SUMMER REPORT

ON

MATERIAL MANAGEMENT IN
GRASIM CEMENT

BY:-
MR. MANISH YADAV
BBA Part-II (2008-2011)

Project report submitted to Jagannath University in partial

fulfillment of BBA program

Acknowledgement

1
I express my deep sense of gratitude to the management of Aditya Cement for
to imparting me 6 weeks summer training on the Project

“Material management in Aditya Birla cement”

First, I would like to pay my sincere regards and respect to Niteen H Wadge,
MR. Banrji (HRD), Aditya Cement, Ultratach Cement and Birla Plus,
mohanpura (Units of Aditya Birla Group) for permitting me to take up this
project

I gratefully express my thanks to Mr. Nitin talukdar (Material received

manager) without whom the project as well as this summer training would
not have been possible, his extreme sense of help & cooperation guided me in
every respect of life, his presence imbibed in me a sense of learning &
creativity.

I pay my sincere thanks Mr. P.K. Bharadwaj, HOD (ER) who provided me
necessary material on specific topics which added value in my report.

I would also like to thank My Project Guide Mr. Mukesh Sharma (Material
Issue manager) help in preparing my project report brief me some basic
points on how to work in a private organization.

I would like to thank MR. O.K. Dash Officer (HR) deserves my warm regards and gratitude,
which in spite of his busy and hectic schedule provided me the wholehearted support and total
guidance in carrying out this exclusive study at Aditya Cement

Mr. S. SAHU deserves very special thanks for her invaluable support and
motivation, which she provided me time & then whenever I was in need,
providing material at her initiative, which would have added value in my report.
In the end I would like to thank the management of Aditya Cement which gave
me extreme help, and a sense of trust & love and made this summer training of
mine a memorable experience in my professional life as this organization
provided me excellent opportunity to understand the things and I always
experienced a healthy environment during the course of time.

2
 Kumar Mangalam Birla

Chairman, ADITYA BIRLA CEMENT

Values
“Integrity,

Commitment ,

Passion,

Seamlessness,

Speed”

Vision
Mission
To be a premium conglomerate

With aTo
clear focus
deliver on each
superior business.
value

To our customers,
shareholders,

Employees and society at

large.

INDEX

3
S. No. Contents Page No.

1 Preface 5-6

2 Introduction 7-8

3 Aditya cement at glance 9-11

4 ABG in dominant player 12-14

5 15-19
Cement manufacturing process
6 Awards and accreditation to Aditya cement 20-22

7 Organization chart- Aditya cement 23-25

8 Material management 26-27

9 Material purchase selection 28-32

10 Material storage 33-35

11 Accounts for stores 36-38

12 Inventory control 39

13 Purchase order register 40

4
 PREFACE

The word “MATARIAL MANAGEMENT” has got a very different

identity and existence in Aditya Birla Group. Material management in
Aditya Birla Group is not merely a function but it is an initiative to
strengthen the position of Aditya Birla Group in global market as well
as an effort to convert an employee into a dedicated and committed
workforce in the present competitive scenario to achieve
organizational goals which can only be achieved through individual
excellence. Basically each and every employee in the group is
involved in a series of Material management functions.

The Life Cycle of an Employee in Aditya Birla Group is very different

than in other business Groups in India & World over.

Aditya Birla Group has always adopted the best Material

management practices for overall development of an employee in all
spheres of life. Such extra ordinary Material management efforts in
Aditya Birla Group has not only put the AB Group as a Market Leader
in the country & overseas but has also provided its employees a
platform and an opportunity to perform their best for overall
development of self as well as of the group which ultimately leads to
satisfaction, both in terms of Job as well as Personal Life.

With entrance in Aditya Birla Group, Material management functions

play a vital role in nurturing & developing the talent (an employee)
being an important asset for the organization.

5
FIGURE :- GRASIM CEMENT MOHANPURA (KOTPUTLI)

6
 INTRODUCTION
The Aditya Birla Group is India's first truly multinational corporation. Global in
vision rooted in Indian value, the group is driven by a performance ethic
pegged on value creation for its multiple stakeholders.

It revenues today are in excess of US $6 billion conglomerate, with a market

capitalization of US $ 31.5 billion. The net earning of US $ 400 million a us
$4.5 million assets base. A market cap of us $ 5 million cap of us $ 5 billion
and 7, 00,000 shareholder. It is anchored by an extraordinary forced of
100,000 employees belonging to over 25 different nationalities.

