Description
done at bhel
A REPORT ON
MATERIAL MANAGEMENT AND INTERNATIONAL BUSINESS
(A Report Submitted in partial fulfillment of summer training work)
MBA IN International business Submitted by NUKALA NEELIMA SAHITYA 10031EIB019
Under the guidance of Mr. S.K PAL Dy. General Manager/Purchase-Oil Rigs & Mr. K.GOPALA KRISHNA Sr. Dy. General Manager / Purchase-Oil Rigs BHEL, Hyderabad.
Tel: 040 23182236, Fax No: 040 23186074 Email: [email protected] CERTIFICATE OIL RIGS PURCHASE Ref. No: HY/Oil Rigs-Pur/2011-12 DATE: 01-06-2011
This is to certify that Ms. Nukala Neelima Sahitya Roll. No. 10031EIB019 of JNTU SMS, has submitted the project entitled ´Material Management and International Businessµ in partial fulfillment of requirements for the ´MBA In International Businessµ in the academic year 2010-2011. This is a record of bonafide work carried out by her under our guidance from 02-05-2011 to 01-06-2011 at BHEL Ramachandrapuram, Hyderabad. This project work has been completed successfully and her performance is commendable.
S.K. PAL Dy. General Manager, Oil Rigs Purchase BHEL, Hyderabad.
ACKNOWLEDGEMENT
It is with a feeling of profound respect that we record our deep sense of gratitude and indebtedness to our project guide Sri S.K PAL, DGM, Oil Rigs (Purchase), B.H.E.L, Hyderabad for his interest, valuable guidance and encouragement in pursuance of our project. I am also very thankful to Sri K.GOPALA KRISHNA, SR.DGM, Oil Rigs (Purchase), B.H.E.L, for his guidance during the course of the project. I am thankful to the Management of B.H.E.L, Hyderabad for giving me this golden opportunity to undergo the project work in their Oil Rigs Purchase Division.
BY N NEELIMA SAHITYA
OBJECTIVE
To provide with information related to exports and imports happening at Foreign Exchange cell at BHEL, to give overview of Overseas Business. To focus on activities happening at various departments like Purchase, Foreign Exchange, Finance, Material Management departments at BHEL. To provide information related to competitors, customers of BHEL.
CONTENTS
1) ABOUT THE COMPANY 2) PERFORMANCE OF BHEL 3) POWER DELEGATION AT BHEL 4) PURCHASE DEPARTMENTAL PROCEDURES 5) COMPETITORS AND CUSTOMERS 6) VENDOR MANAGEMENT AT BHEL 7) INVENTORY MANAGEMENT AT BHEL 8) SUPPLY CHAIN MANAGEMENT AT BHEL 9) FOREIGN EXCHANGE CELL PROCEDURES
ABOUT THE COMPANY:
BHEL is the largest engineering and manufacturing enterprise in India in the energy related/ infrastructure sector today. BHEL was established more than 40 years ago, when its first plant was set up in Bhopal ushering in the indigenous Heavy electrical equipment in INDIA- a dream which has been more than realized with a recognized track record of performance. It has been earning profits continuously since 1971 1972. BHEL as it is known today, has come a long way from being a mere heavy electrical generation equipment company to the position of leadership that it enjoys today with major presence not only in the field of power, but in the other core sectors of industry. Transportation, Transmission, Oil & gas, Telecommunication, Defense & Civil aviation. Today, BHEL has a major presence in the domestic power market and accounts for 65% of the nations installed power generating capacity. Thus making a significant contribution to the growth and development of the country s economy over the years. It has had a consistent track record of growth, performance and profitability and has been reported by the World Bank as being One of the most efficient enterprises in the industrial sector at par with international standards of efficiency. The organization has been exploiting market opportunities in India and abroad by competing, collaborating and co-existing with leaders and enjoys a market presence in over 50 countries. Having achieved the international quality certification (ISO-9000), the organization is now moving towards a culture of total management (TQM) for achieving business excellence and has been recertified from the ISO 9000-2000 for the quality management and ISO 14001 for the environment management.
Vision: A World-class Stakeholder Value.
Engineering
Enterprise
Committed
to
enhancing
Mission: To be an Indian Multinational Engineering Enterprise providing Total Business Solutions through Quality Products, Systems and Services in the fields of Energy, Industry, Transportation, Infrastructure and other potential areas. Values: y y y y y y y Zeal to Excel and Zest for Change Integrity and Fairness in all Matters Respect for Dignity and Potential of Individuals Strict Adherence to Commitments. Ensure Speed of Response Foster Learning, Creativity and Team -Work Loyalty and Pride in the company.
International operations: BHEL has, over the years, established references in 60 countries of the world, ranging from the united states in the west to New Zealand in the far east. These references encompass almost the entire product range of BHEL, covering turnkey power projects of thermal, hydro, gas based types, substation projects, besides a wide variety of projects like transformers, insulators, switch gears, heat exchangers, castings, valves etc. B.H.E.L, Hyderabad: Hyderabad unit of B.H.E.L at Ramachandrapuram started in the early 60 s to cater the power plant requirement of 110 MW and 60MW units and small sets of 12 MW in collaboration with SKODA Czechoslovakia. Over the years Hyderabad unit has emerged as a premium engineering organization with strong system engineering groups and has the expertise to undertake turnkey services for thermo-mechanical projects Right from the green field status. B.H.E.L was the first organization both in public and private sector to realize the importance of a corporate plan.
The first corporate plan was brought out in 1974. This plan while seeking to integrate the diverse operations of the company also sought to reorganize the company essentially along functional lines. Since then B.H.E.L has come out with The growth perspective of 80 s in April 1982. SITE: The factory area is 750 acres, out of which present fenced area is 350 acres and area of 400 acres is available for the future expansion of the factory.
