Holding Company under ministry of Coal, Government of India. It was formed as a public Sector undertaking in November 1975.Coal India presently contributes 85% of the total coal production in India. It operates through eight subsidiaries: seven producing companies and one planning & design institute.

Eastern Coalfields Limited (ECL), Sanctoria, West Bengal. Bharat Coking Coal Limited (BCCL), Dhanbad , Jharkhand



Central Coalfields Limited (CCL), Ranchi , Jharkhand Northern Coalfields Limited (NCL), Singrauli , Madhya Pradesh Western Coalfields Limited (WCL), Nagpur , Maharastra South-Eastern Coalfields Limited (SECL) , Bilaspur , Chattisgarh Mahanadi Coalfields Limited (MCL) , Sambalpur , Orissa Central Mine Planning and Design Institute Limited (CMPDIL) ,

Ranchi , Jharkhand.The mines of North Eastern Coalfields (Assam & Meghalaya) operate directly under coal India.

COAL INDIA OPERATION

Spreads over eight states in Jharkhand, West Bengal, Orissa,

Chattisgarh, Madhya Pradesh, Uttar Pradesh, Maharashtra & Assam.

Operates through 8 Subsidiaries & 78 areas.

Operates 475 mines (UG mines 287, OC mine 151, Mixed mines 37.

Operates 19 washeries (Cocking coal 12, Noncoking 7).

Capacity of cocking coal washeries-19.68 Mt’s approx.

Has over 200 other establishment like workshops, hospitals, captive

power plants etc.

Coal India’s performance, physical as well as financial, for the fiscal year 2009-

10 ended on a note of satisfaction. CIL paid a dividend of Rs. 2210 Crores- the

highest ever – to Government of India during the fiscal. The cheque was

presented to Dr. Manmohan Singh, Hon’ble Prime Minister by Shri Sriprakash

Jaiswal, Hon’ble Minister of Coal on 26 march 2010. The production of 431.27

Million Tonnes – registered a growth of 6.8% - the highest achieved in any year

so far. Coal India managed to achieve 99.1% of the targeted production of 435



MTs. CIL has attained a growth of 6.8% in 2009-10 against a growth of 6.4%

achieved in 2008-09 and 5.3% per annum achieved during the period 2002-03

to 2007-08. Coal India Limited as a whole made a profit (before tax and

dividend) of Rs. 12396.47 Crores during 2009-10. For the Fiscal 2010-11 ,

CIL’s targeted production and coal off take have been pegged at 461.5 MT’s

and 462.5 MT’s respectively for attaining an ‘Excellent’ rating.

2. VISION AND MISSION

“ BE THE LEADING ENERGY SUPPLIER IN THE

COUNTRY, THROUGH BEST PRACTICES FROM

MINE TO MARKET “

“ THE MISSION OF CIL IS TO PRODUCE AND

MARKET THE PLANNED QUANTITY OF COAL

AND COAL PRODUCTS EFFICIENTLY AND

ECONOMICALLY WITH DUE REGARD TO

SAFETY , CONSERVATION AND QUALITY. “



3. INTRODUCTION

A. ORGANISATIONAL SET UP

I) Regional StoresTo cater to the material requirement of various Collieries, Regional Stores will be created in each Area. Each Regional Stores will be under the charge of Depot Officer, who will be assisted by a Store Officer. While he will be functionally responsible to the Area Material Manager, he will be administratively under the General Manger of the Area. The broad functions of Regional Stores/Area Stores will be:

Indenting; Receipts; Custody & store keeping; Issues to collieries; Kardex posting & record keeping; Claims, insurance & other miscellaneous work; Functional analysis; Inventory control; Stock verification.

II) Colliery StoresThe collieries will draw their requirements from the Regional Stores/Area Stores for direct consumption on weekly or fortnightly basis. Each colliery will have a small store for charged of materials of daily consumption, drawn from the Regional Store/Area Stores. The colliery store will keep the receipt and issue record on a numerical ledger.

III) Job Description and Responsibilities

(a) Deport Officer: Every Store Depot in the subsidiaries of Coal India Ltd., will be under the supervision of an officer nominated by the management who will be termed as a Depot Officer. The Depot Officer of the Regional/Area and Central Stores will be a Dy. Material Manager or Assitant Material Manager as the case may be. He will be directly responsible to the General Manager for the stores under his custody. He may, however, obtain advice on the technical aspects of Stores Department like inventory control, replenishment system, procurement, store procedure, etc. from the Area Material Manager (Stores) directly or through the General Manager.



(b) Dy. Material Manager: The Dy. Material Manager will head the Regional/Area Stores of the Area in which he is posted. He will also assist the General Manager in matters pertaining to stores.

Overall ResponsibilityHe will have overall responsibility for the efficient functioning of Regional/Area Stores and will be responsible for all material management functions pertaining to the Area.

Detailed Responsibility(i) Maintain direct personal contacts will all levels of production, especially with GMs in order to solve/reduce material problems.(ii) Maintain direct personal contact with Purchase Officer to ensure/speed up delivery, particularly in respect of items in critical short supply.(iii) Supervise arrangement in his zone for safety and security of the stores under him.(iv) Organize division of labour for the staff under him.

(v) Plan material storage, movement and handling in a way as to achieve maximum utilization of space and energy.(vi) Raising of indents/material budgets on the Purchase Department to replenish stocks in time. Maintain minimum/maximum levels and revise them periodically according to lead time and past consumption.(vii) Review stocks continuously for control of the inventory. Carry out ABC-XYZ and other inventory analysis. Analysis of stores cost and its control.(viii) Initiate action for the disposal of unwanted materials and scrap lying in collieries/units and assist in the disposal activities.

Inspection Duties

(i) Carry out periodical inspection of the colliery stores to ensure the inventory build up does not take place.(ii) Test check all registers e.g. RR Register, Day Book of Receipt, Issue Register etc.(iii) Check that preparation of Receipt Vouchers and clearance of documents is not delayed.(iv) Check the general condition of the stores so that stores are preserved from deterioration and the store area is kept neat and clean.(v) Make visits to the railway station periodically to see that there is no undue delay in clearance of consignments by the Store Depots.

(c) AMM Store Officer : He will be responsible for custody, care, maintenance and handling of materials in his store.

Responsibility(i)He will report to the Material Manager/Dy. Material Manager of the Stores Depot and will directly supervise the staff under him.(ii)He will responsible for correct receipt, issue, safe custody, preparation and posting of store documents in Kardex/bin cards.



(iii)Arrange collection of consignment from railway station and ensure timely unloading of wagons and collection of consignments to avoid incidence of wharfage/demurrage.(iv)Arrange inspection of the material received and preparation of receipt, vouchers.(v) Correspond with suppliers regarding receipt of materials, damage, rejection, claims, etc. (vi)Inspect every week the Day Book of Receipt, Depot Transfer Register, R.R.Register, Issue Register and accountings records of “SELF” consignment. (vii)He will be responsible for opening and closing of the store depot. (viii)To retire documents from the banks and submit monthly statements to Accounts branch giving accountal of the advance drawn.(ix)To arrange for departmental stock verification.(x) Watch stock position and raise indents when they drop to the recorder level and early out the periodic review. (xi) Distribute the work to his subordinates.

Handling Over/Taking Over Charge of the Stores Depot

Store Officers: When a Depot Officer is transferred and new officer takes over as Depot

Officer of a Store Depot, the handing over/taking over of the Store Depot should be attended to

as an important independent function, in addition to the handing over/taking of other functions.

(i) That all receipt, issue and adjustment vouchers have been prepared and posted in the Bin and Kardex Cards and disposed of as per the procedure.(ii) Details of plant & equipment/Stores held surplus on which action is pending.(iii) Disposal of Scrap materials.(iv) Provision reviews for recoupment of stock.(v) Handing taking over charge certificates will be submitted in triplicate.



B. Principles of Store Keeping, Storage, Care & Preservation of Stores

I. Principles of Store Keeping

The following principles of store keeping will be observed by all personnel employed on store keeping functions :(a) Separate areas for different functions (Receipt, storage and issue).(b) Unidirectional flow of stores.(c) Optimum utilization of space- floor area and vertical space, minimum space for office

accommodation in store houses.(d) Proper lay-out, providing gangways for working space, fire lane and use of

mechanical handling devices and ventilation.(e) Proper system of location – Alpha Numerical System.(f) Correct accounting (Use of kardex, numerical and priced ledgers.)(g) Security cage for attractive and costly items and restriction of entry to store houses.(h) Use of drainage.(i) Use of mechanical handling devices.(j) Cleanliness.(k) Room for expansion.(l) Bulk stores near receipt and retail store near issue-bay.(m) First in-First out.(n) Sacred trust-store Keeper, a Trustee of Stores.

II Storage

Every Store Depot will be laid out and organized to allow smooth flow of receipts and issues, to ensure that no hidden stocks exist or stocks accumulate, to obviate stock verification discrepancies and above all to reduce the cost of inventory by better stores management. The principles of store keeping should be observed while organizing a store house.

III Method of Storage

The following methods may be adopted for the storage of different classes and categories of stores :

(a) All small items of stores and spare parts will normally be kept in bins. An identification label showing part number/code number and description of the items will be affixed to one or more pieces of the item in a bin. A bin front label showing the part number/code number and description of the item will also be affixed to the front side of the bin. Where more than one item is kept in a bin, the bin front label of the different items will be pasted in front of the bin.



(b) Where heavy items are stored on the ground in a shed, identification boards showing the class/code number and description of the stores will be kept in the vicinity of the items. The stores will be arranged and stacked in such a way that the oldest materials can be selected first for issue.

(c) Timber stacks will have identification boards attached to the stacks, indicating the class, code number and the full description of the items.

(d) Similarly boards indicating the class, code number and description of the items will be kept near POL drums stacked in the POL area.

(e) Identification boards showing the class, code number and the description of the materials will also be affixed to the different classes of the iron and steel materials in the steel yard. The stacks of materials will be arranged in such a way so as to facilitate the counting and issue of the older materials.

