PROJECT REPORT

ON

THE STUDY OF THE INVENTORY MANAGEMENT
AND

ITS IT IMPLEMENTATION

COMPLETED AT

NATIONAL THERMAL POWER CORPORATION LIMITED
KAHALGAON-BHAGALPUR(BIHAR)

SUBMITTED BY

AVNISH KUMAR JHA
ROLL NO. C-O8-15 UNDER THE JOINT SUPERVISION OF MR. V.N.RAI FACULTY, (DEAN) GSBA, GREATER NOIDA MR. K.N.GHOSH DGM, F &A NTPC, KAHALGAON

IN PARTIAL FULFILLEMENT OF

MBA (FINANCE)
FROM

ON MAY 08, 2009 TO JULY 08

Acknowledgement
I wish to express my sincere thanks to National Thermal Power Corporation for allowing me to work in an open and free manner in their organization. I am also thankful to my project guide, Mr.PRAVEEN KUMAR, -“FINANCE DEPT”, NTPC KAHALGAON, for his continuous support through out my project work without which the true and accurate understanding of the project would not have been possible.

I am deeply indebted to my teacher Prof. V.N RAI who consistently guided and, advised me during my project work .As well as the person that guided us in our first industry visit And taught as how to see and work in any organization .

Table of Contents:
1. Introduction 2. Company Profile 2.1. Vision 2.2. The Operation 2.3. NTPC today 2.4. Performance highlights 2007-08 & Q1 2008-09 2.5. Business opportunities 2.6. Way forward 2.7. Challenges & strategies 2.8. An investment profile 3. Stores(Inventory) Management System 3.1. Introduction 3.2. Stores Function 3.3. Tasks involved in Stores Function 3.4. Organization structure for stores section 4. Goods Receipt 5. Goods clearance and dispatch group 6. Goods inspection and inverd group 7. Custody 8. Reciept and Issues 9. Warehousing and storage 10. Material Planning and Inventory Control 11. Policy Planning and Monitoring for Materials management 12. Computerization 13. Findings 14. Recommendations 15. Conclusion 16. Limitations 17. Bibliography

Introduction
The objective of this Summer Training is to study the operations of inventory Stores Department of NTPC in light of System Application & Designing (SAP). The Public Sector behemoth has been in the field of Power Generation and Management for the past 30 years. NTPC is the Sixth largest thermal power generator in the World and the Second most efficient utility in terms of capacity utilisation based on data of 1998. Its Material Management Software which is popularly known as OLIMFAS (Online Integrated Materials & Financial Accounting System) has been developed and maintained in-house by the NTPC(EDP Deptt.) to ease the functioning of the day -to- day operations of the company, especially the Stores and Purchase Dept. In fact if really to see then we must have to say that there is no any fixed rule to control, Manage and dispatch the inventory.It is totly dependend on the situation and the kind,nature and the wateges of the inventory. NTPC is a kind of organization where there is a great risk involved in managing ,maintaing and controlling the inventory.It is really a tough task to handle the kind of situation when there is a great scarcity of row material and continuous supply is needed to run the organization.In the power plant industry what is the most important is that “the smooth and efficient flow of row material” so that there could not be any intoruption in between. In my summer project I have tried to identified all those possibilities from where one could be able to judge the actual performance of the company and could analyse the various power plant industry in the country where after having all the natural resourses needed for a setting up a plant still we are unable to satisfy the need of the people.

Company Profile

National Thermal Power Corporation Limited (NTPC) is the largest thermal power generating company of India. The public sector company was incorporated in the year 1975 to accelerate power development in the country as a wholly owned company of the Government of India. At present, Government of India holds 89.5% of the total equity shares of the company and the balance 10.5% is held by FIIs, Domestic Banks, Public and others. Within a span of 30 years, NTPC has emerged as a truly national power company, with power generating facilities in all the major regions of the country. Based on 1998 data, carried out by Datamonitor UK, NTPC is the 6th largest in terms of thermal power generation and the second most efficient in terms of capacity utilisation amongst the thermal utilities in the world. This public sector company Has a net worth of Rs. 526.4 billion which has Power capacity as at March 2008 stood at 29,144MW, up from 27,404MW in March 07, an addition of 1,770MW.

Recently, company also commissioned 250MW of Bhilai JV, taking its total capacity to 29,394MW. Its cost of power at Rs1.52 per unit is amongst the lowest. It aims to reach a capacity of 50,000 MW by the end of FY12. It also intends to venture into related areas like coalmining, distribution, transmission,merchant sales, gas exploration, etc.

The Vision

The vision of the company states the fundamental purpose of their existence viz: “To be one of the world’s largest and best power utilities, powering India’s growth” The values of the company provide the essential and enduring general guiding principles in the way it conducts itself in realizing the vision through COMIT. • • • • • Customer Focus Organizational Pride Mutual Respect and Truth Initiative and Speed Total Quality NTPC dreams of building a great company could be achieved through articulation of this core ideology by involving people in sharing this vision and core values and taking steps for actualization of the same.

The Operations

NTPC's core business is engineering, construction and operation of power generating plants and also providing consultancy to power utilities in India and abroad. The installed capacity of NTPC is 23,749 MW through its 13 coal based (19,480 MW), 7 gas based (3,955 MW) and 3 Joint Venture Projects (314 MW). NTPC acquired 50% equity of the SAIL Power Supply Corporation Ltd. (SPSCL). This JV company operates the captive power plants of Durgapur (120 MW), Rourkela (120 MW) and Bhilai (74 MW). NTPC is also managing Badarpur thermal power station (705 MW) of Government of India.

NTPC’s share on 31 Mar 2005 in the total installed capacity of the country was 20.4% and it contributed 27.1% of the total power generation of the country during 2004-05.