Human face of the Hyderabad unit: B.H.E.L was selected as the 7th best employer out of 25 in a survey conducted in 2002-03 by Hewitt Associates. The company has a system of workers participation in management through shop council, plant council and joint committees at shop floor level, unit level and company level respectively. Hyderabad unit runs an institute to take care of the mentally challenged children and make them self dependent through vocational training. Physically challenged persons are provided employment in the company. The HRD institute and other HRD centers of the company help in not only keeping their skills updated and finally honed but also adding new skills, whenever required. Continuous training & retraining , a positive work culture & participative style of management , have engendered development of a commuted and motivated work force, leading to enhanced productivity and higher levels of higher quality. NAVRATNA / MAHARATNA STATUS Bharat Heavy Electricals Limited is likely the next candidate to get this coveted Maharatna tag. This was declared by the Union Minister for Heavy Industries , Sri Praful Patel At present, BHEL is a Navratna company.
Once a company gets the Maharatna status, its board would not be required to take the government's permission for investments up to Rs 5,000 crore in a joint venture project or wholly-owned subsidiary. For the Navratna companies, the limit is Rs 1,000 crore. The company secured a Place among the top nine public sector companies granted Navaratna status over 12 years back.
PERFORMANCE OF BHEL
BHEL performance in the years 2008-09and 2009-10 Rupees (In Million) 2008-09 Turnover Value Added Employee (Nos.) Profit Before Tax Profit After Tax Dividend Dividend Tax Retained Earnings Total Assets Net Worth Total Borrowings Debt : Equity Per Share (in Rupees) : - Net worth - Earnings Economic Value Added 264.32 64.11 20080 325.16 88.06 26700 23.02 37.36 32.97 280330 98940 45666 48490 31380 8320 1420 21640 395810 129390 1490 0.01 2009-10 341540 131710 46274 65910 43110 11410 1910 29790 469600 159170 1280 0.01 CHANGE (%) 21.83 33.12 1.33 35.92 37.38 37.14 36.17 37.62 18.64 23.02 -14.09 0.0
BHEL s Expected Performance for the year 2010-11
Gross Sales (Turnover) (Rs. Millions) 380,000 Gross Margin (Rs. Millions) 81,200 PBDIT to Total Employment (Rs. Millions) 1.740 Gross Margin to Gross Block (%) 92.02 Gross Profit to Capital Employed (at year end) (%) 45.71 Net Profit to Net Worth (at year end) (%) 25.64 Added Value to Gross Sales (%) 17.03 Further, a stretch Turnover target of Rs. 395,000 Millions has been fixed under 'Excellent' rating.
POWER DELEGATION AT BHEL
CHAIRMAN AND MANAGING DIRECTOR (CMD) EXCECUTIVE DIRECTOR (ED)
PRODUCT MANAGERS (GM) AGM
SR DGM
DGM
At unit level
SR MANAGER
MANAGER
DEPUTY MANAGER
SR ENGINEER
ENGINEER ENGINEER TRAINEE
PURCHASE DEPARTMENTAL PROCEDURES
DEPARTMENTAL OBJECTIVES To ensure timely delivery of materials To improve quality of purchased products To create sound suppliers through supplier evaluations To procure materials at competitive price
Purchase departmental activities Concerned executive in charge for this function is responsible for conversion of purchase indent to purchase order Follow-up with the supplier and the receipt of materials at stores and at sites as per BHEL standard OMI 021 Documents needed Approved product directory Customer approval list Purchase indent (SPECIFICATIONS, standards, quality, type of material drawings etc) Key processes Procurement:-obtaining goods from supplier is termed as procurement it follows a flow as below along with arranging payments to suppliers ,arranging insurances, relevant documents, dispatch of materials ,establishing lc s, customs clearances etc.
FUNCTIONS OF PURCHASE DEPARTMENT Procurement of stores through indigenous and foreign sources as required in accordance with the rules in force. Checking of requisitions/purchase indents. Selection of suppliers for issue of enquiries. Issuing enquiries/tenders and obtaining quotations. Analysing quotations and bids etc., and preparation of comparative statement (quotation charts). Consultation with the Indenter for selection and approval of quotations and with Accounts Officer for pre-audit. Negotiating contracts. Checking legal conditions of contracts. Consulting Administrative Officer or Secretary, NCSM where necessary. Issue of Purchase Orders. Follow-up of purchase orders for delivery in due time Verification and passing of suppliers bills to see that payments are made promptly. Correspondence and dealing with suppliers, carriers etc., regarding shortages, rejections etc., reported by the Stores Department. Maintenance of purchase records. Arrangement for Insurance Surveys, as and when necessary. Clearance of foreign consignments. Keeping various Departments/Divisions informed of the progress of their indents in case of delay in obtaining supplier
Purchase Order
urchase Order is an order placed on the supplier for the supply of specified quantity of specific material at a specified rate in accordance with the terms and conditions spelt out in the order. The purchase order contains the following essential information: Name of the supplier Description of the material Unit of the measurement Quantity to be supplied Rate at which the supply is to be made Terms of delivery Destination and mode of transport Terms of payment Other special conditions like requirement of test certificate/guarantee certificate, pre- inspection, insurance, compensation for delayed supply etc. The purchase order also contains reference to indent number, name of the Purchase Officer
Letter of credit
in case of foreign suppliers
L/C. A binding document that a buyer can request from his bank in order to guarantee that the payment for goods will be transferred to the seller. Basically, a letter of credit gives the seller reassurance that he will receive the payment for the goods. In order for the payment to occur, the seller has to present the bank with the necessary shipping documents confirming the shipment of goods within a given time frame. It is often used in international trade to eliminate risks such as unfamiliarity with the foreign country, customs, or political instability. Elements of a Letter of Credit A payment undertaking given by a bank (issuing bank) On behalf of a buyer (applicant) To pay a seller (beneficiary) for a given amount of money. On presentation of specified documents representing the supply of goods Within specified time limits Documents must conform to terms and conditions set out in the letter of credit Documents to be presented at a specified place.
