OVERVIEW OF STORES ACCOUNTS

1. OVERVIEW OF STORES ACCOUNTS BY VINAYAK RAO , I.R.A.S. DY. CAO (C&P) WESTERN RAILWAY HQ, MUMBAI.

2. PURCHASES BY I. R. • 1999-00 RS. 9398 CR. • 2000-01 RS. 10,835 CR. • 1999-00 RS. 8601 CR. INDEGENOUS • 2000-01 RS. 10,373 CR. INDEGENOUS • 1999-00 91.5 % INDEGENOUS PURCHASES • 2000-01 95.7 % INDEGENOUS PURCHASES

3. MODE OF PROCUREMENT • ZONAL RAILWAYS AND PU s PROCURE MOST OF THE MATERIAL THEY NEED. CERTAIN ITEMS ARE PROCURED THROUGH RAILWAY BD., AND DGS&D. • IN 2000-01 48 % WAS PROCURED BY ZONAL RLYS AND PU s, 47 % BY RAILWAY BD. AND 5 % BY DGS&D.

4. INVENTORY TURN OVER RATIO (TOR) • INV. TOR = VALUE OF BALANCE STOCK • ISSUES DURING THE YEAR • YEAR TOR • 1999-00 10.22% • 2000-01 12 %

5. STORES BALANCES & ISSUES (W/O FUEL)

6. INVENTORY TURNOVER RATIO (W/O FUEL)

7. DISPOSAL OF UNUSABLE ASSETS ON I. R. • DURING 2000-01 RS. 949 CR. WAS REALIZED BY DISPOSAL OF UNUSABLE ASSETS. THIS CONSTITUTES ROUGHLY 10 % OF PURCHASES. SCRAP DISPOSAL

8. ORGANISATION AT RLY. BD. LEVEL

9. ORGANISATION AT ZONAL LEVEL

10. ASSOCIATE ACCOUNTS

11. FUNCTIONS OF STORES DEPT. • PURCHASE, INSPECTION, CUSTODY, ISSUE OF RLY. STORES; AND CONDUCT PURCHASES IN MOST EFFICIENT,ECONOMIC,FAIR,AND TRANSPARENT MANNER • INVENTORY MGT. & STANDARDIZATION • DEVELOPMENT OF COST EFFECTIVE MATERIALS • COMPILATION OF STORES BUDGET IN CONSULTATION WITH ACCOUNTS • SATISFY PUBLIC ACCOUNTABILITY AT ALL STAGES OF TRANSACTIONS[ PURCHASE, ISSUE, SALE]

12. FUNCTIONS OF STORES A/CS DEPT. • COMPLETE AND INDEPENDENT AUDIT OF STORES TRANSACTIONS • FUNCTIONS OF ASSOCIATE FINANCIAL ADVISOR • MAINTAINING ACCOUNTAL & PASSING BILLS • COMPILE MONTHLY STORES ACCOUNTS AND PERIODICAL RETURNS • STOCK VERIFICATION

13. MOVABLE SURPLUS THAT STORES WHICH IS LIKELY TO BE ISSUED IN FUTURE DEAD SURPLUS THAT STORES WHICH IS NOT LIKELY TO BE ISSUED IN FUTURE IMPORTANT TERMS

14. STOCK ITEMS WHICH ARE STOCKED IN STORES DEPOTS N. S. ITEMS WHICH ARE NOT STOCKED IN STORES DEPOTS IMPORTANT TERMS

15. CONCEPT OF AVERAGE ANNUAL CONSUMPTION • BASED ON THE AVERAGE OF ANNUAL CONSUMPTION OF PAST THREE YEARS • THIS IS VERY USEFUL IN DECIDING THE QUANTITIES TO BE PROCURED

