INDEX

1. Master data
1.1 Material Master
1.2 Vendor Master
2. Enquiries
1.3 RFQ and Quotation.
3. Procurement
3.0 Imports
3.0.0 Imports Oil
3.0.1 Imports High seas purchase
3.0.2 Imports Transfer of Ownership

3.1 Local Oil

3.1.1 Local purchase Oil
3.1.2 Interstate purchase Oil
3.1.3 Consignment Purchase Oil
3.1.4 Purchasing Conditions
3.1.5 Taxes applicable for KRPL at the time of purchase.

3.2 Others

3.2.1 Chemicals (Refinery and lab).

3.2.2 Electrical & Engineering items
3.2.3 Packing materials
3.2.4 Services
3.2.5 Firewood
3.2.6 Salt
3.2.7 Capital Goods
3.2.8 Stationery
3.2.9 Furnace Oil
3.2.10 Job Work - For third party
3.2.11 Job Work By third party

3.3 Excise duty details

4. Inventory Management
1.4 Goods Receipt
1.4.1 Oil
1.4.2 Other items
1.4.2.1 By Weight
1.4.2.2 By quantity

1.5 Stock keeping

1.5.1 Storage tanks for Crude oil / Finished products
1.5.2 Raw Materials: Import /Local - Crude/Refined Oil
1.5.3 Chemicals
1.5.4 Capital Goods
1.5.5 Engineering goods: Local
1.5.6 Semi finished goods: Local
1.5.7 Finished goods

1.6 Goods Transfer / Issue

1.6.1 Transfer of materials within the factory
 1.6.2 Issue from the main stores
1.6.3 Goods transfer from factory to C&F locations.

5. Stock verification

6. Invoice verification

7. Material Valuation

8. Scrap

9. Approval procedures.

10. Reports

11. Sister Business Concerns

1 Master Data
1.1 Material master.

- System generated serial coding exists only for Product (Oil).

- List of packing materials is maintained in Tally.
- No coding system exists for other materials.
- Total no of items in pinnacle 59 that includes crude oil, finished products and By
products.
-The common units of measurements maintained in the existing system are Kg,
Ton, litres,
tins, box, and numbers.

1.2 Vendor master.

1 No standard vendor coding.

2 Numeric generation of the vendor code in the existing system.
4 List of vendors who supplies oil is available in Pinnacle.
5 Total no of vendors available in pinnacle and tally is approximately 1000.

2 Enquiries
2.1 Request for Quotations and Quotation

1 For new material purchase, quotations will be invited from vendors.

2 For any change in the existing conditions for a vendor, fresh quotations
are invited.
3 The requests for quotation as well as quotations are maintained
manually.

3 Procurement.
3.0 IMPORTS RAW MATERIAL (Crude/Refined OIL)

3.0 IMPORTS OIL

Initial Stage: Negotiation and Agreement:

1 KRPL imports raw materials (raw/crude or refined oil) from the international
market, specifically from Argentina, Indonesia and Singapore.
2 Imports are always carried out through a broker and never directly. KRPLs
broker contacts the sellers broker and negotiates for the price and conditions.
3 A contract is made between the seller and the buyer through their respective
brokers and negotiations for the terms and conditions, likely shipment period,
quality parameters, quantity, rate etc. are made by the broker with approval from
the Managing Director- KRPL.
4 The seller issues the sales contract with details such as the sale order number
and the material to be supplied, the country of origin, other specification of the
material as per the requirements of the importer (KRPL), quantity, packing, price
(CIF or C&F), the latest shipment date and other terms and conditions which is
agreed and signed off by both the parties.
 5 CIF is applicable only on landed load at discharge port. A debit note is raised
against the seller for the shortage in quantity.
6 The importer (KRPL) also prepares a purchase contract with details like the
commodity, seller name, quantity, rate, delivery due date. The importer generates
this at the Head office in their existing system (Pinnacle).
7 This purchase contract for imports is basically used for doing a purchase entry
at the factory. As soon as the bill of lading is received a purchasing entry for the
stock/cargo is made in the importers books to the Goods in Transit A/c.

Import stage: Documentation and Transport.

1 The vessel that is to bring the cargo is nominated one week before the actual
loading time.
2 A Letter of Credit is opened (depending on the availability of LC limit) for the
contract value one week before the date of shipment. The actual practice is to
prepare the LC only one day before the actual date of loading in order to avoid the
payment of margin money (10% of the LC value) in advance.
3 A bill of lading is prepared in lots at the load port in such a way as to suit the
requirements of some expected High sea sales. Therefore the Bill of Lading is
made in partial quantities (lots), for e.g.: if the quantity to be imported is 3000 tons,
there may be 3 or more Bills of lading.
4 The quantity in the Bill of lading need not match the quantity agreed in the
contract, the bill of lading will contain only the quantity that was loaded.
5 In case of shortage or excess quantity during loading then the captain of the
ship issues a protest note declaring the quantity that was loaded. The quality of the
oil is checked at the port of loading and the load port surveyor gives the certificate
of analysis.
6 The seller - through fax/mail sends a copy of the Bill of lading to KRPL for filing
customs Bill of entry and import manifest, for preparation of high sea sales when
required.
7 While the cargo is in transit importer (KRPL) decides whether the cargo is to be
received into the bonded warehouse located inside the harbor or at the factory. And
also decide to have high sea sale to its own sister concern or to others.
8 If it is to be bonded then the importer (KRPL) arranges for the necessary
licenses for the bonded warehouses. The license is issued depending on the
validity period of the insurance policy taken for the bonded warehouse.
9 The insurance policy covers any shortages exceeding 0.3%. Sometimes full
guarantee on quantity is obtained at a slightly higher CIF cost.
10 Incase of imports done by the sister concerns of the importer (KRPL), an
endorsement for the same insurance policy (which has a long validity period) is
made in the name of the importing concern. This is to facilitate the sister concern to
utilize the existing insurance of the parent company.

Receiving stage: Before/ During - Arrival arrangements.

1 Depending on the ETA of the vessel, the importer (KRPL or sister concern) has
to make arrangements for various bonds required by the customs such as a bond
for pending PHO - certificate (Port health Officer), Pending Ullage report, pending
test report from customs.
2 Wharfage dues to be paid for berthing the vessel in the port should be
arranged by the importer (KRPL or sister concern) before the vessel is due to
arrive.
3 Before the actual arrival, the importer (KRPL or sister concern) will appoint a
 surveyor for the supervision and delivery of the cargo from the vessel. CHA
(Customs House Agent) is also appointed to take care of customs formalities.
4 In the absence of original Bill of lading, a shipping guarantee (duly counter
signed by banker) should be produced to the steamer agent for obtaining the
necessary delivery order.
5 To get (Letter of Indemnity) LOI from the bank the importer (KRPL or sister
concern) has to arrange to pay the bank the balance 5% LC margin money.
6 A bill of entry should be filed in the name of the importer,
- There are two types of BE (Bill of Entry), one for home consumption and
another for warehousing.
- Depending on upon the need to unload the cargo in the bonded warehouse,
the importer (KRPL or sister concern) has to file for a warehousing BE.
- If incase the importer (KRPL or sister concern) intends to pay duty and directly
transfer the stock to his factory, then he has to file for BE for Home
consumption.
2 Other duties paid include CESS (10.Rs/per metric ton) for Crude sunflower oil
and CVD (Re.1/Kg) for any refined oil.

Transfer stage: Discharge and storage.

