ACKNOWLEDGEMENT

No endeavor however small can be successfully accomplished without the concrete efforts of all concerned. I was fortunate in being given full co-operation & help whenever I sought it in the course of my training.

In this respect I would like to thank Mr.M.J.Kalra who allowed me under go training in NHPC (Parbati Project Stage II) at Nagwain (MANDI).

I express my sincere thanks to Mr.K.K.Goel (Sr.Manager Finance) who accepted me as a trainee in NHPC& for taking keen interest in my training.

I have no appropriate words express my sense of gratitude to Mr.Anil Gaba M.B.A. (Accounts officer) & Mr. Sachin Behl C.A. (Accounts officer) under whom I was placed during the training tenure. I must thank Mr.Devender Kumar C.A. (Dy. Manager) for his guidance without whom my training would not have been rich and fruitful.

I owe a special thanks to all the executives, supervisors & staff of various departments for their co-operation & making my training period a valuable & pleasant experience for me.

July, 2007.

PREFACE
The confidence of an individual is boosted as one successfully completes the responsibilities shouldered on him. The theoretical concepts only help us to gain Knowledge. However an administrative skill, the pre-requirement for the completion of a success story comes with experience. The ON THE JOB practical training is a stepping stone towards the success story. A mere tenure of two months in the industrial world gives you a birds view of the internal happening of the vast and complex world. It was a privilege to undergo practical training in NHPC (National Hydro electrical Power Corporation Ltd) which allowed me to see the most recent management tools, techniques and methods being put in to practice. NHPC has given me so much in this short duration that I feel confident and capable of taking up challenge in this industrial world and make a success story of my career. Out of different offices located in different states of India, I visited one in Himachal Pradesh at Nagwain (Mandi) i.e. Parbati Hydroelectric Project Stage-II. The present training report deals with the work done during training period at seven week in Finance department. It is outcome of observation, discussion, practical work and some of the assignment given to me. Report has been divided in to two parts. First deals with Introduction about NHPC& Parbati Project-II.Second part deals with the Project Report on Stores management with respect to NHPC.

CONTENTS

PART-I
INTRODUCTORY ANALYSIS BRIEF INTRODUCTION ABOUT NHPC INTRODUCTION ABOUT PARBATI PROJECT

PART-II
PROJECT REPORT ON STORES MANAGEMENT WITH RESPECT TO NATIONAL HYDROELECTRIC POWER CORORATION DEFINITION AND INTRODUCTION ACCOUNTING GUIDELINES PROCUREMENT PROCESS PROCESSING OF PRICED STORE LEDGER(PSL) INVENTORY MANAGEMENT CONCLUSION RECOMMENDATIONS

PART-III

BIBLIOGRAPHY

POWER SCENARIOS IN INDIA

Water power for sustainable Socio-economic development & nation building Hydro Power- Green Power: Power from earth- Power from earth Survival of mankind is totally dependent on natural resources but the incessant demands of development and threatening the delicate ecological balance of planet earth. So far only place to home human beings. Development has become the need of mankind while energy is key to development, but fossil fuels are exhaustible and scarce in out country. In such an environment, hydropower is environment friendly green source of energy harnessed utilizing abundant and renewable water sources. NHPC is dedicated in harnessing vast hydro power potential of the country estimated to 150000 MW of which nearly 18% has been developed by optimum utilization of natural resources.

Introduction about NHPC

NHPC has become the largest organization for hydropower development in India, with capabilities to undertake all the activities from conceptualization to commissioning in relation to setting up of hydro projects. NHPC is also planning to take Wind and Tidal wave projects in the country.

INTRODUCTION Incorporated in the year 1975 with an authorized capital of Rs. 2000 Millions Single largest hydro power utility in India with experience, expertise and capabilities to undertake multidimensional activities such as Planning, Survey & Investigation, Design & Engineering, Construction, Operation & Maintenance, Renovation, Modernization and Updating of hydroelectric projects, a "Concept to Commissioning" endeavor. Achievements include an installed capacity of 2175 MW, another 2370 MW under construction and more than 20,000 MW under Survey & Investigation. In terms of performance as per MOU signed with Ministry of Power, NHPC achieved a distinction of eight successive "EXCELLENT" rating ISO-9001 & ISO-14001 certification for its operations at Corporate Office.

CAPITAL STRUCTURE: Financial Profiles

An authorized share capital of Rs.70, 000 Millions. Government of Indias approval of increasing the authorized share capital of the corporation Rs 100,000 millions Investment base of over Rs. 155,000 Millions and paid up capital of Rs. 62,709 Millions In terms of investment NHPD is one of the TOP TEN companies I the country. Future Plans: Road ahead During the X five year plan, hydro capacity addition of 4357 MW Tentative allocation of Rs. 322260 Millions by Planning Commission for X five year plan; an increase of 500% in comparison to IX five year plan. CONSULTANCY SERVICES: An expert in the arena of hydro power development with experience of over 27 years. Consultancy services to other agencies/ organizations, both in Public and Private sector. Achieved new consultancy assignments totaling Rs. 171.80 Millions (2001-2002). A registered" Consultant" in the area of hydro power with World Bank, Asian Development Bank, African Development Bank and Kuwait Fund for Arab Economic Development. Lending consultancy to various organizations in the field of Enginccring Geology, Geo-Physics, Construction Material & designing of hydroelectric structures.

DESIGN & ENGINEERING: Pool of talent, powering excellence

Multi-disciplined interactive design Division; well equipped and capable of handling intricate design of all the structures associated with hydro power projects from concept to commissioning, operation and maintenance.

ENGINEERING GEOLOGY AND GEOTECHNIAL:

Searching the earth. Revealing the unknown Specialized in the field of Engineering Geology, Geo-Physics and Construction material, well equipped and capable of handling Survey/investigations of Hydroelectric Projects and preparation of DPR in record time. International Experts rated NHPC's Geological Data & interpretation of high standards.

JOINT VENTURE OPERATIONS:

Government of India accorded approval for execution of Indirasagar H.E Project (1000 M W Omkareshwar H. E Project (520 MV/) by Narmada Hydroelectric Development Corporation (NHDC) a Joint Venture Company of NHPC and Govt. of Madhya Pradesh.

PROJECTS ABROAD:
Successfully commissioned devighat H.E Project (14.1 MY/) in Nepal in 198,; in a record time of three and half years. Successfully commissioned The Nuwakot Rural Electrification Project in Nepal covering 64 villages along with sub-station and connecting lines one year ahead of schedule. Very successfully commissioned Kurichu HE Project (60 MW) and Nganglam Tintibi Gelephu Single Circuit 132 KV Transmission Line on Turnkey basis for Kurichu Project Authority, Government of Bhutan, ahead of schedule

RESEARCH AND DEVELOPMENT:

Sustained efforts towards improvement and perfection towards attainment of Self Reliance, Import Substitution, Trouble-free Operation, roster Construction, Efficiency Improvement Innovations and Cost reduction as well as Residual Life Predictions for Forewarning.

CORPORATE VISION

Clean Power for every home. To be a World doss organization in hydroelectric, wind, tidal & geo-thermal power with dominant Indian leadership and global presence. To attain organization excellence by developing true potential of human resources and providing opportunity for growth, well being and enrichment. Preservation of environment matrix and bio-diversity in the project areas as well as protecting rights of project affected people (PAP's).

CORPORATE MISSION

To harness the vast hydro, tidal, wind and geo-thermal potential of the country by covering all aspects of investigation, planning, design, construction operation and maintenance to produce pollution free and Inexhaustible power. Uphold high standards of organizational values and ethos. Commitment to health, safety, environment and human resource development. Faster the culture of commitment and transparency making working as stimulating and challenging.

