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PROCUREMENT
PROCESS GUIDE
(PPG) V 5.0
Version 5.0
Standards and Guidelines on Procurement Processes.
PROCUREMENTPROCESSGUIDE(PPG)V5.0
2015
5th Edition
Control Number: V 5.0
Revision Date: 25/08/2015
Prepared By: Mr. Vishal Asthana, Deputy General Manager, Process Systems and Tools
Approved By: Mr. Ranjan Sachdeva, Chief Central Procurement Officer.
Published for ACC Limited and Ambuja Cements Limited.
For more information, contact your local procurement representative.
2015 India Procurement Organization
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Page 2
2015
Forward
26th August 2015
Dear Colleagues,
We have achieved a major milestone in the journey of Procurement Transformation at Indio by
implementing the new Category Management Framework for India OpCo's. With this initiative, we
also aimed at making a leaner and a more efficient One India Procurement Organization (IPO}, which
resulted in formation of 5 Procurement Clusters which serves both ACC & ACL plants operational
procurement requirements.
With the change in the organization structure, the underlying processes will undergo a change, more
particularly, with respect to transactions flow and authorization profiles. Hence as per new structure,
the new Delegation of Authority was announced and implemented from 23rd June, 2015.
It is imperative that the changed processes are well documented and understood by all concerned for
its effective implementation across the organization.
We are extremely happy to release of the version V 5.0 of the Procurement Process Guide (PPG V
5.0), which covers the changes occurring due to organizational restructuring. It briefly details the new
process flows, Delegation of Authority at /PO etc. and clearly demarcates the role & responsibilities of
category managers and operational procurement teams in the changed scenario.
The compliance to the Procurement Process Guide is a must to ensure smooth transition into a new
culture with transparent processes to be followed across the organization, in order to bring in value
on the table.
We congratulate the entire India Procurement Team and wish them all the best in their continuing
journey to complete the Procurement Transformation.
Bernard Terver
Ajay Kapur
Harish Badami
MD,ACC
~- F>a9e
PROCUREMENTPROCESSGUIDE(PPG)V5.0
2015
It is imperative to continuously improve our procurement processes and make it standard across
ACC & ACL plants. This will not only bring in process control, but also pave way to
transparency and efficient way of carrying out procurement activities.
In 2015, once again we have further sharpened and improved our processes along with changes
in Organization structure in the following areas
We are therefore releasing Procurement Process Guide V 5.0 for our internal reference. This
will help all procurement as well as non-procurement persons to understand current practices
and processes. It will also guide them in aligning within the organization.
We have come a long way from the first procurement process guide with numerous
improvements and I am happy to inform that today we are at a very matured level of
compliance with the guide and process standardization across locations.
I thank the procurement team and especially Business Process team to make this happen.
Make best use of this guide.
Wish you all the best.
Ranjan Sachdeva
August 21st, 2015
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Table of Contents
2015
PROCUREMENTPROCESSGUIDE(PPG)V5.0
2015
SupplierCollaboration....................................................................................................................84
AppendixI....85
AppendixII......86
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Chapter 2 and chapter 3 deal with the Procurement Policies in alignment with the global
policy directives (available at Holcim Hub).
Chapter 4 provides an overview of how procurement is organized in line with the new
global category structure
Chapter 5 deals with selecting the right "Purchasing Channels, a term used by
procurement to describe different ways in which purchases can be made and recorded
in SAP system. The section of this guide dealing with purchasing channels is designed
to give user an overview of the differences between them, and help user understand the
logic behind purchasing rules and guidelines.
Chapter 6, 7, & 9 describes the processes to request and make purchases and make
changes to material and vendor master data. These processes are carefully developed
to make sure that there is clear guideline for everyone. In these sections user can find
out exactly how to get started with purchase or change master data, and find out what
part of the process is user responsibility, what is done by procurement and how all the
steps relate to one another.
Chapter 8 focuses on steps, from start to finish, involved in most purchases. The focus
is on the detail of what is expected of everybody involved in the process, and on how
the work of each department affects the whole process and its outcome. It includes the
steps that are undertaken by procurement to make it clear what is a need from user,
why it is required, and what procurement will deliver.
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2. Procurement Policy
At ACC Limited (ACC) & Ambuja Cements Limited (ACL), Procurement is defined
as third-party sourcing activities at strategic and operational levels to ensure
minimum Total Cost of Ownership (TCO) through the systematic process of
deciding what, when, and how much to purchase, the acts of sourcing, purchasing,
and the process of ensuring that what is required is received on time, and in the
quantity & quality specified.
ACC & ACL integrates sustainable development into the procurement strategy, the
day-to-day operations and the relationships with Suppliers. Sustainable procurement
approach and expectations are communicated to all Suppliers through a Supplier
Code of Conduct and we favor working with Suppliers that are committed to
sustainable development.
2.1 Scope
The scope of the Procurement Policy covers all third parties spend of ACC Limited
(ACC) & Ambuja Cements Limited (ACL) across all business segments. The
procurement function at all levels of the ACC & ACL shall operate within the
framework of this Procurement Policy. All payment terms special conditions (if any),
delivery agreement etc. are an integral part of the procurement activity.
PROCUREMENTPROCESSGUIDE(PPG)V5.0
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i. Courtesies
ii. Conflict of Interest
iii. Anti-Bribery and Corruption Directive (ABCD)
iv. Fidelity and Secrecy Agreement
v. Occupational Health and Safety (OH&S)
vi. Corporate Social Responsibility (CSR) Directive.
b. Fair Competition: All procurement activities in the Group have to
comply with the Fair Competition Directive (refer Holcim "FCD).
c. Sustainability in the Supply Chain: Holcim seeks to engage with
suppliers who commit to their social responsibility; environment
and Occupational Health, Safety, Human Rights, and AntiBribery & Corruption (ABC) (refer Holcim Supplier Code of
Conduct SCC).
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Under
Sustainable
Procurement
initiatives,
Holcim is committed to
meeting
high
social,
environmental, and OH&S
standards; and we expect
our Suppliers to do likewise.
Suppliers must comply with
local and national laws and
regulations. Furthermore, we
expect Suppliers to adhere
to the following standards:
1.
2.
3.
4.
5.
6.
7.
8.
9.
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PROCUREMENTPROCESSGUIDE(PPG)V5.0
4. Procurement Organization.
As part of the Holcim Procurement
Transformation, inorder to build world-class
procurement skills and introduce best
practice category sourcing capabilities,
Category Management Framework is
introduced.
Based on nature of goods and services,
spend, suply base etc; all the 592 product
classes difined under Product Classification
System (PCS) V 7.1, have been
consolidated into 27 categories covering
ALL Holcim 3rd party spend.
These 27 categories have been grouped
into clusters of 1 - 3 categories under 13
global category clusters.
The 27 categories and 13 category clusters
under which they fall are depicted in the
figur on the right hand side
All Third
Party
Spend
27
13
Category Clusters
Categories
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Team
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Procurement Managers coordinate with the OpCo Category Manager and process
the tactical requests coming from Operations and, when needed, with the Regional
Operations Lead, to ensure their requests are in compliance with the Categorys
guidelines and policies, and that specifications are understood and followed.
Apart from this natural interaction between all parties involved in their everyday
tasks, additional means of communication must be noted such as PITT, the category
and project charters (addressed to key impacted stakeholders, procurement and
non-procurement partners), Info Flash releases, etc.
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PROCUREMENTPROCESSGUIDE(PPG)V5.0
Operational Procurement
Category Management
Split of roles and responsibility between the two functional elements of this
framework are as below.
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Each category has a formal category charter that defines the strategy, establishes
measurement criteria and assigns roles and responsibilities in the category structure.
Members of Global Procurement Council sign Category Charters.
The global implementation of the category strategy is governed by aligned individual
project charters. Project charters mentions the OpCos included within it, explains
business requirements, establishes measurement criteria, define RAPIDs, and set
the planning for execution. Key stakeholders within OpCos sign Project Charters,
when relevant for their OpCo. Once signed, the document is live.
