CHAPTER -1 Page 1 of 16 code is given in the Chart of Accounts. In addition to the above two digit...

CHAPTER-1

FINANCIAL ACCOUNTS FINANCIAL ACCOUNTS 1.1 ORGANISATION - FINANCE & ACCOUNTS The Finance Department of the Corporation is headed by the Director(Finance), who is assisted by

General Manager (Corporate Finance) and General Manager (Internal Audit). The divisional

accounts are controlled either by Deputy General Manager (Finance & Accounts) or Chief Manager

(Finance & Accounts) who are administrative under the Divisional heads. They are however,

accountable functionally to the Director(Finance). 1.2. ACCOUNT NUMBERS - RELEVANCE In a multi-unit organisation it is necessary to lay down uniform classification in the financial accounts

to be followed by all the units/divisions and offices of the Corporation. Instructions laying down

Master Chart of Accounts have been issued by the HO from time to time. The sources for entry in the original books of accounts are the vouchers originated by the various

sections for cash and bank transactions, purchases, adjustments for imprest accounts etc. The various transactions are analysed and properly charged to the various expenditure account

heads through Account Numbers. 1.3. GENERAL LEDGER ACCOUNT NUMBERS - GROUPING A 9 digit code number is used to record all transactions. The first 4 digits represent general ledger

account number and the last 5 digits represent the sub-ledger account number. Thus an Account

Number 6000-04204, 6000 represents all the sundry creditors in general ledger and 04204 under

6000 represents the individual supplier’s account number. The general ledger account number is so found as to indicate the broad grouping as under: 0001-0099 Share Capital 0100-0199 Reserves and Surplus 0200-0299 Secured Loans 0300-0699 Unsecured Loans 0700-0999 Unit Accounts 1000-2999 Fixed Assets & Depreciation Reserve 3000-3999 Capital Work in Progress 4000-4099 Investments 4100-5999 Current Assets, Loans and Advances 6000-6999 Current Liabilities and Provisions 7000-9999 Manufacturing and Profit & Loss Account 1.4. LINK CODE NUMBERS Each group of General Ledger Account Numbers will be having a corresponding Link Code Number

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which is a 6 digit code number. Thus the total amount of the group of General Ledger Accounts will be

automatically linked in the Balance Sheet and Profit and Loss Account. At present all the GL

Numbers are linked directly by the Computer to avoid the manual linking. The description of each

link code is given in the Chart of Accounts. In addition to the above two digit Budget Codes are also provided in the Chart of Accounts to facilitate

preparation of Capital and Revenue budgets. Budgetory Control Reports can be prepared from the

same accounting inputs. A copy of the general ledger numbers and Link Code numbers is given in Annexure-1. 1.5. VOUCHERS - JOURNAL CODE NUMBERS Since common account numbers are used, a two digit journal code is used to distinguish the records

as follows:- Purchase Journal 01 Transfer Journal 02 Cost Journal 03 Payroll Journal 04 Invoice Journal 05 Cash Receipt 06 Cash Payment 07 Bank Receipt 08 Bank Payment 09 Sales Journal 10 Creditors Journal 13 Contractors Journal 14

Vouchers are passed through each of the above journals giving a 4 digit running serial number to

cross check vouchers and their subsequent entries in journals and ledgers. Thus purchase journal

vouchers are numbered 010001, 010002 etc. serially.

1.6 SUB-LEDGER ACCOUNT NUMBERS - HOW TO OPEN?

In deciding upon the sub-ledger heads to be opened, it would be desirable to keep the following in

view:-

(i) Every sub-ledger account should fall within the scope of a main ledger account.

(ii) The name of the sub-ledger account should lend itself to clear interpretation.

(iii) The sub-ledger should contain separate control accounts with which balances extracted from

personal and other detailed ledgers (registers) of various sections/branches should tally.

(iv) Parallel sub-ledger codes may be opened for the various activities of a unit, such as

a) Operation and Maintenance

b) Expansion of projects.



c) Township and welfare activities

d) Marketing activity and

e) Training activities.

Badge Numbers should be given as Sub-ledger for the Loans and Advance Accounts pertaining to

employees. In respect of certain Salary Recovery Accounts, Interest Subsidy, Medical

Reimbursement etc. the Badge Numbers are used as Sub-ledger numbers.

These may be opened for assets, liabilities, expenditure and income group of accounts, wherever

found necessary, so that separate amounts are available in the trial balance for each one of the

above activities and also for the purpose of compiling proforma/other statistical data for each of

these items.

(v) The classification of fixed assets in the sub-ledger should, as far as possible, be in line with the

requirements of Income-tax rules and Manufacturing and Other Companies (Auditors’ Reports) Order

1975. For example, buildings may be classified under factory buildings, office buildings, residential

buildings (exceeding 80 Sq.Mtrs. per unit), residential buildings (less than 80 Sq.Mtrs. per unit) etc.

for which different rates of depreciation are prescribed in the rules framed under the Income Tax

Act. All these envisage maintenance of detailed assets register in respect of each major item of

assets, such as plant and machinery, buildings, air conditioners, vehicles, refrigerators etc. showing

full particulars of the asset including source of purchase, make, quantitative details and situation of

the assets, date of acquisition, voucher no. and date, original value, additions, deductions,

depreciation charged etc.

(vi) Sub-ledgers should also provide for the information required to be incorporated in the balance sheet

and the P & L account and also notes forming part of the statement of accounts for the year, as far

as possible, as required in further alterations to Schedule VI of the Companies Act. The important

requirements are as follows:-

a) Sales effected should be given in quantity and value by the class of goods manufactured/purchased.

By the class of goods is meant, the items for which the corporation is holding separate industrial

license. But where the corporation has industrial licence for production of the same item at different

units, the items covered by such licences shall be treated as one item.

b) The value of raw materials consumed should be given both in quantity and value treating all important

basic materials as separate items. The intermediates and components from other manufacturers

may, if the list is too large to be included as separate item, be grouped under suitable headings

without mentioning the quantities provided. All these items which individually account for 10% or

more of the total value of raw materials consumed shall be shown as separate and distinct items with

quantities thereof.

c) The opening and closing stocks of goods manufactured should be given both in value and quantity by

the class of goods manufactured/purchased as defined in item (a) above.

d) Sub ledger heads may have to be opened for miscellaneous expenses under the major heads like

Miscellaneous Factory Expenses, Misc. Administrative Expenses, Misc. Township expenses etc.

This is required to meet the requirements of the alteration that any item under which expenses

exceed 1% of the total revenue of the corporation or Rs.5000/- whichever is higher shall be shown

as a separate and distinct item against an appropriate head in the Profit and Loss Account and shall

not be combined with any other item to be shown under Misc. expenses.



e) Sub-ledger may be opened for expenditure incurred in foreign currency on account of royalty, interest,

TA, know-how and professional consultation fees. Relevant sub-codes for know- how and

professional consultation fees chargeable to ‘revenue’ should be opened under the major heads,

Misc. Factory expenses, Misc. Township expenses as the case may be .

f) Sub-ledger codes for each product of imported raw-material consumed may be opened, similarly sub-

ledger codes may be opened for imported spare parts and components consumed during the year.

g) In order to calculate foreign exchange earnings by way of know-how, professional consultation fees,

interest and income from other sources, separate sub-ledger codes may be opened.

1.7. FORWARDING OF VOUCHERS TO CSC

The following documents will be sent as per the calendar of inputs to be given to CSC as in

Annexure-2.

(i) Cash payment vouchers

(ii) Cash Receipts counterfoils

(iii) Bank payment vouchers

(iv) Bank receipt counterfoils

(v) Purchase journal (adjustment) vouchers

(vi) Transfer journal vouchers

(vii) Cost journal vouchers

(viii) Payroll journal slips etc.

The cost journal entries relating to actual consumption of raw materials, packing materials and

operating supplies based on plant reports are prepared by the costing section.

The totals of debits and credits (journal wise)in each of the above vouchers are noted in a control

book before they are passed on to the CSC.

The above documents are processed in the CSC and printed journals and ledgers are prepared after

tallying with the control totals furnished by them and the outputs are furnished by CSC as per

calender of output as per Annexure-3.

1.8 GENERAL ACCOUNTS SECTION

The following important works are attended by the accounts section.

1.8.1. Fixed Assets

Maintenance of registers, giving details of depreciation, classification etc.

Fixed Assets Register is maintained in respect of the following assets.

Balance Sheet Group GL wise group in Fixed Assets Register

a) Land i) Land Freehold - Factory ii) “ Township iii) Land Development-Factory iv) “ Township v) Land Leasehold - Factory vi) “ Township



b) Roads, Culverts, i) Roads,Bridges, Culverts - Factory Dams etc. ii) ‘’ ‘’ ‘’ - Township iii) Dams,Water Tank- Factory iv) “ - Township v) Sewage,Drainage- Factory vi) “ - Township c) Buildings i) Factory Building ii) Factory Research Building iii) Factory Temporary Shed iv) Office Building v) Office Temporary Shed vi) Residential Building (Exceeding 80 Sq.Mts.per Unit) vii) Residential Building (Less than 80 Sq.Mts.per Unit) d) Railway Siding e) Plant & Machinery i) Corrosive ii) Pollution Control iii) Energy Saving iv) Non-corrosive f) Furniture & Office i) General Equipments ii) Canteen, Hospital, Theatre, School etc. iii) Data Processing Equipments iv) Office Equipments g) Vehicles i) Cars ii) Jeeps iii) Vans iv) Mobile Testing Vans v) Lorries and Trucks vi) Others h) Service Equipments Separate codes are opened for

Farm Equipments, Earth Movers & Tractors, Cranes, Lab Equipments, Publicity, Hospital, Canteen Equipments, Weighing Machines, Sewing Machines, Concrete Mixers, Vibrators, Electrical Fittings, Telephones, Air Conditioners, Refrigerators, Water Coolers etc.

i) Minor Assets j) Indo EEC aided Project Assets k) Plant and Machinery - Retired Each asset/group of assets will be identified by a 12 digit code. The first 8 digits of the asset code



and their corresponding general ledger and sub ledger account number will be identical. The last four digit will be

used for identifying individual asset under the general ledger and sub ledger codes. Whenever the

GL and SL alone will identify an asset the last 4 digits will be zeros.

The assets should be properly classified bringing similar items together under GL and SL codes with

individual serial or identification number codes for identifying each group of assets.

The value of assets and the cumulative depreciation as per books of account will be broken up into

value and depreciation of individual assets and advised to CSC. Whenever further break up of

general ledger account to sub ledger is required for the purpose of asset register, it should be done

only after the general ledger figure is split up into sub ledger figures in the financial book by journal

entry.

All subsequent transaction such as additions, transfer in, transfer out, sales and adjustment etc. in the

asset register will be based on entries other than opening and closing balance and will be broken up

asset-wise and advised to Computer Service Centre in the same format enclosed in Annexure-4.

As soon as the last entry has been cleared for the year ended 31st March the division will send a

confirmation letter to Computer Service Centre on the basis of which the asset register will be printed

by CSC in the format enclosed in Annexure-5.

The depreciation for the year will be computed by the CSC on the basis of asset register, the

summary/totals of which will be brought into the financial accounts. Rates of Depreciation are given

in Annexure-6.

1.8.2. Ledger Scrutiny

The monthly financial ledgers prepared by the CSC shall be scrutinised and checked with the

supporting vouchers and mistakes if any shall be reported to officers concerned with copy to FM.

Necessary follow up shall be made for the rectification of the mistakes reported.

1.8.3. Inter Unit Reconciliation

For all the inter-unit transactions, each division keeps accounts for each units separately. The

originating unit will raise a debit/credit note for all the transactions. General accounts section keeps

a register for recording the movement of all debit/credit notes so as to ensure that all of them have

been properly routed and responded. Monthly reconciliation statements are prepared with details of

pending items and forwarded to the units concerned so as to enable them to take necessary steps to

respond the pending items. At the close of the financial year the balance of unit accounts should

tally with each other and on finalisation the balance standing in the unit accounts of UDL, FEDO,

FEW, Marketing, CD and PD will be transferred to HO.

1.9. GENERAL

1.9.1. Under Management Reporting System various returns and statements are to be compiled for submission

to the management at different levels including top management. In order to facilitate the quicker

compilation of these reports/statements, it would be desirable if various cost centers are codified.

The sub-ledger codes of General Ledger accounts are opened in such a way that these are linked

with the different cost centres.

1.9.2. Similarly in order to facilitate compilation of budget formats as well as to have an effective control on

expenditure vis-a-vis the provision made in the budget it is desirable to link up the financial ledger

heads with the corresponding budget/project estimate heads.



1.10. CHART OF ACCOUNTS

The Chart of Accounts of the Company is attached in Annexure-1.

Notes on Chart of Accounts

The nomenclature of the main ledger accounts given in the Chart of Accounts, in most of the cases,

are self-explanatory. Codes for the sub-ledger accounts within the purview of the main ledger

accounts may be opened by the Unit/Division according to local requirements and section-wise, such

as factory erection section, purchase section etc. for purpose of responsibility accounting. Parallel

sub-codes may be opened for the various activities of the unit, such as operation and maintenance,

expansion, welfare, marketing, training etc. under the Asset, Liability, Income and Expenditure group

of accounts. Sub-codes are also to be opened to meet the requirements of company law and

Income Tax Act and Rules. The scope of account heads is further elucidated in the following notes:-

1.10.1. Share capital (0001-0099)

Separate GL Account Numbers are given for Equity Share capital for cash and for consideration other

than cash (with same link code 070500). Govt. of India Share suspense is given a link code 071000.

1.10.2 Capital Reserves (0100-0149)

General Ledger Accounts are opened for subsidy on Industrial Housing Loan, Govt. of India grant -

EEC project and other capital reserves. All these accounts are given separate link codes so that

they will appear distinctively in the Balance Sheet.

1.10.3 Other Reserves and Surpluses (0150-0199)

Separate GL Accounts with separate link codes are opened for general Reserves, Development

Rebate Reserves, Investment allowance Reserves, Reserves for repairs and renewals and surplus

for Profit and Loss Account.

1.10.4 Secured Loans (0200-0299)

The general ledger for overdraft from Banks (GL 0200) has got both credit link code(110 500) and

Debit link code (621500). Separate sub-ledger accounts bankwise are opened by the Divisions. The

accounts showing credit balances will be linked to “Cash Credit from Banks” in the Balance sheet.

The accounts having debit balance will be linked to current account with Banks in the Balance sheet

schedule under the heading “Cash and Bank Balances”. In addition to the above various GL

accounts are opened for Term Loans for banks, foreign currency loans, demand loan, PCFC and

Interest Accrued and due on OD. Sub-ledger accounts, bankwise, are opened for the above GL

accounts by the Divisions.

Term loans are having a single link code 110550, Loan from Bank of Baroda 110555 and interest

accrued and due 111000. These accounts will be displayed in the balance sheet separately.

1.10.5 Unsecured loan (0300 - 0499)

Individual GL accounts and link codes are available for Govt. of India loan (plan & non-plan), Interest

accrued and due on loan, Intercorporate loan, fixed deposit from Public and interest due on fixed

deposit.

1.10.6 Unit Accounts (0700-0899)



Unit accounts with separate GLs and link codes are opened for various divisions of the company such

as HO, Marketing, UDL, CD, FEDO, FEW and PD. Separate unit accounts are opened for various

Regional Offices of Marketing Division. At the year end, while preparing the Balance Sheet, all the

contra appearing in the Unit Accounts will get nullified.

1.10.7 Fixed Assets (1000-1999)

Fixed assets are grouped in the following heads in the Balance Sheet and for this purpose these

group are given separate link codes:-

a. Land (GL 1000-1019, Link code 500100)

Separate GL Accounts are opened for Freehold, Leasehold and Development in the cases of both

Factory land and Township land.

b. Roads, culverts, Dams etc. (GL 1020-1049, Link code 500200).

The GL Accounts are distinguished for items in Factory area and Township under three groups. (i)

Roads, Buildings, culverts (ii) Dams, Water Tank (iii) Sewage, drainage.

c. Buildings (GL 1050-1089, Link code 500 300)

Buildings are divided into Factory Building, Factory Research Building, Factory Temporary shed,

office Building, office Temporary shed, Residential Buildings (exceeding 80 Sq.Mtrs. per Unit) and

Residential buildings (less than 80 Sq. Mtrs. per Unit). The above classifications were made to meet

the Income Tax requirements in computing depreciation. Divisions are having separate SL accounts

to identify each building plantwise. This is useful for the purpose of costing.

d. Railway sidings (GL 1090-1099, Link code 500 400)

Railway siding is at present having only one GL Account No.1090.

e. Plant and Machinery (GL 1100-1149, Link code 500 500)

Plant and Machinery is classified into Corrossive, Pollution control, Energy saving, Non corossive

etc. Further sub ledger accounts are provided by each divisions to identify each plant. This is

useful for the purpose of costing.

f. Furniture and office equipment (GL 1150-1199, 1260 & 1270, Link code 500 600)

Separate GL accounts are opened for general furniture, furniture for Canteen, Hospital, Theatre,

School etc, Data processing equipments and office equipments. Divisions are having separate SL

accounts for each type of general furniture such as table, chair, filing cabinet, side rack, Almirahs

etc. Separate SL accounts are also given for Data processing equipments to distinguish them as

computers, Time recorders etc. Office equipments are classified categorywise and separate SL

accounts are given such as for Typewriters, Calculator, Xerox machines etc.

g. Vehicles (GL 1200-1249, Link code 500 700)

Separate GLs are available for Cars, Jeeps, Vans, Mobile soil testing Vans, lorries and Trucks. Sub-

ledger Accounts are further given by the Divisions, normally on the basis of Registration numbers of



the vehicles.

h. Service equipments (GL 1250-1349, Link code 500 800)

GL Accounts are opened separately for the various service equipments such as Farm equipments,

cranes, Laboratory equipments, Hospital and Canteen equipments, Drawing office equipments,

Electrical fittings, Telephones etc.

i. Minor Assets (GL 1450, Link code 500 810)

Assets costing less than Rs.5000/- including Plant & Machinery and other items are required to be

booked under this GL account with the corresponding assets GL accounts as the SL accounts

prefixed with ‘O’. 100% depreciation is to be charged on these items as per company law. In view of

the above the GLs 7777 and 7940 for “Minor Assets charged off” need not be operated henceforth.

j. Indo-EEC project Assets (GL 1350-1399, Link code 500 900)

Various assets under the EEC aided project are booked under the GL Accounts opened for this

purpose.

k. Plant & Machinery retired (GL 1140, Link code 500550)

Plant and Machinery items which are declared as “retired” are transferred to this account.

The above accounts are for the group block of the fixed assets. For Depreciation reserve

corresponding GL Accounts are opened with ‘2’ as the first digit instead of ‘1’ and in the case of link

codes ‘52’ as first two digits instead of ‘50’.

1.10.8 Capital work in progress (3000 - 3999)

Individual GL accounts are opened for various new large own projects, which are clubbed in the

balance sheet through common link code 540 000. The latest Accounts opened in this group are GL

3020 for 900 TPD Ammonia Project and GL 3021 for Ammonia Barge unloading facility. Sub ledger

accounts are opened by the Divisions as per their requirement. For advance to suppliers -

indigenous GL-3200 is given and for foreign suppliers GL 3201 is given. Both these GLs are having

debit link code (544002) and credit link code (680 500). Stores for capital jobs are booked under GL

3220 (Indian) and GL 3230 (Foreign) with common link code 544 003. Materials in transit (GL 3250)

and materials pending inspection(GL 3251) are having the common link code 544 004. Own capital

jobs/work orders are booked under GL-3900 and 3902. FEDO and FEW doing capital jobs for other

divisions are booking the expenses under the GL 3901, 3903 & 3904. These GL’s are having a

common link code 540 000. At the time of preparation of balance sheet link entries are passed and

the balances in the link code 540 000 are transferred to 541 000 (Work-in-progress). The balance in

link code 544 002 is transferred to 542 000 for advances considered good and secured and to link

code 542 500 for unsecured advances. Eventhough stores for capital jobs are automatically linked

to 544 003, by passing link entry the balances are transferred to 543 000. Likewise, materials in

transit, link code 544 004 is transferred to 543 500.

1.10.9 Expenditure Pending Allocation (GL 3950 to 3999)

At the time of implementation of various capital projects certain expenses like licence know how,



engineering fees, salaries and wages, welfare expenses, insurance, traveling expenses, interest etc. are booked

under the respective general ledger accounts opened for this purpose. Individual link codes are

provided for various general ledgers in order to display the same in the balance sheet. The GL

numbers and link code numbers are given in Annexure-I.

1.10.10 Investments (GL - 4000 to 4999)

The investments of a company in Govt. securities and Trade investments are displayed in the balance

sheet under the head ‘Investments’. GL accounts are opened for Govt. securities-quoted, and un-

quoted, shares in TCC Ltd, CAPEXIL Agencies Ltd., Indian Potash Ltd., FACT Co-operative Society,

Housing Societies and for investments in SBI Bonds. For the details of GL numbers and link code

numbers Annexure-I may be referred.

1.10.11 Inventories (GL 4100 to 4199)

The inventories are classified into seven categories in the balance sheet viz (i) Machinery spares (ii)

General stores (iii) Loose tools (iv) Raw-materials (v) Finished products (vi)Material-in-transit and

(vii) Work-in-progress. Separate link codes are given for these categories. Each category of these

inventories are further divided into small groups by giving separate General ledger accounts. Details

are given in Annexure-I.