NTPC has set new benchmarks for the power industry both in the area of power plant construction and operations. It is providing power at the cheapest average tariff in the country. With its experience and expertise in the power sector, NTPC is extending consultancy services to various organisations in the power business. A "Centre for Power Efficiency and Environment Protection (CENPEEP)" has been established in NTPC with the assistance of United States Agency for International Development. (USAID). Cenpeep is an efficiency oriented, eco-friendly and eco-nurturing initiative - a symbol of NTPC's concern towards environmental protection and continued commitment to sustainable power development in India. As a responsible corporate citizen, NTPC is making constant efforts to improve the socio-economic status of the people affected by the its projects. Through it's

Rehabilitation and Resettlement programmes, the company endeavors to improve the overall socio-economic status of Project Affected Persons. NTPC was among the first Public Sector Enterprises to enter into a Memorandum of Understanding (MOU) with the Government in 1987-88. NTPC has been placed under the 'Excellent category' (the best category) every year since the MOU system became operative. Recognising its excellent performance and vast potential, Government of the India has identified NTPC as one of the jewels of Public Sector ‘Navratnas’- a potential global giant. Some important highlights of the Company’s performance during the year 2003-04 are:
• • • • • • • • • •

Turnover of Rs. 25964.2 crore. Net Profit of Rs. 5260.8 crore. The highest ever dividend of Rs. 1082.3 crore. Average availability of 88.8%. Highest ever PLF of coal-fired Stations at 84.4%. Generation of 149.171 billion units, which was 26.73% of the country’s generation. 100% realization with billing of Rs. 20,461 crore. Securitization of dues amounting to Rs. 18,214 crore. Competitive average selling price of 147 paise per unit. Trading of 963 million units through the subsidiary NTPC Vidyut Vyapar Nigam Limited (NVVN) and earning of a profit of Rs. 2.13 crore.

NTPC today
At the present time NTPC is the biggest power generator company of the country with installd capacity of 29,144MW, generating ~28% of the electricity in the country. Its cost of power at Rs1.52 per unit is amongst the lowest. It aims to reach a capacity of 50,000 MW by the end of FY12. NTPC has obtained environmental clearance for Pakri Barwadih mine and has also recently received the approval of mining plan from Ministry of Coal.

key points
• • • • • • One of the three largest Indian companies with a market cap of more than Rs. 1621 billion + Has a net worth of Rs. 526.4 billion + Owns total assets of Rs.893.9 billion + Ranked # 1 independent power producer in Asia in 2007 ( by Platts, a division of Mcgraw-Hil companies)

• The fifth largest generating company in Asia • 411th Largest company in the world (FORBES ranking – 2007) • The largest generator in India.

• NTPC Group: Total Assets above Rs.935.5 Billion, Net -worth above Rs.528.6 Billion. • Profit after tax above Rs.75 Billion.

Performance hightlights 2007-08 & Q1 2008-09
1. Capacity Growth 2. Physical Performance 3. Commercial Performance 4. Financial Performance 5. Fuel supply 5. Others

Capacity growth and Funding Tie-up

2007-08
• Achieved highest ever capex of Rs. 86.21 bln • Rupee Borrowings for Rs 44.750 bln tied up in domestic market • Forex loans for USD 480 million tied up Placed Bonds of Rs. 10 bln. • Financial Closure of two JV projects achieved under Project Finance structure on non- recourse basis: • Rs 51.8 bln for Indira Gandhi STPP (Aravali Power) • Rs 37.9 bln for Vallur STPP (NTPC –Tamilnadu Energy Company)

2008-09.
• Tied large ticket funding of Rs. 100 bln with PFC to finance expenditure of ongoing projects • Board has approved to seek shareholders’ approval for increasing borrowing limit to Rs. 1 trillion

Other key highlights (April to July)
• • • • • • • A Joint Venture Company (JVC) formed with Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited, named "Meja Urja Nigam Private Limited" on April 2, 2008 for setting up a power plant of 1320 MW (2X660 MW) at Meja Tehsil in the state of Uttar Pradesh . Sub committee of Board of Directors accorded approval for setting up of “Singrauli Small Hydel Project” of 8 MW located in the state of Uttar Pradesh to utilize hydro potential in Condenser Cooling Water (CW) discharge channel at theexisting Singrauli Thermal Power Station.

COMPANY’S BALANCE SHEET.

Audited Financial Results for the Year ended 31st March 2009
(Rs./Lakhs)
Stand Alone Quarter Sl. No . Particulars ended 9 d) 1 2 3 1,144,578 Quarter ended 8 d) 4 Year ended 9 ) 5 Year ended 8 ) 6 Consolidated Year ended 9 ) 7 Year ended 8 ) 8

31.03.200 31.03.200 31.3.200 31.3.200 31.3.200 31.3.200 (Unaudite (Unaudite (Audited (Audited (Audited (Audited

1 (a Net Sales ) (Net of Electricity Duty) (b Other ) Operating Income 2 Expenditure (a Fuel Cost ) (b Employees ) Cost

1,074,359 4,192,373 3,705,012 4,424,527 3,863,503

76,864

44,070

220,235

170,081

226,294

173,693

801,583

679,996 2,711,069 2,202,024 2,734,645 2,221,876

62,025

39,659

246,313

189,598

253,251

195,328

(c) Depreciation (d Other ) Expenditure

72,639 58,984

60,709 72,491

236,448 195,209

213,850 190,998

249,489 382,259

220,599 304,991

Total (a+b+c+d) 3 Profit from Operations before Other Income, Interest &

995,231

852,855 3,389,039 2,796,470 3,619,644 2,942,794

226,211

265,574 1,023,569 1,078,623 1,031,177 1,094,402

Exceptional Items (1-2) 4 Other Income 5 Profit before Interest & Exceptional Items (3+4) 6 Interest & Finance charges 7 Profit after Interest but before Exceptional Items (5-6) 8 Exceptional items 9 Profit(+)/Los s(-) from Ordinary Activities before Tax (7+8) 10 Tax Expenses: (a Current Tax ) (b Deferred ) Tax 585 247 2,098 1,693 2,186 1,806 1,043 11,960 (44,880) 14,110 (45,203) 14,787 (15,623) 80,960 113,834 283,166 119,430 287,218 196,213 215,160 935,947 1,025,494 930,724 1,035,099 196,213 215,160 935,947 1,025,494 930,724 1,035,099 56,707 80,735 202,290 179,804 214,346 185,811 26,709 252,920 30,321 114,668 126,675 113,893 126,508

