TITLE: PURCHASE POLICY AT REGIONS / HEAD OFFICE 1 PURPOSE & SCOPE 1 The abjective of the poliey is 10 establisiy ant a nsparent, vos! eflective econsimables » the procedure covers all purehusiing activities whieh are handled by Conn » nt at Head office, Administration Depautment or Cuninercial Depart hicheser applicable at Rewinnall CUice anal at Pramcles 2 DEPINITIONS & ABRREVIATIONS (used inthe Procedures Reo wes Fine the Purch er riven, Ti uuthorization to parchas. osal 1 sind torn ipyplier on st esq) é i sen viene! gontaining. the eos dats obi Town tee jofations mentioninns the tis vit prices and vendor's complete nantes sand aukinesse ‘ nider he official document 1a 1¢ purchase af go ie oremtioned prige & terms ane approved b aan official iy aecnrdance with He procedure inentioned tir the purchase + Gyuals Received Now Gonads Received Note (GRIN) ts the document prep horized official in accorday is ahs reams of Purchase Orde 22 Abbreviations, PROCEDURE & RESPONSIBILEEES idling Principles for acquiring an a3.1.2 The purchase is absolutely necessary as there is no alternate asset which could be upgraded or updated 3.1.3 The asset is appropriate to the task or requitement and is cost effective over the life of asset 3.14 The asset is compatible with the existing equipment and will not result in unwarranted additional expenditure on other assets or resources, 3.1.5 The most suitable and appropriate type, brand and model will be selected. Where necessary Original Equipment Manufacturer (OPM) should be preferred for the purchases 5.L6 The procurement process is open, transparent, fair and consistent 3.1.7 ‘The purchase decisions are made on the basis of value for money. Cost will not be the sole deciding factor, however in case lowest prices are not to be accepted a propet justification mentioning clearly the basis and reasons for not accepting the lowest price to be given in writing, 3.1.7 (A) The factors other than cost that may be considered ean be: * Qualification and experience of Vendor * Quality + Range of Products ‘+ Responsiveness and how the supplier accommodates you The Famous 3 E's should be held in this regard | Economy Minimizing the costs of resources used but not forgetting the quality. oe a The relationship between resource used and the output f | | praduee, [ Elieaiveness [The extent io which objectives 3.1.8 Best Value, Since the company is spending a large amount on procuring: the goods thetefore it should demonstrate that it is following the best Value principles. The best value is often summed up as 4 C's 3.1.8(@) Challenge why, how and by whom service is provided £8(b) Compare performance with that of Others 3.1.8(C)_ Consult with service users 3.1.8(€) Use fair competition, wherever practicable to secure the efficient and effective servi 3.1.19 One important part of the Best Value is to measure the performance of the Supplier. To measure the performance the company should use the SMART system in raising the requisition act vor entering the cont + Specific© Measurable = Achievable = Realistic © Timed 3.1.20 Competitive bidding for the supply of goods and services will be encouraged. The sealed bids will be invited if aggregate value of the purchase order exceeds Rs 10 Mn 3.1.21 Acquisition may be throughout-right purchase or lease of new or used asset 3.1.22The commercial department will make every effort to take the Bulk Quantity Purchase Discount form the vendors 3.1.23Commercial department must prepare poo! of approved vendors and the periodic evaliation of all the approved vendors must be done quarterly 3.1.24 Purchase Time Lines. Following timelines will be observed for purchasing # Local available Goods 10 Days © Imported Goods 30-45 Days © Cars (Local) 45-60 Days = Imported Cars 180-210 Days 3.2Budgeted Purchases 3.2.1All the purchases should be budgeted. No purchase will be allowed unless properly justified, if it was not budgeted or planned during the budget process. In case of budgeted requisition, the concerned department will mention proper budget reference, paper number, item number, estimated cost of item given in the budget, on the requisition. (“Budg: Reference Field” is provided on “Requisition Entry Form”) 3.2 Uncbudgeted Purchases 3.3.1In case of unbudgeted requisition use “Justification” field in the “Details” section of the requisition. Proper justification will be given by the concerned department on the requisition. The Unbudgeted Purchases will be approved by BOD only whether purchases are of aisets or other than assets 3.3.2. In cose of unbudgeted purchase of an asset by the Regional Office/Head Office, the RFA wvill only be submitted/raised, after the same has been upproved by BOD as per aboveclause.to the head of Commercial at Head Office with a copy to the Head of Accounts Finance, for further processing. 