Sales tax recoveries are booked under general ledger accounts from 4300 to 4319. The link code

given is 681000 so that it will be grouped under other liabilities.

1.10.12 Cash and Bank balances (GL 5100 to 5199)

This is further classified into 5 sub groups in the balance sheet viz (i) cash/cheques/stamps on hand

(ii) balance with scheduled banks (iii) with post office savings bank (iv) short term deposits with bank

and (v) remittances in transit. Divisions have opened separate sub ledger accounts for imprest (GL

5101) and for bank current accounts (GL 5150).

1.10.13 Other current assets (GL 5200 to 5299)

General ledger accounts are opened for interest accrued on investments and fixed deposits (GL

5200, link code 640 500) and other accrued income (GL 5290, link code 641 000).

1.10.14 Loans and Advances (GL 5300 to 5399)

In the balance sheet advances recoverable in cash or kind are classified into three categories viz (i)

considered good and secured (ii) considered good and unsecured (iii) considered bad and doubtful.

Secured advance given against purchase of machinery, equipment and stores (GL 5300), Material

on loan (GL-5301) and advance for purchase of conveyance (GL 5302) come under secured

advance. Separate link codes are given for these general ledger accounts. Advance tax paid,

Income tax deducted at source (GL 5310) and other loans and advances (GL 5320 to 5389) come

under unsecured advances. For Income tax deducted at source a link entry is passed by transferring

the amount from link code 662 000 to 662 100. Other loans and advances (GL 5320 to 5349 and

5389) are having both debit link code (662 500) and credit link code (681 000). Thus the credit

balances are linked to other liabilities in the balance sheet through link code 681 000. Balance with

customs (GL 5400 to 5403), deposits (GL-5450 to 5499) and prepaid expenses (GL 5500 to 5549)

are grouped along with loans and advances in the balance sheet. Details of general ledger code and

link codes are given in Annexure-I. Regarding sub ledger accounts the following procedure is

followed.

For the General Ledger Accounts mentioned below Badge Numbers numbers of the employees are

given as sub ledger codes.



a. GL-5302 - Advance for purchase of conveyance

b. GL-5320 - Accounts Receivable Employees

c. GL-5321 - Cafeteria purchase Advance

d. GL-5322 - Medical Advance

e. GL-5323 - Travel Advance

f. GL-5324 - Foreign Travel Advance

g. GL-5325 - Accounts Receivable - Ex-employees.

h. GL-5328 - LTC Advance

i. GL-5329 - Payroll salary advance

j. GL-5348 - Petrol cost

k. GL-5349 - Ad-hoc advance

For the following General Ledger Accounts Year of Advance is given as sub ledger code.

a. GL-5327 - Onam advance

b. GL-5330 - Vishu advance

c. GL-5331 - School advance

d. GL-5332 - Ramzan advance

e. GL-5333 - Christmas advance

f. GL-5334 - Employees Bonus advance

g. GL-5346 - Interim advance

h. GL-5347 - Lay-off advance

GL-5337 - Enquiries

FEDO and FEW are booking the expense of enquiries under this GL account. Sub ledgers are

opened by finance for each enquiry on the basis of the recommendation from commercial

department.

GL-5403 - Modvat Credit Receivable Account

The Bill Sections of production units are debiting the excise duty paid against purchases, which are

eligible for modvat under the above account through GRN’s. While utilising the Modvat Credit the

above account is credited. Sub ledger accounts are opened by the divisions on the basis of the

products purchased with the objective to facilitate reconciliation of the Account at the year end.



1.10.15 Current Liabilities (GL 6000 to 6599)

Liabilities are mainly classified in the balance sheet as sundry creditors, bills payable, other liabilities

and interest accrued but not due on unsecured loans. Sundry creditors (GL 6000 to 6099) are

having both debit link code (662500) and credit link code (680 500). The debit balances in the above

accounts will be automatically linked to other loans and advances (link code 662 500) in the balance

sheet. The sub ledger accounts are opened by the divisions for accounts payable purchases for

each party in alphabetical order. An Index Book of suppliers is maintained by the Divisions for

this purpose.

Separate GL accounts are opened by FEDO (GL 6020 to 6099) for major projects executed by them.

Sub ledgers for the above GL accounts and security deposit (GL 6106) are the alphabetical party’s

codes.

1.10.15.1 Salary Recovery

Different general ledger accounts are opened for various salary recoveries (GL 6200 to 6299).

Badge numbers of the employees are used as sub ledger codes for the above GL accounts. All the

above accounts are grouped under other liabilities (link code 681 000) in the balance sheet except

the following three accounts.

i. Rent - GL-6250 link code -763 525 (Rent and other sundry receipts)

ii. Meals ticket GL-6251 link code 765 544 (Workmen staff Welfare expenses) and

iii. CHS Contribution GL-6252 link code 765 544 (Workmen staff welfare expenses)

1.10.15.2 Unclaimed Amounts

General ledger accounts (GL 6350 to 6399) are opened for crediting unclaimed amounts such as

unclaimed wages and salaries, unpaid wages and salaries, unpaid bonus, unclaimed dividends and

other unpaid amounts. All the above accounts are having the common link code 681 000 and are

linked to other liabilities in the balance sheet.

1.10.15.3 Suspense (GL 6400 to 6499)

General Ledger accounts are opened for sales suspense, ESI suspense, Interest suspense, etc.

Provisional recovery from contractors, PF company contribution and ESI company contribution are

also included in the above group with common link code of 681000.

1.10.15.4 Miscellaneous Liabilities (GL 6500 to 6599)

GL number -6500 is used for crediting various outstanding charges payable at the year end. GL-6501

is used for crediting Income tax recovery from contractors. FEDO is crediting the unearned income

on contractors to GL 6502. Other GL accounts are opened for accounting audit fees payable,

material loan account, bonus payable, etc. All the above accounts are having the common link code

number 681000 and are linked to other liabilities. Interest accrued but not due on unsecured loan is

having a separate GL account No. 6590 with a link code of 681500.

1.10.16. Provisions (GL 6600 to 6690)

Provisions for gratuity, taxation and dividend are having separate GL accounts and link codes.

1.10.17 Miscellaneous Expenditure (GL-6700 to 6799)



Market development expenses, deferred revenue expenditure and other miscellaneous expenditure

which are to be written off in more than one year are booked under this group. This will appear in

the balance sheet under link code 700 500 as miscellaneous expenditure. The amount written off

during the year is booked under GL 6710 (link code 701 000) so that the same will appear as a

deduction in the balance sheet.

1.10.18 Subsidy (GL 7200 to 7249)

Various receipts under retention price scheme and subsidy received from Govt. are booked under

their group with common link code 762 000. The transfer for products transferred to other divisions

are booked under GL 7250 with link code 762200.

1.10.19 Income from contracts and other services (GL 7300 to 7399)

GL Number 7301 is used to book revenue on jobs done by FEDO and FEW for outside parties. GL

No. 7302 is used to account income from services rendered for outside parties. The above accounts

are having a common link code of 762500. Revenue earned on jobs executed/services rendered for

own units by FEDO & FEW are accounted at cost under GL No.7350 with link code 763000.

1.10.20 Other income (GL 7400 to 7499)

Other income is subdivided into various heads in the schedules to balance sheet such as income from

investment, rent and other sundry receipts, interest, profit on sale of assets etc. Individual GL

accounts and link codes are given for various heads. For miscellaneous income booked under GL

7424. Divisions will open individual SL accounts to classify the various expenses.

1.10.21 Purchase of finished goods (GL 7500 to 7599)

Various expenses for purchase of finished products are booked under this group by the Marketing

Division. These accounts have a common link code of 765000.

1.10.22 Raw materials consumed (GL 7600 to 7699)

On 1st April, each year the Raw material stock account will be debited with the opening balances

through the opening entries. At the close of the financial year ie. 31st March of each year the

balance in these accounts will be transferred to the debit of the profit & Loss Account (GL 7600, link

code 765502) through the schedule of materials consumed. The respective balances as per certified

inventories as at the close of financial year will be debited to the respective stock accounts and

credited to profit & Loss account (GL 7630 link code 765508) through the schedule of materials

consumed. Stock adjustments for any stock transfer or loan will be booked under GL 7620 with link

code 765506. Individual GL accounts are opened for various raw materials consumed. Through

stores schedule based on the MR’s raised, these accounts are debited for the different raw materials

consumed. The common link code for these accounts is 765510. At the close of financial year the

balance in the link code 765510 is nullified by transferring the same to raw materials purchase

account GL 7610 link code 765 504. Divisions have opened SL accounts for the various raw

materials consumed in order to facilitate cost accounting. The receipts of intermediate products

transferred from other units for consumption are booked under GL 7660 with link code 765512.

Productwise SL codes are given by the divisions for identification. GL 7670 is used for booking

operating supplies consumed and GL 7671 for catalysts consumed. These two accounts are having

common link code 765 514. GL 7680 and 7681 (link code 765516) are used for booking packing

materials consumed.

1.10.23 Power and Fuel (GL 7700 to 7704)

Consumption of power, furnace oil, LSHS, LPG and others are booked under this group. Separate



GL accounts are given for the above items with a common link code of 765518. The divisions have issued SL

accounts for each GL on the basis of cost centres.

1.10.24 Repairs & Maintenance

In the schedule for manufacturing and other expenditure the repairs & maintenance expenditures are

classified into three groups.

i) Repairs to Plant & machinery GL -7710 to 7729 link code 765520.

ii) Repairs to Roads & Buildings GL 7730 to 7739 link code 765522 and

iii) Repairs to service equipments, furniture etc. GL 7740 to 7749 link code 765524.

Divisions have to open SL accounts for further classification of above expenses. In most cases the

SL codes of fixed assets are used for this purpose also.

1.10.25 Rent etc. (GL 7750 to 7759)

Separate GL accounts and link codes are given for rent and hire, rates and taxes, insurance and

Excise duty. Division have given SL codes for insurance based on different categories of insurance

policies. While paying excise duty GL 7753 is debited and the same is credited while collecting the

excise duty through invoices. At the end of the financial year this account will show a debit balance

equivalent to the excise duty paid on stock held outside which will be transferred to GL 5326 as a

current asset falling under loans and advances in the balance sheet. Thus the excise duty account

(GL 7753) will show nil balance at the end of the financial year.

1.10.26 Factory General Charges (GL 7760 to 7799)

Various GL accounts are opened for expenditure falling under this category with a common link code

of 765534. For other factory general charges (GL 7799), divisions have opened various SL accounts

to further classify the expenses.

1.10.27 Salaries, wages, bonus and other staff welfare expenses

Individual GL accounts are given for different components of salaries and wages. The SL accounts

are given on the basis of various departments in each divisions. Salaries & Wages of workmen are

booked under GL 7800 to 7819. Managerial salary is booked under GL-7820 to 7839. Different

types of bonus to workmen are accounted from GL 7840 to 7849 and bonus to managers from GL

7850 to 7854. Company’s contribution to provident fund is booked from GL 7855 to 7859 and

gratuity from GL 7860 to 7864. For various types of workmen and staff welfare expenses, GL

accounts are opened from GL 7865 to 7899. Further details of GL accounts and link codes are given

in the Annexure-I.

1.10.28 Other expenses (GL 7900 to 7999)

In the schedule for manufacturing and other expenditures, following are displayed separately - freight

and handling, advertisement and sales promotion, bank charges, postage & telephone, printing &

stationary, traveling expenses, legal expenses, entertainment expenses, donation,bad debts written

off, provision for bad and doubtful debts, loss on asset sold/written off, damages/shortages of

products and other miscellaneous expenses. The audit fees are categorised into further sub-groups

viz. fee for audit, fee for audit expenses, fee for certification etc. For other general office expenses

(GL 7949) individual SL codes are opened by the divisions to further classify the expenses. Inter



divisional overheads are booked under GL 7990 and the cost of intermediate products transferred are booked

under GL 7993. At the time of year end while preparing the consolidated balance sheet the balances

in the above two accounts will get nullified. The allocated expenses are booked under GL 7991 and

the expenditure allocated to capital jobs are booked under GL 7992. Further details of GL accounts

and link codes are given in the Annexure-I.

1.10.29 Cost of materials and other direct charges on contracts (GL 8000 to 8399,

8410 to 8699)

Cost of materials and other direct charges on revenue jobs of FEDO and FEW are booked under this

group. Various GL accounts for different projects are opened for this purpose. The above GL

accounts are having a common link code of 766000. The expenses for consultancy services are

booked under GL 8299 with individual SL codes for each job.

1.10.30 Sundry Debtors (GL 8400 to 8409)

The GL accounts from 8400 to 8405 are having a common link code of 600000. At the time of year

end, a schedule is prepared for sundry debtors classifying the debtors into the following categories:-

i) Debts over six months - considered good:- Secured - link code 600500 Unsecured - link code 601000 ii) Debts considered bad/doubtful - link code 601500 Less provisions - link code 602000 iii) Other debts - considered good:- Secured - link code 602500 Unsecured - link code 603000 At the time of year end link entries are passed by transferring the debit balances in link code 600000

to various link codes mentioned above so that the classifications will be displayed in the schedule to

balance sheet as shown above. The credit balances in the above accounts will be transferred to

other liabilities through link code 681000.

1.10.31 Interest (GL 9000 to 9041)

Different GL accounts and link codes are opened for various types of interest payments such as

interest on fixed loans from Govt., interest on inter-corporate loans, interest allocated to capital

projects, interest on cash credit accounts etc.

1.10.32 Depreciation (GL 9050, link code 767000)

At the time of closing of accounts computer generates the Journal entries for depreciation from the

Asset Register on the basis of sub ledger codes given in the Asset Register.

1.10.33 Increase/decrease in stocks and work in progress (GL 9100, 9111)

On 1st April each year, the opening stock of finished goods (GL 9100) and opening balance of work-

in-progress (GL 9101) are debited with the opening balances through the opening entries. At the

close of the financial year ie. 31st March of each year, the closing stock of finished goods and work-

in-progress are valued. The inventories are debited with this value and credits are given to closing

stock of finished goods (GL 9110) and closing balance of work-in-progress (GL 9111). The net

difference between the opening stock and closing stock is taken to the profit and loss account as

increase/decrease in stock and work-in progress.



1.10.34 Adjustment in respect of prior years (GL 9200 link code 768500)

Prior period expenses/income are accounted in GL 9200. The respective GL codes of the

expenditure are used as the sub ledger codes in accounting the prior period expenses/income in the

GL 9200.

1.10.35 Sales Discount/Dealer margin (GL 9400 to 9499)

Separate GL accounts are opened for freight, commission, handling charges, cash rebate, quantity

rebate, dealer margin, prepaid rebate etc. The details of GL codes and link codes are given in the

Annexure-I.

1.10.36 Income from sales (GL 9800 - 9830)

Distinctive GL accounts are opened for sale of own products. The details of such GL codes with link

codes are given in the Annexure-I

1.11. ANNEXURES ATTACHED

a) Rates of Depreciation Annexure-6 b) Stores Ledger Annexure-7 c) Departments Asset Register Annexure-8 d) Depreciation Statement Annexure-9



CHAPTER-2

CASH & BANK ACCOUNTS 2.1. CASH AND BANK ACCOUNTS SECTION SHALL BE RESPONSIBLE FOR:-

(i) Receipt of cash, cheques, bank drafts and postal orders;

(ii) Payments by cash, cheques, bank drafts and letters of authority:

(iii) Handling of bank deposits/withdrawals, custody of cash and inter unit transfer of funds;

(iv) Maintenance of petty cash book, cash book and bank cash books;

(v) Reconciliation of bank accounts;

(vi) Security arrangement for cash handling;

(vii) Safe custody of valuable documents;

(viii) Cash imprests and

(ix) Any other duties assigned to cash section by the authorised officer of the company.

2.2. RECEIPT OF CASH, CHEQUES, BANK DRAFTS AND POSTAL ORDERS

2.2.1. The cash section alone would be authorised to serve as a counter for receiving money on behalf of the

corporation in accordance with the receipt vouchers prepared by the other sections. Money will be

accepted at the counter only if it is authorised for receipt by the authorised officer of the company. A

broad category of cash receipts will be by way of:-

(i) Tender deposits

(ii) Sale of tender forms and application forms

(iii) Sale of products

(iv) Sale of surplus stores

(v) Refund of advances taken by employees and

(vi) Other miscellaneous receipts.

All cash remittance are accompanied by a remittance challan in Form No.A.48.

All cheques/Drafts/postal orders received through post by the accounts or any other department

should be promptly forwarded to the cash section along with the covering letter after noting down the

details in a movement register. Cash section should detach the cheque etc. after acknowledging in

the movement register and pass on the covering memo to the concerned section for preparing the

receipt voucher and sending it to the cash section immediately or within 24 hours at the latest. The

cheque/draft/postal order received by the cash section should be entered in a register and cash

section should remit to the bank for collection on day to day basis through proper authority only on

receipt of the requisite voucher from the concerned section. All the cheques should be marked

“Account Payee”. Post dated cheques are kept separately and sent to the bank for collection only on



the due dates, after entering the details of such postdated cheques with date sent for collection in a subsidiary

register. Cheques, demand drafts etc. are sent for collection using forms A.26 and A.21.

2.2.2. For all money received on behalf of the company a cash receipt will be issued by the cashier to the

party tendering such money. The receipt will give the details of the remittances and the general

ledger/sub ledger head of account. The cash receipt duly initialled by the Cashier will be sent for

signature to the authorised officer of the company as per delegation of powers. This will be handed

over by the Cashier to the party duly stamped, wherever necessary. In the case of cheques, drafts

etc. the receipts duly signed and stamped will be sent by post to the concerned parties in window

envelopes indicating the address written legibly in the space provided for.

2.2.3. The receipt shall be in a printed form serially numbered, bound in books and arranged in sets of original

and duplicate. The original will be perforated and after preparation of receipt of the same shall be

handed over to the party tendering the money. The duplicate carbon copy shall be retained by the

cash section.

2.2.4. All blank receipt books shall be kept under lock and key and a register shall be maintained giving the

details of the blank receipt books and issue thereof from time to time. The receipt books when

printed shall be examined with reference to their serial numbers and defects found shall be noted in

the register. A suitable certificate of completeness of the receipt book with regard to serial numbers

shall be recorded on each receipt book with the signature of an authorised officer.

2.2.5. The spoiled and cancelled receipts shall not be used for a second time and shall be kept attached to the

duplicate along with the receipt book.

2.2.6. For administrative reasons, when specific authority is issued to other departments for handling petty

cash receipt such as sale of canteen coupons, usufructs etc. a proper procedure shall be introduced

to ensure that

(i) all receipts are promptly recorded

(ii) the cash received is deposited periodically within a reasonable time with cash section and

(iii) cash balance is not retained with other departments beyond prescribed limits.

2.3. PAYMENT BY CASH, CHEQUES, BANK DRAFTS AND LETTERS OF AUTHORITY

2.3.1. Cash payments are usually made only in the following cases:-

(i) Travel advances to staff and officers

(ii) Miscellaneous advances for local purchases etc.

(iii) Settlement of TA and Medical bills and other claims.

(iv) Short payment of salary

(v) Remittance of cash to bank

(vi) Recoupment of imprest to imprest holders.

2.3.2. All payments shall be made only on the basis of payment vouchers prepared by different accounting

sections and passed for payment by competent authority in accordance with the delegation of

powers.



2.3.3. No payment vouchers shall be prepared by the cash section except for bank charges, bank interest,

revenue stamp, amount drawn from bank for use and inter-transfer of funds. While responding for

bank interest, the interest calculations shall be checked.

2.3.4. Payment shall be made only to the person named as payee in the voucher or to any person who is

holding proper authority in writing to receive such payment on behalf of the said payee. Identification

by executing department for outside parties can be accepted if such identification is made by

competent authority.

2.3.5. While preparing the vouchers, the following points are ensured:-

(i) The payment involved is sanctioned by authorities competent to sanction the expenditure or pay

money or incur liabilities on behalf of the Company.

(ii) The accuracy of the claims is checked with reference to the supporting records.

(iii) Unusual items included in the claims are investigated.

(iv) The amounts are correctly charged to the various heads of accounts indicating the general ledger

account numbers and sub-ledger account numbers.

(v) The entries are made in the subsidiary registers in respect of travel advances, suspense payments

etc. and reference noted in the cash voucher. The payment is also noted in the registers.

(vi) Complete narration of the payment involved is given in all cash vouchers.

2.3.6. Payments will be made by the Cashier on proper identification, after getting the vouchers duly

acknowledged by the payees/recipient. Where payment is made to a person other than the payee

indicated in the cash voucher, it is ensured that

(i) payment on the basis of the authorisation letter is approved by competent authority.

(ii) a discharge from the first payee is available.

2.3.7. The paid vouchers will be defaced by affixing a rubber stamp as given below indicating the date of

payment.

“Paid by cash Date”

The cashier also indicates on every voucher the serial number of the voucher paid.

2.3.8. No cash payment will be made to a corporate or partnership firm unless the person concerned holds

a proper “Power of Attorney registered in our books.