295,895 1,138,237 1,205,298 1,145,070 1,220,910

(c) Fringe Benefit Tax (FBT) Total (a+b+c) Less: Deferred Tax Recoverable / Payable

(13,995) 1,043

93,167 11,960

71,052 (44,880)

298,969 14,110

76,413 (45,215)

303,811 14,778

FBT transferred to Expenditure during Construction / Development of coal mines Tax Expenses (Net) 11 Net Profit(+)/ Loss(-) from ordinary activity after tax (9-10) 12 Extraordinary Items (Net of tax expenses) 13 Net Profit(+)/ Loss(-) for the year before Minority Interest (1112) 14 Minority Interest in Consolidated Profit 15 Net Profit (+)/ Loss (-) for the year after Minority Interest (1314) 16 Paid-up Equity Share Capital (Face value of share Rs. 10/-

84

(5)

115

847

150

926

(15,122)

81,212

115,817

284,012

121,478

288,107

211,335

133,948

820,130 741,482

809,246 746,992

-

-

-

-

-

-

211,335

133,948

820,130 741,482

809,246 746,992

-

-

-

-

(10)

-

211,335

133,948

820,130 741,482

809,256 746,992

824,546

824,546

824,546

824,546

824,546

824,546

each) 17 Paid up Debt Capital 18 Reserves excluding revaluation reserve as per Balance Sheet 19 Debenture Redemption Reserve 20 Earning per share - (EPS in Rs.) (a Basic and ) diluted EPS before Extraordinary items (not annualised) (b Basic and ) diluted EPS after Extraordinary items (not annualised) 21 Debt Equity Ratio 22 Debt Service Coverage Ratio (DSCR) 23 Interest Service Coverage Ratio (ISCR) 24 Public Shareholding 10.19 13.02 3.67 4.16 0.60 0.52 2.57 1.62 9.95 8.99 9.81 9.06 2.57 1.62 9.95 8.99 9.81 9.06 168,894 136,021 - 4,912,460 4,439,315 4,916,185 4,461,728 - 3,456,775 2,719,060 -

(a Number of ) shares

865830000 865830000 86583000 865830000 86583000 865830000 0 10.50 10.50 10.50 10.50 0 10.50 10.50

(b % age of ) share holding 25 Promoters and Promoter Group Shareholding (a Pledged/ ) Encumbered - Number of Shares - Percentage of share (as % of the total shareholdin g of promoter and promoter group) - Percentage of share (as % of the total share capital of the company) (b Non) encumbered - Number of Shares - Percentage of share (as % of the total

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

737963440 737963440 73796344 7379634,4 73796344 737963440 0 100.00% 0 100.00% 00 100.00% 00 100.00% 00 100.00% 0 100.00%

shareholdin g of promoter and promoter group) - Percentage of share (as % of the total share capital of the company) 89.50% 89.50% 89.50% 89.50% 89.50% 89.50%

AUDITED SEGMENT-WISE REVENUE, RESULTS AND CAPITAL EMPLOYED FOR THE YEAR ENDED 31st March 2009
(Rs./Lakhs)
Stand Alone Quarter Sl Particula . rs ended 9 d) 1 2 3 Quarter ended 8 d) 4 Year ended 9 Year ended 8 Consolidated Year ended 9 Year ended 8

31.03.200 31.03.200 (Unaudite (Unaudite

31.03.200 31.03.200 31.03.200 31.03.200 (Audited) (Audited) (Audited) (Audited) 5 6 7 8

1 Segment Revenue (Net Sales) Generation - Others - Total 2 Segment Results (Profit before 4,089 1,144,578 3,243 1,074,359 13,254 4,192,373 10,392 3,705,012 197,139 4,424,527 125,667 3,863,503 1,140,489 1,071,116 4,179,119 3,694,620 4,227,388 3,737,836

Tax and Interest) Generation - Others - Total Less (i) Unallocate d Interest and Finance Charges (ii) Other Unallocable expenditur e net of unallocable income Total Profit before Tax 3 Capital Employed (Segment Assets Segment Liabilities ) Generation - Others - Unallocated - Total 5,737,006 5,263,861 5,737,006 5,263,861 5,757,350 5,298,702 3,226 2,350,115 3,761 2,660,486 3,226 2,350,115 3,761 2,660,486 18,185 2,142,918 13,120 2,476,597 3,383,665 2,599,614 3,383,665 2,599,614 3,596,247 2,808,985 196,213 215,160 935,947 1,025,494 930,724 1,035,099 (66,996) (55,862) (235,088) (221,718) (236,297) (224,632) 31,979 61,480 208,630 107,186 220,701 113,235 1,522 161,196 780 220,778 4,184 909,489 2,886 910,962 12,811 915,128 6,167 923,702 159,674 219,998 905,305 908,076 902,317 917,535

Business opportunities
Power Sector Growth Drivers…..
• The GDP grew at 8.7% during fiscal 2008 and growth projection for fiscal 2009 in the range of 8.0- 8.5% • The current growth is consumer-led and hence expected to take the economy to even higher growth path. From now to 2017,demand growth in India will be second only to China. • At 8% GDP growth, power demand growing to 306 GW by 2017 and 575 GW by 2027 • Per Capita Electricity Consumption to grow from 704 Kwh in 200708 to 1000 Kwh by 2012 • Present energy deficit is 10.8% and peak deficit is at 14.4%.