Depending on the category strategy, contracts are negotiated at global, regional or
local level; however regardless of a Global or Regional Category Manager taking the
lead in any negotiation, the signature and implementation of the contract with the
supplier is done by the OpCo locally.
It is therefore the responsibility of the OpCo to prepare, manage and properly archive
each contract adhering to the category guidelines and the local legal regulations and
framework in place.
The key link between the operational and category management teams is
Procurement Manager under the operational role. This role acts as the bridge
between operations and category managers and must ensure that category
managers are involved correctly.
Regardless of thresholds, whenever there are local / regional / global contracts or
preferred suppliers, the OpCo must adhere to them and should not act
autonomously.
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PROCUREMENTPROCESSGUIDE(PPG)V5.0
Support NCM in
category strategy
formulation
(Industry analysis,
Vendor
prequalification,
special initiatives,
etc.)
Support NCM in
sourcing
and
negotiations
HO
Cluster
Operational Procurement
Plant
National
Category Category
Manager (NCM)
Support Group
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Different types of purchases require different types of recording and control. Each
channel has a different balance between ease of use, control, information storage,
and other factors.
There are several key elements in determining how a given good or service should
be procured, but there are two major factors: whether the purchase requires a
Purchase Order (PO) and whether the good or service requires a material or service
ID.
Before purchase, user should have a good idea of whether or not a PO is required
and what should be the procurement channel. There are four channels:
1.
2.
3.
4.
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In SAP Initiated requisitions there are multiple processes, while other channels have
only one process. A process is a series of steps describing how to buy a type of
good or service.
Table-1 describes if user need a PO (illustrative list not exhaustive).
Examples
Is PO
Required?
Is
Material
or
Service
Code
Required?
Yes
Yes
Refractory,
Grinding
Yes
Media, Motor etc.
Janitorial, Stationary etc. Yes
Consulting,
etc.
Installation
Yes
EPC,
Yes
Employee
Payments,
FI Invoices (As per
Legal fees, Association No
direct invoicing policy)
fees etc.
Yes
No
Partially, to the extent
of available codified
service master.
Yes
No
Partially, to the extent
of available codified
service master.
No
Here is some basic information about each channel, followed by a summary for
choosing the correct one. Please note that specific process associated with each
channel is discussed in detail in Chapter 6.
PROCUREMENTPROCESSGUIDE(PPG)V5.0
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directly entered into SAP and parked by finance. Once the invoice has received all
necessary approvals in accordance with the signing authority policy, the vendor is
paid according to the vendor master payment term. This process is controlled and
administered by finance and governed by the direct invoicing policy issued by CFO
office.
SAP FI invoice do not capture purchasing or payment data at the line item level.
Information is captured only at the invoice document level for vendor, general ledger
account, cost center, plant, profit center, etc. and should be used judiciously.
Examples:
Government Levies & license fees.
Employee Expanses.
Various Tax payments.
Stipend and Scholarships
Demurrages.
1
2
3
4
5
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7
8
2015
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Detailed Plant Risk Matrix along with stocking strategies are key elements of
maintenance planning and demand management. This helps procurement in
obtaining optimal demand and devising sourcing strategy.
A procurement cycle may generally be divided into three segments, namely Strategic
Category Management involving execution of strategic sourcing options in line with
Holcim Category Framework, Operational Procurement Processes involving
execution of category strategy, and Tactical Process calling for execution of add-on
process to obtain control and add value for overall execution of procurement cycle.
Before we get into the detailed process flow charts of procurement processes, we
need to properly classify products / services based upon the consumption and
stocking requirements. The below mentioned process tree will help the user in
selecting the appropriate process out of various possibilities. Further we have also
mapped the unique procurement processes with 13 new category clusters for clarity.
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Based upon above classification, each of the 9 procurement processes has been
mapped in the following sections.
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Procurement of bulk material like Gypsum, Slag, Coal, Bauxite, Fly ash, Iron ore,
Bags etc. should be processed through this process flow diagram. SAP Contracts /
SA are being prepared at HO / Cluster for the bulk materials. Purchase order /
Delivery Order (DO) with reference to the central / regional contract or SA and prices
and the purchasing conditions are followed in the contract / SA. Amendment of
contract / SA is subject to the change / renegotiation with the vendor. Quality of
material will be verified by the user, and in case of deviations in quality from the
ranges specified in contract, the same should be communicated through e-mail to
the Concern category Manager / Operational Procurement Team for taking the
necessary corrective action with the supplier.
Further to this, for ACC, ACL & BCCI the following process is to be adopted.
1. No Purchase Requisition will be required for POs of bulk materials and bags
(except AFR) purchased against contract.
2. Requirement of such bulk materials and packing bags are to be routed as
follows.
a. Requirement generation by Production Manager/Marketing Head.
b. Requirement approval by Director Plant / Plant Head / Unit Head /
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Functional Head.
c. Requirement submission to operational procurement team at HO /
Cluster and Plant Purchase Executive / concerned operational team at
Cluster / HO, for monthly PO / DO creation and issuance of dispatch
schedule to vendors.
Any change in requirement during a month shall also be routed in the same
way.
3. Requirement shall be generated by Production Manager on or before the 25th
of every month for the next month. The dispatch schedule to vendors shall be
issued by Procurement on or before 27th of every month.
4. The Purchase Order release strategy for bulk materials & packing sacks where
contract exists (created with reference to local / regional / central contracts)
shall be for one level i.e. Deputy Head Operational Procurement (Vertical) /
Deputy Cluster Head (Vertical).
5. Purchase Orders are to be created as per requirement and the open order
quantities should be reviewed and short closed appropriately.
6. This process shall be followed for the bulk materials / bags under 01, 02, & 07
material groups and handled at HO / Cluster with a long term contract.
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Maintenance activity should be planned in at least 13 weeks in advance and lastminute exigencies should be avoided to give procurement enough time for
procurement.
Emergency order should be true emergencies and not rush orders due to lack of
planning or insufficient communication. In order to leverage volume pooling opting
for better negotiations, the consolidation of the requirement is done from all the
plants wherever possible. Usually a contract is released from the HO as per category
directive and operational procurement team makes the POs with reference to PR
and contract. Such POs, if created with reference to a valid HO / Cluster contract will
trigger one level of release strategy. All the 03 & 04 material group items are usually
covered under this process.
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This process is applicable for the Stock items and Non-recurrent and Capex in
nature. Usually there are no sourcing contracts for these materials and procurement
activities are initiated whenever the requirement comes. Hence planning at user end
is crucial for delivering such goods on time.
This category of goods usually includes critical parts / insurance spares such as girth
gears, mill liners, raw mill body liners, big size bearings, special parts, wire ropes etc.
and is purchased in 1 - 3 years time frame based upon the need under maintenance
Capex and charged directly to the respective cost center.
In case such material falls under the listed pooling items, same is to be reviewed by
Category Manager at HO.
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The material which does not require any stock keeping activity falls under this
category, like office items, tools, etc.
If such items falls under direct invoicing policy issued by finance, than there is no
need to route it through procurement process, and the invoice can be directly given
to finance for invoice verification.
Contract may be issued for some of the recurrent goods (wherever possible)
regularly required.
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Some of Marketing and Administrative services, various AMCs issued at plants and
offices, etc. fall under this category. Clarity on Scope of Work (SOW) at the user end
is one of the critical criterions for quick and optimum delivery of the services.
It may be noted that for all critical maintenance & engineering services, vendor
safety pre-qualification should be done through standard OH&S process (under CSM
Directive) by OH&S Team.
In case of multiple PAN India Service Contracts are released and business is
awarded to L2 or L3 vendor rather than L1 , then proper justification along with
Category Managers approval should be maintained.
Refer section 6.7 for more detailed guidelines on marketing services covered under
this process.
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This process is applicable for those items under 05 categories that are to be directly
charged to the cost center. Admin materials like office stationeries, tools, food &
beverage etc. falls under this category. Procurement will follow RFQ cycle based on
the value of the item.