16. HISTORY SHEET FOR ITEM “X”(FIGURES IN RED INDICATE NO. OF DAYS WHEN ITEM WAS OUT OF STOCK)

17. VETTING OF NON-STOCK INDENTS • REALISTIC ASSESSMENT KEEPING IN VIEW THE CANONS OF FINANCIAL PROPRIETY • SPECS SHOULD BE DETAILED AND UNAMBIGUOUS • USE BIS OR IRS SPECS • SPECS SHOULD BE SUCH THAT THEY DO NOT SUIT ONLY ONE PARTICULAR MANUFACTURER

18. (CONTD.) • FUNDS AVAILABILITY • LAST PURCHASE RATE • ED/ST/CST/OCTROI HAS TO BE TAKEN INTO ACCOUNT • INDENTS > RS. 40,000 ARE VETTED BY ASSOCIATE ACCTS • INDENTS > RS. 2,000 ARE SIGNED BY JAG OR HIGHER OFFICER

19. 5 R s OF PURCHASING • RIGHT QUANTITY • RIGHT QUALITY • RIGHT PRICE • RIGHT DELIVERY • RIGHT SOURCES

20. TYPES OF TENDERS • OPEN / LIMITED / SINGLE • FOR SAFETY ITEMS APPEARING AS RDSO’S APPROVED SUPPLIERS LIST OR GM’S APPROVED SUPPLIERS’ LIST • BULLETIN TENDERS

21. SCRUTINY OF TENDERS • OPENING OF TENDERS • COMPARATIVE STATEMENT. • DETAILS OF ED, ST / CST, PACKING CHARGES AND CALCULATIONS • FIN. IMPLICATIONS OF OTHER CONDITIONS, e.g. QTY. DISCOUNTS, EARLY PAYMENT DISCOUNT, ETC. • LAST PURCHASE RATES • CREDENTIALS • PAST PERFORMANCE

22. CONTD... • CONSTITUTION OF T. C. • LATE OR DELAYED TENDERS TO BE REJECTED • UNSOLICITED OFFERS TO BE REJECTED • NEGOTIATION WITH L1 ONLY

23. .SPLITTING • SPLITTING CAN BE RESORTED TO KEEPING IN MIND THE FOLLOWING: • VITAL AND CRITICAL NATURE OF THE ITEM • QUANTITY. • DELIVERY REQUIREMENTS • CAPACITY OF FIRMS • PAST PERFORMANCE

24. I. R. S. CONDITIONS OF CONTRACT • RISK PURCHASE • LIQUIDATED DAMAGES • BOOK EXAMINATION CLAUSE • FALL CLAUSE • FORCE MAJURE CLAUSE • TIME PREFERENCE

25. PRECHECK OF P. O. AND BILLS • PRE CHECK OF ALL P.O.s > RS. 40,000 IS COMPULSORY • COMPARISION WITH ORIGINAL OFFERS AND TC MINUTES • CHECK BILLS WITH REF. TO P.O. AND ALL THE SPECIAL CONDITIONS MENTIONED THEREIN

26. PURCHASES (IMPORTED) • BILL OF LADING IS A DOCUMENT GIVING TITLE OF GOODS SIGNED BY A SHIPPING COMPANY OR THEIR AGENTS CONTAINING DECLARATION REG. RECEIPT OF GOODS ( CARGO) CONDITIONS ON WHICH TRANSPORTATION IS MADE AND DELIVERY OF GOODS AT PRESCRIBED PORT

27. LETTER OF CREDIT • L.C. IS A BANK INSTRUMENT AUTHORISING THE (ISSUING ) BANK ON BEHALF OF THE PURCHASER(APPLICANT) TO PAY A CERTAIN SUM TO SPECIFIED SELLER (BENEFICIARY) PROVIDED THE SELLER SUBMITS THE DOCUMENTS AS PRESCRIBED IN THE LETTER OF CREDIT.