COMPETITORS AND CUSTOMERS
MAJOR COMPETITORS OF BHEL 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) Ansaldo Asea Brown Boueri Beehtel Block & Neatch CNMI & EC Costain Electrim Energostio Electro Consult Franco Tosi Fuji GEC Alsthom General Electric Hitachi Mitsubishi Mitsui Raytheon Rolls Royce Sanghai Electric Co. Seimens Toshiba Westinghouse Italy Switzerland USA USA China U.K. Poland Russia Italy France Japan U.K. USA Japan Japan Japan USA Germany China Germany Japan USA
CUSTOMERS OF BHEL s PRODUCTS DOMESTIC:1. PUNJAB STATE ELECTRICITY BOARD (PSEB) 2. UTTAR PRADESH STATE ELECTRICITY BOARD (UPSEB) 3. NATIONAL THERMAL POWER CORPORATION (NTPC) 4. NATIONAL HYDEL POWERCORPORATION (NHPC) 5. ANDHRA PRADESH STATE ELECTRICITY BOARD (APSEB) 6. WEST BENGAL STATE ELECTRICITY BOARD (WBSEB) 7. BIHAR STATE ELECTRICITY BOARD (BSEB) 8. INDIAN OIL CORPORATION (IOC) 9. MADHYA PRADESH STATE ELECTRICITY BOARD (MPSEB) 10. ORRISA STATE ELECTRICITY BOARD (ORSEB) 11. KARNATAKA STATE ELECTRICITY BOARD (KSEB) 12. BIRLA TYRES 13. GOA SHIP YARD 14. HARYANA STATE ELECTRICITY BOARD (HSEB) 15. HIMACHAL PRADESH STATE ELECTRICITY BOARD (HPSEB) 16. INDIAN NAVY 17. DELHI VIDYUT BOARD 18. SIEMENS, NEW DELHI 19. ONGC 20. OIL 21. L&T 22. JK CEMENT
INTERNATIONAL:-
1. M/S EBARA CORPORATION, JAPAN 2. M/S ZEECO INCORPORATION, USA 3. SIMMCO INTERNATIONAL 4. SIEMENS, GERMANY 5. SIEMENS, SINGAPORE 6. BAIJI PROJECT, IRAQ 7. KYCR COIL INDUSTRIES LTD, BANGLADESH
VENDOR MANAGEMENT AT BHEL
VENDOR MANAGEMENT AT BHEL At Bhel every vendor is provided with a 6 digit code To identify and include only quality, reliable and cost effective suppliers the following structure is created
structure at bhel for suppliers
supplier development cell
material identification and suppler control committe
trained and certified assessor
With the coordinated effect of these three committees only the suppliers are guided and evaluated ROLE OF SDC
To identify new suppliers Registration of suppliers
Follow up with suppliers Supplier evaluation Review and supplier evaluation Ensure compliance of procedural guidelines during registration To maintain and update product material directory To maintain supplier performance and periodic review
ROLE OF MISCC Engineering for direct materials Technology for indirect materials Project management Quality management Materials management Preparation of product material directory Scrutinize suppliers Review periodically , update product material directory ROLE OF TCA Evaluation and assessment of supplier registration forms Verification of quality soundness Verify technical competence
Overall vendor selection at BHEL BHEL procures materials and components on a regular basis from suppliers spread all over the world. For this purpose, BHEL is backed by a strong supplier-base which is continually updated. New suppliers and traders (only those who are sole/authorized representatives of OEMs) both from within India and abroad, who would give BHEL competitive inputs, are now being added to the list of existing suppliers. For an initial assessment and empanelment with BHEL, suppliers may get registered by submitting completed forms to respective unit's Contact Person. A committee works on the choosing the vendors Vendor is chosen based on meeting the requirements of the organization. The chosen vendor is examined with infrastructure, technical support and manpower associated with the vendor or not. Vendor proceeds with the guidelines given by the organization like on time delivery , quality is given utmost care ,price as quoted down.
LIST OF SOME OF THE VENDORS FOR BHEL
INTERNATIONAL 1) TESCO 2) INGERSOLL 3) NOV/GRIFFITH 4) BLOOM AND ROSS 5) KEMTRON 6) Red rooster CANADA IRELAND UK GERMANY USA UK
DOMESTIC 1) Hyderabad Castings Ltd 2) Bharath Pumps and Compressors Ltd (BPCL) 3) Alloy Castings ltd 4) Kismet Industries from West Bengal 5) Tractor Engineers Ltd. 6) Unique Engineering Enterprises Pvt. Ltd.
INVENTORY MANAGEMENT
INVENTORY: The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets those are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners. Usually inventory can be defined as stock in financial terms.
STORES INVENTORY MATERIALS INVENTORY I N V E N T O R Y STORES IN TRANSIT TRANS IN TRANSIT MATERIALS LYING WITH SUB CONTRACTERS
PRODUCTION INVENTORY
WORK IN PROGRESS
FINISHED GOODS INVENTORY
Goods ready for transporting
Initially the cycle time is noted down so that the expected time can be calculated and manufacturing time can be known to proceed with production.
Role of inventory management
To deliver goods on time To maintain stock based on requirement To minimize cost and improve efficiency To avoid wastage of goods To meet customer requirement on time
In BHEL ABC analysis is followed where the goods are classified based on value terms and the organization takes care in case of high value products because they account for high costs. Thus organization aims to minimize the wastage of high valued goods The ultimate goal of inventory management is to minimize idle costs and meeting the customer requirement.
