PROJECT REPORT

ON

THE STUDY OF THE INVENTORY

MANAGEMENT

AND

ITS IT IMPLEMENTATION

COMPLETED AT

NATIONAL THERMAL POWER CORPORATION LIMITED

KAHALGAON-BHAGALPUR(BIHAR)

SUBMITTEDBY

AVNISH KUMAR JHAROLL NO. C-O8-15

UNDER THE JOINT SUPERVISION OF

MR. V.N.RAI MR. K.N.GHOSH FACULTY, (DEAN) DGM, F &A GSBA, GREATER NOIDA 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 coal-

mining, 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)

Sl.

No

.

Particulars

Stand Alone Consolidated

Quarter

ended

31.03.200

9

(Unaudite

d)

Quarter

ended

31.03.200

8

(Unaudite

d)

Year

ended

31.3.200

9

(Audited

)

Year

ended

31.3.200

8

(Audited)

Year

ended

31.3.200

9

(Audited

)

Year

ended

31.3.200

8

(Audited

)

1 2 3 4 5 6 7 8

1 (a) Net Sales

(Net of

Electricity

Duty)

1,144,578 1,074,359 4,192,373 3,705,012 4,424,527 3,863,503

(b) Other

Operating

Income

76,864 44,070 220,235 170,081 226,294 173,693

2 Expenditure

(a) Fuel Cost 801,583 679,996 2,711,069 2,202,024 2,734,645 2,221,876

(b) Employees

Cost

62,025 39,659 246,313 189,598 253,251 195,328

(c) Depreciatio

n

72,639 60,709 236,448 213,850 249,489 220,599

(d) Other

Expenditure

58,984 72,491 195,209 190,998 382,259 304,991

Total

(a+b+c+d)

995,231 852,855 3,389,039 2,796,470 3,619,644 2,942,794

3 Profit from

Operations

before Other

Income,

Interest &

226,211 265,574 1,023,569 1,078,623 1,031,177 1,094,402

Exceptional

Items (1-2)

4 Other Income 26,709 30,321 114,668 126,675 113,893 126,508

5 Profit before

Interest &

Exceptional

Items (3+4)

252,920 295,895 1,138,237 1,205,298 1,145,070 1,220,910

6 Interest &

Finance

charges

56,707 80,735 202,290 179,804 214,346 185,811

7 Profit after

Interest but

before

Exceptional

Items (5-6)

196,213 215,160 935,947 1,025,494 930,724 1,035,099

8 Exceptional

items

- - - - - -

9 Profit(+)/

Loss(-) from

Ordinary

Activities

before Tax

(7+8)

196,213 215,160 935,947 1,025,494 930,724 1,035,09

9

10 Tax Expenses: -

(a) Current Tax (15,623) 80,960 113,834 283,166 119,430 287,218

(b) Deferred

Tax

1,043 11,960 (44,880) 14,110 (45,203) 14,787

(c) Fringe

Benefit Tax

(FBT)

585 247 2,098 1,693 2,186 1,806

Total (a+b+c) (13,995) 93,167 71,052 298,969 76,413 303,811

Less: Deferred

Tax

Recoverable /

Payable

1,043 11,960 (44,880) 14,110 (45,215) 14,778

FBT transferred

to Expenditure

84 (5) 115 847 150 926

during

Construction /

Development

of coal mines

Tax Expenses

(Net)

(15,122) 81,212 115,817 284,012 121,478 288,107

11 Net Profit(+)/

Loss(-) from

ordinary

activity after

tax (9-10)

211,335 133,948 820,130 741,482 809,246 746,992

12 Extraordinary

Items (Net of

tax expenses)

- - - - - -

13 Net Profit(+)/

Loss(-) for

the year

before

Minority

Interest (11-

12)

211,335 133,948 820,130 741,482 809,246 746,992

14 Minority

Interest in

Consolidated

Profit

- - - - (10) -

15 Net Profit (+)/

Loss (-) for

the year after

Minority

Interest (13-

14)

211,335 133,948 820,130 741,482 809,256 746,992

16 Paid-up Equity

Share Capital

(Face value of

share Rs. 10/-

each)

824,546 824,546 824,546 824,546 824,546 824,546

17 Paid up Debt

Capital

- - 3,456,775 2,719,060 - -

18 Reserves

excluding

revaluation

reserve as per

Balance Sheet

- - 4,912,460 4,439,315 4,916,185 4,461,728

19 Debenture

Redemption

Reserve

- - 168,894 136,021 - -

20 Earning per

share - (EPS in

Rs.)