28. TYPES OF L. C. • REVOCABLE VS. IRREVOCABLE LC • CONFIRMED LC • TRANSFERRABLE LC • REVOLVING LC

29. STORES SUSPENSE HEADS • PURCHASES INDEGENOUS P 7110 • PURCHASES IMPORTED P 7120 • PURCHASES DGS&D P 7130 • SALES REALISATION P 7140 • STORES P 7160 • STOCK ADJUSTMENT P 7180 • MISC. ADV. (CAP) P 7310

30. STORES (P-7160)DR. WITH COST OF STORES • BY CR. TO: • PURCHASE CAP. 7110 OR 7130 FOR IMPORTED, AND INDIGENOUS ITEMS • WMS 7210 FOR W/S MANUFACTURED ITEMS • REV./ WORKS FOR STORES RETURNED TO DEPOTS • DTR (7170) • MAC CAP.7130 (FABRICATED MATERIALS), • ETC.

31. P 7160 is Credited by cost of stores issued by Dr. to: • Sales (cap.7140) in case of sale • WMS (7210) in case of issue to w/shop • Rev./ Wks allocation for issue to rev./wks • DTR in case of depot transfer • MAC(7310) for issue for fabrication • NOTE:Balance in Cap. 7160 indicates value of stores held in stock.

32. SINT (DTR) • OPERATED TO WATCH RECEIPT & ACCOUNTAL OF STORES TRANSFERRED FROM ONE DEPOT TO ANOTHER. • STORES ISSUED DURING A MONTH BUT NOT RECEIVED IN THE SAME MONTH BY THE RECEIVING DEPOT ARE NOTED DOWN IN THE REGISTER OF SINT(DTR)

33. PURCHASE SUSPENSE • OPERATED TO WATCH PAYMENTS TO FIRMS FROM WHOM MATERIAL HAS BEEN RECEIVED AND TAKEN INTO STOCK BEFORE PAYMENTS ARE MADE. • CREDIT BALANCE IF PAYMENT IS MADE AFTER MATERIAL IS RECEIVED • DEBIT BALANCE IF PAYMENT IS MADE BEFORE MATERIAL IS RECEIVED.

34. SINT (PURCHASE) • CREDITS TO PURCHASE A/C ARE POSTED FROM RECEIPT ORDER (RO). • POSTING OF SUCH RO s WILL BE DONE IN PRICE LEDGERS ONLY WHEN THE MATERIAL IS RECD. AND ACCEPTED IN ITS NUMERICAL LEDGER. IN SUCH CASES ACCOUNTAL IS DELAYED BEYOND THE MONTH IN WHICH THE RO IS ISSUED. ALL SUCH ITEMS ARE POSTED IN SINT (PURCHASE).

35. PT. I DIFFERNCE IN STOCK- DIFFERENCE BETWEEN GROUND BAL.& BOOK BAL. PT. II DUE TO REVISION OF RATES ON ACCOUNT OF DEPRECIATION STOCK ADJ. A/C

36. PT. III ALL DIFFERNCES BETWEEN BOOK VALUE AND VALUE REALISED IN AUCTION SALES, LOSSES ON A/C OF LEAKAGE, THEFT, OBSOLOSCENCE, ETC. REVIEW OF STOCK ADJ. A/C TWICE A YEAR ON 31.3 AND 30.09 STOCK ADJ. A/C (CONTD...)

37. W/SHOP MANUFACTURING SUSPENSE (WMS) • THOUGH IT RECORDS LABOUR COST, MATERIAL COST, AND OTHER MISC. CHARGES INCURRED ON THE WORKS UNDERTAKEN IN RAILWAY WORKSHOPS, STORES FORMS A MAJOR PORTION OF THIS. THUS IT IS AN IMPORTANT ITEM FROM THE POINT OF VIEW OF STORES BUDGET.

