SUMMER INTERNSHIP PROJECT

BLACKBOOK 2021-23
 Batch Year:

2021-23

Roll No:

49

Student Name:

Sumeet Shivshant kadechkar

Specialization:

Operations Management

Faculty Mentor:

Prof. Vishnu Chhatre

Name of the Industry:

Rashtriya Chemicals Fertilizers

Industry Mentor:

Mr. Sanjay Bharambe

Note: Summer Internship Project (SIP)Starts on:- 06/06/2022

Ends on: -23/08/2022
 SUMMER INTERNSHIP PROJECT
(SIP)

Understanding the process of procurement of imported Raw Material in

bulk

Submitted in the partial fulfilment for the award of the degree of

Post Graduate Diploma in Management (PGDM)
(University of Mumbai/AICTE)

Submitted By
Sumeet shivshant Kadechkar
(Roll No: - 49)

Under the guidance of

Faculty Mentor: Prof. Vishnu Chhatre
2021-2023
VES Business School
I, Sumeet Shivshant Kadechkar, hereby declare that the work presented in this
project entitled “Understanding the process of procurement of imported
Raw Material in bulk” is an original piece of work carried out by me under
the guidance of Prof. Vishnu Chhatre. The information submitted is true and
original to the best of my knowledge.

Name: Sumeet Kadechkar

Signature
Roll No: - 49
 ACKNOWLEDGEMENT

I, Sumeet ShivShant Kadechkar student of Vivekanand Education

Society Business School, acknowledge gratitude towards the entire
team associated with completing this project.

I am using this opportunity to express my gratitude to everyone who

supported me throughout the course of this project. I am thankful
for their aspiring guidance, invaluably constructive criticism and
friendly advice during the project work. I am sincerely grateful to
them for sharing their truthful and illuminating views on a number
of issues related to the project.

Thanks to my mentor Mr. Sanjay Bharambe for being there and

guiding me throughout this whole internship project. Mr. Rohit sute
for designing an excellent training program. I would also like to
thank Mrs. Rajalaxmi Naidu and Mrs. Rasika Turlaskar and Mr.
Jitesh for helping out with every little thing and making this
internship a very memorable and learning experience.
INDUSTRY MENTOR EVALUATION SHEET
 INDEX

Sr. No. Topics Page Nos.

1 EXECUTIVE SUMMARY

2 INDUSTRY ANALYSIS
2.1 Size of the Industry
2.2 Major Player in the Industry
2.3 Market Share of the Major Player
2.4 Industry Financials
2.5 Challenges faced by the chemical and fertilizer
Industry in India

3 ABOUT THE COMPANY

3.1 Genesis of the Company
3.2 Mission and Vision
3.3 Products and Services
3.4 Position in the Industry
3.5 Shareholdings Pattern
3.6 Locational and Operational details
3.7 Company Financials
3.8 Challenges Faced by the Company
3.9 SWOT analysis

4 PROJECT DETAILS / ON JOB TRAINING

4.1 T.S.D (Technical Service Department)
4.2 NIT (Notice Inviting Tender)
4.3 FW (Fertilizer Weekly) Report
4.4 Uploading the Documents
4.5 Opening of Bid / Offer
4.6 Purchase Order
4.7 Documentation
4.8 Incoterms

5 PUBLIC PROCUREMENT PREFERENCE TO

MAKE IN INDIA POLICY.
5.1 Margin of Purchase Preference
5.2 Requirement of Purchase Preference

6 BENEFITS TO MICRO AND SMALL

ENTERPRISES MSEs
6.1 Qualifying criteria for MSEs, SC/ST vendors,
Women Owned MSEs
6.2 Purchase Preference for MSE

7 RECOMMENDATION
7.1 Key Performance Indicator
7.2 Implementing Strategic Sourcing in procurement
process
7.3 Introducing Automation in Procurement Process
2) Industry Analysis
2.1) Size of the industry
In 2021, the Indian fertilizer market had a worth of INR 858 billion. The market
is anticipated to grow at a CAGR of 4.7% from 2022 to 2027, reaching INR
1,131 billion.
The success of India's green revolution and eventual independence in the
production of food grains were significantly influenced by fertilizers. The
country's food grains are now being produced more sustainably thanks to the
rise in fertilizer use. As a result, over the past few years, the demand for
fertilizers has seen double-digit growth rates.
Despite a significant increase in recent years, India still uses fertilizers on
average at a significantly lower intensity than the majority of industrialized and
developing nations worldwide. The use of fertilizers is likewise very lopsided,
with significant variances across regions, states, and districts.

Indian Fertilizer Market: Drivers

 Food demand is anticipated to increase significantly during the following
five years, driven by the nation's population expansion. On the other
hand, it is anticipated that the amount of agricultural land will decrease as
urbanization levels rise. We anticipate that fertilizers will be crucial in
raising the typical crop yields per hectare.
 India continues to have a very lopsided fertilizer consumption pattern
despite considerable historical growth. There are currently a few Indian
states where the penetration of fertilizers is still very low. There is a tone
of room for expansion in the future.
 Many government and non-government awareness programs are
anticipated to inform farmers about the advantages of fertilizers. The use
 of fertilizers is also expected to rise in the upcoming years due to
advertising of fertilizers on television, radio, and in-depth rural
workshops.
 Increased rural incomes and simple credit availability are also anticipated
to have a good effect on the nation's fertilizer usage.
 Contract farming, where the food processor (contractor) is intended to
give inputs in the form of technology and training to the farmer, is also
anticipated to have a favorable effect on fertilizer usage.