(f) Items of special steel like tool steel, carbon steel etc. will be marked by a colour code. Both the ends of the items will be colour painted so that even if an item is issued from one end, it will still be possible to identify the cut piece from the colour code at the other end. It will be preferable to mark the specification of the special steel throughout the lengths of rods, bars etc. with paint and stencil at regular close intervals for easy identification at the workshops also.

(g) Cement & lime will preferably be stocked in a separate godown to obviate the fine dust from setting on the stores. cement bags will be stacked not more than 10 feet high to prevent the bottom layer bags turning into stone.

IV Handling of Stores

The following material handling equipment will be provided :(a) 12 tones capacity crane at Central Store, 7 and 3 tones capacity crane at Regional Stores/Area Stores.(b) Fork lift trucks.(c) Gantry(d) Gravity rollers(e) Chain pulley block(f) Trolley(g) Trailer(h) Trucks

Preservation of Stores

General



(a) Preservation of stores is the process of preventing deterioration of stores held in storage in store depots. Under the normal conditions obtainingn in stores depots, stores are liable to deterioration and spoilage due to inadequacy of covered storage accommodation, insufficiency of proper storage conditions and also as a result of chemical and other reactions brought about by the environment in which the stores are kept.

(b) The cost of preventing deterioration along-with spoilage cost is one of the element constituting the inventory carrying charges and it it necessary that the out of pocket expenses incurred in this regard are kept to the absolute minimum with a view to reducing the total inventory cost. The extent to which preservatives will be applied and the degree of protection to be accorded will depend upon the value of the stores, and also subject to the condition that the total production cost is not thereby enhanced considerably.

. Method of Preservation

The methods of maintenance and preservation applicable to some of the important types of stores used in the coal India Limited are described below :

(a) Iron & Steel : All metals are more or less liable to corrosion, particularly iron and steel. If the materials are to be stored for long periods, it is necessary to protect them with a coat of oil, grease or some slushing compound. This particularly applied to bright finished steel bars and iron and steel materials stored in the open area. A red oxide paint is good primer to prevent corrosion of structural steel, and is generally used immediately after installation as long term preservatives.

(b) Metal surfaces : For metallic items of stores in warehouse, the use of temporary coating on metal surfaces will provide adequate cover during their period of storage. The simplest of these solutions is varnish containing resin, bitumen, mineral oil as plasticizer and white spirit. Servo/R P 102 of I.O.C. and equivalent fluids of other oil companies will serve the purpose.

(c) Timber : Timber normally used in collieries are props and rollas, sleepers, sprags, bamboos and sawn planks. As these items are susceptible to damage by bacteria and fungi. Toxic reagents are needed to destroy them. Coal tar/creosole is highly toxic to fungi and bores and as it is insoluble in water, it provides lastings effect. Note: Timber treatment under pressure is a specilized technique and falls outside the scope of Stores Depots.

(d) Rubber hoses : Rubber hoses will be stored in a cool dry place and kept away from direct sun-light and high temperature. Rubber hoses will never be hung on nails, hooks or across boards, as such methods are likely to cause sharp bending, strain and eventual deformation, cracking and bursting of the hoses. Hoses will be kept coiled on floors and shelves.

(e) Conveyor belting : New conveyor belting will always be stored upright in factory crates, and never on their sides, as they are liable to telescope and become distorted. Reels of belting will be kept under covered accommodation on tripod stands, and the reels rotated



once a week. Where short lengths are cut from reels, the exposed ends will be brushed with a vulcanizing solution to prevent absorption of moisture.

(f) V belts : V belts will be stored in a cool dry room and should be stored in coils. They should never be hung up on nails to obviate strain and cracking.

(g) Wire ropes : As ropes have to be stored for long perods, it is necessary to ensure that there is no external or internal corrosion. If stored in the opem, the reels should be raised from the ground. External surface should be greased to prevent ingress of moisture.

(h) Bearings : Bearings are received from suppliers well greased, wrapped in impregnated paper and packed in separate sealed card-board boxes. Packages of this kind are often broken in the store house to check the goods in detail.

(i) Wires & cables : Wires and cables will be protected from corrosion and deterioration by moisture chemicals, high termperature and severe exposure etc. They will be stored in a clean and dry place.New cable wound on solid wooden drums will be retained as received from the firm. Such drums will be stored in a vertical position. Also good air circulation will be provided to prevent dry-rot in the wood.

(a) Cement : Cement solidifies when it gets damp. It is, therefore, necessary to store cement in a dry, heated buildings and will be kept off the floor because even in a warm store-house there will certain amount of condensation at times on the floors. Ceement will be stored on wooden dunnage. The bags will be stacked not more than 10 feet high and these will be restacked often to avoid setting of cement.

(b) Tyres : Tyres will be kept in vertical position in suitably designed racks. They will not be stored in piles on their sides, one to top of the other, because the weight may damage the internal fabric. Tyre will be stored away from heat sources as heat is injurious to articles made of rubber. Tyre, tyre retreading materials and other rubber goods will prefereably be stored in air-conditioning rooms with controlled termperature.

(c) Batteries :

(i) New batteries will be stocked in their cartoons and will be so located that the oldest batteries are issued first.

(ii) Batteries should be segregated by type. The date of receipt will be marked prominently on the carton or battery. This will help in selecting the oldest battery of any type in stock for earliest issue. Charged batteries are liable to self-discharge while in storage. In order to minimize the extent of self-discharge, batteries will be stored in a very cool place., away from hot air duets or radiators and will be shielded from direct sun-light. Before putting on charge, it is necessary to observe the level of electrolyte and ass water to the cells, if necessary, t bring to proper level.



(m) Plant & machinery spare parts : Plant and machinery and pare parts will be protected against deterioration due to rusting, scaling, atmospheric corrosion etc. while in storage.Servo grades of temporary protective such as Servo RO 102 based on mineral oils provide adequate protection to plant and machinery for short period of storage. These fluids can be easily applied or removed. They provide a continuous protective coating inside and outside storage irrespective of the fact whether the parts are dried or not. They have dewatering and rust preventive properties and finger-print neutralizing effect.

3.8 Type of Preservatives

Some of the general preservatives and the stores on which they are used are indicated below:

Types of preservatives Stores on which used

(a) Composition rust preservative, Chain, milling cutters, tools, gear etc. Mineral Jelly(b) Grease G.S On exposed & working parts of machines.(c) Solution rust preventive Interior surfaces,engine cylinders,gauges etc(d) Oil M-80 General purpose, lubrication on spare parts(e) Vapour phase inhibitors For costly small articles, graduations etc.(f) Silica Gel To Keep in cupboards containing small tools as moisture absorbent.(g) Soap yellow For leather goods of definite shape(h) Dubbin For leather goods of indefinite shape(i) Plastic packing Drills, cutter, costly article(j) Copper Naphtha ate & Creosol On bamboo poles.(k) French chalk For rubber goods.(j) Coal tar/Creosol oil For timber



C. Receipt Procedures & Inspection

The Sources of Receipt

(a) Suppliers, both indigenous and foreign.(b) Stock transfer from one Store depot to another within the Company.(c) Return of items from units as surplus.(d) Departmental workshops manufactured items.

Category of materials which will not pass through stores(a) Printing and stationery items.(b) Furniture.

Mode of Delivery

(a) Rail(b) Road(c) Air(d) Post(e) Sea

Despatch Documents from Suppliers

(a) When dispatch documents i.e. challans, invoices, railway receipts/Parcel way bills/consignment notes/bills of lading are received at the stores, they will be scrutinized against the relevant purchase orders. RRs and consignment notes will be recorded in the following as applicable :

(i) Railway receipt register

(ii) Road challan register

Delivery at the Railway Station

(a) A Store Keeper from the stores will be detailed daily to the railway station to verify the arrival of the consignments whether dispatched as piece consignment or full wagon. In case of non arrival he shall have this recorded on the RR by the Railway staff with date and initials. When stores are received, delivery will be taken by surrendering RR to the Railways after making necessary entries in the delivery book. If the consignments are not received within one or two months (depending upon the despatching station) from the date of dispatch of consignment, the matter will be taken up with the Railway authorities.



(b) Piece Consignments : These will be checked carefully. If any package is found broken or in a tampered condition, “open delivery” will be demanded. Entry regarding condition of the package will be made in the delivery book while surrendering the RR. An application will be made to the Station Master for giving open delivery of the consignment. A short certificate will be obtained from the Railways clearly indicating the shortages/losses/damages involved for lodging claims on the Railways/Insurance Company/suppliers.

(c) Full Wagon Loads

(j) Wagons booked to the depot/colliery sidings or at the nearest Railway Station, will be unloaded within the free time (5 day light hours) allowed by the railways, without incurring any demurrage.

(ii) In the event of loss/non receipt of the RR, the delivery will be taken after executing an Indemnity Bond as prescribed by Railways. If the RR relating to a consignment booked to ‘SELF’ is lost, mere execution of an Indemnity Bond at the receiving station will not be enough. The relevant rule regarding Railway goods tarrif requires the production of a stamped Indemnity Bond signed by the sender and countersigned by the Station Master of the forwarding station.

Road Carriers

(a) The store Keeper shall take delivery of material transported by road. He will sign a copy of the challan/invoice and return it to the driver.

(b) In case of suspicion regarding loss/damage in transit, the packages will be opened in the presence of the driver. Damage/loss statement will be prepared, minutes drawn up and signed by the Depot Officer, the carriers’ representative if accompanying the truck and also truck driver.

Depot Transfer Receipt

When stores are received in depot by depot transfer from anther stores depot, Store Keeper, In-charge of the Stores Depot will verify the actual receipt of the material with reference to the Depot Transfer Issue Voucher received from the issuing store depot.