2.3.9. Payment to suppliers/contractors etc. shall be made only by means of Account Payee Cheques. No

payment shall be made by means of bearer cheques. Ordinarily crossed/order cheques can be

issued on specific request at the discretion of the concerned authority provided advance receipts are

obtained from the party and identification is available. Payments exceeding Rs.20,000/- shall be

made by crossed cheques or demand drafts as provided under Section 40-A (3) of the Income Tax

Act 1961. Since payments in excess of Rs.20,000/- by cash would entail loss to the company in the

form of Income Tax on such disallowances, all are advised to strictly adhere to these instructions and



also advised not to make any payments in cash above Rs.20,000/-. These instructions are also applicable to

payment of travel and other allowances to employees, LTC advance/claims, salary and leave

encashment payments, arrears of salary, medical reimbursement etc. Hence such payments are also

to be made by Crossed Cheques/DDs. However, payment in cash can be made to Government

under the rules framed by it if such payments are required to be made in legal tender.

2.3.10. Postdated cheques are not to be issued.

2.3.11 While preparing the cheques the same shall be written with a reverse carbon placed below the cheque-

leaf in order to safeguard from subsequent alterations in the Cheque by any unscrupulous persons.

2.3.12. Cheques prepared together with the supporting vouchers are sent to the authorised officer for

verification. After verification, the officer concerned will initial the cheque counterfoil in token of

having verified the correctness of the payment and send the cheque to the signatories authorised to

sign the cheques for their signature. Cheques are issued in joint-signatures only. The signatories

should ensure that:-

(i) the supporting payment vouchers have been duly passed by the competent authority.

(ii) the name of the payees and the amount of cheques tally with the particulars given in the relevant

vouchers and

(iii) the particulars in the cheque counterfoils are properly filled in and the counterfoils are initialled by the

originator, verifying officer and the officers signing the cheques. The payment vouchers should also

be initialled by the officers signing the cheques and also ensure that the cheque numbers are

entered in the payment vouchers.

2.3.13. A cheque issue statement and a forwarding memo is prepared along with bank voucher for the

cheques issued on a day to day basis. All cheques to be forwarded to the parties shall be sent by

registered post along with the forwarding letter and they will be asked to furnish official receipts. For

issue of cheques direct to the parties, an acknowledgement is obtained in the statement of cheque

issued on a day to day basis.

2.3.14. After despatch/issue of the cheques, the payment voucher shall be defaced by means of a ‘paid’ stamp

and will be passed on to the concerned assistant for entry in the Bank payment book.

2.3.15. All paid vouchers duly numbered shall be arranged serially and preserved in files in accordance with

the procedure prescribed by the Finance Manager. These vouchers shall be retained till the annual

audit is over after which they shall be transferred to the record section.

2.3.16. In respect of salary payments, the employees are paid in cash in pay packets as per Factories Act.

However in the case of officers it should be made almost mandatory, that their salary would be paid

only through bank rather than in cash. If a particular officer wants to draw his salary in cash in a

particular month, then the head of the department, after taking into consideration the circumstances

under which the salary is desired to be obtained in cash, may authorise such payment in cash rather

than through bank.

2.3.17. Cash payments for salary shall be made at the payroll department counter or at any other location

decided by the Management. Salary to each individual employee will be disbursed only after proper

identification.

2.3.18. In respect of salary payments by cash or cheque acknowledgement from the employees shall be

obtained in the prescribed form.

2.3.19. All blank cheque books shall be kept in proper custody under lock and key and a register containing



the details of receipts and issues shall be maintained. Blank cheques should not be signed in advance and kept.

2.4. CUSTODY OF CASH AND BANK WITHDRAWALS/DEPOSITS

2.4.1. Cash shall be kept in a cash safe or safe vault properly fixed in the floor on the wall in the strong room

under double lock having duplicate set of keys. Out of the two sets of the five keys of the strong

room, one set is sealed and deposited in the State Bank of India, Cochin. Three keys of the other

set remains with the Cashier and balance 2 keys remain under the custody of an Accounts

Officer/Asst.Finance Manager. If original keys of the cash safe are lost, arrangements shall be made

for the replacement of its lock and obtaining fresh set of keys with the approval of the competent

authority.

2.4.2. The cash box is kept in the safe room by the Cashier. The cash safe shall be utilised only for the

purpose of keeping the cash of the corporation and no private cash or cash of the employees shall

be mixed with the cash of the corporation.

2.4.3. Keeping in view of the normal requirement of cash, maximum permissible limits of cash to be kept in the

safe shall be prescribed by the Finance Manager and the amount of cash in safe shall not exceed

such permissible limits except due to special requirements duly approved by the Finance Manager.

If at any time the cash is found in excess of the permissible limits, the same shall be deposited in the

bank immediately. This would however, not apply to the requirement of cash during the period of

disbursement of salaries when heavy cash balance is required.

2.4.4. In addition to the cash security deposit, the Cashier is also covered by a Fidelity Guarantee

Insurance, the amount of coverage being determined by the Management from time to time.

2.4.5. Money orders received are entered in a register and passed on to the Cashier who will initial the register

for having received the money and issue receipts.

2.4.6. If any shortage/excess is noticed while verifying cash at the end of the day, by the Cashier it is

reported to the officer in charge immediately.

2.4.7. The fund requirements shall be planned in such a manner that the drawals do not exceed the permissible

cash credit limits at any time. The cash credit balance position shall be intimated to Finance

Manager or the person concerned on a daily basis to enable him to plan timely transfer of funds. If

at any time the cash credit account runs into a positive balance, immediate action shall be taken to

transfer surplus funds to Head Office. Telegraphic transfer shall be made with specific instructions to

the bank to credit the amount on a particular date to the transferee, ie. Head Office or Divisions.

2.4.8. All incoming cheques, demand drafts and postal orders shall be deposited in the bank on the same

or the next working day. Any delay in such deposit shall have to be duly approved by the authorised

officer.

2.4.9. A register of cheques/demand drafts received and deposited in the bank shall be maintained giving

such details as may be prescribed. All pay-in-slips will be preserved in serial order.

2.4.10. The cash section shall also keep a stock of revenue stamp to meet their day-to-day requirements.

The stock of such revenue stamps shall form part of cash.

2.5. MAINTENANCE OF CASH BOOKS AND BANK CASH BOOKS

2.5.1. Separate cash books shall be maintained for recording bank and cash transactions where volume of

transactions warrant such action. Cash book is maintained for recording receipts and payments, the

left hand side being used as receipts side and right hand side as payment side. Columns are



provided to indicate Receipt No., Payment Voucher No., Date, Particulars of amount received, paid etc. The

cash book is written up daily in ink and all the receipts and payment vouchers are entered serially.

Every entry in the cash book on the receipt side shall be supported by duplicate copy of the receipts

except cash drawn from bank for use, adjustment of bank advices etc. and on the payment side by

paid vouchers. The cash book is totalled and balanced daily. The cash balance at the end of the

day as indicated in the cash book is tallied with the cash balance book separately maintained and

initialled by the Cashier and verifying officer. In addition the summary of cash containing the details

of the notes of various denominations shall also be written at the close of every day’s transactions.

Soiled and torn notes if any have to be promptly exchanged from the bank/Reserve Bank of India.

Stamps, hundies, stamp papers not currently required should also be got exchanged into cash.

2.5.2. Cash balances are to be verified by an Officer not below the grade of Ass. Manager once in a calendar

month and a report in the prescribed form is to be sent to Finance Manager.

2.5.3. Separate books are maintained for recording receipts and payments of cheques, demand drafts etc.

Columnar bank receipt book is maintained which facilitates availability of separate figures for each

bank account. All receipts are entered serially giving receipt No. amount and other details on a day

to day basis. The book is totalled daily.

2.5.4. All cash and cheques received shall be entered in the respective cash books on the same day on the

basis of receipt vouchers.

2.5.5. Cash book and bank cash book shall be checked by the Officer-in-charge of the cash section every day

with reference to payment/receipt vouchers, counterfoils of cheques issued, receipts during the

course of the day to ensure that all transactions of the day have been fully and properly recorded.

2.5.6. The correctness of the amount put in the cash chest shall be the responsibility of the Cashier and the

concerned officer in charge. The officer shall conduct a verification of cash daily and a note of such

verification shall be recorded in the cash book. In addition to this Finance Manager may arrange for

surprise verification of cash, at least once in a month by an officer other than the official entrusted

with the handling of cash.

2.6. RECONCILIATION OF BANK ACCOUNTS

2.6.1. Arrangement shall be made with the bank for periodical submission of bank statements during the month

so that the work regarding reconciliation of bank account is spread over during the month.

2.6.2. The bank reconciliation statement shall be prepared immediately on receipt of the ledgers and journals

from the Computer Service Centre and statement of account from the banks every month, and action

shall be taken on outstanding amounts.

2.6.3. Some of the aspects to be closely watched while reconciling the bank accounts are the following:-

(i) Mistakes, wrong credits/debits, omission, wrong totalling, balancing etc. are to be taken up with the

bank concerned by means of a detailed letter and corrections got done.

(ii) Close follow up is to be done with the bank for credit of outstation cheques etc. within a reasonable

time and any unusual delay must be taken up with the bank.

(iii) The charges levied by bank towards interest, commission on outstation cheques, discounting, L/C

and B/G etc. are to be verified and their correctness satisfied.

(iv) The date of credit subsequently of cheques deposited and not credited as at the end of the month

and the date of payment of cheques issued but not presented have to be watched and entered in the



bank reconciliation statement.

(v) Cheques issued but not presented for payment even after 6 months of date of issue become stale.

Entries have to be made for reversing such cheques under intimation to bank. Fresh cheques can

be issued only against return of old cheques/against indemnity bond, after getting confirmation that

the cheque has not been paid and countermanding the same.

(vi) Deposit of cash is to be credited by bank on the same day. Withdrawal of cash shown in the bank

statement is to be entered in the cash book on the same day. Any delay has to be investigated.

(vii) It is to be checked whether the bank is following the standing instructions like, daily transfer of

collections to HO, retaining of overdraft limit etc. variations, if any, taken up with bank and rectified.

2.6.4. The differences between the bank cash book and the bank’s statement may be reconciled by the

following steps:-

(i) Compare the debits appearing in the bank statement for payments of cheques firstly with the list of

outstanding cheques on the prior months’ reconciliation statement and secondly with the entries for

cheques issued in the bank cash book for the month being reconciled.

(ii) Compare the debits appearing in the bank statement for bank charges with the entries in the bank

cash book for bank charges. Bank cash book shall be credited with the amount of bank charges

debited by the bank in the bank statement but not yet accounted in the bank cash book on the credit

side.

(iii) Prepare a list of outstanding cheques, which were outstanding at the end of last month and have not

still been presented to the bank for payment and cheques issued during the month but not presented

for payment till the end of the month being reconciled.

(iv) Check cheques issued have been noted in the bank cash book in serial order.

(v) Trace credits in the bank statement for any deposits of drafts, cheques etc firstly with the previous

months’ reconciliation statement for any cheques, drafts etc. deposited in the current month.

(vi) Total the amount of cheques, drafts etc. deposited but not yet credited till the end of the month being

reconciled.

(vii) Total the amount of any deposits credited by the bank but not yet credited in the bank cash book.

2.6.5. The bank reconciliation is to be done by a person other than the employee maintaining the bank books

and is to be counter checked by the officer in charge once in a month, as an internal control

measure.

2.7. SECURITY ARRANGEMENT FOR CASH HANDLING

2.7.1. Insurance cover shall be obtained for adequate amount for the cash-in-safe and cash-in-transit.

2.7.2. In receipt of persons who are entrusted with the work of handling cash, fidelity insurance cover may

be obtained. The insurance is fixed on the basis of expected cash receipt and the cash balance to

be handled by the particular person. In the event of shortage of cash due to suspected infidelity of

our employee, it is necessary to register a formal complaint with the police immediately as it is a pre-

requisite of admitting of our claim by the insurance company.



2.7.3. All movements of cash between the bank and the company’s office or for other places shall be kept

secret. Wherever it is felt that the cash in transit is quite heavy, the cash movement shall be

undertaken with the escort of security guards or armed police guards as the case may be.

2.7.4. On such occasions when the cash-in-safe is quite heavy, arrangement shall be made to post security

guards outside the safe vault during and after office hours.

2.7.5. In case cash payments/receipts are required to be handled at any place other than the cash room

counter, such place should be safe, well protected and secure.

2.8. SAFE CUSTODY OF VALUABLE DOCUMENTS

2.8.1. All securities and documents regarding investments of the corporation shall be kept in safe custody

with the cash section. Regarding securities, a register shall be maintained giving such particulars as

may be prescribed by the Finance Manager.

2.8.2. In addition, any other important documents or articles as may be approved by the Finance Manager

shall also be kept in the safe custody of the cash section. A separate register for such safe custody

of documents or articles shall be kept and release of documents/articles shall be authorised by the

officer in charge and acknowledgement shall be obtained from the recipients.

2.9. CASH IMPREST

2.9.1. Petty cash imprests can be operated if approved by the competent authority. In such cases limits of

imprests shall be fixed and at the end of the month or earlier when the cash is exhausted imprest

recoupment shall be provided. A petty cash book in such cases shall be maintained and before the

imprest recoupment is made available, the petty cash book shall be checked with reference to the

accounting entries and physical cash available under imprest.

2.9.2. The important advantages of the system are:-

(i) The general cash book and the Chief Cashier are relieved of small cash disbursements.

(ii) The risk of error is reduced as with small petty cash balance in hand there is less opportunity for

fraud, provided proper supervision is exercised, and the disbursements are checked with vouchers

when expenditure is reimbursed and the petty cash is balanced, ruled of and initialed at this point.

(iii) By checking and comparing the periodical petty cash expenses under different heads, extravagance

or unusual heavy expenditure is revealed.

2.9.3. Even when all cash receipts are banked intact and all payments are made by cheques, it is necessary to

keep a small amount of cash in the office to meet petty payments such as coolie charges, cartage,

postage, telegrams etc. which have to be paid in cash on the spot. Cash in the office is also to be

kept to meet such other expenses which are too small to be paid by cheques.

2.9.4. The imprest holder renders accounts of his disbursements from time to time. When a summary of petty

expenses is submitted by him, an entry is passed debiting the various heads of nominal accounts

and crediting the imprest account. The imprest account in the ledger will show on the debit side the

amounts received for the imprest cash from time to time, and on the credit side the totals of the

summaries of expenses paid by him from time to time and the balance is carried forward as the

imprest balance in hand.



CHAPTER-3

PERSONNEL ACCOUNTS 3.1 INTRODUCTION

Personnel accounts relate to the gross and net liabilities of the employer to employees and liabilities

for various deductions from employees gross earnings. This chapter deals with the important

functions of the Pay Roll section of the Finance & Accounts Department.

3.1.1 Functions of payroll - Broad classification

The functions of the payroll section can be divided broadly into the following:-

a. Preparation and disbursement of Salaries and wages to Managerial and Non-managerial employees.

b. Effect various recoveries through Payroll and remit the same to the concerned agencies.

c. Processing of various personal payments, advances etc.

d. Keep books of accounts and records for the above transactions.

3.1.2 Duties of Payroll in brief

The Payroll section keeps necessary records and prepares the input documents to Computer Service

Centre for the preparation of the payroll every month. It also disburses the salary, personal

payments, advances etc. and arranges recovery of advances and maintains records of such

disbursements and recoveries. In the case of field staff, the payroll section advises the concerned

field office for disbursement of salary/advances through net pay list and keep track of such

disbursements, recoveries etc. It also attends to statutory requirements under Payment of wages

Act, ESI, Income Tax etc. and the dues are recovered and remitted to the authorities concerned.

Settlement of account of employees on retirement, resignation etc. calculation of gratuity, payment of

family pension, bonus, attendance bonus, production incentive, LTE etc. and keeping necessary

records thereof are the other duties of the section.

3.2 PAYROLL - PREPARATION AND DISBURSEMENT

The preparation and disbursement of salaries and wages to managerial employees and non-

managerial employees are done by the payroll section attached to each division.

3.2.1 For employees covered by the time office, the time office shall intimate the attendance particulars for

each employee giving details such as name of the employee, reference number,number of regular

days, overtime hours, details of leave and off etc. For employees not covered by time office, similar

particulars shall be sent under certificate by the departmental heads concerned. For officers also the

details as are applicable shall be furnished by the departmental heads.

The leave rules for non-managerial personnel is given in Annexure-10 and Managerial personnel is

given in Annexure-11. The House Rent Allowance Rules and CCA are given in Annexure-13.

3.2.2 Punch clock card system

The system adopted for monthly rated employee for payment of salary in some of the divisions is the

punch clock card system. A specimen of the punch clock card is given in Annexure No.14. The

punch clock card contain information like Department, month, Code No., Badge No. and Name of the



employee. The cards are arranged in different racks based on the Department Code. On one side of the clock

there is an ‘IN’ Board and on the other an ‘OUT’ Board. The employee on entering the factory takes

out the card from the ‘OUT’ Board and punches the card by inserting it in the slot of the clock and

puts it on the ‘IN’ Board.

The card contains ‘IN’ and ‘OUT’ columns against each day, starting from 22nd and ending on the

21st. The attendance period for both payment of salary and overtime should be upto 21st from the

22nd of the previous month for non managerial and end of the month for Managerial employees.

3.2.3 Punching

The employee on entering the factory takes out the card from the ‘OUT’ Board and punches the card

by inserting it in the slot of the clock and places it in the appropriate rack of the ‘IN’ Board. Similarly

when the employee goes out of the factory he picks up the card from the ‘IN’ Board, punches and

place it in ‘OUT’ Board. Thus one may know the time for which he has worked inside the factory by

analysing the punching times.

3.2.4 Card transfer

On the 21st of every month the cards for the non managerial employees are taken out from the rack

by the time office and handed over to payroll department.

3.2.5 Work on card

All relevant information received at Pay roll Department in respect of each employee has to be posted

on the Punch cards. The information is consolidated and displayed in the appropriate column

provided on the card for use by the CSC in printing out the salary statement. The entries to be made

are mentioned below:

3.2.5.1 Late noting

As per the prevailing rules no employee is allowed to enter the Company after 15 minutes from the

time at which his duty is scheduled to start, unless he gets the consent of the Head of the

Department concerned. Normally a grace time of 4 minutes is allowed for punching in and the

employee will be treated as ‘late’ after 4 minutes. Late punching is allowed 3 times in a month.

Appropriate deduction will be made from the salary for any ‘late’ arrival exceeding the admissible

limits as explained above.

3.2.5.2 Short Leave

Short leave is granted to an employee who leaves the factory before the end of his scheduled working

time. The period of short leave is ascertained based on the Gate pass issued by the authorised

officers. The Gate pass will contain the time ‘Out’ and time ‘in’ and the difference of which will be the

period of short leave. The short leave if any, will be posted in the cards against the respective days

and the total of such short leave will be posted in the appropriate column in the Punch card. This

information will used by the CSC for processing the salary. Muslim employees are permitted to go to

Mosque during interval and the time out and time in noted in the register. The time taken in excess

of interval time is treated as Short leave.

3.2.5.3 Overtime



An employee can claim payment for overtime hours worked over and above the normal working

hours, only if prior authorisation is obtained from the appropriate authority. A specimen of the O.T.

Authorisation is given in Annexure No.14. The overtime authorisation approved by the Head of the

Department should reach the time office before actual engagement of employee on overtime begins.

The actual overtime hours worked should be noted on the card against the date, and such time will

be limited to the time approved in the O.T. Authorisation.

3.2.5.4 Off Days

Based on the shift schedule the probable ‘OFF’ days are noted on the time cards in advance. The

‘OFF’ days may sometimes change based on the specific instruction of the Department heads

concerned. In such cases the change in the ‘OFF’ days is also noted on the card. Compensatory off

duly approved is also posted on the cards and necessary entries are made in the leave register.

Compensatory off should be availed within 2 months of its eligibility. Compensatory off for working in

public holiday can be availed at any time within the leave year except for December. 25 which can

be availed before 31st of January of the next leave year.

3.2.5.5 Leave

A leave register is maintained by the payroll section. A specimen page of the leave register is given

in Annexure No.14. The leave register is maintained in the serial order of the Badge Numbers of

employees in each department. Leave applications, properly authorised, received from various

departments are to be arranged in the order of the badge numbers of employees. These leave

forms are then serially numbered and posted in the leave register. There will be no punching in the

card against the days on which the employee is on leave. Eligible and properly approved leave will

be posted against the blank space in the time card, as described above, by the pay roll section.

3.2.5.6 Accident leave

Accident leave is granted to an employee who becomes disabled because of an accident while on

duty. Accident leave with full pay will only be granted to employees who are covered by the

Contributory Health Scheme. Duly approved accident leave will be treated as duty days for all the

purposes of payment of Bonus and attendance Bonus. Accident leave should also be posted on this

cards by pay roll section.

3.2.5.7 Consolidation

The matters endorsed in the Card as described under 3.2.5.1 to 3.2.5.6 are analysed and

consolidated. The consolidated information is then posted in the appropriate column on the back

side of the cards for further use at CSC. A specimen of this format is given in Annexure No-14. The

format has separate columns for Regular days, P.L, C.L, OFF, C.OFF, M.L., P.H., N.S, D.S, E.S.,

OT, Short leave, Short leave bonus, C.M.L., E.S.I etc. where-in the pay roll section enters the

consolidated information derived from the monthly punch time cards. These are then sent to CSC

before the closing time on the 25th of every month.

3.2.6 Computerised Attendance Rcording System

New electronic system has been developed for recording the attendance of the employees instead of

the manually operated system. In this, the punching clocks are replaced by Electronic Badge

Readers and plastic ‘one time’ cards in the place of punch time cards. The badge readers are

connected to the terminals in which the data is recorded/stored before being transferred to host

computer. The terminals are connected to the concentrator which in turn transfers the data to the

computer. The entire system is backed up with a Battery to safeguard failure in electric supply.