Aditya Birla Group has 100 states-of-the-Arts manufacturing units and

sectoral service plan 20 countries - India, Malaysia, Philippines, Indonesia,
Egypt, Thailand, Canada, China, Australia, Laos, USA, UK, Germany, Hungry,
Brazil, Italy, France, Luxemburg, Switzerland & Korea,

A premium global conglomerate, the Aditya Birla Group is a dominant player

in all the sectors in which it operates.

Among these are viscose staple fiber, non-ferrous metals, cement, viscose,
filament yarn, branded apparel, carbon black, chemical, fertilizer, sponge iron,
insulator and financial services, telecom, retail, BPO & it sector.

It is: -

 The world no. 1 producer in viscose staple fiber.

 The world largest single location palm oil production..

 Among the best energy efficient fertilizer plants.
 The world's third largest producer of insulators.

 Globally the 4th largest producer of carbon black.

7
 Among the world's largest producer of white cement.

In India:-
 India's premier branded garments player.

 India's second largest producer of viscose filament yarn.

 India's 2nd largest player in cement.

 One of the India's leading Life Insurance asset management company

 Among the top 5 mobile telephony companies

 The group has also made successful forays into the IT (information
technology) and BPO (business process outsourcing) sectors.

8
 The Aditya Birla Group manufacturing world wide

Grasim at a Glance:-

Business Unit located at Installed Product

capacity Brands

Viscose Nagda (Madhya 220,775tpa Birla Viscose

Staple fiber Pradesh) Harihar
(VSP) (Karnataka)

Kharach (Gujarat)

Rayon Grade Harihar (Karnataka) 70,000tpa

Pulp

Joint
Canada 1,22,,500
ventures
tpa
Canada
Av cell Inc.
1,89,000
Av Nackawic tpa
Inc.

9
 Grey Cement 13.12 National
million tpa Brands
Jawad (Madhya
Pradesh) Ultra Tech.

Rawan (Chattisgarh) Birla Super

Cement
Shambhupura
(Rajasthan)
Regional
Malkhed Brands
(Karnataka)
Vikram
Reddipalayam Premium
(Tamil Nadu) Cement

Grind Units Rajshree

Cement
Hotgi (Maharashtra)
Grasim Super
Bhatinda (Punjab)
Cement
Six Ready-Mix
Concrete Plants

White Cement
475,000 tpa
Kharia Khangar

(Rajasthan)
2.4 million Birla White
Ready-Mix Concrete cubic
plants (13) meters
Birla Ready
mix

Subsidiary Sikka (Gujarat) 1.08 million Kamal

tpa
Shree Digvijay
Cement

10
Chemicals

Rayon Grade

Caustic Soda Nagda (Madhya 258,000 tpa

Pradesh)

Salav (Maharashtra)
Sponge Iron 900,000 tpa

Textile Malanpur 8832

(Maharashtra) Spindles
Yarn

Subsidiaries
Bhiwani (Haryana)
Fabric Grasim
Bhiwani (Haryana) 146 looms
Graviera
Malanpur (Madhya 35,232
Yarn
Pradesh) spindles

11
 ABG is a dominant player in all the following sectors:
*Viscose Staple fibre

*Metal

*Cement

*Viscose Filament yarn

*Branded Apparel

*Carbon Black

*Chemicals

*Fertilizers

*Insulators

*Financial Services

*Telecom

*Retail

*BPO

*IT Services

The ABG has been adjudged the Best Employer in India and
among the top 20 in Asia by the Hewitt-Economics Times and
Wall Street Journal Study 2007.

12
 CEMENT UNITS

• ADITYA CEMENT - 1.75 MTPA

• GRASIM SOUTH - 1.03 MTPA

• DIGVIJAY CEMENT - 1.20 MTPA

GRASIM CEMENT - 1.90 MTPA

• RAJASHREE CEMENT - 2.30 MTPA

• RAJASHREE - 1.35 MTPA

GRINDING UNIT

• VIKRAM CEMENT - 3.00 MTPA

VIKRAM GRINDIN UNIT (BATHINDA) -
1.00 MTPA
BIRLA WHITE CEMENT - 0.60 MTPA

13
 LOCATION

Grasim Cement Mohanpura

A Unit of

Grasim Industries Ltd.

A Cement Plant of 21st Century

Cement Capacity – 5.6 million TPA

Captive Power Plant – 1*23 and 2 *25 MW TPP & 18 MW DG

Aditya Cement, it was established in March 2006, which is one of the latest
cement division of Grasim Industries Ltd. It is a record of producing 1 million tones
per annum cement unit. This record is completed in 22 months from the
beginning.