1 After the arrival of the vessel into the importers port, the importer (KRPL or
sister concern) has to arrange for supervision of the measurement of load port and
arrival ullage.
2 The samples are taken by (Port health officer) PHO and customs and also by
KRPL.
3 The sample taken by KRPL is tested at factory and if there is any variation in
the quality, KRPL negotiates with the sellers broker for rebate and the same is
adjusted with the next consignment.
4 PHO will send the samples to Mysore (CFTRI Central food technology
research Institute - Lab) to check whether the oil is fit for human consumption.
5 Sample taken by the customs is checked whether the material is crude or
refined.
6 After the samples are taken by the customs, the instructions to commence the
discharge will be given to the C&F agent of KRPL.
7 After the ullage has been confirmed the discharge of the cargo can commence
through the pipelines to the bonded warehouse located inside the harbor or directly
to the tankers for transferring to the bonded warehouse located at the factory.
8 Another alternative is, in case the duty has already been paid the cargo can be
transported to the customer directly from the vessel. In such cases, the invoice is
made at the port itself during discharge.
9 After the arrival of the vessel, another entry (accounting) is made to transfer
the Goods in transit A/c to Goods in harbor location in the system.
10 After the completion of discharge yet another entry is made to transfer the
goods in harbor location stock, to goods in bonded warehouse location stock, in the
existing system.
11 An entry is also made in the system, while transferring the stock from the
bonded warehouse location to the factory. An out entry is given by the head office
for the stock in the bonded warehouse location stock and an inward entry is made
at the receiving location (factory) for the stock transfer.

Bank Operations - After delivery and Discharge.

 1 The importer (KRPL or sister concern) has to now follow up the sellers
document with the bank in which the LC was opened, in order to check the LC due
date, interest loaded and discrepancies in the documents, if any.
2 After the documents arrive at the bank, the importer (KRPL or sister concern)
check for discrepancies and then he accepts the documents (original invoice,
original BL, load port survey report, certificate of analysis, certificate of origin etc.).
A certificate from the negotiating bank showing the LIBOR rate (London Inter
banking Offer rate) at the date of negotiation is issued along with the above set of
documents.
3 When the original BL is received from the bank (importers bank), it is
submitted to the steamer agent for cancellation of original LOI, and return the same
to the bank.
4 All the bonds taken at the time of arrival of the vessel, such as the PHO, Ullage
and test by the customs, is now cancelled (by the C&F agent).
5 At the time of removal of cargo from the bonded warehouse, KRPL or sister
concern has to file an Ex bond BE for home consumption.
6 In the absence of PHO certificate, ullage report and customs lab test report,
the importer has to pay 1% as extra duty deposit (EDD) along with the duty. The
EDD is refunded after the cancellation of the above said bonds.
7 Arrangement of DEPB (Duty entitlement Pass book) license is to be made by
the importer for the payment of customs duty.
8 A separate account is maintained in maintained (MS Excel) to track the
utilization, purchase, and balance credit available.
9 Payment vouchers for the vendors who supplied the DEPB license is to be
made.
10 The quadruplicate Bill of entry is to be submitted to the LC issuing bank as
proof of Import.

Note: At the time of shipment if there is no storage space to unload the arriving cargo, then the
cargo in the existing tank will be transferred to the bonded warehouse located at the factory or
any other bonded location within KRPL.

3.0.1 High Seas Purchase - Oil

1 As in imports, the high seas purchase also involves dealings with the broker
who in turn confirms the prices and other terms and conditions with the seller.
2 Before the vessel reaches the Indian Boundary, the Bill of lading is duly
endorsed to the buyers (KRPL or sister concern) name.
3 The seller raises high seas sales invoice and sales agreement for the buyer
(KRPL or sister concern).
4 The entity, to which the cargo is sold to, is now responsible for getting the
necessary licenses from the government.
5 In case of high seas purchase from an external party (e.g.: Ruchi Ltd), the
stock is stored at the sellers premises itself and the stock is delivered to the
buyers premises (KRPL or sister concern) as and when required after the payment
to the party.
2 Another scenario is when the buyer (KRPL or sister concern) stores the stock
in his own warehouse, all the responsibility for getting the necessary licenses from
the government lies with the buyer.
3 All the formalities relevant for importing of goods is applicable after the stock
 are transferred to the buyer (KRPL or sister concern).
4 In case of any shortage in the shore tank, it is pro-rated to the buyers (in case
of more than one buyer) and the seller raises a credit note, to the buyer, for the
shortage quantity.

3.0.2 Imports Transfer of Ownership

1 All the processes are similar to the high seas purchase, the only difference
being the stock is transferred to the buyer (KRPL or sister concern) after the stock is
unloaded to the importers bonded warehouse.
2 There are two possible scenarios here:
- One is that the stock can be moved to the factory after payment of customs
duty.
- The second scenario is when the both the importer and the buyer (KRPL or
sister concern) owns bonded warehouses, the stock can then be transferred
directly to the buyers (KRPL or sister concern) bonded warehouse without
payment of duty.

3 Payment to the Vendor is to be made in advance for the second scenario. For
the first scenario both the customs duty and the vendors payment is necessary.
4 All the formalities relevant for importing of goods is applicable after the stock
are transferred to the buyer.
5 The party gives a credit note to KRPL, if the quantity drawn differs from the BL
quantity. Initially an invoice for the BL quantity is prepared by KRPL.
The advantage of transfer of ownership to high sea purchase is that the importer can store
the entire cargo in a single bonded warehouse and can be transferred to the buyer in any
lots when desired.

1 Note: Grace period for payment of customs duty for bonded items is 90
calendar days.
Interest charged at the rate of 24% pa.
If the duty is paid under DEPB scheme, no interest is applicable.

3.1 Local Purchase:

3.1.1 Local Purchase Oil

1 The decision to procure oil locally is made solely by the Managing Director or
the Director, depending on the prevailing market rates and availability.
2 The MD/Director prepares a Purchasing Memo, which contains details about
the Broker, commodity, rate, quantity and delivery period.
3 Based on this purchase memo, the broker gives his confirmation, and then a
comparison is made between the two.
4 Based on broker confirmation a purchase contract is prepared at the Head
Office with details such as seller name or nominee, Broker name, commodity,
quantity (in Tankers of 9.5Mts each), rate, delivery period, type of purchase.
5 When oil is procured from regular vendors, the brokers will be avoided.
6 A delivery order issued by the seller on receipt of payment in advance by blank
cheque or pay order.
7 The Contract details are transferred through the system (Pinnacle) to the
factory to facilitate in the goods receipt when the delivery is made.
8 Delivery at the sellers godown: In this case the seller delivers the oil to the
buyers premises using his own freight or the freight of the buyer. If the buyers
freight is used then the seller is not responsible for any shortages occurring during
the transportation.
9 Delivery at the buyers godown: if the seller agrees to transport the goods to
the buyers premises using his own freight, then seller is responsible for any
shortage of more than 30 kgs. If the shortage goes beyond 30 kgs say 50 kgs then
the buyer is liable to pay only for that 30 kgs and nothing more. Certain unloading
charges are collected from the transporter and adjusted with the vendors account.
10 There is a scenario when the representative from the HO takes the DO and
goes to the sellers installation with the companys tankers. The seller now makes
the sales invoice to KRPL. KRPL raises a sales invoice to its customer and delivery
is made directly to the customer from the same tanker.
11 When the tanker arrives at the buyers premises, before the GEN is prepared,
the due date of the contract is checked. If at the time of delivery if the rate is found
to be higher than the rate at which the purchasing contract was made then the
delivery is accepted. However if the rate at the time of delivery is found to be lesser
than the rate at the time of contact then the delivery is rejected or negotiations are
made with the seller through the broker to arrive at a new rate.
12 This check is carried out only if the supply is made after the due date
mentioned in the purchasing contract is exceeded. Otherwise no check is carried
out.
13 When the tanker arrives at the buyers premises, a GEN (Goods Entry Note) is
prepared (at the factory / plant) in the system, with reference to the contract. The
following details can be seen in the GEN Type of purchase, date of delivery,
supplier name, contract number, supplier invoice number, vehicle number,
commodity, rate and quantity.
14 After the GEN is prepared a sample of the oil is drawn from the tanker and sent
to the QC lab for testing. The tanker is allowed to wait inside the premises until the
test report becomes available.
15 The test report is sent to the GM for approval. If the test fails due to non-
confirmation to the requirements of the buyer, like the FFA content, then the GM
decides the cutting rates (Depends on the quality of the material). Entry is made in
the existing system (Pinnacle).
16 If the oil is found to be adultered, the material is rejected.
17 If any deviation is found, then the MD/Director instructs the broker to further
negotiate with the seller to get rebates. If the seller does not accept, then the
material is sent back to the seller.
18 A Debit note is prepared for the non-supply of oil, in case the supplier is unable
to replace the rejected material.
19 In case of rejection and non-replacement, the GEN is cancelled.
20 A report of the number of vehicles that are waiting for inspection at a particular
time is available in the existing system.
21 If the material passes the QC test, the tanker is weighed (Gross) and the
weighbridge slip is issued and the truck is allowed to enter the factory for
unloading.
22 After unloading the empty tanker is weighed again, the system calculates the
net quantity that was received. Weighment slip is given for the net quantity.
23 GRN is prepared (in the system) with reference to the weighment slip for the
net quantity received.
24 The GRN along with the vendors invoice, lab test report, weighment slip is
sent to the HO for payment.
 25 The report of pending purchase contract is available in the existing system
(Pinnacle).
26 Accounting entry is created in the financial accounting software (Tally) by
importing the data from the existing inventory software (Pinnacle). The payment is
released to the vendor.