If such items falls under direct invoicing policy issued by finance, than there is no
need to route it through procurement process, and the invoice can be directly given
to finance for invoice verification.
At HO, regional offices, and sales offices, where there is no facility of stores,
requester makes the goods receipt in the system and keep a record of consumption.
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2015
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S
No.
Marketing
Procurement
Category
Tour
Description
Retailer/
Dealer
Trips
including
Logistics
trips.
(Domestic/
International tours)
2015
PR
to
delivery
lead
time.
Operating Process
Approval of
Requirement
By
60
DS/ MH/CMO
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S
No.
Marketing
Procurement
Category
Description
PR
to
delivery
lead
time.
Events
Annual
Dealer
Conferences,
Retailer
meets,
Builder
meets,
Product launches
Gold/ Silver
Coins/ Vouchers
30
White Goods
45
Lakshaya/
Aasman
Customer Loyalty
Programs.
White
Goods & Gift Cards
along
with
insurance
and
delivery.
60
90
2015
Approval of
Requirement
By
Operating Process
1. User should provide approved event scope (based
on pre quote meet along with Procurement &
Marketing) sheet minimum 3 months before the event
date. This will help in obtaining the most competitive
rates.
2. Based on the approved scope, procurement will
finalize rate and vendor (based on 2 or more
quotation obtained from approved vendor list), so as
to optimize the total spend and take benefit of
advanced booking (any exception will require
approval
by
CCO/CMO).
3. In case of any deviation in scope or special cases,
approval of DS/MH needs to be obtained by end
user, since this may have cost implications for the
company.
4. Any cost incurred during the event as out of pocket
expense should be pre-conceived within the scope
(max 5% of the total order value) and provision
should be made in PR / PO accordingly. MH/DS
approval will be required on actual bills submitted
after
the
event.
5. In order to ensure fair assessment of vendor
service level during the event and compliance to the
scope, one person from procurement may
accompany the event as observer, which is subject to
approval from Head Operational Procurement
(Services).
6. The event coordinator (nominated prior to the
event) will be solely responsible and empowered to
take decisions pertaining to the minor changes to the
scope and out of pocket expenditure. It will be his
responsibility to take necessary approvals and keep
these communications documented for future
references.
1. User should provide consolidated released PR
along with required denominations (coins / bars /
jewelry
etc.)
and
delivery
locations.
2. Real time tendering with time slot of 1 hour to be
given to bidders of Gold Price. Bullion metal pricing
can be based on real time/ pre booking/ MCX /KITCO
related index etc. Labor rate/ making charges etc.
can be derived based on bidding process once or
twice
a
year.
3. Procurement's responsibility will end after PO
release. Reconciliation / delivery scheduling etc. all
other activities after the PO is released will be the
responsibility of user.
1. User should provide the approved PR (considering
the MRP from respective companies website) for
non-obsolete products along with complete
specifications
and
model
numbers
etc.
2. For OEM products best negotiated rates from
Channel partners would suffice. Tendering not
required in such cases.
1. Procurement will select the portal vendor for
customer loyalty programs for uploading of selected
items.
2. SMX team along with approved portal vendor will
take care of the product selection and uploading of
items.
3. Focus will be on providing wide range of choices
and reach to all postal codes. Lowest cost may not be
criteria for selection of uploading catalogues.
Tendering not required.
DS/ MH/CMO
CMO
DS/ MH/CMO
DS/ MH/CMO
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PR
to
delivery
lead
time.
Marketing
Procurement
Category
Description
POP/
Gifts
Outdoor media
Branding
Festival Gifts
60
10
Dairy/
Calendar
Yearly
Dairy/
Calendar
for
dealers
and
internal employees
90
11
Other
Contracts (RO/
RMO)
S
No.
12
13
CSS
Local
area
activities
(Involvement of
Local TC)
Emergency
Purchase
Flex/
Brand
Signage
(Hoardings)/
In
shop branding
Standees/
Shop
Boards/
Power
Shop
Hotel,
Taxi,
Security & other
Admin contracts
Local
Advertisement like
newspaper,
exhibition,
sponsorship,
festive
events,
Wall/ Shop/ Impact
wall/
trolley
painting, etc.
Last
minute
requirements
having
delivery
days less than PR
to delivery lead
time.
60
30
30
30
2015
Approval of
Requirement
By
Operating Process
1. Product mela to be conducted region wise/
centrally
in
ACC/
ACL.
2. Approved PR based on the approved items
required
from
user
side
3. Final negotiated product catalogue will be
published region wise.
Approved PR for each activity on the basis of which
RFQ can be floated by procurement
DS/ MH
DS/ MH
DS/ MH
DS/ MH
DS/ MH/CMO
30
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2015
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preparing service entry sheet in SAP. After receiving the service bill verification is
done and payments are released from site. Finally the contractor Performance
evaluation is done by user and procurement.
Study the Technical Offer Evaluation Report for completeness, i.e. changes
with respect to tender documents, scope supply / services, technical loading,
performance guarantees and remedies for subnormal performance, liquidated
damages, ranking of bidder with criteria etc. Refer back to user departments in
case of correction and clarification.
Ensure proper and valid price offer in line with the final scope frozen by the
technical team along with its price break up and other relevant technical
details.
Check the possibility of volume pooling with other similar requirements.
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Wherever, one to one comparison with the earlier purchases is not possible,
estimate the Price using historical data of earlier orders.
Adjust the estimated prices for escalation using prevailing commodity price
indices, price escalation formulae etc.
Factor in the general market information about order book status etc. of the
vendor.
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Also expect that you may be faced with the unexpected, this could be a question,
response or silence, or general behavior and attitude of the other party.
In most negotiations, price should not be the only issue on the table. Think about
what we can exchange with the supplier better payment terms, longer contract
duration, wider scope, excess to in-house expert, etc. With this we shall be able to
justify a higher-than-average price.
Try to invoke a two way communication and a win-win situation for both the parties
without losing your position. Arrive at target cost with the help of the historical data,
price estimation, and best quotes, wherever possible.
Do not make your approach personal and take breaks when necessary.
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For example, in the e-Reverse Auction of coal, if any Third Party is supplying
coal having low GCV, a price loading will be added at the time of final
approval.
4. Auction Types
ACC / ACL can conduct only Rank Base Auction where only rank of the
particular participating Third Party is visible instead of price.
5. Auction Intimation.
Complete schedule of the e-Reverse Auction will be intimated through a
system generated emails to the participating Third Parties. Flash messages
between the event and at the end of the events can be generated whenever
required.
6. Auction Timings.
The minimum duration of the auction will be 20 minutes with the provision of
auto extension as per the auction rules to be decided by ACC / ACL while
creating auction. The Bid Extension rules as decided and set before the start
of event shall be governed after the expiry of the auction time.
In the event a participating Third Party is placing his bid in last x minute of
the scheduled end time of the event, the event will get automatically extended
for next y minutes for n number of times. X & y are decided by ACC /
ACL during auction creation. The auction time will get automatically extended
so as to allow other participating Third Parties to participate and give better
offer to win the bid.
7. Bid Decrement.
Bid decrement is the minimum fixed amount or percentage by which, the next
bid value can be decreased. However, ACC / ACL reserve the right to decide
appropriate bid decrement factor during auction creation.
Participating Third Party should enter the next bid price considering the Bid
Decrement, with reference to self-bid for Rank Auction and L1 bid with
reference to Price Auction. However in no case would the system accept
modification to a higher value.
8. Surrogate Bidding
Surrogate bidding is the bidding in which the vendor is not able to participate
due to some reason and has authorized the administrator to bid on his behalf.
Surrogate bidding is not allowed.
9. Price Break-up
All participating Third parties are required to submit the price break-up of the
final bid price just after the event on to the formats / price break-up sheet.
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The sole purpose of e Auction is to reduce the price quoted by the physical bidding.
