Procurement Process Guide V 5.0 - Final Compressed

2015
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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About the Procurement Process Guide (PPG)

Introduced in 2009, Procurement Process Guide (PPG) in tendum with Holcim Policies
(available at Holcim Hub), standardizes the procurement policies and procedures
across India. It adds clarity and consistency to the way we buy. It has travelled a long
journey since inception and is a cornerstone for unification of processes after the
formation of Central Procurement Organization.
The goal of process standardization is to efficiently manage procurement activities and
to make the procurement freternity, more responsive and streamlined partners to ACC
Ltd & ACL Limited.
This guide makes things easier for the procurement department by acting as a refrence
manul to purchasing decisions, and has helped the function in deliverying its the
services efficiently since 2009.
While the guide does not address all the Procure to Pay (P2P) process issues, it
address most of them, critical to process standardization and efficiency.
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PROCUREMENT PROCESS GUIDE (PPG) V 5.0
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
CEO & MD, ACL
Harish Badami
MD,ACC
----- -.----- ------------------------------------- ------------- --- --------------- -
~- F>a9e
2015
From CCPOs Desk

Dear Colleagues,
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
New Delegation of Authority for IPO.

E- auction guidelines
Sustainable Procurement
Supplier Code of Conduct
New Procurement Organization
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
1. How to Use This Guide. ................................................................................................................. 6

2. Procurement Policy ....................................................................................................................... 7
Scope ............................................................................................................................................... 7
Policy Principles ............................................................................................................................... 7
3. Sustainable Procurement ............................................................................................................ 10
4. Procurement Organization .......................................................................................................... 12
Holcim Category Management Framework ................................................................................... 13
Organizational design under Category Management Framework ................................................. 15
Organizational Structure of India Procurement Organization (IPO) .............................................. 18
5. Choosing Right Purchasing Channel ........................................................................................ 24
SAP Initiated Requisition ............................................................................................................... 24
Direct FI Invoice ............................................................................................................................. 25
One Time Vendor ........................................................................................................................... 26
Cash Purchase through Petty Cash............................................................................................... 27
6. Purchasing Process Flowcharts ................................................................................................ 28
Operational Process for Stock / Recurrent / Bulk Material and Bags ............................................ 31
Operational Process for Stock / Recurrent / Spare Parts & Consumables .................................... 33
Operational Process for Stock/ Non-Recurrent / Goods ................................................................ 34
Operational Process for Non-Stock / Recurrent / Goods ............................................................... 35
Operational Process for Non- Stock / Recurrent Services............................................................. 36
Operational Process for Non-Stock / Non-Recurrent Goods ......................................................... 37
Operational Process for Non - Recurrent / Services...................................................................... 38
Operational Process of Capex Goods ........................................................................................... 42
Operational Process of Plant Capex Services ............................................................................... 43
Negotiation Process ....................................................................................................................... 44
Operational Process for Emergency Purchase ............................................................................. 46
E - Reverse Auction Process ......................................................................................................... 47
Supplier Performance Evaluation .................................................................................................. 52
Request For Quotation (RFQ) Policy ............................................................................................. 54
Related Party Transaction ............................................................................................................. 57
New Benefits and Savings Definitions .......................................................................................... 64
Approvals in Purchasing Process ................................................................................................. 65
7. Master Data ................................................................................................................................... 66
Material Master Data ...................................................................................................................... 66
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Vendor Master Data ....................................................................................................................... 67

8. The Procure to Pay (P2P) Process ............................................................................................. 71
Purchase Requisitions ................................................................................................................... 71
Supplier Selection .......................................................................................................................... 72
PO Creation and Release .............................................................................................................. 73
Receiving ....................................................................................................................................... 75
Invoice verification.......................................................................................................................... 77
Write off Procedure ..................................................................................................................... 78
9. Supplier Relationship Management ........................................................................................... 79
Supplier Segmentation ................................................................................................................... 80
Supplier Qualification ..................................................................................................................... 82
Supplier Relationship and Development ........................................................................................ 83
SupplierCollaboration....................................................................................................................84
AppendixI....85
AppendixII......86
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1. How to Use This Guide

This Guide is a reference to procedures for anyone requesting or approving the
purchase of goods and services. It is a companion to training and a textbook for
employees, designed to help user make purchasing decisions and avoid common
mistakes.
There are four main sections of this Guide that present information from different points
of view. These sections are:
Procurement Policies (Ch. 2 & 3)

Choosing Right Purchasing Channels (Ch. 5)
Purchasing Processes Flowcharts (Ch. 6)
Procure to Pay (Ch. 8)
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.
2.2 Policy Principles

2.2.1 Key Elements of the Policy
1. The practical implementation and the application of the key elements of the
Procurement Policy are detailed in the Holcim Procurement Handbook
(HPH) and Holcim Hub. The high level key elements are stated here.
2. Important elements of the Procurement Policy contributing to value creation
for the Holcim Group are:
a. Exploitation of Holcim Group wide bundling potential: Holcim spend
needs to be addressed at the appropriate level (local / regional / global)
to obtain best conditions and performance from its suppliers.
b. Standardization of processes, products and services: This will enable
the ACC & ACL to reduce process cost, as well as TCO for such
products and services procured.
c. Management of the supplier base: ACC & ACL needs to carefully
manage the performance of key suppliers while streamlining the
number of non-strategic suppliers. Alternative suppliers shall be
developed as a priority to ensure a balanced supply base and to
ensure best possible TCO solutions.
d. Design and implementation of lean and efficient business processes:
Aligned processes and systems will allow Procurement function to
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address larger spend and manage key supplier relationships more

efficiently.
e. Making best use of existing technology: SAP and other existing tools
offer a wide range of functionalities, which shall be used extensively,
based on proven best practices and aligned efficiency parameter
across or within group companies, wherever possible.
f. Establishment and measurement of key performance indicators:
Effectiveness of the procurement function must be measured and
benchmarked across the Holcim Group and with other industries.
These are clearly defined by Holcim and Procurement report
performance at regular intervals by means of a Procurement Score
Card.
2.2.2 General Principles

The overall objective of the Procurement Function at Holcim is to achieve the best
value for procured goods and services at the lowest TCO while collaborating closely
with all other functions within the organization and with suppliers, and in doing so,
the Procurement Function will be an active contributor to improving Operating Profit
and creating added value for the Holcim Group.
2.2.3 Organization, Governance, and Code of Business Conduct

1. The Procurement Function is organized:
a. On global and regional levels through Group Procurement.
b. On local levels through a dedicated procurement organization
within ACC & ACL (at Head Office, Regional clusters and Plant)
and working hand in hand with global and regional procurement.
2. Procurement in the Group is governed by:
a. A Global Procurement Council that directs Group procurement
strategy and determines the appropriate level to source
categories and process alignment
b. Three Regional Procurement Councils, which execute the Group
procurement strategy by:
i. Directing and supporting the implementation of regional
sourcing and process initiatives, including the allocation
of technical / operations resources to support crossfunctional and cross-regional teaming.
ii. Tracking and directing procurement performance of
Group companies in their area of responsibility.
3. The Code of Business Conduct & Ethics issued by ACC & ACL
management, sets the norms of behavior that will govern the work of all
employees at ACC & ACL.
Procurement organizations must adhere to a set of business conduct
principles. In Case, if an employee is uncertain of an interpretation,
he/she is expected to discuss the matter with his/her manager/
superior:
a. Business Ethics for procurement in the areas of (refer Code of
Business Conduct & Ethics issued by ACC & ACL
management):
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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).
2.2.4 Category Management

1. The basis of all category management activities and benefit planning is the
Total Spend Analysis. The implementation and proper usage of the Product
Classification System (PCS) by ACC & ACL is a precondition to carry out
this analysis.
2. Several Strategic Sourcing Options are available to achieve lowest TCO. It is
the responsibility of the relevant category team and the concerned
procurement organization to ensure that the most appropriate strategic
sourcing option is selected to meet their requirements.
3. All 3rd party spend is under the responsibility of category teams. Initiatives /
projects are negotiated based on thresholds limits by either the category
teams (above threshold) or by local operational procurement teams (below
threshold). An agreement with the selected supplier documents the conditions
at which Group companies buy these goods and services. Goods and
services covered by mandated global, regional or local agreements shall not
be procured through alternative channels.
The applicability of these agreements, and the commitments of Group
companies, are determined and mandated by the Global and Regional
Procurement Councils. Aforementioned mandates include the commitment of
spend and/or volumes on behalf of each Group company.
4. Category Management is the main contributor to generate monetary and
operational benefits. In order to ensure a competitive cost position for the
Holcim Group, ACC & ACL carry out an annual Benefit Target Setting process
based on annual category savings forecast and implementing Procurement
strategies in line with Holcim Group strategy.
5. The ACC & ACL seeks to engage in structured and long term relationships
with its key suppliers. This will be achieved through a systematic Supplier
Relationship Management (SRM) process followed by performance
measurements.
6. To improve the procurement performance of the ACC & ACL, and to
benchmark internally and externally, a set of reporting and controlling tools
are followed.
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3.0 Sustainable Procurement

Sustainable Supply Chain, is the management of environmental, social and
economic impacts, and the encouragement of good governance practices,
throughout the lifecycles of goods and services.
- UN Global Compact 2010
Sustainable Development (SD) is integrated into our procurement strategy, all day to
day operations, and in our relationships with suppliers.
The company cares about the environment and communities around its sites and it is
expected that products and services delivered by suppliers comply with this.
All Holcim operating companies are required to identify, prevent and manage risks
pertaining to OH&S, social responsibility and environment in their supply chain.
Further, Holcim seeks to engage in long-term relationships with Suppliers that are
committed to sustainable development.
The sustainable procurement approach and expectations are communicated to all
suppliers through a Supplier Code of Conduct (SCC) (refer Holcim Supplier Code of
Conduct).
The principles of Sustainable Development value creation, sustainable
environmental performance, and corporate social responsibility are integral to the
group companies business strategy. The approach to sustainable development
extends through the full value chain, including how our suppliers work with its own
supply base. Holcim group companies favor doing business with suppliers that are
committed to sustainable development. Therefore, Group Procurement HTEC has
developed a Supplier Code of Conduct to assist group companies in communicating
these expectations to all suppliers. The Supplier Code of Conduct can be found on
the global Hub.
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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.
Occupational Health and Safety (OH&S).

Working Conditions
Freedom of Association and Non-retaliation
No Forced Labor
No Child Labor
No Discrimination
Environmental Regulatory Compliance
Management of Environmental Impacts
No Bribery and Corruption
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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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4.1 Holcim Category Management Framework:

Holcim Category Management is neither a Procurement approach, and nor a
Corporate Function approach. It is rather a cross functional and cross regional
framework which bringing together Procurement with all relevant functions at
Corporate, Regional, and OpCo levels and provide a platform for 100% third party
spend management from the strategy definition to local execution. This framework
deliver value by leveraging;
Our groups size by pooling / bundling at global level.
Utilizing the skills of cross-functional and cross-regional category teams, have
full empowerment and accountability for delivering results (category
specialization).
Big picture approach, which enable to optimize supply chain and gives
increased negotiation power to derive, lower Total Cost of Ownership (TCO)
and efficiency in managing supplier relationships.
This framework has two basic elements at functional level.
Category Management at Global / Regional / Local level.
Operational Procurement at local level
Where as Category management teams (at global / regional / local level) serves to
provide a planned direction to the category by formulating sourcing strategy which
has involvement of people from cross functional teams (procurement & non
procurement), operational procurement team at local level is largely involved in
execution of the strategy at tactical level.
In order to ensure proper segmentation of responsibilities and workload, thresholds
have been established. For local spend where there are not any contracts in place,
these thresholds come into play. Where spend is above the thresholds, then
responsibility for execution falls on to the local Category Manager / Sourcing Lead
and the Category Management Team. Below the category threshold, initiatives
execution is the responsibility of Operational Procurement.
Threshold Values for Categories
Thresholds are to be used for local initiatives in the absence of already

existing contracts (negotiated by a category team, visible in a published
contract list)
Thresholds define the involvement of the Category Management Team
represented by OpCo Category Managers and Sourcing Leads
Thresholds for Category Team involvement:
1. Threshold for all categories except logistics (sub category pooling). If
annual spend is < CHF 500 K for a specific equipment / material /
service the purchase is done at the OpCo level by operational
procurement.
2. For logistics the proposed threshold is: CHF 1,000,000 per tender /
contract due to the special nature of this category.
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Key Considerations on Threshold:
In absence of a Global / Regional / Local contract, Category Manager at its

own discretion can delegate procurement of any material / service,
irrespective of the threshold limit, to operations procurement team.
Wherever there is an ongoing Initiative (be it local, regional or global), even if
the Contract is not yet placed, threshold will not apply. In such cases, only the
Initiative Owner can recommend the OpCo operation to buy so much quantity
which is necessary for ongoing business until the initiative is fulfilled.
Thresholds limits are generic values for categorizing / segmenting the jobs,
which can be independently done by operational procurement team (in the
absence of a category directive), and the ones in which category
manager is to be involved. It is on the discretion of category manager to
initiate sourcing activities for such above or below threshold limit spend
bundle or ask operational procurement to act upon it directly (being local or
spot buying in nature).
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4.2 Organizational design under Category Management

Framework:
In order to govern all the third party spend consistantly across the Holcim group,
cross functional Global, Regional, and Local Category teams have been formed for
each of the 13 categories. These category teams are fully empowered to define
strategy and execute projects; and are accountable for delivering savings and
performance by obtaining synergy from pooling volume and talent on the same table.
OpCo (local) Operational Procurement teams execute the transactional and tactical
tasks.
4.2.1 Structure of Global Category Team.