SUPPLY CHAIN MANAGEMENT
customer orders
supplier supplies
manufacturer manufactures
customer receives the ordered goods
1. Company has an ERP system. 2. Company follows "Make to Order" strategy, i.e., goods are manufactured when purchase order is received from customer. Supply chain process inside a manufacturing company starts from receiving a customer purchase order, subsequently requisite raw material in desired quantity is arranged as per the production plan of manufacturing, after which it is packed and dispatched. Following is a broad flow chart of supply chain inside a manufacturing facility: -
FOREIGN EXCHANGE CELL
OVERSEAS BUISNESS BHEL, ranking among the major power plant equipment suppliers in the world, is one of the largest exporters of engineering products & services from India. Over the years, BHEL has established its references in more than 70 countries worldwide, ranging from the United States in the West to New Zealand in the Far East. BHEL's export range covers individual products to complete Power Stations, Turnkey Contracts for Power Plants, EPC Contracts, HV/EHV Sub-stations, O&M Services for familiar technologies, specialized after-market services like Residual Life Assessment (RLA) studies and Retrofitting, Refurbishing & Overhauling, and supplies to manufacturers & EPC contractors. BHEL has assimilated and updated/adopted the state-of-the-arttechnologies in the Power and Industrial equipment sectors acquired from world leaders. BHEL has successfully undertaken turnkey projects on its own and possesses the requisite flexibility to interface and complement international companies for large projects, and has also exhibited adaptability by manufacturing and supplying intermediate products to the design of other manufacturers and original equipment manufacturers (OEMs). The success in the area of rehabilitation and life extension of power projects has established BHEL as a reliable alternative to the OEMs for such power plant
INTERNATIONAL BUISNESS It has established reference in more than 70 countries across all inhabited continents of the world Bhel s Power projects in OMAN LIBYA MALAYSIA SAUDI ARABIA IRAQ BANGLADESH SRILANKA CHINA KAZAKHSTAN BELARUS CYPRUS MALTA LIBYA EGYPT INDONESIA THAILAND ETHIOPIA CALEDONIA SENEGAL NEWZEALAND
Execution of overseas projects provided the BHEL the experience of working with the world renowned organizations and agencies The foreign exchange department is concerned with two activities mainly Licensing Clearance
LICENCING Initially the licencing department after forming a contract applies for licencing.To obtain licencing following documents are required Copy of contract Copy of epcg licence obtained by customer Payment terms Duration List of goods CA certificate for export performance for past 3 years, etc. Only after providing with licencing the further activities proceeds it is the prior step in the foreign exchange department. With licencing prior to commencement of import activities provides with eliminating customs and other taxes by government this facilitates foreign exchange.
CUSTOMS CLEARANCE:-
FLOW CHART OF ACTIVITIES AT FOREIGN EXCHANGE CELL REGARDING CLEARANCE
RECEIPT OF NNDD S FROM PURCHASE GROUP CHECKING AND FEEDING TO SYSTEM FORWARDING OF P.O CHECK LIST FORWARDING OF LICENCES/P1 LISTS TO ROD ARRIVAL OF VESSEL FILLING OF IGM WITH CUSTOMS BY SHIPPING COMPANY ISSUE OF FREIGHT BILL BY SHIPPING COMPANY RECEIPT OF OBL FROM BANK FORWARDING TO ROD MUMBAI
CHECKING OF DOCUMENTS WRT CHECKLIST;LICENCE AND PI LIST BY ROD PREPARATON OF DOCKET
CHA
REGISTRATION OF LICENCE/PI LIST WITH CUSTOMS
PREPARATION OF BILL OF ENTRY
OBTAIN CRA/TRA
B.E. NOTING WITH CUSTOMS DEBITING TO LICENCE AND P1 LIST AS APPLICABLE
B.E ASSESMENT AND AC SIGNATURE
DUTY PAYMENT (IN CASE OF MERIT AND PI)
ADF (ASSESED DUTY FREE) INCASE OF DEEC
PAYMENT OF FREIGHT, D.O.FEEAND STAMP DUTY CHARGES
DELIVERY ORDER FROM SHIPPING COMPANY ON THE OBL
EXAMINATION OUT OF CHARGE
PORT TRUST FORMALITIES
EXPORT DOCUMENTATION There are a number of documents, which have to be prepared by the exporter in order to arrange export of his consignmThese documents can be mainly classified into two i.e. (a) Commercial Documents and (b) Regulatory Documents
Out of the 15 commercial documents, eight are principal and the rest are auxiliary.
The eight principal documents are
1. The Commercial Invoice, 2. Packing List 3. Bill of Lading/Air Waybill 4. Certificate of Inspection/Quality control 5. Certificate of origin 6. Bill of Exchange and 7. Shipment Advice 8. Insurance Certificate
The seven auxiliary documents are
1. Proforma Invoice 2. Intimation for inspection 3. Shipping instructions 4. Insurance Declaration 5. Application for certificate of origin. 6. Mate's Receipt 7. Letter to bank of collection/negotiation of document
Regulatory Documents There are seven regulatory documents associated with the pre-shipment stage of the export transaction. They are: 1. ARE Form ( for Central Excise) 2. Shipping Bill/Bill of Export (for Customs)
3. For export Port Trust Copy of Shipping Bill/Export Application/Dock Challan 4. Vehicle ticket 5. Exchange Control Declaration/GR/PP forms 6. Freight Payment Certificate 7. Insurance Premium Payment Quotation An offer to sell goods and should state clearly the price, details of quality, quantity, trade terms, delivery terms, and payment terms.
AFTER SHIPMENT, SUBMIT DOCUMENTS TO BANK FOR REALISING EXPORT PROCEEDS
Import procedures For clearance of import goods, the importer or his agents have to undertake the following formalities:1. Bill of Entry It is a document certifying that the goods of specified description and value are entering into the country from abroad. Bill of Entry are of three types :a. Bill of Entry for home consumption: is to be submitted when the imported goods are to be cleared on payment of full duty for consumption of the goods in India. It is white colored. b. Bill of Entry for Warehouses : is to be submitted when the imported goods are not required immediately by the importer but here they are to be stored in a warehouse without payment of duty under a bond and cleared later when required on payment of duty. c. Bill of Entry for Ex-Bond Clearance : is used for clearing goods from the warehouse on payment of duty. The goods are classified and valued at the time of clearance from the Customs Port. Value and classification are not determined on such Bill of Entry.
In the non-EDI system along with the bill of entry filed by the importer or his representative the following documents are also generally required:1) Signed invoice 2) Packing list 3) Bill of Lading or Delivery Order/Airway Bill 4) GATT declaration form duly filled in 5) Importers declaration 6) License wherever necessary 7) Letter of Credit/Bank Draft/wherever necessary 8) Insurance document 9) Import license 10) 11) 12) 13) Industrial License, if required Test report in case of chemicals Adhoc exemption order DEEC Book/DEPB in original
Catalogue, technical write up, literature in case of machineries, spares or chemicals as may be applicable Separately split up value of spares, components machineries Certificate of Origin, if preferential rate of duty is claimed No Commission declaration
BIBLIOGRAPHY
1) http://www.bhel.com 2) http://bhelpsnr.co.in 3) http://www.bhelhyderabad.com 4) BHEL journals 5) BHEL files 6) Ppt,word documents
doc_144595225.docx
done at bhel
A REPORT ON
MATERIAL MANAGEMENT AND INTERNATIONAL BUSINESS
(A Report Submitted in partial fulfillment of summer training work)
MBA IN International business Submitted by NUKALA NEELIMA SAHITYA 10031EIB019
Under the guidance of Mr. S.K PAL Dy. General Manager/Purchase-Oil Rigs & Mr. K.GOPALA KRISHNA Sr. Dy. General Manager / Purchase-Oil Rigs BHEL, Hyderabad.