This plant is located at Mohanpura (Kotputli) in Jaipur district of Rajasthan. It

is 10 km far from kotputli N.H.-8 This plant has 697 manpower for the
manufacturing of cement.

14
 CEMENT MANUFACTURING PROCESS AT
GRASIM CEMENT

CEMENT MANUFACTURING PROCESS

The latest technology of manufacture of cement by dry process with
suspension pre heater and precalcination has been adopted by us.
We have selected the dry process for the manufacturing of cement
because the fuel consumption in dry process of cement manufacture
is less, compared to wet process, The coal consumption ratio of wet
and dry process is about 1.3 : 1. However, in the case of dry process
power consumption is higher. The present worldwide trend in
cement industry is to put up all plants with dry process mainly
because of the overall economy and lesser need of water resources.

RAW MATERIALS USED:

1) Limestone
2) Gypsum
3) Laterite
4) Brown Ochre
5) Red ochre
6) Coal
(a) Pet coke

(b) Imported coal

15
 STAGES OF MANUFACTURING PROCESS:
Mining and Crushing

Lime Stone (LS) is quarried with the help of computerized mine

planning from the captive Mines utilizing the latest air deck blasting
system and crushed in the Impactor (L&T Make, Type : APPM 1882
with Heating Equipment) to size of maximum 75 mm from 1000mm.

Transportation and Storage

Crushed LS is transported to a homogenizing stock pile where it is

stacked in as many layers as is possible by a Stacker (MDW Make,
Capacity: 1000 TPH). Cross Belt Analyzer (CBA) analyses the
chemical composition of entire population material that is being
transported thus reducing the sampling errors. A high degree of
homogenization is obtained as the Lime Stone is reclaimed from the
full section of the pile, cutting through all the layers by the
Reclaimer (Bridge type Scrapper Reclaimer, Capacity: 650 TPH).
Similarly, Coal is also stacked by a Stacker (Capacity: 750 TPH) and
reclaimed by a Reclaimer (Cantilever Scrapper Reclaimer, Capacity
150 TPH).

Size Reduction

Crushed Lime stone is mixed in desired proportion with additives as

per requirement of raw mix design, with the help of Weigh Feeders
(Tran weigh Make) and fed to vertical roller mill. Feed materials are
ground to a size of 20-22% on 90 Microns sieve in the mill to facilitate
easy burning conditions at clinkerisation process. The vertical Raw
Mill is supplied by Krupp Polysius and the Mill specification is RM
54/27, which has a rated capacity of 300 TPH. Krupp supplied
Separator has been replaced with LNV separator for better separating
efficiency & high productivity.

16
Storage and Blending

The Raw Meal is further homogenized the CF silo of 22 meter dia.,

49 meter height, with 20,000 ton storage capacity , which has a

blending effect of 10:1.

Pyro Processing

Kiln feed is extracted from the Blending Silo and fed to the Six stage
Preheater cyclones with in-line pre-calcinatory through bucket
elevator and air slide and is finally burnt in a Rotary Kiln (Krupp
Polysius Make, Capacity: 3,300 TPD, 65 meter long and 4.4 meter
diameter) at a temperature of 1450-1500o C. The product from the
kiln will be brownish black in color and with the maximum size of 40
mm clinker granules. Heat energy is supplied by firing pulverized
coal to the kiln and precalcinator. The fine return dust from the
preheater is collected in the Reverse Air Bag House (Thermax Make,
Air Volume: 7, 81,000 M3/hr, Gas Temperature: 220o C, Number of
Chambers: 22), and re-circulated to silo or kiln feed system.

Cooling

The hot clinker leaving the kiln is cooled in a static grate cooler
where 10 Nos. of cooler fans are discharging air to different grates for
cooling the clinker. Clinker crusher reduces the clinker lumps to
small size and is transported to a clinker stock pile (Capacity 60,000
tons, 80 meter diameter) by deep bucket conveyors. Clinker
discharged from the kiln at nearly 14000 C will be cooled to 120 –
1400C in the Cooler at the same time recuperating nearly 70 –73% of
heat possessed by clinker in to the kiln system reducing the specific
heat consumption considerably.

Clinker Grinding

Clinker and Gypsum are added in the desired proportions through

respective weigh feeders and transported by belt conveying system
into the POLYCOM (a high pressure grinding roll). From the Polycom,

17
the ground material is fed to High Efficiency Separator (SEPOL) then
to a single compartment Ball Mill (Krupp Polysius Make, Capacity 225
TPH, 4.6 meter diameter, 14.5 meter long and has a 115 ton media)
running on single shaft. Clinker is being ground to nearly 3000 Blaine
(specific surface) in the process of size reduction. From Cement Mill,
Cement is transported by bucket elevators into the Cement Silo.