Global Category Teams define the category strategy through aligned objectives and
are led by a Global Category Manager. It is fully accountable globally for planning,
forecasting, and delivering initiatives and savings.
Each Global Category Team has members from the 3 largest spend OpCos
(covering 70- 80% of the global category spend), as well as a Regional Category
Manager and an Operations lead from each Procurement region. Additionally cross
functional team members participate as required
The Global Business Sponsor mentors the Global Category Manager and drives
business alignment
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4.2.2 Structure of Regional Category Team.

Each Region uses the same cross functional and cross regional structure led by a
Regional Category Manager who is fully accountable for implementing the projects,
initiatives and savings as per category strategy in the region.
Each Regional Category Team has members (OpCo Category Managers) from the 4
largest spend OpCos in the region covering 70-80% of the category spend.
OpCos within the remainder 30-20% of the categorys spend are not expected to
have an OpCo Category Manager for the category and are represented by another
Opcos Category Manager, who acts as their sourcing lead.
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4.2.3 Responsibility and accountability of Category Management
Team
4.3 Organizational Structure of India Procurement Organization

(IPO).
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4.3.1 Structure of Category Management Team at IPO.
4.3.2 Structure of Operational Procurement Team at IPO.
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4.3.3 Collaboration channel between Category Management Team,

Operational Procurement and various other stakeholders:
The Category Management structure combines two different communication paths
into a single collaborative forum. Procurement gathers information through Buyers,
involved in daily transactions, and Procurement Managers, up through Category
Managers who collaborate and bring their own OpCo needs and data to the table. In
parallel, the Operations Leads gather more technical information from the users and
specifiers and bring this critical operational information to discussions of opportunity
assessment and strategy definition. All strategies are ultimately approved by the
Procurement Councils, where the inputs from both streams, as well as other
business-critical information, are considered.
On a daily basis, operations (via OpCo users and specifiers) liaise with buyers
(mainly for transactional activities) and with Procurement Managers for tactical
topics. The Regional OpCo Operation Lead develops his or her own operations
network in each OpCo to communicate initiatives, collect needs, standardize
specifications and design common policies.
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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4.3.4 Responsibility and accountability at IPO
Category Managers are primarily

responsible for Category
Management. This includes working
as a member of a global or regional
category team, and representing the
interests of his or her OpCo in the
development of category strategy.
The primary tasks associated are:
- information and needs gathering.
- opportunity assessment.
- strategy definition and ensuring that
strategy, projects, and initiatives are
defined and executed.
In addition to the strategic tasks
mentioned above, the Category
Managers will engage in local
activities such as RFQ execution,
negotiations, etc., where spend
exceeds defined thresholds (i.e.
category spend exceeds CHF 500k
annually).
Operational Procurement
Category Management
Split of roles and responsibility between the two functional elements of this
framework are as below.
Operational Procurement is mainly

responsible for day to day tactical and
transactional activities as determined
by strategy and local needs.
Operational Procurement is
responsible for providing support and
complying with all local procurement
policies and procedures. This
includes the implementation of
regional and global category projects,
allocation of supplier volumes as
described in the categorys strategy
and transactional activities (such as
Purchase Order issuance, monitoring
delivery and quality, monitoring of
invoices and payment).
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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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4.3.5 Workload Segmentation at IPO:

Work load distribution and segregation of roles and responsibility within IPO is
demarcated in the below table.
Support NCM in
category strategy
formulation
(Industry analysis,
Vendor
prequalification,
special initiatives,
etc.)
Support NCM in
sourcing
and
negotiations
HO
Develop the category

strategy with the Global
/Regional
Category
Team
- Demand
planning
- Industry
intelligence
- Vendor
Prequalificatio
n
- Special
initiatives
Execute sourcing for all
OpCo's in scope (gather
specifications and needs,
prepare RFPs, negotiate
and finalize commercial
Terms and Conditions
with vendors)
Handle major escalations
which
cannot
be
addressed
at
plant/
cluster/ HO Ops team
level
Cluster
Operational Procurement
Plant
National
Category Category
Manager (NCM)
Support Group
Provide leadership to the Cluster

and
Plant
procurement
organization
Upload the contract in SAP,
ready for execution
Handle
P2P
process
for
procurement at the HOs
Handle sourcing activities as
mandated by Category Team
Handle escalations from Cluster
and Plants
Handle key P2P process steps
like PO and scheduling for all
spend pooled at the clusters
Upload the contract in SAP, for
local contracts
Handle sourcing activities below
a defined threshold
Handle escalations from Plants
Coordinate local day-to-day
operations, receipt, QC, stock
monitoring,
payment
and
compliance etc.
Handle sourcing activities like
Vendor
identification,
negotiation,
finalization,
expedition,
feedback,
consolidation of requirement.
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5. Choosing the right Purchasing Channel

A procurement channel is a unique combination of
systems and processes through which goods and
services are procured and paid for. When selecting
the most suitable procurement channel, many
variables must be considered, such as level of
control required, IT tools available and suppliers ereadiness.
This process has a significant influence on
operational efficiency, internal controls, usage of IT
platforms, realization of cost saving, and the way we
relate internally and with our suppliers. Choosing the
right purchasing channel also helps to reduce other
undesirable issues such as:
Unnecessary distraction of management (e.g. handling invoices payment

claims)
Category managers and buyers handling process issues instead of using that
time for strategic sourcing and negotiations.
Additional resources needed to process invoices, do reconciliations and/or
attend to suppliers queries.
Poor payment records, which leads to supply interruption and/or advance
payment requests and/or tougher negotiations.
Stock out due to longer internal processes lead times.
Avoidance of internal controls (e.g. spend fragmentation, maverick
purchasing).
Low service level to internal customers.
Reduced spend visibility and additional effort required for reporting.
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.
SAP Initiated Requisition

Direct FI Invoice
One Time Vendor
Cash Purchase through Petty Cash
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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).
Table 1. Purchasing Processes:

Process
Bulk Material, Fuels,
Bags.
Inventory Material/
MRO.
Admin Supplies.
Services.
Examples
Is PO
Required?
Is
Material
or
Service
Code
Required?
Coal, Slag, Gypsum etc.
Yes
Yes
Refractory,
Grinding
Yes
Media, Motor etc.
Janitorial, Stationary etc. Yes
Consulting,
etc.
Installation
Yes
Capex Spares parts/

Wear
parts
/ Bearing, Steel etc.
Yes
consumables (03 & 04)
Capex Equipment / Stacker, VRM, Gear Box
Yes
Sub-assemblies
assembly etc.
Capex
Services
Engineering Labor services,

Fabrication etc.
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.
5.1 SAP Initiated Requisition

A SAP requisition is the default procurement channel for all purchases. Users should
always consider this channel as the primary requisitioning tool unless the purchase
meets the criteria specifying or allowing the usage of another procurement / payment
channel. This channel encompasses processes, which are described in details in
chapter 6. Raw materials, fuels, electricity, spare parts, consumable & wear parts
maintenance services, direct charge materials usually falls in this category.
5.2 Direct FI Invoice

SAP FI invoice is the procurement channel where process is initiated after a vendor
sends an invoice that does not correspond to a purchase order. The invoices are
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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.
5.3 One Time Vendor

One time vendor is a standard SAP process where normal vendor master creation is
not required but we get all payment details in system as normal vendor, and
payment can be processed using banking channel.
Manual Requisitions for payment through one time vendor is initiated when such
request is made as per approvals. Once approved as per the standard procedure,
finance posts the entry and pays to the vendor. This process is controlled by finance,
and governed by corporate finance controlling. Standard FRM/OH&S/ABCD etc.
declaration applicable for normal vendor master creation will not apply to one time
vendor. One time vendor transaction will be exception to the policy.
One time vendor helps us in reducing the number of vendor master records in
system, specifically for the cases where we do not expect further transaction with
same vendor.
One time vendor cannot be used for the transactions which requires PO to be
created, or requires trail in the system such as for advance payment, TDS deduction,
Deposits, related party transactions etc.
List of nature of transaction eligible for this process and its monetary limit per
transaction is defined below to avoid misuse of one time vendor process.
Monetary limit per
transaction (INR)
Advertisements in festivals, sponsorship and Less than 30,000.00
souvenir
Compensation paid to farmers
Less than 1,00,000.00
Donations
Less than 1,00,000.00
Land purchases payment to farmers
At actual
Payment to nominees for deceased employees
At actual
S. No. Expenses covered under One Time Vendors
1
2
3
4
5
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6
7
8
2015
Reimbursement of interview candidates

Less than 30,000.00
Settlement of some old court cases where in At actual
vendor / employee code is not in system.
Any other nature of expenses with approval of At actual
CFO
5.3.1 Process Flow for One Time Vendor payments:

1. Authorization for one time vendor processing is with central finance team.
2. Concern user department will submit one time vendor request with necessary
details about vendor (name, address etc.) and the nature of transaction to
concerned finance team at locations with an approval of unit head and finance
in-charge.
3. One time vendor request related to advertisements in festivals, sponsorship
and souvenir and Donations will require prior approval from secretarial
department at HO.
4. Concern user department will be responsible to follow and comply with all
applicable rules and directives like OH&S, ABCD etc.
5. Finance Team at location will send the details of one time vendor through email in OTV Template along with necessary supporting & required approval to
centralized accounting team for processing transaction.
6. Central accounting team will verify whether the requested vendor is a part of
related party vendor list updated in SAP.
7. Final decision for processing the transaction through one time vendor will be
with central accounting team.
8. Central finance team will account for the transaction as direct invoice based
on detail received in template and will provide document number to local
finance team to send the same for payment through APP.
9. By default, payment will be made through cheque. In case the payment is
required to be made through DD, a specific mention of the same needs to be
made while sending APP sheet. One time vendor cases will not be processed
through electronic payment mode.
5.4 Cash Purchase through Petty cash

A petty cash fund is a cash advance issued to a custodian who will be responsible for
the security of the fund and the control of disbursements made from the fund.
Petty cash is used as a purchasing channel at the places where the inherent costs
and time required to process financial transactions is high with respect to value of
payment and where a debit card /credit card is not available or when its usage is not
appropriate /feasible.
Every department head / manager has been given the authority to cash purchase for
certain amount based on operational needs at different locations and subject to petty
cash policy of the company. In addition to this, all department managers are given a
certain amount of Petty Cash, which will be refilled after submitting the cash bill to
the finance department.
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6. Purchasing Process Flowchart

This chapter covers the high-level procurement processes applicable to the different
product / services categories.
An efficient purchasing process starts with proper demand planning and ends with
proper supplier performance evaluation.
To optimally support manufacturing function, forecasts for operational activities

needs to be communicated to Procurement well in advance (1 year +).
Maintenance material / service consumption planning requirements, needs

to be communicated at least 13 weeks in advance.
Production forecasting (consumption of fuels, raw materials, etc.)
requirement should be communicated to Procurement well in advance (1
year +).
Procurement should be formally involved in demand planning / scheduling
of other departments (e.g.: participating in plant shutdown plan meetings
etc.).
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2015
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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2015
Based upon above classification, each of the 9 procurement processes has been
mapped in the following sections.
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6.1 Operational Process for Stock / Recurrent / Bulk Material

and Bags.
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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2015
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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6.2 Operational Process for Stock / Recurrent / Spare Parts &