v A credit note will be raised against the party, if excess quantity is

delivered.
v Note: a purchasing contract is raised only for bulk purchases. In case
where the company purchases finished products (refined oil) in
packed form, a purchase order is prepared for which there is no
specific GRNs or QC tests done. Instead of GRN a general GRN is
raised with reference to the purchase order. The material is received
at the Godown and General GRN with the invoice is passed on to the
HO for payment.

Re Sale: On the basis of the earlier purchasing contract existing with the broker, instructions
will be given to him to sell it to the third party. The difference amount will be taken into KRPLs
account.
For ex:
Contract price = Rs.30/kg with Ruchi.
Contract price (KRPL) = Rs. 35 with X.
Ruchi will sell the product to X at Rs.30/-
The sale note will have the rate as Rs.30 only. The balance amount of Rs.5 has to be paid by
X to KRPL through cash or cheque.

3.1.2 Interstate purchase Oil

1 The decision to procure oil from other states is made solely by the Managing
Director or the Director, depending on the prevailing market rates and availability.
2 The MD/Director prepares a Purchasing Memo, which contains details about
the Broker, commodity, rate, CST (4%), quantity and delivery period.
3 In case of purchase of refined oil from other states then, the buyer has to suffer
excise duty. In case of purchase of crude oil then there is no excise duty levied on
it.
4 Based on this purchase memo, the broker gives his confirmation, and then a
comparison is made between the two.
5 Based on broker confirmation a purchase contract is prepared at the Head
Office with details such as seller name or nominee, Broker name, commodity,
quantity (in Tankers of 9.5Mts each), rate, delivery period, type of purchase.
6 The Contract details are transferred thru the system to the factory to facilitate
in the goods receipt when the delivery is made.
7 Delivery at the sellers godown: In this case the seller delivers the oil to the
buyers premises using his own freight or the freight of the buyer. If the buyers
freight is used then the seller is not responsible for any shortages occurring during
the transportation.
8 Delivery at the buyers godown: if the seller agrees to transport the goods to
the buyers premises using his won freight, then seller is responsible for any
shortage of more than 30 kgs. If the shortage goes beyond 30 kgs say 50 kgs then
the buyer is liable to pay only for that 30 kgs and nothing more. Certain unloading
charges are collected from the transporter.
9 When the tanker arrives at the buyers premises, before the GEN is prepared,
 the due date of the contract is checked. If at the time of delivery the rate is found to
be higher than the rate at which the purchasing contract was made then the
contract then the delivery is accepted. However if the rate at the time of delivery is
found to be lesser than the rate at the time of contact then the delivery is rejected
or negotiations are made with the seller through the broker to arrive at a new rate.
10 This check is carried out only if the supply is made after the due date
mentioned in the purchasing contract is exceeded. Otherwise no check is carried
out.
11 When the tanker arrives at the buyers premises, a GEN (Goods Entry Note) is
prepared (at the plant) in the system, with reference to the contract. The following
details can be seen in the GEN Type of purchase, date of delivery, supplier
name, contract number, supplier invoice number, vehicle number, commodity, rate
and quantity.
12 After the GEN is prepared a sample of the oil is drawn from the tanker and sent
to the QC lab for testing. The tanker is allowed to wait inside the premises until the
test report becomes available.
13 The test report is sent to the GM for approval. If the test fails due to non-
confirmation to the requirements of the buyer, like the FFA content, then the GM
decides the cutting rates (Depends on the quality of the material). Entry is made in
the existing system (Pinnacle).
14 If the oil is found to be adultered, the material is rejected.
15 If any deviation is found, then the MD/Dir, instructs the broker to further
negotiate with the seller to get rebates. If the seller does not accept, then the
material is sent back to the seller.
16 A Debit note is prepared for the non-supply of oil, in case the supplier is unable
to replace the rejected material.
17 In case of rejection and non-replacement, the GEN is cancelled.
18 A report of the number of vehicles that are waiting for inspection at a particular
time is available in the existing system.
19 If the material passes the QC test, the tanker is weighed (Gross) and
weighment slip is issued and it is allowed to enter the factory for unloading.
20 After unloading the empty tanker is weighed again, the system calculates the
net quantity that was received. Another weighment slip is given for the net quantity.
21 GRN is prepared (in the system) with reference to the weighment slip for the
net quantity received.
22 The GRN along with the vendors invoice, lab test report, weighment slip is
sent to the HO for payment.
- Accounting entry is created in the financial accounting software (Tally) by
importing the data from the existing inventory software (Pinnacle). The
payment is released to the vendor.