Along with OPC, Blended cement is also being manufactured under

the brand name of BIRLA PLUS. Also super fine cement is being
made under the brand name 53-S, which is used, for making Railway
sleepers.

Automation

For optimising cement mill output rate & specific power

consumption, software supplied by TCS, Pune has been installed.

Cement Storage and Packing

The silo acts as a buffer capacity towards the fluctuations in cement
demand, making the mill operation consistent, resulting in reduced
energy consumption. It is a multi-compartment silo having six
compartments, which can be used for storing six different grades of
cement. Cement silo has been provided with sufficient ventilation
system for the purpose of dedusting as well as to take out the water
vapour present in the cement to reduce silo blockage due to lump
formation.

Packing
Cement is transported to Rotary Packers (Ennexco Make, 2 Nos.,
Capacity 180 TPH each, having 12 points each), by means of Air
Sl
ides where cement is filled into HDPE bags with the help of
compressed air and weighed to 50 kgs automatically (with an
average variance of 0.3 kgs) and carried out to truck, trailer or
wagon loaders by belt conveyors where cement bags fall directly
from the belt conveyors into the trucks, trailers or wagons
respectively. Supply of compressed air is required to be confirmed
continuously for the uninterrupted dispatch of cement.

The above in brief explains the process of cement manufacture right

from the mining to the dispatch stage at Aditya Cement.

18
NATIONAL & INTERNATIONAL AWARDS WON BY ADITYA
S Year of
N Name of Award Year Receipt Given by

M/s.TUV,
1. ISO 9002:1994 1997 July97
Germany

ISO 14001:1996 * M/s.DNV,

2. 1998 Jan 98
* First company in Rajasthan to be Netherlands
certified as ISO 14001:1996

Merit award for Excellence in Ministry of

Energy Conservation and 1998 Power,
3. Dec. 98
Management. Govt. of India

National
Council for

Best Electrical Energy Efficient 1998- cement &

4. Nov 2000
award 99
Building
Material, New
Delhi

Merit award for Excellence in Ministry of

Energy Conservation and 1999 - Power,
5.
Management. Govt. of India

M/s.QIMPRO
International Quality Rating standards
6. 1999 April 99
System Level III organization,
Mumbai

7. Best Productivity Award 1998- National

99 AUG
Productivity

19
 Council, New

Delhi
Merit award for Excellence in Ministry of
8. Energy Conservation and 2000 Power,
Jan 2001
Management.
Govt. of India
M/s.QIMPRO

International Quality Rating standards

9. 2000
System Level V April 2000
organization,

Mumbai
Confederation
Excellent Energy Efficient unit
10 2000 of Indian
. award Nov 2000
Industries
Recertified,
11 ISO 9002:1994 2000 M/s.DNV,
. Sep 2000
Netherlands
Recertified,
12 ISO 14001:1996 2000 M/s.DNV,
. Jan 2001
Netherlands
S. Year of
N. Name of Award Year Receipt Given by

Greentech
Indo-German Greentech 2000-
13 Nov’2001 Foundation,
. Environment Excellence Award 2001
New Delhi

Merit award for Excellence in Ministry of

14 Energy Conservation and 2001 Power,
. 2001
Management.
Govt. of India
15 OHSAS 18001:1999 2001 M/s.DNV,
. Dec 2001

20
 Netherlands
Greentech
Greentech Industrial Safety Gold 2001-
16 Foundation,
. Award 2002 Jun’2002
New Delhi

Chairman Award For

CWCM,
17 Manufacturing Excellence - Silver 2002 Nov’2003
. Mumbai
Medal

Greentech
Greentech Environment 2001- Foundation,
18 Feb’2003
. Excellence Award 2002
New Delhi

21 SA 8000 (Social Accountability) 2003 M/s. DNV, HongKong

22 India Manufacturing Excellence 2004 M/s. Frost & Sullivan,

Award Mumbai

23 Gold Peacock Env. Management 2005 Institute of Directors, New

Award Delhi

24 Greentech Environmental 2006 Greentech Foundation

Excellence Award

25 IMC Ramakrishna Bajaj National 2007 For performance excellence

Quality Special Award 2007 in the manufacturing
category

ORGANIZATION MANAGEMENT
Aditya Cement is a Unit of Grasim Industries limited a flagship company of the
Aditya Birla Group rank among India's largest private sector companies, with a
consolidated net turnover Rs. 141 billion (FY2007) & net profit of Rs.20billion
(FY2007)