Consumables.
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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6.3 Operational Process for Stock/ Non-Recurrent / Goods.
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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6.4 Operational Process for Non-Stock / Recurrent / Goods.
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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2015
6.5 Operational Process for Non- Stock / Recurrent Services.
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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6.6 Operational Process for Non-Stock / Non-Recurrent

Goods.
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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6.7
2015
Operational Process for Non - Recurrent / Services
Service procurement of Non-Recurrent services follows the similar procedure, as for

recurrent services. Maintenance services where no maintenance contract exists for
the equipment, entertainment /welfare event service etc. falls under this category.
Clearly defined on Scope of Work (SOW) is a prerequisite under this process for
quick and optimum delivery of the services.
It may be noted that for all non-recurrent critical services, vendor safety prequalification should be done through standard OH&S process (under CSM Directive)
by OH&S Team.
A brief procurement operating process for major Marketing Service procurement
activities have been enlisted in the below table. The same needs to be followed as a
Standard Operating Procedure (SOP).
Page 39
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
1. User should provide approved tour calendar for the

complete year latest by 28th Feb every year.
2. Approved scope sheet (based on pre quote meet
done along with Procurement & Marketing) should be
received 60 days before the day of travel and
accordingly release PR should be given to
procurement for execution. Minimum two vendors for
pre quote meet (as identified by NCM). This will help
in obtaining the most competitive rates for hotel and
air
booking.
3. Scope change should be avoided after rate
finalization, however in exceptional cases, NCM can
decide if the rate change should invite a retendering
or negotiation with L1/L2 vendors so as to incorporate
new
scope.
4. Based on the approved tour calendar and scope
sheets, procurement will finalize rates and vendor so
as to optimize the total spend and take the benefit of
bulk booking in the lean period (July to Sept). Avoid
peak periods Nov-Dec & April - June as tour cost is
very high (in case of exceptions approval by CCO /
CMO
will
be
required).
5. In case of international travel, required documents
(like passport etc.) should be available with user
department at least 30 days before commencement
of
the
tour.
6. In case of tour cancellation due to change in tour
period/ deviation in number of PAX, RFQ will be
refloated again and will require 60 more days to replan
the
tour.
7. In any deviation or special case approval of DS/MH
needs to be obtained, as this may have cost
implications
for
the
company.
8. Any cost incurred during the trip 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
trip.
9. In order to ensure fair assessment of vendor
service level during the tour and compliance to the
scope sheet, one person from procurement should
accompany the tour as an observer, subject to the
approval of CCPO and as a part of free of cost seat.
10. The tour coordinator (companies representative
nominated prior to the tour) 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 and audit
requirements.
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
Electronic Items for

Dealer/ Retailers
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
Page 41
PR
to
delivery
lead
time.
Marketing
Procurement
Category
Description
POP/
Gifts
Caps, T-shirts, Key

Chains, Tiff ins,
Giveaways
for
Dealers/ Retailers
Outdoor media
Branding
Festival Gifts
Diwali, Holi etc.
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

RFQ can be floated by procurement.
1. Approved specifications along with PR to be
received by procurement for floating RFQ by 30th
June
of
every
year.
2. Rate & vendor finalization to be done by 31st July.
Pan India tendering to be done for combined
requirement
of
ACC
&
ACL.
3. Artwork to be provided by Corporate
Communications
latest
by
31st
August.
4. Dealers names to be provided to the vendor latest
by
10th
September.
5. Delivery expected by 1st week of December.
DS/ MH
DS/ MH
DS/ MH
DS/ MH
DS/ MH/CMO
Quotes to be called and vendor to be decided by

marketing team at RO.
30
Approval of Head Operational Procurement (Service)

up to 5 lacs and CCPO > 5 lacs
Page 42
6.8
2015
Operational Process of Capex Goods.
1. Based on the identified scope, CAPEX budget approval is obtained by user

department for creation of PR. In case of green field or new technology projects,
if required, budgetary offers may be obtained by procurement in order to estimate
the CAPEX budgetary amount.
2. Proper project budgeting and planning process should be in place before actual
procurement activity starts.
3. Standard SAP PS functionalities should be used to implement operational
procurement processes for Capex so as to ensure process efficiency and
automatic internal controls.
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6.9 Operational Process of Plant Capex Services.
Based on the identified scope, CAPEX budget approval is obtained by user

department for creation of PR. In case of green field or new technology projects, if
required, budgetary offers may be obtained by procurement in order to estimate the
CAPEX budgetary amount.
Based on CAPAX approval, user / project team shall create the SAP- PR along with
tender documents and proper service specifications. With reference to the tender,
RFQ shall be released by procurement (CMT & OPT) on the approved vendors or
newly identified vendors. Offers are invited in two parts for such critical orders.
Scrutiny and evaluation of technical Offers is done by user department and
recommendations are given. After the receipt of technical & OH&S evaluation, and
freezing of detailed Scope, T&Cs etc., revised offers may be obtained by
procurement, if required. Then price offers are analyzed for scrutiny.
Negotiation shall be carried out by team of procurement & / or technical personal.
More over for erection and civil contracts, site in-charge may also be involved. The
negotiations shall be as per approved Negotiation Process and Delegation of
Authority.
Approval is obtained based on the value as per the delegation of authority. SAP
Contracts / PO are created by operational procurement team and released as per
SAP released strategy. Orders / amendments are released in the system by OPT
from time to time. Plant/ site person are responsible for receiving the Services and
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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.
6.10 Negotiation Process

Negotiation is a process when both seller and buyer reach to achieve their value for
money. Negotiation is a very important phase in the procurement process and
results in achieving the benefits. It is about understand power and positions of play.
A successful negotiation is one where both the parties feel that they have achieved
satisfactory outcome and a good deal, that will stand the test of time. Ultimately the
objective should be to reach an agreement that achieves our key wants, but not at
the expense of more than what we want to give away (not just any agreement).
Negotiation shall be conducted with all the bidders as per negotiation schedule. The
vendors who could not participate physically should be asked to give their no regret
price on mail.
With the new Holcim Category Management Framework in place, the tender
committee will cease to exist. There are some general guidelines to be followed
during negotiations as per applicability and relevance.
Negotiation process can be generally divided into 5 steps.
1.
2.
3.
4.
5.
Understanding your Own Position.

Define Negotiation Options.
Understand other Partys Position.
Plan the Tactics.
Implement the Plan.
6.10.1 Understand your Own Position

Negotiation is all about preparation and planning. We need to understand our basic
requirement that needs to be met and key issues that we need to be resolved. Check
if there is a prior experience or learning, and who were the key people involved. How
quickly do you need to reach at an agreement (timeframe)? What can you afford to
give away verses any position that you must maintain (concessions)? Ask yourself
what you dont know, and what you need to do to find this out.
Step1:
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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Step 2: Price Estimation
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.
Step 3: Preparation of comparative statement as per the Format
Comparative statement shall be prepared as a standardized chart.

Price comparison shall take into consideration, the technical and commercial
loading factors, wherever applicable (Technical Loading Power, fuel
consumption, efficiencies, life of components etc., Commercial Loading
Payment terms, Taxes, Delivery cost )
Identify the differences with respect to technical details.
6.10.2 Define Negotiation Options.

Negotiation options can be defined based on 3 key aspects;
I. Most Desired Outcome (MDO).
II. Best Alternative To a Negotiated Agreement (BATNA).
III. Least Acceptable Agreement (LAA).
MDO is the most aggressive target for the negotiation. LAA is the bottom line that is
least acceptable outcome. And BATNA is the course of actions pursued, if the
negotiation options do not meet the LAA. This involves implementation of different
solution to meet the requirement, finding a different source / alternative supplier / or
insourcing, or even eliminating use / not buying /change requirement to fit other
option.
6.10.3 Understanding Other Partys Position.

Carry out supply market profiling, relative power & positioning, and SWOT analysis
of the supplier to understand the levers.
Gather the information by asking questions from supplier, its other customers, and
from other public sources.
6.10.4 Plan the Tactics

Understanding the negotiation options will help you defining the tactics. Plan to what
extent you would take hard adversarial approach or a soft collaborative approach.
Think about outcomes versus relationships and the future ongoing effects.
6.10.5 Implement the Plan

Prepare relevant question for the other party and think what the other party will ask
and prepare your answers for that.
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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.
6.11 Operational Process for Emergency PO

Emergency purchase is done for materials / services for want of which production
stops. In this purchase process, material / service from vendor is requested over
phone / e- mail / fax by Operational Procurement team. Vendor supplies material or
renders services based on the request. He also sends offer, challan (delivery note) /
invoice along with the material / service. The material is required in emergency and
immediately consumed; hence routine procurement process of competitive bidding is
not followed. Contract validation in SAP is by passed for such PRs/POs created
through emergency procedure.
6.11.1 Detailed Procedure of Emergency Purchase

During emergency respective Functional Manager at various business units will
request the procurement to procure material or service by creating an emergency PR
with document type ZEPR for both ACC & ACL. Such emergency PRs are created
manually by the user with Account assignment category as mandatory field (as the
material will be directly consumed & would not go into inventory). Please note that
the emergency PRs are to be created manually for both coded / non coded items
and services. Here, the user has to select requisitioner as EMERGENCY only
(except in case of Ambujanagar where it is EMERGENCY1 & EMERGENCY2). The
procurement department will follow up with vendor for supply of material or service,
and will create emergency PO with document type ZEP for both ACC & ACL. Inward entry of the material may be recorded at Gate (through IGP module).
The emergency purchase requisition & purchase order will be subjected to release
as per Delegation of Authority (DoA) value slab. Formal goods receipt will be done
by stores, and excise person will capture excise invoice & post cenvat as per
standard practice. Accounts Payable will then do invoice verification based upon
goods receipt as per normal practice.
Please Note that any material which is routed through weigh bridge interface (i.e.
goods receipt is done automatically through weigh bridge interface) should not be
procured on emergency basis.
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6.12 E - Reverse Auction Process.

A reverse auction is a type of auction in which the roles of buyers and sellers are
reversed. In an ordinary auction (also known as a forward auction), buyers compete
to obtain goods or services, and the price typically increases over time. In a reverse
auction, sellers compete to obtain business, and prices typically decrease over time.
In business, the term most commonly refers for a specific type of auction process
(also called procurement auction, e-auction, sourcing event, e-sourcing or ereverse auction) used in industrial business-to-business procurement.
6.12.1 General guidelines for carrying out reverse auction.

These Guidelines are intended to educate and assist ACC / ACL employees and
third parties with regards to e-Reverse Auction processes, awarding criteria,
confidentiality requirements, and clearly states the binding nature of bids made at
any e-Reverse Auction.
The aim of e-Reverse Auctions is to enable negotiations to be engaged in using a
technology that allow a faster pricing process, a more objective way of selecting
third parties, and ensures greater transparency of market prices. ACC / ACL and
third parties are expected to follow the standards set forth in these guidelines, and
to deal fairly with each other in e-reverse auction.
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6.12.1.1 Scope of e-Reverse Auction.