3.1.3 Consignment Purchase Oil

1 The decision to procure oil on consignment is made solely by the Managing

Director or the Director, depending on the prevailing market rates and availability.
2 The MD/Director instructs to prepare a Purchasing Memo, which contains
details about the Broker, commodity, rate, quantity and delivery period.
3 Based on this purchase memo, the broker gives his conformation, and then a
comparison is made between the two.
4 Based on broker confirmation a purchase contract is prepared at the Head
Office with details such as consignor name or nominee, Broker name, commodity,
quantity (in Tankers of 9.5Mts each), rate, delivery period, type of purchase.
5 The Contract details are transferred thru the system to the factory to facilitate
in the goods receipt when the delivery is made.
6 Delivery at the consignors godown: In this case the consignor delivers the oil
to the consignees premises using his own freight or the freight of the consignee. If
the consignees freight is used then the consignor is not responsible for any
shortages occurring during the transportation.
7 Delivery at the consignees godown: if the consignor agrees to transport the
goods to the consignees premises using his won freight, then consignor is
responsible for any shortage of more than 30 kgs. If the shortage goes beyond 30
kgs say 50 kgs then the consignee is liable to pay only for that 30 kgs and nothing
more. Certain unloading charges are collected from the transporter.
8 When the tanker arrives at the consignees premises, before the GEN is
prepared, the due date of the contract is checked. If at the time of delivery the rate
is found to be higher than the rate at which the purchasing contract was made then
the contract then the delivery is accepted. However if the rate at the time of
delivery is found to be lesser than the rate at the time of contact then the delivery is
rejected or negotiations are made with the consignor through the broker to arrive at
a new rate.
9 This check is carried out only if the supply is made after the due date
mentioned in the purchasing contract is exceeded. Otherwise no check is carried
out.
10 When the tanker arrives at the consignees premises, a GEN (Goods Entry
Note) is prepared (at the plant) in the system, with reference to the contract. The
following details can be seen in the GEN Type of purchase, date of delivery,
supplier name, contract number, supplier invoice number, vehicle number,
commodity, rate and quantity.
2 After the GEN is prepared a sample of the oil is drawn from the tanker and sent
to the QC lab for testing. The tanker is allowed to wait inside the premises until the
test report becomes available.
3 The test report is sent to the GM for approval. If the test fails due to non-
confirmation to the requirements of the buyer, like the FFA content, then the GM
decides the cutting rates (Depends on the quality of the material). Entry is made in
the existing system (Pinnacle).
4 If the oil is found to be adultered, the material is rejected.
5 If any deviation is found, then the MD/Dir, instructs the broker to further
negotiate with the consignor to get rebates. If the consignor does not accept, then
the material is sent back to the vendor.
6 A Debit note is prepared for the non-supply of oil, in case the supplier is unable
to replace the rejected material.
7 In case of rejection and non-replacement, the GEN is cancelled.
8 A report of the number of vehicles that are waiting for inspection at a particular
time is available in the existing system.
9 If the material passes the QC test, the tanker is weighed (Gross) and
weighment slip is issued and it is allowed to enter the factory for unloading.
10 After unloading the empty tanker is weighed again, the system calculates the
net quantity that was received. Another weighment slip is given for the net quantity.
11 GRN is prepared (in the system) with reference to the weighment slip for the
net quantity received.
11 The GRN along with the vendors invoice, lab test report, weighment slip is
sent to the HO for payment.
 12 An inventory entry is given as stock transfer in and stock received is shown as
consignors account in KRPLs book. The accounting entry is not made at this time.
13 At the time of commission sales, the buyer account is debited and consignors
account is credited. An inventory entry, stock transfer out is made along with.
14 Once in a month, a SALE PATTI is prepared and is sent to the consignor.
The SALE PATTI contains
- Quantity received from the consignor.
- Freight paid.
- Unloading charges paid.
- Rent if any.
- Commission sale made.
- Amount paid to the consignor after sale realization.
- Closing stock of the consignor being held at the time.
- Amount payable if any.
- Commission for the consignee.
At the year-end Form F is issued to the consignor for the proof of consignment purchase.

- Accounting entry is created in the financial accounting software (Tally) by

importing the data from the existing inventory software (Pinnacle). The payment is
released to the vendor.

Note:
For all purchases:
Brokerage and taxation:

- For any type of bulk purchase involving transactions with brokers, the
brokerage is paid to the brokers based on the number of tankers procured. The
broker levies Rs.500 per tanker load of material in both sales and purchase.
- Depending on whether the material is procured on a first sales basis or on
second sales basis, the buyer is able to set off the entire 4% if purchased on
first sales and sells it under a brand name. Then again, if the buyer does not
sell it under a brand name then he is not eligible for the 4% set off. However if
he sells it in loose form then he can levy only 1% sales tax.
- In case of second sales purchase the buyer is liable to pay only 1% sales tax,
which he can set off.
3.1.4 Purchasing Conditions
The conditions applicable for purchase contracts of KRPL are as follows:

1 Discount
2 Excise duty
3 Sales Tax
4 Surcharge on Sales tax
5 Freight
6 Insurance
7 Packing and forwarding.

3.1.4.1 Taxes applicable for KRPL at the time of Purchase:

1 Taxes applicable for KRPL can be broadly classified to 4 types depending on

the materials that are being procured and the origin of the material.
2 For Oil: Taxes applicable:
Inter state Purchase: 4% CST
Local Purchase (within the state): 4% LST or 1% RST for
resale purchase
High Seas purchase: No Tax.
 Imports:

Customs Tariff
Product CVD Landing charges CESS
Duty (in multiples of)
Crude Palm Oil 65% $390 - - -
Crude Palmolein 65% $415 - - -
RBD Palmolein 70% $434 Re.1/Kg - -
On assessable 1% on Assessable
Crude Sunflower Oil 50% - Rs.10 / Kg
value only value
Refined Sunflower On assessable
92% Re.1/Kg - -
Oil value only
Crude Soya bean oil 45% $537 - - -

1 For Chemicals: Taxes applicable are:

- MRP Price inclusive of all tax.
- Interstate tax 4% CST on submission of Form C.
- Local sales tax TNGST 3.15 % with submission of Form 17.
- For purchase on Resale Tax 1% (in some cases only)
- For Furnace Oil Excise duty of 16% (set off), Sales Tax 16
%, Additional 5% Surcharge on sales tax (without form 17) or
3% ST plus 5% surcharge on submission of Form 17.

1 For Electrical & Engineering Goods: Taxes Levied are:

- MRP Price inclusive of all tax.
- Interstate purchase: Excise duty 16% (in some cases) + 4%
CST with form C
- Local Purchase TNGST 3.15% with Form 17 or without Form
17- 12.6% to 20 % (depending on the material).
- On resale purchase RST of 1% (In majority of cases)

1 For Packing goods: Taxes applicable:

- MRP Price inclusive of all tax.
- Inter state purchase: Excise duty of 16% (set off) plus 4% CST
with Form C
- Local Purchase: TNGST of 3.15% with form 17 or 12.6 % without
form 17.
- On resale purchase RST of 1%.

3.2 Others:

3.2.1 Chemicals:

2 The trigger for procurement of chemicals comes when the stock reaches the
approximate re-order level of 2 weeks stock.
3 The person in-charge of monitoring the stocks of Chemicals refers to the
vendors list and places order verbally over telephone, to the vendor, on a rotation
basis or based on the quality of the stock supplied previously.
4 Except for chemicals like Fullers earth and Caustic lye (used for neutralizing
and bleaching of crude oil), all other chemicals are procured from regular vendors only.
5 HO is responsible for the purchase of chemicals like Lime, Alum, Citric Acid,
and Soda Ash. The person in charge sends a purchase requisition from the factory with
approval from the factorys Plant Manager or General Manager.
6 The PRS is a manual slip with details such as material description, quantity
required, UOM, rate per unit, date, the PRS number and the person to whom the PRS
should go for preparation of purchase order at the HO. The MD has the final authority
to accept or reject the PRS at his discretion.
7 With reference to the PRS the purchasing officer in charge places a verbal
order to the appropriate vendor to supply the material immediately. In case of
emergency the PRS document is not given, the requirement is notified to the
purchasing officer and it becomes his responsibility to ensure immediate supply of the
material.
8 For certain chemicals like TBHQ, the person in charge of chemicals at the
factory raises the purchase order (using Microsoft excel template) with approval from
the Plant Manager.
9 The purchase order contains details such as the name of the party, the
purchase order number (manually generated- starting with KC for chemicals), date,
vendors reference number, the material, KRPLs excise registration number, TNGST
number, CST number, terms and conditions such as payment terms, excise duty, sales
tax, P&F, delivery and freight depending on the location of the supplier.
10 When the vendor is from another state, this purchase order is sent to the HO
and the copy of the order is faxed from the HO (because of non-availability of STD fax
facility at the factory). Otherwise for local vendors the order is faxed directly from the
factory to the vendor.
11 When the material arrives, the chemical is sent for quality testing, in case of
bulk material (Furnace oil, fullers earth, activated carbon, caustic lye, select 350, pure
flow B81, alum powder, lime, filter aid, phosphoric acid, sulphuric acid, citric acid),
which has to be weighed, the tanker is sent for weighment. In case of supply in smaller
quantities a physical count is done to check the quantity supplied.
12 If any variations are found during the quality testing, especially in terms of
concentration the vendor is informed of the variation and the price is negotiated
accordingly (only quantity adjustment is made not price variation).
13 After weighment or counting the chemical is unloaded and the empty tanker is
weighed and a GRN (Book entry only, a tally entry is made later at the HO with
reference to the GRN, for specific chemicals only) is made with details such as the
company name, the vendors DC number, Invoice number and date, the vendors name
and a manually generated GRN number (the first character is C denoting Chemicals.
The next three numbers are serial number starting from 001. It also contains details like
the material description and quantity as per DC, actual and any variations if any, the
rate, tax and the total amount.
14 The GRN is duly signed by the store keeper/person-in-charge, the PM and the
GM.
15 During delivery the material gets distributed to the various points of storage
attached to the processing area where the material is used.
16 The person in charge receives the vendors invoice. Payment is made through
the bank, through HO or through factory. Irrespective of where the payment is to be
made the cheque is issued from HO only.
17 A Cheque requisition statement is made to the HO with details such as the
GRN number, Company name, vendors invoice number, Name of the vendor, amount
due and Mode of payment (cheque or DD) duly signed by the PM and GM, with a copy
of the QC test report.
18 A cheque issue slip is made at the HO (the amount issued is also updated in
tally credit entry for vendor) for the cheque or DD issued to the factory.
19 A cheque acknowledgement form (with KRPLs letter head), along with the
cheque is sent to the vendor. A copy of the acknowledgement form is kept at the factory
for reference.
3.2.2 Electrical & Engineering items