CORPORATE OBJECTIVES

Development of vast hydro potential at faster pace and optimum cost elimination time and cost over-run.

Completion of all on going projects within stipulated time frame. Ensure maximum utilization of installed capacity and help in better system stability.

Generation of sufficient internal resources for expansion and setting up new projects.

Corporate development along with simultaneous human resource development.

FINANCIAL PERFORMANCE
Highest ever turnover and net profit, Commissioning of 280 MW Dhauliganga Power Station in Uttaranchal, finalizing major contract agreements for civil works of Uri-II, Chamera-III, Parbati-III & Teesta Low Dam Stage-IV, surpassing the MOU generation target, achieving 98.16 % Capacity Index, record realization of energy bills from various beneficiaries, signing of power purchase agreements for 7 projects with various beneficiaries, Bagging more consultancy assignments, Obtaining Government sanction for 4 projects with a total installed capacity of 1151 MW, bagging 2 projects in Sikkim and 3 projects in Uttaranchal, Submission of DPR of 8 Projects with an installed capacity of 6085 MW to CEA/ CWC for TEC / TEA, speeding up construction activities on Dul Hasti, Teesta Stage-V and other Projects are some of the major achievements of NHPC during the Financial Year 2005-06.

FINANCIAL INITIATIVES & ACHIEVEMENTS DURING 2005-06

Registered a net profit of Rs. 701 crore in the year 2005-06. Achieved an all time high sales turnover of Rs. 1834 crore as against Rs. 1668 crore during the year 2004-05 Rs. 140 crore given to Government of India as Dividend for 2005-06. Highest rating for Domestic borrowings i.e. AAA & for external borrowings BB+/Stable, equivalent to Sovereign rating re-affirmed by reputed International rating agencies. The average rate of Interest on borrowings has been brought down to around 6% p.a. (2005-06) from 10% p.a. (1999-2000) The Corporation is in the process of raising 100 Million USD loan through ECA route for part financing of prestigious Subansiri lower Project. As financial re-engineering General purpose loans raised in previous years (1997-98 to 2002-03) are being pre-paid to improve profitability, Corporation is poised to liquidate all General purpose loans during the current financial year Became self sufficient for its short term/ working capital needs. Standardized Accounting & Internal Audit procedures by way of their Manualisation. All set to generate Internal Resources to partly finance funds for Plan Outlay requirements from the year 2006-07 & onwards.

The Corporation has switched over to electronic mode of payments to its contractors/suppliers wherever possible. Some of the Regional offices have also been lined to net banking.

POWER GENERATION

During the period under review the eight operating power stations of the Corporation generated 11045.52 Million units of energy against the MOU target of 9400 million units which is 11.9% more than the generation of 9862.71 million units achieved during 200203. The machine availability of operating power stations of NHPC measured as capacity index is 96.88% as against MOU. Target of 94%. During the previous year the capacity index was 96.19%. All the Power Stations of NHPC exceeded the generation target except Baira Siul Project where target could not be achieved due to less inflow. 540 MW Chamera Stage I Power Station in Himachal Pradesh, 690 MW Salal Power Station in J&K, 120 MW Tanakpur Power Station in Uttaranchal and 480 MW Uri Power Station in J&K achieved highest generation since their commissioning.

REALISATION/OUTSTANDING DUES
The Corporation is supplying power to 22 beneficiaries As on 31.3.2003 the beneficiary States owed to NHPC RS.1881.46 crores including Rs.732.80 crores as surcharge 1 for delayed payments. With the implementation of securitization scheme of Government of India for one time settlement of SEBs dues, as on 30.09.2001, the Corporation has signed Tripartite agreement with 19 States/union territory and Corporation and has realized an amount of

RS.2841.44 crores up to March, 2004 including receipt of bonds and long term advances of Rs.1041.95 crores and Rs.248.32 crores towards interest on bonds. The principal outstanding dues have reduced to Rs.367.62 crores as on 31.3.2004.

SALES AND PROFIT(NHPC)

Financial

Review

2007

The Board of Directors of NHPC in its meeting held on May, 2007 has adopted the Annual Accounts for the period ending 31.3.2007. During the Financial year 2006-2007, the Corporation has achieved a net profit of Rs.924.80 crore against Rs.742.75 crore for the previous year, thereby registering an increase of 24.5%. The sales turnover of the Corporation has also gone up from Rs.1,714 crore during 2005-06 to Rs. 1,963 crore during 2006-07 registering an increase of 14.5%.The subsidiary company NHDC has also registered a net profit of Rs.454.31 crore and a sales turnover of Rs.748.54 crore during the year 2006-07.The Board has also recommended a dividend of Rs.278 crore @ 30% of our net profit for the year 2006-07 including an interim dividend of Rs.72 crore.

Paid Up Capital
The Board of NHPC has allotted 5,66,800 equity shares to the President of India in its meeting held on 24.3.2006. With this, the total paid up capital of the Corporation has gone up to Rs. 10, 215.28 crore.

Power Generation
During the period under review, the operating Power Stations of the Corporation generated 12567.15 million units against the MoU target of 12344 million units for very good rating , as compared to 11286.43 million units generated during the previous year showing an increase of 11.347 %.

The machine availability of the operating Power Stations measured as capacity index is 98.16 % against the annual MoU target of 96.2 % for Excellent Rating Almost all power stations exceeded generation target. The 690 MW Salal Power Station generated 3480.86 million units against the MoU target of 3082 million units . The 105 MW Loktak Power Station in Manipur achieved generation of 586.12 million units against the target of 448 million units. The 60 MW Rangit Power Station in Sikkim achieved generation of 352.05 million units against the target of 339 million units. The 180 MW Baira Siul Power Station in Himachal Pradesh achieved a generation of 790.99 million units against the target of 779 million units. 540 MW Chamera Stage-I generated 2343.18 million units against the target of 1665 million units. The 120 MW Tanakpur Power Station generated 483.15 million units against the target of 452 million units.

Sale of energy & Realization

During the financial year 2005-06, the Corporation raised a total billing of Rs. 1858.27 crore to the various beneficiaries and the total amount realized was Rs. 1911.32 core. The current outstanding dues towards principal amount have been

reduced to Rs. 20.75 crore ( as on 31.3.2006) from Rs. 73.80 crore ( as on 31.3.2005) which is equivalent to reduction in terms of months of average billing from 0.54 to 0.13. Besides the above realization, UI charges of Rs. 58.77 crore and surcharge of Rs. 22.75 crore and interest on bonds of Rs. 257.14 crore has also been received during the year. Long pending outstanding dues as on 30.9.2001 amounting to Rs. 33.38 crore have been securitized into power bonds in respect of Bihar ( Rs. 19.70 crore) and Jharkhand ( Rs. 14.31 crore). Doubtful debts reduced to Rs. 74.11 crore from Rs. 76.86 crore through settlement and recovery thereof from the concerned beneficiaries.

The Corporation has signed Power Purchase Agreement (PPA) for the 330 MW Kishanganga, 45 MW Nimmo Bazgo, 44 MW Chutak, 240 MW Uri-II , 390 MW Dul Hasti , 231 MW Chamera-III and 160 MW Teesta Low Dam IV Projects with the concerned beneficiaries of Northern and Eastern Region.

Project commissioned
The 280 MW Dhauliganga Power Station in Pithorgarh District of Uttaranchal started commercial operation with effect from 01.11.2005 . Power from this Power Station is being sold at a provisional rate of 183 paise per unit as approved by CERC. The beneficiary States are Uttaranchal, Haryana, Chandigarh, Himachal Pradesh, Jammu & Kashmir, Punjab,Rajasthan, Uttar Pradesh and Delhi. The Dhauliganga Power Station was dedicated to the Nation on 8.4.2006 by Shri Sushilkumar Shinde, Honble Union Minister of Power.