Consignment Register

The store staff detailed on station duty for collection of consignments despatched by rail will maintain Consignment Register as per specimen given at Annexure 5. After taking delivery, he will put his initial in the appropriate column and handover the consignments to the In-charge of the Receipt Section who will also put his initials as token of receipt and enter in the goods inward register along with details of discrepancies if any. This register will be inspected by the Officer-in-charge of the stores depot weekly to ensure that the consignments transported from the Railway station have actually brought in the depot and accounted for.

Goods Inwards Register



All stores received in the store depot whether by road, rail, air or post will be recorded in this register .

Inspection of Stores at Store Depot

All plant, equipment, stores, spare parts and materials received in a store depot will be subjected to inspection by the Inspection Department according to the procedure given separately on the subject. In the case of timber delivered directly to the collieries, the inspection will be carried out by the Colliery Manager nominated by the Project Officer/Agent for the purpose.

Documentation of Receipts

(a) After inspection is over, the receipt voucher will be prepared in quadruplicate, by receipt section in respect of the stores found acceptable by the inspecting wing. The result of inspection will be recorded by the Inspector under his signature duly dated on the receipt voucher itself in the column provided.

(b) Separate receipt voucher will be prepared for each challan. Each receipt voucher will be allotted a control number from the receipt control register maintained by receipt section. The control numbers will remain in serial order for each block year commencing from 1st April. All copies of receipt vouchers will be signed by In-charge of Receipt Section, CSK/Sr.S.K. and the officer stores.

(c) Receipt voucher number will be endorsed on the relevant challan which will be retained in the Receipt Section.

(d) The stress along with all the copies of receipt voucher will be forwarded to the concerned shed/area on a peon book. In-charge of shed/area will sign in the peon book in token of having received the materials and receipt documents.

(e) Kardex poster will post the receipts in kardex cards and put his signature with date in the receipt voucher. He will then forward all the copies of receipt voucher to Receipt Section. The columns in receipt control register showing the ‘date stores binned/stacked’ and ‘date posted in kardex cards’ will be completed and the receipt voucher will be put up for the signature of Depot Officer along with the receipt control register. The Depot Officer will check if any abnormal delay has taken place in binning or kardex posting and after signing the receipt vouchers return the same to receipt section with his remarks, if any, in the receipt control register. In case of full/part rejections the instruction as laid down in Annexure 9 will be followed. Rejection note will be prepared in quadruplicate within maximum 15 days of receipt and distributed as follows :

(i) Supplier; and

(ii) Accounts, i.e. paying authority.

(f) Receipt section will retain the book copy (yellow copy) of receipt voucher and distribute the other copies as follows :



(i) Original copy (pink) – Data Processing Section; and

(ii) Duplicate and triplicate (white & green) – Accounts.

(g) Accounts Department will carry out valuation of the receipt voucher by adding sales tax, excise duty, freight charges, wharfage/demurrage, packing/handling charges etc. to the basic price and pass the supplier’s bill. Total value will be shown in both the copies of receipt vouchers. White copy will be retained by the Accounts and green copy sent to data processing section for carrying out adjustments in the value of stores received. The green copy will be sent to Kardex Section for filling.

(h) Rejected goods will be kept aside and not mixed (other acknowledgement due) with the other consignments. The supplier will be asked by a registered post letter to remove the rejected material within 15 days from the receipt of the letter. If the supplier does not remove the material within the specified time limit or if he desires that the goods be sent to him, then arrangements will be made to send back the goods on freight ‘to pay’, under advice to the suppliers. Packing and handling charges will be recovered from the supplier. When there are no pending bills, Depot Officer will approach purchase wing to arrange recovery of the amount for the rejected materials prior to handling over to the supplier.

Acceptance of Stores after Expiry of Delivery Date

(a) The Depot Officer will accept the stores delivered upto a period of 21 days after the expiry of the delivery date as stipulated in the supply order provided he is satisfied that the material is still required. This, however, is not applicable to local purchase.

(b) Where the delay in supply is more than 21 days but less than 90 days from the date of delivery stipulated in the supply order, the Depot Officer will, in the first instance, accept the material but forward the bills relating to that supply under objection to the Purchase Office concerned for consideration of acceptance of the bill with or without penalty for late delivery. Where the delay in supply is more than 90 days, the consignment will be accepted only with the prior approval of Material Manager (Purchase).

(c) The date of despatch of consignment i.e. date of railway receipt will be taken as the date of delivery of material for the above purpose.



D. MANUAL STORES ACCOUNTING

Introduction

In all the stores depots manual stores accounts will be maintained in kardex cards by Central Regional Stores. They will be kept in cabinets in the order of material code number, arranged category wise. Specimen forms of the kardex cards comprising numerical ledger card and history card are in respectively. The advantage for maintaining the store accounts in the Kardex cards are as follows :

(a) Periodical review of cards is easy.(b) Easier to operate the automatic replenishment system of procurement.(c) By using plastic sliding signal, the range of items on which action is required can be determined merely by pulling out the panels from the kardex cabinets.

Procedure for Kardex/System

The kardex/system will contain a set of two cards as follows and a title insert for each item :

(a) Kardex/Numerical Ledger Card : The numerical ledger card will contain the following information :

(i) Line No. : To be allotted serially.(ii) Date : Date of the transaction, i.e. the date of receipt or the date of issue.(iii) Party : In the case of receipts, the name of the supplier from whom the stores are received. Name of the department or indentor in case of issues.(iv) Reference : Reference of the receipt voucher, return receipt voucher, departmental stock verification sheet etc.(v) (a) Quantity : Quantity received.(b) Rate : The rate at which the material has been purchased i.e. purchase order rate including sales tax, discount etc.(vi) Issues : Quantity issued.(vii) Balance : The balance quantity which will be arrived at after each transaction.(viii) Location : Alpha numerical location indicating the shed/area, line row and bin (with alphabet and number alternating) where the item is stored.(ix) Initials : The ledger poster posting the kardex cards will initial at the space against the each transaction posted by him.

Note : All postings should be made within 24 hours of the transactions.

(b) History Card : will have the following details :

(i) Monthly Consumption of stores : This information will be collected by the person maintaining the same from the column “Issues” of the stock card.



(ii) Material Budget/Indent Reference : This will show either quantity approved against the material budget or indent issued by the area concerned.(iii) Once the material budget is approved, the Direct Demanding Officer will place the supply order against the rate contract as per the min/max limits fixed for each item.(iv) The store depot will also receive copies of supply orders placed by the purchase department, against the indents initiated by the areas.(v) Supply Orders Issued Against Indent/Material Budget : The No. and date of the supply order, the quantity ordered, name of the supplier, rate and promised date of delivery will be indicated in the appropriate column of the history card.(vi) The supply order received will be routed through the ledger poster for making entries as indicated above.(vii) Monthly Quota : Depending on the consumption pattern monthly quota will be fixed for each group/colliery stores/unit to avoid over demanding by indentor. The quantities so fixed will be recorded in this column.(viii) Remarks : The stores to be kept reserved for any project/group/colliery/unit will be recorded in this column giving the name of the unit for which the stores have been reserved, quantity and the relevant reference under which reservation has been made.(ix) Deliveries : All receipt and issue vouchers and cancellations/reductions relating to indents/material budget and supply orders will be routed through the ledger poster.(x) When the receipt vouchers are received by the ledger poster, the date of receipt, quantity received and the balance due will be posted in the relevant column of the history card corresponding to the indent and supply order in question. In addition to these entries, the ledger poster will simultaneously post receipt details in the numerical card.(xi) Cancellation/reduction of quantities against indents/supply orders will also be posted under “Delivery Column”.

(c) Title Insert : Title insert will contain the following information :

(i) Code Number of the item : This will be typed.(ii) Description of the items as Given in the Vocabulary : The principal noun describing the items will be typed in “Block Capitals” followed by the remaining portion of the description.(iii) Manufacturer’s Part Number : The part number will be typed.(iv) Unit : The accounting unit (unit of measure)(v) Classification : The first two digits of the material code Nos. allotted to each item will represent “Classification” of the materials. These two digits will be typed out in this column.(vi) Minimum : This is the safety stock which will always be kept for the item to meet the demands during procurement lead time fluctuations. This will be posted in pencil.(vii) Re-order Point : This figure will represent lead time consumption plus safety stock (minimum). This will also be posted in pencil.

Instruction for Maintaining Kardex Cards



(a) These cards will be maintained at the respective store depots by store staff who will be responsible to the Depot Officer for the prompt and correct posting of all the stores transactions. The ledger clerks will also operate the automatic replenishment system of procurement under the advice of the Depot Officer.(b) Kardex will remain under the safe custody of stores staff. Depot Officer will carryout check periodically.(e) Posting in the numerical ledger will be done daily.(g) The obsolete materials and the items having no movement for the last 24 months will be taken note of for initiating disposal action either by transfer of stock to other sister group/collieries ot through tender/auction as laid down in disposal procedure.

Numerical Ledger

Loose leaf numerical ledgers as per specimen will be maintained by all colliery/washery coke plant and workshop stores and revenue items of stores which are treated as “Charged off stores”. Each page will be signed by the Depot Officer and all entries initialed by the Store Keeper maintaining the ledger. A certificate duly signed by the Depot Officer on 1st April of each year giving the total number of the pages contained in the ledger, a record of pages added and the moved as per the specimen and code numberwise index of items will be filled on the top of the ledger inside the binder. All the ledger pages should bear the colliery/project stamp and should be serially numbered from 1 onwards at the commencement of each financial year. Decimal numbers should be given to the ledger cards inserted during the year. For example, when card i inserted between cards No. 2 &3 it should be numbered 2.48. The card inserted between 2 and 2.48 should be numbered 2.24 and so on.

Deferred revenue items (i.e. items having more than one but less than 3 years life) and capital items (i.e. items having more than 3 years life like plant & machinery) will be accounted for in the numerical ledger as per Annexure 13. On the reverse of each card, the details of distribution will be entered in pencil. The total of quantities distributed should always be equal to the quantity shown as “balance” on the obverse of the card.