1 The procurement process for this category of material depends on the value
and usage of the material. A PRS is raised for the required quantity and material
with approval of the PM/GM.
2 The MD has the final authority to approve or reject the PRS at his discretion.
3 Some Class A items and their spares are kept in stock. Stocks for Class B & C
class items are always maintained, till they reach a minimum stock level
determined by the person in charge (store keeper).
4 Whenever a requirement arises for a class A items a purchase order is raised.
5 The type of purchase order raised, i.e., whether as a word document or in MS
Excel template depends on the type of material specification that is to be given to
the vendor during purchase.
6 The PO raised in word format does not contain any PO number and hence
cannot be traced. Whereas the PO raised in excel format contains a PO number
and can thus be traced.
7 This purchase order contains details such as the name of the party, the
purchase order number (in excel manually generated- starting with K0 for
Engineering and electrical items, for the year 2003-04), date, vendors reference
number, the material, KRPLs excise registration number, taxes to be paid, excise
duty, freight charges, delivery cost, delivery terms, place of delivery, P&F charges,
insurance, quantity, unit price and the code number of the material (as given by the
vendor).
8 When the vendor delivers the goods to the factory, the goods are physically
counted for quantity and entered into the stores.
9 A GRN (Book entry only, a tally entry is made debit Expenses, later at the HO
with reference to the GRN) is made with details such as the company name, the
vendors DC number or bill number, date, the vendors name and a manually
generated GRN number (the first two numbers of the GRN number represents the
year and the month of receipt and the last 4 numbers are in serial form). It also
contains details like the material description and quantity as per DC, actual and any
variations if any, the rate, tax and the total amount.
10 The GRN is duly signed by the store keeper/person-in-charge, the PM and the
GM.
11 In case the purchase has been done over the counter, then the material is sent
to the factory from the HO with the approval from MD along with a copy of the bill.
In case the bill is not available the GRN cannot be made, and a communication is
sent to the HO informing them of the same and the GRN is made only after the Bill
for purchase is made available at the factory.
12 Direct purchase is carried out in majority of the cases, where the purchase
officer in charge goes to the market and does over the counter cash purchase. Bill
for purchase is always demanded as proof, unless the value of the material is very
low in which case it is directly entered in the JV.
13 A journal voucher is prepared with approval from the MD and an entry is made
for the same in the sundry expenses a/c in the tally system. Separate G/L accounts
are maintained for taxes
14 Vendor details are available in tally.
15 When the material is purchased from the HO, a material transfer note is
prepared and sent along with the material at the time of transporting the material
from the HO to the factory.
16 When the material reaches the factory, the material is distributed to the
appropriate locations depending on the physical identification of the material.
 17 If the material cannot be identified easily, then it is directly sent to the main
store.
18 The person in charge receives the vendors invoice. Payment is made through
the bank, through HO or through factory. Irrespective of where the payment is to be
made the cheque made at HO only.
19 A Cheque requisition statement is made to the HO with details such as the
GRN number, Company name, vendors invoice number, Name of the vendor,
amount due and Mode of payment (cheque or DD) duly signed by the PM and GM,
with a copy of the QC test report if applicable.
20 A cheque issue slip is made at the HO (the amount issued is also updated in
tally credit entry for vendor) for the cheque or DD issued to the factory.
21 A cheque acknowledgement form (with KRPLs letter head), along with the
cheque is sent to the vendor. A copy of the acknowledgement form is kept at the
factory for reference.

3.2.3 Packing materials

1 Procurement of packing material takes place from two areas mostly from the
HO, except the films and tins, which are procured from the factory itself.
2 Procurement of packing material is affected by the following parameters:
- In case of corrugated boxes: Weather plays a vital role. Purchase of these
boxes are restricted or even stopped because of their tendency to spoil easily
in wet conditions. Hence it becomes essential to include such requirements
during ideal weather conditions.
- The requirement for the boxes is also highly dependent on the demand for the
packed oil in various states.
- Supply of packed oil to different states is made in different colored boxes,
hence the requirement of each state also affect the purchase of Carton /
Corrugated boxes.
- Generally the requirement of all the other packing material is solely dependent
on demand from the market for a particular product in packed or loose form.
- Depending on the type of packing material (except films and tins) the orders
are placed from HO, this order contains the delivery schedule (for boxes only)
based on which the vendor supplies the boxes to the factory directly.
2 In case of films, a bulk order is placed as and when the requirement arises, the
person in charge of the packing material gives instructions over telephone.
3 The PO (in MS word format) for films contains some important specifications
such as the thickness and design of the film (depending on the films thickness and
layer the prices may vary), what should be printed on the film (in case of
Vanaspathi, then the film should have the appropriate print on it), quantity and the
Landed price per kg of the film.
3 The material is checked for quality and quantity. The parameters checked for
quality are Load Capacity, thickness, wetness, stapler pins etc For carton box.
4 If the material meets the quality parameters, the lot is accepted and kept in
different pouching stations.
5 The GRN will be prepared and will be sent to the HO with GMs approval.
6 In HO the details will be fed to Tally before making the payment.
7 Once the processing is through the cheque will be issued to the Party.
8 Stock register maintained on daily basis.
9 Note No CRS from the factory for packing material
3.2.4 Services
Service contracts are used for the procurement of the following activities Cleaning staff,
 Garden maintenance, Boiler erection, Structure work, Oil line laying, Water line laying,
Electrical contract, Tank fabrication, Painting, Civil work, Road work, Manpower
consultants.

1 For specific requirements the service contracts are issued.

2 The decision to have service contracts is by the GM and MD.
3 For service contracts the continuation / extension of the contract will be based
on performance.
4 On completion of the work the respective departments will make the
verification.
5 For plant related work, the CRS is made at the factory with due approval from
PM / GM.
6 The CRS will be sent to HO for the preparation of cheque.
7 The necessary information is fed into Tally.
8 Cheque is prepared after deducting the TDS.
9 Cheque is sent to the factory for distribution to the service contractors.
* Painting, Civil work Cash payment will be made directly at the factory.
Summary of the same will be sent to HO, for entry in Tally

Annual Maintenance Contract:

1 AMC is maintained for equipments and plant with the contractor who does the
actual commissioning of the equipments. For e.g.: boilers are procured from M/s.
Thermax, who supplies the boiler. However authorized contractors according to the
capacity of the boiler that is to be erected and the location of the premises in which
it is to be erected, do the actual erection and installation.
2 The terms and conditions are mutually agreed by KRPL and the
supplier/contractor.
3 These contracts are for breakdown and routine maintenance.
4 Stocks of spare parts, if necessary is maintained by KRPL, as advised by the
contractors.
5 Payment is made from HO, after confirmation from the factory as per the
agreement with the contractor.