3.3.3. ‘The approved REA will be sent back to the region for the pure Ge hase of the asset and to the val Manager Commercial if such asset is required at Head office. Rest of procedure will remain the same 3.34 The same procedure will be followed for purchases other than assets 34 Centralised Purchases 3.4.1 The procurement of land & buildings, vehicles, schoo! furniture, computers & printers & Polishes (For annual Repair & Maintenance), Library and Syllabus and books, Printed Stationary are centralized at Heacl Office The Regions eannot buy such items on their own even if they fall under their approving, w limits 3.4.3 The RFA of all such items duly signed by the Regional Director must be submitted to the Commercial Department at Head Office for further processing and approval of the approving authority 3.44 For the school’s furniture the branches will submit their requisitions to the Regional Office after preparing the Students’ Flow Chart for the next session by Ist March every year. The Administration Department at Regional Office will evaluate and consolidate the requisition and will submit the same to the Commercial Department at Head Office by 10th march every year so that the delivery can be made by 30th July. System erated advice to RD by February Ist each year to submit furniture requirements by Generators, Air Conditioners, TV, water coolers Paint March Ist 3.5.1 Itis recommended that purchases should be made on credit, and payment should be made through crossed cheque. Any vendor insisting for payment in cash must be phased out General Manager Commercial must try to get tat least 30/45 days credit 3.6 Cash Purchases 3.6.1 All efforts should be made to make purchases on credit. In certain situations, cash purchases can also be made to micet the emergency requirements as per the maximum threshold limit of Rs, 5000/- Purchase Imprest Fundhow 38.2 3.8.3 3.9.1 3.10 3.10.1 A Purchase Imprest fund of Rs. 10,000/- for the Head Office and for the Regional Office shall be created for purchase of small item of irregular nature. The amount shall remain with the commercial departments at head office and administration department at Regional Office. The fund shall be replenished on submission of actual bills/invoices to the accounts department. Urgent/ Immediate Purchases All the departments must plan their requirements and period of procurement of the requited items well in advance, given enough time (max. 10 days) to the commercial departments to attange or purchase those items, Emergencies should not be ereated and all the efforts should be made to reduce urgencies. Unplanned activities at Head office, Regional Offices and brancties should also be minimized. In case of budgeted or unbudgeted items needed urgently / immediately, a proper justification must be given on the requisition for the nature of urgency, reason must also be mentioned that why it has become urgent requirement, (Tick the “urgent” checkbox and enter “justification” in the details section of requisition). The process will remain the same except that the commercial department will ensure that the delivery is made on time as mentioned in the requisition, Such repeated requests from a department may be tumed down by Head of Commercial/ Regional Director unless properly justified. Asset’s Purchases The assets are purchased either by the Head Office or the Regional Office. The branches are not authorized to buy any kind of assets. Branches will send their requisition of assets through their Annual Budget. On approval of their budget, they must send the requisition of their approved assets to the Regional Office. A document called RFA (Request for Assets) is prepared according to the capitalization policy of the company for the purchase of an asset. The asset is approved / purchased according to the authorization limits mnentioned in this policy. Acquisition of land and buildings is the responsibility of the Estate Department Purchase of Assets for the Merged Branches When the branches are merged it will be the responsibility of the regional Admin Manager to prepare the list of asseis of the branch to be merged and submit to the head office accounts department. Regional Admin Manager will first use the assets of the ‘merged branch or to replace the existing assets replaced from the merging branch. Once the process is done the region will send the detail of surplus assets to the Head Office accounts department and-commercial department to dispose off the assets as per Policy.et 3.10.2 New purchases of assets for the merged branch will only be made if its proved by the tegion that same or similar assets was not available at the time of branch merging or the asset was available but utilized by some other branch, 3.11 Consumable Purchases 3.11.1 Routine consumable items like stationery will be purchased once in a month, requisition for such items will be submitied to the relevant Administration Department on the 20th of month by all the departments. Requisitions received after the 20th of the month will be considered the following month. 3.11.2 Head of A the requ inistration at each Regional office/ Head office location , after evaluating tions will consolidate the requisitions sent by different department to derive at the consolidated figures, after checking the stocks and will enter the consolidated requisition in ‘Purchasing module’ . After requisitions have been approved they will be available to the commercial department. 3.11.3 General Manager commercial will ensure that the consumabl the administration department within fifteen (15) working days. This is applicable to single item as well as bulk purchases. tionery is delivered 10 3.11.4 The whole Purchasing process for consumable items should be completed within fiftee (15) working days starting from the initiation of the requisitions to the detivery of the gonds to the initiating department 4.12 Purchases of computer Parts BIZL AIR and at Head Office General Manager IT should be consulted. ions, computer parts will be purchased in consultation with Regional IT Manager 3.12.2 The branches may purchase from their Head Imprest, small external parts like Mouse and keyboard worth Rs, 500/- but has to take prior written approval (through email) from NCC Coordinator of their region. They cannot buy the internal parts even of worth Rs. 500/- , as itis the responsibility of the region to maintain the computers at the branche: The NCC Coordinator maintains the centralized inventory and any part replaced must be updated in the inventory by NCC coordinator. 