The minimum number of physical bid is 03 and e bid is 02. In case of poor biding
response, the e-auction should be cancelled or postponed. Procurement on the
basis of single bid is acceptable only if final price is less than reserve price. In case
of acute emergency due to business need, the procurement on the basis of single
bid with same reserve price and final price is acceptable after subject approval of
Head IPO/CCPO. However, such cases should be rare.
Once in a quarter, the category manager should review the auction events from
receipt of physical bids till execution of POs by the selected vendors and perform
an objective vendor assessment to track particularly the following:
1. Vendors intentionally quoting very high price in physical bids, which may
result in ACC / ACL fixing higher base price.
2. Price gap between various physical bids to identify possible cartelization.
3. Price gaps between physical bids and final prices quoted by same vendors
during live auction to identify the instance of quoting unreasonably high prices
in the physical bids.
4. Vendors agreed to supply particular quantity in e-auction and failing to fulfill
the requirements during PO execution.
Recommendations should be made to Head IPO for blocking of such vendors in
view of possible wrongdoings. These quarterly reports should be documented as a
part of vendor assessment exercise.
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2. They cannot change price or quantity or delivery terms (or any other terms
that impact the price) post the e-Reverse Auction event.
3. They need to furnish the item rate form within the stipulated time after the
event.
4. They cannot divulge either your bids or those of other Third Parties to any
other external party.
5. Technical and other non-commercial queries (not impacting price) can be
routed to the respective ACC / ACL contact personnel indicated in the RFQ.
6. Inability to bid due to telephone line glitch, internet response issues, software
or hardware hangs will not be responsibility of ACC / ACL.
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Transparency
Helping to identify internal shortcomings
Three primary areas of focus while reviewing the supplier scorecards are as below:
1) Criteria, 2) Weight-age, and 3) Rating
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6.14.8 E-Sourcing
Category Manager / Operational Procurement team shall consider procuring those
materials and services through auction, wherever there is commercial advantage. Ereverse auction process outlined in section 6.12, should be adhered to while carrying
out any such event.
HO procurement shall also be responsible for engaging a reverse auction service
provider. Currently, C1 India is being used as reverse auction platform provider.
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prices to related parties. Income tax looks at these transactions as tax evading
transactions and values the related party transactions at Arms length. Analysts also
fail to evaluate the financial results when related party transactions are understated
or not given effect. Companies Act, in the name of good corporate governance
mandates approvals of board and shareholders, disclosure of such transactions and
imposes penalties for noncompliance of relevant provisions.
The changes in the regulatory and governance environment arising out of,
predominantly, the following rules and regulations governing related party
transactions are made effective during 2014:
New Section 188 of the Companies Act, 2013 as well as the relevant
provisions under the Companies Rules, 2014 (Definition Rules) and
Companies (Meetings of Board and its Powers) Rules, 2014 (RPT Rules).
Revised Clause 49 of the Listing Agreement effective from October 1, 2014
for all listed entities; and
Accounting Standard 18 (Existing) Related Party Disclosures (AS 18),
which lays down the mandatory disclosures that a company is required to
furnish as a part of its financial statements.
Who is a Related Party?
A related party is a person or entity that is related to the entity preparing its financial
statements. Section 2(76) of the Act, revised clause 49 and AS18 defines related
party with reference to a company as per below table.
It would be evident from the above that the New Act has included KMP or his
relatives , influential persons such as promoters or their relatives according to whose
instructions bodies corporate or directors or managers act and it may add in future
any other person.
Sr.
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
RelatedParty
Director/KeyManagerialPersonnel(KMP)oftheCompanyor
theirrelatives
Director/KMPoftheHoldingCompanyortheirrelatives
Afirminwhichadirector,managerorhisrelativeisapartner
Aprivatecompanyinwhichadirectorormanagerisamember
ordirector
A public company in which a director or manager is a director
and holds along with his relatives more than 2 % of its paid up
sharecapital
AnybodycorporatewhoseBoardofDirectors,managingdirector
ormanagerisaccustomedtoactinaccordancewiththeadvice,
directionsorinstructionsofadirectorormanager;(2)
Anypersononwhoseadvice,directionsorinstructionsadirector
ormanagerisaccustomedtoact;(2)&(3)
Aholdingcompany
Asubsidiarycompany
Anassociateorjointventurecompany
Fellowsubsidiaries
Associateorjointventureofamemberofagroupofwhichthe
otherentityisamember
An investor having control or significant influence or their
relatives
Companies Revised
AS18
Act,2013
Clause49
Yes
Yes
Yes(1)
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Yes
Yes
No
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No@
Yes
Yes
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14(a)
14(b)
15
16
17
18
19
Individualswhoarejointventures (3)
Otherinvestorswhoarejointventures
Anotherjointventureofthesamethirdparty
Oneentityisajointventureofathirdentityandtheotherentity
isanassociateofthethirdentity
The entity is a postemployment benefit plan for the benefit of
employees of either the company or an entity related to the
company. If the company is itself such a plan, the sponsoring
employersarealsorelatedtothecompany
Entitiesthatarecontrolledby:(4)
Partiesidentifiedat1and13above
Partiesidentifiedat2,7and14(a)above
Enterprisesoverwhichsignificantinfluenceisexercisedby:
Partiesidentifiedat1above
Partiesidentifiedat13above
Partiesidentifiedat14(a)above
No@
No@
No
No
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Yes
No
No@
No@
No@
No@
No@
Yes
Yes
No
Yes(6)
Yes(6)
Yes(5)
No
Yes(7)
Yes(7)
No
(1)Onlyexecutivedirectorsandtheirrelativesarecovered.
(2)Willnotapplytotheadvice,directionsorinstructionsgiveninaprofessionalcapacity.
(3)WillincludetherelativesofthepersonaswellunderRC49.
(4)ControlshallincludejointcontrolalsoforthepurposesofidentificationofrelatedpartiesunderRC49
(5)Thisincludesenterprisesownedbydirectorsormajorshareholdersofthereportingenterpriseandenterprisesthathavea
memberofkeymanagementincommonwiththereportingenterprise.
(6)Willincludesubsidiariesofsuchentitiesoverwhichsignificantinfluenceisexercised.
(7)Thisincludesenterprisesthathaveamemberofkeymanagementincommonwiththereportingenterprise.
@Totheextentnotalreadyincludedinanyoftheabovecategories
6.15.1 Overview of Section 188 and Sec 177(4) of the Act and Revised
Clause 49 in relation to related party transactions.
Overview of Section 188
Subject to certain conditions, Section 188 (1) requires that the following contracts or
arrangements with a related party may only be entered into with the consent of the
Board given vide resolution at a Board Meeting:
a)
Sale, purchase or supply of any goods or materials;
b)
Selling or otherwise disposing of, or buying, property of any kind;
c)
Leasing of property of any kind;
d)
Availing or rendering of any services;
e)
Appointment of any agent for purchase or sale of goods, materials,
services or property;
f)
Such related party's appointment to any office or place of profit in the
company, its subsidiary company or associate company; and
g)
Under writing the subscription of any securities or derivatives thereof,
of the company.
In addition, if the company has paid-up share capital of Rs.10 cores or more, or the
transaction exceeds the thresholds provided in Rule 15(3) of the RPT Rules the,
prior approval of the board of directors and shareholders by a special resolution shall
be required. The above approval requirements shall not apply to any transactions
entered into by the Company in its ordinary course of business and on an arms
length basis. (Refer guidance in Section 4.2 (Chapter 4) of RPT manual issued by
corporate Tax team)
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Further that no member of the company shall vote on such special resolution, to
approve any contract or arrangement which may be entered into by the company, if
such member is a related party.
Section 188 (2) requires that every contract or arrangement entered into under subsection (1) shall be referred to in the Boards report to the shareholders along with
the justification for entering into such contract or arrangement. (The disclosure
requirements are covered in detail in Chapter 7 of the RPT Manual)
The Act further states that any contract or arrangement entered into, without
obtaining the consent of the Board or approval by a special resolution in the general
meeting and if it is not ratified within three months from the date on which such
contract or arrangement was entered into, it shall be voidable at the option of the
Board.