Key Market Segmentation

In this I have categorized the market based on product type, segment,
formulation, application, and region.

Breakup by Product type

 Chemical Fertilizers
 Bio fertilizers
The market has been divided into chemical fertilizers and biofertilizers based on
the type of product. Chemical fertilizers currently control the largest share of
the market.

Breakup by Segment:
 Complex Fertilizers
 DAP
 MOP
 Urea
 SSP
 Others
The market has been divided into segments for complex fertilizers, DAP, MOP,
urea, and SSP. DAP now holds the vast majority of the market share and is the
largest kind.

Breakup by Formulation:
 Liquid
  Dry
The market has been divided into two categories based on formulation: liquid
and dry. The majority of the market share belongs to the main category of dry
fertilizers.

Breakup by Application:
 Farming
o Grains and cereals
o Oil seeds
o Fruits and vegetables
o Others
 Gardening
The market has been divided into agricultural and gardening based on
application. The market is primarily dominated by farming applications.

Breakup by region:
 East India
 North India
 South India
 West India
The market has been divided into four categories based on geography: North
India, South India, East India, and West India. The Indian fertilizer market is
now dominated by North India.

2.2) Major Player in the Industry

 Coromandel International
 Chambal fertilizers and chemicals
 National Fertilizers
 Rashtriya Chemicals and Fertilizers
 Gujarat state fertilizers and chemicals
 Gujarat Narmada valley fertilizers and chemicals
 Paradeep phosphates
 Fertilizers and chemicals Travancore
 Tata chemicals
 Mangalore chemicals and fertilizers
 Deepak Fertilizers and Petrochemicals corporation

Leading chemical and fertilizers companies Rankings based on their net

Sales.
2.3) Market share of Major player

RCF is the third largest player in the domestic urea industry in terms of
production capacity. The company had a share of around 11 per cent in the
domestic urea market, which is sold under the popular brand name “Ujwala”.
Complex Fertilizers, sold under the brand name “Suphala”, enjoy about 5.4%
market share and has a strong position in its primary markets of Maharashtra,
Karnataka, Andhra Pradesh & Telangana.
2.4) Industry Financials
The Department of Fertilizers deals with disbursal of subsidy on urea and
phosphatic and potash (P&K) complex Fertilizers under Urea Subsidy Scheme
and Nutrient Based Subsidy Policy, apart from the Secretariat budget, the
budget allocation for 2020-2021 vis-à-vis 2021-22 in respect of Urea Subsidy
Scheme and Nutrient Based Subsidy Policy are as under: -
(Rs. In Crores)
Scheme Budget Estimate Budget Estimate Revised Estimate
for 2020-21 For 2021-22 For 2021-22
Secretariat 35.94 37.08 36.28
Expenditure
NBS Policy
Indigenous P&K 14179.00 12460.00 39062.66
Imported P&K 9296.00 8260.00 25087.34
City Compost 29.00 42.00 42.00
Total Allocation 23504.00 20762.00 64192.00
for NBS Policy
Urea Subsidy
Indigenous Urea 38375.00 43236.28 48612.00
Imported Urea 12050.00 19550.00 36250.40
Direct Benefit
Transfer Subsidy
Office Expense 1.00 1.40 1.40
Professional 9.00 10.00 26.52
Service
Total Allocation 50435.00 62797.68 84990.42
for Urea Subsidy
Total Subsidy 73939.00 83559.68 149182.42
Allocation (Gross)
Recovery received 2630.00 4030.00 8960.00
from sale of
imported Urea
Total Subsidy 71309.00 79529.68 140222.42
Allocation (Net)

Internal & Extra Budgetary Resources (IEBR)

The Internal & Extra Budgetary Resources (IEBR) generated by five profits
making fertilizer CPSEs for 2020-21 i.e., FCI Aravali Gypsum & Minerals
India Limited (FAGMIL), Projects &Development India Limited (PDIL),
Brahmaputra Valley Fertilizer Corporation Limited, National Fertilizers Limited
(NFL) and Rashtriya Chemicals & Fertilizers Limited (RCF) are as under
(RS. In crores)
Sr. No. Name of CPSE Actuals 2020- RE 2021-22 BE 2022-23
21
1 BVFCL -101.36 -63.56 -1.86
2 FAGMIL 3.60 4.96 74.21
3 NFL 326.32 281.26 278.92
4 PDIL - - 0.10
5 RCF 201.03 240.74 293.87

2.5) Challenges faced by the Fertilizer and chemicals industry in India

Due to the country's expanding population, which is driving up food demand,
as well as rising demand for agricultural products, the India fertilisers market
is predicted to rise strongly over the course of the projected period. India is
one of the world's top producers of agricultural goods, including pulses,
wheat, rice, groundnuts, potatoes, onions, etc., which leads to a strong need
for fertilisers there. In addition, rising government measures to cut back on
fertiliser imports along with increased fertiliser production capacity in India
are predicted to further fuel the growth of the Indian fertiliser market in the
upcoming years. However, there will undoubtedly be significant problems for
manufacturers in 2018 that could necessitate them to rethink their strategy.