Tel: 040 23182236, Fax No: 040 23186074 Email: [email protected] CERTIFICATE OIL RIGS PURCHASE Ref. No: HY/Oil Rigs-Pur/2011-12 DATE: 01-06-2011
This is to certify that Ms. Nukala Neelima Sahitya Roll. No. 10031EIB019 of JNTU SMS, has submitted the project entitled ´Material Management and International Businessµ in partial fulfillment of requirements for the ´MBA In International Businessµ in the academic year 2010-2011. This is a record of bonafide work carried out by her under our guidance from 02-05-2011 to 01-06-2011 at BHEL Ramachandrapuram, Hyderabad. This project work has been completed successfully and her performance is commendable.
S.K. PAL Dy. General Manager, Oil Rigs Purchase BHEL, Hyderabad.
ACKNOWLEDGEMENT
It is with a feeling of profound respect that we record our deep sense of gratitude and indebtedness to our project guide Sri S.K PAL, DGM, Oil Rigs (Purchase), B.H.E.L, Hyderabad for his interest, valuable guidance and encouragement in pursuance of our project. I am also very thankful to Sri K.GOPALA KRISHNA, SR.DGM, Oil Rigs (Purchase), B.H.E.L, for his guidance during the course of the project. I am thankful to the Management of B.H.E.L, Hyderabad for giving me this golden opportunity to undergo the project work in their Oil Rigs Purchase Division.
BY N NEELIMA SAHITYA
OBJECTIVE
To provide with information related to exports and imports happening at Foreign Exchange cell at BHEL, to give overview of Overseas Business. To focus on activities happening at various departments like Purchase, Foreign Exchange, Finance, Material Management departments at BHEL. To provide information related to competitors, customers of BHEL.
CONTENTS
1) ABOUT THE COMPANY 2) PERFORMANCE OF BHEL 3) POWER DELEGATION AT BHEL 4) PURCHASE DEPARTMENTAL PROCEDURES 5) COMPETITORS AND CUSTOMERS 6) VENDOR MANAGEMENT AT BHEL 7) INVENTORY MANAGEMENT AT BHEL 8) SUPPLY CHAIN MANAGEMENT AT BHEL 9) FOREIGN EXCHANGE CELL PROCEDURES
ABOUT THE COMPANY:
BHEL is the largest engineering and manufacturing enterprise in India in the energy related/ infrastructure sector today. BHEL was established more than 40 years ago, when its first plant was set up in Bhopal ushering in the indigenous Heavy electrical equipment in INDIA- a dream which has been more than realized with a recognized track record of performance. It has been earning profits continuously since 1971 1972. BHEL as it is known today, has come a long way from being a mere heavy electrical generation equipment company to the position of leadership that it enjoys today with major presence not only in the field of power, but in the other core sectors of industry. Transportation, Transmission, Oil & gas, Telecommunication, Defense & Civil aviation. Today, BHEL has a major presence in the domestic power market and accounts for 65% of the nations installed power generating capacity. Thus making a significant contribution to the growth and development of the country s economy over the years. It has had a consistent track record of growth, performance and profitability and has been reported by the World Bank as being One of the most efficient enterprises in the industrial sector at par with international standards of efficiency. The organization has been exploiting market opportunities in India and abroad by competing, collaborating and co-existing with leaders and enjoys a market presence in over 50 countries. Having achieved the international quality certification (ISO-9000), the organization is now moving towards a culture of total management (TQM) for achieving business excellence and has been recertified from the ISO 9000-2000 for the quality management and ISO 14001 for the environment management.
Vision: A World-class Stakeholder Value.
Engineering
Enterprise
Committed
to
enhancing
Mission: To be an Indian Multinational Engineering Enterprise providing Total Business Solutions through Quality Products, Systems and Services in the fields of Energy, Industry, Transportation, Infrastructure and other potential areas. Values: y y y y y y y Zeal to Excel and Zest for Change Integrity and Fairness in all Matters Respect for Dignity and Potential of Individuals Strict Adherence to Commitments. Ensure Speed of Response Foster Learning, Creativity and Team -Work Loyalty and Pride in the company.
International operations: BHEL has, over the years, established references in 60 countries of the world, ranging from the united states in the west to New Zealand in the far east. These references encompass almost the entire product range of BHEL, covering turnkey power projects of thermal, hydro, gas based types, substation projects, besides a wide variety of projects like transformers, insulators, switch gears, heat exchangers, castings, valves etc. B.H.E.L, Hyderabad: Hyderabad unit of B.H.E.L at Ramachandrapuram started in the early 60 s to cater the power plant requirement of 110 MW and 60MW units and small sets of 12 MW in collaboration with SKODA Czechoslovakia. Over the years Hyderabad unit has emerged as a premium engineering organization with strong system engineering groups and has the expertise to undertake turnkey services for thermo-mechanical projects Right from the green field status. B.H.E.L was the first organization both in public and private sector to realize the importance of a corporate plan.
The first corporate plan was brought out in 1974. This plan while seeking to integrate the diverse operations of the company also sought to reorganize the company essentially along functional lines. Since then B.H.E.L has come out with The growth perspective of 80 s in April 1982. SITE: The factory area is 750 acres, out of which present fenced area is 350 acres and area of 400 acres is available for the future expansion of the factory.