A director or any other employee who enters into a contract or arrangement in
violation of the above provisions shall be punishable with imprisonment for a term
which may extend to one year or with fine not less than Rupees Twenty five
thousand but which may extend to Rupees Five lakhs, or with both, in case of a
listed company.
Overview of Section 177(4) of the Act
Every Audit Committee shall act in accordance with the terms of reference specified
in writing by the Board which shall, inter alia, include,
(iv) Approval or any subsequent modification of transactions of the company with
related parties;
(Refer Chapter 5 of RPT Manual for more details on the process of approval to be
followed for a related party transactions and interpretive guidance in that respect.)
Overview of Revised Clause 49 of Listing agreement
Related parties have been defined to include some parties in addition to all the
parties identified as related parties under the Act.
A related party transaction is a transfer of resources, services or obligations between
a company and a related party, regardless of whether a price is charged.
All Related Party Transactions shall require prior approval of the Audit Committee.
All material Related Party Transactions shall require approval of the shareholders
through special resolution and the related parties shall abstain from voting on such
resolutions.
Details of all material transactions with related parties shall be disclosed quarterly
along with the compliance report on corporate governance.
The company shall disclose the policy on dealing with Related Party Transactions on
its website and also in the Annual Report.
Overview of AS 18 Related Party Disclosures
Objective:
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(iii) the income, if any, earned from such activity / transaction is assessed as
business income in the companys books of account and hence, is a
business activity;
(iv) it is a historical practice and there is a pattern of frequency (and not an
isolated transaction); or
(v) it is a common commercial practice
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Provided that where the need for Related Party Transaction cannot be
foreseen and aforesaid details are not available, AC may grant omnibus
approval for such transactions subject to their value not exceeding Rs.1
crore per transaction.
a. AC shall review, at least on a quarterly basis, the details of RPTs
entered into by the company pursuant to each of the omnibus
approval given.
b. Such omnibus approvals shall be valid for a period not exceeding
one year and shall require fresh approvals after the expiry approval
period"
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Unit prices: Whereas Procurement benefits consider the YoY average purchase
prices from booked invoices; the income statement considers cost per unit or
average cost per item according to different costing methods.
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i.
ii.
iii.
iv.
v.
2015
e) Vendor data is uploaded by VMC Team along with bank data. When
uploaded, system generates a unique 9 digit number for each vendor. Using
this SAP vendor number, corresponding excise data, MSMED and TDS data
are uploaded separately.
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d) Vendor Master Controller Team then sends information to all Vendor Data
Coordinators informing the intention to block the Inactive Vendors. In case a
valid business reason is provided for not blocking, then such vendors are not
blocked. VMC Team then proceeds to block identified inactive vendors.
e) If the Supplier is inactive and belongs to more than one company code,
validation is required from the Vendor Master Controller of other company
codes.
End
User
Processes
BAForm/VRSS
Sheet
Output
VendorData
Coordinator
Category
Managers
Approval
VendorMaster
Templateentryby
VDC
ChecknewData
byVMCTeam
Data
Upload
VMCVendorMaster
Controller
DuplicateData
Rejected
Vendor
Number
Generated
VendorData
Coordinator
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The following procedure describes the steps followed when blocking Vendor as
Duplicate.
a. Identification of duplicated suppliers. A vendor is identified as duplicate for a
company code, when name, address, city and the PAN are identical. To be
done once in a year.
b. If identified duplicate Vendor has open balance or has open Purchasing
documents then Vendor Master Controller Team puts only purchase block.
Posting block is kept open for clearing pending transactions.
c. If the duplicate vendors are common in more than one company code, then
Vendor Master Controller of HO requests authorization to unify duplicate
vendors, from the Vendor Master Controllers of other Company codes.
d. If Vendor Master Controller of other company code authorizes the unification
of duplicate vendors, then Vendor Master Controller blocks the duplicate
vendor and extends the vendor code from one company code to the other.
e. If Vendor Master Controller of other company code does not authorize the
unification of duplicate vendors, then Vendor Master Controller blocks the
duplicate vendor for financial and purchasing purposes at company code
level.
As per approved SLA vendor master creation or maintenance requests received
from the authorized Vendor Data Coordinator or from alternatives at business units
are processed with a response time of two working days. The response time of two
days is for error free transactions received during office hours on normal working
days.
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II.
III.
A complete and accurate description of what you need from a supplier and
work to be performed by him. Its broken into specific task and deadlines
clearly stating the role and responsibility shared with supplier to achieve
desired outcome.
While provide a detailed scope of work for external services, be sure that the
requisition captures planned and unplanned services.
Allot sufficient service level agreement to procurement department in order to
source and arrange delivery of goods or services.
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III.
IV.
V.
VI.
VII.
VIII.
It is important to note here that the requisition sets up subsequent P2P process,
hence please work with the procurement representative prior to requisition creation
to make sure that it is made correctly.
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Use a clearly defined RFQ to invite current / approved suppliers (if any as per
category directive) and potential new supplies to participate. The suppliers
presenting the most promising proposals should have the opportunity to negotiate.
The offer should include following:
I. Request for Quotation.
II. Performance warranty Pro-forma, if any
III. Applicable standard contract conditions Pro- forma, if any
IV. Technical specification
V. Scope of work (SOW)
VI. Time schedule
VII. Invoicing process and Payment terms
document
N1IM-ACC
Import
N3IM-ACL
Import
PO
N1PO-ACC
Local
N3PO- ACL
Local
PO
PO
Procurement Scenario
Goods
Manual
receipt
/
Invoice
Service Entry
Yes
Yes
Yes
Yes
PO
Yes
No
N1UO-ACC
STO
w/o Shipment
N3UO-ACL
STO
w/o Shipment
Yes
No
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maintenance material(bearing)
N1UP-ACC
STO
Non-Accrual /NS
Yes
No
No
Yes
Yes
Yes
ZEPAPAC
Emergency PO
Yes
Yes
ZFOAPAC
Framework Orders
Table present the key attribute and difference between the various types of POs and
the effect it has on the receipt and invoice verification.
IV.
V.
VI.
VII.
VIII.
IX.
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8.4 Receiving
Receiving here means to acknowledging that the vendor has delivered the goods or
services, and ensuring that the received goods or services are added to inventory,
attributed to the project, and so on as per policy.
This is crucial, from the point of view of both accurate inventory / cost attribution and
for paying to the vendors.
Even though paying the vendor is the last step of P2P process, it is not the least
important. Error can occur during any of the P2P step.
Under this scenario, the normal goods receipt for both stores and spares and
materials and bulk materials is done. These direct materials are purchased by
the purchasing department and after receiving the materials at the stores /
yard, these materials need to be quality inspected and approved by technical
people / lab before updating data into the system.
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II.
III.
2015
If stores and spare material is due for inspection, then it is the responsibility of
stores to do GR in blocked stock on same day the material is received from
vendor.
In case of urgency, materials procured under revenue may be required for
capital / AUC consumption. In these circumstances, material is directly issued
from revenue to capital account.
The requesting department confirms the receipt of actual services performed by the
contractor through service entry sheet creation in the system. These entry sheets will
then be approved and released electronically by performing the service acceptance
assigned to the requesting department manager.
Creation / release of service entry sheet is given to the requestor of the service PR.
Acceptance or approval of service entry is generally given only to the department
manager of the service PR requestor.
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Here are some guidelines for defining users responsibility to be met in the receiving
process.
The service entry should be made accurately and on time based upon actual
measurement / certification.
Similarly goods receipt should also be done on the bases of actually received
quantity and on time.
Make sure the described scope of work or specification in the vendor invoice
matches those in the approved PO or in the requisition user created.
Make sure all additional work or items provided by the supplier are included in
the approved PO.
The user must sign- off on the verification document, wherever required, (e.g.
for service completion/quality, for quality inspection) in order to allow a 3- way
match between the PO/ Goods receipt or service entry sheet / invoice.
The rules and guidelines, will serve user well in most cases, but there are specific
cases that are important for different types of receiving.