38. OUTPUTS FROM EDP CENTRE • LIST OF STOCK MASTER • LIST OF VOUCHERS WHERE BOOK AVERAGE RATE (BAR) CHANGES BY > 10 % • DEBIT CREDIT SUMMARY- STORES MONTHLY SUMMARY • DIVISION WISE ISSUES TO REVENUE DEMANDS • TRANSACTION REGISTER • CONTROL CLASS LEDGER

39. WHY DO WE NEED B.A.R.? • THOUGH THERE ARE VARIOUS METHODS FOR PRICING ISSUES SUCH AS LIFO, FIFO,ETC. THE BOOK AVERAGE OFFERS A SIMPLE AND SCIENTIFIC METHOD FOR ALLOCATING VALUE TO ISSUES FROM STOCK.

40. Book Average Rate (BAR) : AN ILLUSTRATION

41. STOCK ITEMS IF ITEM IS NOT OVERSTOCK CREDIT IS GIVEN AT BAR FOR SECOND HAND MATERIAL AT 1/2 THE VALUE FOR ALL NON STOCK ITEMS AT APP. SCRAP RATE RETURN STORES

42. DISPOSAL OF SCRAP • RECEIPT OF SCRAP • PROXY AUCTION • FORMATION OF LOTS • LOT REGISTER • VALUATION OF SCRAP[NON FERROUS SCRAP R.P. IS VETTED BY HQ A/Cs • SALE THROUGH AUCTION, TENDER, TENDER CUM AUCTION, DIRECT SALES • STAFF SALE

43. CONTD… • EARNEST MONEY: VALUE UPTO RS. 2000 • @ 25 % OF VALUE FOR RS. 2000- 10,000 • @10 % OF VALUE FOR RS. > RS. 10,000 • TIME PERIOD FOR PAYMENT • FOR < RS. 1 LAC 10 DAYS • FOR > RS. 1 LAC 20 DAYS • FOR > RS. 2 LACS INSTALMENTS CAN BE GRANTED BY C O S

44. DIRECT SALE • FREIGHT @5% • INCIDENTAL CHARGES @ 2 % • DEPARTMENTAL CHARGES @ 12.5 %OVER AND ABOVE.

45. INVENTORY CONTROL • OBJECTIVES: • AVOID BLOCKING OF CAPITAL • MINIMISE CARRYING COST • MINIMISE HANDLING COST • MINIMISE OBSOLESCENCE

46. TECHNIQUES OF I. C. • A B C ANALYSIS • AA CATEGORY- ANNUAL ISSUES > RS. 5 LACS • A CATEGORY - ANNUAL USAGE BET. RS. 50,000 & RS. 5 LACS[NOT> 3 MONTHS REQ.] • B1 CATEGORY - BET. RS. 25,000 TO 50,000[NOT > 6 MONTHS REQ.]

47. CONTD... • B2 CATEGORY ANNUAL USAGE BET. RS. 10,000 BUT < RS. 25,000 [ NOT MORE THAN 6 MONTHS REQ.] • C CATEGORY - USAGE < RS. 10,000 P.A.[NOT > 12 MONTHS REQ.]

48. V.E.D. ANALYSIS • VITAL ITEMS ARE THOSE WITHOUT WHICH EQUIPMENT WILL NOT FUNCTION • ESSENTIAL ITEMS ARE THOSE WITHOUT WHICH EEFFICIENCY WILL BE AFFECTED ADVERSLY • DESIRABLE ITEMS ARE THOSE WITHOUT WHICH EQUIPMENT WILL STILL WORK.

49. STOCK VERIFICATION • There is a separate cadre of the Stock verifiers (SV s) and Inspectors of Stores Accounts (ISA s). They carry out verification of stock in depots, and with the plant holders in the field / workshops. • The differences detected between the book balances and the ground balance is reported through stock sheets.

50. Stock verification (contd.) • Disposal of stock sheets • The stock sheets are discussed by the controlling officer with the accounts officer and explanations are offered. If these are acceptable, the stock sheets are closed without further action. • If not then action under DAR is recommended against the defaulting staff.