Human face of the Hyderabad unit: B.H.E.L was selected as the 7th best employer out of 25 in a survey conducted in 2002-03 by Hewitt Associates. The company has a system of workers participation in management through shop council, plant council and joint committees at shop floor level, unit level and company level respectively. Hyderabad unit runs an institute to take care of the mentally challenged children and make them self dependent through vocational training. Physically challenged persons are provided employment in the company. The HRD institute and other HRD centers of the company help in not only keeping their skills updated and finally honed but also adding new skills, whenever required. Continuous training & retraining , a positive work culture & participative style of management , have engendered development of a commuted and motivated work force, leading to enhanced productivity and higher levels of higher quality. NAVRATNA / MAHARATNA STATUS Bharat Heavy Electricals Limited is likely the next candidate to get this coveted Maharatna tag. This was declared by the Union Minister for Heavy Industries , Sri Praful Patel At present, BHEL is a Navratna company.
Once a company gets the Maharatna status, its board would not be required to take the government's permission for investments up to Rs 5,000 crore in a joint venture project or wholly-owned subsidiary. For the Navratna companies, the limit is Rs 1,000 crore. The company secured a Place among the top nine public sector companies granted Navaratna status over 12 years back.
PERFORMANCE OF BHEL
BHEL performance in the years 2008-09and 2009-10 Rupees (In Million) 2008-09 Turnover Value Added Employee (Nos.) Profit Before Tax Profit After Tax Dividend Dividend Tax Retained Earnings Total Assets Net Worth Total Borrowings Debt : Equity Per Share (in Rupees) : - Net worth - Earnings Economic Value Added 264.32 64.11 20080 325.16 88.06 26700 23.02 37.36 32.97 280330 98940 45666 48490 31380 8320 1420 21640 395810 129390 1490 0.01 2009-10 341540 131710 46274 65910 43110 11410 1910 29790 469600 159170 1280 0.01 CHANGE (%) 21.83 33.12 1.33 35.92 37.38 37.14 36.17 37.62 18.64 23.02 -14.09 0.0
BHEL s Expected Performance for the year 2010-11
Gross Sales (Turnover) (Rs. Millions) 380,000 Gross Margin (Rs. Millions) 81,200 PBDIT to Total Employment (Rs. Millions) 1.740 Gross Margin to Gross Block (%) 92.02 Gross Profit to Capital Employed (at year end) (%) 45.71 Net Profit to Net Worth (at year end) (%) 25.64 Added Value to Gross Sales (%) 17.03 Further, a stretch Turnover target of Rs. 395,000 Millions has been fixed under 'Excellent' rating.
POWER DELEGATION AT BHEL
CHAIRMAN AND MANAGING DIRECTOR (CMD) EXCECUTIVE DIRECTOR (ED)
PRODUCT MANAGERS (GM) AGM
SR DGM
DGM
At unit level
SR MANAGER
MANAGER
DEPUTY MANAGER
SR ENGINEER
ENGINEER ENGINEER TRAINEE
PURCHASE DEPARTMENTAL PROCEDURES
DEPARTMENTAL OBJECTIVES To ensure timely delivery of materials To improve quality of purchased products To create sound suppliers through supplier evaluations To procure materials at competitive price
Purchase departmental activities Concerned executive in charge for this function is responsible for conversion of purchase indent to purchase order Follow-up with the supplier and the receipt of materials at stores and at sites as per BHEL standard OMI 021 Documents needed Approved product directory Customer approval list Purchase indent (SPECIFICATIONS, standards, quality, type of material drawings etc) Key processes Procurement:-obtaining goods from supplier is termed as procurement it follows a flow as below along with arranging payments to suppliers ,arranging insurances, relevant documents, dispatch of materials ,establishing lc s, customs clearances etc.
FUNCTIONS OF PURCHASE DEPARTMENT Procurement of stores through indigenous and foreign sources as required in accordance with the rules in force. Checking of requisitions/purchase indents. Selection of suppliers for issue of enquiries. Issuing enquiries/tenders and obtaining quotations. Analysing quotations and bids etc., and preparation of comparative statement (quotation charts). Consultation with the Indenter for selection and approval of quotations and with Accounts Officer for pre-audit. Negotiating contracts. Checking legal conditions of contracts. Consulting Administrative Officer or Secretary, NCSM where necessary. Issue of Purchase Orders. Follow-up of purchase orders for delivery in due time Verification and passing of suppliers bills to see that payments are made promptly. Correspondence and dealing with suppliers, carriers etc., regarding shortages, rejections etc., reported by the Stores Department. Maintenance of purchase records. Arrangement for Insurance Surveys, as and when necessary. Clearance of foreign consignments. Keeping various Departments/Divisions informed of the progress of their indents in case of delay in obtaining supplier
Purchase Order
urchase Order is an order placed on the supplier for the supply of specified quantity of specific material at a specified rate in accordance with the terms and conditions spelt out in the order. The purchase order contains the following essential information: Name of the supplier Description of the material Unit of the measurement Quantity to be supplied Rate at which the supply is to be made Terms of delivery Destination and mode of transport Terms of payment Other special conditions like requirement of test certificate/guarantee certificate, pre- inspection, insurance, compensation for delayed supply etc. The purchase order also contains reference to indent number, name of the Purchase OfficerLetter of credit
in case of foreign suppliers
L/C. A binding document that a buyer can request from his bank in order to guarantee that the payment for goods will be transferred to the seller. Basically, a letter of credit gives the seller reassurance that he will receive the payment for the goods. In order for the payment to occur, the seller has to present the bank with the necessary shipping documents confirming the shipment of goods within a given time frame. It is often used in international trade to eliminate risks such as unfamiliarity with the foreign country, customs, or political instability. Elements of a Letter of Credit A payment undertaking given by a bank (issuing bank) On behalf of a buyer (applicant) To pay a seller (beneficiary) for a given amount of money. On presentation of specified documents representing the supply of goods Within specified time limits Documents must conform to terms and conditions set out in the letter of credit Documents to be presented at a specified place.