The operation of the system is simple. As soon as the plastic cards are inserted, the data recorded

are displayed on the badge reader, such as badge number and time. A “beep” sound also is heard

which confirms that the data is accepted by the badge reader. The information is stored in the

terminal which is passed to the computer through the concentrator.

The system can give daily report on attendance, Absentee lists etc. apart from monthly reports like

attendance register, leave reports, overtime reports, No. of late arrivals etc.

3.2.6.1 Preparation of Data for payroll

The computerised Attendance Recording system has been installed in Udyogamandal, Petrochemical

Division, FEDO, Cochin Division and FEW. The system is under implementation in other Divisions.

By the introduction of the total system, the manual card work is completely avoided. The ‘IN’ and

‘OUT’ time of each employee based on punching is recorded in the monthly attendance file in the

computer. The deduction of time for late coming is automatically worked out by the computer.

Additional data such as leave particulars, short leave details, authorised overtime details etc. have to

be entered in the computer by the payroll staff. The shift schedule of the employees are entered into

the computer master file and the same is updated whenever the shift schedule of the employee is

changed. The computer compares the actual overtime worked and the overtime authorised and the

computer accepts the lower of these, for the purpose of computation of overtime. The processing of

the data for payroll is done after the close of the payroll period ie. 21st of the month. The computer

prepares the consolidation of the data instead of manually as mentioned in para 3.2.5.7 above. This

data is transferred to computer centre for preparation of payroll either through floppy or online.

3.2.7 Preparation/Updating Master Files

For preparation and updating of Master files in respect of each employee, the following information

has to be sent to the CSC by the pay roll section in specified format.

3.2.7.1 New Appointments

Details regarding Basic pay, D.A., and other allowances in respect of newly appointed employees are

to be furnished to the CSC in Format No.60, No.61, No.62 and No.63 (See Annexure-14) before

the 15th of every month. The format is designed to include department code and badge number of

each newly appointed employees.

3.2.7.2 Rate Change Due to Annual Increments and Promotions

Advises for Rate change on account of increments or promotions will be sent by the Personnel

Department. These advises are verified with the last drawn salary statement of the employee

concerned and passed on to the CSC in format No.61 before the 15th of every month. Similarly any

change in the code number of the department because of transfer or promotion is also informed

through format No.60 by the 15th.

3.2.7.3 Short/excess payments

At times there may be short/excess payments on account of some change/variation in the rates of

pay. The excess/short payment is verified with the pay roll and the variation is advised to the CSC in

Format No.83 on 20th of every month for further recovery/payment. The resultant effect of

short/excess payment is quantified in terms of contribution to ESI/PF and entered in the above

format for necessary recovery/payment etc.

3.2.7.4 In case of Retirement, Resignation etc.



When an employee resigns, retires or dies, or leaves the services of the company on deputation

timely information has to be forwarded to the CSC. This is done before the 15th of every subsequent

month, in Format No.60. The format has different codes for identifying different ways of vacation of

office.

3.2.7.5 Cumulative Earnings

There are certain other personnel payments other than those included and paid through pay roll. The

cumulative earnings in respect of each employee as on a particular month starting from the

beginning of the financial year can be ascertained only if the CSC is informed in time of payments

made directly through Cash vouchers or bank payments. These cumulative earnings information is

essential, especially when the taxable salary has to be computed for the purpose of deduction of

income tax at source. This information is given to CSC in Format No.72 before every 15th of the

month. Such direct payments are mainly on account of encashment of earned leave, interest

subsidy and similar other payments.

3.2.7.6 Advice of leave & attendance

Sometimes there may be some delay in getting the approval for leave or informing the nature of leave

to the Pay roll section concerned. Consequently, against such days of leave when there is no

punching of time, the endorsement of leave cannot be made at the time of consolidating the

information on the card for preparation of the pay roll. When the decision on such leave comes, the

Pay roll section effects supplementary direct payments. Also if some mistake occurs in card work

supplementary payments may have to be made. The CSC is informed of their supplementary

payments in format No.82

3.2.7.7 CSC Advises

The summary of various advises relating to employees personnel data, salary data, employment

service data, fringe benefits, welfare assistance etc. advised to CSC for either payment or recovery,

prepared and sent to the Computer Service Centre from the Payroll are given below. Due dates for

sending advises to CSC are on 10th for PB updation, 15th of every month for all other advises like

rate change, promotion, group change, and that of short payment and excess payments is on 20th of

every month. Following are some of the important formats used in Payroll, the specimen of which

are given in Annexure-14.

Formats:

60. New appointment/Retirement/Transfer

61. Pay rate, (Basic, PP,PPP, DA, FDA)

62. Allowances

63. Miscellaneous Benefits/Recoveries

67. Salary through Bank, LTE, ESI, CHS

68. Recoveries of recurring nature



69. LTE details and Bank

71. Cumulative leave details

72. Earnings - Yearly

74. Actual Direct remittance (for Income Tax full exemption)

75. Actual direct remittance (Income Tax Section-88 rebate)

82. Monthly supplementary attendance

83. Short/excess payment

84. Fixed deduction data

85. Variable deductions

3.2.8 Salary Statement - Pay Slip

Based on the information given in consolidated term through time cards and various advises in

different format described earlier, and including the advise for fixed and variable deduction which will

be dealt with separately, CSC process the salary statement/pay slip in duplicate (See Annexure

No.14). The salary statement will be given to the pay roll section 2 to 3 days before the due date for

disbursement of salary.

3.2.8.1 Gross Earnings, Deductions & Net Earnings

The salary statement contains the following information.

A. Period of payments - month & year.

B. Name of employee, Unit code, Department Code and Badge Number.

C. Rate of Pay, DA, HRA, CCA and special allowances.

D. Attendance, Regular days present, leave days, off days, holiday, number of night shifts, short leave

taken and calculation of weeks for ESI Contribution.

E. Gross earnings column which comprises calculated amount for regular days present, leave days, off

days, overtime payments, special allowances, night shift allowances and any short payment for

previous month.

F. Deduction & Recoveries:

All deduction like PF, PF loan , Insurance, CTD, various advances, Car/Scooter loan, Bonus

advances, ESI arrears, Meals tickets, personal debits, petrol, Hospital, Telephones, rent for quarter,

co-operative society and excess payments of previous month will be recovered from gross pay to

arrive at net pay.

3.2.8.2 Details of Provident Fund

Opening balances, current contribution, closing balance, Interest, Total etc. in respect of Provident

Fund will be shown separately. Details of PF loan and interest thereon will also be shown. The

details of Badge No. and % of PF contribution is informed in Format No.63 for those employees who



are in the rolls of the Company.

3.2.8.3 Income Tax

For the purpose of calculation of income tax to be deducted at source from salary income, certain

details like gross salary for the full financial year, standard deduction, section 88 deduction and HRA

rebate are shown separately. Taxable income, tax already deducted and tax to be deducted will also

be computed and shown separately.

3.2.9 Cover Filling and Disbursement of Salary

The salary statement is received in duplicate separated by perforation. One copy of salary statement

put inside the pay covers along with net salary payable to the employee as per salary statement.

The covers are filled and kept ready for disbursement.

3.2.9.1 Disbursement of Salary

The salary covers are disbursed to the employees on the last working day of every month. The salary

covers will be kept separately for disbursement upto 6 days from the 1st day of disbursement. The

unclaimed salary on the 6th day is to be given back to the Cashier. A register is also maintained to

record the unpaid salary. Further disbursement of salary is made in cash through separate cash

voucher, after making necessary notings in the Register opened for unpaid salary. Any unpaid

salary outstanding for 3 years will be transferred to the Welfare fund.

3.3 RECOVERIES THROUGH PAY ROLL

The recoveries through payroll are categorised into 3 types such as Fixed, Loan and variable. The

loan recoveries are also treated as fixed deduction. Different code numbers are given for each type

of deduction. The details of various categories of deductions with code no. and description are given

in the Annexure-15

3.3.1 Fixed Deductions

Depending on the nature of deduction, the advice for fixed deductions are given to CSC in Format -

84. The CSC makes appropriate deduction from the employees salary through salary statement.

The total of such recoveries under each category will be given as a print-out under the caption

Consolidated Earnings and Deduction Statement. CSC also gives the detailed list of recoveries

made under each head containing particulars like type code, Badge No., deduction amount, No. of

installments, completed installments and balance outstanding, etc. Necessary entries for recovery of

the advances are passed by CSC.

3.3.2 The details of major fixed and variable deductions are given below:

3.3.2.1 Life Insurance Premium

Deduction on account of Life Insurance premium under salary savings scheme shall be made on the

basis of intimation received from LIC. The LIC will send monthly advises of all changes. The details

regarding deduction is sent to CSC in Format No.84.

3.3.2.2 Recurring Deposit

On the basis of the application along with the authorisation to recover the amount duly filled by the

employees the quantum and period of deduction to be made are informed to the CSC in Format



No.84. The details of recoveries are received from the CSC and the payment is made accordingly to the post

office. The CSC for each subsequent months gives details of these fixed recoveries. The statement

of deduction in quadruplicate, along with the pass book is sent to the post office. 3 copies of the

statement along with the pass book are returned to us after putting necessary endorsement. A

collection charge of 2.5% of the total amount remitted to post office is given to the company of which

1.5% is distributed among the pay roll staff and the balance 1% is transferred to Welfare Fund

Account.

3.3.2.3 Provident Fund Loan

Loan amount is supposed to be remitted back in 12 or 24 or 36 instalments with the ruling interest

rate. Hence the amount that is to be deducted monthly is informed to CSC for deduction by the PF

section.

3.3.2.4 Festival Advances

The following are the main type of advances given to the employees.

i) Onam advance - Rs.1000/- to Rs.1500/- recoverable in 10 equal monthly installments

ii) Salary advance - Advance salary for the month recoverable in full from the salary of the

subsequent month will be given to employees attached to school in

certain circumstances.

iii) Vishu advance - Rs. 300/- recoverable in 5 equal monthly installments.

iv) School advance - @1/2 months Basic + D.A. + Special pay recoverable in 10 installments.

v) Ramzan advance - Rs.300/- recoverable in 5 equal monthly installments.

vi) Christmas advance - Rs. 300/- recoverable in 5 equal monthly installments.

vii) Employees Bonus advance and special advance are also given depending on the

rules/regulations of the company.

3.3.2.5 Conveyance Loan

Employees are eligible to avail conveyance loan for the purchase of scooter, motor cycle, moped etc.

based on their period of service, subject to the magnitude of the amount provided in the budget. The

Welfare Department gives the allocation of each year indicating the eligible employees out of the

applicants for availing the conveyance loan. The advance/loan is granted to the employees after

assessing their repayment capacity also. Detailed Conveyance Loan Rules are given in Annexure

No.12

The following documents are to be executed by the employee who is availing the loan.

A. A promissory note in prescribed form for the full amount of loan.

B. Agreement ‘B’ in stamp paper of Rs.50/- containing important terms and conditions.

C. Security bond to be executed in stamp paper of value of Rs.100/-.



After scrutinising the records and various documents submitted by the employee, the eligible

employee is given the advance. The employee has to purchase the vehicle of the stipulated

specification within 30 days of the issue of advance. After the purchase of the vehicle the employee

has to comply with the following formalities.

A. Execute Agreement ‘C’ for hypothecation of the vehicle in stamp paper of value Rs.50/-

B. Sale letter has to be handed over to the company.

C. R.C. Book incorporating the hypothecation in favour of the company has to be shown to the

concerned officer of the company.

D. Take a comprehensive insurance policy for the value of the vehicle.

The amount of loan will be recovered in instalments from the salary of the employee as per rules.

After recovery of the loan amount, the interest accumulated will be recovered from the salary of the

loanee on instalment basis not exceeding the loan instalment amount.

The officers concerned should have to see that all the above formalities are complied in full. He must

also maintain a register showing the required particulars and initiate timely follow-up in future. A

specimen of the conveyance loan register is given in Annexure No.14

3.3.2.6 Bicycle Loan

Non-managerial employees are eligible for bicycle loan. The loan will be released as per rules of the

company. Pay roll accounts informs the recovery of loan to CSC in format No. 84. The interest is

also recovered as in the case of scooter loan interest.

3.3.2.7 Rent

Houses are allotted in accordance with the “House Allotment Rules” prevailing in each division.

Recovery for house rent would be made as provided under the rules. Details of recovery based on

the nature of the quarters is given by the estate department. Changes in occupation and vacation of

the employee during the month is also informed by the estate department monthly. The recoveries

of House rent is informed to CSC by Pay roll Accounts. Change in rate and quantum of recovery is

also informed.

3.3.2.8 Income Tax

Income tax is deducted from salary in accordance with the provision of Income Tax Act in force.

Income tax is calculated on the estimated total income less allowable deductions and exempted

savings as per I. T. Act. The details of Direct Remittances with full exemption is informed to CSC in

Format No. 74. Details of all other direct remittances for tax free savings under Section 88 are

informed to CSC in format No.75. Employees are required to furnish a declaration form showing all

the details for the purpose of calculation of income tax. The employees declaration should be

checked with reference to the CTD pass book, insurance premium receipts etc.

3.3.2.9 Cost of Meals and Co-operative Society Credit

Employees are given credit facilities of stationery, textiles and provision etc. from the Co-operative

Society and a consolidated summary of such credits is forwarded by respective sections to payroll

section for recovery through payrolls. These are transmitted to CSC to be incorporated in the

payrolls while printing. Cost of meals are worked out on the basis of attendance.



3.3.2.10 Sports and Medical Benefit

The employees who are enjoying these facilities are supposed to pay fixed monthly contribution. The

present rate of deduction for CHS is Rs.15/- per month. In case of wife/husband employed

elsewhere, in such case an additional CHS of Rs.15/- is deducted for providing medical benefit to the

spouse also. Contribution to FACT Sports Association is Rs.3/- per annum will be deducted from

employees.

3.3.2.11 Provident Fund

CSC calculates PF contribution at the fixed rate of 12% of the salary excluding overtime. This amount

is credited to the employees PF account with an equal amount of contribution by the company. For

accounting and disbursement of PF employees, a separate section is established under a Trust by

the Management and employees representatives. Employees are allowed to contribute more

percentage as voluntary contribution to the fund, which will not be counted for company’s

contribution to the PF. Company contribution is equivalent to 12% of wages

(Basic + D.A).

3.3.2.12 Family Relief Fund & Retirement Benefit

Deductions are made from the salary of employees at the rates decided from time to time for the

benefit of the dependants of the employee who expires while on service and the employee who

retires. Necessary accounting entries are passed based on the recovery list given by CSC.

3.3.2.13 Other Variable Deductions

Advises are sent to CSC in format No. 85 for effecting recoveries from the salary of the employees on

account of the following:

a. Kala Kendra

b. Housing Society

c. Sports Club/Association

d. Technical Society

e. Kerala Labour Welfare Fund

f. Bus pass recovery

g. Court attachment

h. Personal Debit

i. Prepaid salary

j. Petrol

k. Telephone calls

l. T.A. Advance

m. Furniture hire



n. Security Deposit

o. Hospital

p. ESI arrears

q. Vehicle Hire charges.

The recoveries made from the salaries of the employees by CSC will be remitted to the concerned on

receipt of the recovery statement from CSC. Individual sub ledgers are maintained for personal

debits, court attachment, vehicle hire charges etc. A register is maintained by the pay roll accounts

to note the personal debit advises received from various department and also to enter the advises of

vehicle hire. Vehicle hire charges varies in accordance with the type of vehicle hired. Necessary

entries are passed debiting sub ledger account and crediting concerned expenditure. The CSC

effects necessary recoveries from the salaries and gives the details of deduction to pay roll

accounts.

In respect of court attachment the recovered amount is paid to the concerned authority through a

cheque voucher.

3.3.2.14 Excess Paid

Sometimes due to various reasons over-payments are effected through rolls. These when found out,

are recovered through the following months’ salary.

On preparation of the rolls sometimes deductions exceed one’s total earnings and in such cases

recovery will be deferred in the following chronological order:- Cooperative society, Loan, Company

dues and P.F.

3.3.2.15 Reconciliation

The control totals of these recoveries are to be reconciled with the total of recovery, selection and

unrecovered amount.

3.4 OTHER PAYMENTS FROM PAYROLL

3.4.1 Local Travel Expenses

The employees who own and use for official purpose vehicles like car/Scooter/Motor cycles and

mopeds are eligible for reimbursement of local travel expenses at the rate of Rs.1400, Rs.500 and

Rs.120/- respectively per month. After verification of the required documents regarding ownership of

the vehicle the pay roll section informs the CSC in a format No.69. CSC processes the information

and gives print outs to Pay roll section. Payment will be made directly through Bank for eligible

employees. Proportionate deductions will be effected for leave/absence or when a vehicle is out of

service for a continuous period exceeding 15 days. The Rules pertaining to Local Travel Expenses

are given in Annexure-16.

3.4.2 Education Allowance

Personnel department forwards advises containing details of employees who are eligible for obtaining

this benefit to the pay roll section. Eligibility of the employee for the above benefit is also verified by

pay roll section with reference to salary earned by each employee. Payment will be made in cash



from pay roll section.

3.4.3 Transport Subsidy

Based on the advises given by the personnel department, Transport subsidy is calculated in respect

of the eligible employees. At present an employee will be given 50% of the Actual bus fare from

residence to office and back, calculated for 25 days in a month subject to a maximum of Rs.100/- per

month. No transport subsidy will be paid for employees attending all the 3 shifts in regular turn and

who is holding a bus pass. The advise for Transport Subsidy will be sent to CSC and the payment

for the same will be made through salary statement.

3.4.4 Uniform stitching charges and Footwear Allowance

Payment for stitching charges and footwear allowance will be paid in cash or advised to bank on the

basis of advice received from Welfare Department.

3.4.5 Tool Allowance

Some employees in certain departments are allowed to use their own instruments, tools for works

inside the factory. In such situations they are allowed to claim a tool allowance. This is paid along

with the salary.

3.4.6 Special Allowance

This allowance is given to employees attached to FACT House, Fire and Safety Department. This

payment is made on the advice of the Payroll section to the CSC through Format No.62 on 15th of

every month.

3.4.7 Production Bonus

It is an incentive payment to employees based on the production achieved. The employees are

categorised in different wage group based on the salary structure for the purpose of payment of

production bonus. These wage group are further reclassified as Direct, Semi direct and indirect for

the purpose of arriving at the quantum of bonus. Certain changes may occur due to transfer,

promotion, new recruitments, terminations and so on. The pay roll section is informed of these

changes by the personnel department in appropriate format. The payroll section studies the

changes and informs the CSC in format No.72 on the 15th of every month. Production bonus is

worked out at the rates applicable for the month for each category of employee after deducting the

proportionate amount for medical leave and absence. Normally, working days are reckoned as 25

for a month. The CSC processes the information and gives to the payroll section, on the 14th of

every month, a detailed statement of production bonus payable to each employee. The pay roll

section fills the individual covers and disburses the bonus on the 15th of every month.

3.4.8 Attendance bonus

Attendance Bonus is paid on the basis of attendance of the employees during a Calender year.

There are 3 different rates for payment of attendance Bonus as explained below.

3.4.8.1 12 days salary

12 days salary will be paid as attendance Bonus only if the employees has worked for a minimum of

266 days in a calender year. While calculating 266 days all types of leave will be treated as absence

from duty except accident leave. It is also important to note that 12 days salary eligibility arises only



if the employee has not come late on any day and not availed Loss of pay leave in the calender year.


10 days salary will be paid if the employee is on loss of pay upto 6 days in a calender year. All types

of leave and late arrivals are taken into account in calculating the days present.


7 days salary will be paid if the employee is on loss of pay upto 12 days in a calender year.

Salary for all these purposes including Basic pay, Personal pay, protected personal pay and

Dearness allowance.

The consolidated attendance statement for the calender year in respect of each employee will be

given to the payroll section by the CSC. The pay roll section gives details of supplementary

attendance in case of accident leave etc. subsequently approved in format No.82 to the CSC. CSC

processes the information and gives a print out of the attendance bonus for disbursement to payroll

section.

3.5 OTHER PERSONAL PAYMENTS

3.5.1 Reimbursement of Medical Expenses

The employees covered under Contributory Health Scheme can claim for reimbursement of medical

expenses. The application for reimbursement of medical expenses submitted by the employee is

verified and approved by CMS on the basis of the rules for medical reimbursement. A specimen

form for medical reimbursement is given in Annexure No.14. The duly approved application form is

processed at pay roll accounts and payment is made after adjusting medical advance, if any,

outstanding.

A monthly statement of medical advance outstanding is prepared and necessary action is taken up.

Details of the Contributory Health Scheme are given in Annexure-17.

3.5.2 Family Pension

Family pension is granted to the family of the eligible employee who dies while in service provided he

has completed 1 year of service. The welfare department process the claim for family pension and

finally advise is sent to pay roll accounts for disbursement. The officer in charge of pay roll has to

give a certificate showing eligibility of the expired employee for salary on the day of death. The

eligible amount will be released to the legal heir (only for 1 member in the family) on the basis of the

advise from Welfare Department along with a pre-receipt duly signed by the survivor. A register is

maintained at pay roll accounts for noting all the details of the payee, mode of payment, amount of

pension and date of payment.

Family means:

a. Wife in the case of male employee.

b. Husband in the case of female employee.

c. Minor son

d. Unmarried minor daughter.