21
 BOARD OF DIRECTORS

Mr. Kumar manglam Birla, Chairman

Mrs. Rajshree Birla

Mr. M.L. Apte

Mr. B.V. Bhargava

Mr. R.C. Bhargava

Mr. Cyril Shroff

Mr. S.G. Subhramanyam

Mr. S.B Mathur

Mr. Shailendra Jain

(Whole-time Director)
Mr. D D Rathi

(Whole-time Director & CFO)

BUSINESS HEADS Company Secretary

Mr. Shailendra Jain, Viscous Staple Fiber Mr. Sourabh Mishra, Cement

Mr. Ravi Kastiya, Sponge Iron

ORGANIZATION CHART OF GRASIM CEMENT –MOHANPURA

UNIT HEAD

22
 FH - Mines FH – Tech. FH - HR FH - Commercial

FH - CPP HOD - QC SH - Safety

HOD – Opert.

HOD – Accts
HOD – Mech.
HOD – TPP

HOD – HR HOD – Material

HOD – Elect.

HOD – Maint
HOD – ER HOD – IT
HOD – Inst.

HOD – DG
HOD – Admn/Security/CSR
HOD – Process

HOD – Proj.

HOD – TS WCM

For every concern a structure is necessary which

HOD – Pkg Plant
acts as a measure to lessen ambiguity in decision
and information flow and helps the formation of a sound foundation for
the future operations HOD – Clull of the organisation. A good
organization structure facilities efficient management
and operation of enterprises and to encourage growth. It helps the
organization to reach its predetermined goals.

In order to make the organizational structure more effective ADITYA

BIRLA GROUP has kept in consideration organizational structure that
can meet the demands of various factor namely environmental

23
technology, size and people. Hence like any contemporary Company, it
has adapted a flat structure following are the major structure of
GRASIM CEMENT.

1. Clear line of authority.

2. Adequate delegation of Authority.
3. Minimum managerial skill Level.
4. Unity of directors.
5. Application of ultimate responsibility.
6. Span of control.
7. Simplicity.
8. Flexibility.
9. Due consideration to top grow

Material management:-
Definition: A process encompassing acquisition, shipping,
receiving, evaluation, warehousing and distribution of goods, supplies and
equipmentEach step is vital.

Objective of materials management-

Primary Objective of materials management

1. Low prices- to be lowest - includes transportation: enhances profit

24
2. High inventory Turnover- value of inventories to be low in relation to sales.
Reduces storage costs
3. Low cost acquisition and possession- reduced handling and storage
costs.
4. Continuity of supply- alternative sources, , captive suppliers, flexible
suppliers

5. Low payroll costs- Low operating costs of material management personnel

6.Favorable supplier relations- supplier development Secondary objectives of

Materials management-

1. New materials and products- working closely with Design and research
departments for development of new materials and products

2. Economic make-buy- Coordinating and assisting other

departments in Make-Buy decisions

3. Standardization- coordinating with Design departments in

reducing no. of items.

4. Product improvement- Contribution towards product improvement

by giving

Appropriate inputs and assisting Design department.

5. Inter departmental Harmony- Success of materials management

department depends on the success of other departments. Hence
relations are to be harmonious

Materials management functions:-

1. Material planning and programming
2. Purchasing and outsourcing
3. Inventory control
4. Storekeeping and warehousing

25
5. Codification
6. Standardization and evaluation of all products
7. Transportation and material handling
8. Inspection and quality control
9. Cost reduction through value analysis
10. Disposal of surplus / obsolete material
11. Distribution

Scope of Material Management:-

The scope of material management includes decision on purchasing raw material,
management & control of work in progress items, stores and the shipping and
distribution of finished products. The Materials from the most critical inputs of any
business firm organization Proper handling and control of material inputs ensures the
smooth running of plant. Material management includes the procurement issuance and
control of materials in right quantity and at right time to facilities the production
function.

From this we can gather that material management includes two important
Functions:
• Purchasing
• Storing and control of materials
Hence, it is divided into sections:

• Purchase section
• Stores section
Through performing two extent these two section are interrelated and work
in coordination

Material Purchase selection

The purchase department, in any organization, is at the interface of internal and
external environment. This department is responsible for purchase of various
machines, raw materials and other items required by the organization. Purchase
function from integral part of material management and it plays very important

26
function as it is through this procedure that the right amount of material required is
delivered at the right place and at the right time so that the process of production or
manufacturing goes on unhampered.

There is a distinct difference between “ buying and purchasing”.The latter involving

knowledge of various vendors, their prices, comparison of the prices, actual buying,
after sale service and followup, besides payment terms etc.