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Supp1
Supp2
fully
don't Points
agree supp2
3
4
x
3
x
3
14
x
x
3
x
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i.
ii.
2015
Actions are defined out of identified performance gaps and common agreement is
made for corrective measures to achieve required performance.
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Appendix - I
ListedPooledItems
Sr. No.
Equipment
Bucket Elevators
Crusher
HT Transformers
10
HT Motors
11
HT Switchgears
12
13
14
Process Fans
15
16
Compressor
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Appendix - II
List of Major Policies Governing Procurement
S. No.
Policy Name
1.
2.
3.
4.
5.
6.
7.
DelegationofAuthority(DoA)forIndiaProcurementOrganization(IPO).
DelegationofAuthority(DoA)forACL.
DelegationofAuthority(DoA)forACC.
AuthorityforPhysicalSigningofContract.
PettyCashPolicyatACC.
ListofitemsallowedforSAPFrameworkOrders(Doc.typeZFO)atACC.
ListitemsforwhichDirectInvoiceverification(throughFB60)isallowedatACC
(PolicyissuedbyFinance).
ListofitemsallowedforSAPFrameworkOrders(Doc.typeZFO)atACL.
ListitemsforwhichDirectInvoiceverification(throughFB60)isallowedatACL
(PolicyissuedbyFinance).
8.
9.
Page 87
Ambuja
Cement
At:t:
-._..,..
> "11
~
~
-
- -
Date : 26.03.2015
As per the approved blue print for India Procurement Organization, all plants of ACC & ACL will be
mapped to 5 procurement clusters i.e. North, East, Central, South & West. The existing plant procurement
teams will be migrated to new procurement clusters in a phased manner and as per cluster roll out plan.
This Delegation of Authority (DoA) document proposes limits for various procurement activities applicable
for the India Procurement Organization, including its own expenses and its employee's expenses.
A reference of Category Manager (National/Regional/Global) is made to clarify its role as an overall
category in-charge for any value of spend bundle and is authorized for either initiate sourcing activities on
its own or ask operational procurement team to act upon it directly (as being local I spot buying in nature).
Further CCPO approval will be required for execution of the documents proposed by Category Manager.
Category Manager
Authority Delegated to
Position
Head Operational Procurement
1.
Selection of New
Supplier for Sending
RFQ.
Category Manager
Procurement Activity Authority Delegated to Value Limit
Position
Respective MD or Bo1h
wherever acclicable
Approval for
Purchase&
Amendment.
2a.
(Negotiation can
be delegated
down the level as
CCPO
Head of Country
Category Management
Up to
1000.00
Up to 700.00
and when
required).
Category Manager
Lacs
Any Value
Up to 200
Upto 100
Authority Delegated to
in INR Lacs
Position
More than Respective MD or Both
1000.00
lacs
wherever aoolicable
More than
1000.00
CCPO
Up to 1000.00
Head Operational
Procurement (Vertical)
Deputy Head Operational
Procurement (Vertical)
Up to 500.00
Up to 100.00
Cluster Head
Up to 75.00
Up lo 5.00
Upto1.00
UptoS00.00
Ambuja
Cement
At:t:
Category Manager
Procurement Activity
2b.
Authority Delegated to
Position
Value Limit in
INR lacs
Authority Delegated
to Position
CCPO
More Than
2000.00
CCPO
Up to 2000.00
Head Operational
Up to 500.00
Procurement (Vertical)
National Category
Manager
Up to 500.00
Value Limit in
INR Lacs
More Than 500.00
Value Limit in
HO
3a
CCPO
Up to 1000.00
Release of
Contract.
INR Lacs
Up to 100.00
CCPO
Zero
More than 1000
Up to 1000.00
Cluster Head
Up to 75.00
Up to 5.00
Buyer
Zero
Organization
HO
3b
Approval of
Subsequent Debit
Notes.
Authority Delegated to
Position
Level of release
CCPO
Procurement Level 2
Head Operational
Procurement (Vertical)
Procurement Level 1
Head Operational
Procurement (Vertical)
Procurement Level 2
Cluster Head
Procurement Level 1
Ambuja
Cement
At:t:
Procurement Activity
PO Release against SAP Contract.
Zero
Buyer
4.
Procurement Activity
Zero
(Vertical)
Up to 75.00
Cluster Head
5.
CCPO
6.
INR Lacs
More than
50.00
UptoS0.00
Wavier of Penalty
Head of Country
Category Management
Procurement Activity
Up to 30.00
Up to 100.00
As per actuals
Value Limit in
INR Lacs
More than
50.00
CCPO
Up to 50.00
Head Operational
Procurement (Vertical)
Up to 30.00
Up to 3.00
Cluster Head
Up to 1.50
Value Limit
7.
Miscellaneous expenses, like business
lunch I dinner
As per actual.
As per actual.
Ambuja
Cement
ACC
Procurement Activity
8.
Value Limit
As per point no 3a
This Delegation of Authority, once approved will supersede any other the Delegation of Authorities issued
previously by ACC, ACL & CPO, and will be applicable to CPO controlled procurement activities at HO,
Cluster & Plant.
~<~
Sanjeev Churiwala
CFO,ACL
~
~2-Ha.. ,r. i~
MD, ACC
Encl. 1 : Existing Delegation of Authority at ACC, ACL & CPO.
Abbreviations:
: Central Procurement Organization.
CPO
DoA
: Delegation of Authority.
CCPO : Chief Central Procurement Officer.
: Request For Quotation.
RFQ
HO
HCCM
HOP
DHOP
CH
NCM
CFS
: Head Office.
: Head of Country Category Management.
: Head Operational Procurement (Vertical).
: Deputy Head Operational Procurement (Vertical).
: Cluster Head.
: National Category Manage.
: Container Freight Station.
Sunil Nayak
CFO,ACC
Ambuja
Cement
ACL-CORP-01
Section:
Title:
Delegation of Authority
Transaction Type
Version: 1.8
IPage 5of11
9. PURCHASE REQUISITIONS OF
GOODS I SERVICES
Both CaRital and Revenue Items
Purchase Requisitions I Indents
(#) MRP Controlle.rs will release all MRP
PRs, with NIL financial release authority, to
indicate technical release of the MRP PR.
Note:
Within the limits of the approved
annual Budget.
AmCbujat
emen
ACL-CORP-01
Version: 1.8
Page 10 of 11
Section:
Title:
Delegation of Authority
TABLE 1:
8. PURCHASE COMMITMENTS - GOODS I SERVICES Capital and Revenue items (except for Marketing, Outbound Logistics &
Cement Swap Sal e)
(Purchase Orders, Works Orders, and any other contracts for Goods or Services)
Location
All procurement except Marketing, Outbound Logistics, & Cement Swap Sale procurement"
Designated Authority
Procurement Activity
Buyer16
Release of PO/Contract
Release of PO against
SAP contract
Emergency PO Release
Lakhs)
NA
NA
U to 100.00
100.00 - 1000.00
> 1000.00
75.00- 1000.00
> 1000.00
I II
Cluster Head
Deputy Head 0 erational Procurement (Vertical)
Head Operational Procurement (Vertical)
CCPO
Buyer'
Deputy Cluster Head (Vertical) I Depu Head Operational Procurement (Vertical)
Cluster Lead (Vertical)/ Deputy Head Operational Procurement (Vertical)
Head Operational Procurement (Vertical) I Cluster Head
,,,k,. ~
HO(~
NA
0.00
Any value
0.00
Any value
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ACL-CORP-01
Page 11of11
Version: 1.8
Section:
Title:
Delegation of Authority
1.00 - 5.00
5.00 - 50.00
50.00 - 100.00
0.00 - 1.00
1.00 - 10.00
10.00 - 25.00
25.00 - 100.00
0.00 - 1.00
0.00 - 1.00
1.00 - 10.00
10.00 - 25.00
25.00 - 100.00
1.00 - 5.00
5.00 - 15.00
15.00 - 25.00
0.00 - 1.00
1.00 - 10.00
10.00 - 15.00
15.00 - 25.00
0.00 - 1.00
0.00-1.00
1.00 - 10.00
10.00 - 15.00
15.00 - 25.00
0.00 - 1.00
1.00 - 10.00
10.00 - 25.00
> 25.00
0.00 - 1.00
0.00 - 1.00
1.00 - 10.00
10.00 - 25.00
> 25.00
0.00 - 5.00
5.00 - 25.00
> 25.00
0.00 - 5.00
5.00-10.00
10.00 - 25.00
> 25.00
At:t:
CENTRAL PROCUREMENT ORGANIZATION
@r
Date : 10.10.2012
During the execution of process work stream of Project Procure!, it is recommended that the Release
Strategy levels & value slabs should be aligned in ACC & ACL to have a better internal control. HGRS has
also pointed out that it is a mandatory criteria for procure certification.