Way forward

1. Human Resource Development & Compensation Package 2. Land Acquisition 3. Managing Environment – generating clean power 4. Regulatory Environment 5. Fuel security 6. Sustaining present level of operational efficiency 7. Competition

Key Challenges

8. Financial viability of Customers 9. Limited Financial Resources 10. 11. Technological Upgradation Sustaining Market Share

The company has formulated its plans and strategies on the basis of • • • opportunities in the sector, company’s strengths, challenges

Land Acquisition
Strategy –Well laid down CSR and R&R Policies
• The welfare of project affected persons and the local population around NTPC projects is taken care of through well drawnRehabilitation and Resettlement policies • The company has also taken up distributed generation for remote rural areas • Providing sponsorship to candidates for ITI training at recognized private ITIs in the trades of welder, fitter, instrument mechanic and electrician. Close to 750 village youth sponsored during fiscal2008. • Proposal to set up an ITI at Chatra District in Jharkhand State at an estimated cost of Rs. 67.10 million on land to be provided by the State Government of Jharkhand. • • NTPC Foundation formed to address Social issues at national level NTPC has framed Corporate Social Responsibility Guidelines committing up to 0.5% of net profit annually for Community Welfare Measures on perennial basis

Key Challenge –Managing Environment – generating clean power

Strategy – Sound environment management

• “For sustainable energy development NTPC has adopted the vision-“Going Higher on Generation, lowering GHG intensity” • 0.5% of profit to be set aside annually for undertaking/sponsoring research • leading to sustainable energy development. • Design criteria for ESP ensures SPM emissions below norms • Clean Development Mechanism initiatives to ensure future reductions in emissions • Induction of Super-Critical Technology and development of IGCC plant for enhanced efficiencies and to reduce CO2 emissions • Per capita CO2 emissions 1.05 tonnes in India as compared to 4.22 tonnes of world’s average • • • All stations ISO 14001 certified Environment Impact Assessment studies before project is taken up Setting up of Integrated effluent treatment plants, Ash water recycling system and others initiatives to reduce effluent discharge Ash mound formation for the first time in Asia in NTPC’s Dadri Plant

An investment profile

Company description
NTPC is the largest power generator in India with installed capacity of 29,144MW, generating ~28% of the electricity in the country. Its cost of power at Rs1.52 per unit is amongst the lowest. It aims to reach a capacity of 50,000 MW by the end of FY12. It also intends to venture into related areas like coal mining, distribution, transmission, merchant sales, gas exploration, etc.

Key investment arguments
Outlined expansion projects during Xth and XIth Plan represents 24% of country’s planned generation capacity addition. Enjoys significant growth option across entire spectrum: transmission, distribution, coal mining, merchant power plants, gas exploration, etc. Efficiency incentives results in ROE from core business at 21% vs 14% permitted by CERC. Growth will not be equity dilutive.

Key investment risks
Tightening of efficiency norms may reduce quantum of incentives Slowdown in the pace of reforms would impact growth plans.

Methodology of the Study
Initially the knowledge of brief of the company and its functioning in its core sectors. The major part of the study focused on the knowing and understanding of the Stores operations in depth in relation to the software(OLIMFAS)which is developed in – house by the corporation.. It required to interact with company officials at the EDP and Management Services Dept. The staff used to make the researcher understand each and every module of the software so developed and its significance in respect of the Stores Operations. Stores operation involves multidimensional activities including clearance and dispatch of goods, inspection and inward movement of materials, claims and settlement, receipt, stocking, issue, preservation, safety and security of materials, indenting for recoupment, disposal of scraps etc. The details of each and every function are given later in the report.

The meetings used to take a lot of time and one would have thought that it would take even over 6 weeks to know all the operations of the Stores Department of NTPC. Each functioning of the dept. is held up with lot of intricacies and detailing. There is lot of check and balances kept in place which at times hinder the faster functioning of the processes involved. The project also entailed a visit at one of the NTPC plant as Faridabad. It is a gas based power plant having installed capacity of 432MW.I was able to look much deeper into the actual functioning and the operations of the corporation.

STORES MANAGEMENT SYSTEM
Introduction Today, NTPC has an installed capacity of 23,749MW, and generates more than one fourth of the Total Generation of the entire country. Further, NTPC has an ambitious growth plan to become 56,000 MW plus power company by the year 2017 AD. Around 50,000 items of various nature are handled by Stores in a typical NTPC Coal based station. Inter departmental linkages also need to be established to ensure continuous availability of material to the user and thereby improve the plant availability. The Stores of an industrial set-up is considered as a measuring point to judge the effectiveness of Material Management Services. The basic objective of the Stores Management is to achieve a system oriented functioning to be followed uniformly within all units of the NTPC and thereby contribute to continual improvement in day to day working. It is also intended to ensure proper handling , preservation and accountal inventories. The Stores management mainly includes the activities like:1. Clearance of Goods from carriers. 2. Receipts and Inspection 3. Warehousing 4. Preservation 5. Issue of Material 6. Inventory Control 7. Codification 8. Stores Accounting 9. Claims and Disposal of Scrap, Surplus & Obsolete Items.

OLIMFAS(Online Integrated Materials & Financial Accounting System) have been introduced for computerized Material Management System. STORES FUNCTION Site Stores is to execute their job in line with over all policy and guideline framed by Corporate Materials Management Group with a view to have integrated approach and adoption of uniform practices. A. To arrange clearance, receipt, inspection, acceptance and storage of materials. B. To regulate inventory, planning and budgeting through liaison with all associated departments e.g. Purchase, User, FQA, EDP and Finance etc. C. To review the stock positions of AR (Automatic Recoupment) items and prepare indents based on corporate guidelines / norms. For other non-stock items, screening and checking of indents (raised by user), critical analysis is required before forwarding the indents to Purchase wing. D. To Store and preserve the material ensuring proper handling facilities. E. To arrange insurance policies covering various types of risk coverage, lodging of claims and follow up with insurance agencies for early settlement. F. To identify non-moving, surplus and obsolete materials and arrange their disposal. G. To maintain proper up-to-date records of issue, receipt, rejection etc. H. To generate all relevant MIS for circulation as per format. I. To review the performance Periodically/Annually with that of agreed Standard /Benchmark to assess the achievement level as well as comparison of the same with other Stores of NTPC. J. To carry out Stock Verification Activities on Periodical basis. K. To codify the materials as per functional utility of each item and Corporate guidelines and explore the ways and means for Standardisation of nomenclature / specification to minimize the varieties of items and to put them in to the OLIMFAS for proper accounting and inventory control. While allotting code

numbers it is to be ensured by MPIC group that all information regarding the item are available so that the duplication of the code for the same item is totally avoided. The functional interfaces among various departments :-