The purchase department of an organization must know following things:

• Knowledge of the materials
• Source of material- Vendors
• Reasonable price
The most important thing is that indenter must trust the vendor.

PURCHASE PROCESS
i) Recognition of need: The purchase function is perform whenever something is
needed and which not available in stores department at the particular point of time.

ii) Requisition to purchase : This is an intimation to purchase department by the

indenter that the needed certain materials. He raises request by filling form as ‘
material purchase requisition’ (MPR). In this he furnishes several information like:-

• Name of the item & its code no.

• Amount required.
• Technical and other specifications.
• Estimated price.
• Required delivery date.
• Suggested vendors.
• Section/ Deptt. Code No.

iii) MRP scrutiny : Next step involves scrutinizing of the MRP to certified the
genuinely of the need, for this, first approval to given by immediate higher authority of
the indenter. Next, the MRP is send to the stores, to check wether the material is
available or not. If it is not available the MRP goes to the purchase deptt. For futher
action. Here it is scrutinize in three ways :-

27
• Approval scrutiny
• Budget scrutiny
• Technical scrutiny

iv) Sending or Enquiry/invitation to bid: Items can be classified in to two categories

keeping in view the purchasing function –
• Proprietary items : These are those items e.g. spares which have to be bought from
particular supplier or vendor.
• Nonproprietary items: These are those for which there is no restriction on vendor.
store where the store release the “ Stores Receipt Voucher” (SRV). From here it is
delivered to the vendor.

viii) Follow up done for every order: It may be regarding delay in

supply, changes in price, defective or damaged items supplied etc.For every indent, a
separate file is opened and crrespondance goes on. For every step, recommendations
of indenter, manager (F& A), materials manager & general manager are sought.

 Whether bank charges are claimed as per the purchase order.

 Other terms and conditions of the purchase order.

Where there is delay in supplying the material and the payment through bank is 90 %
to 95 %. It should be ensured that penality for delay, as provided in the purchase order,
is recovered before releasing the balance payment. Where payment required to be
made , a clarification is to be sought from materials deptt and proper approval taken
for waiving of penality or otherwise before retiring documents.

The payments under the contracts must be regulated as per the expressed terms and
conditions. Any payment not covered by the contractual terms and conditions should
not be released.

 Full payment / Balance payment after receipt of materials :

In case the purchase ored provides the 100 % payment after receiving of materials and
accepted payment is to be released after the MRR is receised from the stores
department. In case the purchase order despatch documents and the balance payment
after receipt of materials, the balance payment may also to be released after the MRR

28
is received and it is confirmed that the material has been accepted after inspection and
taken on charge.
Before released of the payment, the invoices should be scrutinized as the case of
payments released through bank. In addition it should also be verified whether all the
items invoiced have been received, inspected and accepted per the MRR.
Q.C.S. Quotations comparison statement

L.O.I. Letter of Indent

T.O.I. Telex of Indent

T.O.P. Terms of Payment

F.O.R. Free on Rail / Road

M.P.R. Material Purchase Requisition

E.X.W. Ex-Works(At the supplliers work)

F.A.S. Free Along Sideship
N.I.T. Notice Inviting Tender
S.O.R. Schedule Of Rates
B.O.Q. Bill Of Quantitiess
I.T.B. Invitation To Bid
F.O.B. Free On Board
C.I.F. Cost Insurance & Freight

5R’sRight Price, Right Quantity, Right Quality, Right Place, Right Source. claim
should be lodged with insurance company for the value of material plus incidentals.
As soon as the shortage per damage of the materials is noticed the material department
will lodge the provisional claim with the underwriters and pass on the relevant papers
to the finance & accounts department for lodging monetary claim.
 In respect of transit insurance claims bill section will pass an adjustment entry
debiting “claim recoverable account” and credit the “ Advance to vendors account”.
After the adjustments the bill section sent the copy of journal voucher along with all
necessary details such as P.O. No. , MRR No. quantity and value, name of the supplier
to the insurance section for following up the claim with the insurance company.

29
 Where the responsibility for short supply or damages in transit is of the suppliers,
the material department should take up the matter with the supplier for arranging
replacement claim should be lodged with insurance company for the value of material
plus incidentals. As soon as the shortage per damage of the materials is noticed the
material department will lodge the provisional claim with the underwriters and pass on
the relevant papers to the finance & accounts department for lodging monetary claim.
 In respect of transit insurance claims bill section will pass an adjustment entry
debiting “claim recoverable account” and credit the “ Advance to vendors account”.
After the adjustments the billn section sent the copy of journal voucher along with all
necessary details such as P.O. No. , MRR No. quantity and value, name of the supplier
to the insurance section for following up the claim with the insurance company.
 Where the responsibility for short supply or damages in transit is of the
suppliers, the material department should take up the matter with the supplier for
arranging replacement

Material purchase orders are placed by the commercial department time to time
depending on the material requirement. The material received valued at agreed price
plus local sales tax and freight for transportation of material up to plant site.