Successful deployment of e-Reverse Auctions is not limited to high volume
commodities and services. E-Reverse Auction can be successfully used in complex
spend categories with highly engineered specifications and with direct impact on
the business operations. E-Reverse Auction has proved to be a successful enabler
in the negotiation of direct and indirect goods and services also. It is therefore the
aim of ACC / ACL to access the suitability of e-Reverse Auctions as a support
mechanism in all final commercial negotiations and to conduct e-Reverse Auctions
whenever feasible.
6.12.1.2 Initiation on Bid Process.
1. Lots:
Only Third Parties who have been pre-qualified as meeting the required
standards set forth by ACC / ACL for bidding, including the criterion of
available capacity for the product at the necessary order volume and / or
service quality, may participate in an e-Reverse Auction. In case, if the Third
Parties are not able to meet the full demand, lots will be prepared of a small
volume. Balance required quantity will be auctioned at a later stage (after 8
days).
2. Opening Price:
Opening price is the upper / ceiling price of the contract value fixed by ACC /
ACL for the lot / item. Third Parties can bid only lower than the opening price
in case of e-Reverse Auctions. (Bid price would be based on the total price
arrived at multiplying specified quantities with unit rates and summing up for
the entire requirement). Only pre-approved Third Parties will be allowed to
participate in the e-Reverse Auction and their performance will be evaluated
as per Holcim standards. This Opening Price will be pre-approved as per
Delegation of Authority (DoA).
The opening price approval should be backed by following documents:
a. Working sheet showing summary of initial bids and average price,
highest bid and the lowest bid.
b. Report of independent verification of prevailing prices for coal, steel
etc. from authentic websites.
c. Approval note seeking approval of opening bid price based on above
criterion. Recommendations from category manager would be required
for high value transactions above the value slabs up to which they
themselves can approve as per DoA.
3. Weightage / Loading Factor
This factor shall be incorporated by the System Administrator during the
event. This factor is the effect of financial implication arising out of the
deviation taken by the participating Third Parties in the Bid.
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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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10. Mistake Proofing

If by mistake any participating Third Party puts a wrong bid, then this bid will
be deleted only on receipt of written communication from the same, within 5
minutes of placement of the bid to the system administrator.
6.12.1.3 Transparency & fairness
In order to maintain the transparency & fairness Level, ACC / ACL have currently
tie-up with M/s. C1 India Pvt. Ltd. to conduct the e-Reverse Auction event. Different
departments are assigned different user id and password for creating the auction
and setting the basic rules, administrator is the only person who has the access to
view the live auction.
The e-Reverse Auction will be conducted in the presence of system administrator
and inside a closed room where internet connectivity is available. Any
communication (only technical issues) must be from administrators mobile phone
only. Contact details should be communicated to the supplier prior to the start of
the auction.
No price negotiations should take place on an individual basis (with Third Parties
who are not awarded the auctioned business) after the e-Reverse Auction should
has been concluded, unless the commercial negotiation with the Third Party who
has been awarded the business cannot be successfully concluded.
Head System, Process, & Tools or Head Reporting & Performance Management
will be monitoring the auctions on random basis to check the independence and
transparency of the e-auction process. All auction events to be published must be
copied to the Head System, Process, & Tools or Head Reporting & Performance
Management apart from the system administrator (auction controller who is part of
the Business Process & Procurement Intelligence Team). Each auction should be
witnessed by at least one person not related to the category.
Attendance register named as Auction Report will be maintained and required to be
signed by each person entering and leaving the auction room and this register will
be in custody of Head System, Process, & Tools or Head Reporting & Performance
Management.
C1 India e-auction platform cannot be accessed at different work stations at a
given point of time as there is no provision for multiple logins.
After the e-Reverse Auction event has been concluded, no price negotiation will
take place on an individual basis with Third Parties who are not awarded the
auctioned business, unless the commercial negotiation with the Third Party who
has been awarded the business cannot be successfully concluded. The final
purchase order should be backed up with the closing report of auction event
directly generated from reverse auction platform.
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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.
6.12.2 Introduction of new vendors for e-auction

Particular reference should be made for the following cases:
1. Vendors who were blocked earlier.
2. Vendors who were rated below satisfactory during vendor assessment.
3. Approval process and levels before including the vendor in the list of
approved suppliers.
6.12.3 Expectations from Third Parties:

Third Parties are deemed to have accepted the auction rules on participation at the
bid event. Participation in an e-reverse Auction event is by invitation from ACC /
ACL. Any other Third Party does not automatically qualify for participation.
ACC / ACL will make every effort to make the e-Reverse Auction process
transparent. However, the award decision by ACC / ACL would be final and binding
on supplier. The following points must be complied by the Third Party.
1. They agree to non-disclosure of trade information regarding the purchase,
identity of ACC / ACL, e-Reverse Auction process, technology details,
documentation and bid details.
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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.
6.12.4 Compliance & termination

The responsibility of any Third Party to comply with applicable regulations,
standards and law remains with the Third Party. ACC / ACL shall evaluate Third
Parties in respect of their commitment to the e-reverse Auction Guidelines and of
their efforts to comply with them. In the vent of evident and persistent violations of
ACC / ACLs principles in this context, the relationship with the Third Party in
question shall be terminated.
6.13 Supplier Performance Evaluation.

To meet the growing business requirement the company needs to sustain and
improve the relationship with suppliers for uninterrupted supply of goods & services.
The need to improve procurement spend through value added services from
suppliers; and the growing complexity of the products, services and extended supply
chain raises the importance of having an effective supplier performance evaluation
system. It provides actual performance of suppliers in an evaluation period. Based
on the performance scorecard of a vendor, procurement team can decide future
business pattern with the supplier. This also provides a good platform for integration
of procurement and end users.
Supplier performance evaluation is to be done for chosen strategic & critical
suppliers among high spend A class vendors as identified by segmentation process
on yearly basis. The procurement team and end users can add any other vendor
based on criticality of the product / service supplied by the vendor.
Performance Evaluation to be done Vendor wise and category wise. Scoring function
combines both subjective and objective metrics based on experience with the
supplier and using data from various end users.
An effective supplier performance evaluation program gives the company the
following benefits:
Reducing procurement cost
Promoting supplier improvement
Concentrating the business with high-performing
suppliers
Ensuring end-product quality
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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
6.13.1 Responsibility of supplier evaluation.

Criteria & Weightages are finalized by Category Manager at IPO, while ratings are
to be given by Operational Procurement team and users. In some cases like Capex,
Raw Material, etc., ratings can also be given by category manager.
The criteria such as Quality, Cost, On-time delivery, response, OH&S etc. forms the
basis of performance assessment of suppliers.
For each Criteria Weight-ages are different for different categories like MRO, Energy,
Capex, Services etc.
Both Weight-age & Criteria are decided by category manager and would remain
same for all vendors supplying same commodity / service.
Rating Scale provides end-users to give score against the predetermined criteria for
a supplier based on past performance. This shall provide a more objective evaluation
methodology, where the goal of the evaluation scorecard is to assess the suppliers
performance as accurately as possible. If the past performance data is inadequate,
rating can be provided by all end users & final rating can be derived by averaging it
out.
Advantages of supplier performance evaluation:
Optimize supplier relationships

Treat different suppliers in different ways depending on the nature of
the relationship and their strategic value
Extend and strengthen supplier relationships
Integrate suppliers into the business processes
Drive profit enhancement through reduced operational cost of the
supply chain while maintaining quality.
Create competitive advantage and drive revenue by jointly bringing new,
better and more customer-centric solutions to market faster.
Make structured information available to increase the quality and efficiency of
communication and results in fact-based negotiations and decision-making.
Develop relationships with suppliers while driving down total cost and
managing risk.
Increase efficiency of procurement processes.
Create approved supplier portfolio.
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6.14 Request For Quotation (RFQ) Policy

In order to ensure proper control and regulation of Procurement activity, the following
Process shall be adopted.
6.14.1 Short listing of Suppliers

1. Vendor Master Controller shall generate vendor master records of qualified
and registered Suppliers as per Vendor qualification Policy and Registration
Process in SAP so that adequate numbers of qualified and registered
Suppliers for supply of various categories of items being procured are
available at any point of time.
2. Request for offer for stock and non-stock items including capex shall be
addressed to all potential suppliers maintained in SAP and / or any new
supplier, when the list contains less than 3 Suppliers, and to minimum of 3 or
more suppliers when the list contains more than 3 Suppliers, as short listed by
procurement personnel based on performance and experience with the
supplier.
3. List of registered & approved suppliers to be maintained by respective
Category Managers. New suppliers can be added to this list as approved in
accordance to Delegation of Authority (DoA). However before placing any
order, it shall be ensured that the supplier is qualified and registered as per
Vendor qualification Policy and Registration Process in SAP.
6.14.2 Single Supplier Offer Process

Items falling under the following categories can be covered by above system.
1. Items of proprietary nature: When the specific items required are available
with a particular supplier, as he has the exclusive right in respect of that item
and no alternate source is available.
2. Procurement on account of standardization of source / item. The items
are required to be procured from the same supplier of original supplies of
equipment and/or spares for reason of standardization.
3. Development orders released both for short and long term development.
When new sources to be developed as existing sources are not sufficient.
4. Procurement from OEM / Collaborators: When the spare parts ordered are
pertaining to the equipment that are originally manufactured by supplier.
5. Exceptional Cases: With prior approval of Head Country Category Manager
& CCPO.
6. Low Value Items up to a maximum value of INR 15000.
6.14.3 Single Part Offer

In this system offer is be received in one part only, giving technical as well as
commercial terms and conditions including price, in a sealed envelope or through email mentioning the offer number and due date of submission. Generally for revenue
items offers shall be received in single part bidding system.
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6.14.4 Two Part Offer

1. Generally, procurement of equipment against project or capital budget
proposals & services may be covered under two parts offering system.
2. RFQ document should provide detailed guidelines to the suppliers for
submission of the offer in two parts. First part (generally called Technical
Offer) should contain complete technical specifications / requirements and the
suppliers response towards meeting these specifications and deviations, if
any. First part shall also contain commercial terms and conditions such as
delivery, payment terms, etc. excluding price.
3. Second part shall contain price and detailed commercial terms and conditions
of the supplier, for the scope of supplies and services as indicated in the
Technical Offer.
4. Request for Quotation along with the technical data / drawings shall be sent to
prospective suppliers through e-mail / fax / courier by procurement personnel.
The supplier shall be advised to send offers by e-mail (in non-editable format
like PDF etc.) or fax followed by original or by post / courier (in a closed
envelopes), indicating the quotation reference, due date, etc. to the concerned
procurement personnel.
5. Processing of offers is to be done as per Negotiation Process defined in the
Process Guide.
6.14.5 Period allowed for offers

1. Adequate notice shall be given to all suppliers for submission of offers. In
case of revenue goods / services, a minimum of one week and for capital
goods / services, generally 2 - 3 weeks shall be given for the submission of
offers. Offers against urgent requirement may be received even within 2 - 3
days also. In case there are no responses from the suppliers, reminder mail
may be sent to the supplier.
2. Adequate technical data needs to be furnished in the quotations, and in the
event of any change in the scope of supply made by the user department, all
suppliers should be informed of these changes so that offers are received for
same scope of supplies from all the suppliers. The last date of receipt of offers
shall be suitably revised, whenever scope of supply has been changed and
respective suppliers are informed accordingly.
3. In case of extreme urgencies, parties may be requested over phone to send
their offer by fax/ e-mail, in which case, the allowed time shall be less than
that indicated above.
4. Procurement Personnel will be allowed to receive the offers till the end of
deadline date mentioned in request for quotation, unless extended. Any
change in deadline as mentioned in RFQ can be made with approval from
Category Manager / Operational Procurement Head / Cluster Head and shall
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be communicated in advance to all the suppliers to whom RFQ has been

issued.
6.14.6 Documentation for Sending Quotation and Receipt of Offers.

The Procurement Personnel shall maintain details with respect to sending
quotations, receipt of offers, any change in scope, date of submission date etc.
6.14.7 Opening of Offers and Processing.

1. All offers received for revenue items shall be opened and initialed by
procurement personnel.
2. In case offers could not be opened on the day next to due date, the Category
Manager / Operational Procurement Head / Cluster Head shall decide the day
of opening of offers suitably as per number of offers received and shall open
all the offers received on the same day. Any exception to this procedure shall
be duly approved from Category Manager / Operation Procurement Head /
Cluster Head.
3. Offers for capital budget proposals and project requirements are generally in
two parts as indicated below.
a. Part I containing technical offer and commercial terms except price.
b. Part II containing prices and detailed commercial terms.
The following guidelines shall be followed with respect to opening of offers
received against capital budget and / or project requirement.
a. First the Technical offers shall be analyzed and evaluated.
b. Offers containing the price and payment terms shall be kept with
procurement personal and should be considered after technical
evaluation.
c. Technical offers shall be sent to the indenting units / department /
division / Techport for Technical Evaluation or recommendations.
d. The indenting Division shall evaluate the technical offers and forward
their technical and safety recommendations to procurement.
e. Technical evaluation of the offers should clearly indicate whether the
offers are
i. Technically & OH&S Acceptable.
ii. Technically & OH&S Acceptable with certain modification
iii. Technically & OH&S NOT Acceptable.
iv. If there have been favorable / adverse parameters such as
energy consumption, losses, past performance, standardization,
other technical advantages / superiority between the various
offers; the same shall be indicated clearly in the technical
evaluation indicating the loadings (both in technical terms and
relevant estimate for these variations) so that these factors can
be accounted by procurement while comparing the prices
v. Technical evaluation should also clearly indicate the
performance parameters such as desired output levels /
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operating parameters / guaranteed life of components of the

equipment proposed etc.
f. After receipt of no regret price within scheduled time of one working
day after negotiation, best offers will be reviewed. Based on the
discretion of the negotiation team, counter offer will be given to the
bidder whose offer is technically and commercially best. If the bidder
accepts the counter offer the process ends. If the bidder is not able to
accept the counter offer he shall confirm his best offer and the counter
offer shall be extended to the second best bidder who shall confirm his
acceptance of counter offer or submit the best offer in case he is also
not able to accept the counter offer. The negotiation process shall stop
if first or second bidder accepts the counter offer, in case both do not
agree, compare the offers and decide the best value bidder.
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.
6.14.9 Special Conditions

1. For government / PSU administered prices, quotation may not be required.
2. Procurement approvals shall be taken as per Delegation of Authority.
3. For all critical maintenance & engineering services contracts, vendor safety
pre-qualification shall be done through standard OH&S process by OH&S
team.
6.15 Related Party Transaction.