LOCATION MAP OF N.H.P.C. PROJECTS

CONSULTANCY SERVICES

NHPC has been providing consultancy services in the area of Hydro Power development for generating additional revenue for the Corporation in the form of consultancy business. The clients to whom the consultancy services are being provided include agencies/organizations both in public and private sector in India and abroad.

During the financial year 2003-04 new consultancy assignments amounting to RS.9740 lakhs were received which is 785% more than the target for "Excellent" rating i.e. Rs.1100 lakhs. The payments received during the period for the various consultancy assignments stood at RS.1707 lakhs. The total value of consultancy assignments and payments received on account of services is more than RS.15, 782 lakhs 'and RS.5742 lakhs respectively.

GEO-THERMAL PROJECTS
NHPC has been appointed as a Nodal Agency for exploitation of geothermal energy in the country by Ministry of Non Conventional Energy Sources (MNES). The ranking studies of geothermal fields In India have been carried out through an International Consultant viz, M/s GeothermEx, USA.

Tattapani Geothermal Field, Chhattisgarh

The matter regarding overall development of Tattapani Geothermal Fields has been examined by MNES and NGRI has been asked to submit proposal to MNES for conducting detailed survey, NHPC is to be associated for further action based on surveys' results.

INFORMATION TECHNOLOGY
NHPC has created a robust, scalable und secured communication network connecting all Project locations, Corporate Office and Regional Load dispatch Centers using VSAT based satellite communication technologies.

The communication network has been expanded to 27 such locations for data, voice, fax, video conferencing and internet e-mail connectivity. The Corporation is also provided consultancy services in the area of information technology to organizations like BBMB, SJVNL etc.

THE HUMAN RESOURCE DEVELOPMENT

The human resources development division imparted training to 6194 employees, which constituted 47.03% of its workforce against the MOU target (for excellent rating) of 38%. HRD division conducted 539 programs which included 312 in-house programs.

DIVERSIFICATION
NHPC intends to form a joint venture with the Government of Gujarat for development of Kalpasar Multipurpose Project in Gujarat, which includes tidal power generation of 5880 MW. NHPC has sent a draft MOU in this connection to the Government of Gujarat for their concurrence.

PROJECT ABROAD
The Corporation has taken-up the matter to develop Upper Karnali Hydroelectric 'Project on River Karnali fn Nepal with approximately 300 MW installed capacity on Build Own

Operate and Transfer basis. Draft MOU in this regard has been sent to the Royal Govt. of Nepal for their concurrence.

NEW INITIATIVES
Feasibility studies of 162 Hydroelectric Schemes have to be completed by various agencies under the 50000 MW Hydroelectric Initiative launched in May, 2003.Out of these NHPC was allotted 43 schemes having total installed capacity of_21345 MW. NHPC has submitted Pre-Feasibility Reports (PFR) of 40 schemes with a total installed capacity of 18420 MW till March, 2004. PFR of one more scheme with installed capacity of 552 MW has also been submitted in April, 2004. Based on the Pre-Feasibility Report submitted to CEA and based on the criteria that first year tariff is below Rs.2.50/kWh, Secretary (Power), Govt. of India has desired that 2 projects in Sikkim with installed capacity of 305 MW and 7 projects in Arunachal Pradesh with installed capacity of 11000 MW be allotted to NHPC for execution in the central sector. State Governments in this regard have been approached for their consent.

DEVELOPMENT OF HYDROPOWER

Indian State of Himachal Pradesh is blessed with abundant water resources in its five major rivers i.e. Chenab, Ravi, Beas, Satluj and Yamuna, which emanate from the western Himalayas and flow through the State. These snow fed rivers and their tributaries carry copious discharge all the year round and flow with sleep bed-slopes, which can be exploited for power generation. The expeditious harnessing of this vast and economically viable hydro-electric potential, estimated to be more than 20,000 MW, is the only answer to the prevailing chronic and ever-growing power shortage in the Northern region. In India, since independence, concerted efforts have been made to increase the availability I of power to various segments of Indian society. The hydropower development in India has I' not taken place in a systematic manner since year 1950 till date with more advantage to I thermal/nuclear Station during the last 50 years, which resulted in improper hydro-thermal mix of power generation. Central Electricity Authority (CEA) has estimated the Hydroelectric potential in the country at 84000 MW, at 60% load factor. Existing projects and projects presently under execution account for only about 22,9,83 MW. Two large blocks of the potential are located in the North Western Middle Himalayas and in the North Eastern portion of the country. The present installed capacity in the Northern Region, where the existing projects are located, is about 26285 MW, out of which 7877 MW is hydro power and 18408 MW thermal and ' nuclear power. As per the studies conducted by CEA, there will be an anticipated deficit bf f about 26,654 MW in peaking capacity and. about 1, 19,663 GWH in annual energy I generation in the Northern Region alone during 2011-12. The dire need of creation of additional capacity in this region is thereby obvious.

The Northern Region comprises the States of Uttar Pradesh, Rajasthan, Haryana, Punjab, Himachal Pradesh and Jammu & Kashmir. It is in this context that Parbati Hydroelectric. Projects in Three Stages have been considered for detailed investigation and execution. These projects shall utilize the waters of Parbati River & its tributaries and Sainj River & its tributaries. In addition small streams, which are tributaries of Beas River, are also being utilized for enhancing the potential of the scheme.

Parbati Hydroelectric Project

NHPC has been associated with the development of hydro power potential of Himachal Pradesh since its inception. Commissioning of Baira Siul in May 1981 and Chamera Stage-I in March. 1991 have given a fillip to hydro power generation and development of the State. These projects are now supplying power to various beneficiary states in the North. Construction of Chamera Stage-II Project has been taken up. In November 1998 agreement for harnessing power potential of Parbati basin has been executed with Government of Himachal Pradesh. Potential of river Parbati will be harnessed in three stages comprising Stage-I (750 MW). Stage-II (800 MW) and Stage-III (520 MW). NHPC has therefore taken up planned development of the Basin with construction of Stage-II initially, and completion of balance investigation of Stage-I and Stage-Ill projects before taking up these for construction.

PARBATI STAGE- II H.E. PROJECT

PROJECT UNDER COSTRUCTION

SALIENT FEATURES Location Distt. Kullu, Himachal Pradesh. Nearest Rail Head - Kiratpur & Approach Nearest Airport - Bhunter. Capacity 4x200 MW Annual 3108.66 MU (90% dependable Generation year) Latest Rs.3919.59 Crores (December Estimated 2001 price level) Cost Beneficiary H.P., Delhi, J&K, Punjab, States Haryana, Rajasthan, U.P & Union

Territory of Chandigarh. Completion September 2009 Schedule

TECHNICAL FEATURES 1. 85 m high concrete Gravity dam. 2. 130 m high, 17m Dia Orifice type surge shaft. 3. 6 m dia 31.52 km long Head race tunnel. 4. 2 pressure shafts of dia 3.5 m and length 2150 m and 2133 m including 1546 m inclined portion in each shaft. 4 nos. Tail Race Channels 60m long 5 m x 4.5 m each. Surface power house containing 4 Pelton Turbine Generating units of 200 MW each. 400 KV GIS Surface Switchyard with 2 out going 400 KV feeders.

5. 6.

7.

Power House
The proposed surface power house is located on the right bank of River Sainj near Village Sainj at about 200 m downstream of the confluence of River Sainj and Jiwa Nallah. The power house shall have an installed capacity of 800 MW with four generating units of 200 MW each. Short Tail Race Channels shall discharge the water from Power House to river Sainj.