COMPETITORS AND CUSTOMERS
MAJOR COMPETITORS OF BHEL 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) Ansaldo Asea Brown Boueri Beehtel Block & Neatch CNMI & EC Costain Electrim Energostio Electro Consult Franco Tosi Fuji GEC Alsthom General Electric Hitachi Mitsubishi Mitsui Raytheon Rolls Royce Sanghai Electric Co. Seimens Toshiba Westinghouse Italy Switzerland USA USA China U.K. Poland Russia Italy France Japan U.K. USA Japan Japan Japan USA Germany China Germany Japan USA
CUSTOMERS OF BHEL s PRODUCTS DOMESTIC:1. PUNJAB STATE ELECTRICITY BOARD (PSEB) 2. UTTAR PRADESH STATE ELECTRICITY BOARD (UPSEB) 3. NATIONAL THERMAL POWER CORPORATION (NTPC) 4. NATIONAL HYDEL POWERCORPORATION (NHPC) 5. ANDHRA PRADESH STATE ELECTRICITY BOARD (APSEB) 6. WEST BENGAL STATE ELECTRICITY BOARD (WBSEB) 7. BIHAR STATE ELECTRICITY BOARD (BSEB) 8. INDIAN OIL CORPORATION (IOC) 9. MADHYA PRADESH STATE ELECTRICITY BOARD (MPSEB) 10. ORRISA STATE ELECTRICITY BOARD (ORSEB) 11. KARNATAKA STATE ELECTRICITY BOARD (KSEB) 12. BIRLA TYRES 13. GOA SHIP YARD 14. HARYANA STATE ELECTRICITY BOARD (HSEB) 15. HIMACHAL PRADESH STATE ELECTRICITY BOARD (HPSEB) 16. INDIAN NAVY 17. DELHI VIDYUT BOARD 18. SIEMENS, NEW DELHI 19. ONGC 20. OIL 21. L&T 22. JK CEMENT
INTERNATIONAL:-
1. M/S EBARA CORPORATION, JAPAN 2. M/S ZEECO INCORPORATION, USA 3. SIMMCO INTERNATIONAL 4. SIEMENS, GERMANY 5. SIEMENS, SINGAPORE 6. BAIJI PROJECT, IRAQ 7. KYCR COIL INDUSTRIES LTD, BANGLADESH
VENDOR MANAGEMENT AT BHEL
VENDOR MANAGEMENT AT BHEL At Bhel every vendor is provided with a 6 digit code To identify and include only quality, reliable and cost effective suppliers the following structure is created
structure at bhel for suppliers
supplier development cell
material identification and suppler control committe
trained and certified assessor
With the coordinated effect of these three committees only the suppliers are guided and evaluated ROLE OF SDC
To identify new suppliers Registration of suppliers
Follow up with suppliers Supplier evaluation Review and supplier evaluation Ensure compliance of procedural guidelines during registration To maintain and update product material directory To maintain supplier performance and periodic review
ROLE OF MISCC Engineering for direct materials Technology for indirect materials Project management Quality management Materials management Preparation of product material directory Scrutinize suppliers Review periodically , update product material directory ROLE OF TCA Evaluation and assessment of supplier registration forms Verification of quality soundness Verify technical competence
Overall vendor selection at BHEL BHEL procures materials and components on a regular basis from suppliers spread all over the world. For this purpose, BHEL is backed by a strong supplier-base which is continually updated. New suppliers and traders (only those who are sole/authorized representatives of OEMs) both from within India and abroad, who would give BHEL competitive inputs, are now being added to the list of existing suppliers. For an initial assessment and empanelment with BHEL, suppliers may get registered by submitting completed forms to respective unit's Contact Person. A committee works on the choosing the vendors Vendor is chosen based on meeting the requirements of the organization. The chosen vendor is examined with infrastructure, technical support and manpower associated with the vendor or not. Vendor proceeds with the guidelines given by the organization like on time delivery , quality is given utmost care ,price as quoted down.
LIST OF SOME OF THE VENDORS FOR BHEL
INTERNATIONAL 1) TESCO 2) INGERSOLL 3) NOV/GRIFFITH 4) BLOOM AND ROSS 5) KEMTRON 6) Red rooster CANADA IRELAND UK GERMANY USA UK
DOMESTIC 1) Hyderabad Castings Ltd 2) Bharath Pumps and Compressors Ltd (BPCL) 3) Alloy Castings ltd 4) Kismet Industries from West Bengal 5) Tractor Engineers Ltd. 6) Unique Engineering Enterprises Pvt. Ltd.
INVENTORY MANAGEMENT
INVENTORY: The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets those are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners. Usually inventory can be defined as stock in financial terms.
STORES INVENTORY MATERIALS INVENTORY I N V E N T O R Y STORES IN TRANSIT TRANS IN TRANSIT MATERIALS LYING WITH SUB CONTRACTERS
PRODUCTION INVENTORY
WORK IN PROGRESS
FINISHED GOODS INVENTORY
Goods ready for transporting
Initially the cycle time is noted down so that the expected time can be calculated and manufacturing time can be known to proceed with production.
Role of inventory management
To deliver goods on time To maintain stock based on requirement To minimize cost and improve efficiency To avoid wastage of goods To meet customer requirement on time
In BHEL ABC analysis is followed where the goods are classified based on value terms and the organization takes care in case of high value products because they account for high costs. Thus organization aims to minimize the wastage of high valued goods The ultimate goal of inventory management is to minimize idle costs and meeting the customer requirement.