Challenge 1 – Heavy Imports-Lack of Domestic Production

India is a significant agricultural hub in the world, and the bulk of the people
relies on agriculture to meet their needs. The primary end-use industry for
fertilisers is agriculture, and demand for fertiliser is rising rapidly. Due to the
country's restricted supply of speciality fertilisers, including muriate of potash
(MOP), India imports them.
2.86 million MOP were consumed in FY2016–17, the majority of which was
imported. Seventy-five percent of India's need for calcium nitrate (15.5-0-0-
18.8) grade, which accounts for 20% of the market for water-soluble
fertilisers, is imported. The fertiliser market is predicted to increase at the
fastest rate for water-soluble fertilisers. More than 80% of the potassium
nitrate (13-0-45), 95% of the potassium sulphate (0-0-50), and 12-61-0 mono-
ammonium phosphate are imported compared to the domestic production of
water-soluble fertilisers. Only 16% of the country's entire need for water-
soluble fertilisers is fulfilled by domestic production; the majority is imported
because the industry hasn't seen any significant technological advancements
that would enable high production.

 Challenge 2 – Low Yield Due to Wrong Usages of NPK

It is completely surprising from organic farming how the government is
developing farming. It's now limited to using NPK and three other compounds
(nitrogen, phosphorus and potassium). At least 17 different elements are
necessary for the development of plants. Although the government claims to
be promoting organic farming in this instance, compound composts are
receiving funding, and fertiliser consumption varies greatly. The ratio of NPK
use should be 4:1:1. However, this ratio is 61:19:1 in Punjab. Because urea is
inexpensive to purchase, farmers apply it more frequently, which causes
irregularity and lowers output. It is important to look into the overall effects
of the subsidy system on agriculture. The overuse of fertilisers is the biggest
problem in agriculture. The yield was higher in 1950 when less NPK was
used. Currently, a lower yield is being produced since more NPK is being
used. Natural farming is necessary to improve the organic component of the
soil.

Challenge 3 – Raw Material Availability and Pricing

The availability and variable costs of the raw materials needed to create
fertilisers present significant obstacles for the Indian fertiliser sector. The
supply and demand variables are primarily to blame for changes in fertiliser
prices. India is also at a disadvantage since it lacks the natural resources
needed to make fertilisers. There isn't enough natural gas in the nation to
produce enough urea.

Challenge 4 –Lack of Long Term and Stable Policy

The problems with fertiliser certifications and appropriate standards that the
fertiliser business is experiencing are still being disregarded by the Indian
government. Currently, the import duty is the same for both imported raw
materials and finished goods, although raw materials should be subject to a
lower customs duty than finished goods to promote domestic production.
Additionally, there is no market requirement for certification.

Challenge 5 – Distributors and Retailers-Key Influencers in Specialty

Fertilizers Industry
The market for specialised fertilisers is expanding quickly. The sales of water-
soluble fertilisers are greatly influenced by distributors. Although the total sales
of different grades of water-soluble fertilisers are increasing at a rapid rate,
some businesses in the Indian market are having substantial difficulties as a
result of declining sales in the corresponding grade.
Challenge 6 – Government Policies
The government used subsidies to keep fertilisers affordable for farmers and to
stop the cost of producing food crops from rising, but as governments are
increasingly constrained by international institutions, such as the WTO
agreement, subsidies must be reduced. This is detrimental to the expansion of
this sector.

Challenge 7 – Lesser expansion of irrigation facilities and consequent low

fertilizer consumption leads to low demand and therefore, restricts the growth
of industry.

Challenge 8 – Obsolete technology

The majority of the fertiliser sector is run by PSUs, who employ technology that
is ten years old and is making large losses while losing out on the competitive
edge.

Challenge 9 – Less expansion of irrigation facilities is also the reason for low
demand hampering the growth of industry.
3) ABOUT THE COMPANY

3.1) Genesis of the company

Rashtriya Chemicals and Fertilizers (RCF) was established in 1978 under the
Companies Act of 1956. RCF was formed as a result of the reorganisation of
FCI into five companies.
The company was a wholly-owned PSU until 1992. During 1992 and 1993,
7.5% of the equity was disinvested to financial institutions, the general public,
and other entities. Since 1988-89, RCF has been an MoU signing company.
RCF is one of India's leading fertiliser manufacturers. Its major fertiliser brands
are Sujala, Suphala 15:15:15, Suphala 20:20:0, Ujjwala, Microla, and Biola. All
of the products can be used in a variety of soil types and climatic conditions.
In India, the company was a forerunner in the production of basic chemicals
such as methanol, sodium nitrate, sodium nitrite, ammonium bicarbonate,
methylamines, dimethyl formamide, and dimethylacetamide.
RCF is currently India's sole manufacturer of DMF. The primary considerations
in determining the type of packaging and modes of transportation for each
product are product characteristics, consumer needs, consumer economy, and
safety.
The company owns two complexes, one in Mumbai's Trombay neighbourhood
and the other in Maharashtra's Raigad district. The company's marketing
headquarters are in Mumbai.
RCF also manages projects and provides O&M services to its clients in the
fertilizer/chemicals industry.
RCF provides turnkey projects that include total management, including project
report preparation, budgetary offer detailed engineering, know-how, licence tie-
up along with performance guarantee, civil and mechanical erection with
instrumentation, including procurement of equipment, commissioning,
guarantee trial runs, and subsequent successful operation if desired.
In addition, the company forms joint ventures to conduct feasibility studies in
the fields of fertilisers, industrial chemicals, and petrochemicals.

3.2) Mission and Vision

Mission of RCF
"Exponential growth through business excellence, with a focus on maximising
stakeholder value by manufacturing and selling fertilisers and chemicals in a
trustworthy, ethical, and socially responsible manner."