Cost

The estimated cost for construction of Project is worked out to be Rs. 3708.66 crores +US$11.774 million (1US$=Rs 45.50) at August 2000 price level.

Benefits
The Project is planned to be operated as a peaking power station. A: 800 MW installed capacity the Project will generate 3108.66 million units of Power in 90% dependable year. The construction of the Project will bring social & economic development in the region. Rv10reover facilities like infrastructure. Education Medical and reemployment will get boost with the execution of the Project.

Environmental Aspects
Based on Environment Impact Assessment Studies conducted by the State Forest Department, an Environment Management Plan has been prepared incorporating the Catchments Area Treatment Plan and Compensatory A forestation scheme. The project involves diversion of 87.79 ha of forest land. In lieu of this forest land to be acquired, compensatory forestation is proposed over 190.28 ha of land. Biological and engineering soil conservation measures have been proposed under Catchments Area Treatment Plan. Other environmental measures proposed include wildlife protection, heath measures, subsidized fuel .supply to laborers, etc.

PROJECT REPORT
ON

STORES MANAGEMENT

STORES MANAGEMENT WITH RESPECT TO NATIONAL HYDROELECTRIC POWER CORPORATION

INTRODUCTION

National Hydroelectric Power Corporation Limited (NHPC) has several units, which are engaged in operation of generating electricity or are under construction stage. Various types of stores inventory need to be maintained to ensure smooth running of these power stations and construction of the units under construction. The purchase and stores accounting procedures shall be subject to NHPCs policy for procurement of stores, delegation of powers and administrative instructions issued in this regard from time to time. The stores inventory includes inventory for construction (like steel, cement, etc.) as well as for operation purposes.

OBJECTIVES OF STUDY

General objective:
To relate our theoretical knowledge about stores management with the actual procedures being adopted in industries regarding their stores management.

Specific objective:
To study & analyse the stores management procedures of an under construction project of NHPC i.e. of Parbati Project-II.

RESEARCH METHODOLOGY

Research methodology is a way to systemically solve the research problem. Why a research study has been undertaken, what data have been collected & what particular technique of analyzing data has been used etc. are all considered under research methodology. The subject of my research is to study the stores procedure of Parbati Project of NHPC. The data being collected is of following types: Primary Data Secondary Data Primary data has been collected by personally interviewing the employees of stores Department of Parbati Project-II. These interviews were of unstructured form. Few questions asked are as:Q: How is the material being procured in the stores? Q: Which transportation system is being adopted? Q: How materials are unloaded? Q: What is the purpose of gate pass & challan? Q: Is the incoming material being inspected? Who inspects them? Q: How is the unacceptable material being treated? Q: Issue of materials is done on which basis? Q: Rate of materials issued is determined by which method? Q: When are the entries of the materials being made in stock registers? Q: When are the stock records reconciled with the accounts records?

Q: Are the stock entries & accounts maintained manually or by computerized system?

Q: Is the software being fully exploited for the purpose? Q: How inventory stock level is determined in the stores? Q: Which method of inventory management is being employed?

Secondary data of both published & unpublished form has been collected from following sources: NHPCs manual on stores procedures. News magazine of NHPC. NHPC diary. NHPCs website www.nhpcindia.com .

INTERPRETATION & ANALYSIS

During data collection, Stores Department employees at Garsa & Bajaura stores gave following: Materials are procured by tendering process. In certain emergency situations of shortage of materials, a committee is formed to perform market survey & purchase the required materials through local purchase. Materials to be bought are either inspected at the suppliers place or after receiving at the stores of corporation. Issue of materials from stores is based upon the indent requisition & availability of materials in stores. Rate of materials issued by the stores is determined by weighted average method in N.H.P.C. NHPC has bought a customized MMS(Materials Management System) package from TCS for Rs. 14 lakhs to maintain the stores records & to connect this system with other sites & projects also. But due to non-availability of basic infrastructure this system is not functioning fully yet though Garsa Store has been connected to Nagwain office from 25th July, 2007. In NHPC no specific method of inventory management is being employed. Orders of requisition are based upon the approximate consumption of materials & the past experience of the department.

ACCOUNTING GUIDELINES FOLLOWED BY N.H.P.C.

The accounting guidelines that shall be followed for stores accounting are provided below: Accounting for all material transactions shall be done in the same period in which the physical event of receipts, issues, etc. take place and the ownership/ title in the material purchased passes to NHPC.

Receipts from suppliers All receipts shall be valued in the month in which the material is received and accepted as per the GRN based on the bills received and passed. In case the bills have not been received/ processed, the receipts shall be provisionally valued at the Purchase Order rates. Adjustments, if any, to the provisional value shall be done at the time of actual bill passing in the month in which the bill is passed. The material value, on account for such adjustments, shall be affected for the future issues. The purchases shall be valued at the landed cost i.e. basic price, excise duty, sale tax, freight and other incidental expenses. In case of imports, the cost of material shall include the following: - Custom duty. In case a GRN contains several items with different custom duty rates, the custom duty amount for each individual item shall be absorbed at the applicable rates. - Port charges, landing charges and clearing agent's commission - Local transport charges. - Other incidental expenses and local taxes, if any. In case there is any amount payable by NHPC for freight and other incidental expenses, it shall initially be debited to Freight and incidental expenses on inventory (foreign/

indigenous) on insurance of such expenses. This account shall be adjusted in the manner given below: At the time of valuation of receipts, freight and other incidental expenses incurred shall be absorbed with a credit to the Freight and incidental expenses on inventory (foreign/ indigenous). In case the actual freight and incidental expenses incurred can be identified / is dedicated to the specific receipt of material, the same shall be absorbed at actuals. In other cases, the absorption shall be made at a pre-determined rate. Each unit should fix a pre-determined annually based on the previous year data of receipts and such expenses and get the rate approved by the competent authority. - The balance in the Freight and incidental expenses on inventory (foreign/indigenous) account is to be reviewed periodically and the nominal balance that may remain unadjusted at the year-end shall be charged off to the P&L account. Necessary provision shall be created at the year-end for any pending bills. The following types of expenses shall be charged to the natural heads of expenditure and shall not be included / loaded to the material purchase cost: - Costs of running of departmental trucks (i.e. of NHPC) used for bringing the bought out material to stores from the suppliers site / intermediary transit location, keeping in view the materiality concept and simplicity in accounting. - Stores holding expenses / storage costs.

Receipts from other units

 All receipts from other units shall be valued in the month in which the material is received. The stores transferred from other units shall be valued at the rate intimated in the Inter Unit Advice (IUA) by the transferor unit. The Store Transfer Note (In) (STN (IN)) contains the provisional/ final value of the material transferred and the materials shall be valued on the basis of the STN (IN) in the month material is received. The difference, if any, in the above provisional value and the inter unit advice shall be adjusted in the store value in the month in which inter unit advice from the sending unit is accounted for. The cost of transport from the transferor store to the transferee store shall be charged off to revenue expenditure.

Returns out of material issued The material returned to stores shall be valued at the original issue rate. In case of return of material to stores after its use and such material being re-usable (such as CGI Sheets, Steel, Timber etc.), the same shall be valued at a price assessed by the concerned Engineer in consultation with the Purchase Department and kept at a separate location from the good stores. However the return price shall not exceed the current issue price of fresh material items as per the PSL. The credit for such returns shall be given to the concerned account head which was debited at the time of issue of material.

Issues for internal use for works/ O&M All issues shall be made against specific work / expense head and there shall be no lump sum issues. Issues shall be accounted for in the month in which material has been issued and shall be charged /debited to the final expense/ capital head in the month the issues are made from the main stores. Issues shall be valued at a moving weighted average rate. A new issue rate shall be worked out after each new receipt.