33 Preferred Vendors3.13.1 In order to smooth the operations Commercial Department sbould create a Data Base. The vendors in the data base should be evaluated on quarterly basis. Once the supplier is added to the master list the names should not be removed from the list except for good and sufficient reasons, Such reasons shall include but not limited to the following * Delivery of goods and services do not comply with specifications ‘* Failure to deliver with in specified time + Refusal to deliver after submitting a quotation ,bid or proposal and after receiving an order © Withdrawal of quotation, bid or proposal prior to placing of an order. + No longer in the business Failures to timely cure one or more non compliant deliveries PS 3d Je Souree Supplier 3.14.1 Single Source Supplier means that a single vendor is uniquely qualified to meet the organization procurement objectives. To be considered a Single Source and therefore exempt from bid process one of the following conditions must be met + The product or service needed is the only one that will meet the company’s need or requirement and it can only be purchased from one souree(manufacturer or distributor) | + The product or service must match or compatible with current equipment or services. + An unusual or compelling urgency exists. 3.15. Shipping/freight terms 3.15.1 F.O.B destination is the company’s standard since it provides the most protection to the company. It should be negotiated into all purchases whenever possible. F.O.B destination ‘means that legal ownership of the goods transfers when it reaches the buyer and therefore seller pays all shipping costs and is also responsible for the goods during transit. But if the company can arrange the cheap transportation and insurance then F.O.B may not be ad insisted 316 Background and reputation of suppliers 3.16.1 The back ground of supplier is very important and should never be ignored. Often the suppliers are passed on through local recommendation. Therefore it is very important to have detailed back ground search which might include j \ * Any potential conflict of interest © Complaint Procedure© Quality Assurance procedureNames of the referee. 3.17 Dispatch of Purchase Order to Vendors 3.17.1 Purchase Orders will be sent to vendors by any of the below mentioned method © Fax "= Mail/Courier » E-Mail 3.18 Incorreet or Damaged Shipments 3.18.1 The goods received should be inspected within 24 firs by the department which has requested the goods. If the shipment received is incorrect or damaged following should be performed + Inform to the Commercial Department ‘= Inform the supplier immediately in writing by Commercial Department © Asmuch as possible the goods should be repacked in the original packing. ‘= Proper follow up should be made with vendor for substitution of the damaged goods. + Incase Insurance claim has to be filed it should be done urgently, 3.19 Contract Signing 3.19.1 Only the authorized persons who have been delegated the authority in writing in terms of Board of Directors resolution are authorized to sign or enter in fo the contract with third party, 3.20 Conflict of Interest 3.20.1 Employees referring to any vendor or are divectly involved should sign the deceleration that they have No conflict of Interest with the company.Approving Authority & Limits for Purchase Order in the System 4.1 Head Office Authority | Amounts) —_] 50,001 & above | 1 office Purchase committee/ Chie? Financial officer «lof commercial/ Chief Accounta ___|_5,001-25,000 {Administration [0.5000 a Authority ( ] [pop | 30,001 & above _| Head office Purchase committee! Chief Financial officer | _25,001-50,000__| Regional Director ~ |_15,001-25,000_| | Regional Purchase Commitice — [s,001-15,000 Regional Administration Coordinator | 0-5,000 3 4 4.1.2 The above limit will be applicable on bulk as well as on single item purchase. As there is no Head of commercial in the regional office, Head of administration will perform the same duties as Head of commercial perform at the Head Office. 4.1.3. Members of Purchase Committee Following will be the members of purchase committee at Head office/ Regional offices. 4.2.1 Head office 1, Chief Financial Officer . Head OF Administration 5. Representative of the concemed Departments Note: Once the committee approves purchase in the meeting the Purchase Order will be approved by the CEO 4.2.2. Regional offices 1. Regional Director 2, Head of Administration 3. Head of Accounts/Finance4. Representative of concerned department Note: Once the purchases are approved by the Committee the Purchase Order will be approved by the RD 4.3 Meeting of Purchase committee 4.3.1 Head of administration at head office’ Regional office will convene the meeting ‘The meeting may also be called at any time where urgent approval is required. 