Tasks involved in the Stores management

GOODS RECEIPT
INTRODUCTION

This section initiates all prerequisites in smooth transfer of materials on its arrival to the custody section. This section is responsible for getting the goods cleared from different transporting agencies. On receipt of the materials, Unloading Report (UR), MIS cum SRV are prepared, goods get inspected and finally handed over to the custody section. This section also raises discrepancy and rejection memos whenever damages, rejections and shortfalls are noticed and deals with the concerned authorities which includes Insurance Companies, Transporters, Suppliers etc. and makes settlement of claims. This section is further sub-divided into three functional groups for monitoring and control: A) Goods Clearance and Dispatch Group. (GCDG) B) Goods Inspection and Inward Group. (GIIG) C) Risk Management Group.(RMG)

GOODS CLEARANCE AND DISPATCH GROUP
FUNCTIONS. The function of Clearance and Dispatch group is to arrange receipt of goods and transfer the same to GIIG and performs the following activities in general. A. To receive Documents. i) Receipt of Purchase Order and Amendments: A hard copy of P.O and subsequent Amendments if any will be received from purchase section and the same will be kept serially purchase order-wise. The P.O is also available On-line in the Computer. GCDG can view the Purchase Order and Amendments to track the supply position. ii) Receipt of Despatch Documents: GCDG shall receive despatch document from various internal / external Agencies e.g.Purchase, Finance (Received through Bank) or directly from Supplier for door delivery /advance intimation. B. To maintain LR/RR register. Once despatch documents are received by Goods Receipt section, GCDG shall register LR/RR details in On-line system. Provision for maintenance of manual LR / RR – Register may be kept to record data in case the On-line system is down. But the concerned authority shall take care about updation of database when the On-line is available. C. To arrange clearance of materials from different clearing point of various transport agencies /authorities e.g., i) Road Transport / Railway Go-down.

The GCDG shall maintain close and regular contact with Transporter / Railway to get intimation regarding arrival / awaiting clearance of consignments. Information will be collected with reference to RR / LR. The Group shall get the consignment released after presenting the negotiable documents to the Transporters / Railways and on payment of freight, demurrage or any other charges as per terms of order. Collection of consignments shall be done by this Group in case of urgency / as per terms of order or where no Transport contract is existing. (ii) Railway Yard. (iii) R P P (iv) Domestic Airport / Seaport for Imported consignments through T & CC. D. To receive materials at receipt section itself in case of door delivery. E. To prepare unloading report (UR). F. To maintain accounts for different incidental charges towards Clearance & Despatch including Imprest account. i) The expenditures on account of payment of freight, wharfage / demurrage, under charges, loading and unloading charges, packing and repackaging charges (in case of packing of any delicate item stores may take necessary help from respective users and FQA.), if any, shall be incurred from Imprest Fund, sanctioned by site GM. ii) All these expenditures and subsequent recoupment of Imprest shall be recorded in "Imprest Control Register" along with supporting documents duly signed by the Incharge of Goods Receipt Section. iii) Chief of Materials shall approve and authorize GCDG representative to draw the sanctioned Imprest amount and its recoupment and maintenance of records. iv) The carriers will submit their bills with acknowledgement duly signed by the authorized signatory of clearance and despatch group. Transportation cell of Clearance Group shall verify the bills w.r.t, LR/RR entries available in the on-line system (The print outs of LR/ RR in chronological order has to be maintained

strictly by Clearance Group) and shall stamp the bills as "verified" confirming its accuracy and protecting duplicate payment before sending advice to accounts department. G. To obtain Shortage / Damaged certificate from appropriate transporting agencies. H. To handover the material to GIIG. I . To despatch rejected & other materials for repair or transfer to other Plants. J. To inform Risk Management Group (RMG) for abnormally delayed consignment in transit. K. To obtain sanction of payment of Demurrage / Wharf age charges.

GOODS INSPECTION AND INWARD GROUP
FUNCTION After receipt of material from supplier and prior to taking the same in stock, GIIG is responsible for the following activities: A. To receive material from Goods clearance and despatch Group i) On arrival of material from cartage contractor / GCDG, consignment will be checked with respect to Unloading Report. ii) After necessary checking of the consignment material will be received and copy of UR to be returned to cartage contractor / GCDG duly acknowledged. B. To arrange inspection of material. C. To keep material in GIIG custody till it is inspected. D. To hand over material to concerned Custody section / Rejection cell. i) After inspection, the accepted materials are to be handed over to Custody section along with relevant documents. ii) Custody on receipt of material from GIIG will fill up the following in SRV 1. BIN Line No. 2. BIN Balance. iii) GIIG shall distribute the SRVs among the following departments for their action. 1. Finance / Stores Bill Section 2. Purchase 3. Indentor 4. Custody or warehousing 5. Risk Management Group (in case of rejection or excess / shortage) E. To prepare Discrepancy Memo.

CUSTODY
INTRODUCTION Being one of the most important sections of Stores Management System , it consists of various Custody cells which look after Stockyard / Godowns having different group of items such as general stores, Oils, Lubricants & Chemicals, Steel & Cement, Spares for specific installation / unit, Construction Stores for Electrical, Mechanical and C & I items, Scrap & surplus etc. Activities of each custody cell consist of the following: i) Receipt and Issue. ii) Warehousing and Storage. iii) Preservation. iv) Stock Verification. v) Scrap and surplus Management.

RECEIPT & ISSUE
FUNCTION

Stores custody section is responsible for receipt, custody, storage and issue of materials. The major functions of this section are: A. Receipt of material from Receipt Section / other Stores Cells / Project sites (Through R & I)etc. B. Receipt of Materials returned from Users. C. Storage and Accounting of Material Receipt and Issue.