Vision of RCF
"To be a world-class business in the sector of fertilisers and chemicals with a
leading position in the Indian market, assuring optimal resource utilisation,
environmental stewardship, and maximisation of stakeholder value."

3.3) Products and Services

Major products that RCF manufactures are
 Ujwala

Ujjwala Chemical fertilisers called urea are round, white pills that contain 46%
nitrogen. Due to their great water solubility, they can be used on any type of
crop or soil. When seeding, disseminating, or spraying, they are typically
applied in 2-3 steps. Due to its qualities, this fertiliser is very well-liked by
farmers and is available all over India
 Suphala

S15, also known as Suphala 15:15:15, is a complex, granular fertiliser with a

brown tint. It is created by combining equal parts of nitrogen, phosphorus, and
potash, and is used as a plant nutrient. These nutrition granules maintain the
nutrients' precise proportions and are homogeneous. These granules may be
placed by seed drill with ease because to their substantial density, which
prevents dispersion by wind or water.

 Sujala

There are two varieties of Sujala 19:19:19: foliar grade (sprayed), and drip
grade (dripped during irrigation). These fertilisers, which contain the three main
plant nutrients nitrogen, phosphorus, and potash, are extremely water soluble.
Secondary nutrients like sulphur and magnesium are also abundant in them.
Sujala enhances yield by 20–40% while reducing fertiliser costs by 30–40%. It
stops and prevents crop mechanical damage as well as soil texture and
appearance deterioration. Application varies depending on the type of crop, the
type of irrigation, the weather, the stage, etc. During tilling, flowering, fruit
setting, fruit maturity, pruning, and plucking, it may be used.
  Biola

A multi-purpose bio-fertilizer called Biola (PSB) creates a soil solution with

fixed phosphorus that is beneficial for the growth of plants. It promotes soil
microorganisms to grow more quickly, which benefits the soil's structure and
texture. Additionally, this promotes crop development and increases resistance
to many pests and diseases.
RCF LTD is quite well-known for producing basic chemicals like-

 Methanol
 Sodium Nitrate
 Ammonium bicarbonate
 Methylamines
 Dimethyl Formamide
 Dimethylacetamide

Services of RCF
RCF is in testing services such as
 Soil testing
 Micronutrients fertilizers testing
 Industrial water testing
 Compost testing

3.4) Position in the Industry

 RCF has a well-established position in the domestic fertiliser market, and
its operations are vertically integrated and offer a wide range of products.
RCF is India's third-largest urea producer in terms of production capacity.
Additionally, during FY21, RCF had a market share of about 6% for urea
sales in India (fifth largest in FY20). RCF has two production plants in
Maharashtra that serve the needs of almost 18 states.
High levels of vertical integration are present throughout RCF's
businesses, including its industrial chemical and fertiliser product
divisions. The consistency of its revenues is attributed to its wide range of
product offerings, including urea, complex fertilisers, traded fertilisers,
and industrial chemicals, as well as its capacity to adapt its product mix
to changing market conditions. RCF's established dealer distribution
network, which has more than 6,000 points of contact, enables it to serve
a variety of geographic areas.
The above chart is of operating revenue as you can see Rashtriya Chemical and
Fertilizers has seen exponential growth in the operating revenue in the past 10
years. And the company is still growing with its diversification of products and
holds a very strong ground in the chemical and fertilizer industry. The company
generates most of his money through Urea production and its product such as
suphala, ujwala, biola sales have seen an exponential growth in the past few
years.

3.5) Stake holder details

CATEGORY NO. OF SHARES PERCENTAGE
Promoters 41,37,69,483 75.00 %
Pledge 0 0.00 %
FII (Foreign Institutional 1,62,74,774 2.95%
Investors)
DII (Domestic 16,63,043 0.30%
Institutional Investors)
MF (Mutual Funds) 1,22,766 0.02%
OTHERS 11,99,80,800 21.75%
3.6) Locational and Operational Details
LOCATION TYPE ADDRESS

Registered & Corporate Office Priyadarshini, Eastern Express Highway,

Sion
Mumbai - 400022
Maharashtra - India
Factory/plant Trombay Unit: Mahul Road, Trombay,
Mumbai - 400071
Maharashtra - India
Factory/plant Thal Unit: Alibag, Thal,
Raigad District - 402208
Maharashtra - India
3.7) Company Financials
3.8) Challenges faced by the company
3.9) SWOT analysis
Strengths:-
High-quality Products:
Ujjwala, Suphala, Microla, Biola, and Sujala are some of the high-quality
products made by Rashtriya Chemicals and Fertilizers.

Recognized Brand:
The RCF-produced fertiliser brands Ujjwala and Suphala have strong brand
equity and therefore are well-known throughout the nation. An robust network
of RCF dealers distributed across the country transports these products to the
most remote areas of the nation.

Social Schemes:
Farmers are trained the most recent farming methods at the training facilities.
Additionally, the business offers a toll-free service called "Kisan Care" that
enables farmers to get answers to any questions they may have and consult with
industry professionals.

Brand Name:
Rashtriya Chemicals & Fertilizers has built a solid reputation; they are the
market leaders in chemicals and have a stellar reputation among their rivals.

Government Support:
As the Indian government owns around 75% of the company's shares, it is
obligated to support RCF in any circumstance.
Weakness:-
Maintenance:
The upkeep and repair of factories that have been in place for a number of years
cause a halt to fertiliser and chemical production.

Imports of Raw Materials:

The raw minerals needed to make complex fertilisers, such as Rock Phosphate,
MAP, DAP, and MOP, originate outside of India. Profitability is impacted by
changes in currency exchange rates.