(a) Basic and

diluted EPS

before

Extra-

ordinary

items (not

annualised)

2.57 1.62 9.95 8.99 9.81 9.06

(b) Basic and

diluted EPS

after Extra-

ordinary

items (not

annualised)

2.57 1.62 9.95 8.99 9.81 9.06

21 Debt Equity

Ratio

- - 0.60 0.52 - -

22 Debt Service

Coverage Ratio

(DSCR)

- - 3.67 4.16 - -

23 Interest Service

Coverage Ratio

(ISCR)

- - 10.19 13.02 - -

24 Public

Shareholding

-

(a) Number of

shares

865830000 865830000 86583000

0

865830000 86583000

0

86583000

0

(b) % age of

share

10.50 10.50 10.50 10.50 10.50 10.50

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

737963440

0

737963440

0

73796344

00

7379634,4

00

73796344

00

73796344

00

-Percentage

of share (as

% of the

total

shareholdin

g of

promoter

and

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

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 31 st March 2009

(Rs./Lakhs)

Sl

.

Particula

rs

Stand Alone Consolidated

Quarter

ended

31.03.200

9

(Unaudite

d)

Quarter

ended

31.03.200

8

(Unaudite

d)

Year

ended

31.03.200

9

(Audited)

Year

ended

31.03.200

8

(Audited)

Year

ended

31.03.200

9

(Audited)

Year

ended

31.03.200

8

(Audited)

1 2 3 4 5 6 7 8

1 Segment

Revenue

(Net

Sales)

-

Generation

1,140,489 1,071,116 4,179,119 3,694,620 4,227,388 3,737,836

- Others 4,089 3,243 13,254 10,392 197,139 125,667

- Total 1,144,578 1,074,359 4,192,373 3,705,012 4,424,527 3,863,503

2 Segment

Results

(Profit

before

Tax and

Interest)

-

Generation

159,674 219,998 905,305 908,076 902,317 917,535

- Others 1,522 780 4,184 2,886 12,811 6,167

- Total 161,196 220,778 909,489 910,962 915,128 923,702

Less

(i)

Unallocate

d Interest

and

Finance

Charges

31,979 61,480 208,630 107,186 220,701 113,235

(ii) Other

Unallocabl

e

expenditur

e net of

unallocable

income

(66,996) (55,862) (235,088) (221,718) (236,297) (224,632)

Total

Profit

before

Tax

196,213 215,160 935,947 1,025,494 930,724 1,035,099

3 Capital

Employed

(Segment

Assets -

Segment

Liabilities

)

-

Generation

3,383,665 2,599,614 3,383,665 2,599,614 3,596,247 2,808,985

- Others 3,226 3,761 3,226 3,761 18,185 13,120

- Un-

allocated

2,350,115 2,660,486 2,350,115 2,660,486 2,142,918 2,476,597

- Total 5,737,006 5,263,861 5,737,006 5,263,861 5,757,350 5,298,702

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 2007-08 to 1000

Kwh by 2012

Present energy deficit is 10.8% and peak deficit is at 14.4%.

Way forward

Key Challenges1. 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

8. Financial viability of Customers

9. Limited Financial Resources

10. Technological Upgradation

11. 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 Groupi) 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 Section2. Purchase3. Indentor4. Custody or warehousing5. 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

F UNCTION

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) Appropriate dunnage for various kinds of materials (equipment and stores) and

optimum air space at the floor of the stack.

ii) Optimum stack sizes and stocks construction to minimise deterioration /

damage through environmental hazards.

iii) 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 re-

processed 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