E. STOCK VERIFICATION

General

Stock verification is the process of physically counting/weighing/measuring all items of stores held in the stores depots and colliery stores and to compare the physical balances with stores recorded in the stock cards/numerical ledgers. The discrepancies detected if any, will be investigated promptly and adjustment action taken at the earliest.

Object

The object of stock verification is to ensure the following :(a) Stores and materials held tally with the descriptions and specifications as shown I the stock cards/ledgers.(b) The actual balances agree with the balances recorded with stock cards/ledgers.(c) The discrepancies noticed are investigated and adjusted.(d) Proper arrangements exist for the safe custody, proper storage, accountal and issue of stores.

Types of Stores to be Verified

All items of plant & machinery, general and consumable stores, medicines and medical stores, spare parts for mining and earth moving machinery and drilling equipment and all charged off stores held in colliery/consumers units.

Responsibility

Accounts Department (Internal Audit) will be responsible for stock verification of stores, materials, plant and machinery. It will be carried out departmentally under instructions from the Chief Material Manager by the stores personnel of the stores depots/units independently.

Periodicity

Internal audit will carryout stock verification as per the following periodicity :(a) Plant and machinery and other capital items in stores depots and all deferred revenue and revenue stores on charge of stores depots – once a year.(b) All charged off stores with colliery/project stores which are accounted for on numerical ledgers – once a year.(c) Plant & machinery and other capital items deployed – once a year.

All store holders will also carryout departmental stock verification of the stores at least once in two years. The stock of costly and attractive items like power and training cables, bearings, non-ferrous metals, instruments, etc. may however, be verified more frequently.



Organization

The internal audit organization for stock verification will comprise the following :(a) Accounts officer (stock verification) who will be responsible for organizing stock verification in the entire company as per the periodicity laid down.(b) Inspector incharge (stock verification) who will supervise the verification work in various area and other places in the company.(c) Stock verifiers who will physically carry out the stock verification work allotted to them.

The departmental stock verification will be carried out by the stores depots under their own arrangements.

Duties

The duties of various personnel employed on stock verification work be as follows:(i) To ensure that before commencement of the financial year, adequate staff is positioned in all the areas and other places for stock verification.(ii) To prepare 3 copies of Annual Stock Verification Programme and submit 2 copies of the same to the Controller of Accounts (IA) for approval by 15th March each year. On receipt of one copy of the approved programme from Controller of Accounts (IA), the programme for the whole year will be intimated to all concerned.(iii) To obtain progress reports on stock verification periodically.(iv) To carry out test check on the items verified by the stock verifiers.(v) To carry out surprise stock verification of a few items selected at random.(vi) To ensure that the reconciliation of discrepancies is carried out within a specified period. Discrepancies not adjusted within a period of two months will be reported to the Controller of Accounts (IA) and the Chief Materials Manager.

Inspector (SV)(i) To maintain the following for the purpose of control :(a) Verification register;(b) Field book register;(c) Stock verification sheet register;(d) Write off register; and(e) Register of serious discrepancies i.e. discrepancies involving value of Rs.1,000/- and above each.(ii) To watch the progress on stock verification through weekly reports to be submitted by stock verifiers.(iii) To receive the stock verification sheets from stock verifiers and Depot Officers and obtain the orders of Accounts Officers (SV).(iv) To submit a report once in two months, showing the progress on stock verification programme to the Accounts Officer (SV) who will keep the Chief Accounts officer (IA) informed of the same.(v) To make surprise visits to see that the stock verifiers are actually performing their duties.



(vi) To carry out test check of the work done by stock verifiers when considered necessary.

Stock Verifier

(i) To carry out routine verification of stock comprising of any of the following as per the detailed procedure given in succeeding paragraphs :(a) Stores in the custody of stores depots/units;(b) Plant and machinery in stores; and(c) Plant and machinery deployed in projects.(ii) To carry out surprise verification of stocks wherever ordered by higher authorities.(iii) To test check the postings on the receipt and issue side in bin cards for the items verified by him to ensure that the receipt and issue side postings are genuine.

Method for Determining Physical Stock

The following simplified methods may be adopted for determining the physical balances of certain types of stores as indicated below :

(a) Where the accounting unit is in m/tonne, the actual stock will be indicated in m/tonne and in decimals indicating kilograms.(b) Where large quantities of small items are involved, it will be preferable to determine the test weight of say 100 pieces of the items or of 5% of the total stock and thereafter the entire stock will be weighed and the total quantity determined on the basis of the test weight carried out earlier. When the weighment of the entire quantity is made, the maximum quantity which the scale can weigh will be weighed each time.(c) In the case of iron and steel materials, like M.S.Rounds, M.S.Squares, M.S.Plates, R.S.Joist, M.S.Angles, etc, which are accounted for in M/tonne the weight in kgs. per meter for different categories is indicated in the vocabulary of colliery stores. In such cases, therefore, the total weight of the entire holdings will be determined on the basis of sectional weight as prescribed, in the vocabulary.(d) In the articles like wire-ropes the weight of the total length of wire-rope in a partly used reel can be determined on the basis of the approximate weight per 100ft or per meter as indicated in the manufacturer ‘s handbook. The actual weight of the wire rope will be ascertained by deducting the tare weight of the reel as marked on it from the gross weight of the reel and thereafter the length will be determined by dividing the net weight by the sectional weight i.e. weight per meter as indicated in the manufacturer’s handbook. For intact drums/reels, the length as marked on the reel and manufacturer’s test certificate will normally be taken as correct.(e) In the case of valuable articles like non-ferrous metal ingots, the entire stock will always be weighed regardless of what the stocks may be.(f) In the case of large stocks of electrical and fragile materials liable to damage in handling, a certificate will be obtained from the holders of the stock regarding the correct physical balance.



(g) In respect packed goods like spare parts, the actual weight or numbers as printed on the packages will be taken as the correct weight/quantity, provided the packages cartons are intact.(h) In the case petrol, HSD oil which are distributed through supplier’s pumps, the quantity held in stock will be determined by use of a properly graduated dipstick.

Clearing Agents

Normally clearing agents are engaged for the discharge of cargo from the ships. BCCL is working as a clearing agent for all the subsidiary companies of Coal India Limited through their office at 6, Lyons Range, Kolkata-700001, In performing their duties, the clearing agents comply with all the rules and regulations laid down by the Commissioners for the port of discharge, the customs, the steamer agents, the Railways and they will work in such a way as to get the forwarding note accepted within the free time, as also to ensure that the goods while I their custody are to be protected from damage or loss and are safely delivered to the consignee. Besides the responsibility of clearing the consignments from the port and then dispatching to the consignee, the clearing agents will also get the consignments surveyed in the following cases for lodging claims for compensation of the loss/damage, if any.

Nature of Loss Authorities to be associated for survey

Remarks

(a) Consignments shows external sign of damage and there is suspicion about soundness of the contents

(i) Manager of the Dock(ii) Insurance Company(iii) Steamer agent (Survey to be completed within 3 days)

On the basis of this survey the cleaning agents will obtain refund of the value of loss from clearing agents & Insurance Co. and proportionate refund of custom duty.

(b) Landed but missing packages

‘Landed but missing’ certificate is obtained from port authorities on the basis of which claim is lodged.

Claims to be lodged by the Purchase Department on agents/port authorities /under-writers & Insurance Company.

(c) Short landed packages

(i)’B’ form for the short landed packages is obtained from the port authorities.(ii)Short landed certificate to be obtained from steamer agents.

Claims to be lodged by the Purchase Department on agents / Insurance Co..

Legal Action

If a legitimate claim of loss/damage preferred against the carriers/Insurance Company/supplier’s within the stipulated period is not settled by them inspite of close follow up action , a suit may be filed in consultation with the legal adviser of the company after



obtaining sanction from the competent authority. Care has to be taken by the consignee to preserve all evidence and correspondence in support of the claim and also to ensure that all actions for filling a suit are taken within the prescribed time limits.

(a) To institute a suit against the Railways, a statutory notice under section 80 of Civil Procedure Code which is a pre-requisite and condition prior to the filling of a suit shall be served on the Railway administration within three years from the date of R/R. The object of giving notice under Section 80, CPC, is to enable the Railway administration to consider the claim on merits and to settle it without litigation and if they fail to effect settlement within the prescribed period of 60 days, a suit can be filed.

(b) To institute legal proceedings against port trust, it is necessary to give one month’s notice, in writing of the indicated suit or other proceedings and the cause thereto. The suit should be filed within six months from the accrual of the cause of such suit for the proceedings.

(c) To institute a suit against the steamer’s agent unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered the claim will be time barred.



F. ISSUE OF STORES

Basis of Issue

Issue of plant and machinery, stores and spares parts will be made from the stores depots on the basis of requisitions submitted by the indentor in the prescribed proforma. Issues will also be made as per the release orders by the General Manager, Dy.CMM(Stores) or Chief Engineers.

Types of Issue

The types of issues are indicated below :

(a) Unit Issues : There are issues made by the colliery stores to the consuming unit.(b) Depot Transfer Issue : There are issues made by one stores depot to another under the order of competent authority.(c) Loan Issue : There are issues made by a stores depot to an outside party for a specified period with the approval of the competent authority. The stores will be returned by the outside agency before expiry of the period of loan. Where the stores are consumed by the outside parties, equivalent replacement will be made by them before expiry of the period of loan. The return of stores before expiry of loan period will be carefully progressed by the depot officer of the issuing stores depot.(d) Sale Issue : There are issues made by the stores depots to contractors as per the terms of the contract, at the predetermined issue rates. Issue of surplus/unserviceable stores and plant and equipment to other Government Organisations and private companies are also treated as sale issues. This will be mostly in the case of sale of such items by public auction or tender.