3.2.5 Fire Wood:

1 The Boiler operator checks the stock position of firewood.

2 If the same is to be procured, the information is given to The Director verbally.
3 The same is conveyed to the factory accountant for procurement process.
4 The boiler operator checks the quality of the firewood.
5 After quality inspection the truck is sent to the weigh-bridge for weighment.
6 The material is unloaded at predefined locations.
7 After unloading the truck is weighed.
8 The details are sent to HO for necessary inputs to Tally.
9 Cash payment is made to the supplier.

3.2.6 Salt
1 Reverse Osmosis plant operator checks the stock position of salt.
 2 If the same is to be procured, the information is given to The Director verbally.
3 The same is conveyed to the factory accountant for procurement process.
4 No quality check for the salt.
5 The truck is weighed with the load.
6 The material is unloaded at predefined location.
7 After unloading the truck is weighed.
8 The details are sent to HO for necessary inputs to Tally.
9 Cash payment is made to the supplier.

3.2.7 Capital Goods:

1 The concerned department will identify the requirement.
2 The PM / GM will confirm the requirement.
3 PRS is prepared and sent to HO.
4 Depending on the nature of the requirement, PO may or may not be raised.
5 Depending on the nature of the purchase, Cheque / cash payment is made.
6 In case of advance payment a copy of the purchase order, along with CRS is
sent for HO approval. Advance is usually made on a 20-70-10 basis (i.e, 20%
before supply and 70% after supply and 10% retention money).
7 Relevant entries are made in Tally.

3.2.8 Stationery

1 Depending on the nature of the requirement stationery could be procured in the

factory by cash payment.
-The Stores person after getting the approval from the accountant can make local
purchase for stationery.

2 In general all stationery purchase is made at HO.

- The PRS is send from factory to HO for Directors approval.

3.2.9 Furnace Oil

1 Boiler operators check the daily stock position of furnace oil.

2 If the quantity is less than the safety stock, the information is given to HO over
telephone.
3 The tanker contractor is instructed to lift the material from IOC premises.
4 Managing Director gives the approval for the cheque.
5 HO prepares the authorization letter.
6 The cheque and an authorization letter are handed over to the tanker
contractor.
7 The tanker load is weighed at the factory before unloading.
8 Quality check is carried out during unloading by the boiler operator.
9 The empty truck is weighed after unloading.
10 The GRN is prepared and sent to HO with the weight details.

3.2.10 Job Work for third Party

 OILS

Process:

1 Creation of Job Work agreement between the sub-contractor and the job
vendor. The agreement contains the specifications of the final output (refined oil),
rates (processing charges), weighment charges and overtime charges (if the tanker
arrives after office hours).
*Note: Job vendor the job vendor here is a sister concern of KRPL and also
others.
2 Based on the agreement, sales tax licenses (branch license) are obtained.
3 The material is delivered from the warehouse inside the harbor or from inside
the KRPL premises.
4 At the GMS (Supplier) office a stock transfer note is made for transfer of
material out of the GMS stock to the KRPL (Sub-contractor) stock. At KRPL,
another stock transfer note is made to bring the stock into KRPLs plant for doing
the job work.
5 A book entry (accounting entry) is made at the GMS office showing the stock at
KRPLs premises.
6 In the KRPLs book of accounts an entry is made showing the stock of GMS.
7 A work order is created for the quantity taken for processing. Now an entry is
made for taking out the stock of GMS for processing and it is transferred to the
work in progress (WIP) stock.
8 As and when the refined oil output takes place for the crude oil, placed in the
WIP stock, the stock is transferred into finished goods (refined oil) stock of GMS.

3.2.11 Job Work By Third Party

OILS

Process:

1 Creation of Job Work agreement between the sub-contractor and the job
vendor. The agreement contains the specifications of the final output (refined oil), rates
(processing charges), weighment charges and overtime charges (if the tanker arrives
after office hours).
2 The material is delivered to the third party for Job work.
3 At the KRPL office (Mumbai) a subcontract PO is raised against the Job work
for the related work.
4 A book entry (accounting entry) is made at KRPL office showing the stock at
Job work premises.
5 Once the Job work is finished, a book entry is made for the stock transfer from
the Job work premises to Mumbai office.
6 Similar operations happen in Hyderabad also. The only difference is that of the
supply of packing material from Chennai.

15 KG Tins

Process:

1 Creation of Job Work agreement between the sub-contractor and the job
vendor. The agreement contains the specifications of the final output (15 kg tins), rates
 (processing charges), labor charges etc.
2 The supplier delivers the material to the third party for Job work.
3 At the KRPL office a subcontract PO is raised against the Job work for the
related work.
4 A book entry (accounting entry) is made at KRPL office showing the stock at
Job work premises.
5 Once the Job work is finished, a book entry is made for the stock transfer from
the Job
- Work premises to KRPLs premises.

Poly Bags
Process:

1 Creation of Job Work agreement between the sub-contractor and the

job vendor. The agreement contains the specifications of the final output (Poly
bags), rates (processing charges), labor charges etc.
2 The supplier delivers the material to the third party for Job work.
3 At the KRPL office a subcontract PO is raised against the Job work for
the related work.
4 A book entry (accounting entry) is made at KRPL office showing the
stock at Job work premises.
5 Once the Job work is finished, a book entry is made for the stock
transfer from the Job work premises to KRPLs office.

3.3 Excise duty details

General:
Registration:
1 KRPL is the only entity registered under excise.
2 The plant at Vengaivasal is registered under excise.

Product coverage:
1 All refined oils in any form other than Vanaspathi is excisable at the
rate of Re1/ kg.
2 Vanaspathi attracts Re1.25/ kg.
3 By products attracts 16% ED (Ad valorem).
4 For crude oil ED is not applicable.

Material eligible for cenvat credit

1 Imported refined oil.

2 Locally procured refined oil.
3 Packing materials
4 Chemicals
5 Stores and spares
6 Capital goods.

The following excise registers are maintained by KRPL

RG1 (Stock register).
RG23A part1
RG23A part2
RG23C part1
RG23C part2
PLA
Business Process:

Procurement: Imports Crude oil

1 Procurement of crude oil does not attract excise duty. However RG1 register is
maintained
2 While transporting from the port Form 27 is prepared.
Procurement: Imports Refined oil

1 RG1 register is updated, when the material is brought into factory stock.
2 Currently RG23A part 1 and part 2 is taken for the CVD amount if it used for
processing.
3 In case the oil is procured by group entity and subcontracted to KRPL, CVD is
taken into the books of KRPL.
4 Sales returns/Rejections are almost nil and hence excise impact is not
considered.

Procurement: Local Crude oil

5 RG1 register is updated when the material is brought into factory stock.
6 Even though the stocks are stored together physically, it is identifiable in the
excise books.

Procurement: Local Refined Oil

7 RG1 register is updated when the material is brought into factory stock.
8 If the material is used for further processing, then RG23A part1 and part2 are
updated. However if it is procured by group entity and subcontracted to KRPL,
cenvat credit is taken by KRPL.
9 Sales returns/Rejections are almost nil and hence excise impact is not
considered.

Procurement: Local Other items

1 At the time of goods receipt RG23A Part1 (Cenvat stock register) and part2
(Cenvat credit register) registers are updated.
2 In case of packing materials like granules and tin sheets, materials are
consigned to the subcontractor from the vendor directly. The cenvat credit is taken
for these items when subcontractor delivers the final packing material to KRPL.
3 Similarly packing materials and refined oil shipped to M/s Godrej directly by the
vendor and invoiced to KRPL are not considered while taking Cenvat credit, since
M/s. Godrej is taking the cenvat credit in their books.
4 Sales returns/Rejections are almost non-existent and hence excise impact is
not considered.