Research and Development:

Rashtriya Chemicals & Fertilizers invests a fair amount on research and
development, but far less than some of the other industry players who have
profited from their innovative products.

Opportunities:-
Overseas Opportunities:
The business has expanded its manufacturing, mining, and fertilizer production,
and it can work with foreign farmers.

Expansion in NPK Fertilizers:

The ability to extend its sectors in the NPK fertilisers base is made possible by
the nation's significant NPK fertiliser demand and dependence on imports.

Operation and Management Services:

The organisation can provide operation and management services in India and
internationally thanks to its highly skilled workforce.
Energy-saving Projects:
The Trombay Urea-V plant revamp, Trombay Ammonia-V plant revamp, and
GTG-HRSG are three energy-saving projects that could increase the company's
profitability.

Threats:-
Increased Prices of Raw Materials: High pricing for raw materials have a
negative effect on the company's core operation of producing and selling
fertilisers.

Production Dependent on Feedstock Gas:

Chemicals, complex fertilisers, and urea production all rely on feedstock gas
being available.

Competition:
The prices are constantly being challenged from continuous competition. If the
price isn't changed, this can result in fewer earnings or, alternatively, it might
cause the company to lose market share.

Government Policies:
Uncertain government actions regarding feedstock gas, fertiliser prices, and
subsidies thereon have an impact on the company's performance and ability to
compete.
4) Project Details / On job training
Procurement of Imported Raw Material in bulk

4.1) Step 1: - It all starts with Technical Service Department (T.S.D)

This department job is to check the stocks suppose if the company has 2 months
stocks remaining. Then the technical service department will contact purchase
department saying we have 2 months stock remaining and for smooth
production we will require this much quantity of stock. So basically, their job is
to make sure that the company’s production is running smoothly without any
problems.

4.2) Step 2: - Notice Inviting Tender (NIT)

All Volumes and its Annexures, as well as any other papers provided with this
Notice or released all through the selection of bidder, seeking a set of solutions,
service(s), materials, and/or any combination of them, are collectively referred
to as the "Notice Inviting Tender."
Drafting of NIT and GTC are done while drafting the new NIT we use previous
NIT because we need the materials in same quantity and of same specifications.
Once the drafting of new NIT and GTC is done then it is checked by the higher
ups and if there are any changes or any revision in PGB (Performance
Guarantee Bond) or in EMD (Earnest Money Deposit) or in mutually agreed
damages then all these changes should be updated in the new and final NIT.

4.3) Step 3: - FW Report

Fertilizer Weekly (FW) it’s a magazine that company uses to check the prices of
the materials that the company is importing. From this magazine we also
estimate the CFR (Cost and Freight). It’s a weekly magazine so the prices of the
materials are changing every week so company always takes the higher prices
for estimation.
4.4) Step 4: - Uploading the Documents
NIT (Notice Inviting Tender), GTC (General Terms and Conditions), BOQ
(Bill of Quantity). All these 3 documents are uploaded on e-procurement
website it’s a government website where all the government companies upload
their tender.
It’s a cpp portal (Central Public Procurement Portal) as we are importing
material outside of India that’s we upload the document on cpp portal because
all the transactions are to be done in US dollars. And if we would have imported
materials from India then we would have used the GeM (Government
eMarketplace) portal.
Once the tender is uploaded and if any company wants to submit their offer
against the company tender then the submission period is 10 days. And for pre-
qualification companies the submission period is proper 1 month.
The pre-qualification of vendor is under three categories listed below:
Category 1 Producers/Manufacturers
Category 2 Reputed international traders. They should have supplied
materials to India at least for two years in the last five years.
Category 3 Others traders: Parties who do not fall under the above-
mentioned categories.

For pre-qualification, the vendors to furnish the following

details/documents.
1) Name of the firm/vendor and company details/Name of the
directors/Chief Executive, History, Structure of organization and vendor
category.
2) Complete technical details/Specification of the products for which the
pre-qualification is sought.
 3) Details of mining/Manufacturing facilities with location and capacity of
each producing unit.
4) Financials statement of the last three years.
5) List of customers including customers in India to whom material has been
supplied during last 5 years specifying quantity supplied with
documentary evidence.
6) In case the vendors have any representatives in India they shall submit a
copy of their agreement with the Indian representative giving the details
of their relationship.

For Category 2
1) Name of the firm/vendor and company details/Name of the
directors/Chief Executive, History, Structure of organization and vendor
category.
2) Complete technical details/Specification of the products for which the
pre-qualification is sought.
3) Details of mining/Manufacturing facilities with location and capacity of
each producing unit.
4) Financials statement of the last three years.
5) List of customers including customers in India to whom material has been
supplied during last 5 years specifying quantity supplied with
documentary evidence.
6) In case the vendors have any representatives in India they shall submit a
copy of their agreement with the Indian representative giving the details
of their relationship.
7) Copy of their agreement with producer giving the details of their
relationship with the producer. Support letter from producer mentioning
the reference of the tender.
 8) Documentary evidence such as Invoice for having supplied the product
into India for at least 2 years in the last 5 years.