In addition, to mitigate SOD conflicts, we have proposed to keep the first level of release strategy for
MRP controller with zero value. Also the Emergency PR release will remain as per existing policy.
The proposed new release strategy levels and value slabs are mentioned as under.
l GU:
MRP Controllers
0 to 25 K
25 K to 5 L
5 L to lOL
Level
Position
I VP I
> 10 L
Position
0-SL
5 to 10 L
10 to 25 L
I VP I
> 25 L
Level
1
2
3
4
Position
Dept Department Head/ Departmental
Project Manager / Man ager
Departme nt Head I Sr Manager/ DG M
Project Manager/Head Project
Operations/ GM / VP
Project Head/ Director Project
Plant
I Director
> 25 L
Position
5 to 10 L
> 10 L
Position
I Sr Manager
Dy. SU Head
SU Head
25 K to 1 L
1 to 10 L
Business Head
> 10 L
25 K to 1 L
Head ICI
1to10 L
> 10 L
Level
Position
The release strategy value slabs for Stores function will remain unchanged and will be released by Plant
Head directly. The release strategy for MIC business will also remain unchanged.
We request your kind approval to implement this change.
Shakti Arora
CCPO
Sunil Nayak
CFO
At:t:
Date: 25.03.2015
1
2
3
Existing Position
Dy. Dept. Head I
Functional Support
Dept. Head I
Functional Incharge.
Functional/ Business
Head
Proposed Position
I RO I Thane
Existing Value Slab
[L= Lakhs, K =
thousand]
0-SL
5 to 10 L
> 10 L
2
3
4
Position
Proposed Position
I Sr Manager
Dy. SU Head I Sr
Manaqer
SU Head
SU Head
25 K to 1 L
Regional Sales I
Logistics Head
Business Head
1to10 L
Dy. SU Head
> 10 L
At:t:
Capex /Revenue PR Release Strategy for ICI Business
25 K to 1 L
Head ICI
Head ICI
1to10 L
> 10 L
Leve
I
Position
Proposed Position
Existing Position
Proposed Position
SU Head
SU Head
o - 5 Lacks
Director Sales
Director Sales
5 - 25 Lacks
Business Head
> 25 Lacks
Existing Position
Proposed Position
Purchase Manager
Purchase Manager
PMM Head
PMM Head
O - 5 Lacks
5 - 25 Lacks
Project Head
Project Head
25 - 100 Lacks
Business Head
Existing Position
Purchase Manager
Proposed Position
Purchase Manager
PMM Head
PMM Head
o - 5 Lacks
5 - 10 Lacks
Project Head
Project Head
10 - 75 Lacks
Business Head
75 - 100 Lacks
Existing Position
Proposed Position
Logistics Manager
Logistics Manager
0- 5 Lacks
Logistics Head
Logistics Head
5 - 25 Lacks
Business Head
>25 Lacks
At:t:
The new release strategy levels and value slabs, as mentioned above is put to you for your approval
and implementation in SAP.
n Sachdeva
Sunil Nayak
CFOACC
Ambuja
Cement
At:t:
CENTRAL PROCUREMENT ORGANIZATION
Sub: Authority for Physical Signing of Contract.
Circulation: CPO All, ACC & ACL procurement.
Date : 14.04.2015
A need is felt to clearly instate the authority of approving a contract and that of physically signing of
contract separately. Whereas, approving the contract is a critical activity governed by Delegation of
Authority {DoA) and creates obligations for the company; physical signing of the contract is related to
issuance of already approved contract to the vendor. Therefore, contract approval is a decisive activity
and should follow DoA; while contract signing is insignificant and can be done by competent procurement
authority.
Further, with the implementation of procurement functional organization with people sitting at
different geographic locations (like plants, cluster office and HO), it becomes imperative to detach the
procedure of contract approval and physical signing of contract, distinctly. The same is also suggested in
the recent P2P regional Internal audit team. In view of the above, the below guidelines are proposed for
approval.
a) For the interim period starting from 1st January 2015 till procurement cluster go-live, plant PMM Head
I Commercial Head I Unit Head are authorized to physically sign the contract issued from respective
plants for any value, provided the contract is pre-approved as per prevailing DoA.
b) After the procurement cluster goes live in a phased manner as per project plan, Procurement Cluster
Head/ Cluster Vertical Lead I Deputy Operational Procurement Head I Operational Procurement Head
I CCPO are authorized to physical sign the contracts for any value, provided it is pre-approved as per
prevailing DoA.
We request your kind approval for the proposed guidelines on Physical Signing of Contracts.
Recommended by:
Approved by:
Policy Requirements
1. The Appropriate Authority {viz; Plant Head at CMU / Sales Head at SU
or their authorized representatives} must ensure that policies and
procedures are established and followed to ensure the control and
safekeeping of petty cash funds (including suitable locks, keys or
combinations, where required) and appropriate insurance cover(cash in
transit, safe and fidelity insurance) taken in accordance with Companys
regulations and policies.
2. Based on Operational needs each Unit will have a Cashier and / or
Custodians (as mentioned above) with whom Petty Cash amount would
be placed. The Cashier and /or the Custodians will disperse petty cash
payments as per rules.
Accounting and control
1. Petty cash must be used when it is more cost-effective than other
payment methods such as by cheque , bank transfer or credit/debit cards
2. Before establishing or increasing petty cash funds, the Appropriate
Authority must ensure that the security and safekeeping arrangements
are commensurate with the risk of theft and the size of the petty cash fund
and suitable insurance cover is taken.
3. Wherever Custodians are appointed, they must sign a declaration
confirming that they have received, read and understood the Policy,
regulations, procedures and instructions and acknowledge that they are
personally responsible for the compliance.
4. There must be only one custodian of a petty cash fund at any given time.
A detailed account must be given periodically (preferably monthly) and
also when there is a change in Custodian. When the Custodian is being
changed, fresh declaration to be obtained.
5. Petty cash advances must not be used for personal need, for cheque
encashment, or to give salary/wage advances to employees.
6. If a shortage is discovered, it must be reported promptly to the Custodian's
superior and to the Appropriate Authority who, after reviewing the
Total amount Rs. 50000/- for the Cashier at Plants and Rs. 25000/with Cashier at SU
Total amount Rs. 25000/- for Mines (only if Mines are far away from
Plant)
Only one Custodian per sales / area office and not to exceed more
than 6 custodians for the Unit as a whole. In case of Plant, Cashier
would handle all petty cash requirements except for Mines Dept,
where a Custodian could be appointed.
10. If there is an excess amount in the petty cash fund, reasons for the
same should be studied to find the cause of the excess. When the
Entertainment expense which total not more than Rs 2500/- per instance
[Exception: Any reimbursement, regardless of the quantum, which
include alcohol/ any prohibited item must be approved by appropriate
authority in the Unit/Location and submitted to Accounts Office/Cashier
for processing and should not be routed through Petty cash]
Expenditure on fuel [petrol/diesel], minor repair expenses on vehicles
whilst on journey for company work amounting to not more than Rs 2000/ Payment of fines, penalties etc less than Rs 1000/- [ challan / receipt
must be furnished the penalty should not recur]
Urgent medical expenses on employees upto Rs 5000/Cannot be used
person responsible for controlling and safeguarding the petty cash fund
responsible for only one petty cash fund
disburses cash from the petty cash fund
provides appropriate documentation and/or receipts for the transactions
and the transactions does not vitiate the companys laid policies/rules,
not to approve a reimbursement to himself out of the petty cash fund.
must obtain an approval signature from Appropriate Authority for
reimbursement from petty cash
responsible for ensuring appropriate documentation is retained for each
petty cash transaction and fund reimbursement
The Custodians have to settle the imprest amount and zeroise the account
before 31st Dec every year.