HANDLING OF DOCUMENTS BY CUSTODY (RECEIPT AND ISSUE CELL) Documents to be Raised  MTN  Regularisation of Stores Requisition cum Issue Voucher (SRIV) & MIS cum SRV  SIV (for loan to other organisation) Documents to be Received  MIS cum SRV  MRN  SIV

WARE HOUSING AND STORAGE
FUNCTIONS The functions of Warehousing and Storage are as under: A. Safe custody of all materials (Stores and Equipment) warehoused in the Project Site / Power Station. B. The correct tally of materials with the Kardex, or on computer ledger. C. Correct preparation and posting of all initial documents in the available On-line system. Incase of the On-line system gets down the above document should be maintained manually and the same should be re-entered into the On-line system whenever the system is available. D. Periodical identification of Materials in stock (likely to become inactive) and declaration of the same as "Surplus for Sale". STORING ARRANGEMENT The stock statement maintained by each project / station should be distributed among different enclosures (i.e. "Yards" or "Godown") and are provided with proper handling facilities and modes of access appropriate to the size, shape and weights of the material stocked. Each Yard or Godown shall cover almost all the items in a Main Group of the Material Codification System. Each Yard / Godown or the sub-section of the Yard / Godown that can conveniently be locked and secured and operated by a custodian. HANDLING AND STACKING OF MATERIALS : No materials (except certain heavy materials) is kept on the floor of the Yard / Godown. These are stacked in the appropriately designed racks. Incase stacking on floor is unavoidable adequate dunnage is invariably used to provide at least 20 mm air space above the floor from the bottom of the material stacked .

For satisfactory stacking , the following things should be kept in mind:i) ii) iii) Appropriate dunnage for various kinds of materials (equipment and stores) and optimum air space at the floor of the stack. Optimum stack sizes and stocks construction to minimise deterioration / damage through environmental hazards. Permanent labeling arrangements of each stack.

In order to achieve compact stacking of materials and to facilitate an assessment of the level of existing stock at a glance, a system of stacking is developed with number of rows and layers depending upon the size of the material. In case of small items the packing system is uniform considering quantities in convenient weights or numbers of items. Furthermore wherever possible, graduation marks are to be painted on the bins to indicate certain previously ascertained quantities. This action enables custodian to know the appropriate level of existing stocks at a glance and facilitate him in regulating levels of issue and giving priority of the items needed to be taken up for recoupment and/or expediting action.

STORAGE
For satisfactory receipt, storage, preservation & issuance of material Stores / Godown facilities should be in proper manner & preferably as follows: Stores Layout Uniformity is maintained regarding the layout of stores and especially for Covered Sheds so that the godowns are all in one identified place and the inward / outward movements become smooth. "O&M stores Building" is established near the "Main plant". This provides better area coverage, compact warehousing, quick facility of handling equipment, tight security, less kg-km. movement per day, etc. The sheds are to be grouped broadly as under to take care of the major material classes:

The Layout for Better Space utilization and Dual entry/Exit Points

Bin Management A blueprint of total Bin availability and it's geographical coordinate and lane no. related to item code, main group etc. is required. Hence a graphical sketch of inside arrangement is drawn based on "Grid" concept and accordingly each station is codified logically. The rows and columns in each lane shall be drawn based on "Grid" concept and accordingly each station shall be codified logically. The rows and columns in each lane are designed by way of linking "Item Code Main group". It is further divided into odd and even no. basis to facilitate quick access and identification. A Master Chart is displayed just at the entrance of Stores Main gate to project an overall inside distribution pattern of stocking points.

PRECAUTIONARY MEASURES DURING RECEIPTS During any Receipt of Materials in custody Section the following precautionary measures are to be taken invariably. a. The relevant vouchers must accompany all receipts of material. The quantity of materials must be carefully checked with the particulars given in the vouchers. b. A broad comparison is to be made w.r.t. colour, appearance and other visual characteristics of such receipts with the stocks available under the same material code number. In case of significant discrepancy, the same is to be brought to the notice of authorised signatory before acknowledging the receipts. c. In case of materials recovered in the Yard without documents or otherwise, adjustments should be done using Stock Verification Sheet (SVS). d. When an assembly in stock is disassembled and put into stocks as components, this involves the preparation of a certified (adjustment) SRIV and SRVs subject to approval from Head of user department.

MATERIALS PLANNING AND INVENTORY CONTROL
OBJECTIVE The prime objective of this cell is to optimize Inventory in totality as well as to reduce the probability of Stock-Out situation. This cell is fully responsible for the Materials Planning and Inventory Control of stock items and will act as a bridge between the user and procurement group so that the stock balancing and availability of goods are maintained. The Major Functions of this cell are: A. Material Codification and its management. B. Implementation of Computerization. C. Recommendation of Inventory Level (Safety Stock, Economic Order Quantity, Re Order levels etc). D. Planning and Indenting of Automatic Recoupment items. E. Overall Inventory Management. F. Coordination / Liaison with all interface departments. G. Adoption & Formulation of Management Systems and Procedures. H. Generation of MIS(2) to take proactive action. I. Screening of Purchase Requisition from user department. J. Co-ordination with Corporate Materials for Inventory Management (Classification, Codification , Surplus , Obsolete declaration and Scrap Disposal MIS(2) , Insurance Claims MIS(2) Inventory Status etc.) K. Inventory Management - Review and Analysis L. Identification of Surplus and Obsolete items in consultation with User Department.

The following broad guidelines are followed in respect of the frequency of procurement of various types of items under the periodic review system both for Construction & Operational requirements.

POLICY PLANNING AND MONITORING FOR MATERIALS MANAGEMENT
INTRODUCTION During commercial operation of the plant, the degree of Materials Management activities increases many fold and to gear up the activities, it is required to face the challenge of optimal supply and demand of plant inputs. To meet such cross-functional utility, a cell is formed under direct reporting to Head of Materials and Contracts Services. The major duties and responsibilities may be framed as under: 1. Planning & Budgeting of Resource Requirements for Materials & Contract Services. 2. Orientation of Manpower & review of Organization Structure. 3. Fixation of Lead time for various activities (as below) at purchase and Stores Section i) Purchase Indent to Purchase Order (activity wise) ii) Receipt of GR to Preparation of SRV (activity wise) 4. Benchmarking of Activities 5. Preparation of ISO Policy & Procedures. 6. Ensure Implementation of ISO Policies & Procedures strictly. 7. Review of Work Flow Systems and Lead-time. 8. Arrangement of Monthly Review Meeting & Generation of MIS for review meeting. 9. General Administration Related to Tender Opening, Data Systems and Co-ordination with other Deptt. for policy decision. 10. Interaction with Corporate Materials in regard to Systems & Procedures, Manpower Planning etc. 11. Regularization of the deviation from the laid down policies and procedures if any due to local abnormalities. 12. Co-ordination with different wings of inventory management towards timely accomplishment of the tasks assigned under the policies framed by this group.