Subcontracting

1 Subcontractor receives Plastic granules / Tin sheets directly from KRPLs

vendor.
2 KRPL prepares form 57F4 on receipt of vendors invoice and account the
material under subcontracting.
3 Manually quantity received from subcontractor is tracked and reconciled with
the quantity to be received
4 Scrap is not being considered.
5 Once the total quantity is received, based on the duplicate copy of the form
57F4 given by the subcontractor, cenvat credit for the source material is taken.
 6 Whenever refined oil received by KRPL from its group entity for sub
contracting, based on the transporters copy of the shipment cenvat credit is taken
in KRPLs books.
7 On monthly basis KRPL will issue the cheque to the respective group concern
for the cenvat credit availed in its books after adjusting the excise duty amount
paid/payable while clearing the oil from factory on account of sale or dispatches.
8 Sales returns/Rejections are almost nil and hence excise impact is not
considered.

Stock Transfer:

1 Whenever dispatches happen RG1 register is accounted along with entries for
excise liability.
2 While updating the RG1 based on the ownership of the materials the stock
maintained in RG1 under the appropriate head is adjusted.
3 In case if the dispatch is for the group company the individual entity does not
account any excise records.
4 On receipt of goods at C&F locations/Godowns, even though RG23D is not
maintained, manual stock registers are updated.

4. Inventory Management

4.1 Goods Receipts:

4.1.1 Oil:

1 The truck arrives at the gate.

2 Vehicle no is noted down at the security gate with particulars Date, Truck no.,
materials, Party name.
3 Vehicle is allowed inside and parked in the bay area.
4 Sample taken for quality inspection, if applicable.
5 The total weight of the truck is taken after the quality (OK) confirmation report
from the lab.
6 Unloads the material at the relevant area specified (Sump).
7 Empty truck weight is also confirmed after unloading.
8 The difference quantity (Full truck Empty truck) forms the delivered quantity.
9 Consequently the GEN and the GRN confirmation will be prepared with the
following details Date, Supplier name, Broker name, Product, Billed quantity,
Received qty, shortage if applicable, Rate, Lorry no., Type of purchase. The entries will
be made in the existing system.

4.1.2 Other items:

4.1.2.1 By Weight:

1 Material arrives at the gate.

2 Vehicle no is noted down at the security gate with particulars Date, Truck no.,
materials, Party name.
3 Vehicle is allowed inside and parked in the bay area.
4 Sample taken for quality inspection, if applicable.
5 The total weight of the truck is taken after the quality confirmation report from
the lab.
 6 Unloads the material at the relevant area specified.
7 Empty truck weight is also confirmed after unloading.
8 The difference quantity (Full truck Empty truck) forms the delivered quantity.
9 Consequently the GRN will be prepared with the following details Date,
Supplier name, Product, Billed quantity, Received qty, shortage if applicable, Rate,
Lorry no., Type of purchase.
4.1.2.2 By Quantity:

1 Material arrives at the gate.

2 Vehicle no is noted down at the security gate with particulars Date, Truck no.,
materials, Party name.
3 Vehicle allowed inside and parked in the bay area.
4 Sample taken for quality inspection, if applicable.
5 Receives the material at the relevant area specified.
6 The received quantity forms the delivered quantity.
7 Consequently the GRN will be prepared with the following details Date,
Supplier name, Product, Billed quantity, Received qty, shortage if applicable, Rate,
Lorry no, Type of purchase.
4.2 Stock Keeping:

4.2.1 Storage tanks for Crude oil/Finished products:

Total no of tanks in the factory 30.

Total no of tanks in the harbor 4.

The contents of the storage tanks are tentative; the contents will vary with requirement and
time.

Location Product description No. of Tanks

Harbor (Bonded Crude Oil 4
Warehouse)
Crude Type of storage
Factory Sunflower Oil 3
Soya bean Oil 3
Palm Oil 1
Rice Bran Oil 1
Ground nut Oil 2
Refined
Sunflower Oil 6
Soya bean Oil 4
Groundnut Oil 1
Palmolein 3
Palm Oil 2
Miscellaneous
Neutral Oil 1
Palm Fatty Acid 1
Distillate
Sunflower Acid Oil 1
Sesame Oil 1

4.2.2 Raw Materials: Import /Local.

a. Crude / Refined Oil:

Crude oil stock is kept in the harbor if imported and moved to the factory as and when
 storage tanks are available. The same is directly transported to the factory, if storage
tanks are available. This stock is kept in bonded warehouse in Harbor as well as in
factory. The differentiation of the oil will be based on whether it is bonded or duty paid.

4.2.3 Chemicals: The chemicals relevant for the factory will be kept in the storage area
near to the factory. Stocks for two weeks production will always be maintained. The details
are not available in the existing system.

4.2.4 Capital goods: Local: The details are not kept in the system. Are not being kept in
stock.

4.2.5 Engineering goods: Local: Stocked in the various locations as well as in main
stores.

4.2.6 Semi finished goods: Import / Local: In some cases processed bought out oil will
have to be reprocessed to bring it to the required quality.

4.2.7 Finished goods:

1. Oil

a. Sunflower Oil: The material will be kept in storage tanks.

b. Palm oil: The material is kept in storage tanks.
c. Palmolein: The material is kept in storage tanks.
d. Ground nut oil: The material is kept in storage tanks.
e. Soya Oil: The material is kept in storage tanks.
f. Vanaspathi: The material is kept in storage tanks.
g. Acid oil: The material is kept in storage tanks.
h. Palm Fatty acid: The material is kept in storage tanks.
i. Wax: The material is kept in barrels.

4.2.8 Packing materials:

These materials are stored in all the 5 Pouching Stations.

For immediate requirement the packing materials are kept near to the
machine.
Surplus stock is maintained in the same building for later use.
Internal transfer of materials between pouching stations also happens if
necessary.
Packing materials of sister concern is also kept at the same storage place.
Free gifts are also kept in the pouching stations (area).

Minimum quantity maintained:

Film rolls - 3weeks.
Carton box Minimum of 3 Months. During rainy season excess stock is
kept.
Carry bags 2 Months.
5-Liter Cans 3 Months.
15 Kg /Liter Tin 3 Months.

4.2.9 Lab Chemicals: This is kept in the quality lab only. Stock of one month is kept.

1 Salt for purification: Being stored in the purification plant. Yearly consumption is
500Kg.

1 Chemicals for Reverse Osmosis: Is being stored in the RO Plant. Yearly

consumption of 500kg.

2 Plants 1, 2, 3, 4: The relevant materials for the plant running will be kept in
 close proximity to the respective plant.

3 ETP Plant: Lime and Alum will be kept here.

4 General Store: Select 350 (1 Month), Paint, TBHQ (2 Month), Boiler brick,
Citric acid, Filter aid,Pure flow B81 (2 Months).

5 Main store: Washers, Bolts, Electrical items, Pouching machine consumables,

Flanges, Valves (As and when required).