The emoluments for the purpose of calculating family pension shall be the rate of basic pay per month

drawn on the date of death.

In the case of central or state Government or other public sector employees who are reemployed or

absorbed, the family pension payable by FACT shall be reduced by the amount of family pension

they are entitled to or receiving from such organisation.

In the case of an employee who dies while in service after a continuous service of 7 years, the

pension payable will be 50% of pay last drawn or twice the family pension admissible as per rules

whichever is less and shall be payable for 7 years or upto the period of superannuation had he been

alive. This is a deviation from the normal rates.

3.5.3 Reimbursement of membership fee of professional bodies

Managerial employees are eligible for reimbursement of membership fee paid to professional institute

as notified by the company. The application for reimbursement of the membership fee along with the

receipt for payment duly approved by the head of the department is processed at Pay roll accounts

and eligible amount is reimbursed to the employee concerned.

3.5.4 Leave travel concession

The details of the Scheme are given in Annexure-18

3.5.4.1 Home Town:

Leave travel concession will be admissible once in every alternate year for visiting home town to

every employee who has completed 1 year of continuous service except those who are part-time,

contingent or casual employees. This concession is allowable to employees whose ‘home town’ is

situated beyond 400 Kms from the place of posting. The benefit of reimbursement of to and fro

eligible fare is extended to the employee and the family. The employee claiming LTC to home town

should produce sufficient documents/receipts in support of his travel. The employee has to submit

an application which will be verified and approved by the personnel department. The amount

eligible as per rules will be released by the Pay roll accounts.

3.5.4.2 Other cities:

3.5.4.2.1 Declaration basis:

Employees who have completed 2 years of continuous service are eligible for reimbursement of

expenditure for LTC payments anywhere in India on declaration basis, once in a block of 4 years.

The employee has to submit the application form which is verified and approved by the personnel

department. The eligible amount in respect of each category of employee will be disbursed from pay

roll accounts. For control purpose a register is maintained by pay roll accounts.

3.5.4.2.2 Others:

The reimbursement of fare for travel anywhere in India once in a block of 4 years for self and family or

twice in a block of 2 years for travel to home town in lieu of former. The employee has to submit the

application forms. Personnel department approves the claim if regular as per rules and informs pay

roll accounts where the voucher for reimbursement is prepared. The employee will be reimbursed

the eligible to and fro fare allowable to the category in which he belongs for self and family. There

are various rules controlling this benefit. The employee has to submit receipt/documents/reference

of ticket no. etc. in respect of the travel along with the application.



3.5.5. Reimbursement of Footwear to Managerial personnel

The details are given in Annexure-19.

3.5.6. Children’s Education Assistance

The details are given in Annexure-20.

3.6 OTHER ADVANCES

3.6.1 Travel Advance

Travel advance are given to employees proceeding on official tour. The Travelling Allowance Rules

of Managerial is given in Annexure-21 and Non-Managerial in Annexure-22.The quantum of

advance is generally based on the fare and estimated eligible expenditure during the tour. The travel

advance released based on the approval of the controlling officer, will be adjusted against the travel

expense bill submitted by the employee after completion of the tour and the balance if any, has to be

refunded within 7 days of his return from tour. A specimen of Travel Advance form is given in

Annexure No. 14.

A register is maintained for noting the travel advance taken, travel bill submitted etc. The unadjusted

travel advance if not remitted within 7 days of his return from travel will be recovered fully from his

forthcoming month’s salary.

In case the ticket for travel is arranged by any other division the employee shall pay for the cost of the

ticket thereby avoids any instance of raising debit notes.

Travel Allowance is payable to the employee who submits the T.A. Bill containing certain particulars,

as per the prevailing travel rules. A specimen of the travel allowance form is given in the Annexure-

14. The travel allowance claimed by the employee will be approved by the controlling officer based

on the eligibility as per rules. Actual expenses against travel allowance can be admitted only if the

claim pertains to self only where the stay should be in eligible hotels and the expenses are supported

by vouchers. Where the employee claims for a category of hotel higher than the eligibility of his

category, the claim will be restricted to his eligible amount. Actual expenses can be claimed only if

there is no accommodation available in Guest House and certificate to that effect is obtained.

3.6.2 Travel Advance on Transfer

Travel advance will be given to employee who is transferred from one unit to other. The travel

advance will be settled by the employee on the basis of Travel allowance applicable to self and

family and other allowance/reimbursement of charges in respect of personal effects applicable as per

travel rules, as soon as he reports duty in the transferred unit.

3.6.3 Medical Advance

Medical advance are given to deserving employees, as per medical rules, duly approved by the

appropriate authority in concerned department. Medical advances are adjusted against medical

expenses duly approved by the Chief of medical Services. A specimen of Medical Advance format is

given in Annexure No. 14.

3.7 PAYMENT OF GRATUITY



Gratuity is paid in accordance with the provision of payment of Gratuity Act 1972, for Non-managerial

employees and Managerial Employees.

As per payment of Gratuity Act 1972, 15 days salary for every completed year of service, subject to a

maximum of Rs. 3.5 lakhs will be paid as gratuity except in the case of death of an employee. Salary

for the purpose of gratuity shall include Basic pay, personal pay, protected personal pay and D.A.

Even in the case of death certain additional benefits are given. For details See in Annexure-23.

The personnel department should prepare an application form for payment of gratuity after verification

of the service records and forward the application along with the service records to the payroll

section. The pay roll section should check the particulars filled in the application forms and verify the

period of service certified by the Personnel department. For detailed Procedure please refer

Annexure-23

3.8 TRANSFER AND LPC

In the case of transfer of employees from one unit to another, it shall be the responsibility of the unit

from which the employee is transferred to prepare a last pay certificate giving the details of the

employee and sending the same to the other unit immediately on handing over the charge by the

employee on transfer.

3.9 STATISTICAL REQUIREMENTS

The monthly and annual return of Income-Tax deducted at source shall be submitted under the

income-tax Act to Income-tax authorities concerned. A statement of particulars of employees in

terms of Section 217(2-A) of the Companies Act, 1956 who are in receipt of remuneration of not less

than Rs. 3 lakhs per annum or Rs. 25,000/- per month inclusive of the value of perquisites would be

prepared for incorporating in the notes forming part of the statements of accounts for the year.

3.10 ACCOUNTING

3.10.1 Accounting of Salary

Most of the journal entries for accounting salary expenses, Advances and Recoveries are

automatically generated by the CSC. The journal entry for salary accounting is generated by

computer by debiting the basic pay and other allowances (GL 7800 to 7808 in the case of Non

managerial employees and GL 7820 to 7828 in the case of Managerial employees). Department

codes are used as sub ledger codes in these cases. Various recoveries are accounted by crediting

to the respective Recovery accounts form GL 6200 to 6299. The net salary payable is credited to

Accrued Salary Account GL 6240. The above journal entries are automatically posted by the

computer in the general ledger every month.

A statement showing earnings and recoveries of employees with a reconciliation (gross salary -

recoveries = net salary payable for the month) is prepared by CSC every month. In addition list of

net pay payable, bankwise is given to payroll by the CSC. Bank vouchers (09-slips) are prepared

and separate cheques are issued to each bank with the list of employees and their net salary for the

month. Banks are requested to credit the employees account as per the list. CSC gives the list of

employees who are to be paid salary in cash with total cash to be drawn and the denominations.



When salary disbursement is done through payroll by cash, A.O-payroll withdraws the amount from

cashier issuing cash voucher and debiting payroll imprest account with A.O payroll GL-5101. After

payment a reverse entry is given by debiting accrued salary account GL-6240 and crediting payroll

imprest account GL-5101. Thus the balance of accrued salary account will be nil after the

disbursement of salary.

3.10.2 Final settlement and Ex-employees account

When an employee leaves the services of the company on superannuation, resignation, voluntary

retirement or termination, the settlement of his account is done by the payroll section only after

obtaining clearance certificate of dues from the personnel office. To settle the account of an

employee payroll has to verify all the advances account, previous month salary roll and obtain

clearance from other sections also. As a first step, payroll close the leave register and arrive the PL

balance if any, loss of pay is deducted from the PL balance. Encashment for the balance PL will be

paid along with gratuity. Salary from 22nd to last day of retirement and deductions, CHS, all dues

noted in the dues certificate, etc. will be deducted from the terminal benefits.

All payments and recoveries of an employee is accounted through o4-slips. A statement showing

amount to be payable and recoverable is prepared and a copy is given to the employee. A cheque is

issued for the balance amount after retaining Rs. 1000 to Rs.2000 in normal cases or a higher

amount, if required, as personal debit towards any dues that may arise in future. Journal entry is

passed by debiting all his payments to corresponding accounts like gratuity paid, PL encashment,

salary etc. and the net credit is given to ex-employees account GL-5325. Individual Badge No. of the

employees are used as SL number. Any arrears in respect of his salary arises later on, payroll

section credits the amount to ex-employee account GL-5325. This shall be settled subsequently by

debiting to this account and the cheque shall be forwarded to his address.

Normally the Ex-employee accounts shall show ‘nil’ balance except for the amounts retained at the

time of final settlement. This amount also shall be released after six months. Reconciliation may be

done for finding out any amount pending in this account for a long time.

3.10.3 Conveyance Loan account

A register is maintained in each division for conveyance loan. The details of documents such as

promissory note date, Renewal date, B-form date, Hypothecation in R.C book date, C-form date and

details of insurance such as name of insurance policy No., date, period, renewal etc. are provided in

the register. While granting the loan 09-slips are used to debit Advance for purchase of conveyance

A/c GL-5302. Badge No. of the employees are used as SL numbers. The advance granted will be

recovered in monthly installments not exceeding 72 in number. Interest is charged at the

diminishing balance method. At the end of each financial year, the interest is calculated and the total

amount is credited to (GL-7431) and individual advance accounts are debited through journal slips.

After recovery of the loan amount, the interest accumulated will be recovered from the salary of the

employee on installment basis not exceeding the installment amount for loan advance recovery. A

fixed deduction statement (format-84) is sent to the CSC at a time for recovery from pay roll.

3.10.4 Accounting of Petrol requisition

Employees are allowed to draw petrol through company’s own petrol pump. Those employees who

wants to use this facility will be given a Material Requisition (MR) book for drawing petrol and it is

used for accounting purpose also. When an employee draws petrol through MR, a debit is given to

GL-5348 with SL as badge number of the employee. A Debitable Material Requisition (DMR) is also

prepared for recovery by CSC with the details of quantity drawn in a particular badge number, total

amount to be recovered, etc. While making recovery during the next month a journal entry is



generated in the computer automatically by crediting GL-5348 (petrol cost).

3.10.5 Welfare accounts

All Welfare transactions are accounted in the payroll section using separate GL numbers for Non

managerial and Managerial employees (GL-6210 and 6211) respectively. Individual badge

numbers are used as SL numbers. The welfare department will forward the list of employees who

are selected for interest free welfare loan and other welfare aids to the employees as per the

decision of welfare committee. Payment/recovery is arranged by payroll.

3.10.6 Provision at the end of the financial year

Provision is made with respect to the following items at the end of the financial year. The following

outstanding expenditures are credited to outstanding charges account GL-6500.

i. 10 days salary and PF

ii. Production Bonus

iii. Annual Bonus

iv. Premium on gratuity Scheme

v. ML/PL encashment

Reverse entries are being made in the beginning of the next financial year for the above items

through journal slips.

3.10.7 Inter-Unit Transactions

Inter-unit Transactions shall be followed as per the procedure laid down by the Head Office. When a

debit is received from other Unit/Divisions, it shall be responded to immediately after due verification

by debit to appropriate head of account in the Unit. Similarly when a Unit has to pay the employees

on any account which is payable/recoverable from other Unit/Division, a debit shall be raised against

other Unit/Division by credit to appropriate head of account in the unit and it shall be watched

whether it is being responded to by the other Unit/Division or not.

3.10.8 Accounts Receivable Employees Account

Over payment, if any and non-recoveries of company’s dues shall be debited to Accounts Receivable-

Employees account by credit to wages and salaries. Individual Badge numbers are used as SL

codes. This account shall be reconciled from time to time and recovery follow up to be done to make

the recovery.

3.10.9 Books of Accounts

As mentioned earlier payroll is maintaining Leave Register, Conveyance Loan Register and Travel

Advance Register manually. Ledger accounts of various other advances and recoveries are

prepared by the CSC. It is the responsibility of payroll to scrutinise the following ledger accounts.

Ledger Accounts for Advances:-

i) Advance for purchase of conveyance GL - 5302

ii) Accounts Receivable - Employees GL-5320.

iii) Medical Advance GL-5322.

iv) Travel Advance GL-5323.

v) Foreign Travel Advance GL-5324.



vi) Accounts Receivable - Ex-employees GL-5325

vii) Onam Advance GL-5327

viii) LTC Advance GL-5328

ix) Payroll Salary advance GL-5329

x) Vishu Advance GL-5330

xi) School advance GL-5331

xii) Ramzan advance GL-5332

xiii) Christmas Advance GL-5333

xiv) Employees Bonus Advance GL-5334

xv) Interim Advance GL-5346

xvi) Petrol Cost GL-5348

xvii) Adhoc Advance GL-5349

Ledger Accounts for Recoveries

Various recoveries are made through salary and credited to GL-6200 to 6299. While making

remittances to the respective agencies the above accounts are debited. Payroll has to reconcile the

outstanding balances of these accounts.

3.10.10 Reconciliation

Ledger accounts are posted on batch wise by CSC and the balances are printed monthly and

consolidated ledgers are printed half yearly. The accounts mentioned in the above para are

reconciled periodically. Irregular balances have to be set right immediately. Annual schedules of

balances duly reconciled are submitted to the Statutory Auditors.

3.10.11. Annexures Attached

1. Departments and codes Annexure-24 2. Family Pension Rules Annexure-25 3. Acting, Officiating & Charge Arrangements Annexure-26 4. Kit Allowance Annexure-27 5. Conditions for Training Abroad Annexure-28 6. Group Insurance Scheme Annexure-29 7. Per Diem Living Allowance Annexure-30 8. Interest Subsidy Scheme Annexure-31



CHAPTER-4

BUDGETS 4.1. GENERAL

4.1.1. Budget - Definition

A budget is defined as a financial and/or quantitative statement of the policy to be pursued during a

period of time usually one year, for the purpose of attaining a given objective. It is a sort of period

planning involving a projection of the activity of a business in terms of income & expenditure, assets

etc. In addition to its use in planning a budget is also used for control and coordination.

4.1.2. Budget Preparation

In FACT two separate main budgets are prepared every year one to control capital expenditure and

the other to control revenue expenditure. Both the budgets are usually prepared during

September/October every year. Two types of estimates are prepared for both Revenue and Capital

Budgets - the Revised Estimate(RE) and Budget Estimate (BE). RE is the revised budget for the

current year and the BE is the budget for the next year. Revised Estimate is prepared taking into

consideration the actual expenditure for April to September and the revised estimates for October to

March extrapolated on the basis of actuals for April to September.

4.1.3. Corporate Plan

Corporate Plan is prepared by taking estimates and future projections for 5years. The Corporate Plan

is revised every year by deleting one year in the beginning and adding one year at the end, keeping

the total budget period as 5 years. This plan projects the Company’s position for the next 5 years.

4.2. CAPITAL BUDGET

4.2.1. Capital Expenditure

Generally, expenditure on acquisition of new assets such as land, buildings, plant and machinery,

furniture, office equipment, vehicles, service equipments etc. which have reasonable life, expansion

of existing facilities, and modification and improvements to plant and machinery resulting in (i)

increase in capacity, (ii) increase in useful life (iii) improvement in quality of output and (iv) reduction

in cost of output is treated as capital expenditure. The Capital Budget shows all the items of capital

expenditure to be undertaken during the budget period. Items of capital expenditure that need more

than a year for completion should also be covered by the capital budget showing the yearwise cash

outflow.

Capital budget is usually divided into three groups. Plan Schemes Revamps and rehabilitation and

Renewals & Replacements. While the new projects are included under Plan Schemes, modifications

and expansions are shown under revamps and rehabilitation and improvements to the existing

facilities are shown under Renewals & Replacements.

4.2.2 Administrative Approval

Before an item is included in the Capital Budget, administrative approval for inclusion in the Capital

Budget has to be obtained from Competent Authority in the prescribed format. Details such as

justification for the item, pay back period, period of work etc. has to be submitted along with the

proposal. Only items with administrative approval will be included in the Capital Budget.



4.3 DIVISIONAL CAPITAL BUDGET

The Division Heads are responsible for the proper administration of capital budgets in their Divisions.

The Associate Finance of the Division is responsible for exercising financial control over the budgets,

submission of various statements, reports etc. to Head Office on time and also for the maintenance

of the Capital Expenditure Commitment Register.

During the month of July every year the Division Heads would call for from the head of departments

proposals for inclusion in the capital budget of the Division. A Budget Committee with the Head of

Division as Chairman would carefully scrutinise the proposals and the capital expenditure request is

submitted to Head Office for finalisation of Capital Budget. All urgent requirements of the Division for

capital expenditure for the period are foreseen and capital expenditure requests are drawn for

them. The committee should also ensure that the instructions issued by Head Office from time to

time in connection with capital expenditure are adhered to strictly.

4.4. CORPORATE CAPITAL BUDGET

Review and finalisation of the Capital Budget is the responsibility of the Corporate Budget Committee

with the Director (Finance) as Chairman and the Division Heads and the General Manager

(Personnel) as members. Before the end of August a meeting of the Committee is convened and

approval is given to such of the items found necessary to be included in the Capital Budget. A list of

capital budget requests so approved is prepared for each Division properly grouped under civil

engineering, production, maintenance, administration and township. The list is submitted to CMD for

review and approval. On receipt of the approval of CMD the Capital Budget estimates for the

ensuing year are prepared. The final draft of the Capital budget estimates would be placed before

the Board of Directors during the second or third week of October for its approval. A contingency

fund of about 10% of the total value of the capital budget estimates would be created in the capital

budget to take care of over runs in expenditure and extremely urgent items of capital expenditure not

envisaged in the budget.

4.5 CAPITAL WORK ORDERS

After the budget is approved by the Board, Finance would assign serial capital order numbers for the

items of capital expenditure and communicate the capital budget as approved by the Board along

with the capital order numbers to the Division Heads and Associate Finance before 30th November.

The details are to be furnished to the Computer Services Centre for preparation of MIS Reports on

Capital Budget. The Division Heads should also be intimated the items of capital expenditure

requiring approval of CMD before commencement of incurring expenditure. The capital order

numbers should be mentioned on all purchase requisitions, purchase/work orders etc. relating to

capital expenditure.

4.6 INCURRING OF CAPITAL EXPENDITURE

Approval of the capital budget should not be taken as the basis for incurring of any capital expenditure

item. The concerned department head in the Division/Head Office who originated Capital Budget

request should obtain the sanction of the Division Head/CMD with the concurrence of the Associate

Finance for incurring Capital expenditure. The Associate Finance will give finance concurrence for

incurring the expenditure along with FC number. On receipt of such sanction action may be initiated

to incur the expenditure. Copies of capital purchase/work/job orders should be sent to the Associate

Finance and they should record the purchase/work/job order numbers in a Capital Expenditure

Commitments Register and affix on them an approval rubber stamp. This rubber stamp should be

affixed on the purchase/work/job order copies and the copy of the executing department passed on

to it for necessary action. When contracts are entered into with outside parties for incurring capital



expenditure an entry is made in the Capital Expenditure Commitment Register to enable the Associate Finance to

have financial control over capital expenditure.

4.7 REPORTS ON ACTUAL CAPITAL EXPENDITURE

A report on actual capital expenditure is generated every month in each division. The report will

contain the following information on each capital item/job.

1. Approved cost of the project/item.

2. Anticipated cost of the project/item.

3. Expenditure till last year.

4. Expenditure during the year.

5. Total expenditure till last month.

6. Provisions as per RE and BE (Original and Revised)

7. Spill over from current year.

8. Commitments made till date.

9. Expected date of completion.

Also a comparative statement showing the actual total expenditure against the budget on the Capital

Jobs/Items is included in the monthly report.

The formats of the above reports are given as Annexures-32.

4.8 EXPENDITURE OUT OF CONTINGENCY FUND

When there is expenditure overrun in the budget sanction, the department head originating the capital

budget request should process through Associate Finance the request for approval of overrun in

expenditure. The Division Heads are authorised to sanction overrun in individual items of capital

expenditure as per the delegation of powers on justifiable reasons. Before such overrun is approved

the Division Head along with Associate Finance should enquire into the reasons. The reasons are

recorded in the Capital Expenditure Commitment Register and attested by the Division Head. The

overruns would be met out of the contingency fund provided in the budget. A monthly report on the

overrun on capital expenditure sanctioned by the Division Heads should be sent to FD and CMD.

4.9. REVENUE BUDGET

Control of revenue expenditure is achieved through the Revenue Budget. Preparation of revenue

budget for the next financial year and revision of revenue budget for the current year are taken up

together. Every year early in August detailed production targets and norms for consumption of

materials for remaining portion of the current year and also for the next financial year are prepared

and the Division Head would obtain CMD’s approval for it. A production budget in quantities is

prepared based on the approval targets and communicated to department heads concerned for

preparation of functional budgets. During the last week of August the Division Head would discuss

the production budget targets with the Marketing Manager and based on market demand

adjustments are made. The Area Managers and Regional Managers would prepare their own

budgets for all activities covered by them and send the same to the Marketing Manager for the

preparation of sales budget.