COMPUTERISATION (STORES MANAGEMENT SYSTEMS)
The complete on-line systems are available and are interlinked with interface functions now all data are live and State-of-the-Art information is availabe at everybody's doorstep. The operative system is popularly known as "OLIMFAS" i.e. On Line Integrated Materials, Finance & Accounting System. It has its various features and very useful from the user's angle to handle large volume of Data and its interpretation. The on-line stores Management system has the following 14 modules. 01) Road Permit Details 02) LR/RR Details 03) Unloading Report Creation 04) MIS cum SRV 05) Stores Issue Voucher (SIV) 06) Material Return Note (MRN) 07) Material Transfer Note (MTN) 08) Adjustment Voucher 09) Bin Location Updating 10) PSL processing 11) Posting of Stores JV into GL 12) Yearly Processing 13) Sub-stores Accounting 14) Rejection Apart from the above, the System can generate various reports and queries as and when required which are detailed in Reports and Query section.

A. Road Permit Details Road permit is issued to vendor who are located outside the state for bringing material to NTPC projects against various P.O. The details regarding the road permit information is fed into the system through this module and copy sent to the vendor. This operation is performed by Goods Receipt Section / Purchase Section. B. LR/RR Details When LR/RR is received from the vendor, the Goods Receipt Section invokes the LR / RR details through this module and regular printouts are taken for maintenance of LR / RR register. However if documents are received from Bank then Finance department feeds the details of LR/RR into the system. C. Unloading Report Freight payment details which NTPC is incurring from various premises to local transport companies is taken care of through this module. Unloading report is generated in the Receipt Section of Stores Department.

F. Material Return Note (MRN) : This module is used for return of only new material. This module has following 7 (seven) sub modules:i)MRN Preparation and Data Entry: The unused Material's Return Note shall be generated through the respective users terminal. However, Departments those do not have terminal will prepare three copies of MRN in a pre-printed proforma. User along with material of MRN will go to the stores for returning material. Store-keeper shall feed all the necessary information by calling this sub module. Once this is saved, the system will generate MRN No. and Date. ii) Calling of MRN by Store: User representative along with material and MRN shall go to the store. Storekeeper will update the qty. accepted and the system shall generate MRN No. and date. The storekeeper shall write the MRN No. and date on the voucher and return back one copy to user representative and send second copy to PSL section and retain third copy in stores. iii) Pending for Finance Updating: Finance shall print a list of MRN which are still to be checked for nature of activity, Project code, account head, cost center field etc. iv) Updating by Finance : This option is used for updating / correction of above-mentioned fields. Finance has the privilege to price MRN manually and can enter values against all items if desired. v) Listing for a Period: A print out of MRN for any period can be taken through this option in the sequence of MRN No. and Date. vi) View

G. Material Transfer Note (MTN): MTN is prepared in case of inter project transfer of material. MTN has the following sub modules. i) MTN Preparation: The Custody cell shall access this module and shall generate MTN list of material those are identified & declared as surplus/sparable material by Competent authority. Further processing will be as per norms like number of copies, where to send etc. ii) Pending for Transfer Details Updating: Report is generated for MTN pending for updating of transfer details. iii) Transfer Details Updating: his option will be used for updating of transportation details if material is dispatched to any NTPC Project/Station.

iv) Pending for Finance Updating: The list of MTN which are still to be checked by finance for nature of activity project code, account code, cost centre fields can be printed by this option. v) Updating by Finance: This option is used for updating / correction of above mentioned fields. vi) Listing for a Period: List of MTN for any decimal period can be taken in the sequence of MTN No. and Date.

vii) Material Exit Gate Pass: Material Exit Gate Pass that is required to taking material outside plant premises, can be printed by selecting this option. viii) View

H. Adjustment Voucher: This module has following sub modules:i) Voucher Preparation: Adjustment voucher is prepared in stores / Finance Department. Stores will prepare voucher for quantity adjustment whereas Finance will prepare / update for value only. This voucher will be prepared to take care of any mistake which might have occurred during pricing or due to shortages / damage in stores. Provision is made to feed Receipt and Issue Adjustment through one adjustment voucher only. Adjustment voucher is not priced through computer. ii) Printing: A printing of Adjustment voucher can be taken through this option. iii) Pending for Finance Updating: This voucher will also requires Finance checking. A list of vouchers pending for finance checking may be printed through this option. iv) Updating by Finance: Finance shall update NA, Account head, project code, cost centre, if applicable. v) Listing for a Period: Listing of adjustment voucher with sequence of adjustment no and date can be printed for any desired period.

vi) View I. Bin Location Modification: It is possible to change Bin Location for any material code by invoking this option. J. P.S.L. Processing: Processing of PSL will be done in Finance Department. Finance representative will call the PSL processing option and will enter the period and cycle no. If PSL is to be reprocessed and then same period and cycle no. should be given while processing. While processing past PSL can be re-processed. Subject to the condition that JV based on this PSL has not been posted to GL. K. Posting of stores JV into Books: Separate JV to be generated for SIV, MRN, MTN per each cycle. Each JV will be posted to GL and GLV no. and will be displayed on the terminal. Once JV is posted, it can neither be cancelled nor modified. Also printing of JV facility exists in this module. L. Yearly Processing: This option is to be operated if more than one PSL is being maintained for a project / station. After final processing of all PSL's for the year is completed. M. Sub-store Accounting: This option provides for accounting / printing of left out materials in sub stores. The option is to be operated by the EDP department only. N. Rejection Module: This module is basically monitoring status of Discrepancy / Rejection during Receipt / Inspection stages etc. This module has following 11 sub modules : i) Create New Discrepancy / Rejection: This option provides for feeding pending Discrepancy / Rejection data at the stage of starting this module. Upon entering MIS no. and date by user, system will pick up Discrepancy / Rejection details automatically. It simply needs to save this information.