For Category 3
1) Name of the firm/vendor and company details/Name of the
directors/Chief Executive, History, Structure of organization and vendor
category.
2) Complete technical details/Specification of the products for which the
pre-qualification is sought.
3) Details of mining/Manufacturing facilities with location and capacity of
each producing unit.
4) Financials statement of the last three years.
5) List of customers including customers in India to whom material has been
supplied during last 5 years specifying quantity supplied with
documentary evidence.
6) In case the vendors have any representatives in India they shall submit a
copy of their agreement with the Indian representative giving the details
of their relationship.
7) Copy of their agreement with producer giving the details of their
relationship with the producer. Support letter from producer mentioning
the reference of the tender.
8) Credit rating by the agency which will be appointed by the company.
This rating will be evaluated by company in relation to the value of one
shipment under the relevant NIT
9) Reference from the bankers.
4.5) Step 5: - Opening of Bid/Offer
Once the submission period is over the offers/Bids are checked.
If the Bids are less than 3 then we require the approval of CMD (Chairman and
Managing Director).
And if the Bids are more than 3 or 3 then the purchase department can open the
Bid without the approval of CMD.
And if there are any deviations in NIT or in GTC then that deviation sheet
should also be submitted with offer/Bid.
Suppose a company does not agree with the other company’s terms and
conditions then that’s a deviation. So, the deviation can be more than one that’s
why company needs to submit a separate sheet with all the terms and conditions
that they do agree with.
All the deviations are discussed and negotiated and should be as minimum as
possible.
The Bids should be submitted in 2 parts
1) Techno-Commercial Bid: i.e., Technical and unpriced commercial Bid
should contain following: -

i. Packet 1: - Scanned copy of “process compliance statement for e-

tendering” printed on bidder’s letter head with duly signed by
appropriate authority.
ii. Packet 2: - Scanned copy of Self-attested supporting documents as
per NIT requirements as below.
 a) Signed and Scanned copy of NIT and GTC.
b) Complete specifications of material offered.
c) Support letter with detailed specification of the offered product.
d) Copy of price bid with the prices blank.
e) A declaration of the bidder on their letterhead that they are
blacklisted or put on holiday by PSU’s.
f) The deviation taken if any, should be clearly specified on a
separate sheet. Deviation should be spelt out clearly with
reference to the clause No. of the NIT against which deviation
is taken.
g) For new vendors, pre-qualification documents applicable to the
respective category.

iii. Packet 3: - Scanned copy of dully filled “Technical cum

Commercial Bid” signed by appropriate authority.
 iv. Packet 4: - EMD Details Scanned copy of ‘EMD payment slip/BID
Bond’. Bidder shall furnish EMD as applicable to their respective
category of vendor as mentioned in the NIT. However, while
submitting e-bid on CPP. website bidder to specify the EMD
amount as shown against EMD details field of e-tender.

In techno-commercial bid if the documents are not submitted properly

company might reject the offer without even opening the priced bid.

2) Priced bid: - BOQ given with the tender to be uploaded after filling all the
relevant information like Name of the bidder, FOB price and Freight.
And these prices are evaluated outside the e-procurement system. If the
specification of the materials is all good and the company has minimum
deviation but the prices are high then negotiation of prices are done that’s
why prices are evaluated outside the e-procurement system. Then the
negotiated prices are sent to the finance department their job is to check
how much profit can company make on the negotiated prices.
Once the negotiation is done and the prices are finalized then we place
the order.

4.6) Step 6: - purchase order

Once we get the approval from the committee the purchase order is created.
This purchase order comes into force when it has been signed by both the
parties. Once the purchase order is created then it is sellers’ responsibility to
make sure the material reaches buyers port safely in the given time.
4.7) Step 7: - Documentation
Document that seller need to submit on their load port.
1) Packing List: - An international commerce document is a packing list. It
offers details about the shipment, such as how it is packed, the sizes and
weights of each container, and the markings and number that are noted on
the outside of the boxes, to the exporter, international freight forwarder,
and eventual consignee.

2) Bill of Lading: - The nature, quantity, and destination of the goods being
transported are specified in a bill of lading; a legal document issued by a
carrier (transportation business) to a shipper. When a carrier delivers
goods to a specific location, a bill of lading also functions as a shipping
receipt. This document must be included with the sent goods and must be
signed by an authorised representative of the carrier, shipper, and
receiver.

3) Country of origin certificate: - An essential international commerce

document known as a Certification of Origin (CO) attests that all of the
items in a specific export shipment were entirely acquired, produced,
manufactured, or processed in that nation. They act as a statement by the
exporter to meet custom or trade requirements as well as stating the
"nationality" of the goods.

4) Commercial Invoice: - One of the most crucial records in global

commerce and ocean freight shipment is the business invoice. In an
international transaction, it is a legal document that the seller (exporter)
issues to the buyer (importer) and acts as a contract and a record of the
sale.
 5) Insurance Certificate: - Freight forwarders' liability insurance protects
against financial obligations brought on by cargo damage or indirect
losses from delivery delays. All types of transportation are covered under
a single amount insured. When a carrier or freight forwarder is at fault,
claims under a freight liability policy are triggered.

All of the above documents are submitted at their load port and once the
documents are cleared then the loading process starts. And as soon as the
loading process is done the ship start sailing from their port.
Once the vessel reached our port then custom clearance takes place and for the
custom clearance documents needed is same documents that seller has
submitted on their port which is packing list, Bill of lading, country of origin
certificate, commercial invoice, and insurance certificate. Once all these
documents are cleared then the checklist is created and that checklist is sent to
buyer once we get the buyer approved the checklist then Bill of entry is
prepared.
Besides this we also need to submit IGM (Import General Manifest) to the
section office and payments of appropriate custom duty.
Once the goods are cleared it is taken to the warehouse and CHA pays the port
charges, warehouse charges to the freight forwarder which later reimbursed by
the buyer.
As we are importing raw materials from outside of the country the shipping
incoterms, we use is FOB.
4.8) INCOTERMS
There Are Total 11 incoterms.