Unit Issues

Requisitions : Requisitions for stores will be made on issue voucher (unit issue). This requisition-cum-issue document will be prepared by the officers authorised by Colliery Manager/Project Managers/Workshop In-charge to demand stores for their respective colliery/project/workshop. Three specimen signatures of the officers authorized to demand stores duly attested by the authorising authorities should be maintained in the unit stores for record and verification at the time of issue of stores. Officers authorized to demand stores should obtain the signature/thumb impression of the person detailed to collect stores on the issue voucher in the column “Person authorized to collect” before sending the same to unit stores. Requisitions for stores will normally be prepared by Unit Engineer in case of spare parts and general consumable stores and by the Under Manager/asst. Manager in the case of mining equipment and supplies. Requirements of stores should be properly worked out in advance and consolidated requisitions prepared to avoid demanding the same item several times during the day.



The issue voucher will be prepared by indentor in quadruplicate, the second, third and fourth copies being carbon copies of the original. The following details will be entered in the voucher, all copies of which should be signed and dated by the indenting officer :

(a) Name of indenting colliery/unit.(b) Requisition No. and date.(c) Name of the work/scheme/project.(d) Material Code No.(e) Description of item (Part No. will be furnished in the case of spare parts)(f) Quantity required.(g) The serial number and type of machine (in case of spare parts and accessories demanded.)

The serial number and type of machine for which the spares are demanded are required to be furnished on the issue voucher to ensure that the spares and accessories drawn for a particular machine are used for the same machine. For this purpose, al the machine deployed in the unit should be given a serial number. A machinery card should also be maintained for each machine showing date of spares and accessories replaced with dated, signature of the machine incharge.

The indentor will retain the fourth copy of the issue voucher as book copy and send copies No.1 to 3 to unit stores.

Distribution Issue Document

The three copies of the issue voucher will be distributed by the unit stores as under :(a) Copy No. 1 – Retained by unit stores.(b) Copy No.2 - To accounts section/(c) Copy No.3 - To indenter, indicating quantity issued for retention.

Gate Pass System

The stores staff issuing the stores will prepares three copies of gate pass in the printed from from the issue voucher, for the stores issued. The number of packages or cases or bundles will be indicated on the gate pass to facilitate check by the security staff at the gate of the stores depot. The gate pass No. and date will be entered in all the copies of issue voucher. Gate pass will be signed by the Stores Keeper In-charge authorised by the Manager/Officer In-charge of unit. The specimen signatures of the persons authorised to sign the gate passes will be maintained by the security staff for record and verification at the stores. The remaining two copies along with the stores will be delivered to the indentor’s representative who will surrender one copy at the gate to the security staff. The stores will be allowed to pass out of the gate after checking by the security staff. The copy of the gate pass deposited at the gate will be compared with the book copy by security staff for any breaches in security.

Documentation Procedure



On completion of the issue, copies no.1&2 of the issue voucher, will be forwarded by the concerned Store Keeper to the Store Keeper/asst. Store Keeper maintaining the numerical ledger for entering the issue in consolidated issue statement in duplicate. He will write the Material Code No. wherever not done in the issue voucher and enter all the details (including rate) in the consolidated issue statement which will be serially numbered and dated. After entering the details of all the issues made during the day in the consolidated issue statement he will post the total quantity of each item issued during the day in the respective cards of the numerical ledger giving the Reference Serial No. and number and date of the consolidated issue statement. He will write page number of the ledger card in which the issue is posted and initial against each item in the consolidated issue statement. One copy of the statement will be filed by him and the other copy along with connected issue voucher (Copy No.2 ) will be sent to colliery/project Accountant for entering the value of issues made and for working out the stores cost. Copy No.1 of the issue voucher will be kept as office copy by the ledger keeper. Store Keeper Incharge of unit stores will carry out necessary checks to ensure that all the entries in the issue vouchers, consolidated issue statement and the numerical ledger are correctly made.

Inter Unit Transfer

Where stores are transferred from one unit stores to the other, issue voucher (inter unit transfer) will be used. It will be prepared in quadruplicate and distributed as under :

(a) Copy No. 1 : To be retained by issuing unit stores duly receipted by receiving unit stores.(b) Copy no.2 : To receiving unit stores for retention.(c) Copy No.3 : To area/regional of issuing unit for taking on charge in computerized ledger and to debit to the receiving unit.(d) Copy No.4 : Book copy.

Depot Transfer Issues

Transfer of stores from one depot to the other is termed as “Depot Transfer”. It may be from central stores to regional/area stores depot, between the colliery stores and regional/area stores, between one colliery stores and another colliery stores within an area or outside an area. Although the stores thus issued from the regional stores/area stores to the colliery stores are charged to consumption, the stores will not be directly issued to the consuming units. They are drawn from the regional stores/area stores at fixed intervals and issued from the colliery stores to the consuming units only as and when required. Depot transfer will be done by issue voucher (Depot transfer). This form is prepared in quintuplicate, 2nd, 3rd, 4th and 5th copies being carbon copies of the original. The indenter will enter the following details in the voucher (Depot transfer).

(a) Issuing stores depot’s name and Code No.(b) Indenting stores depot’s name and Code No.(c) Release order No. and date, if any.



(d) Description of item.(e) Material code.(f) Unit of quantity (code).(g) Quantity required.(h) Unit of quantity in words.(i) Indentor’s reference No. and date (Voucher No. and date).(j) Chargeable A/c head (code).

The Indenting Officer will sign the issue voucher (Depot transfer) in the space provided along with designation and date. He will retain Copy No.5 marked as “Book Copy” (Blue colour) and forward the remaining four copies to the central stores/area stores/regional stores from where the stores are to be drawn, through the stores staff authorized to draw the stores. Here also as in the case of unit issue, 3 sets of specimen signatures of the officers authorized to draw the stores duly attested by concerned officers and the specimen signatures of the authorized stores staff deputed for collection of stores by the above officers will be maintained at the issuing stores depots for verification and record.

The authorised stores staff of the receiving stores depot will take the stores along with Copies No.1 and 3 (white & yellow) and return Copy No.1 (white) to the issuing stores depot duly signed by the Depot Officer of the receiving stores depot as token of receipt within 72 hours of receipt of stores. Copy No.3 (yellow) will be retained by the receiving stores depot along with the book copy (No.5) for record. The issuing stores depot will send Copy No.2 (pink) to the Data Processing Section/Accounts Department and will retain Copy No.4 (green) along with Copy No.1 (white) duly receipted by receiving stores depot for record.

The distribution of 5 copies of issue voucher (Depot transfer) will be as follows :

(a) Copy No.1 (White copy) : To be retained by issuing stores depot duly receipt by receiving stores depot.(b) Copy No.2 (Pink copy) : To be retained section/accounts department after issue of stores.(c) Copy No.3 (Yellow copy) : To be retained by receiving stores depot.(d) Copy No.4 (Green copy) : To be retained by issuing stores depot.(e) Copy No.5 (Blue copy) : Book copy of receiving stores depot.



G. LOCAL PURCHASE

General

Local purchase is a method of providing items of inventory required in an emergency or for a breakdown, which cannot await purchase in the normal course. It involves the purchase of stores or spare parts from the nearest market, trade center or metropolitan city by payment of cash. Local purchase also includes local manufacture or local repair, where it is authorized.

Circumstances under Local Purchase may be effected

Local purchase will be authorized and should be effected in really emergent cases only. Local purchases could be effected under the following circumstances viz, :

(a) When a machinery or equipment has suffered breakdown and certain items of spares are required for replacement, which are not available in stock in the stores depot concerned or in the regional/central stores. To restore production without delay it would be justifiable to arrange local purchase of such items.

(b) An emergent situation may sometimes arise which may necessitate the immediate provision of certain items not available in stock. This includes situations where medical attention is immediately required which call for the purchase of certain medical supplies not available in stock.

(c) Where a requirement arises for an isolated item costing less than Rs.200/-, the same may be locally purchased provided no other item of the same class is required at the same time which can be combined in the same indent to make the total value of the indent more than Rs.200/-, in which case the procurement should be arranged by normal purchase action.

(d) In any other exceptional situations where receipt of stores through normal purchase methods cannot be awaited.

Categories of Stores Purchased Locally

Local purchase will be restricted to the following categories of items, viz :

(a) General and consumable stores required for production and in exceptional cases office requisites.

(b) Spare parts applicable to mining, drilling and excavation machinery, which are of indigenous manufacture or of imported origin available ex-stock.

(c) Medicines and medical stores.

(d) In extreme cases, it may become necessary to procure items of capital equipment by local purchase, with prior approval of General Manager/Chairman-cum-Managing Director.

Types of Local Purchase



Local purchase can be effected by any of the methods indicated below :

(a) Local Purchase Ex-local Markets : Representatives of projects/units may effect local purchase of stores through local markets or nearby trade centers by payment of cash obtained through project imprests.

(b) Local Purchase Ex-Kolkata Market : Project/unit representatives may effect local purchase of stores through Kolkata market by payment of cash obtained through project imprests.

(c) Local Purchase Ex-Kolkata Through Kolkata Purchase Officer : Local purchases may be effected by the purchase executives of the Kolkata purchase office of the subsidiary company at the request of the projects/units and assisted by the representatives of the projects/units. In such cases the local purchase will be paid for by cash secured from the imprest maintained in Kolkata purchase office. No local purchases will be effected of any items on forward delivery basis.

Where the local purchase of stores involves deputing a representative to nearby trade centers of the Kolkata market, the Officer authorizing the local purchase will ensure that the total value of stores to be purchased at any one time is commensurate with the cost of local purchase; that is the TA/DA and other incidental expenditure to be incurred by the person deputed to effect the local purchase is not unduly large in relation to the value of stores to be purchased.

Local Purchase Records :

(a) Register of Approved Local Contractors : This register will be maintained commodity-wise indicating the names and addresses of different approved suppliers on the basis of satisfactory supplies previously made. For purchases to be made from Kolkata market, the register of approved contractors will be maintained by the Controller of purchase/Purchase Officer, Kolkata. Project/unit representatives making direct local purchase in Kolkata will consult this register for obtaining questions from approved suppliers.