ii) Settle Rejection by Rectification: Rectification information to be fed and system will generate MIS no. and Date. For such cases MIS not to be generated through MIS cum SRV module. iii) Settle Rejection through Replacement: For replacement material supplied by voucher, MIS to be called through this option and to be saved. Accepted quantity will get adjusted against Quantity pending for settlement. iv) Settle Discrepancy / Rejection by other Means: Rejections can be settled through other ways also like payment made by Insurance company /write off / return of material by NTPC and deductions through bills. P.O. to be short closed in such cases. v) Settle Discrepancy / Rejection by memo printing. vi) Rejection memo printing. vii) Discrepancy cum Rejection memo printing. viii) Pending discrepancy / Rejection Report. ix) Pending discrepancy / Rejection Report (vendor wise). x) Detailed Pending discrepancy / Rejection report. xi) Detailed Pending discrepancy / Rejection report for a station.

Recommendation
1. Too much of overstaffing in the Stores department can be reduced by merging some of the activities. Instead of having six persons manning the store-keeping department (for a small plant). 2. The manner in which the materials, which are required frequently used, should be kept in front so that easy and faster accessibility of the product can be done is not done in accordance with the rules.

3. The product which are expensive and heavy are not given due importance in the storehouse by the keeper. The materials should be are kept in accordance with the value of the item as well and not according to the easy availability of the space

4. The heavy items should be kept in its location area assigned so. 5. The software should be enhanced with a aim of reducing the redundant paper work which is still prevalent in the system. 6. The software should be made to appear more user friendly by having a GUI (Graphics User Interface). 7. The faults can be corrected by frequent intervention by the head office by conducting system audits. 8. The software is now being transferred to oracle in a phased manner. The oracle is coming up to give support for enhancing the existing software for the company.

9. The authentication till date is only via user name, password only. Using Biometrics and Smart Cards can further enhance the security of the system. 10. For working with the other companies NTPC can employ Digital Certificate and Signature for the transactions to happen faster. At present some transactions take a lot of time to go through to completion.

Conclusion
The project the researcher had undergone a deeper understanding of the company. That included knowing the corporate culture of the company. The researcher gained the first-hand experience of the culture and pace of one of the “Navratnas” of India. It also helped him to learn from the managers who were managing of such a huge size and understanding how the different department in the public sector behemoth interact with each other to increase the overall productivity. Te researcher gained knowledge of the jargon, the magazines employees read, the valued outcomes, the practiced cultural values, the performance measures, and the other real details that define a career in NTPC. The researcher spent the first two weeks on the summers in a full-throttle learning mode, learning the nuts and bolts of how NTPC delivers its services. By summer's end, he could draw and explain NTPC Stores Department’s Management Workflow with ease and understand the supported physical architecture - in sufficient depth to lead a discussion with the higher authorities on the improvement of the existing structure.. The researcher worked in the EDP. Six weeks a lot less time to undergo a project in the organization such as NTPC. A bigger constraint was the less number of employees of the researcher’s age. Apart from some other students undergoing training at NTPC, the average age of the people whom the researcher interacted during the project was above 40 years. The researcher was able to observe the working environment of NTPC and find that the employee satisfaction was high even though it is Public Sector Company. The employees were very cordial and receptive to any problem/query faced by the researcher. It seemed deservedly enough that NTPC has been rated among the top ten "Best companies to work for in India" by Mercer HR Consulting-Business Today Survey 2004. This is the second consecutive year that NTPC has appeared in this prestigious list. Besides, NTPC is also the

only PSU among the top ten companies. The survey was conducted on the basis of five attributes such as HR Metrics, HR Processes, Employee Perception, Stake holder Perception and Attrition on a weighted scale to arrive at a total score for each company surveyed. There were also times when the employees at times were reluctant to divulge certain information from the researcher. The information was withheld on the pretext of it being confidential. There was a weekend off in the NTPC. The researcher felt that at least Saturdays the corporate office should have been opened so that more amount of time would have been devoted towards the learning and understanding of the project. In the entire project gave a combination of healthy exposure to the working of the NTPC. The summer training was a good experience of using the theoretical knowledge in real life situations. The training helped in getting an opportunity to do some meaningful work in the industry. The researcher met and worked with other undergraduates, engineers, General Manager and deputy general managers, operating staff store managers and keepers. The summers at NTPC also brought the researcher into contact with experts in a wide variety of functional areas - from engineering to marketing to sales. The view from the inside, as an individual contributor or a manager within an operating company, is very different from an outsider’s view. The chance to spend 6 weeks living and working hard within an operating company was a valuable real-world counterpart to the classroom work of the school year.

LIMITATIONS

1. The humungous organization like NTPC itself. It is so huge that to understand and study each and every aspect of its functioning will require more than six weeks. 2. The project required to go through various sites of NTPC. Again due to apathy of time and the disparate locations of the power plants( at different parts of the country) ,this was curtailed. 3. The Computer at the NTPC Noida center were few , therefore I had to work on a old PC(an x86) whose screen flickered continuously and the processing speed was excruciatingly slow. This hampered the speed of my work as it was quite a strain to the eyes while working on such a computer. 4. The time was sometime wasted when the certain officials were not available when required. Things moved faster only after the interference of my guide, Mr. Ashok Kumar. 5. There was regular apathy of the govt. officials at the people working at the plant. 6. The average age of the employees whom the researcher met was above 40 years and this seemed to be a constraint at some times.

Bibliography
1. NTPC Website – http://www.ntpc.co.in 2. NTPC Intranet 3. Material Management System ---System Manual 4. NTPC Annual Report 2003-2004. 5. Principals of Management ----Koontz 6. www.competitionmaster.com 7. www.bussinessweek.com

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