1. FOB (Free on Board)

FOB, which is used for containerized shipping and inland water transportation,
signifies that the seller delivers the goods on board.
Additionally, the seller discloses to the buyer the arrangements for the products
under which the buyer is responsible for paying all transportation charges.

2. FCA (Free Carrier)

According to FCA, the process of the goods is when the seller delivers them to
the carrier, a location specified by the buyer, or another individual the customer
has permitted. This transfers the buyer's obligation from the vendor.
It is forbidden to dump them on the seller's property while they are under their
control until they have been delivered to the specified location. The buyer and
seller (at their request) sign a contract outlining the costs, risks, and state of the
products in order to ensure the delivery is secure.

3. EXW (Ex Works)

When items are delivered EXW, the seller places them at the buyer's disposal at
a predetermined location.
EXW is the only Incoterms description in which the items cannot be cleared for
export, which is a crucial fact.
Additionally, the buyer informs the seller that they have received the products,
whose condition and clearances are dependent on the buyer.
 4. FAS (Free Alongside Ship)

FAS denotes that the seller pays for the port, terminal, or ship as well as
manages the shipment's customs clearance. handles the delivery and transport
documentation, and all costs are the responsibility of the buyer.
The contracts for carriage applicable to the quay or the ship as well as the
export licences are handled by the seller as well.

5. DAP (Delivered at Place)

These Incoterms descriptions speak about the seller's duty to deliver products to
a mutually agreed-upon place of arrival, which is typically outside of the
terminal. When using multiple transport modes, this criterion is typically used.

6. DAT (Deliver at Terminal)

When the seller delivers the goods to the buyer's designated terminal, DAT is
employed. Any mutually agreed-upon port, warehouse, container yard, etc.
could be a terminal.
When the seller handles all export documentation, the buyer handles any
transportation arrangements and insurance after the shipment has arrived at the
agreed-upon location.

7. CIF (Cost, Insurance and Freight)

Once the products are securely packaged, aboard, and prepared for transport to
the specified location, the vendor delivers. The contract is paid for by the
vendor, but after the products are on board, the buyer receives the payment.
They are permitted to discuss the coverage, though.
 8. CIP (carriage and Insurance paid to)

When the seller delivers the products to a predetermined location, CIP is

employed. The seller is responsible for the payment and insurance, according to
the Incoterms specifications of CIP, but the risk of damage or loss is transferred
to the buyer after the carrier accepts the delivery. They may talk about the
additional insurance, though.

9. CFR (Cost and Freight)

CFR is the procedure by which the seller delivers the goods once they have
been securely packaged, loaded, and prepared for delivery to the shipping port.
In accordance with these Incoterms descriptions, the seller is likewise obligated
to pay for shipping, although ownership of the products passes to the buyer once
they get there.

10.DDP (Delivery Duty Paid)

The seller in this case is under the most responsibility. Once the products are
approved for import and prepared for unloading at the destination port, he
delivers them. Where there is more than one method of transportation, DDP is
frequently employed.
Both the buyer and the seller are exempt from the obligation to insure the
products under certain Incoterms definitions. The sales contract includes
discussion and agreement over the coverage.
11.CPT (Carriage Paid to)

According to CPT, the seller is in charge of delivering the items to a destination,

which can be any location that the seller and the buyer have decided upon. The
buyer is in charge of the import clearance formalities, while the seller is in
charge of the export formalities.
5) Public procurement preference to make in India policy.
If the material we are importing is from India means it is an indigenous
material, then what would be its 1) margin of purchase preference 2)
Requirement of purchase preference.
5.1) Margin of purchase preference: -
Means the maximum extent to which the price quoted by the local supplier
may be above the L1 for the purpose of purchase preference.

 local supplier: - Means a supplier or service provider whose product or

service offered for procurement meets the minimum local content.

 local content: - Means the amount of value added in India which shall be
the total value of item procured minus the value of imported content in
the item as a proportion of the total value.

 L1: - Means lowest tender or lowest bid or lowest quotation received in a

tender.

5.2) Requirement of purchase preference: -

a) In procurement of goods that there is sufficient local capacity and local
competition and if the estimated value of procurement is Rs 50 lakhs or
less, then only local supplier shall be eligible. And if it is more than 50
lakhs
then refer point (b) and (c)

b)
I. Among all qualified bids the lowest bid will be termed as L1. If L1
is from local supplier the contract for full quantity will be awarded
to L1.

II. If L1 is not from a local supplier, 50% of the order quantity shall
be awarded to L1. Thereafter, the lowest bidder among the local
supplier will be invited to match the L1 price for the remaining
50% quantity subject to the local supplier’s quoted price falling
within the margin of purchase preference and contract for that
quantity shall be awarded to such local supplier subject to
matching the L1 price.
 In case local supplier fails to match the L1 price or accepts less
than offered quantity, the next higher local supplier within the
margin of purchase preference shall be invited to match the L1
price for the remaining quantity and so on and the contract shall be
awarded accordingly.

c)
1. Among all qualified bids the lowest bid will be termed as L1. If L1
is from local supplier the contract for full quantity will be awarded
to L1

2. If L1 is not from local supplier, the lowest bidder among the local
supplier will be invited to match the L1 price subject the local
supplier’s quoted price falling within the margin of purchase
preference and contract for that quantity shall be awarded to such
local supplier subject to matching the L1 price.