(b) Record of stores Purchased Locally : This register will be maintained to provide a record of all local purchases effected by the project/unit concerned indicating the rats at which stores are purchased. The form of this record is shown below :



LOCAL PURCHASE REGISTER

Sl.No.

Date of Local Purchase

Code No./ Part No.

Description of stores

Quantity Purchased

RateName of Supplier

Sanction No. & Date

Receipt Voucher No. & Date

Remarks

1 2 3 4 5 6 7 8 9 10

(c) Indent for Local Purchase : Where local purchases are effected in the Kolkata market, in consultation with the Kolkata Purchase Office, an emergent indent will be prepared and handed over to the Controller of Purchase/Purchase Officer, Kolkata as authority of purchase. The form for indent for local purchase is shown in Annexure33..

The project/unit representative deputed for local purchase will hand over to the concerned officer the documents as indicated below :

(a) To the head of accounts of the Company at Kolkata. :(i) A copy of the sanction letter for the local purchase; and(ii) A copy of the emergent indent for local purchase.(b) To the Controller of Purchase/Purchase Officer, Kolkata :(i) A copy of the sanction letter for the local purchase; and(ii) A copy of the emergent indent for local purchase;(iii) An authority letter requesting cancellation of same items on earlier indents giving particular references to indent/supply order number or if no such indent exists, a certificate to that effect will be rendered; and(iv) A letter requesting local purchase of the items required.



H. DISPOSAL PROCEDURE General

Disposal is a function of liquidating unnecessary holding in return for a price. It releases valuable storage space and locked up investment. It is, therefore, necessary to resort to disposal of unwanted holdings, with due regard to economy and administrative convenience.

Unwanted Holdings

The unwanted holdings and arising consist of the following :

(a) Surplus serviceable equipment, stores and spare parts.

(b) Old and unserviceable plant, machinery and equipment.

(c) Second-hand empties.

(d) Scrap.

The arising of unwanted holdings are due to the following :

(a) Obsoletion of serviceable equipment

(b) Discarding of old equipment which become unsuitable to the revised working methods of uneconomical to operate.

(c) Spare parts applicable to obsolete or old equipment which are rendered redundant.

(d) Spare parts of current usage rendered surplus due to faulty and excessive provisioning.

(e) Equipment and stores becoming unserviceable due to constant use and by fair wear and tear.

(f) Items of perishable nature rendered unserviceable due to long storage.

(g) Scrap of materials-arising in manufacturing process.

(h) Equipment rendered unserviceable by accidents or severe damage in transit.

Surplus Equipment

The details of surplus equipment will reported by the Colliery Manager/Project Officer/Sub-Area Manager to the General Manager of the area concerned. The General Manager will examine and confirm that the equipment is truly surplus to the colliery/project, and if so, ascertain possibility of utilisation in any other colliery/project in the area. If the equipment can be utilised elsewhere in the area, the same will be transferred to the colliery/project authorized to hold it or held



temporarily in the area stores. Where the equipment are surplus to the requirements of an area, details of such surpluses will be reported to the Chief Materials Manager.

Unserviceable and Scrap

Items which have outlined their utility due to fair wear and tear or accident and equipment declared beyond economical repair by a competent technical authority (Executive Engineer-Excavation/Dy.Drilling Superintendent as the case may be) are termed as unserviceable stores.

The reject of a material used in the manufacturing process like turning, borings and waste materials which are not reusable are termed as scrap.

Survey Committee

The Survey Committee in each area will consist of the following :

(a) Concerned Sub-Area Manager/Project Officer, Agent or his authorized representative;

(b) The Area Engineer;(c) The Area Finance Manager; and(d) The Area Stores Officer.

Where the anticipated sale value exceeds Rs.1 lakh the CMM or Dy.CMM(Stores) will be associated as a member of the Survey Committee.

In the case of important and costly items of plant and machinery, CE(E&M) his representative will also be associated in the survey.

When equipment/vehicle of the headquarters are considered for disposal, the Survey Committee will be constituted under the orders of CMM. In such Survey Committee, the representative of the Controller of Accounts, CE concerned and the CMM should also be associated, in addition to the representative of the holding department.

Duties of Survey Committee

Fixation of Reserve Value : The Survey Committee will carry out physical survey of all the equipment, stores and scrap materials put up for disposal and fix the reserve value in respect of individual lots. At the time of carrying out survey the committee should determine the utility of the items to perform the original function or whether it could be rehabilitated for similar or alternative purpose. The long term usage of the equipment should be kept in view by the survey committee before accepting to condemn the plant and equipment. The reserve value or sale value should be carefully fixed taking into consideration all facts like the original purchase price, the last sale value or depreciated value, the present condition of the equipment, the last sale value realized in the sale similar plant equipment and the replacement value or the current



market value. The particulars of the equipment/stores surveyed will be recorded in the survey report to be prepared in sextuplicate in form shown in Annexure 39.

Survey Report

The survey report and the proceedings of the Survey Committee will be signed by all members of the Survey Committee and will be approved by the concerned General Manager/CMM. Where the value exceeds Rs.5 lakhs, approval of concerned Director will be sought for. The reserve value will be indicated only in one copy the survey report, in red ink, in addition of the office copy. The original copy the survey report containing the reserve value will be forwarded in a sealed of to the Dy.CMM (Store). The reserve value will be treated as strictly confidential till the disposal action is completed.

Account of Disposal Stores

In the case of equipment/stores sold by auction or tender, the sale stores transfer note (IST) is prepared in the usual manner giving reference to the survey report and the sale value realized. The item will be charged off from the ledger/tools and plant register, on the authority of the above stores transfer note. The Accounts Officer will then necessary debit against ‘CV’ sundry debtors (purchasers) and afford necessary credit to ‘C-I’ stores and spare parts’ of the concerned stores depot.



I.LOSS OF STORES

How Losses are Caused ?

Losses of stores can arise from any of the following causes viz:

Losses in transit. Losses in handling the materials within or outside the stores depot including losses as

a result of retail issues. Losses due to deterioration or change in condition of materials in storage. Losses due to evaporation, leakage, drayage and shrinkage of materials. Losses due to theft, fraud or neglect.

Action to be taken on Detection of Losses

When the losses of stores are detected in a stores depot, the following actions will be taken by the Depot Officer himself or instructions from the Controlling Officer viz:

(a) A preliminary investigation will be carried out to determine the circumstances under which the loss occurred , and the report will be submitted to the Controlling Officer.

(b) Depending on the nature and value of loss involved the Controlling Officer will appoint an Enquiry Committee to investigate the loss and to pin point the responsibility.

(c) Based on the report of the Enquiry Committee the Project Officer/Agent/Controlling Officer will recommend the course of action to be adopted in dealing with the loss, namely, whether the loss should be recovered from the person responsible for the same or whether it should be written off if it is not due to neglect on the part of any individual.

(d) Simultaneously, the Project Officer/Agent will himself initiate or based on the suggestions made by the Enquiry Committee implement remedial measures to avoid recurrence of such losses in future.

Report on Losses

Every case of loss of stores will be reported by the Depot Officer to the Controlling Officer. The report will indicate the full details of the loss, nature of the stores involved and their value and a descriptive report will be rendered indicating the circumstances under which the loss occurred, whether an enquiry was conducted and if so, the recommendations of the Enquiry Committee, the manner in which the loss is proposed to be adjusted and the remedial measures proposed to avoid recurrence of such losses in future.

The Depot Officer will retain three copies of the above report and forward two copies to the Controlling Officer. The Controlling Officer will ensure that adequate explanation have been furnished for the loss sustained. He will retain one copy of the report and forward one copy together with his recommendations to the Dy.CMM (Stores) at the head quarters for



obtaining the sanction for write off from the competent authority. The CMM will examine the cause carefully on behalf of the competent authority and obtained sanction for the write off of the loss if there is full justification for the same. He will also communicate the sanction together with any order of the competent authority to the General Manager and Depot Officer concerned for further action. Where the value of the loss exceeds the power of the CMD, the case will be referred to Secretary to the Board with the CMDs order thereon for obtaining sanction of the Board of Directors.

12.1 On the receipt of the decision of the competent authority and sanction for the write off the Depot Officer will fill in columns 9 & 10 on the three copies of the report retained by him. He will then arrange to prepare the final stock adjustment vouchers in the forms shown in the chapter on stock verification for adjusting the loss on the basis of the write off sanction of the competent authority. The Depot officer will then post the adjustment vouchers in the numerical ledgers. Two copies of the report of loss along with two copies of the final stock adjustment vouchers will then be forwarded to the Accounts Deptt. For necessary action in the price ledgers. In case the final stock adjustment vouchers initiated as a result of Accounts stock verification, one copy of the final stock adjustment vouchers will be forwarded to the Accounts Officer (SV) by the Area Finance Officer for his information and record.

Losses due to deterioration of stores

Items like rubber goods, common tyre, rethreading materials, chemicals, chemical coated materials etc. have normal self life as prescribed by the manufacturer. These items are likely to deteriorate in storage if the are store for periods in excess of their self life. The Depot Officer will therefore ensure that items having prescribed self life are ordered in quantities which are sufficient for consumption during the self life period only. The date of expiry of such items should be clearly indicated on racks containing these stores so that the items are consume before the date of expiry of their life. In respect of certain other items like black adhesive tapes, although the self life may not be prescribed by the manufacturer, it is desirable that self life of such items is determined by the stores depot as a result of their past experience and quantities should be so ordered that they are consumed before the expiry of their life.

Losses due to Theft, Fraud or Neglect

The occurrence of losses, as a result of theft, fraud or neglect should be reported by the Depot Officer to the Controlling Officer on telephone as soon as the incident comes to his notice. The Depot Officer will visit the place of occurrence along with representative of the Security Department and make a joint investigation report which will be forwarded to the Controlling Officer within 24 hours of the time of occurrence of he incident. In case of theft/fraud a complaint will be lodged with the Police. The Depot Officer will report in writing the details of fraud/loss/theft to the Controlling Officer with copies to the CMM, Chief of Security, Chief of Finance and Accounts. In all such cases the Depot Officer along with security officer will carry out spot investigation and findings submitted to the higher officer within 2 days.