4.3.2 Meeting of Purchase committee will be held every Friday at 9:30 am at head offi Regional office Board room, 43.3 In case of absence of any member of the Purchase Committee, his/her immediate subordinate can attend the meeting, 1.3.4 If there is no specific agenda or no RFA is pending for approval, Head of administration i at Head Office/ Regional Office will inform all the committee members about the same. ‘The meeting will than be held the following week 4.3.5 In absence of any negotiating/approving authority. The immediate subordinate can recommend/approve the purchase/RF.A on behalf of the absentee. 43.6 ‘The quorum of the committee will consider being complete if any three members are present in the meeting, provided that one of them is Head of administration/ Accounts. 4.4 Preparation of Req 4.4.1 The concerned department will prepare the requisition mentioning the items with their exact specifications and will obtain approval from the Head of Department and will send it to the local Administration Department, The Head of Administration will evaluate and consolidate the requisitions, enter them in the system and send for approval 45 Approval of Requisition(For Consumable Items only) 4.5.1 The requisitions are automatically routed to the Head of administration for verification and approval 4.5.2 The approved requisitions are available to the Head of commercial for obtaining the quotations and finalising the prices/eost of the pur 4.6 Preparation of Request for Asset(RFA) 4.6.1 After receiving the reduisition for an asset from the concemed department, the Commercial depatiment will make the requisition entry in the system, in accordance with our Capitalisation Policy (copy attached). The type of items on the requisition “Asset Purchase” and Ungent/Justification/Transaction Nature fields in the “Details section must be filled out. The process niust be completed in two (3) working days by Commercial department. 4.7 Approval of REA 47. ‘The RFA will be approved by the Head Administration and Head of commercial as per ion we the approving. limit 4724.8 Pre-Qualification of Vendors & Collection of Quotations 48.1 Commercial Department at Head Office/Regional Office will select a pool of at least three suppliers for each kind of purchase on the basis of their reputation, Size of business, qualify, service, category ie. manufacturer, dealer, whole seller or authorized dealer ete, location, ability to deliver goods, sufficient stock, pricing, financial strength ete. 48.2 Commercial department must finalize the pre-approved vendors list for a quarter. A new survey must be done by the Head of commercial for the next quarter. A vendor may quality for the next quarter on the basis of this service and competitive prices. However, the commercial Department must also seck the quotation from open market to confirm rates before placing the order to them. 483 Commercial Department should Prepare RFQ of approved requisition and issue it to the selected vendors. 484 On obtaining quotation from the vendors, each quotation should be entered against the corresponding RFQ for the purpose of comparative analysis. The status of the quotation to be used for the comparison must be marked as “Active”. 4.85 In case the items are not available from the pre-approved vendors, Commercial department will collect at least three quotations in accordance to the same specifications mentioned on the requisition from three different vendors before issuing the Purchase Order ‘After obtaining the quotations, Commercial Department will negotiate the price with vendors to strike the best deal. 4.9 — Comparative Statement 4.9.1 “Quotation Comparative Statement” will be automatically generated based on the quotations entered in the system 4.9.2 ‘The “Quotation Comparative Statement”, “Purchase Requisition Report”. “Purchase Requisition Report for Assets (RFA)” can be printed from the system and put up to the relevant authority or purchase committee members for signatures, if required, before issuance of purchase order 49.3 ‘The Comparative statement will be signed by the Head Commercial Department, Head of gp Pepariment of Respeetive Department and Head OF Accounts Departinent 4.10 Issuance of Purchase Order 4,10.1ERP generated Purchase Order must be issued for all purchases irrespective of the amount, by the Commercial Department. 4.10.2.Afer the approval of REA (For asset/s) or requisition (For consumable items) by the Administration Department, Commercial department will prepare the Purchase Order in the system. 4.10.3 The quotation selected from the comparative statement for purchase, must be marked as“ Approved” in the system, by giving appropriate reason & comments in the “Approval” section of the Quotation from, before it can be applied to the Purchase order 4.10.4 The purchase order is automatically created in the system by giving the number of the approved requisition and then applying the approved quotation on it.4.10.5 After preparing Purchase Order, it should be send for approval, The Purchase Orders are automatically touted to relevant approving authorities based on approval limits (Please refer 3.12.1 & 3.122 above). The purchase order must bear all the specifications of the items requited and the rate of each item (as per the approved quotations), total quantity and the total amount 4.10.6 General Manager Commercial will sign the Purchase Order after it has been approved and censute thatthe items are delivered to the respective departmentas per terms of Purchase Order 4.10.7 If the items are to be delivered directly to the office/branch that initiated the requisition to save the cost of dispatch, then Head of Commercial at Head Office or relevant office should select that office/branch in the “Ship-To” field of the Purchase Order 4.11 Delivery of items by the vendor 411.1 The vendor will deliver the items as per the specifications mentioned in the Purchase Order to the Commércial Department, or at the address mentioned on the Purchase Order: @ £12. Cheeking/Inspeetion of items (Arranged by Commercial Department) 4.12.11 shall be the responsibility of Head of Commercial to ensure that the supplies correspond to the Purchase Order in terms of specifications, quantity and quality. 