On receipt of the various functional budgets the Finance Manager of the Division prepares the



divisional budget. After approval of the divisional budget by the divisional budget committee with the General

Manager as Chairman, it is sent to FM(HO) for preparation of the corporate budget. Head Office

Finance will compile the budget for the company which is placed before the Corporate Budget

Committee with FD as Chairman. After approval by this Committee CMD’s approval is obtained.

The revenue budget as approved by CMD is placed before the Board for their approval during

October.

4.10 REVISION OF REVENUE BUDGET

When preparing the next year’s revenue budget, the revenue budget for the current year is revised

based on the actuals from April to September and the anticipated trend for the remaining period.

Apart from this revision, the revenue budget may require revision on account of substantial variations

in prices of raw materials, revision of excise duty, transport charges etc. Such changes should be

immediately incorporated in the main revenue budget and a revised revenue budget is prepared and

placed before the Board.

4.11 MONTHLY REPORT

On closing of the accounts of the month each division would prepare a monthly profit and loss

account and send it to the Division Head, FD and CMD. This report will give a comparison of the

actuals for every month against budgeted performances.



CHAPTER-5

FINANCIAL CONCURRENCE AND DELEGATION OF POWERS 5.1. DELEGATION OF POWERS

With a view to decentralisation of authority, CMD has delegated powers to Divisional Heads. They

have in turn sub-delegated powers to their subordinate officers. The delegation of powers to

Divisional Heads and sub-delegation of powers by them to various other officers are given in

Annexure-33.

In accordance with the Delegation of Powers, it is stipulated that certain powers, have to be exercised

only with the concurrence of the Associate Finance.

5.2. FINANCIAL CONCURRENCE - DEFINITION

Financial concurrence is the vetting of proposals submitted for sanction of the competent authority,

after due examination of the proposals involving financial implications, with reference to its cost and

benefits and clearing it for execution from the financial angle including availability of funds.

5.3. TYPES OF PROPOSALS FOR F.C.

The proposals that are put up for financial concurrence fall under the following broad categories.

(i) Purchase of Capital items. Eg. Plant & Machinery, Vehicle, Office equipments, furniture etc.

(ii) Purchase of revenue items. Eg. Raw Materials, Operating Supplies, Stores and Spares, Printing and

Stationery etc.

(iii) Award of contract for construction of buildings, roads etc.

(iv) Award of contract for the erection of plant and machinery.

(v) Award of contracts for clearing and transport, mixing contract etc.

(vi) Proposal for fixation of rent of office accommodation, godown accommodation and revision of

rentals.

(vii) Proposals for write off of bad debts, shortages, waiver of claim, payment of compensation etc.

(viii) Sale/disposal of articles like vehicles, salvage materials etc.

(ix) Cases involving extention of time for delivery/for completion of work, for excess quantity of supply or

work over originally approved quantity of supply or work.

(x) Other proposals having financial implications/involving deviations from contracts.

Such proposals are referred to Finance for Financial concurrence.After giving concurrence Finance

will record the details in a register. The concurrence reference number will be noted in the proposals

sent for concurrence, to enable the purchase department/maintenance department to quote the

finance concurrence number on the finance copy of the purchase order/work order. This will

facilitate reference at the time of supply and payment of bills.



As per the Purchase Procedure, for purchases above Rs.25,000/- the Purchase Recommendation

shall be forwarded to Associate Finance Department for according financial concurrence before it is

put up to the competent authority for sanction. If there is a difference of opinion that cannot be

sorted out between Purchase Department and Finance, the matter shall be refered to the Head of

Materials Department who shall review the proposal and take action for submitting it to the

competent authority for approval.

Work Orders upto the value of Rs.10,000/- in each case need not be sent to finance for concurrence.

5.4. IMPORTANT POINTS TO CHECK

The important aspect to be seen while according financial concurrence are the following:-

(i) Provision for the expenditure in the approved budget.

(ii) The indents are cleared by the purchase committee (at least major ones).

(iii) Whether the procedure prescribed in connection with incurring of expenditure has been complied

with.

(iv) The cost benefit analysis of the proposal.

(v) Whether expenditure is within the guidelines of the Company/Government, if any on the subject.

(vi) The appropriate authority to sanction the expenditure.

5.5. PROPOSALS TO BE REFERRED TO HO

In exercise of the finance concurrence powers, the Finance Department will observe vigilance and

ordinary prudence, to see that no loss to the Company arises. When the Finance Department is

unable to concur with the proposal, normally clarifications will be called for and the entire case will be

referred to Head Office for orders of FD/CMD. In practice, the following cases are referred to Head

Office.

(i) The proposals not covered by the approved budget and requiring re-appropriation and sanction.

(ii) Cases beyond the limits of delegation of powers of Division head, requiring CMD’s sanction. If

however, the heads of the division feels that such a reference will mean loss to the company, danger

to plant, life or property or where the action cannot be postponed without detriment to the interests

of the Company or the expenditure is essentially an operational necessity, he may proceed to take

such action as he deemed fit. In such cases, the Division Head will report at the earliest opportunity

the whole case to CMD including the views of Associate Finance and the reasons why action could

not be taken to obtain sanction from Head Office, as explained above. The nature of the urgency will

have to be indicated in all such cases.

(iii) All proposals for Capital expenditure will have to be commenced/made only after obtaining

administrative and technical sanction and financial concurrence. The proposals will be sent through

Associate Finance Department who will examine:-

(a) The necessity for the work and the ultimate benefit to the company as a result of taking up the



work/purchase, expressed in monetary terms and the pay back period.

(b) The alternatives available and the preference of the particular alternative proposed.

(c) Any special features, which require special attention.

(d) In case of a supplementary estimate, the reasons for variations from the original estimate approved.

As soon as it becomes apparent that the original estimate approved for a particular work/purchase is

likely to be exceeded, a revised estimate will have to be got approved in advance of incurring the

expenditure by the concerned department heads from sanctioning authorities, under delegation of

powers, with the concurrence of Associate Finance.

5.6. PURCHASES UPTO A VALUE OF RS.25,000/- ETC. ..PROCEDURE

5.6.1. The following procedure for Financial Concurrence is introduced vide FD’s Circular D(F)/I-2/229 dt.10-11-

86.

(i) Purchases upto Rs.25,000/- in each case need not be referred to Finance for concurrence provided

budget heads and provisions are indicated and the Materials Manager is satisfied that budget

provision is available for the expenditure.

(ii) Single tenders upto a value of Rs.10,000/- need not be referred to Finance for concurrence.

(iii) Variations from Standard payment terms need not be sent for concurrence to Finance for purchases

upto Rs.10,000/- in each case.

(iv) Where a tender other than the lowest is being accepted and the tender accepted is the lowest

technically acceptable and technical and commercial clarifications are acceptable to the Purchase

Department, the case need not be referred to Finance, for the only reason that lowest tender is not

accepted. If there are other implications,the case would require Finance concurrence, though within

the ceilings indicated in (i) above.

5.6.2. The Materials Manager will arrange to send to Associate Finance by 7th of the month following, a

statement showing the value of the orders so placed under the above procedure, in the previous

month indicating the budget heads under which the amounts have been committed.

5.6.3. The above relaxations are subject to provision for items being available in the annual budget and the

budget head identified.

5.6.4. Capital items not directly related to production like furniture, office appliances, air conditioners,

calculators, refrigerators, etc.costing more than Rs.2,000/- in each case, shall be purchased with the

prior concurrence of Director (Finance).

5.7. FINANCIAL CONCURRENCE - LIMITS

Following limits have been fixed to the officers in Finance Departments, for giving Financial

Concurrence

Layer-I - Items requring the approval of Chief (Asst.Manager) Engineers level and below Layer-II - -do- DGMs level and below.



CM (FIN)/DGM(FA) - -do- GMs level and below The above limits were prescribed vide decision in FM’s Meeting dated 31-1-87.

5.8. GENERAL POINTS

In the case of new proposals, whenever the budget provisions have been exceeded, the proposals for

expenditure will be returned with the advice of actual expenditure to date, to enable the concerned

Department Heads to take necessary action.

In the case of renewals and replacements, it will be ensured that credit has been taken in the estimate

for materials that may be realised on renewal/replacement.

The date of receipt of the files for financial concurrence is to be recorded in the FC Register

maintained by Finance.

Finance concurrence given is subject to sanction from competent authority.



CHAPTER - 6

PURCHASE ACCOUNTS(INCLUDING CORPORATE MATERIALS & FOREIGN CURRENCY MANAGEMENT) AND MANUAL FOR IMPORT OF FERTILISERS, INTERMEDIATES AND

RAW MATERIALS

This chapter deals with all the important functions that the purchase section or Bills Section of the

Accounts Departments has to perform in connection with the purchase of various types of materials.

6.1. It is necessary to indicate in a broad way, the various stages through which procurement action has

to pass, in order to understand the procedure in this respect. The Board approved purchase

procedure is given in Annexure-34.

6.2. Purchase can be broadly classified as under:-

a) Purchase made in India, ie.indigenous purchase.

b) Purchase made from foreign countries.

The above can either be stock items viz. items which are kept in stores and issued to the using

departments as and when required or be non-stock item, which are utilised by the using department

as soon as they are delivered by the suppliers.

6.3. In the case of stock items, the stores department has to assess the requirement of the items with

reference to standards laid down and place requisition (via. indent) on the purchase department for

the quantity required. In the case of other items, the Department which requires the material, has to

submit the requisition to the purchase department through the stores department. The stores

department would ensure that there are no substitute items available in the stores against the

requisition and also that the items contained in the requisition are not declared surplus by other units

and divisions in the list of surplus items circulated by them. In case of materials required urgently an

emergent indent will be sent directly to purchase department, certifying that the material is not

available in Stores Department.

6.4. Once the budget estimates have been approved and intimated to the various departments, the

indenting department requiring certain material should keep a watch on the budget provision for the

purchase specifying the budget head under which the provision has been made. These indents, with

the above certificate, will be sent direct to the purchase department through stores department who

would initiate action in such cases without getting financial concurrence from the Accounts

Department. The above procedure would be followed if the purchase is of revenue nature and the

value of indent does not exceed Rs.25000/-. As soon as purchase department finally decides on the

supplier (after obtaining tenders from suppliers in cases where it is necessary to do so as per rules),

the proposal has to be sent to the Accounts Department for financial scrutiny/concurrence before the

purchase order is placed on the supplier in cases where the value exceeds Rs.25,000/-.

6.5. The necessity for purchase of the required material is to be determined solely by the indenting

departments. The indents are to be raised for the right quantity and at the right time. The indenting

departments are answerable for any stock outs or overstocking of the materials.

6.6. The purchase order becomes a document, along with other documents such as receipt and

inspection documents where separately issued etc. for passing of bills.

Page 1 of 21CHAPTER - 6


6.7. It can thus be seen that Accounts Department’s function in the matter of purchase, relates to:

(i) Financial scrutiny and

(ii) the passing of bills and keeping of records pertaining to purchase transactions.

6.8. FINANCIAL SCRUTINY OF PURCHASE PROPOSALS

Maximum, minimum levels, ordering quantity of all the items of stores should be fixed by the

Technical Department in consultation with consuming department and Materials Management

Department.

When the proposals are received from the purchase department for check in accounts, the finance

branch should, inter-alia, see that,

(i) The competent authority, to whom powers are delegated for the purchase, has signed the indent.

(ii) In the case of stock item that the quantity indicated for purchase is arrived at on the basis of ‘order

point’ standard laid down.

(iii) In case materials are non-stock items, that the essentiality of purchase has been established.

(iv) Whether funds are available in the sanctioned budget estimates.

(v) The allocation of the proposed expenditure is indicated in respect of non-stock items, ie. the plant or

purpose for which the material is required to be indicated.

(vi) The indent clearly indicates proper description or specification of the material proposed to be

purchased.

(vii) To the extent possible, the estimated cost of the material is indicated in the indent and that the

amount mentioned is neither an over estimate or an under-estimate.

(viii) whether delivery conditions are indicated properly.

(ix) That a particular indent does not contain items of different classification if possible, so that the

tenders issued may conform to a particular category of suppliers dealing in that category.

(x) The indents for emergency purchase should be on forms intended for the purpose and it need not be

sent to Accounts Department for concurrence provided, however the amount involved does not

exceed Rs.25,000/- per order. In such cases, the Materials Manager would make the purchase

without calling for tenders. It should, however, be ensured that emergency purchase is resorted to

only under exceptional circumstances where it is likely to affect production or completion schedule of

projects/turn around jobs or there is a danger to safety (in such cases the quantity proposed to be

purchased should be just sufficient to tide over the emergency). A quarterly statement of the

emergency purchase should be submitted to the General Manager of the Unit/Division through the

Finance Manager. Steps should be taken to reduce emergency purchases, which is comparatively

costly, by better planning and foresightedness. The statement to be submitted to the Units/Division

Head should show broad details of items purchased during the quarter and their value and also the

value of such purchases made from the beginning of the financial year to the end of the previous

quarter.

(xi) A proper explanation is given to establish that a material is of a proprietory nature, in case the



material is described in the indent as a proprietory article.

(xii) To see that the requisitions are not split up for the same article in such a way as to bring the value of

the indent within the powers of a lower authority, whereas if the indent is prepared for the whole

quantity, it would require the sanction of higher authority.

(xiii) Check whether the particulars given on the indent are not at variance with those shown in the

concurrence paper.

(xiv) Check whether the minutes/proceedings of purchase committee are available, in cases where

approval of such committees are required in the matter of purchase of capital equipment and

revenue items when tenders are decided.

(xv) Check whether the selection of firms for placing the order has been done on the basis of advertised

tenders or limited tenders.

(xvi) Check whether full details regarding specification, quantity, terms of payment, time and place of

delivery, mode of delivery etc. are given.

(xvii) If it is a limited tender, check whether enquires have been issued only to firms on approved list of

suppliers.

(xviii) In the case of any delayed tender (or tenders delayed in post although posted before the opening

date of tender), see whether it is lower than the lowest offer received in time. If so, see whether the

same has been admitted by a competent authority. If the quotation of the delayed tender is lower

than the lowest tender received in time, the offer should be included in the delayed tenders

statement, if the tender is otherwise acceptable. In all such cases, the decision shall rest with the

tender committee or the next higher officer who is competent to place the purchase order or award

the contract.

(xix) Late bids are those which are posted after the date and time of opening of bids and received

subsequently. Normally late bids shall not be opened. However, in exceptional cases late bids may

be considered with Division Head’s approval for reasons to be recorded in writing.

(xx) Check whether the tender is complete in respect of specification, price, delivery time, delivery place,

terms of payment, liquidated damage clause etc. and is in accordance with the terms and conditions

mentioned in the enquiry.

a) The purchases are to be made in accordance with the tender system prescribed. The main

objective of the tender system is to ensure that right quality of materials is purchased from

competitive sources on best available terms and rates, consistent with the delivery schedules.

b) That the quotations have been opened in the presence of the Accounts and

Materials/Administration Department representative and have been signed by the Officers who

have opened the tenders. There should be no unattested alterations or corrections.

(xxi) Ensure that a comparative statement is prepared on uniform basis and comparable basis

incorporating the important terms and conditions, details of price etc. and that it is duly signed by the

responsible officer of the Materials Management Department.

(xxii) Check whether reasons for rejecting the lowest offers have been recorded and are justifiable and

approved by competent authority.



(xxiii) Where against a limited or advertised tender, only one quotation is received, check whether the

reasonableness of the price quoted by the tenderer has been established and the indenting officer

has certified that the prices quoted are considered by him reasonable.

(xxiv) See that orders are placed on suppliers direct where rate and/or running contract of the DGS & D

are in force. However, it is permissible to place a direct order on a supplier if he has a rate or running

contract with the DGS & D provided the orders are placed at the DGS & D rate. If exception to this

procedure is sought to be made for any particular reason, justification for the departure from the

procedure should be recorded in writing and sanction of the competent authority obtained after

getting financial concurrence to the proposal.

(xxv) Repeat purchase orders are issued after indentor’s recommendation and financial concurrence after

satisfying that there has been no downward trend in the prices.

(xxvi) In the case of issue of amendments to purchase orders extending delivery period, ascertain whether

there will be any loss if the delivery period is extended. If time was the essence of the contract,

ascertain whether clause regarding liquidated damage/penalty is proposed to be enforced if delivery

period is being extended for no fault of the company and an intimation in this regard sent to Accounts

Section. If a purchase order is cancelled due to the failure of the party to supply the materials in

time, where time is the essence of the contract, and a fresh order is being issued on a higher

tenderer, ascertain whether risk and cost clause has been enforced after proper notice to the

supplier.

(xxvii) In the case of amendments to a purchase order agreeing to changes in rates, it should be seen that

such changes are on a result of escalation clause in the contract providing for escalation in freight,

customs duty, sales tax etc. Any other changes in rates after the contract has been concluded would

be outside the terms of the contract and would require financial concurrence and should not

ordinarily be agreed to. In case the increase is justifiable for any reason, the sanction of the

competent authority should be obtained.

(xxviii) See that all proposed amendments involving major changes in terms and conditions of the contract

are issued only with the financial concurrence and sanctioned by the competent authority. If after

amendment the value of the purchase order exceeds the financial powers of the authority which had

approved the original order approval of the appropriate higher authority shall be obtained for the

amended value of the order.

(xxix) Check that in respect of imported purchases, all formalities such as foreign exchange sanction and

procurement of imported license etc. have been complied with before the order is issued.

9. BILLS AND PAYMENT

6.9.1. In respect of orders placed on foreign suppliers, involving opening of irrevocable letter of credit in

favour of the supplier, prompt action shall be taken to open such letter of credit with the bankers.

6.9.2. A copy of the purchase order issued by the purchase branch will be received in the above section of

the Accounts Department, which has to pass the bills, when received from the suppliers for payment

after ensuring that it had already been scrutinised by the Finance Section of the Accounts

Department, it is separately kept in a file.

6.9.3. The supplier having supplied the materials at stores simultaneously submits their bill to the Accounts

Department which has to pass the bill. As and when these bills are received they are entered in a



bill register and accorded a serial number of entry in the said register.

6.9.4. The receipt of materials in Stores Department is documented (such as Stores Receipt voucher or

goods receipt note) and the fact that the material has been accepted after inspection is either

recorded in the receipt voucher or indicated in a separate form, used for this purpose. On receipt of

material, Stores will prepare Daily Receiving Report( DRR). After inspection and clearance RR (or

GRN) will be prepared and two copies will be forwarded to Finance Department along with

Inspection Report,if it is required as per Purchase Order. These documents are received in the

section of the Accounts Department dealing with the payment of bills.

6.9.5. If the payment term is after receipt and acceptance, the purchase order and the receipt document, ie.

store-receipt voucher are the basis on which the bills received from suppliers are passed for

payment.

6.9.6. The suppliers bill is checked with a view to ensure that the payment is claimed only for the quantity of

materials supplied and that they have been accepted in inspection. This check is exercised from the

particulars in the receipt document and inspection certification. If variation in the quantity of material

received and those shown in the purchase order is within 5% and the value of the difference also is

less, no amendment in the purchase order need be made and payment made according to the

purchase order. The correctness of claim in regard to rate, taxes, delivery conditions (ie. ex-godown

or at site, delivery schedule, liquidated damage/penalty clauses) etc. is to be checked from the

particulars in the purchase order. It should further be ensured that in cases where time was the

essence of the contract and the delivery was delayed beyond the time stipulated in the purchase

order that the grounds for delay have been recorded and condoned by the competent authority. If

the delay is not acceptable, it should be ensured that liquidated damages at the rates mentioned in

the purchase order are duly deducted from the bills before they are passed for payment.

6.9.7. a) In cases where the supplier is required to comply with certain formalities such as submission of bank

guarantee, performance guarantee, endorsement of insurance policies, or hypothecation of

materials, it shall be ensured that all such formalities are complied within due time as per Purchase

Order terms and at least before the payment is released.

b) After the above mentioned checks are exercised a payment order/voucher should be prepared in

triplicate in the proforma prescribed. The payment order will be in favour of the supplier indicating

the address of the supplier, the amount to be paid, the particulars of the bill and the heads of account

to be debited or credited. The payment order/voucher should be signed by the Officer-in-charge of

the purchase account section. Both the original and

duplicate copy of the pay order/voucher should be sent to the cash and bank section for arranging

payment.

When the payment is arranged and the fact of the same is recorded the duplicate copy of the pay

order/voucher indicating the Cheque No. and the date should be returned by the cash and bank

section to the Account Section from which pay orders/voucher was received. The pay order

indicating the Bill No. amount of payment together with deduction memo in respect of deduction

made, if any, name of the party etc. will be filed separately so that it becomes a supporting document

for the expense journal. The purchase order on the back of which rubber stamp containing the

following information has been imposed will be kept in a separate file in consecutive order.

(i) Bill No. and Date.

(ii) Amount of the bill

(iii) Deduction made, if any



(iv) Net payment

(v) Goods Receiving Note (GRN)

(vi) Bank Voucher No. & Date

(vii) Sales Tax Declaration Form No.

(viii) Journal Reference No.

(ix) Income Tax Declaration Form No.

The provisional liabilities for stores, packing materials, spare parts and the sundry creditors for

purchases of stores, packing materials and spare parts should be reconciled every month to

scrutinise the balance if any, lying in these accounts.