The finance department at head office ensure that payment for these raw materials are
released on due dates to avoid interest liability. After releasing the payments the inter
unit debit advice is sent to plant. On receipt of the payment advices the supplier’s
account is adjusted in the plant.

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Natural Gas

Kalol and Aonla plant consume as feed stock and fuel. As per the contract with
ONGC, gas is supplied to GRASIM at the price fixed by Govt. of India from time to
time.

The meters provided at the inlet point in the plants are the basis for monthly billing.
Meter reading is carried out jointly by ONGC / GAIL and IFFCO representatives. The
unit sends the telex to head office for making payment to ONGC / GAIL after due
certification of bill by the head of technical department about quantity of gas received.

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 Material Storage selection
Store of any organization is of vital importance. Its is the responsibility of stores to
receive the material required by the organization’s operations to keep it properly & to
issue it as when required. The stores are divided in to three subsections for greater
flexibility like receipt, custody, issues and spares.

Store have following warehouses:

 Main Store
 Cement godown
 Petrol Pump
 Cable yard
 Cemical godown
 Paint godown
 PDIL store

A. RECEIPT SECTION-
This section is responsible for receiving the materials and inspecting them.
The process involves following steps.

1) The document regarding the material may be sent to the stores, purchase, concerned
deptt. But ultimately they have to be send to stores.
The documents may be :

 Goods receipt / railway receipt / challan

 Form 31
 Excise duty
 Toll tax

2) The particulars of the document are noted in the carriers receipt register (CRR)
3) After the entry in the register, the document is given to an agent termed as handling
contractor. He will collect the material.
4) Consignment’s cases are intact. If not he will ask for open delivery. He then has to
deliver the goods to stores. In case of damage he has to give a certificate. Some

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consignment may without document i.e. door delivery and is some cases it may be
face to face delivery.
5) If any discrepancy is found during checking, the accounts section is informed for
necessary action and getting claim from insurance company. The date of receipt is
filled in CRR
6) The next operation is filling the stores receipt vouchers (SRV) here the quantity
mentioned in challan and purchase order are compared, SRV Has 7 copies, two for
accounts and one for each purchase, stores, indenter, masterfile & custody section.
7) Inpection is done by the indenter:

 Suppose all items are accepted then the material is handed to custody section
after putting an identification & giving a SRV control number.
 If some items are defective then the accepted items will be sent to custody and
for defective ones, information is sent to supplier, accounts, indenter & insurance
company and the particulars noted in rejection register.

If there is some breakage then either item may be replaced by company or claim
against insurance is obtained, when an item is replaced, its dispatch advice is made.
8) Direct charge SRV ( DCSRC) is prepared when indenter wants material directly
from receipt section.

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B) CUSTDY SELECTON -

This section is responsible for proper keeping of materials and issuing them when
required by different department and contractors. The material received here is first
checked as per SRV for every material there is a card. These cards are located in bins
according to code of material is received in custody the card information is updated.

When some one wants to issue certain material he has to fill the store issue voucher
(SIV). Once the item is issued again information is updated in the card. When a
particular part is returned then this received in stores, by internet stores return voucher
(ISRV). After issuing the material the number of issue and the quantity issued is noted
in SIV control registers.

C) SPARES–

Around 30000 spares are housed in stores, spares have been classified plant wise. The
first digit of the code of item is numbered according to given criterion-

 Gas
 Product handling
 Power
 Sp. Equipments
 General items

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 ACCOUNTING FOR STORES-
General Outline of stores Function
 The authority of receipt, store and issue of all material is centralized in the
materials department subject to exception in permitted in certain cases. In certain cases
a nominal stock of few consumable items can be permitted with uses departments such
as maintenance, laboratory, administration department for meeting emergencies. In
addition certain chemicals are permitted to be stored in production department due to
the operational needs.

 The authority of storage of packing materials like bags is vested with bagging
department. The bagging department receives the material, gets it inspected in
laboratory, issued the same for product bagging and maintain the stocks.

Maintenance of records for all quantitative transaction of packing material is the

responsibility of bagging department. Similarly the raw material are handled by
production department with all responsibilities in respect of quantity accounting.