3. In case such lowest eligible local supplier fails to match the L1

price, the local supplier with the next higher bid within the margin
of purchase preference shall be invited to match L1 price and so on
contract shall be awarded accordingly. If none local supplier
matches L1 price then the contract will be awarded to L1.

Minimum local content requirement to categorize a supplier as

‘class 1 local supplier’ is minimum 50% for ‘class 2 local supplier’
minimum local content requirement is 20%

6) Benefits to Micro and Small Enterprises (MSEs)

6.1) Qualifying criteria for MSEs, SC/ST vendors, Women Owned

MSEs:
I. MSE bidder must submit registration certificates from any of
the following:
 National small industries corporation
 District industries centres
 Coir Board
  Khadi and Village Industries Commission
 Khadi and Village Industries Board
 Aadhar Udyog Memorandum
II. SC/ST owned enterprises (i.e., SC/ST proprietorship, or holding
minimum 51% shares in case of partnership/ private limited
companies) shall additionally submit relevant SC/ST certificates
issued by any of the following:
 Chief presidency magistrate / Additional chief presidency
magistrate / president magistrate
 Revenue officer not below rank of tehsildar
 Sub-divisional officer of the area where the individual and / or
his family normally resides.
III. Women owned MSEs (i.e., Woman proprietorship, or holding
minimum 51% shares in case of partnership / private limited
companies) bidders must submit additional certificate from any
of the following:
 Aadhar Udyog memorandum
 National Small Industries corporation
 Certificate / Documents mentioning women as owner of MSE
IV. The registration shall be valid as on date of placement of order.
A self-attested photocopy of the relevant certificates shall be
submitted as a support document.
V. The registration must be for the items / category of items /
services relevant to the tendered items / category of items /
services.

6.2) Purchase Preference for MSE

In tenders, Where the L1 (Evaluated price) bidder is a non-MSE, up to
25% of the tendered shall be allowed to be supplied by participating
MSEs provided that the tendered quantity is divisible into two or more
orders and adequate for the purpose; all qualifying bidders have agreed
for acceptance of part-order quantity and participating MSE matches L1
rate.
A share of 4% out of this 25% shall be allowed to be supplied by
participating MSEs owned by SC/ST entrepreneurs. In case of an SC/ST
owned failing to participate in the tender or not meeting the tender
requirements, this 4% sub-target shall be met by other participating
MSEs. A share of 3% out of 25% shall be allowed to be supplied by
participating MSEs owned by women entrepreneurs. In case of women
owned MSEs failing to participate in tender or not meting the tender
 requirements, this 3% sub-target shall be met by other participating
MSEs. The above shall be subject to that the participating MSE
(including SC/ST and women owned MSEs) bidder shall have quoted a
price within +15% of L1 bid price and further that they shall agree to
match their quoted price with L1 price. In case that two or more MSEs
are within the L1 +15% band, all such MSEs will be offered the
opportunity to match the L1 rate and 25% of the order will be shared
equally by them. Where the MSE is SC/ST owned, they shall be
exclusively awarded a share of 4% of the above 25% and where the MSE
is women owned, they shall be exclusively awarded a share of 3% of the
above 25%, in addition to equally sharing the balance 18% with other
non-SC/ST MSEs. In case of more than one SC/ST MSEs matching L1
price, they shall equally share 4% of the order, and additionally share the
balance of 18% with other non-SC/ST, non-women MSE bidders. In case
of more than one-woman MSEs matching the L1 price, they shall equally
share 3% of the order, and additionally share 18% with other non-SC/ST,
non-women MSE bidder.

7) RECOMMENDATION

7.1) CONSIDER KEY PERFORMANCE INDICATORS

A group of measurable measurements used to assess a company's overall

long-term performance are known as key performance indicators (KPIs).
Particularly when compared to other companies in the same sector, KPIs
specifically assist in determining a firm's operations, financial, and
operational achievements.

This stage is crucial for gaining a thorough grasp of your procurement

process' effectiveness and operation, as well as which elements or areas need
to be changed. You may determine how effective your approaches are by
comparing your key performance indicators to the final outcomes. It is
crucial to keep in mind, nevertheless, that these indicators could alter over
time in order to accommodate changing business and regulatory situations.
Therefore, success depends on the constant or regular evaluation of these
metrics.

7.2) STRATEGIC SOURCING

In today’s world many businesses are using strategic sourcing. And we can
apply strategic sourcing to make the procurement processes less shortsighted
and focused on price.
 Instead, they create a flexible structure that enhances the long-term worth of
the company with the use of a strategic sourcing plan. The selection of a
supplier list is influenced by data collecting and market analysis, which is
done after examining business demands and previous spending patterns
before establishing a strategic plan. strategic sourcing also involves
measuring performance and improving the process on a continual basis.

Benefits of Strategic Sourcing

 lowering both costs and expenses

 Develop Long-Term Supplier Relationships
 Obtain effectiveness and a methodical approach
 Control Supplier Risk
7.3) Making the company procurement process automated.

Using automation to streamline and speed up your procurement procedures is

known as procurement automation. It accelerates the procurement process by
relieving staff members of time-consuming and repetitive chores. You can
concentrate on business-critical tasks like decision-making and strategy-
building thanks to procurement automation. The procure-to-pay process is
transformed while costs are kept low.

Benefits of Automation Procurement

 Boosts productivity
 Gets rid of manual mistakes
 Provides transparency into your spending
 Acts as Central Repository
 Eliminates barriers to approval