The Companies Act, 2013 (the Act or New Act) aims at enhancing Corporate
Governance by clearly defining the duties of directors and fixing additional
responsibilities and defining the attributes and role of independent directors to
preserve their independence. It has increased the responsibility of auditors by
imposing certain restrictions on providing services other than audit and huge
penalties to ensure their independence. Disclosure of related party transactions and
approvals for such transactions is one such area which is intended to prevent
directors, Key managerial persons from taking undue advantage of their position for
their personal benefit and ensure transparency in dealings of the company.
Why law mandates disclosure of related parties?
The general presumption is that shareholders interests are compromised in related
party transactions and goods or materials or services are sold at unreasonably low
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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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The objective of this Standard is to establish requirements for disclosure of:

a)
Related party relationships; and
b)
Transactions between a reporting enterprise and its related parties.
Related parties have been defined to include some parties in addition to all
the parties identified as related parties under the Act.
Scope:
a)
This Standard should be applied in reporting related party relationships
and transactions between a reporting enterprise and its related parties. The
requirements of this Standard apply to the financial statements of each
reporting enterprise as also to consolidated financial statements presented by
a holding company.
b)
This Standard applies only to related party relationships described in
paragraph 3 of AS 18 which are defined in the definitions chapter of RPT
Manual (chapter 2).
6.15.2 Assessment of Ordinary Course of Business (OCB)
No definition of ordinary course of business is provided in Companies Act 2013.

However, the following conditions / factors may be used for assessment of a
transaction as ordinary course of business.
(i) the objects (main, incidental or ancillary) of the company permit such
activity;
(ii) it has a connection with the normal business carried on by the company;
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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
6.15.3 Assessment of Arms Length Principle (ALP)

Sec 188 of Companies Act 2013 specifies Arms length as;
The expression arms length transaction means a transaction between two
related parties that is conducted as if they were unrelated, so that there is no
conflict of interest.
When independent enterprises deal with each other, the conditions of their financial
and commercial relations (e.g., the price of goods transferred) are ordinarily
determined by market forces. This may not be the case for transactions between
related parties where the pricing of transactions inter-se may potentially be
determined by a combination of market and group driven forces which can differ from
open market conditions. Hence, transfer pricing between related parties assume
importance from a tax perspective since it can affect the tax liabilities of the parties
and in case of cross border transactions, the tax revenues of the countries involved.
This implies that a transaction between associated enterprises has to be priced at a
level, at which unrelated (or independent) parties would undertake similar
transactions under similar conditions.
The application of the arms length principle is based on a comparison of the
conditions in a controlled transaction with the conditions in similar transactions with
independent enterprises. This implies that a transaction between associated
enterprises has to be priced at a level, at which unrelated (or independent) parties
would undertake similar transactions under similar conditions.
6.15.4 Omnibus approval of Related Party Transaction from Audit

Committee (AC).
All Related Party Transactions shall require prior approval of the AC. However, the
Audit Committee (AC) may grant omnibus approval for Related Party Transactions
proposed to be entered into by the company subject to the following conditions:
(i) AC shall lay down the criteria for granting the omnibus approval in line with
the policy on Related Party Transactions of the company and such
approval shall be applicable in respect of transactions which are repetitive
in nature
(ii) AC shall satisfy itself the need for such omnibus approval and that such
approval is in the interest of the company
(iii) Such omnibus approval shall specify (i) the name/s of the related party,
nature of transaction, period of transaction, maximum amount of
transaction that can be entered into, (ii) the indicative base price / current
contracted price and the formula for variation in the price if any and (iii)
such other conditions as AC may deem fit;
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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"
6.15.4.1 Documents requirement to obtain Omnibus Approval

Documentation is an integral part of Related Party Transaction and
contemporaneous documentation should be maintained for each transaction to
establish dealings at arms length. The following details are required to be presented
to AC to facilitate omnibus approval:
(i) Brief note about the transaction with the related party
(ii) Name of the Party, Nature of Product
(iii) Quantity expected to be purchased / sold during the year
(iv) Basic price (either a fixed price or formula)
(v) Other relevant terms and conditions
(vi) Maximum amount during the year
(vii) Justification on need for such omnibus approval and benefits to the
company
(viii) Substantiate the inter-company price meets the arms length principles
(ix) Draft Agreement/Contract
6.15.5 Review of transaction by Audit Committee.

AC shall review quarterly all the related party transactions including
transactions covered under omnibus approval. For this purpose the following
documents to be provided to AC.
(i) A statement of all the related party transactions covering nature of
transactions, basis of pricing, justification for arms length price.
(ii) Note on procurement process followed such as selection of potential
suppliers, circulation of Request for Quotation (RFQ) and selection of final
supplier.
(iii) Copy of RFQ and duly signed quotations received from all the potential
suppliers
(iv) Summary of the final negotiated price (CIF / FOB / Freight charges) offered by
all the potential suppliers duly signed by procurement team
(v) Copy of the purchase agreement (in case of HTR, between supplier and HTR)
& invoice raised by suppliers (i.e., back-to-back invoice).
(vi) Comparability of price with data is available in public domain such as
recognized commodity index (Platts, etc.), actual transactions entered by
independent domestic suppliers, etc.
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6.16 New Benefits and Savings Definitions
6.16.1 Principles of Reporting Benefit

1. Definitions are based on the fact that 100% of spend will be managed by
category management aligned with a cross-functional team work approach
(common goal).
2. The cost development (positive and negative / net savings) of 100% of third
party spend will be reported by Procurement.
3. All calculations are to be done year-on-year. The baseline for contract
benefits is always the previous year.
4. All benefits reported must have been realized (e.g. based on booked invoices
or after implementing changes).
6.16.2 Comparing net savings to Income Statement Results.

Volumes: Whereas Procurement benefits consider purchased volumes from booked
invoices, the income statement considers consumed volumes.
1. This difference is especially relevant for medium- and high-value stock items.
2. Reported net savings may not appear in the income statement if items purchased
were not consumed during the same reporting period or when some items were
consumed but not purchased during the same reporting 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.
6.17 Approvals in Purchasing Process.

The approval in purchasing process should be in line with the approved DoA
applicable from time to time.
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7. Master Data - Material & Vendors

Material master database is the information about the materials, parts including part
number, description and MRP data. Keeping this master data clean and accurate is
of prime importance as a good quality of stored data will help in improving the
efficiency of the supply activities of procurement organization. To ensure good
quality of data, a centralized master data management procedure has to be in place
as well as policies clearly established. Good master data will also ensure that parts
are always describe the same way and easy to find.
7.1 Material Master Data

For any new creation user has to follow the criteria for the creation of new records.
The master data coordinators at each plant collect, validates and communicates with
the central master data controller. This is done in collaboration with the plant
procurement executive for procurement data and with plant finance specialist for the
accounting / excise data. The requester asks for any such creation / extension of
material by using an excel template. The requester identifies if the required material
belongs to selected PCS segment as per standard naming convention described in
the Master Data Management Policy, FICO provides and validates accounting /
excise data, and MRP controller validates safety stock, reorder point and planning
data.
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7.2 Vendor Master Data

7.2.1 Creation of New vendor Record
Need for vendor codification is determined by procurement team at various business
units and HO procurement organization based on the user requirement, Vendors
capability, quality, price and delivery commitment. Vendors capability is enquired
and assessed during the initial phase of supplier identification and is given a
Business Associates (BA) Form to provide data. This form contains all details related
to vendor name, address, bank data, excise and TDS data etc. All the fields are
reasonably explained for easy understanding and filling in the form.
Business Associates Form submitted by vendor is reviewed at procurement
organization at HO, Cluster, and Plant and approved for creation by category
manager / any other person made responsible by CCPO. Users at business units put
these vendor details obtained from BA form in an excel sheet (called Vendor
Registration Summery Sheet (VRSS)) for uploading by Central Vendor Master
Controller Team (VMC Team). It is mandatory to fill this excel sheet whenever a new
vendor master record is required to be created and forms a base document for
upload of data into SAP system. This template is validated by the vendor data
coordinator (VDC).
The procedure adopted for master creation is as below;
a) Respective business units give vendor registration requirement to their vendor
data coordinator, who in turn verifies whether the vendor already exist in the
system. If it does not exist, then he completes the vendor registration
procedure after obtaining approval of the concerned category manager or
approving authority and forwards the details in template along-with necessary
attachments to the central Vendor Master Data Team (VMC Team) at HO for
further scrutiny and uploading of vendor data into SAP system.
b) Where the registration of vendor procedure is not followed, following data is
collected by user from vendor with approval of category manager / person
responsible.
1.
Name and Address details
2.
Bank details
3.
Excise details as applicable to Vendors business
4.
TDS details as applicable to Vendors business.
c) Vendor Master Controller Team does verification and cleaning of data
received. This data is verified for ready existence of vendor in the system. A
vendor is identified as duplicate for a company code, when name, city,
address and PAN are identical.
d) Data received from all units is compiled in one template and checked for
correctness. Responsibility for providing correct data lies with vendor data
coordinator (VDC), who is seeking vendor data creation.
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i.
ii.
iii.
iv.
v.
2015
Completeness of data provided

1.
Name (reflects to business and financial transactions).
2.
Address (reflects communication)
3.
Bank data ( 11 digit code for bank key) RTGS / NEFT
Code
Character length of each field is properly maintained (as mentioned in
the vendor master template).
Account group is properly given (account group reflects type of
business the vendor is delivering and a vendor can be registered more
than once for the purpose. In such cases vendor data shall not be
treated as duplicate).
Duplication of data (same vendor data receipt from many units).
Filling in common data to make data suitable for upload (Recon a/c no,
House bank etc.).
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.
7.2.2 Updating Vendor Record

Any time if master data of vendor is to be modified for specific reasons the data
change request is sent through Vendor Data Coordinator to Vendor Master
Controller Team by e-mail giving vendor number, name and change desired.
If the changes are for many vendors, then the same data is sent through excel file
giving all relevant details in sequence.
After changes are made, information is sent back to the Vendor Data Coordinator.
7.2.3 Blocking of Vendor Record

Any time if a vendor is identified as duplicate or vendor is to be blocked for business
reasons, then the Vendor Data is blocked and convention code is put in Tax Code
2 field along with reasons for blocking in field Telebox.
The following procedure describes the steps to be followed for the blocking of an
existing vendor record in SAP.
a) Identification of Suppliers with financial risks (Supplier Risk Analysis based on
certain strategic guide line given in purchase manual)
b) Vendor Master Controller blocks the identified vendor code for financial
purpose at Company Code level and for purchasing purpose at Purchasing
Organization level.
c) Vendor Master Controller identifies suppliers with at least one invoice, debit
note or credit note in the last 12 months (reported as Inactive Vendors in the
Procurement Scorecard).
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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.
Process flow diagram for Vendor Master Creation

Input / Vendor
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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8. The Procure to Pay (P2P) process

In this chapter we will discuss the purchasing process from start to finish in a general
way in chapter 5 and 6 the focus was on the particular of each process, like Direct
Charge Purchase and issues unique to each one. The focus here is on the steps,
such as creation of Requisitions. The goal is to provide a macro level view of the
process, and to make clear how each steps affect the other. Some of the steps here
are primarily the responsible for Central Procurement Organization of Plant
procurement, but they are provided here to make the whole P2P process more
understandable. The task in the P2P process, as describe in the chapter 5, are found
in the header for each process flowchart. Here we will concentrate on four key topics
of greatest interest in the P2P process
1. Purchase Requisition (in case of CAPEX / Project Orders procurement team
will initiate P2P process based on the tender documents received before PR
creation in SAP)
2. Supplier selection
3. PO Creation and Release
4. Receiving Material / Services
5. Invoice verification and Payment
PR generation process for revenue / CAPEX purchases
8.1 Purchase requisitions

In order to process purchase requisitions efficiently and avoid any scope creep the
Scope Of Work (SOW) / Requirement Specifications should be defined clearly.
I.
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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8.1.1 Points to remember while creating a Requisition