6 Firewood: Will be kept near to the boiler area for easy access (5 tons).

7 Furnace oil: Two tanks are maintained for the storage of furnace oil (52KL).

8 Diesel: In plant 1, near power house (200L).

9 Pipes: Kept in the ground floor of main store in the pipe rack.

10 Hydrogen gas: In a tank near plant 2. (This is used for the production of
Vanaspathi).

11 Oxygen gas: Near the main store (15 in stock).

12 Distilled water: Minimum stock is maintained.

4.3 Goods Transfer / Issue

4.3.1 Transfer of materials within the factory:

1 The decision to start production is made by the Managing Director and the
communication is passed on to the plant manager/General manager.
2 The plant manager informs the stock accountant in the factory who checks
against the input output file (which gives a summarized report of the days
production) and with the systems consolidated stock report (Pinnacle). He checks the
stock available in various tanks and confirms the tank from which the oil is to be drawn.
The stock accountant also maintains a book /register with details of input and output
quantity of every batch/shift of raw material that is processed.
3 The above information is in turn communicated to the plant operator and shift
engineer who start the production.
4 The plant operator instructs the load cell operator to release the oil from the
load cell for production
5 The load cell operator, notes the input and output quantity in a book maintained
by him.
6 At the end of the processing cycle the refined oil is again sent to the load cell to
determine the output.
4.3.2 Issue from the main stores:

1 The requirement for a material is communicated verbally to the stores.

2 If it is a general item an entry is made in the issue register and the item is
issued directly to the requesting dept.
3 In case bulk request (for. e.g: a set of 29 filter cloth, instead of a few numbers)
and class-A items, verbal approval is required from the Plant manager.
4 A separate register is maintained for tools, with details such as name of the
receiver, receiving dept, time and date of receiving the material, purpose of request and
the time of return of the tool.
 5 In case of breakage or loss the incident is informed to the PM.
6 In case of chemicals, the person in charge of procurement also does a stock
check everyday and according to the consumed quantity he places fresh order for
purchase of the material.
4.3.3 Stock Transfer of Refined Product from Factory:
1 The concerned Area sales manager communicates the requirement to HO.
2 At regular intervals, HO sends a fax communication to factory regarding the
daily requirements. The fax communication will have the following details like the party
to whom the stock is to be supplied, the quantity to be supplied and the rate.
3 The factory accountant checks the availability of stock and the delivery
instruction is given accordingly.
4 As per the above instructions, stock is issued from the filling stations.
5 The vehicle is weighed before and after loading to find the final weight of the
loaded goods.
6 A delivery challan is raised manually and an entry is made in the pinnacle
system to transfer the stocks from the appropriate stock centers. It is later transported
to the tally system where it updates the accounting entries in HO.
7 Details of stock maintained in the C&F location, quantity dispatched from
factory and sales made from the C & F location is stored in Pinnacle and Tally at HO.
8 Only in case of major variation in weight, unloading and reloading will take
place.
9 Documents like transit pass (in case of interstate transfer), delivery challans
are attached and given to the driver. Form 27/Form 20 are attached if the transfer is
within the state. For interstate transfers, form 20 is attached.

5. Stock Verification:

1 For Oil Twice in a day.

2 For packing material Once in a day (6pm).
3 For stores item On yearly basis. (Data not available in the existing system).

6. Invoice Verification:

Only manual verification is being done. The reference documents send to HO for the
issue of cheques is GRN, Weighbridge slip, Vendors Invoice, Cheque Requisition Slip.

Oil

1 The quantity, quality, weight of the material is compared to the vendors invoice.
2 The terms and conditions in the PO are verified for the rate and the tax
specified.
3 With reference to the conditions given at the time of PO the payment will be
made.
4 The GRN docket contains Partys bill, Weight slip, lab report, Cutting charges
slip. (Dependent on Quality, Quantity, Due date).

Packing materials

1 The quantity, quality, weight of the material is compared to the vendors invoice.
2 The terms and conditions in the PO are verified for the rate and the tax
 specified.
3 With reference to the conditions given at the time of PO the payment will be
made.
4 The GRN docket contains Partys bill, Weight slip.

General Items:

1 The quantity, quality, weight of the material is compared to the vendors invoice.
2 The terms and conditions in the PO are verified for the rate and the tax
specified.
3 With reference to the conditions given at the time of PO the payment will be
made.
4 The GRN docket contains Partys bill, Weight slip, Cheque requisition slip
(CRS) for specific items.
7. Material Valuation:

Material valuation is broadly covered in CO AS-IS document.

8. Scrap:

1 Damaged packing goods (Plastic films) are stored and are disposed on a
periodic basis.
2 Damaged packing goods (Carton Box) are stored and are fed to the boiler.
3 Damaged engineering goods are sold as scrap.
4 Scrap is disposed off on a periodic basis.
5 No entries are made in the system regarding scrap sale.
9. Rejections and Returns:

Material Rejections / Returns

1 Material will be rejected / Returned on the following parameters.

- Size
- Quality
- Due date
2 The payment will be made for the entire quantity and a subsequent debit entry
will be given for the rejected / returned quantity against the vendor.

10. Approval Procedures:

Purchasing:

3 Plant level Signatures of any the below mentioned persons are necessary.
Plant manager / General Manager / Director / MD.

4 HO level Advertising Manager / Director / MD.

 11. Reports:

In the existing system, the following reports are available.

Purchase Purchase register.

Purchase register with type.
Purchase ledger.
Product wise.
Supplier wise.
Form 9 Local purchases.
Purchase register Local.
Purchase register Interstate.
Purchase register Others.
Purchase Product wise.
Purchase register wise.
Purchase return.
Consignment purchase register.
Rate difference report Contract Vs GRN.
Consignment GRN Vs Commission Sales.

Stock reports Stock register (Stock center wise).

Stock register (Location wise).
Stock report (Consolidated).
General GRN register.
GRN register.
GRN status report.
Purchase and sales value stock.

Stock transfer Stock transfer IN.

Stock transfer OUT.
Stock transfer details.
Stock transfer register.
Stock transfer summary.

GRN with cuts GRN cuts & Shortage.

Interstate purchase.

12. Sister Concerns:

KRPL does the processing / packing for the sister concerns.

1. Ananda Oil Corporation (AOC).

Crude supplied by AOC is processed by KRPL.

The processed oil is given back to AOC.
KRPL charges AOC for processing.

2. Arun Oil Trade (AOT).

Crude supplied by AOT is processed by KRPL.

The processed oil is given back to AOT.
KRPL charges AOT for processing.

3. Ashok Oil Trade (AkOT).

Crude supplied by AkOT is processed by KRPL.

The processed oil is given back to AkOT.
KRPL charges AkOT for processing.

4. GMS Traders
 Crude supplied by GMS is processed by KRPL.
GMS has a storage tank and a packing machine on lease with KRPL.
GMS does the packing and also the bulk product movement.
GMS trader pays the processing charges to KRPL.

5. Guru Oil Mart (GOM).

Crude is supplied by GOM, processed by KRPL.

The processed oil is given back to GOM.
GOM trader pays the processing charges to KRPL.

6. Kaleesuwari Oil Store

Retail shop for KRPL at HO.

7. MK Oil Corporation (MKOC).

Crude supplied by MKOC is processed by KRPL.

The processed oil is given back to MKOC.
MKOC pays the processing charges to KRPL.

8. MKA Transports

Tankers and load vans of MKA transports are catering the transportation
requirements of KRPL.

The transport maintenance person identifies the requirement.

The procurement decision is with the MD.
The spares are on cash purchase only.
Bills are in the name of MKA Transport.
For availing discount, from some specific vendors, the bills is
in the name of KRPL
A debit note is raised against MKAT by KRPL.
Stock of materials is for lubricating oils, brake fluid, tyres etc.,
No register is maintained for the stock materials.
The consumption of these materials is available only from
vehicle service reports.
Disposal of the scrap is done on a periodic basis.

9. Tharun Oil traders (TOT).

Crude supplied by TOT is processed by KRPL.

The processed oil is given back to TOT in Bulk.
TOT pays the processing charges to KRPL.
Flow chart Process 3.0 Purchase: Imports -Oil
Flow chart Process 3.1
Flow chart Process 3.2
Flow chart Process 4.3 Issue to production

Flow chart Process 4.3 Goods issue

Flow chart Process 4.3 Tools issue
Flow chart Process 6