Issues to contractors Material issued to contractors shall be valued on the same basis as material issued for internal use. In case terms of a contract provide for issue of materials at a rate different from the issue rates of materials, then the difference between the issue rate and the rate chargeable to the contractor shall be adjusted to the respective work.

Issues to other units Material issued to other units shall be valued on the same basis as material issued for internal use. Such issue price shall not include any element of profit.

PROCUREMENT PROCESS

1. Procurement order/ Contract is a backbone of any commercial activity. The Finance plays an important role in the procurement/ contracts. The role of Finance in NHPC is a staff function. It has the concurrence power and as such the Finance has to critically examine every proposal coming up for concurrence. The Finance Executive examining the proposals for various types of contracts for procurement should be fully conversant with the latest developments in the statutes, market conditions (both National and International), policies/ programs/ planning/ objectives and delegation of power of the Corporation.

TYPES/ CONDITIONS OF CONTRACT 2. Now days, various types of contracts are entered into by NHPC through National Competitive Building (NCB) as well as through International Competitive Bidding (ICB). 3. In order to have uniformity in the Contracts being entered in to by different Projects of the Corporation, Standard General Conditions of Contract (GCC) for Civil Contract, Supply Contract, as well as Supply cum Erection Contract have already been approved by the Competent Authority and circulated. Any change in the standard clauses of the General conditions, which become necessary due to the site conditions, past experience, or due to other reasons are incorporated in the Special Conditions of the Relevant Contract (SCC) and got approved from the Competent Authority. These General Conditions of Contract can however be used only in case of National Competitive Bidding (NCB).

PRE-TENDERING PROCESS

4. The procurement process is initiated based on the periodic procurement plan and / or purchase requisition in case of non- availability of any item in stores. 5. All proposals for procurement are prepared in the form of estimates, by the indenting department before any expenditure or liability is incurred thereon. The basic prerequisites to be fulfilled before starting the process for finalizing a purchase order are: Administrative approval Expenditure sanction Technical sanction Appropriation or re-appropriation of funds

Administrative Approval
6. Normally before any action for Procurement is initiated an administrative approval of the Competent Authority has to be obtained. While examining the proposal seeking administrative approval, the finance has to see the following: Whether the proposal is covered under the Detailed Project Report (DPR)/ Feasibility Report (FR) as approved by the Board/ Government of India (GOI) or is covered under the Annual Plan/ Approved O&M Budget, etc. The Propriety of Expenditure i.e. to see whether the proposed expenditure is a correct charge to NHPC. Essentiality and Justifiability of the proposed expenditure will be seen at this stage, and if required Finance may seek clarifications from the Initiating officer in this regard. Any alternative proposal or suggestion can also be made by Finance at this stage.

7. After obtaining an administrative approval of the Competent Authority a detailed PR is prepared by the initiating division/ indenting division. This PR is again sent to Finance for checking.

TENDERING PROCESS Pre-qualification of Bidders

8.Tendering process starts only after the Competent Authority has approved the PR. Normally the tenders are invited through Open Tender, Limited Tenders or Single Tender. However, sometimes considering the estimated value/ nature/ technical requirement of the procurement, pre-qualification of the bidders are resorted to whereby the capability of the probable bidder (both technical and financial) is ascertained before one is allowed to bid for a particular procurement tender. Pre-qualification of bidders is normally done to ensure selection of resourceful, technically competent, and financially sound prospective bidders with proven past performance for participation in the bidding process. 9. The criteria of financial capability of the applicant are fixed taking into account the completion period of the proposed work, requirement of the monthly cash flow for the work, etc. Keeping these facts in view the minimum qualifying criteria for the following are generally considered: Average annual turnover of the applicant Net worth of the company Profitability of the applicant

 Working capital of the company: The cash credit facility enjoyed by the applicant from any bank or Financial Institution can be considered. 10. Once the bidders are selected on the basis of the PQ, tenders are invited only from those pre-qualified bidders.

Vetting of tender documents

11.. Normally no work is put to tender unless the tender documents are prepared and got approved from the Component Authority .Various inputs are collected from the concerned divisions (designs, civil, CEP unit, etc.) and compiled to form the draft tender documents. 12. Before the Competent Authority approves the tender documents, it is sent to Finance Department for vetting/ checking. The tender documents should also be sent to Law Division wherever a legal opinion is involved or if there are changes from the typical format of the tender documents issued by NHPC. 13. Generally, different types of contracts are executed depending on the nature of the work to be executed. Examination of tender documents in Finance will depend on the type of contract proposed therein. 14. While examining the tender documents, the finance should keep the following in mind: Guidelines, policies, circulars issued from time to time by NHPC or GOI Relevant tax laws, EXIM policy of the GOI, taxation laws of the state in which the work is to be executed, price preference/ purchase preference policy of GOI, FEMA, etc.

15. Any change in the approved terms and conditions should be examined critically to see whether the proposed change is in the overall interest of NHPC.

ISSUE OF TENDER DOCUMENT

16. Once the Competent Authority approves the tender documents, the tender is notified through Notice Inviting Tender (NIT) giving wide publicity either through press advertisements or through other means depending on the estimated cost, type of tender like open tender/ limited tender/ single tender, etc. as per the policy of the corporation. 17 .Further the tenders are invited in different ways (single envelope, two envelope, three envelope, etc.). 18 .In Three Envelope System the bidders are asked to submit: Technical particulars, commercial terms, an un-priced price schedule and all other relevant documents like Power of attorney, copies of joint venture agreement, documents in support of financial capability, etc. The EMD, Technical particulars, commercial terms, an un-priced price schedule and all other relevant documents are called in one envelope. The Price Bid is called in the other envelope. 19. In Single Envelope System all the particulars are called for in one envelope only. 20. Two Envelopment and Three Envelopment system are resorted to in cases where the technical, financial and other capabilities of the bidder are to be ascertained before the price bid is opened. In such cases price bid of only those bidders are opened who technically and financially fulfill the criteria prescribed therein.

21. The procurement department receives the request/application for the tender documents from vendor (in response to the NIT). The tender fee is received in form of cheque/ demand draft (DD) only, as per guidelines issues by NHPC from time to time. The procurement department forwards a summary of tender documents along with the cheque/ DD to the finance department for necessary accounting and action 22. Committees are constituted for the opening and evaluation of the tenders as per the extant Delegation of Powers (DoP) and got approved by the Competent Authority

Tender opening
23. Tender opening will be done by a Tender Opening Committee (TOC) constituted by a Competent Authority as per DoP in which one member is from Finance. The authorized representatives of the bidders are also invited to be present at the Tender Opening, if they wish so. 24. Generally the bidders are asked to furnish EMD in a separate envelope which shall be opened first. Techno-commercial/ price bids of only those bidders who have submitted the requisite amount of EMD shall be opened and considered for further evaluation. 25. A spot report of the tender opening, indicating therein the following, shall be prepared and signed by all the members of TOC: Number of tenders received. Name of the bidders. Number of tenders received late and not considered. Amount of EMD/ bid security Rates of taxes and duties quoted by the bidder.

 Amount/ rate of discount, if any, offered by the bidder.

EVALUATION OF TENDERS 26. The evaluation of the Tenders is done by the duly approved Tender Evaluation Committee (TEC). This evaluation is normally done in two stages. The first stage is techno-commercial evaluation vide which the responsiveness to the technical specifications laid down in the tender and the commercial terms and conditions are seen. The TEC at this stage obtains clarification and confirmations from the bidders if any required. After the deliberations on the tender along with the clarifications by the bidders the TEC recommends the bidders whose Price Bids are to be opened. The recommendations of the TEC and the date of the opening of Price Bid is got approved by the Competent Authority and the same is intimated to the bidders to enable their representative to be present at the Price Bid Opening if they wish so. Checking/ vetting of comparative statements 27. A comparative statement indicating therein the prices quoted by the various bidders as per the schedule of quantity and prices along with all applicable taxes and duties, discount/ rebate if any and also loading as suggested by the tender evaluation committee will be prepared by the Procurement Department and will be sent to finance division for checking. Wherever there is a variation between rates quoted in words as well as in figures, the rates mentioned in words are taken for comparison (subject to production of documentary evidence).