I.
II.
III.
IV.
V.
VI.
VII.
VIII.
User should ensure that the PR is created with complete specifications, so

that requirement is clear for initiating procurement.
User may contact procurement department for an estimated price for a
requisition, but no one should commit fund to a supplier prior to the issuing
of a PO (except in true emergencies).
For CAPAX requirements, proper budgetary approvals from Finance
should be obtained before commencing any procurement activity (like
RFQ, negotiation etc.) or fund commitment. However, in order to estimate
budget amount for approval, procurement should facilitate obtaining of
budgetary offers. Further, the user should also build in add-on costs such
as taxes, transportation & handling, installation, training, etc. in the CAPAX
approval. Further appropriate contingency amount should also be included
in order to mitigate minor scope modifications, escalations due to delays
etc.
While making the requisition for the 05, 06, and 08 material groups, user
should ensure the correctness of PCS group as total spend analysis report
is based upon it, and hence no guess should be done.
When a quotation is required from the supplier, the specification / SOW
should provide enough details such that procurement is able to float
enquiries to meet the requirement on time.
Based upon the value of the purchase requisition SAP approval is
required, this will be as per the release strategy defined in the SAP
system.
The level of detail required to measure the service impacts how the
service requisition should be created. User has to keep in mind that the
requisition will determine the P2P process and how the service entry sheet
is done.
On monthly bases, user department should review and close all the
unwanted open PRs lying for their department (Requsitioner wise). For
MRP created PRs the respective PM Orders / open reservations should be
closed before closing the PR.
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.
8.2 Supplier Selection

The following section covering RFx process used to determine the supplier for
procuring goods and services.
8.2.1 Request for Quotation (RFQ)

Procurement is responsible for the creation of the RFQs. A minimum of 3
documented offers are required for any purchase, however for low value orders (<=
Rs. 15000 per Order), or items / services supplied by OEM / having customizable
nature, or for items / services having limited supplier base; one RFQ is sufficient as
an exception (refer section 6.14.2).
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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
8.2.2 Select Supplier on the basis of

I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
Background information on relationship with the company

Business references.
Proven technical capacity and skills to meet required needs
Environmental, Health and safety standards
Financial status
Compliance with environment, occupational health and safety
Total Cost of Ownership (TCO) Price, transport, services, etc.
Payment terms
Delivery time or execution plan
Warranties
Post- sale services etc.
8.3 PO Creation and Release

This section covers the various types of POs and approval process.
PO
Type
document
N1IM-ACC
Import
N3IM-ACL
Import
PO
N1PO-ACC
Local
N3PO- ACL
Local
PO
PO
Procurement Scenario
Goods
Manual
receipt
/
Invoice
Service Entry
This document type is used for

the
import
purchase
of
materials / services from the
foreign vendors.
Yes
Yes
Yes
Yes

the local purchase.
PO
N1UB- ACC STO

With Shipment
N3UB ACL STO
With Shipment

the STO of material within the
company between CMUs to
WH and WH to WH. No excise.
Yes
No
N1UO-ACC
STO
w/o Shipment
N3UO-ACL
STO
w/o Shipment
This document type used for

the STO of material between
CMU to RMX/CMU and excise
is based upon the receiving
unit. Example: CMU to CMU for
Yes
No
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maintenance material(bearing)
N1UP-ACC
STO
Non-Accrual /NS

the STO of material between
CMU and RMX with no freight
and excise. Example: CMUs to
RMX
Yes
No
Basic framework with validity

period, GR service entry sheet
and invoice entry. Example:
water, mid and long term
services
No
Yes
ZNB APAC Auto

PO

automatic
generation
of
purchase orders
Yes
Yes
ZEPAPAC
Emergency PO
To handle the true emergency.

Example: any maintenance
material which is not in current
stock and is needed in one or
two days
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.
8.3.1 Key consideration while issuing Purchasing Documents.

I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
Good planning and contingencies should be embedded within the total

amount of the PO.
Any type of change in PO will be subject to the release again based upon the
release strategy.
For Emergency PO, release strategy is different than the one commonly used
in order to avoid the delay in the processing and control requirements.
However, this is to be used only in cases of real emergencies.
Never divide the order into smaller spend bundles so as to avoid higher
release strategy value slab / authorization level.
Avoid mixing different business areas or cost center in the same PO.
Repeat purchase order can be placed within a span of maximum one year of
issuance of previous order for which proper sourcing activities (like RFQ etc.)
took place. Due approval for justification of such procurement, along with
waiver of fresh RFQ, should be obtained as per the authority defined in DoA
under the point - Approval of Purchase and Amendment. Such orders should
not be created with reference to same PR.
Extension to an existing contract after its expiry can be made for a maximum
period of six months, in case of materials and for one year, in case of services
(including composite services). Due approval for justification of such
extension, along with waiver of fresh RFQ, should be obtained as per the
authority defined in DoA under the point - Approval of Purchase and
Amendment.
POs should be regularly reviewed and closed, if delivery is not expected
against them.
PO should be released as per the approved release strategy limits defined in
Delegation of Authority (DoA) document / Management Approved Note.
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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.
8.4.1 Process of Receiving Material

I.
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.
8.4.2 Process of Goods Receipt for Equipment

In this scenario, goods receipt for equipment (e.g. Material Conveying system, Raw
mill (VRM or Ball mill) / Coal mill, Elevator, Boiler etc.) is done which are the main
units for CAPEX project. The purchase of these materials normally starts by making
a quotation document as per requirements of the project and a PR is created.
Offers are received from various suppliers and a vendor is finalized after technocommercial evaluation and negotiations. Vendor will supply the materials within a
certain period according to predefined terms and conditions and makes a delivery
according to the conditions agreed in the contract / PO. The receiver can confirm
the receipt of goods simply by entering the good receipt with reference to a
purchase order number. For some of the packages the detailed break-up of
equipment is not available and can be provided by the vendor only after approved
detailed engineering in done. Because of this a fractional GRs are made for multiple
consignments, or a complete GR is done only after final consignment is received. A
separate register is maintained to track the partial receipt and issue of such
materials outside SAP.
Free of cost goods provided by the vendor are created as a FOC line item in the PO
in order to track the receipt of such items.
8.4.3 Process of Service Acceptance
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.
8.4.4 Rules for the receiving goods and services

I.
II.
III.
IV.
V.
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.
8.4.5 Return Deliveries to Vendor process

This scenario is to return delivered goods (Indigenous) to the vendor (from
unrestricted use stock & GR blocked stock) for some reason (for example, the goods
are inadequate, wrong specification, poor quality or they are the wrong model).
Please note that, if invoice verification against goods receipt has already been done
then follow below mentioned procedure should be used:
I.
Either the relevant invoice is to be cancelled, or a credit memo is to be
created.
II. Or another goods receipt which refers to the same invoice takes place.
The detailed process is covered in stores manual.
8.5 Invoice verification

Process of Invoice Verification is situated at the end of P2P cycle which includes
Purchasing, Inventory Management, and Invoice verification. Incoming Invoices are
verified in terms of their content and prices. When the invoice is posted, the invoice
data is saved in the system. The system updates the data saved in the invoice
documents in Material Management and Financial Accounting system. Invoice
verification follows the three way match procedure in which three things are
mandatory:
I. Purchase Order
II. GR / Service entry sheet Doc.
III. Vendor Invoice
To process the payment all three document should match. An Incoming Invoice
contains the payments to be made based on Business Transactions performed in
Purchasing and Inventory Management. An incoming invoice can be invoice or a
credit memo is issued. Invoice Verification is done with the following references:
I.
Agreed terms of payment, including quality deductions and payments.
II. Quantities to be invoiced
III. Prices expected for each item
Page 78
2015
If the vendor invoice contains different information, proposed data can be

overwritten. The system checks whether entries are allowed and displays a warning
or error message if anything is incorrect. Document is posted with reference to
invoice, and document number is generated by system. Print of the document
number generated may be enclosed with the bill and can be filed for audit trail.
8.6 Write off Procedure

Plant has to follow the defined process for writing off the old and obsolete items
which is not useful for the production, maintenance and other admin related activity.
Obsolete / surplus assets are generated because of process / technology changes
either in full or in part. For e.g., old kilns of wet processes, raw mill of wet process
plant etc., including their spares which may become obsolete after installation of a
new dry process/ Pyro processing line.
Also, heavy earth moving machineries like rope shovel, dozer, loader etc. which
have clocked the requisite number of running hours as per norms and for which
replacement equipment with better technology have already been sanctioned,
purchased and received may become obsolete.
In the case of disposal of such obsolete / surplus materials, the disposal action is
initiated by inviting tenders / e-auctions for disposal of main equipment and its
spares available in general stores at the time of disposal. However, we need to
check with other plants before disposal of such spares as any other units may still
continue to use it in their works. For approaching for disposal / write off, the following
details required:
a) Asset Number/Sub Number wherever applicable
b) Description of Equipment
c) Total Original Cost i.e., cost at the time of purchase
d) Year in which the item has been brought into use.
e) Hours clocked since inception/commissioning of the equipment
f) Estimated realizable value
Page 79
2015
9. Supplier Relationship Management (SRM)

SRM involves working closely with suppliers in order to develop the communication
and trust required between both parties for greater efficiencies and active
participation during implementation.
It typically results in projects that require time and resource, therefore SRM is more
likely to be deployed with suppliers where there is a large spend, high risk, or
strategic value (e.g. new technology). The aim is to target suppliers that make up the
majority of the group- wide purchasing spend or suppliers who are identified as
critically important to the success of our operations.
Key benefits of SRM.
I. Focuses attention on suppliers that can add most value.
II. Provides a uniform and transparent measure of supplier performance.
III. Aligns companies strategies and supplier strategies with each other.
IV. Focuses on total cost and managing risk.
V. Creates competitive advantage.
VI. Increases the quality and efficiency of communication with suppliers.
VII. Increases the efficiency of procurement processes.
Page 80
2015
SRM is a comprehensive approach of managing our interactions, as a company, with

that of suppliers organization. It is intended to streamline and make more effective
processes between an enterprise and its suppliers. Holcim has got structured
approach to Supplier Relationship Management including supplier segmentation,
qualification, selection, relationship development and collaboration
9.1 Supplier Segmentation

Supplier segmentation is required to evaluate suppliers regarding their relative
strength and importance to business, it defines strategic importance based on
Relative importance of the supplier to ACC/ACL and relative importance of ACC/ACL
to the suppliers. This provides Base for strategic supplier portfolio development
according to procurement roadmap. Appropriate treatment for suppliers can be
planed based on their strategic importance for the company. Segmentation provides
optimization for resource allocation & Identification of supply risk.
ABC Analysis is used for segmentation which provides a clear and standard
differentiation methodology that enables better understanding of supplier
relationships.
9.1.1 ABC Analysis

ABC analysis is the spend wise analysis of vendors after consolidations of Vendor
spend at company level and sorting in descending order of spend to arrive at the
following categorization.
Category A - Suppliers who make up for 80% of total spend.
Category B - Suppliers who make up 15% of total spend on top of Category A
suppliers.
Category C- Suppliers who make up for balance 5 % of total spend on top of A & B
category suppliers.
Responsibility: ABC Analysis is to be done by VDM team for every year in the month
of January
For Category A suppliers, based on segmentation criterion, Supplier Segmentation
Portfolio-matrix per PCS is made for analyzing the relative importance of vendor to
us and vice versa.
Based on the Supplier Segmentation Portfolio-matrix, Supplier Strategy Portfolio
Matrix is derived (The examples of business strategies are not necessarily limited to
the box where mentioned).
Responsibility: Category Managers should do Segmentation once in a year as per
the standard template.
Page 81
2015
Example of Supplier Segmentation:

Supplier Segmentation Analysis for
Supp1
Supp2
fully
don't Points fully

agree supp1 agree
Segmentation Criterion Question / agree

statement.
4
Relative importance of supplier in the market
put a "x" in appropriate

field
Supplier has a strong position in the market / market x
4
share
Supplier has taken a leadership in developing x
4
technical and business competences
Switching supplier is complicated and causes high
x
3
costs
Products or services provided from supplier have a
x
3
strong impact on ACC/ACLs cost and operation
The omission of supplier would cause high costs to
x
3
ACC/ACL
Total
17
don't Points
agree supp2
3
put a "x" in appropriate

field
x
3
x
4
x
3
x
3
14
Relative importance of Holcim to market

ACC / ACL has a strong demand in the market
ACC/ACL is allocating a high capacity from supplier
Products bought from supplier have a high saving
potential.
ACC/ACL is ranked as an "A" customer in terms of
turnover.
ACC / ACL has technical, commercial etc.
dependencies to be considered
Total
x
x
3
x
16
Supplier Segmentation Portfolio-matrix