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 Receipt/Issue/Returns transfer of
Material:-
Shall be kept on weight basis. The difference in quantity in weight basis, if any, shall
be adjusted to revenue / capital account, as then case may be, in consultation with
consuming department, in case the shortage is more than the consumption norms, the
same should be recovered from the contractor.

 For all issue notes relating to works contracts, one copy of the price issue notes
may be sent to the work accounts section to enable them to debit the contractor’s
account.
A monthly abstract also be prepared and passed on to works accounts group for check.

 Details for receipts and issue of materials received / issued on loan shall be
maintained by the store account section loan transactions shall be approve by the
competent authority. It is the responsibility of material department to take action to
square up the transactions within the reasonable time.

 Inter unit transfer of material shall be accounted at cost basis freight and other
incidental charges shall be borne by the transferee unit.

 Materials issued to contractors shall be priced at the monthly weighted average rate
and debited to materials issued to contractors account. The accounting for the
difference between issue price and recovery price provided in the contract shall be
cleared by the accounts section dealing with the works. Recovery should be predefined
basis and must be uniform.

 For material returned to stores, return note shall be priced by the stores accounting
section at the same rate which it was issued and the . value shall be debited to the
relevant code of stores and spares parts inventory accounts by credit to the cost center /
job number where the material is received back. The return note shall be priced on the

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basis of the original issue requisition against which the material was drawn if such
reference is available, otherwise the same should valued at the prevailing average
monthly rate applicable to that material.
 No material shall be transferred to one card to another card without giving proper
information to the stores account section. Such transfers shall be made by means of a
transfer voucher on receipt of such transfer voucher and pass adjustment entries by
debiting and crediting respective accounts.

 Under the mechanized system of store accounting, all documents, such as MRR’s
issue notes return notes and transfer vouchers shall be sent to the EDP section after
exercising the prescribed checks. The EDP section shall prepare the all accounting
abstracts with the summary figures with monthly journal entry. In addition, it shall
prepare the priced store ledger. Ledger abstract for all items trasacted during the
month giving the opening stock, receipts, issues and past closing balance shall also be
prepared. A copy of this statement shall be forwarded to store section for verification
of the bin card balances. Discrepancy if any shall be reconciled by the store section
with the stores accounts section.
 The price store ladger balance for each category store shall reconciled value wise
with the control account balance in the ledger wherever possible. The accounts section
shall draw out reconciliation on monthly basis. After reconciliation a monthly material
consumption statement, cost center wise, is prepared and circulated to concerned
department by the 10th of following month for verification of its correctness and for
monitoring the budgeted expenditure, if any discrepancy is reported, the same is
adjusted in the ensuring month.

Internal Check:-
 One set of document for receipts, issues and return of materials shall be sent to
the accounting section of finance department. Based on these documents, priced store
ledger shall be prepared for each item for stores. The material code number between
stores and accounts shall be identical. The priced store ledger shall provide value of
each receipt, Issue and return transaction along with quantity ledger. The quantity
balance appearing in priced store ledger shall serve as counter check for accuracy of

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bin card balance in store which is essential for proper functioning of inventory control
system.
 The priced store ledger shall not be maintained for large number of low value
items such as stationery, medicines, canteen stores etc. in this case the expenditure
shall be charged to the appropriate expense account at time purchase . Quantitative
record shall be kept by the concerned department and shall be produced as and when
required for audit purpose.

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 INVENTORY CONTROL:-
A good inventory management policy should ensure smooth and uninterrupted
supply without making unnecessary investment of funds in inventory. This requires
that inventory management policy must balance the requirements of the following two
opposing and conflicting ends:

i) To maintain a large quantity for smooth operation and efficient customers’ services.
ii) To maintain only a minimum possible inventory because holding costs and
opportunity cost of funds invested in inventory.

OBJECTIVE OF INVENTORY CONTROL:-

Scientific control of inventories should serve the following purposes:

1) To provide the continuous flow of required materials, parts and components for
efficient uninterrupted flow of production.
2) To minimize investment in inventories keeping in view operating requirements.

3) To provide for efficient store of materials so that inventories are protected from
losses by fire and threat and handling time and costs are kept at minimum.

4) To keep surplus and absolute items to minimum.

5) To protect the inventory against deterioration, obsolescence and Unauthorized use.
6) To ensure that finished goods are available for delivery to customers just to fulfill
the orders

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 REFERENCES

BOOKS
PURCHASE ORDER REGISTER:-

No Date P.O. Name Bill Date of Amount M.R.R.

of amount Dt. – Paid No Dr. –
party Payment Remarks
I.D.B.

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