28. After checking the comparative statement in Finance, the Finance Executive, as per the DoP, should record a certificate as given below under his signature. 29. The TEC then scrutinizes the comparative statement and after obtaining the approval of the Competent Authority negotiates with the first lowest bidder if required. The recommendations of the TEC are then put up to the Competent Authority (Board in the case of Major Contracts) for approval and subsequently process for issue for letter of award. Vetting of letter of award 30. Vetting of letter of award to be issued to the successful tenderer (First lowest tenderer) after approval of Competent Authority, is to be done in the Finance. The Finance will check that: The particulars regarding quantity, quality and rates are clearly brought out. The particulars of the contracts providing payment terms, taxes and duties, price variation clauses, performance guarantee, liquidated damages, delivery/ construction schedule, place of delivery, dispatch instruction, name of consignee, penalty for delay, etc. No undue liability is imposed on NHPC due to omission of a necessary clause or insertion of an unauthorized clause or by faulty wording of any conditions All the changes agreed to at the time of pre award discussion between the supplier and the TEC and approved by the Competent Authority have been incorporated suitably in the final agreement 31. Finance executive has to ensure that at every stage of tendering, approval of the Competent Authority as per DOP has been obtained.

POST AWARD EXECUTION OF THE CONTRACT 32. During the execution of the contract also, the Finance has to be actively involved in: Rendering advice/ assistance to the line managers in operation of the contract regarding taxes/ duties/ interpretation of the contract clauses, etc. Critical examination of proposals for amendments/ modifications in the contract terms, time extension involving waiver/ imposition of liquidated damages/ penalty, etc. 33.. Finance should also ensure that all the proposals during post award execution are as per contract provisions and are properly got approved by the Competent Authority as per the DoP.

PROCESSING OF PRICED STORE LEDGER:1. This process deals with the procedure for valuation of material and processing of Price Store Ledger (PSL).

Stores system

2. A brief description is given below of the activities of Stores Department which provide a background for processing of bills of Payments by the Finance Department. 3. The following documents are used to record transactions in the PSL: Goods received note (GRN) for receipt of material from suppliers Material Return Note (MRN) for return of material with the unit Store transfer note- in (STN-IN) for receipt of material from other units Material Issue Note (MIN) for issue of material to the indenting department within the unit Store transfer note-out (STN-OUT) for issue of material to other units Store adjustment note (SAN) for making any adjustment in the stores.

4. The stores documents for fixed assets items and scrap items shall be identified separately from stores documents for inventory (stock) items. 5. In case the stock records are kept manual, the above documents are printed in the form of book of 100 pages, in required number of copies, in different colors indicated above duly machine numbered. The last copy is kept intact in the book and other copies are perforated copies for distribution as required.

Material received from suppliers

6. The Stores department initiates the process of receipt of material by entering the details of the challan and invoice, in Goods Inward Register (GIR) maintained by it, as soon as the material enters the stores.

7. The stores department ensures that the following documents are available at the time of receipt of material: Invoice Inspection certificate, wherever necessary Guarantee certificate, wherever necessary Challan Test certificate, wherever required Any other document a mentioned in purchase order 8. In case inspection certificate is not there, it intimates the Procurement Division to send a representative to check the material and issue the Inspection certificate 9. It checks the material with the inspection certificate, invoice and purchase order, for description, quantity, rate, price, delivery period, etc. In case of any difference in the description, etc. it intimates the procurement department and ensures that an amendment to the purchase order is issued, if required. 10. After examination and measurement of materials, an acknowledgement is signed by the authorized representative of the stores department and issued to the supplier. 11. A Goods Received Note (GRN) in 5 copies is prepared to take the material in stock and update the stores records. In case the stock records are manual, blank G.R. Note are printed in the form of pre-numbered bound books containing 100 pages, quintriplicate, in different colors indicated above duly machine numbered. Four copies of the G.R. Notes in the book are perforated and the 5th copy is intact. 12. The material is transferred to its respective bin cards and taken in stock thereafter.

13. The GRN is an important record since it is an evidence of acceptance of liability in respect of receipt of material and all payments for purchases of stores are based on the entries made in GRN. It also serves as a base document for maintenance of stores records. 14. The Stores department fills the following details in the GRN: Invoice number and date Purchase order reference. Item description. Quantity received in good and acceptable condition. Amount of sales tax, if any. Amount of any other taxes, duties, etc. Quantity received in damaged form, shortages, etc. Incidental charges paid at the time of receipt of goods, if any. 15. The GRN is prepared only for the material received in acceptable form. The extent of short receipt of goods is mentioned on the GRN separately by the Stores department. 16. The stores department forwards a copy of the GRN along with the supporting documents like final invoice, challan, inspection certificate, warranty certificate; guarantee certificate, etc. to the Finance Department as soon as the goods are taken in stock to process for payment.

17. In an integrated computerized environment the stores department shall enter the details of GRN and invoice in the system in the draft mode. The finance and accounts shall use these GRN and invoice details to pass the bills in the system.

18. The GRNs is distributed as follows: Stores section in F&A for updating the PSL Stores section in F&A along with suppliers bills for payment. User department (who raised the purchase requisition). Procurement department for acknowledgement for receipt of stores against relevant purchase order. Retained by stores.

19. In case of material directly received at site, the stores department receives the invoice and other supporting documents from the site. GRNs as well as MINs are prepared on the basis of these documents. 20. GRNs shall be processed for payment only for the accepted material.

Material received as transfers from other departments within the unit

21. A return indent is prepared by the concerned department for the concerned department for the quantity and description of material to be returned to stores department. Details of the Material issue note are also referred on return indent. 22. The stores department inspects the material and verifies the quantity. It prepares a MRN in 4 copies on the basis of the return indent, MIN Reference (if available) and material received. A copy of the MRN is forwarded to store keeper to take the custody of the material and the balance copies are distributed (at the month end) as follows: Procurement Department Finance and Accounts

Retain the fourth copy as office copy

23. MRN is dealt with in the stores department in the same manner as GRN and entries are made in the stock register and bin cards

Material received as transfers from others units

24. The stores department receives the Material indent raised by the user department (within the unit) on other unit along with the STN (OUT) issued by the other unit (approved by the head of that unit). 25. The stores department intimates the user department and ensures that inspection certificate, wherever necessary is prepared. It prepares the Stores Transfers Note (IN) in 5 copies for acceptance of material. 26. STN (IN) is dealt with in the stores department in the same manner as GRN and entries are made in the stock register and bin cards

Issue of Material (for use within the unit to user department)

27. The concerned department prepares 2 copies of Indent for the quantity and description of material required and forwards the same to the issue section of stores department. The following details are entered in the indent: Material code number Material description Quantity required Date of requirement of materials

Sanctioned estimates number where necessary Purposes for which material required (capital or O&M)