J. RETURN OF STORES



Materials and machinery/equipment returned to Stores Depot will be classified as follows

New and unused materials and machinery/equipment originally drawn for various jobs but subsequently found surplus to requirements.

Used but serviceable materials and machinery/equipment. Unserviceable red list items. Empties.

New and Unused Surpluses

The colliery stress will draw materials to cater for their weekly/fortnightly consumption.Any item held in colliery stores over and above one month requirement will be returned to the respective Regional Stores/Area Stores on the Return Store Voucher

Returns Stores Vouchers will be prepared in quadruplicate and distributed as under:

(a) Original and Duplicate Receiving Store Depot.(b) Area Finance Manager-Triplicate copy.(c) Book Copy- Quadruplicate Copy.

The Return Store Voucher will show the following:

Name of the colliery returned the stores with colliery code number. Regional stores/Area stores Material code and description of the item. Accounting unit Quantity returned Original issue vouchers number and date under which the item was drawn by the

colliery from the stores depot. Price of the item. If the original price is not available, the assessed value will be

given.

The return store vouchers will be signed by the Managers/Agent of the colliery.

The material with two copies of the returned store voucher will be delivered to the regional store/area stores.

The material will be received in the Regional Store/Area Stores with two copies of returns store vouchers, one copy of which duly signed in taken of having received the material will be handed over to the colliery representative. Regional Stores/Area Stores will treat this returns as received and raise store received vouchers for the receipted material in normal manner. On the basis of the receipt vouchers in question the Area Finance Manager will adjust his record and give credit to the colliery.

I

K. INVENTORY CONTROL



Introduction

Although the broader concept of materials management includes inventory control as a whole, it is usual for the Materials Department to be primary concerned with stock control or stores inventory of regular stock items. We can very well define the inventory as “All things which have been bought for reselling after some modification or used for such modification of used to produce and sell altogether different commodity (like coal in coal industry).”

The main reasons for keeping inventory are :-

(a) Un-interrupted transactions of stores items.(b) To procure at an opportune time at minimum price.(c) As a precaution against any eventuality of procurement.

Terminology

Inventory carrying cost – The hidden cost which normally does not appear in the documents but is accrued on acquisition and maintaining the inventory. The principal elements of the inventory carrying cost are detailed below :(a) Interest on the investment(b) Storage cost(c) Physical deterioration or its prevention(d) Obsolescence cost(e) Insurance cost(f) Handling & distribution.

Level

(a) Safety Stock Level : A certain amount of stock maintained to take any sudden fluctuation of demand or of supply is known as safety stock level. The safety stock acts as cuslrion or buffer. There are many sophisticated ways to calculate safety stock level. One common way is to calculate the standard deviation which is maximum consumption less the average consumption/3.5 for normal distribution and square root of average consumption for poission distribution and multiply standard deviation by a factor which in our condition may be taken as 1, 2 & 3 depending upon the stock out cost. In coal industry the safety stock may be taken as 1 to 4 months consumption depending upon the critically/availability of stores. Alternatively it may be taken as 1/3rd of lead time consumption.(b) Minimum Level : For most of the items it is taken as the same as safety stock level but for some insurance/imported stores, the level may be higher than the safety stock level.(c) Maximum Level : The maximum amount of allowable stock which can be kept . This level can be determined as stock level and twice the lead time consumption. It should normally vary from 3 to 8 months consumption depending upon the lead time and safety stock level.(d) Re-order Level or Re-order Point : This is represented by safety stock and lead time consumption. It is known as minimum level in stock holding.



(e) Lead Time (L.T.) : It is the time that elapses between voicing of a need for anything and the time taken to satisfy that need by supplying the stores.(f) Lead Time Consumption (L.T.C.) : The average consumption of any item during the lead time is known as Lead Time Consumption.

Economic Order Quantity (ECQ) : As the term indicates, it means the Order Quantity which is economic for the whole system. If the order is placed once in a year, the order cost will be low but the inventory carrying cost will go up i.e. as the ordering cost goes down, inventory carrying cost soars up, and vice versa. It has been seen that the balance between these two costs is struck when the ordering cost is equal to Inventory Carrying Cost. In other words, it is the optimum lot size of an item which should be ordered anytime to balance the procurement cost and inventory carrying cost.

From the above principle the formula of calculating EOQ had been derived as follows:

Quantity to be ordered will be twice the difference between lead time and the safety stock. If lead time is 3 months and safety stock is 1 month’s consumption (i.e. 1/3rd of lead time) the ordering quantity will be 2(3-1) = 4 months consumption.

ABC Analysis : For the purpose of selective control, all the items are divided into three main classes depending upon their annual usage value. This classification is known as ABC Analysis.

The items having higher annual usage value say more than Rs.2 lakhs per item are termed as A items, the items having medium annual usage (Say Rs.50,000/- to 2 Lakhs) are termed as B items and items having low usage value Say (below Rs.50,000/-) are termed as C items. This classification is irrespective of quantity consumed. The levels of A, B & C items should constitute approximately 70%, 20% and 10% of the total annual usage value but as a percentage of the total number of items, it should be of the order of 5%, 10% and 85% respectively. The main advantage is that by controlling 5% or 10% of the total number of items, 70% to 90% of the inventory is controlled.

HML Analysis : Since the total annual usage is considered in case of ABC analysis, we may come across a few items which fall in ‘C’ or ‘B’ category, although the unit cost is quite high. If the controls are exercised on the basis of ABC analysis only, the importance of these items will be much less than ‘A’ or ‘B’ items even though the inventory as transaction involves considerable amount. It is, therefore, necessary that unit cost of an item is also taken into account in deciding its importance.

For the purpose, limits of unit costs should be fixed for high cost items (H), medium cost items (M) and low cost items (L) and all items should be segregated into H, M & L category depending on their unit cost. This analysis is quite helpful in deciding the safety stock in relation to the availability of the material (SDE analysis).

VED Analysis : This analysis specially pertains to the classification of maintenance spare parts denoting the essentiality of stocking spares. The spares are split into three categories if importance, from the view point of functional utility, the efforts of non-availability of the time of requirement on the operation, process, production plant or



equipment and the urgency of replacement, in case of break down. Importance of certain spares is so great that non-availability of the same would render the equipment or a number of equipment in a process line, completely inoperative or cause damage to them. While on the other hand some spares would be non-functional. The decision regarding the stock of spares to be maintained will depend not only on the critically of spares from the functional point of view (VED Analysis) but also on the annual consumption cost of spares (ABC) spares. Both VED and ABC analysis are combined for this purpose. Items are classified as under for VED Analysis :-

(i) V – (Vital) : Items which render the equipment or the whole line operation in a process totally and immediately inoperative. Non-availability of these spares would result in loss of production.

(ii) E – (Essential) : Items which reduce the equipment performance but do not render it in-operative. Non-availability of these items may result in temporary loss/dislocation of production. Replacement can be delayed without effecting the equipment performance seriously. Temporary repairing also some times possible.

(iii) D – (Desirable) : Items which are mostly non-functional and do not affect the performance of the equipment.

(iv) XYZ Analysis : XYZ analysis is to stock what ABC analysis is to consumption. It is the counterpart of ABC in stock.

It focuses the attention of the management on the materials which have been procured at a faster rate than their consumption and hence its procurement policy needs a review or have become obsolete and hence have to be disposed off.

(a) ‘X’ items – Items having stock of more than 12 months consumption.(b) ‘Y’ items – Items for which no issues have been made for 2 to 3 years.(c) ‘Z’ items – Items which have never been issued after procurement.

Periodicity

This will be a yearly exercise.

FSN Analysis (Fast, Slow & Non-moving)

Also called the movement analysis, this is applicable mainly in the case of spares where the speed at which the inventory is turned over varies within a vasr range. The applicability of this analysis lies in the procurement of spares which can, in some cases be few and far in between.

SDE Analysis (Scarce, Difficult, Easily Available Items)



This analysis indicates the market estimations of the various items/in terms of their availability. This forms the basis on which speculative purchasing can be done in the face of different market conditions. This will be done by the technical cell of the Purchase Department.

Method

1. These items are separated which are either controlled by the Govt. or have a very long lead time (more than 2 years) e.g. iron & steel, conveyor beltings, cement etc. Those items fall on one end of the S & E scale.

2. Items which are available ex-stock can be obtained without any difficulty, i.e. for which the lead time can be practically put as zero, fall on the other end of the scale.

3. The remaining items for the difficult class. These have a definite positive lead time attached to their procurement.

Periodicity

This will be a continuous exercise. As of new, most of the materials will fall in the critical or difficult class and there will be very few termed easily available.

Stock Out Cost

The loss incurred by way of production or otherwise due to non-availability of items Is known as a stock-out-cost. This may be nil to anything, depending upon the essentiality of the stores. To counteract the stock outs, suitable value of N is given while calculating the safety stock level as stated earlier.

Average inventory : It is the sum of half the ordered quantity and safety stock.

System of Inventory Control

The objectives of inventory control is :

(a) Economy or provisioning at minimum investment and cost without jeopardizing essential production.

(b) Insurance against losses due to stock-out of Stores.

To achieve the above goal, one or combination of the following systems are practiced.

(a) Two bin system.(b) Periodic review system(c) Stock level system.



Two Bin System

The two bin system though effective, is very much labour intensive and also postdated as compared to other two systems.

Stock Level System

Stock level system is now a days widely used. Once the level of safety stock, reorder, maximum and minimum are fixed along with economic order quantity, the inventories are maintained within upper and lower limits. The levels are translated in the stock cards, (Bin Card, kardveyor or kardex cards) and flags are attached to these cards of different colour, to indicate the levels. For example, if the red is meant for safety stock level, immediate action is taken when the stock level is indicated by red flag..