6.9.8. While the above is the general pattern of procedure against suppliers, according to which payment is

made only after supplies are received, cases would arise when payments have to be made in

advance in full or in part, before delivery of goods against bank guarantee, advance against

proforma invoice, advance for collecting goods as per purchase order or despatch documents

through bank. Payments, in such cases, should be made as per terms of the purchase order on the

basis of advice to this effect, and would remain in advance account till the time of the store receipt

document is received in purchase accounts section.

After regular scrutiny of bills has been conducted on receipt of store document/voucher, along with

purchase order, an entry is passed journalising the transactions for clearance from advance account.

In order to safeguard our interest it is necessary to obtain bank guarantee for the amounts of the

advance in cases where (a) advances paid for purchases being outstanding for a considerable

period of time, (b) materials and equipments not being put to use for a considerable time after

purchase due to defects detected on inspection and in some cases due to delays in repairs and

replacements etc. This will serve as an effective hold on the suppliers for arranging prompt repairs

or replacement of the defective equipments/materials. Units will have to ensure prompt inspection of

the equipments/materials soon after the receipt say within a period of two weeks so that bank

guarantees given by the suppliers are released promptly; Management/indenting department should

be streamlined to make the above procedure effective.

Efforts should be made to ensure wherever possible that instead of paying an advance on proof of

despatch, credit is obtained for 30 days even if it results in slightly extra cost to the extent of the

interest we save on our cash credit arrangements. This aspect should be kept in view by General

Manager, Finance Managers and Material Managers in order that when such terms are agreed to by

the party, payments are made strictly and promptly in accordance with such commitments.

6.9.9. The purchase made through DGS & D call for a slight change in procedure. Company is on the

approved list of DGS & D as a purchaser against their rate contracts. When purchases are made

through DGS & D’s, an order is placed straightway by the purchase department on the supplier, for

supplying a specific quantity according to the relevant contract rate. When the material is ready for

delivery/delivery received, company arranges inspection at our receiving point or as per the terms of

purchase order. The payment is arranged directly to the supplier by the Company.

6.9.10. Purchases of goods and services made from foreign countries have distinct and special feature

which has to be taken into account. These may relate to the following.

6.9.10.1. Import of equipment, spares and other materials for projects under construction or units in



production.

6.9.10.2. Purchase of know-how involving following types of payment.

i) Payment relating to the submission of basic design package by the foreign vendor.

ii) Payment of license fee which gives the legal right to use the process and other technical

documentation given by the foreign collaborator.

iii) Payment of royalty to cover the license fee and/or submission of the process design package and

other technical documentation. The royalty payment could be linked to one or more of the following

elements:

(a) Profitability

(b) Cost of Production

(c) Production in quantitative terms

(d) Sales

iv) Lumpsum consideration towards detailed engineering if done by the foreign vendor on the basis of

the process design package.

v) Payment for technical services mainly relating to the supervision of detailed engineering if done by

the party, supervision of erection, supervision of commissioning and guarantee tests.

The payments to be made to the foreign vendors could be from the special project loans given by the

Government of India in which case foreign exchange is required to be released by the Government

from the special loan granted by the foreign government.

Broadly speaking for all foreign payments, funds in foreign currency are required to be arranged for

which Government/Reserve bank of Indias’ approval is always essential whenever payment is to be

made. As an exception, however, where, on the basis of a specific release for the foreign exchange,

an import license has already been issued by the Chief Controller of Exports and Imports, no

separate approval of either the Government of India or the Reserve Bank of India is necessary while

making the payment to a foreign party against a valid import license issued by the CCI & F on the

basis of specific release by the Government of India.

6.10. METHODS OF PAYMENT

There are various methods of making payment which are elaborated hereunder.

6.10.1 Letter of Credit

This is the most common method acceptable to the foreign vendors. A banker in India is required to

open a letter of credit with a banker in the foreign country from where imports are to be made and

payments required to be effected. A letter of credit to be opened is normally irrevocable and

divisible, permitting partial shipments also in which case the foreign supplier is allowed to ship the

material in instalments. A letter of credit may also be confirmed or unconfirmed. In case of a

confirmed letter of credit, the foreign banker confirms to the foreign exporter the fact of having

established a letter of credit by an Indian banker and commits to the foreign supplier that the

payment would be made by it on submission of the documents in keeping with the conditions of the



letters of credit. For such a service, the foreign banker charges extra commission, which the foreign parties

normally press, should be borne by the Indian importer. It should, however, be our endeavour to

persuade the foreign exporter not to insist on the opening of a confirmed letter of credit and in case

any confirmed letter of credit is required by it, then the confirmation charges of the foreign banker

should be borne by the foreign collaborator. Letters of credit do not normally permit transhipment

except when it is absolutely essential. Transhipment on the high sea from one vessel to another

could mean damage to the equipment and supplies due to handling of the equipment. All such

equipments should be handled by cranes and other appliances. A loss of an equipment in the

course of transhipment can also not be ruled out and as such transhipment is not normally allowed

so long as it is not absolutely essential.

6.10.2. Collection Basis

Under this procedure, the documents are sent by the foreign collaborators to the Indian banker

through their banker who is requested to submit the same to the Indian importer against payment. In

this procedure, the foreign collaborator does not receive payment on submission of documents to its

own bankers but the payment is collected by the Indian banker from the Indian importer and then

remitted to the foreign banker for payment to the foreign party. This procedure is also fairly in vogue

and is resorted to:

i) Where the foreign collaborator is very well known to the Indian importer: or

ii) Where the validity of the letter of credit has expired and the shipments have been made by the

foreign party. Instead of requesting for extension of the validity, they can also send the documents

to the Indian Banker through their banker for collecting the payment from the Indian importer.

6.10.3. Payment through Letter Of Authority/Letter of Instruction

Where the foreign governemt gives a credit to Government of India for import of equipment and

machinery from the foreign country, the terms and conditions of the contract for purchase of

equipment and machinery from that country are negotiated by the Indian importers. After having

negotiated a contract, the contract is sent to the Govt. of India for their approval and for the issue of

Letter of Authority/Letter of Instruction to the Bank of the exporting country. Such Bank as a trustee

is given the instruction to make the payment to the exporter on submission of the particular set of

documents indicated in the Contract included with the Indian importer. As and when shipments are

made by the exporter, he submits the relevant shipping and other documents to the trustee Bank

who makes the payment to the exporter. The documents are sent by that bank to the Indian Bank

who hands over the same to the Indian importer against payment in Government account at the

composite rate of exchange. On the date the payment is made by the trustee Bank to the exporter in

the foreign country, the amount paid is considered to the credit of the Govt. of India to be paid in

installments as per the protocol/economic agreement signed by the govt. of India with the foreign

government. So far as the Indian importer is concerned, it has got nothing to do with the credit in

financial terms except that contract is to be concluded in keeping with the licensing conditions

finalised between the two Governments and paying is required to be made in Indian rupees in the

Government of India’s Account.

6.10.4. Payment through Bank (LSC payments)

Most of the bills are paid under this method. As per this procedure, the documents are sent to the

buyer through bank by the supplier. The payment terms shall be prescribed in the P.O. On receipt

of all the documents through bank, the payment is effected from the Finance section. The following

documents are mainly ensured by the Finance section while/before making the payment.



i) LSC (Local Short Collection) Memo/Bills Intimation Memo

This memo is drawn and sent to the buyer by the bank. In this memo the bank will indicate the

amount payable to the supplier ie. bill amount, bank charges, postal charges, etc. The buyer will

bear his bank charges normally and not the collecting bank charges.

ii) Invoice

If the item supplied is modvatable, the Finance section will insist for the “ Original for buyer “ copy of

invoice for claiming modvat.

iii) Guarantee Certificate

If any guarantee is to be ensured by the supplier, the Finance section will have to ensure that the

guarantee certificate has been received before effecting the payment to the supplier.

iv) Pre-Despatch Inspection by FEDO

The FEDO inspection certificate is also checked by the Finance section, if it is required as per the P.O

terms while making the payment.

On receipt of all the above documents the details of LSC such as date of receipt of documents in

Finance department, LSC No., amount, P.O No., date of receipt of clarification sought from other

departments, Bill No. & Date, Supplier’s name, description of materials, etc. are recorded in a Bills

Register in the Finance section. After recording the details, these documents are forwarded to the

concerned section for verification along with the P.O. The Bank voucher and LSC advising memo

are prepared and verified and passed by the A.O concerned. If the amount is above Rs. 1 lakh the

same is forwarded to the AFM for passing the voucher. Thereafter the LSC payment Instruction

memo is signed by the officers who are authorised to sign in the cheque. The payment is accounted

by giving debit to the party’s account GL-6000. Separate SL numbers are given to each supplier of

the company. Subsequently the memo is sent to the bank. Bank after debiting our accounts will

handover the other documents. On receipt of LR, stores will collect the materials and prepare a

Daily Receiving Report and submit the same to Inspection department. After receiving inspection

report, stores will prepare a RR. Based on the RR, Finance section will credit the party’s account.

6.10.5. Payment against Delivery/Payment against proforma Invoice

Under this method, the payment is made by the Finance section based on the request received along

with the Proforma Invoice copy from Purchase

Department. On receipt of the request from Purchase Department, Finance section will issue the

cheque. The Purchase Department will handover the cheque to the supplier directly and receive the

materials. These purchases are accounted based on the RRs prepared by stores.

6.11 BOOKS MAINTAINED

The accounting transactions of the Bills Section are computerised. The parties accounts are credited

either through Purchase Journal (01) or creditors journal (13). GL 6000 is normally used for booking

the credits of Accounts payable on purchases. Suppliers’ code on alphabetical basis is prepared by

each division for the sub-ledger Account Numbers. Computer process the batch of vouchers every

month and prepares the general ledger Accounts and Trial balance. Consolidated ledger is printed

by the CSC half yearly. The following are the books that should ordinarily be maintained in the

section of Accounts Department dealing with purchase:-

6.11.1 Sundry Creditors Ledger (GL 6000 to 6099)



Bills section has to reconcile both credit and debit balances periodically and confirmation of balances

have to be obtained from the parties at the year end. The debit balances in these accounts are the

advances paid to suppliers. Credit entries are made when bills are passed. The outstanding debit

balances shall be analysed periodically and action shall be taken to follow up of outstanding

balances.

6.11.2 Earnest Money Deposit and Security Deposit (GL 6101 to 6106)

All earnest money deposits by parties are credited generally to GL 6105 and the security deposits to

GL 6106. Debit entry is passed when the deposit is returned to the supplier concerned. The

balances are analysed periodically and action is taken to write back old balances to miscellaneous

income.

6.11.3 Bills Register

All bills received in the Finance are entered in this register chronologically with all details such as

purchase order No., party, Date of receipt, amount, date of payment, amount paid etc.

6.11.4 Foreign Purchase Register

All details of letter of commitments and details for individual cases are entered for individual loans and

check is exercised against amount allotted and actually utilised. This ensures that the amount spent

is not more than the sanctioned amount and whether any saving can be utilised for further

purchases.

6.11.5 Insurance Register

All cases for claims are entered here in order to watch the realisation of the claims.

6.12 FOREIGN CURRENCY MANAGEMENT

Around September ’95 the dollar parity with Indian rupee went upto Rs.33 from the then prevalent rate

of Rs.31.50 per US dollar. The wide fluctuation from Rs.31.50 to Rs.33 had substantially affected

our operating results. We are importing raw materials like Sulphur, Rock Phosphate, Ammonia and

Phosphoric Acid and anually the value of import is around Rs.400 crores. The slightest impact on

the dollar will have good effect on the cost of raw materials and thereby profitability. Hence the

Management decided to form a Committee to look and take a decision on a periodical basis. The

Committee has been constituted with Chief of Internal Audit as Chairman and members being the

Chief of Finance Heads of Cochin Division, Petrochemical Division and Head Office. The points of

reference to the Committee are

6.12.1. The Committee will collect data on a continuous basis regarding foreign exchange rates/forward

cover premia for the intervening period from the earlier meeting/decision and also review the

decisions taken in the earlier meeting vis-a-vis the actuals obtained.

6.12.2. Ascertain reasons for fluctuations in foreign exchange rates during the current period.

6.12.3. Assess the likely trend in the near future, medium term and long term period.

6.12.4. Take a decision as to whether to go in for forward cover selectively or on total basis and decide on

the extent of coverage on the foreign exchange exposure.



6.12.5. The decision will be recorded by the Committee with reasons therefore.

6.12.6. The Committee’s decision will be communicated to FD for information.

The Committee meets periodically and takes decision. After taking decision, it is put up to Director

(Finance) for approval/ratification.

6.13 CORPORATE MATERIALS GROUP

6.13.1. Consequent to the decanalisation of imports announced by the Govt. of India, we are now directly

importing major raw materials like Ammonia, Phosphoric Acid, Rock Phosphate, Sulphur etc.

However, certain difficulties like occasional non-availability of materials are experienced because of

the complexity of the subject which involves dealing with international suppliers and connected

agencies as well as systematic monitoring of the stock positions and production patterns.

Accordingly the Corporate Materials Group, as envisaged in CMD/HD-2/IC.160/85 dated 7-6-1985,

will function on the following lines:

6.13.2 They will be directly responsible for the functions listed below:-

6.13.2.1 Procurement of major consumables like Rock Phosphate, Sulphur, Ammonia and Phosphoric Acid as

well as packing materials required by Udl., CD, PD and Marketing.

Issue of Purchase Orders and follow up with the suppliers in respect of Packing Materials would

continue to be done by the respective Divisions as is being done now.

6.13.2.2 Processing of the major transport contracts listed below:-

a) Transport of finished products from Udl. and Cochin Divisions.

b) Movement of raw materials from W/Island to Udl. and Cochin Divisions by road and water as well as

inter divisional movements whenever necessary.

c) Award and execution of the contracts as per (a) and (b) would continue to be done by the

respective Divisions as is being done now.

6.13.2.3 Coordinating the movement of raw materials from W/Island to Production Units in order to maintain

uninterrupted production in the Production Units.

6.13.2.4 Maintain effective liaison with Railways, Port, Customs etc.

6.13.3 ED(CEW) will be in-charge of the Corporate Materials Group. Corporate Materials Manager will

report to ED(CEW).

6.13.4. Purchase of raw materials and packing materials will be finalised by Standing Sale Purchase

committee as given in Manual for Import of Fertilisers, Intermediates and Raw Materials.

6.13.5. AM(WI) will continue to be in-charge in the W/Island Office. He will be in-charge of all activities of the

Shipping Office including the berthing schedule, stevedoring, transportation of raw materials,

Customs clearance, POH of Ammonia wagons etc. He will continue to liaise with the Customs, Port,

Railways and other agencies. AM/W-Island will report to CMM.

6.13.5.1. CM/W-Island will be in-charge of the operation and maintenance and safety of the various

installations in W/Island, ie. Ammonia Storage as well as Rock and Sulphur and Phosphoric Acid



handling facilities. CM/W-Island will continue to report to DGM(OP)/CD.

6.13.5.2. MRM(CD) will continue to report to CM/W-Island and will be in-charge of the accounting of stock of

various raw materials in addition to his other duties.

MANNUAL

FOR

IMPORT OF FERTILISERS,

INTERMEDIATES AND

RAW MATERIALS

Contents Page Nos.

1. Scope 91

2. Competent Authority 91

3. Determination of Quantity 91

4. Prequalification of Vendors 91

5. Invitation to Bid 92

6. Validity of Bids 92

7. Opening of Bids 92

8. Late, Delayed, Invalid and Unsolicited Bids 93

9. Single Tender 93

10. Deviation 93

11. Spot Purchase 93

12. Purchases from PSEs 94

13. Long Term Contracts 94

14. Negotiations 94

15. Exemption for Producers 94

16. Earnest Money Deposit 94

17. Performance Bank Guarantee 95

18. Firm Price 96

19. Shipping Terms - FOB/CFR Imports 96

20. Delivery Schedule 96



21. Default 97

22. Force Majeure 97

23. Inspection at Loadport 98

24. Inspection at discharge port 98

25. Marine Insurance 98

26. Terms of Payment 98

27. Sellers Indian Agent 100

28. Arbitration 100

29. Government Law 101

30. Government of India 101

MANUAL FOR IMPORT OF FERTILISERS INTERMEDIATES AND

RAW MATERIALS

1. SCOPE

The procedure outlined in the manual shall be followed for the import of following items:

i) Decontrolled fertilizers like DAP, MAP, MOP, NPK etc. for direct sale.

ii) Raw materials and intermediates i.e. Rock Phosphate, Sulphur, DAP, MAP, MOP, Urea etc for

captive consumption.

Import of liquid raw materials through FAI consortium or directly by FACT are not covered under this

manual.

2. COMPETENT AUTHORITY

The Import shall be undertaken only with the approval of a Standing / Sale Purchase Committee

(SPC) constituted by the Board of Directors,. The present Committee comprises of Director

(Finance), Director (Technical), Director (Marketing) and Executive Director (CEW). Director

(Finance) shall be the Chairman of the Committee. Details of such approvals shall be reported to the

Board on quarterly basis for their information.

3. DETERMINATION OF QUANTITY TO BE IMPORTED

Imports shall be made based on realistic consumption levels, production schedule and available

stocks. Inventory carrying cost shall be kept to the minimum.

4. PRE-QUALIFICATION OF VENDORS

Prequalified lists of vendors shall be maintained for the items imported.

a) The pre-qualification shall be made on the basis of invitation for pre-qualification advertised in

leading national news papers. .

b) Initially the vendor list may be prepared based on the approved lists maintained by other public

sector enterprises/co-operatives.



c) The pre-qualification of vendors shall be based on the credentials of the vendors including previous

supplies made to FACT or other buyers in India, their financial capability and past performance.

d) The list of pre-qualified vendors shall be approved by the SPC.

e) The vendor list shall be valid for two years from the date of approval.

4.1 When there are outstanding disputes/claims regarding default in supply or supply of poor quality

materials, such suppliers shall be put on ‘Holiday’ i.e. tender enquiries shall not be sent to them, till

such time the matter is settled.

5. INVITATION TO BID.

5.1 Bids shall be invited from approved prequalified vendors. Minimum seven days time from the date

of issue of enquiry shall be given for submission of bids. However in case of urgent requirement or

in case the prescribed time is not possible to be adhered to, approval/ratification of SPC shall be

obtained giving recorded reasons for deviation.

6. VALIDITY OF BIDS

Bids shall be valid for minimum 7 days from the date of opening of the bids depending on the

material. All attempts shall be made to issue LOI/Order within the validity period of the bid. In

case the purchase cannot be finalised within the initial validity period of the bid due to circumstances

beyond the control of FACT, further extension of validitiy as required shall be obtained. However in

no case shall LOI be issued against a bid which has not been revalidated.

7. OPENING OF BIDS

The bids received shall be opened on the date and time stipulated in the enquiry documents as

below:

i) The bids shall be opened by Officers from Finance, and concerned department in the presence of

representatives of bidders, if present. Bids received in time by telex/fax/e-mail shall also be

considered along with the bids received in sealed envelopes.

ii) The quoted prices and terms and conditions shall be read out to all the bidders present at the time

of opening.

iii) The bids opened including telex/fax/e-mail bids shall be initialled and dated on all pages by the

Officers of FACT.

iv) In case there is any cutting or alteration in the quoted prices or in the quoted terms and conditions,

the same shall be attested by the officers.

v) The attendence sheet with the names of representatives of the bidders who attended the bid opening

shall be signed by bidder’s representative and the bid opening officers.

vi) Any clarification, additional information required shall be sought in writing from the bidders by

concerned department for submission to SPC.

8. LATE, DELAYED, INVALID AND UNSOLICITED BIDS

i) Late Bids:

Bids received after the opening of bids on the scheduled date and time shall be treated as late bids



and ignored.

ii) Delayed Bids:

Bids posted well before the opening date but received after opening due to delay in transit shall be

termed as delayed bids and ignored.

iii) Invalid Bids:

Bids without prescribed EMD shall be treated as invalid bids and ignored.

iv) Unsolicited Bids:

Bids received from vendors to whom limited tender enquiries had not been sent shall be termed as

unsolicited bids and ignored.

v) Names of bidders from whom late, delayed, invalid or unsolicited bids had been received shall be

recorded in the purchase proposal.

9. SINGLE TENDER

Where in response to tender enqiry only one bid is received and purchases are proposed to be

finalised on single tender basis, specific mention of the reasons to purchase on single tender basis

shall be made while seeking approval of SPC.

10. DEVIATION

Deviation from N.I.T. Terms if any can be considered only with the approval of SPC.

11. SPOT PURCHASE

Spot purchases may be resorted to under the following situations:

i) emergent requirement

ii) sellers offer attractive prices.

iii) inter-company high-seas sales between the companies.

Procedure set forth herein shall apply for finalisation of purchases on spot basis also.

12. PURCHASES FROM PUBLIC SECTOR ENTERPRISES

Purchases may be made from other Public Sector Enterprises, after negotiating with them, the

margin/commission payable to them over and above their cost of production/purchase. Reasons for

such purchases and justification of price shall be recorded in the purchase proposal to SPC.

13. LONG TERM CONTRACTS

Long Term Contracts may be entered into with the approval of SPC. The purchase shall be as per

procedure set forth in this Manual.

14. NEGOTIATIONS



Where the lowest acceptable bid received against the enquiry is considered high, price negotiations

may be conducted by SPC. Price negotiations shall be conducted only with the technically suitable

lowest bidder, if he can meet our delivery and quantity requirements.