28. The stores department ensures the following: There is no over writing in the indent and all additions and alterations have been attested by the indenter with dated initials Number and quantity of stores materials included in the indent are clearly recorded in figures and words and blank space left in the indent is properly crossed The indent gives full name of the work, work order number, estimate number, etc. along with reference to the item to which the cost is chargeable. Category and classification code of the material is clearly mentioned and the indents are authorized by the competent official. 29. The stores department checks whether the material is available in the stores. In case the material is not available it issues a Non availability certificate (NAC), (specifying the material code on the NAC else indicating that it is a new type of material). In case material is available then it authorizes the indent for issue of materials. 30. The stores department prepares a Material Issue Note (MIN) in 3 copies stating the quantity and material code and description to be issued. 31. The MIN is authorized by the concerned official and is forwarded to the storekeeper for issue of materials 32. The store keeper issues the materials to the user department and updates the bin card and stock register for the quantity of materials issued. It also takes the receipt of the user department as evidence for issue of materials

33. The copies of MIN are distributed as follows: Indentor Finance and account Office copy

Issue of material to other units

34. The stores department receives the Indent (approved by head of project of that unit) from other units requesting to send the material required as per the indent. It prepares 3 copies of STN OUT and gets it authorized by Head of stores department and Head Of Project. 35. One copy of STN-OUT is given to the transporter and one copy of STN-OUT is forwarded to stores bill section, F&A at the end of the month

Stock records
36. Chronogical record of the receipts, issues and running balance of each article of stock is kept in the stock registers and bin cards. Entries in the stock register and bin card are made immediately the event of receipt and issue takes place and balance is hand struck. 37. The stores accounting system is designed based on the principal that initial record of all stores as also the returns of the divisions / sub- divisions shall take account of quantities only and value accounts shall be maintained in the stores accounts section of the Project F&A Wing.

Valuation of material transactions: 38. The material transactions shall be valued as per the accounting
guidelines provided in beginning of the Project Report.

Accounts heads related to stores accounting

39. The following material categories have been provided in the chart of Accounts (COA): Steel Cement Other Civil building material items Power Generating Plant and machinery & support systems, Ancillaries/ Auxiliary Systems- proprietary spares based on the identification of the point of use and the Capital Asset/ Systems- imported Power Generating Plant and machinery & support systems, Ancillaries/ Auxiliary Systems- proprietary spares based on the identification of the point of use and the Capital Asset/ Systems-Indigenous Other Generic Electric items used anywhere and standardized Spares and components for construction equipment and heavy moving earth moving equipment, etc. Spares for Vehicles in use Other Generic hardware used anywhere and standardized Petrol Oils And Lubricants

General Communication/ Administrative items Loose Tools Scraps

40. The above Account heads have been linked to the 12 digit Material Codes in the computerized system to generate necessary summaries of material transactions for accounting purposes. 41. The 12 digit material codification scheme has been implemented at some of the projects. 42. Each of above mentioned material category has been given a separate general Ledger code in the chart of accounts.

STORES PROCEDURES IN BRIEF

1. The purchase and stores procedures followed are as per NHPCs policy for procurement of stores, delegation of powers and administrative instructions issued in this regard from time to time. 2. The general administration of all the stores of a project / construction unit / other units is vested in the officer (Manager or Senior Manager), in charge of the stores division, on whom primarily devolves the duty of arranging in accordance with such rules and instructions as have been laid down by the Corporation, for (i) the acquisition of stores (ii) their custody and distribution according to the requirement of works and (iii) their disposal. 3. Disposal of scrap is made in accordance with corporate policy. The CEP Wing has circulated the corporate policy as contained in manual i.e. `NHPC Manual for Disposal of Construction Plant & Equipments & Spares & Use rate and Hire charges of Construction Plant & Equipment` regarding disposal of surplus plant machinery equipment including spares which should be referred to. 4. The stores department is divided into following sections: Receipt section Receives the material and prepares the GRN Issue section Authorizes the issue of materials and prepares the MIN Disposal section Authorizes the disposal of stores (scrap, surplus materials) Custody section Has physical custody of materials and stores and maintains the bin cards, etc. 5. All the above sections are under the overall in charge of Manager/ senior manager (Stores).

6. In case dam/ powerhouse are far off from the main stores, then sub stores are also maintained at such locations. 7. There are following types of stores material in any project: Stores and spare parts Consumables Bought out fixed assets

Stores records
8. Stores department maintains following types of records: For receipt of goods: Goods inward register, Goods received note, Stock transfer note (in), material return note For issue of goods: Material issue note, Stock transfer note (out) Stock records: Stock register, Bin card, Tag card 9. The stores documents for fixed assets shall be identified separately from stores documents for other stores items such as material, cement, etc. 10. Officers entrusted with the care, use or consumption of stores are responsible for maintaining correct records and preparing correct returns in respect of stores entrusted to them. All transactions of receipts and issues should be recorded, strictly in accordance with prescribed rules or procedure, in the order of occurrence and as soon as they take place.Fictitious stock adjustments are strictly prohibited, such as (i) the debiting to a work of the cost of materials not required, or in excess of actual requirements, (ii) the debiting to a particular work for which funds are available of the value of materials actually intended to be utilized on another work for which no allotment has been sanctioned, (iii) the writing back of the value of materials used on a work to avoid excess

outlay, over outlay, over appropriation etc. Any breach of this rule constitutes a serious irregularity. Receipt of stores 11. Stores and materials may be received from any of the following sources: Supplies against purchase orders placed: - By the Procurement department - Through departmental advance (spot purchases) Returns from other departments within the unit Transfers from other units 12. As per the terms and conditions of the Purchase Order, the paying authority and the consignee of the material is a competent person (as per DoP) from the Stores Department. Thus all the payments made to the suppliers are to be approved by the Stores Department. Goods received from suppliers 13. In case of supplies to be received from suppliers, the stores department receives a copy of the purchase order from procurement department/ concerned employee (in case of local/ spot purchases) 14. A gate pass (SD/09) is issued to the carrier before the material enters the NHPC premises. The stores department initiates the process of receipt of material by entering the details of the challan (SD/08) and invoice, in Goods Inward Register (GIR) maintained by it, as soon as the material enters the stores. 15. The stores department ensures that the following documents are available at the time of receipt of material:

 Invoice. Inspection certificate, wherever necessary Guarantee certificate, wherever necessary. Challan. Test certificate, wherever required. Any other document a mentioned in purchase order. 16. In case inspection certificate is not there, it intimates the Procurement Division to send a representative to check the material and issue the Inspection certificate. 17. It checks the material with the inspection certificate, invoice and purchase order, for description, quantity, rate, price, delivery period, etc. In case of any difference in the description, etc. it intimates the procurement department and ensures that an amendment to the purchase order is issued, if required. 18. After examination and measurement of materials, an acknowledgement is signed by the authorised representative of the stores department and issued to the supplier. Receipt of stores should immediately be taken in Stock and brought to account. The material is transferred to its respective bin cards and taken in stock. 19. A Goods Received Note (GRN) in 5 copies is prepared to take the material in stock and update the stores records. In case the stock records are kept manual, blank G.R. Note are printed in the form of bound books containing 100 pages, quintriplicate, in different colors indicated above duly machine numbered. Four copies of the G.R.Notes in the book are perforated and the 5th copy is intact. 20. The GRN is an important record since it is an evidence of acceptance of liability in respect of receipt of material and all payments for purchases of stores are based on the

entries made in GRN. It also serves as a base document for maintenance of stores records. 21. The Stores department fills the following details in the GRN: Invoice number and date. Purchase order reference. Item description. Quantity received in good and acceptable condition. Amount of sales tax, if any. Amount of any other taxes, duties, etc. Quantity received in damaged form, shortages, etc. Incidental charges paid at the time of receipt of goods, if any. 22. The GRN is prepared only for the material received in acceptable form. The extent of short receipt of goods is mentioned on the GRN separately by the Stores department. 23. The stores department forwards a copy of the GRN along with the supporting documents like final invoice, challan, inspection certificate, warranty certificate; guarantee certificate, etc. to the Finance Department as soon as the goods are taken in stock to process for payment. 24. The GRNs is distributed as follows: Stores section in F&A for updating the PSL. Stores section in F&A along with suppliers bills for payment. User department (who raised the purchase requisition) Procurement department for acknowledgement for receipt of stores against relevant purchase order