Page 82
2015
Supplier Strategy Portfolio Matrix
9.2 Supplier Qualification

The purpose of qualification & performance Evaluation is to identify the possible
improvement & development potential for each supplier in relation to its strategic
positioning and to create transparency about strength and weakness of suppliers in
each business segment.
Supplier Qualification is to be done for strategic & critical suppliers among high
spend A class suppliers, as identified by segmentation process on yearly basis.
The category team can add any other vendor based on criticality of the product /
service supplied by the vendor.
Supplier Qualification consisting of ratings on below criterion:
a. The commercial risk, based on
i. financial risks
ii. company information
iii. company resources
b. The Suppliers performance, based on:
Page 83
i.
ii.
2015
For Capex and projects: soft factors (i.e. support, services,

capabilities and equipment performance, TCO)
For consumable and wearing parts: hard factors (Price, Quality,
and Delivery).
Supplier qualification must be repeated in order to assess changes in supplier

performance. This process is called Supplier Re-qualification.
Responsibility: Criteria & Weightages are finalized and applied by Category

Managers at Head Office.
9.3 Supplier Relationship and Development

Supplier Development & Performance Measurement builds a framework for
approved supplier by
i.
ii.
iii.
iv.
empowering approved supplier

ensuring supplier is fit for strategy
improving weaknesses
developing multiple communication
Actions are defined out of identified performance gaps and common agreement is
made for corrective measures to achieve required performance.
Page 84
2015
9.4 Supplier Collaboration

Collaboration with strategic suppliers may offer significant potential to create
benefits, but is in many aspects challenging and time intensive.
Page 85
2015
Appendix - I
ListedPooledItems
Sr. No.
Equipment
Deep Pan Conveyors
Bucket Elevators
Crusher
Packers, Truck and Wagon Loaders
Mining & Mobile Equipment
VRM & Roller Press Boxes & High HP Gear Box
Fly Ash Handling System
Close Circuiting of Mills
HT Transformers
10
HT Motors
11
HT Switchgears
12
Diesel/ Electric Locomotive
13
Process Bag Filter
14
Process Fans
15
CEMS ( Continuous Emission Monitoring System )
16
Compressor
Page 86
2015
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
~
~
-
- -
CENTRAL PROCUREMENT ORGANIZATION
Sub: Delegation of Authority (DoA) for India Procurement Organization.

Circulation: CPO All, ACC & ACL procurement.
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.
Operational Procurement Team

Procurement Activity
Category Manager
Authority Delegated to
Position
Head Operational Procurement
1.
Selection of New
Supplier for Sending
RFQ.
Provide approved vendor list (Vertical)

(wherever applicable) for
Deputy Head Operational
sending RFQ.
Procurement (Vertical}
Selection of new vendor for
sending RFQ of any value.
Cluster Head
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
in INR Lacs
Position
More than Respective MD or Both
1000.00
Value Limit in INR
Value Limit in INR
lacs
wherever aoolicable
More than
1000.00
CCPO
Up to 1000.00
Head Operational
Procurement (Vertical)
Up to 500.00
Up to 100.00
Cluster Head
Up to 75.00
Buyer f Cluster Lead

(Vertical)
Up lo 5.00
Plant Purchase Executive
Upto1.00
UptoS00.00
Ambuja
Cement
At:t:
Category Manager
2b.
Approval for Base

Price for carrying
out Reverse
Auction (Value=
Base Price X
Quantity).
Position
Value Limit in
INR lacs
Authority Delegated
to Position
CCPO
More Than
2000.00
CCPO
Head of Country Category

Management
Up to 2000.00
Head Operational
Up to 500.00
National Category
Manager
Up to 500.00
Value Limit in
INR Lacs
More Than 500.00

Procurement Activity Organization
Value Limit in
Authority Delegated to Position
HO
3a
CCPO
More than 1000
Head Operational Procurement (Vertical)
Up to 1000.00
Deputy Head Operational Procurement

(Vertical)
Buyer
Release of
Contract.
Cluster & Plant
INR Lacs
Up to 100.00
CCPO
Zero
More than 1000
Up to 1000.00
Cluster Head
Up to 75.00
Cluster Lead (Vertical)
Up to 5.00
Buyer
Zero

Organization
HO
3b
Approval of
Subsequent Debit
Notes.
Position
Level of release
CCPO
Procurement Level 2
Head Operational
Procurement Level 1
Head Operational
Procurement Level 2
Cluster Head
Procurement Level 1
Cluster & Plant
Ambuja
Cement
At:t:
PO Release against SAP Contract.

Authoritv Delegated to Position
Deputy Cluster Head (Vertical)\ Deputy

Any Value
Zero
Buyer
4.
Value Limit in INR Lacs

Any Value
I Cluster Head
Emergency PO Release
Cluster Lead (Vertical}\ Deputy Head
Operational Procurement (Vertical)
Zero

Value Limit in INR Lacs
Head Operational Procurement (Vertical) More Than 100.00

Approval for Release of Advances and
MR11(DOA ofCorporateFin11nce & accounts tobe Deputy Head Operational Procurement

referred for disposals I Write offs/write backs in the
books of accoums ).
(Vertical)
Up to 75.00
Cluster Head
5.
Approval for Release of payment of

expenses related to imported
National Category Manager I Head
Operational Procurement {Vertical)
procurement like import customs duty,
stamp duty, liner and CFS charges, etc.
Category Management Team

Procurement Activity Authority Delegated to Value Limit in
Position
Respective MD or Both
wherever annlicable
CCPO
6.
INR Lacs
More than
50.00
UptoS0.00
Wavier of Penalty
Head of Country
Category Management
Up to 30.00
Up to 100.00
As per actuals

Position
Respective MD or Both
wherever annlicable
Value Limit in
INR Lacs
More than
50.00
CCPO
Up to 50.00
Head Operational
Up to 30.00

Up to 3.00
Cluster Head
Up to 1.50
Value Limit
Approval by CCPO I HCCM I HOP I

DHOP I CH for their direct reports.
Employee travel.
7.
Miscellaneous expenses, like business
lunch I dinner
Exceptional I non-entitlement cases:

Approval from CCPO.
CCPO or his direct reports.
As per actual.
As per actual.
Ambuja
Cement
ACC
8.
Administrative expenses for

HO, Cluster and Plant.
Value Limit
PR creation by HO HR team (for HO

Any Value
requirement) and by Buyer (for Cluster & Plant
requirement).
PR & SES (in ACL) Release by HO HR Head (for
Any Value
HO PRs) and by Cluster Head (for Cluster &
PlantPRs).
PO creation and release by service team at
respective location.
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.
We request your kind approval for the proposed Delegation of Authorities.
~<~
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
Ambuja Cements Ltd. (ACL)
Section:
Corporate Finance & Accounts
Title:
Delegation of Authority
Transaction Type
Version: 1.8
IPage 5of11
Effective Date :1st July 2015

(unless otherwise specifically stated)
Prepared by: S. Churiwala

Authorisation Level
(Financial Figures in ~ Lakh)
8. PURCHASE COMMITMENTS GOODS I SERVICES

CaRital and Revenue Items
(Purchase Orders, Works Orders,
and any other documents for
Goods or Services in SAP)
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.
& Functional Head means heads of

functions such as Manufacturing,
Marketing, Finance, HR, Corporate
Services, Corporate Affairs, OH&S, Internal
Audit as well as Common Functions9 or any
other position as delegated by MD & CEO.
Note:
Within the limits of the approved
annual Budget.
Please refer to Table 1 & 2 , annexed,

for SAP release authorities configured
in system .
CMU/CGUfferminal - Revenue items:

MRP Controllers
: 0.00 (#)
Dy. Dept. Head
: S0.25
.
Dept. Head
: S5.00
Technical Head
: s 10.00
Unit/BCT/Ship Hd.
: > 10.00
CMU/CGUfferminal - Ca12ex items:
Dy. Dept. Head
: S5.00
Dept. Head
: s 10.00
Technical Head
: s 25.00
Unit/BCT/Ship Hd.
: > 25.00
HO - Revenue/ Ca12ex Items
Dy. Dept. Head
: s 5.00
Dept. Head
: s 10.00
Functional Head&
: > 10.00
RO - Revenue/ Ca12ex Items
Dy. Dept. Head
: s 5.00
Dept. Head
: s 10.00
Functional Head&
: > 10.00
RMO/ RSO - Revenue/ Ca12ex Items
: s 0.25
Branch Head
Regional (RSO) Hd.
: s 1.00
Marketing Head
: s 10.00
Chief Marketing Officer
: > 10.00
Common Functions include T echpor t, IPO, HSSA , Geocycl e, AA L A .
AmCbujat
emen
ACL-CORP-01
Ambuja cements Ltd. (ACL)
Version: 1.8
Page 10 of 11
Section:
Effective Date : 1st July 2015, (unless otherwise specifically stated)
Title:
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
Buyer16
Release of PO/Contract
Release of PO against
SAP contract
Emergency PO Release
Lakhs)
NA
NA
RO/ Cluster/ CMU/ GU/

BCT / Ships (~ Lakhs)
0.00
Up to 5.00
5.00-75.00
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)
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
O""'"""
"'i<i~
" "' " ' poi ' ' '"' poi

Amhori" """' 26.03.200S.
'"""i" f eo -- '"'' M"kios
""'
Cement Swap Sale. This is covered separately. Also Marketing & Commercial Services has issued a separate DOA for Cement Swap Sales dated 15.01.2014 which may be referred.
16
Local procurement offices
Ambuja Ambuja cements Ltd. (ACL)

emen1
ACL-CORP-01
Page 11of11
Version: 1.8
Section:
Effective Date : 1st July 2015, (unless otherwise specifically stated)
Title:
Dy. Dept Head I Purchase Manager

Head Market in Procurement
Dept Head/ Marketing Head

Chief Market ing Officer
Branch Head
Re ional (RSO) Head
Head Marketing Procurement
Grou Head Mkt . Procurement
CCPO
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
Marketing f unction - logistics & others - to follow

release authorities as applicable at RO/ RMO
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:
@r
Sub: Purchase Requisition Release strategy levels & value slab.

Circulation: CPO All & ACC All.
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.
Purchase Reguisition Release Strateg~ at CMU
l GU:
Revenue 'PR Release Strategy for CMU/GU
MRP Controllers
Proposed Value Slab

[L= Lakhs, K =thousand]
0
Manager/Dept Department Head
0 to 25 K
Chief Manager/ Sr Manager I Head

Engineering/ Department Head
25 K to 5 L
Head Plant Operation I GM

Works Manager
Director Plant I Plant Head
5 L to lOL
Level
Position
I VP I
> 10 L
Capex PR Release Strategy for CMU/GU

Level
Proposed Value Slab

[L= Lakhs, K =thousand ]
Position
Manager/Dept Department Head
0-SL
Chief Manager/ Sr Manager/ Head

Engineering/ Department Head
5 to 10 L
Head Plant Operation I GM

Works Manager
Director Plant I Plant Head
10 to 25 L
I VP I
> 25 L
Project PR Release Strategy for CMU/GU
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
Proposed Value Slab

[L= Lakhs, K = thousand ]
0- S L
5 t o 10 L
10 to 25 L
I Director
> 25 L
Purchase Reguisition Release Strateg:\f at Head Office l Regional Office l Thane:

Capex /Revenue Release Strategy for HO/ RO/ Thane
Level
Position
Dy. Dept. Head/ Functional Support
Proposed Value Slab

0- SL
Dept. Head I Funct ional Incharge.
5 to 10 L
Functional / Business Head
> 10 L
Purchase Reguisition Release Strategy: at Sales Units:

Capex /Revenue Release Strategy for SU
Level
Position
I Sr Manager
Proposed Value Slab

0 - 25 K
Dy. SU Head
SU Head
25 K to 1 L
Reg ional Sales/ Logisti cs Head
1 to 10 L
Business Head
> 10 L
Purchase Reguisition Release Strate~ for ICI Business:

Capex /Revenue Release Strategy for ICI Business
Key Account Manager
Proposed Value Slab