4.12.21 case of electroniesielectrical equipment he would arrange the inspectio equipment before handling that over to the concerned department 4.12.3, The vendor may deliver the items directly to the user provided he has been given such instructions by the Commercial Department. The relevant Administration department then will have the responsibility to check/inspect that items and forward the findings to the Commercial Department within 2 (two) days. 4.13 Return of Purchase 4.13.1 I the items delivered by the vendor do not match/suffice the specifications given in the /testing of the Purchase Order, Head of Commercial/Admin Depariment/User whete applicable (Refer 3.23.3) ‘will return the items to the vendor immediately and will not accept the invoice or will amend the delivery challan accordingly 4.13.2 The invoice should not be forwarded to the Accounts Department tnless the Commercial Department at Head Office prepares/teceives the satisfactory report, In case of unsatisfactory performance of the equipment, Head of Commercial will ensure the replacement of the equipment 4.13.3 Commereial Department will deliver goods to the Administration Department and get the receiving on the Delivery Note. 4.14 Warranty / Guarantee Card 4.14.1 Commercial Department will hand over the warranty/Guatantee cards with the copies of the invoices, copy of the user's report to the concemed Departmenis/Regions for claims. If the items are delivered directly to the user by the vendor then it would be the responsibility of the concerned Administration Department to keep the record of warranties and Guarantees. 4.15 Goods Received Note (GRN)(On Receipt of items from vendor Commercial department will prepare the GRN which will be checked by the Administeation department. 4.15.1 GRN will be prepared in ERP system for those items only that have been accepted by the recipient. 4.16 Recording in Fixed Assets/Stock Register 4.16.1 Manager Administration records the purchases in Assets/Stock Register (whichever applicable). For details, please refer the Quality Manval 4.16.2 Accounts department wall enter the new assets in ERP, and the number generated by BRP must be written/tagged on. the Assets by Administration department. 4.17 Issuance of Items 4.17.1 Administration department will issue the items to the concemed department as per approved requisitions and receiving on the asset/stock register must be taken from the Head of the concerned Department as proof. In case of consumable items, the items should be delivered to concerned department by Sth of every month on need basis. The issuance entry must also be @ 726 inthe “Inventory Module” for non-capitel items 4.18 Submission of documents to accounts department 4.18.1 Head of Commercial will submit the following documents to the Accounts Department for making payment (o the vendor immediately after the transaction is completed i. Original Invoive/Bill (uly signed by Head of Commercial, the payable amount should be written in words) ii, Tax Exemption Certificate (f any) iii, Approved Requisition iv, Comparative Statement with copies of quotations \. Original Approved RFA (If applicable) vi. Approved copy of Purchase Order vii. _ Original GRN' Note: Except for the 1st two items, all documents ean be viewed directly from the system or their print outs can also be taken. 4.18.2The documents must be delivered/ forwarded to Accounts Department within three (3) days of the delivery goods to enable them to book the payables in their accounting ledger. 4183 The Accounts Department must verify the authenticity of the supporting documents at the time of entering supplier's invoice in the system, 4.184Invoice must be entered in ERP by matching the corresponding Purchase order in the system, 4.18.5 crossed cheque will be prepared by the Accounts Department in favor of the vendor as per credit terms mentioned in the Purchase Order. The cheque will be delivered to Head of ‘Commercial refer the vendor to the Accounts Department for inquiry or collection of cheque, 4.19 Purchase Policy at Branch Level 4.19.1 Branches are not authorized to purchase any asset or any item of capital nature. They ean only purchase consumable items from monthly Head Impzest fund. 4.20 Automated Tracking of Procurement Processnotifications will be generated after every 18 days in ander ts identify and expedite Requisitions, Purchase Orders, GRN'S and pay «ling in the system. Resuisitions/RFA's Pureliase Order that are pending. approval and with whom. hat have been appeaved but Purchase Onder has not been rete | Purehase Orders thar have been issued but thelr GRN’s has not heen entered. after the | ‘Need By" date mentioned on the Purchase Order. 4. Purchase Onder whose GRIN’s have been entered but thei been afler the specific credit peri 5. Difference in amount, if any, betw proved Requisition/REA and tke Purchase Onder issue Cireulation of Fouls: » CRO > Head o % Head of Commercial @ > Head of Admin