 Retained by stores 25. In the computerized MMS package the store department shall enter the bill entry in the draft mode in the system. 26. In case of material directly received at site, the stores department receives the invoice and other supporting documents from the site. GRNs as well as MINs are prepared on the basis of these documents. 27. A return indent is prepared by the concerned department for the quantity and description of material to be returned to stores department. Details of the Material Issue note are also referred on the return indent. 28. The stores department inspects the material and verifies the quantity. It prepares a MRN in 4 copies on the basis of the return indent, MIN reference and material received. A copy of the MRN is forwarded to store keeper to take the custody of the material and the balance copies are distributed (at the month end) as follows: Procurement Department Finance and Accounts Retain the 4th copy as office copy 29. MRN is dealt with in the stores department in the same manner as GRN and entries are made in the stock register and bin cards

Material received as transfers from other units

30. The stores department receives the Material indent raised by the user department (within the unit) on other unit along with the STN (OUT) issued by the other unit (approved by the head of that unit).

31. The stores department intimates the user department and ensures that inspection certificate, wherever necessary is prepared. It prepares the Stock Transfer Note (IN) in 5 copies for acceptance of material. 32. STN (IN) is dealt with in the stores department in the same manner as GRN and entries are made in the stock register and bin cards Issues of materials 33. Materials may be issued for any of the following purposes: For use within the unit (use on works directly, issue to contractors for use on works, transfer to other stores within the unit). Transfer to other units. Issue for sale of scrap / obsolete stocks. Material issued for use within the unit 34. The concerned department prepares 2 copies of Indent for the quantity and description of material required and forwards the same to the issue section of stores department. The following details are entered in the indent: Material code number. Material description. Quantity required. Date of requirement of materials. Technical specification. Sanctioned estimate number where necessary. Purpose for which material required (capital or O&M). 35. The stores department ensures the following:

 There is no over writing in the indent and all additions and alterations have been attested by the inventor with dated initials. Number and quantity of stores materials included in the indent are clearly recorded in figures and words and blank space left in the indent is properly crossed. The indent gives full name of the work, work order number, estimate number, etc. long with reference to the item to which the cost is chargeable. Category and classification code of the material is clearly mentioned and the indents are authorised by the competent official. 36. The stores department checks whether the material is available in the stores. In case the material is not available it issues a Non availability certificate (NAC), (specifying the material code on the NAC else indicating that it is a new type of material). In case material is available then it authorizes the indent for issue of materials. 37. The stores department prepares a Material Issue Note (MIN) in 3 copies stating the quantity and material code and description to be issued. In case the stock records are kept manual, Materials Issue Notes are printed in the form of book of 100 pages, quadruplicate, in v6 different colors indicated above duly machine numbered. Three copies of the MINs in the book are perforated and the 4th copy is intact. 38. The MIN is authorised by the concerned official and is forwarded to the storekeeper for issue of materials. 39. The store keeper issues the materials to the user department and updates the bin card and stock register for the quantity of materials issued. It also takes the receipt of the user department as evidence for issue of materials. 40. The copies of MIN are distributed as follows:

 Indentor Finance and account Office copy 41. The sub stores prepare a consumption certificate (CC) in case the material is directly received at site. The CC is authorized by the concerned official of the department. The CC is forwarded to the main stores. The main stores issues MINs for the quantity mentioned in the CC. In case of issue to other units 42. The stores department receives the Indent (approved by head of project of that unit) from other units requesting to send the material required as per the indent. It prepares 3 copies of STN OUT and gets it authorized by Head of Stores department and Head of project. 43. One copy of STN-OUT is given to the transporter and one copy of STN-OUT is forwarded to Stores bill section, F&A at the end of the month.

INVENTORY MANAGEMENT SYSTEM

The following inventory management techniques are generally used for efficient and effective inventory management: ABC Analysis VED Analysis Stock Levels ABC ANALYSIS ABC analysis is a basic analytical management tool, which enables top management to place more effort where the result will be the greatest. The first step in the inventory control process is classification of different types of inventories to determine the type and degree of control required for each. The ABC system is widely used classification technique to identify various items of inventory for purposes of inventory control. This technique is based on the assumption that the organisation should not exercise same degree of control on all items of inventory. The organisation shall keep more rigorous control on items that are most costly and/ or slow turning / expensive while items that are less expensive should be given less control effort. ABC analysis is carried out by grouping items on the basis of their annual cost volume consumption: A group items are those, which have highest value of volume usage, generally constituting around 70% of the value but around 15% of the number of items. B with intermediate values and generally constituting around 20% of the value but around 30% of the number of items.

 C group with the least value generally constituting around 10% of the value but around 55% of the number of items. This grouping helps to identify items that enhance inventory performances when properly controlled. Appropriate inventory management techniques are then used to manage items according to their priority levels. Thus close attention is paid towards managing A group inventories as they contribute significantly to high performance levels, followed by B and C group inventories. The ultimate goal of ABC analysis is to closely supervise the items according to their share in the inventory investment. This helps to reduce time and minimize efforts towards managing those items which though are not properly taken care off, do not show noticeable effect on inventory performance. Thus we can achieve effective inventory control by closely monitoring `A' class items - watch waste, obsolescence and surplus. Review monthly. Whereas `B' class items can be brought under routine follow up and `C' class should be kept in good surplus to avoid frequent attention and production loss due to stock outs. While exercising control over stores, items of category A should be given the maximum attention. Their levels of stock should be strictly controlled. In case of items of category B, ordinary stores routine should be observed but rules regarding levels of stock may not be so strictly adhered to as for the items in category A. Items of category C do not require continues monitoring.

VED ANALYSIS Under VED technique, items are classified into Vital, Essential and Desirable on the basis of criticality of the item as perceived by the user department. Here the importance to an item of material is given based on its criticality to the business rather than the investment/ volume of consumption. FSN ANALYSIS FSN analysis is a tool used for bringing out the list of slow moving/ non-moving material. This report is based on the ratio of movement, which is arrived at based on the total issues during the period of a particular item to its stock in hand. FSN analyses facilitate categorization of items into Fast, Slow-moving and Non-moving.

CONCLUSION
National Hydroelectric Power Corporation Limited (NHPC) has several units, which are engaged in operation of generating electricity or are under construction stage. Various types of stores inventory need to be maintained to ensure smooth running of these power stations and construction of the units under construction. The purchase and stores accounting procedures shall be subject to NHPCs policy for procurement of stores, delegation of powers and administrative instructions issued in this regard from time to time. The stores inventory includes inventory for construction (like steel, cement, etc.) as well as for operation purposes. NHPC uses all the procedure and guidelines for the stores management discussed in the report.

RECOMMENDATIONS
Procurement of materials is based upon the requisitions being asked to each department which in turn are based upon the past experiences and approximate consumption of materials by the corporation. This implies that there is no inventory method being employed by NHPC. In some cases no re-order level is being determined so it sometimes may lead to shortages of materials at worksites which lead to wastage of many valuable working hours and financial resources. The customized MMS package is not fully functioning due to non availability of basic infrastructure requirements. So there is no purpose of investing funds in it before providing the basic infrastructure for its proper utilization.

BIBLIOGRAPHY/REFERENCES
BOOKS MANUAL OF N.H.P.C. HAND BOOK OF N.H.P.C. MAGAZINES OF N.H.P.C. N.H.P.C. NEWS.

WEBSITE www.nhpcindia.com