SUPPLY CHAIN MANAGEMENT
customer orders
supplier supplies
manufacturer manufactures
customer receives the ordered goods
1. Company has an ERP system. 2. Company follows "Make to Order" strategy, i.e., goods are manufactured when purchase order is received from customer. Supply chain process inside a manufacturing company starts from receiving a customer purchase order, subsequently requisite raw material in desired quantity is arranged as per the production plan of manufacturing, after which it is packed and dispatched. Following is a broad flow chart of supply chain inside a manufacturing facility: -
FOREIGN EXCHANGE CELL
OVERSEAS BUISNESS BHEL, ranking among the major power plant equipment suppliers in the world, is one of the largest exporters of engineering products & services from India. Over the years, BHEL has established its references in more than 70 countries worldwide, ranging from the United States in the West to New Zealand in the Far East. BHEL's export range covers individual products to complete Power Stations, Turnkey Contracts for Power Plants, EPC Contracts, HV/EHV Sub-stations, O&M Services for familiar technologies, specialized after-market services like Residual Life Assessment (RLA) studies and Retrofitting, Refurbishing & Overhauling, and supplies to manufacturers & EPC contractors. BHEL has assimilated and updated/adopted the state-of-the-arttechnologies in the Power and Industrial equipment sectors acquired from world leaders. BHEL has successfully undertaken turnkey projects on its own and possesses the requisite flexibility to interface and complement international companies for large projects, and has also exhibited adaptability by manufacturing and supplying intermediate products to the design of other manufacturers and original equipment manufacturers (OEMs). The success in the area of rehabilitation and life extension of power projects has established BHEL as a reliable alternative to the OEMs for such power plant
INTERNATIONAL BUISNESS It has established reference in more than 70 countries across all inhabited continents of the world Bhel s Power projects in OMAN LIBYA MALAYSIA SAUDI ARABIA IRAQ BANGLADESH SRILANKA CHINA KAZAKHSTAN BELARUS CYPRUS MALTA LIBYA EGYPT INDONESIA THAILAND ETHIOPIA CALEDONIA SENEGAL NEWZEALAND
Execution of overseas projects provided the BHEL the experience of working with the world renowned organizations and agencies The foreign exchange department is concerned with two activities mainly Licensing Clearance
LICENCING Initially the licencing department after forming a contract applies for licencing.To obtain licencing following documents are required Copy of contract Copy of epcg licence obtained by customer Payment terms Duration List of goods CA certificate for export performance for past 3 years, etc. Only after providing with licencing the further activities proceeds it is the prior step in the foreign exchange department. With licencing prior to commencement of import activities provides with eliminating customs and other taxes by government this facilitates foreign exchange.
CUSTOMS CLEARANCE:-
FLOW CHART OF ACTIVITIES AT FOREIGN EXCHANGE CELL REGARDING CLEARANCE
RECEIPT OF NNDD S FROM PURCHASE GROUP CHECKING AND FEEDING TO SYSTEM FORWARDING OF P.O CHECK LIST FORWARDING OF LICENCES/P1 LISTS TO ROD ARRIVAL OF VESSEL FILLING OF IGM WITH CUSTOMS BY SHIPPING COMPANY ISSUE OF FREIGHT BILL BY SHIPPING COMPANY RECEIPT OF OBL FROM BANK FORWARDING TO ROD MUMBAI
CHECKING OF DOCUMENTS WRT CHECKLIST;LICENCE AND PI LIST BY ROD PREPARATON OF DOCKET
CHA
REGISTRATION OF LICENCE/PI LIST WITH CUSTOMS
PREPARATION OF BILL OF ENTRY
OBTAIN CRA/TRA
B.E. NOTING WITH CUSTOMS DEBITING TO LICENCE AND P1 LIST AS APPLICABLE
B.E ASSESMENT AND AC SIGNATURE
DUTY PAYMENT (IN CASE OF MERIT AND PI)
ADF (ASSESED DUTY FREE) INCASE OF DEEC
PAYMENT OF FREIGHT, D.O.FEEAND STAMP DUTY CHARGES
DELIVERY ORDER FROM SHIPPING COMPANY ON THE OBL
EXAMINATION OUT OF CHARGE
PORT TRUST FORMALITIES
EXPORT DOCUMENTATION There are a number of documents, which have to be prepared by the exporter in order to arrange export of his consignmThese documents can be mainly classified into two i.e. (a) Commercial Documents and (b) Regulatory Documents
Out of the 15 commercial documents, eight are principal and the rest are auxiliary.
The eight principal documents are
1. The Commercial Invoice, 2. Packing List 3. Bill of Lading/Air Waybill 4. Certificate of Inspection/Quality control 5. Certificate of origin 6. Bill of Exchange and 7. Shipment Advice 8. Insurance Certificate
The seven auxiliary documents are
1. Proforma Invoice 2. Intimation for inspection 3. Shipping instructions 4. Insurance Declaration 5. Application for certificate of origin. 6. Mate's Receipt 7. Letter to bank of collection/negotiation of document
Regulatory Documents There are seven regulatory documents associated with the pre-shipment stage of the export transaction. They are: 1. ARE Form ( for Central Excise) 2. Shipping Bill/Bill of Export (for Customs)
3. For export Port Trust Copy of Shipping Bill/Export Application/Dock Challan 4. Vehicle ticket 5. Exchange Control Declaration/GR/PP forms 6. Freight Payment Certificate 7. Insurance Premium Payment Quotation An offer to sell goods and should state clearly the price, details of quality, quantity, trade terms, delivery terms, and payment terms.
AFTER SHIPMENT, SUBMIT DOCUMENTS TO BANK FOR REALISING EXPORT PROCEEDS
Import procedures For clearance of import goods, the importer or his agents have to undertake the following formalities:1. Bill of Entry It is a document certifying that the goods of specified description and value are entering into the country from abroad. Bill of Entry are of three types :a. Bill of Entry for home consumption: is to be submitted when the imported goods are to be cleared on payment of full duty for consumption of the goods in India. It is white colored. b. Bill of Entry for Warehouses : is to be submitted when the imported goods are not required immediately by the importer but here they are to be stored in a warehouse without payment of duty under a bond and cleared later when required on payment of duty. c. Bill of Entry for Ex-Bond Clearance : is used for clearing goods from the warehouse on payment of duty. The goods are classified and valued at the time of clearance from the Customs Port. Value and classification are not determined on such Bill of Entry.
In the non-EDI system along with the bill of entry filed by the importer or his representative the following documents are also generally required:1) Signed invoice 2) Packing list 3) Bill of Lading or Delivery Order/Airway Bill 4) GATT declaration form duly filled in 5) Importers declaration 6) License wherever necessary 7) Letter of Credit/Bank Draft/wherever necessary 8) Insurance document 9) Import license 10) 11) 12) 13) Industrial License, if required Test report in case of chemicals Adhoc exemption order DEEC Book/DEPB in original
Catalogue, technical write up, literature in case of machineries, spares or chemicals as may be applicable Separately split up value of spares, components machineries Certificate of Origin, if preferential rate of duty is claimed No Commission declaration
BIBLIOGRAPHY
1) http://www.bhel.com 2) http://bhelpsnr.co.in 3) http://www.bhelhyderabad.com 4) BHEL journals 5) BHEL files 6) Ppt,word documents
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