[L= Lakhs, K =thousand ]
0 - 25 K
Regional Head West
25 K to 1 L
Head ICI
1to10 L
Head Commercial Services
> 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:
Sub: Change in PR & Purchasing Document Release strategy approval as

per the new Functional Structure.
Circulation: CPO & ACC All.
Date: 25.03.2015
Based on the organizational memorandum issued by Corporate HR about the

implementation of new functional organization, the below changes in the PR and Purchasing
document approval position in release strategy is proposed.
The changed model will enable us to take leverage of faster implementation of functional
strategy and use functional expertise in driving the business objectives.
These changes, once implemented will integrate the functional head to their respective
teams under their direct control and replace the existing Regional Structure.
Capex /Revenue PR Release Strategy for HO
Level
1
2
3
Existing Position
Dy. Dept. Head I
Functional Support
Dept. Head I
Functional Incharge.
Functional/ Business
Head
Proposed Position
Dy. Dept. Head / Functional

Suooort
Dept. Head / Reg1onal Head I
Functional In charge,
Functional Head
I RO I Thane
Existing Value Slab
[L= Lakhs, K =
thousand]
0-SL
5 to 10 L
> 10 L
Capex /Revenue PR Release Strategy for SU

Level
2
3
4
Position
Proposed Position
I Sr Manager
Existing Value Slab

[L= Lakhs, K =
thousand]
0 - 25 K
Dy. SU Head I Sr
Manaqer
SU Head
SU Head
25 K to 1 L
Regional Sales I
Logistics Head
Business Head
Dept. Head I Regional Head /

Functional In charge.
Functional Head
1to10 L
Dy. SU Head
> 10 L
At:t:
Capex /Revenue PR Release Strategy for ICI Business
Key Account Manager
Key Account Manager
Existing Value Slab

[L= Lakhs, K
thousand J
0 - 25 K
Regional Head West
Regional Head West
25 K to 1 L
Head ICI
Head ICI
1to10 L
Head Commercial Services
Chief Logistics and

828 Sales Officer
> 10 L
Leve
I
Position
Proposed Position
Cement Swap Sale Purchasing Strategy at ACC

Leve
I
Existing Position
Proposed Position
Value slab In INR
SU Head
SU Head
o - 5 Lacks
Director Sales
Director Sales
5 - 25 Lacks
Business Head
> 25 Lacks
Project Purchase Release Strategy at Jamul & Sindri (Material)

Level
Existing Position
Proposed Position
Value slab In INR
Purchase Manager
Purchase Manager
PMM Head
PMM Head
O - 5 Lacks
Commercial Head Projects
5 - 25 Lacks
Project Head
Project Head
25 - 100 Lacks
Business Head
Chief Manufacturing Officer
100 - 500 Lacks
Project Purchase Release Strategy at Jamul & Sindri (Services)

Level
Existing Position
Purchase Manager
Proposed Position
Purchase Manager
Value slab in INR

0
PMM Head
PMM Head
o - 5 Lacks
5 - 10 Lacks
Project Head
Project Head
10 - 75 Lacks
Business Head
Chief Manufacturing Officer
75 - 100 Lacks
Revenue Purchasing Retease Strategy for Logistics Procurement at ACC RO/SU

Level
Existing Position
Proposed Position
Value slab In INR
Logistics Manager
Logistics Manager
0- 5 Lacks
Logistics Head
Logistics Head
5 - 25 Lacks
Business Head
Chief Loalstlcs and 828 Sales Officer
>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:
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:
Head Operational Procurement

(MRO CAPEX & RM)
Approved by:
18th May, 2011
Petty Cash Fund Policy/Procedure revised w.e.f. 18th May 2011

There are two types of petty cash handlers in SAP system
1. The Petty Cash Payer [Cashier] and
2. the Petty Cash Vendor Payers [others designated as Custodians]
The earlier Policy covered essentially the Custodians. We propose to restrict the
Petty Cash Vendor Payers and therefore henceforth all petty cash related
payments would be handled only by the Cashier. Custodians will be allowed only
in Area offices at Sales Units and at Mines Department at Plant considering the
logistics involved.
Policy Objective
To ensure the cost-effective and efficient use of petty cash funds while
maintaining the required level of control.
Policy Statement
Use petty cash funds for making small miscellaneous payments when immediate
settlement is required or when this method of payment is most expedient and
more cost-effective.
Petty Cash Fund
Petty cash funds are used
- for expenditures in connection with approved company activities, the amount
and significance of which is so small to preclude going through regular
procurement PR PO process and disbursement by cheque
- as a cash advance issued to a custodian or kept with the Cashier who will be
responsible for the security and the control of disbursements made from the
fund.
- The amount of the fund required is calculated based on operational needs
Establishing a Petty Cash Fund

Three items are required to establish a petty cash fund
A Request letter duly authorized by Plant Head at CMU / Sales

Head at SU
A Custodian responsibility form duly approved as above
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
circumstances of the case, shall take whatever corrective or recovery

action as deemed necessary.
Regulatory Requirements
Units must meet these regulatory requirements:
1. An individual to whom a petty cash advance is issued is personally
responsible and any loss or shortage in respect of that advance may
be recovered from that individual
2. The Petty cash Fund would be maintained as follows:
-
Total amount Rs. 50000/- for the Cashier at Plants and Rs. 25000/with Cashier at SU
Total amount Rs. 30000/- at the Area offices
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.
3. No large quantum of funds would be allowed to be maintained either

with Cashier or with the Custodian
4. The Custodians of the petty cash fund shall give an account for the
imprest money utilized with all details and supporting
5. The Appropriate Authority shall arrange to submit to the auditors at
the end of every fiscal year such reports and certificates in respect of
all petty cash advances as may be required for the purposes of the
Audit
6. When disbursements are not made frequently, the Cashier /
Custodian should check the petty cash fund at least once a week to
ascertain that no theft has taken place
7. The Cashier / Custodian is required to reimburse losses and
shortages unless:
the prescribed procedures were followed and the petty cash was
properly secured
there is physical evidence of breaking-in and no act or omission on
the part of the custodian contributed to the loss
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
money cannot be returned to its rightful owner, it should be deposited

with the Cashiers Office & credited to (relevant) A/c.
11. All vouchers submitted in support of a requisition for reimbursement
should be cancelled in a manner that will preclude any possibility of
being reused
Monitoring and Safekeeping

Periodic unannounced verifications of the petty cash advances should be

made by internal audit groups or management
Departments will conduct internal audits to evaluate their compliance with
the laid down policy.
The Treasury Section will monitor the effectiveness of this policy by
reviewing departmental internal audit reports
The petty cash fund is to be safeguarded in a lockable cash box which
should be kept locked not only after office hours but also during normal
business hours in a safe or a filing cabinet approved by the Unit Head
/Finance Head. Keys should be kept in a secure place by the Cashier /
Custodian
Utilisation of Petty Cash funds

Can be used
Upto a maximum of Rs 5000/- per invoice/bill/voucher [subject to

maximum 3 such instance per vendor per month] on the following:
- Purchase of miscellaneous stationery,
- Expenses on refreshments, photocopying, minor repairs to assets,
petty contract jobs, transport contracts etc.
- Expenditures falling under the PCS segment 05 (administrative and
other supplies) for max. upto Rs. 5,000 per invoice/bill/voucher
[subject to maximum 3 such instance per vendor per month]
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

Suppliers/Contractors invoices/bills expenses which total more than Rs

2000/- per invoice/bill
Entertainment expenditure which total more than Rs 2500/Personal expenses
Employee services [excepting for certain urgent medical/other expenses]
Cheque encashment
Salary / Wage advance, Bonus, incentive, Personal Loans
Alcohol or any other item which may be prohibited/restricted by the
Company
Custodian and his duties

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

A receipt is presented to the Custodian for reimbursement

The petty cash voucher / slip must be signed by the Custodian and the
recipient of the cash
If the Custodian is the recipient of the cash then the Appropriate
Authority should sign in the approval space
The Petty cash voucher slip must be attached to any receipts or
supporting documentation and kept until the Petty cash fund requires
replenishment
Funds must be reimbursed in a timely manner. In the same month in
which the expenditure is occurred whenever possible
Replenishment of Petty Cash Fund

The off-line / on-line request for reimbursement form must be submitted in

order to replenish the cash in the 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
Petty cash reconciliation process:

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
Audit functions and Internal Controls

Petty Cash fund are subject to audit any time by :

Unit Head or his authorized representative
The Cashiers Office
Internal Audit Team
Statutory Audit Team
Controlling Dept team from Corporate Office
Surprise checks to be conducted by Head Finance at CMU / Finance

Incharge at SU / Regional Finance Manager at RO or by any person
authorized by the Plant Head / Sales Head
Making changes to Petty Cash Fund

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
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
List items for which Direct Invoice verification through FB60 is

allowed at ACC (Policy issued by Finance).
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
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
Page 87
2015
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
TentHouseArrangementup toa valueofINR15000

VegetablesupplyforG/H&Mess
ProvisionSupplyforG/H&Mess
MilkSupplyforG/H&Mess
SweetforTemplePrasad
Snackssupplyduringmeeting&variousevents lessthanINR 5000
PoojaitemsforTempleFunctionuptoINR10000
TVchannelsubscriptioncharges
Flowerarrangementfortemplepooja,functions,andmeetingsetc.
Photographercharges
Canteen/GuesthouseutensilsuptoINR15000
Vehiclefitnesscertificatepayment
ExpendituresunderthePCSseg.05(administrativeandothersupplies)formax.up
toINR5000perinvoice/bill[subjecttomax1suchinstancepervendorpermonth.
Page 88
2015
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
List items for which Direct Invoice verification through FB60 is

allowed at ACL (Policy issued by Finance. See along with DoA).
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
VAT
Excise
IncomeTax
SalesTax
WorkContractTax
PFANDEPS
PLVC
OSF
Demurrages
ProfessionalTax
Insurance
TerminalTax
Directorsfees
Villagewelfareexpense
ServiceTaxonGTA
Page 89
2015
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
Employee Related Payments (For details refer the policy issued by

Financedept.).
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.
Page 90
2015
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Procurement Process Guide V 5.0 - Final Compressed

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2015

About the Procurement Process Guide (PPG)

PROCUREMENT PROCESS GUIDE (PPG) V 5.0

CEO & MD, ACL

----- -.----- ------------------------------------- ------------- --- --------------- -

From CCPOs Desk

New Delegation of Authority for IPO.

1. How to Use This Guide. ................................................................................................................. 6

Vendor Master Data ....................................................................................................................... 67

1. How to Use This Guide

Procurement Policies (Ch. 2 & 3)

2.2 Policy Principles

address larger spend and manage key supplier relationships more

2.2.2 General Principles

2.2.3 Organization, Governance, and Code of Business Conduct

2.2.4 Category Management

3.0 Sustainable Procurement

Occupational Health and Safety (OH&S).

4.1 Holcim Category Management Framework:

Thresholds are to be used for local initiatives in the absence of already

Key Considerations on Threshold:

In absence of a Global / Regional / Local contract, Category Manager at its

4.2 Organizational design under Category Management

4.2.1 Structure of Global Category Team.

4.2.2 Structure of Regional Category Team.

4.2.3 Responsibility and accountability of Category Management

4.3 Organizational Structure of India Procurement Organization

4.3.1 Structure of Category Management Team at IPO.

4.3.2 Structure of Operational Procurement Team at IPO.

4.3.3 Collaboration channel between Category Management Team,

4.3.4 Responsibility and accountability at IPO

Category Managers are primarily

Operational Procurement is mainly

4.3.5 Workload Segmentation at IPO:

Develop the category

Provide leadership to the Cluster

5. Choosing the right Purchasing Channel

Unnecessary distraction of management (e.g. handling invoices payment

SAP Initiated Requisition

Table 1. Purchasing Processes:

Coal, Slag, Gypsum etc.

Capex Spares parts/

Engineering Labor services,

5.1 SAP Initiated Requisition

5.2 Direct FI Invoice

5.3 One Time Vendor

S. No. Expenses covered under One Time Vendors

Reimbursement of interview candidates

5.3.1 Process Flow for One Time Vendor payments:

5.4 Cash Purchase through Petty cash

6. Purchasing Process Flowchart

To optimally support manufacturing function, forecasts for operational activities

Maintenance material / service consumption planning requirements, needs

6.1 Operational Process for Stock / Recurrent / Bulk Material

6.2 Operational Process for Stock / Recurrent / Spare Parts &

6.3 Operational Process for Stock/ Non-Recurrent / Goods.

6.4 Operational Process for Non-Stock / Recurrent / Goods.

6.5 Operational Process for Non- Stock / Recurrent Services.

6.6 Operational Process for Non-Stock / Non-Recurrent

Operational Process for Non - Recurrent / Services

Service procurement of Non-Recurrent services follows the similar procedure, as for

1. User should provide approved tour calendar for the

Electronic Items for