Inventory Control and Provisioning of Spares Parts

This is a very important subject, in as much as, most part of the surpluses that accrue constitute the spare parts.

Only indenting of first set of spares for the equipment should be done on the basis of the manufacturers recommended lists of spare parts, duly trimmed and adjusted so as not to exceed 10 to 15% of the total value of the equipment. Here also it would be desirable to order smaller quantities in the initial stage and only after gaining experience by maintaining proper records of consumption for each type of equipment, larger quantities of spares should be procured. The indents covering the 1st set of spares will be processed simultaneously along with the indents for equipment in order to ensure availability of full backing of initial spares for preventive maintenance when the new equipment are put into commission.

The second set of spares will be provided to cover the maintenance requirements for the third and fourth year of operation of the equipment. The range of spares indented will be based on the manufacturer’s recommendations suitably adjusted in the light of experience gained in the first two years of equipment operation and the maintenance scales developed by engineers. It is very important to build up proper consumption data right from the stage of commissioning the equipment which should from the basis for all further indenting. The provisioning of subsequent requirements of spare parts will be done by the users based on the consumption pattern duly projected to cover the anticipated requirements and taking into consideration the actual working conditions and the maintenance scales.

L. FINANCIAL

Journal Voucher



A document that provides written authorization for a financial transaction, often used in place of or supplementary to the journals or registers. It is commonly used for disbursements from the petty cash account. In terms of Business we do a lot of Financial Transactions on a day to day basis, There is every possibility that we loose track of those crucial transactions. So we post/maintain them in a Book "book keeping system" is an accounting term, all such transactions are logged here, each such transaction is called a Journal Entry.

Purposes of Journal Vouchers Journal Vouchers are a common transaction prepared in all University units and are used to initiate a variety of accounting transactions: • Transfer Funding for projects or initiatives • Make corrections to previously recorded transactions • To record sales of services and products to other University units • To record sales of services and products to external customers of the University on Accounts Receivable

Important Features of Journal Vouchers

When preparing journal vouchers, there are a number of pieces of information that are important in preparing a complete transaction: • The transaction date will determine the accounting period that the transaction is recorded to. It is only possible to record transactions to open accounting periods • Descriptions are important to identify the nature of the transaction and to provide reference to any document numbers that are being corrected or adjusted • Identify the journal type that is appropriate for the transaction you wish to process.

ERROR CHECKING

As produced by office, Error checking of issue transaction and received material receipt and issue and received transaction records of April 2010 to June 2010. Find some mistake or errors which have been informed to Dy. Finance Manager, Orient Area, (MCL).

Accounts Department (Internal Audit) will be responsible for stock verification of stores, materials, plant and machinery. It will be carried out departmentally under instructions from the Area Material Manager by the stores personnel of the stores depots/units independently

Accounts Department will carry out valuation of the receipt voucher by adding sales tax, excise duty, freight charges, wharfage/demurrage, packing/handling charges etc. to the basic price and pass the supplier’s bill. Total value will be shown in both the copies of receipt vouchers. White copy will be retained by the Accounts and green copy sent to data processing section for carrying out adjustments in the value of stores received. The green copy will be sent to Kardex Section for filling.

4. COMPANY PROFILE



MAHANADI COALFIELDS LIMITED.

EVOLUTION: MCL, now a mini ratna company, when established as the Eight subsidiary of Coal India limited (CIL) in 1992, was the smallest amongst the seven producing company of CIL . The Coal fields of IB valley and Talcher, the former being a part of Western Coalfields ltd and the other a part of the Central Coalfields Limited , were carved out from their respective Companies and brought into the fold of South-Eastern Coalfields Limited in 1986. Eventually , with the passage of time and due to expansion in the capacities, being the only Coalfields in Orissa , the Coalfields were taken out from SECL and restructured into a separate entity, called the Mahanadi Coalfields Limited (MCL) with head quarter at Sambalpur.

ORGANISATION : The organization of MCL comprises 2 coalfields, comprising 9 mining area, 2 joint venture projects namely M/s MNH Shakti Ltd & MJSJ, 2 Central Workshops and 2 Central Hospitals and sales offices at Kolkata and Bhubaneswar.

There are 7 underground and 15 open cast mines in the two coalfields.

GROWTH: Within a short span of just 15 years its Coal production has grown from 23.14 million tones in 1992-93 to 96.34 million tonne in 2008-09, and has become the second largest coal producing company in the country next to SECL only. MCL the largest coal producing company in the world.

ORGANISTION OF MCL



TALCHER COALFIELD IB VALLEY COALFIELD

JAGANNATH AREA ORIENT AREA BHARATPUR AREA IB VALLEY AREA TALCHER AREA LAKHANPUR AREA LINGRAJ AREA BASUNDRA & GARJANBAHAL AREA HINGULA AREA CWS(X) IB CWS(X) TALCHER

MCL has nine areas in two coalfields with 7 underground mines and 15 opencast mines.

ORIENT AREA

Orient Sub Area Rampur Sub Area

Mine No 2 Mine No 3 Mine No 4 Rampur Mine Bundia Mine

5. FUTURE PLAN

Mahanadi Coalfields Limited (MCL), a Mini Ratna (PSU) and Subsidiary of Coal India Limited (A Navratna PSU) is engaged in Extraction of Coal



through Open Cast and Under Ground Mines in the province of Orissa (India) and has already produced 100 MT coal in the financial year 2009-10. In the current financial year it is going to produce 105 MT coal. The activities of MCL are located mainly in two coalfields namely Talcher Coalfields in the distt. of Angul (Orissa) and IB Valley Coalfields in the distt. of Jharsuguda & Sundargarh (Orissa). The Company is committed to produce 137MT Per Annum coal at the end ofthe 11th plan i.e; in 2011 – 2012 and 180MT Per Annum coal at the end of 12th plan period. Presently the dispatch of coal in MCL is through Road to railway siding and thereafter through Rail and directly through road also.

6. REVIEW OF FINANCIAL PERFORMANCE(APRIL 2009 – MARCH 2010)

Profit Before Tax(PBT) of 2009-10 (QE) as compared to 2008-09 (Actual)



(Rupees in Crore)

Company 2009-10 (Quick estimate)

2008-09 (Actual)

ECL 152.36 -2105.70BCCL 402.29 -1376.99CCL 1500.26 763.80NCL 3775.45 3131.01WCL 601.04 516.12SECL 2743.32 1817.93MCL 3010.00 2580.25

CMPDIL 16.68 6.73Sub-Total 12201.40 5333.15NEC/CIL 3502.74 3657.68

DIVIDEND RECVD. 3371.67 3329.73Adjustment 64.00 83.00

Total 12396.47 5744.10

7. BIBLOGRAPHY

Inventory Control And Management, by Donald Waters

Purchasing And Inventory Management by K. S. Menon , Sarika Kulkarni

Cost Accounting by Jawahar Lal

Jain, S.P. & NARANG, K.L(2004), Cost & Management Accounting, Material Control, chapter – 3, p-50-75.

PANDEY, I.M., Financial Management, Inventory Management, chaoter-29.


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http://www.flipkart.com/cost-accounting-jawahar-lal-book-0070221626/cost-accounting/5

http://www.flipkart.com/author/sarika-kulkarni/

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http://www.flipkart.com/inventory-control-management-2nd-ed-book-8126516488/inventory/3


WEBSITES:-

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http://www.azinventorymanagement.com/inflationeoq.htm

http://www.azinventorymanagement.com/safetystock.htm

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http://www.equitymaster.com/detail.asp?date=3/26/2009&story=2

8. CONCLUSION & RECOMMENDATION

Conclusion:-

(a) All fires have small beginning and can be effectively tackled at this stage if suitable fire fighting equipments are readily available. Ofcourse suitability, serviceability and most important the training in the use of these equipments are equally important for effective control of fire in their initial stages. The persons selected to man fire fighting organization should be carefully selected and properly trained in the use and maintenance of the fire fighting equipments.

(b) Material planning, programming and indenting are integrated functions of materials management involving most of the departments of the


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subsidiaries of CIL headquarters. Unless every officer/department/section carry out their respective functions in time and with company objectives in mind, problems of overstocking and stock-outs cannot be tackled successfully. Timely actions by all concerned and co-ordination at different levels will ensure optimum utilization of inputs, resulting in reduction I costs and efficiency all round

(c) Accounting and consuming units should prepare proper type of document carefully indicating the correct item code No., Unit of measure, store code, accounts code, quantity and value. This is the essence of computerization and is very important.

(d) Accounting units should submit the documents to Data Processing Center strictly as per the laid down time schedule. Failure to do this results in creation of errors and reporting of incorrect inventory figures.

(e) The initial check list should be promptly scrutinized within 48 hours and return to fully corrected to EDP.

(f) Error list should be attended to by all concerned immediately and corrective action initiated within 10 days of receipt.

RECOMMENDATIONS

We have seen that through selective control techniques stores can dispose the non moving items which are increasing inventory but this process does not eliminate all non moving items. So selective control techniques should be better used so that most of the non moving items are disposed off immediately. Other selective control techniques such as VED can also be used.

Spares such as mechanical, electrical, instrumentation spares are the materials which are one of the reasons for high inventory as these are either slow moving or non moving items. Thus,



inventory control techniques should be used for spares and better planning for procurement for storing should be made.

Automatic procurement items are fast moving but duplicate indent may cause high inventory. Thus, company should review the automatic procurement list from time to time and check the list precisely for double indent.

There are some items which are required by different departments. If one department finishes the items stock can be refilled by transfer from other department having surplus items. Thus avoiding unnecessary of those items

The company orders the raw materials every months. This can increase the total cost of inventory. Thus company should use EOQ model for procurement of raw materials as this provide right level of inventory with minimum cost.

SAP software and ERP technology provides better maintenance of data and records through internal control. These technologies can provide easy accessibility to authorized employee of the organization to go through the record of data, inventory etc to help follow better inventory management.
