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Specific conditions of purchase Purchase order no.

ase order no. Name and address of the supplier Delivery address of the goods Description of the goods Product specifications Quantity Contract price Delivery date Delivery conditions (liability to transport, packaging, insurance cost etc.) Terms of payment Liquidated damage (right to recover some specified amount from supplier for delayed Other features (responsibility for export license, custom clearance at port of origin, An authorizing signature

delivery) transportation and insurance cost upto port of loading, shipping document etc.)

General conditions of purchase Prices: All prices are fixed for the duration of the contract and, unless otherwise agreed. Quantity and description: The goods shall confirm in all respect to the specification given Indemnity: The seller at his own expense repairs or replaces all defects attributed to Loss or damage: All responsibility for any loss or damage to the goods shall lie with the Rejection: The rejected goods observed during testing/ inspection will have to be lifted

by the company to the seller. faulty design or workmanship which may crop up in the goods within a period of 12 months. seller. by the supplier at his own cost within a month of receipt of rejection advice from the company.

Force majeure clause: Neither the company nor the supplier shall be responsible if the

execution of the contract is delayed /interrupted due to the cause absolutely beyond their control, such as acts of God, war, major civil commotion etc. Termination: The company reserves the right to terminate the contract either in full or in part in the event of failure/default/refusal on the part of supplier to perform as per the contract. Arbitration: All disputes related to the contract will be referred to the sole arbitrator Applicable law: The law of the buyers country will be applicable. chosen by the company.

Order placement process SN. Activity Description Management Project manager and planning & budgeting 1. Finalization of methodology for execution (Turn key/semi 2. 3 4. 5. 6. 7. turn key/ In-house) Preparation of technical specification and indent Finalization of list of vendors Issue enquiry Preparation and submit bids Receipt of bids Evaluate technical bid in association with operating 8. 9. department/vendors Check suitability of technical specification Commercial evaluation(discussion/negotiati on/and finalization of terms 10. 11.a 11. and conditions) Check terms and condition Return price bid in as is condition Open price bid/negotiate with vendors and select best 12. 13. 14. 15. vendors Obtain management solution Approve sanction Prepare PO, obtain vetting from legal depart Get signature of project manager and release it 1 3 1 14 5 1 6 1 1 1 2 3
Ok ? 10

Project Procurement


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Ok ? 8



16. 17.

Acknowledgement receipt of PO Archive PO Exhibit 11.6 Order placement process 1 7

Sn. 1. 2. 3.

Transportation of equipment from origin to destination Activity description Buyer Supplier Sends test certificate(TC) or inspection report to buyer Give dispatch clearance based on TC/Inspection report Transport equipments to port and load it on the ship and send bill of lading and invoice to buyer Arrange insurance of the material With the information contained in the documents(bill of lading and invoice), Buyer arranges funds and appoints custom house agent(CHA) On arrival of the ship to destination port, CHA pays the freight to shipping agent Issues delivery order to the captain to the material to destination port Destination port gets satisfied that payment is made to the supplier through the NOC issued by suppliers bank to this effect. Thus, destination port issues inward Goods manifesto(IGM) number to each item manufactured by a separates country Prepares bill of entry(which shows total custom duty payable) based on landed value of items and tariff rules(obtainable from custom tariff book) Pays custom duty and obtain its clearance Takes necessary action for loss damage during transit




4. 5.

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10. 11.


Takes care of materials held at dock beyond prescribed time 12


Ensures that import license has been 13

14. 15.

procured before arrival of cargo. Arranges trans porter and insurance from port to project site. Under takes road survey between domestic port to project site for repair of the road and change route to avoid obstruction Hands over material to transporter for onward movement to project sites 14 15 2


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CHA- Custom house clearance SA- Shipping agent DP- Destination port Exhibit 11.7 Transportation of equipment from origin to destination

Process of payment through LC I. Buyer makes an application to his local bank to open an LC in suppliers bank. Following documents are mentioned as proof of dispatch in the application. a. Bill of lading in case of transporting by ship or Air way bill (AWB) in case of air freighting. Besides many things, it shows origin and destination of material. b. Technical specification c. Original invoice d. Packing slip e. .Insurance certificate f. Guarantee/ warrantee certificate g. Performance bank guarantee: Supplier gives a bank guarantee to buyer for meeting desired performance. Usually, the value of guarantee is about 15-20% of the price of the equipment. If equipment fails to give desired performance within one year of the commissioning, buyer can encash the guarantee. h. Commissioning period II. III. IV. Local bank asks its counterpart overseas bank to open an LC in suppliers bank for specified amount. Suppliers bank opens an LC and sends it to supplier. When equipment is dispatched, supplier submits documents (mentioned in the application for LC) to his bank for release of payment. Also, he faxes following documents to customer: V. VI. VII. Bill of lading (which indicates freight amount, name of shipping company agent, etc) Invoice

Bank, on receipt of documents from supplier, sends copies of all documents to buyer. Buyer sends confirmation to the suppliers bank about discrepancies, if any and advises to negotiate LC in case no discrepancies exist in the documents. (vii) Payment is released to supplier, if everything is O.K.