The Custodian should retain petty cash records [Refer to the Records
Retention schedule for specific retention/destruction time periods]
Reimbursement process of Petty Cash Fund
Petty cash voucher slips and receipts for petty cash transactions must be
submitted along with the request for reimbursement of petty cash fund
form
When completing the request for reimbursement for petty cash fund, the
expenditures should be charged to appropriate cost center and General
Ledger code.
The request for reimbursement cannot exceed the total amount of the
petty cash fund
The request for reimbursement of petty cash fund form must be reviewed,
signed and approved by Plant Head for CMU and Sales Head for SU
The complete request for reimbursement of petty cash fund should be
submitted to the Finance Section [Cashiers Office] to receive the cash
The Finance Section [Cashiers Office] will not release cash unless the
Custodian
- The request for reimbursement of petty cash fund form and all
accompanying
petty cash voucher slips have been properly
approved
Petty cash fund should be replenished at least on a monthly basis
If the petty cash funds are not replenished regularly the Finance Section
may require that the size of the petty cash fund be reduced or that the
fund be closed altogether
Add all petty cash expenditure receipts on hand [amount being requested
for reimbursement]
Add cash remaining in Petty cash / Petty cash holder
The amount of the requested reimbursement plus the cash remaining
must equal the total amount of petty cash fund.
Discrepancy if any, must be immediately brought to the attention of the
Appropriate Authority
new Custodian responsibility form duly signed and approved by the Plant
Head at CMU / Sales Head at SU
Complete reconciliation of the petty cash by existing Custodian prior to
handing over to new Custodian
The new Custodian must be made fully aware of the company policy with
regard to petty cash fund
This Policy would be effective from 18th May 2011 and supersedes all existing
petty cash policies.
2015
PROCUREMENTPROCESSGUIDE(PPG)V5.0
6.
List of items allowed for SAP Framework Orders (Doc. type ZFO)
at ACC (policy issued by Finance).
1
2
3
4
5
6
7
8
9
10
11
12
13
14
7.
Royalty
Power/EnergyBill
ElectricityDuty
FactoryLicenseFees
BISMarkingFees
TelephoneandFaxBills
LeaseRent
Watercharges
WaterRoyalty
CessOnPower
CessOnRoyalty
Cessoncement
CessonLimestone&Ironore
Infrastructuredevelopment&EnvironmentCess
VAT
Excise
IncomeTax
SalesTax
WorkContractTax
PFANDEPS
PLVC
OSF
Demurrages
ProfessionalTax
Insurance
TerminalTax
Directorsfees
Villagewelfareexpense
ServiceTaxonGTA
PaymentToClubs
PropertyTax
MotorVehicleTax
MotorVehicleTax(Ambulance)
Annualinspectionfeeforboiler
Feeforissuanceoffreshgunlicense
RenewalofH.S.Dstoragelicense/explosivelicense/Explosivesvanlicense.
Surfacerent
Groundrent
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25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Additionalgoodstax
RenewalofLDOlicense
RenewalofBISlicense
RenewaloflicensePetroleumpumpfactory
RenewaloflicenseexplosiveMagazine
RenewaloflicenseDGSET
RenewalofANFOlicense
RenewalofTransportationofExplosiveslicense
RenewalofDeedagreement
LicensefeeofCommercialplot
BonusonFlyash
RenewalfeesofFactorylicense
Vehiclefitnessfees
SidingTripchargestorailways
Punitivechargesonoverloadingtorailways
Underchargesfordistancetorailways(differencefreight)
CourierCharges
EmployeeRelatedPayments(FordetailsreferthepolicyissuedbyFinancedept.).
Guest house/canteen/colony expenses for companys function (other than yearly
contracts)foruptoINR10,000pertransaction.
44
45
46
47
StationarysupplieslessthanINR5,000(otherthanRC).
ScenariosforDirectInvoiceProcessing
Stampingfeesforweights&measurement.
Rental & maintenance charges for diesel tank & pump installed (IOCL) in various
plantsINR10,000pertransactionperyear.
48
49
50
51
52
53
54
RTO,insuranceandGovernmentfees.
Advocatefees,newspaperexpenses,newspaper.
ThirdPartyCompanyawardsandparticipationfees.
GroceryitemsforOfficeCanteen/Pantry
TransitHouseLaundrypayment
MedicineprocurementofOccupationalHealthCentreuptoINR15000
MedicaltreatmentexpenseforNonManagementStaffatoutsideHospital/Nursing
HomeuptoINR50,000
55
56
57
58
59
60
61
62
63
64
65
66
67
Page 88
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PROCUREMENTPROCESSGUIDE(PPG)V5.0
8.
List of items allowed for SAP Framework Orders (Doc. type ZFO)
at ACL (policy issued by Finance).
9.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Royalty
Power/EnergyBill
ElectricityDuty
FactoryLicenseFees
BISMarkingFees
TelephoneandFaxBills
LeaseRent
Watercharges
WaterRoyalty
CessOnPower
CessOnRoyalty
Cessoncement
CessonLimestone&Ironore
Infrastructuredevelopment&Environmentcess
HotelBills(bookedatcorporateofficeforbulkroombookings)
ShipLicenses.
LandingFeesandPortCharges
Whafrage
TradeMark
GroupCompanyRelatedExpenses.
IT Related expenses (Maintenance & Operations, License renewal /
subscription,VanCharges
22
23
CementSampleTesting
Fuelforpooledvehicles
VAT
Excise
IncomeTax
SalesTax
WorkContractTax
PFANDEPS
PLVC
OSF
Demurrages
ProfessionalTax
Insurance
TerminalTax
Directorsfees
Villagewelfareexpense
ServiceTaxonGTA
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16
17
18
19
20
21
22
PaymentToClubs
PropertyTax
MotorVehicleTax
MotorVehicleTax(Ambulance)
Annualinspectionfeeforboiler
Feeforissuanceoffreshgunlicense
Renewal of H.S.D storage license/ explosive license/ Explosives van
license.
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
Surfacerent
Groundrent
Additionalgoodstax
RenewalofLDOlicense
RenewalofBISlicense
RenewaloflicensePetroleumpumpfactory
RenewaloflicenseexplosiveMagazine
RenewaloflicenseDGSET
RenewalofANFOlicense
RenewalofTransportationofExplosiveslicense
RenewalofDeedagreement
LicensefeeofCommercialplot
StampingFeesforWeightsandmeasurements
RenewalfeesofFactorylicense
Vehiclefitnessfees
SidingTripchargestorailways
Punitivechargesonoverloadingtorailways
Underchargesfordistancetorailways(differencefreight)
Stationary(exceptionalitemsnotcoveredunderratecontract)
Donations
Souveniradvertising
GramPanchayatTaxes
Penalties&Fines
AccidentExpenses(MedicineforOH&S)
DirectorsCommission
Stipend
StampPaper/NotaryCharges
Poojaexpenses(anycommercialexpensenotexceedingRs15000/)
MonthlyULWAPortdues
GuestHouse/Canteen/Colonyexpenses(otherthanyearlycontracts)
Expendituresforadministrativesupplier(PCSsegment05)forRs.5000.
FreightChargesuptoRs10000/incaseofpartloadmaterialbookedby
supplier.
55
56
DEVIATION
POLICY:
a)
Deviations
are
strictly
avoidable.
b) However if any deviation arises, the same needs to be ratified by
Functional Head (at Head Office) only. A list can be compiled on a
monthlybasisforratificationpurpose.
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