15. EXEMPTION FOR PRODUCERS

All attempts shall be made to source the imports directly from manufacturers/producers or their

designated sole selling agent. Preference shall be given to manufacturers by way of exemption

from EMD and relaxation/exemption from submission of P.G. Bond.

16. EARNEST MONEY DEPOSIT

The enquiry documents shall clearly mention the amount of EMD to be submitted by the bidders

either in the form of interest free Demand Draft or Bank Guarantee. In case EMD is to be

submitted by a Bank Guarantee, it shall be as per prescribed proforma. The amount of EMD shall

be sufficient to be a security against loss in the event of the supplier failing to perform the terms and

conditions of the contract or to furnish the required P. G. Bond within the stipulated time after the

acceptance of their bid.

The amount of EMD shall normally be kept at USD 1.00 PMT. However, the EMD amount may be

increased specially for nontraditional suppliers who have not supplied similar goods to any buyer in

India in the last 24 months.

The EMD amount may be reduced with the approval of SPC when the volumes of import are relatively

large.

The requirement of EMD can be relaxed/waived in the case of following categories of bidders:

i) Reputed manufacturers/producers who have satisfactory record of supply to PSEs/ Coops, in India.

ii) Reputed traders who have satisfactorily executed similar supplies to FACT for atleast two years in

the last five years.

However, the requirement of EMD in case of new entrants without any credentials of past

performance to FACT shall not be relaxed in any case.

The EMD furnished by the unsuccessful bidders shall be refunded as expeditiously as possible, within

a reasonable time, after finalisation of order.

17. PERFORMANCE BANK GUARANTEE

Successful bidders shall be required to submit a performance guarantee bond equivalent to 2% of

the value of the order in the prescribed proforma. Bank guarantee can be from a scheduled

bank/nationalised bank/Foreign Bank. In the case of bankguarantee issued by branches abroad of

foreign banks or bank guarantees issued by branches abroad of Indian banks confirmation from a

scheduled/nationalised bank situated in India shall be obtained. Bank Guarantee shall be

submitted within 21 days of acceptance of their bid/issue of LOI. failing which the earnest money

deposit shall be forfeited.

The value of PG bond, may be increased in case the amount, equivalent to 2% value of the order

value is not sufficient as security towards the loss likely to be suffered in case of non performance

by the sellers.

Requirement of PG Bond may be reduced to 1% or relaxed/waived in the case of reputed



manufacturers/producers/traders who have satisfactorily completed similar supplies to FACT in the past.

In case of new/non traditional suppliers without any previous credentials of supply to FACT, the

value of PG bond may also be increased upto a maximum of 10%.

The validity of PG bond shall normally be kept as 90 days from the likely last date of arrival of

ordered goods at the Indian discharge port. All attempts shall be made to finalise and settle the

claims within the validity of PG bond. However, in no case, the PG bond shall be released till all

claims against the order have been settled by the sellers. The PG bond to be submitted by the

seller shall be unconditional, operative BG and payable on demand without demur or reference

to the seller.

18. FIRM PRICE

The bids shall be submitted and accepted on the basis of firm prices only.

19. SHIPPING TERMS:FOB/CFR IMPORTS

As per the extant policy of the Govt. of India, all imports shall be finalised on FOB basis. The

chartering/shipping arrangements shall be made by Transchart, Ministry of Surface Transport,

Govt. of India. Transchart may be requested to make shipping arrangements either on parcel wise

basis or for the entire contracted quantity.

Bids shall be invited on FOB and CFR bases with indicative laycans. Evaluation of bids shall be

made on CFR basis. In the case of Rockphosphate, the lowest bid shall be determined based on the

cost of production of one tonne of P2O5 using the quoted CFR prices of Rockphosphate. Purchase

orders shall be placed indicating FOB and CFR prices, reserving FACT’s right to exercise option for

shipment on FOB or CFR basis at the time of shipment. Firm shipment lay can shall be obtained

from the supplier 15-30 days before scheduled date of shipment, depending on sailing time and

Transchart requested to provide suitable vessel at or less than the freight component of supplier

and failing which to grant NOC to operate the purchase order on CFR basis. Care shall be taken to

give sufficient time to seller to arrange vessel if order is to be executed on CFR basis. However

for fertilisers, orders may be placed on either FOB or CFR basis on commercial prudence.

Vessels shall be chartered as per relevant Charter Party and shipping terms shall be in accordance

with INCOTERMS 1990 edition and as amended.

If for reasons like co-mingled cargo or vessel being already on the high seas at the time of

submission of bids, or for any other reason, the bidder is not able to offer FOB prices, letter of

intent/purchase order shall be placed on CFR basis within bid validity and NOC obtained from

Transchart.

20. DELIVERY SCHEDULE

The contractual delivery schedule shall normally be treated as essence of the contract. In case of

FOB contract, the shipment schedule Ex-loadport/last date of shipment shall be clearly mentioned.

In case of CFR contract, the arrival schedule/last date of arrival at discharge port shall be clearly

mentioned in the Purchase Order. In case of any delay on the part of FACT to fulfil their obligations,

suitable time extension can be allowed. Extension of shipment/arrival schedule may also be granted

in case of force majeure condition or where FACT have not suffered loss due to delay in supply.

However, in case the delay in shipment/arrival is solely attributable to negligence of the seller,

further extension of time shall be subject to recovery of liquidated damages for the delay as per the

terms of the Purchase Order.



21. DEFAULT

The following provisions shall be made in the purchase order regarding default in performance of the

contractual obligations by the sellers:

i) To recover as liquidated damages and not by way of penalty for the period after the material was

due until actual delivery or until FACT secure the material from other sources, a sum equivalent to a

maximum of 2% of the contract value.

ii) To cancel the contract or a portion thereof and, if so desired, to purchase the material from other

sources at the risk and cost of the Seller.

22. FORCE MAJEURE

i) If at any time during the continuance of the contract either party is unable to perform the whole or in

part any obligation under the contract because of war, hostility, civil commotion, sabotage,

quarantine restrictions, acts of God and acts of Govt. (including but not restricted to prohibition of

exports or imports) fires, floods, explosion, epidemics, strikes, embargoes, closure of discharge

berth, then the date of fulfilment of engagement shall be rescheduled after considering FACT’s

ullage, production requirements and other scheduled supplies.

ii) Any waiver/extension of time in respect of the delivery of any instalment or part of the goods

occasioned due to the reasons in (i) above shall not be deemed to be waiver/extension of time in

respect of remaining deliveries.

iii) If operation of such circumstances exceeds three months, each party shall have the right to refuse

further performance of the contract in which case neither party shall have the right to claim eventual

damages from each other.

iv) The party which is unable to fulfil its obligation under the contract must within 15 days of occurrence

of any of the causes mentioned in this clause shall inform the other party of the existence or

termination of the circumstances preventing the performance of the contract. Certificate issued by

the Chamber of Commerce in the country of the seller or competent authority in case of FACT shall

be sufficient proof of the existence of the above circumstances and their duration.

v) Non availability of material will not be an excuse to the seller for not performing their obligations as

per the contract.

23. INSPECTION AT LOADPORT

Sellers shall ensure that internationally reputed inspection agencies like Inspectorate, SGS etc. are

appointed by seller for pre-shipment inspection at the loadport in respect of quantity and quality. The

inspection charges for such inspection agency shall be paid directly by the Seller. FACT may

appoint its own inspection agency at load port at its cost, if so desired.

24. INSPECTION AT DISCHARGE PORT

For the finished fertililisers covered under Fertiliser Control Order of India, attempts shall be made

to ensure that the quality as determined at the discharge port is final and binding on sellers. The

quality as determined by Central Fertiliser Quality Control Laboratory, Faridabad/Regional

Laboratories shall be final. The penalties to be recovered from the sellers towards variation in

quality at discharge port for finished fertilisers shall be as followed by Govt. of India for import of

fertilisers and shall be specifically provided in the contract.



In case, the suppliers do not accept the condition of discharge port quality as final, specific approval

of SPC shall be taken for consideration of loadport quality as certified by III Party inspection agency

as final.

Discharge port inspection of raw materials for quality and quantity shall be arranged by FACT

through reputed III party agencies.

Any claim in respect of quantity/quality shall be lodged on the seller/vessel owner within 45 days of

completion of discharge or as per terms of the order/Charter Party.

25. MARINE INSURANCE

The marine insurance of the cargo shall be arranged by FACT. The vessel chartered by the seller

against CFR contract shall not be more than 15 years in age and shall be on 100 A1 or equivalent

class failing which the seller/vessel owner shall be liable for any extra insurance premium to be paid

on account of vessel’s age, flag or class. The vessel nominated by the seller shall be subject to GIC

approval. If for any reason the purchase is on CIF basis, seller shall arrange the insurance policy

indicating the beneficiary as FACT.

26. TERMS OF PAYMENT.

Payment may be made as below:

i) By telegraphic transfer to supplier’s designated bank account against clean and complete shipping

documents presented to FACT’s bank through supplier’s bank.

ii) By letter of Credit (L/C)

L/C shall not be normally Transferable, Divisible or Assignable. However, transferable L/C can also

be opened in special circumstances with the specific approval of SPC.

The L/C shall be opened after receipt of PG Bond in the approved proforma. The charges for

opening letter of credit and bank charges in India shall be to FACT’s account. All bank charges in

the Seller’s country including confirmation charges shall be to the account of Seller.

Indian agents commission, if any, shall be deducted from seller’s invoice and paid in Indian rupees

directly to the Indian agent. Rate of exchange shall be as on the date of payment to seller.

iii) The letter of credit shall be established for the full value of the shipment in favour of the Sellers as per

the terms of the Purchase Order and the Invoice value shall be payable generally against

presentation of the following documents:

a) One of the three negotiable copies of the clean Bill of Lading and three non-negotiable copies.

Charter Party Bill of Lading is acceptable provided it bears an endorsement that all terms &

conditions of the relevant Charter Party are deemed to have been incorporated therein.

b) One original and four copies of certified commercial invoice.

c) Original Certificate of origin duly signed by Chamber of Commerce, alongwith a copy.

d) Original copy of the certificate of Inspection showing analysis and weight furnished by Sellers.

e) Certificate from the Sellers that the material supplied are correct as to quantity, quality, rate, total



value and the payment is due in accordance with the terms of the Purchase Order at the time of

presentation.

f) Certificate to the effect that 2 negotiable sets of documents with 6 non-negotiable sets have been

despatched to the FACT indicating Courier Company’s name, receipt number and date.

g) Copy of the Telex/Fax/Cable from Sellers to FACT giving details of shipment.

h) Four copies of stowage plan.

i) Original Load Port draft survey report.

j) Certificate of inspection issued by FACT’s inspection agency for Quantity & Quality wherever

applicable.

k) Acknowledgement of Master of vessel for receiving sealed samples, wherever applicable.

27. SELLER’S INDIAN AGENT

27.1 The bidders/sellers shall disclose at the time of bidding the name and address of their Indian

agent/representative along with following information:-

i) Indian Agent’s Registration Nos. and their permanent income tax account no.

ii) Amount and nature of commission/remuneration.

iii) A copy of terms and conditions of the appointment of the Indian agents including the commission

being paid to them.

In case there is no seller’s agent in India the seller shall certify that they have no agents in India and

that no remuneration is to be paid to any Indian Party.

27.2 FACT while remitting payment to the Seller shall deduct the Indian Agent’s commission from the

value of the invoice and pay to the Indian agent in equivalent Indian Rupee Cheque.

27.3 The information required above shall include those agents situated in India who have some other

kind of commercial relationship and may not fall within the usual definition of Agent. In cases where

there is no agent but the Seller has any Indian Branch or subsidiary or a financially inter-linked

concern the same shall be intimated to FACT. This shall also include such Indian agents, who

are paid general retainer fee and may not have any reference to this particular contract i.e. the seller

shall intimate FACT if they have got any agent/representative by whatsoever name he may be called

in India and is receiving in India and/or outside India, any payment or facility in any form in return

for any service rendered by him to the Seller.

27.4 Should FACT suffer any loss/losses or penalisation by the appropriate authority in India because of

the failure or action of the Seller in not disclosing the names and other details in respect of their

agents in India, FACT shall hold the Seller responsible for such penalties and shall be entitled to

claim from them damages for breach of the above provision of the order and also to resort to such

other action which they may consider appropriate.

28. ARBITRATION

All disputes or differences, whatsoever, arising between FACT and Seller shall be settled by

arbitration of the Indian Council of Arbitration The Arbitrators shall give a reasoned award. The

venue of the Arbitration shall be New Delhi.



29. GOVERNING LAW

The contract shall be constructed and Governed by the Laws of State of India.

30. GOVERNMENT OF INDIA

The Govt. of India is not a party to the import contract and the following clause shall be provided:

It is expressly understood and agreed by and between both parties that FACT is placing this

purchase order solely on its own behalf and not on behalf of any person or entity. In particular it is

expressly understood and agreed that the Govt. of India is not a party to this purchase order and

has no liabilities, obligations or rights hereunder. It is expressly understood and agreed that FACT

is an independent legal entity with power and authority to place purchase orders solely on its own

behalf under the applicable laws of India and general principles of contract law. The Seller expressly

agrees, acknowledges and understands that FACT is not an agent, representative or delegate of the

Govt. of India. It is further understood and agreed that the Govt. of India is not and shall not be liable

for any acts, omissions, breaches or other wrongs arising out of the Purchase Order. Accordingly

FACT hereby expressly waives, releases and foregoes any and all actions or claims including cross

claims, impleader claims or counter claims against the Govt. of India arising out of this contract and

convenants not to sue the Govt. of India as to any manner, claim cause of action or thing whatsoever

arising out of or under this Purchase Order.



CHAPTER-7

STORES ACCOUNTS 7.1 FUNCTIONS OF STORES/MATERIAL ACCOUNTS SECTION

The section shall maintain quantity and value accounts of receipts, issues and balances of stores in

hand and reconcile the numerical balances held by the Stores Department with the value accounts.

The section shall also prepare statements and returns for submission to the management for control

purposes. This functions as a part of the Finance department and the functions of the Stores section

are the following:-

a) Maintenance of priced stores ledger indicating numerical stock position.

b) Ensuring that the quantity account of receipts, issues, balances of materials agree with the balances

appearing in the bin maintained by the stores department and reconcile the variation, if any

c) Ensuring reconciliation of the balances in the priced Stores ledgers with the control account in the

general ledger.

d) Arranging for recovery of cost of materials issued on recoverable basis.

e) Maintenance of regular and effective reconciliation of bin card balances and proper investigation of all

discrepancies reported by perpetual inventory team.

f) Ensuring that Stores issues are priced with reasonable accuracy and the rates initially charged are

reviewed from time to time and co-related to actual.

g) Initiating action for adjustment of profits or losses due to stock taking/survey or other disposals on

other causes with appropriate sanction and also ensuring that these are not indicative of any serious

lapses.

7.2 ACCOUNTING SYSTEM

This can be divided into the following main sections.

1. Receipt of Stores

2. Issue of Stores

3. Return of Stores

4. Value adjustments

5. Reconciliation with control accounts

6. Unconsumed materials lying at site at the close of financial year.

7.2.1 Receipt of Stores

a) The basis for the accounting of the receipts shall be the Goods Receiving Notes (GRN) or Receiving

Reports(RR). After the materials are tallied with the supplier’s challan and the purchase order,



inspection is conducted. The Goods Receiving Note shall then be prepared by Stores Department in

quadruplicate. These shall be serially numbered. The accounts department will receive from the

stores department-

(i) Two copies of Receiving Reports.

(ii) Inspection report, if given separately, otherwise RRs will contain the report of inspection.

(1) Original RR will be forwarded to Bill Section and a copy of the same to Material Accounts Section.

Bill section will note the total of the invoice with all the items in the GRN and forward to Material

Accounts section along with the invoice. The Material Section will allocate the total cost to each

material separately and forward the same to General Accounts section for onward transmission to

CSC by 10th of the succeeding month. Provisional pricing of material is done only at the time of

Annual closing in the case of pending RRs for which proper invoice bills are not received in the

section.

The actual payment of unloading, transport etc. of stores will be debited to Stores Account (GL 4160)

by the dealing section and the stores accounts section shall recover such charges on the basis of a

fixed rate and include the same in the value of stores by credit to Stores Account at the time of issue

of materials. The materials accounts section will advice the rate to be charged for a year on each

issue to CSC who in turn will recover the charges on each issue for a year. This should be reviewed

periodically and adjustment if any to be communicated to CSC with a copy to FM(HO).

Bills on account of loading, unloading and handling of the materials will be paid after the verification

by the Stores Department.

Road transport contracts involving large amounts shall be finalised after obtaining competitive

quotations in accordance with the prescribed tendering procedure, with the approval of competent

authority.

In cases where the Stores department is authorised to hold an imprest for making petty payments on

account of transport contracts, etc., the payment shall be made by the Stores Department after

satisfying themselves regarding the correctness of the claim and necessary account shall be

rendered to the accounts department promptly.

The total value of Stores arrived at and its break up in the various elements of cost viz. freight,

insurance etc. shall be entered serially in the Stores Receiving Register from each stores receiving

report.

The priced RRs are posted in the RR Register with the following details. PO No., date, RR No., PJ

No., date of pricing, Amount, Name of the supplier. Thereafter the RRs are forwarded to General

Accounts Section for onward transmission to CSC.

b) Financial Entries

The Stores will be grouped under the following three main categories and separate accounts kept in

respect of each of them:

i) Stores and spare parts

ii) Raw materials

iii) Packing materials



7.2.2 Issue of Stores

(a) Valuation and posting of issue notes or requisition notes

The stores department shall issue material after verifying that the requisition has been sent by the

authorised officer and is complete in all respects. The basis of accounting for issue of Stores shall

be the requisition notes which shall be prepared in the form prescribed.

These shall be numbered serially. It is the responsibility of the requisitioning department to give all

prescribed details in the issue notes, and special attention shall be paid in the following details.

i) Proper classification regarding the nature of expenditure (whether capital or revenue) shall be given.

For capital expenditure,name of the job along with the additional facility number/job number shall be

given. Job details shall also be given for works on maintenance account.

ii) For issue of materials on operation or maintenance account, the cost code number and shut-down

code number, if any, shall be given. Detailed instructions regarding the cost centre codification shall

be issued at the unit level.

iii) The issue of requisition should be signed by the authorised officers in the requisitioning department

and the Stores department.

The Stores will enter the details of MR in the online computer and forward the original to Material

Accounts Section. Inter-unit/division transfer of materials shall be accounted at cost basis. Freight

and other incidental charges shall be borne by the transferee unit/division. In case of transfer of

materials, the transferring unit/division will ensure that the debit advice is immediately forwarded

along with the documents for the transfer of material to transferee unit/division.

Other Stores documents such as stock verification advices, transfer advice etc. are received by

Material Accounts section and Stores adjustment memos, stores return note etc. are passed on to

CSC(HO) through general accounts section after noting the serial numbers of such vouchers.


When stores are issued, the material accounts section shall debit the respective material consumed

accounts and credit the respective stores issued accounts. In the case of stores earmarked for

capital jobs all issues should be booked directly to concerned accounts.

Return of Stores

a) Valuation and posting of return notes

The materials returned to the Stores department from work/plants shall be returned through the

Advice of Return of Materials (ARM). They shall be serially numbered. Three copies of the ARM will

be received by the Material Accounts Section from the Stores Department. These will indicate

reference to the MR against which the materials were originally drawn. The quantity returned will be

valued at the last average price of the material in question. The first copy of ARM will be retained by

the concerned ledger keeper. The second copy will be sent to the costing section for necessary

adjustments and the third copy will be returned to the department which has requested the material.

Advices for return of material are forwarded to material accounts section monthly after due verification

for Serial No., item code and unit code for onward transmission succeeding month to CSC(HO).




When stores issued during a year are returned in the same year, these will be adjusted by debiting to

respective stores issue accounts and crediting to the respective materials consumed accounts

previously debited.

The financial entry has to be passed by the Material Accounts Section in those cases where the

details of nature of transactions are not readily known from the Return Note. In such cases return

note should be forwarded to the stores accounts Section who will pass the necessary financial entry.

c) Transfer of assets from department to another department

Whenever equipments, furniture, office appliances etc. are transferred from one department to

another department, transfer notes in duplicate duly signed by the transferor and the transferee are

to be prepared. Such transfer notes shall contain the original issue note No., date, quantity (no. of

equipment such as No. of typewriter, air conditioner etc.) detailed specifications etc., and to be

passed on to the concerned section, which is maintaining the assets register, for recording the

change of location of the assets in that register. No accounting entries will be made for such

transfers.

d) Issue and receipt of materials on loan to/from outside parties

Material will be received or issued on loan to/from companies, firms or other parties with the approval

of the competent authority as per powers delegated to that authority and also in accordance with the

guidelines issued from time to time. When materials are issued to other units, it is to be ensured that

MRs are prepared. If materials are issued from the stock available with plant directly to other units,

care is to be taken to see that this is regularised by issue of Advice of Return of Material and Material

Requisition. Similarly when materials are received from other divisions, a receiving report is to be

prepared. In case a direct receipt of material by plants from other divisions, Receiving Reports and

Material Requisition are to prepared immediately to regularaise the transaction. Value of material

issued to other units is to be debited to the respective units every month on the basis of the material

summary and debit notes are to be issued. Action is to be taken to obtain debit notes in time from

other divisions for materials received. Such inter unit accounts are to be settled on a monthly basis.

A loan register is to be maintained to record the details of materials issued on loan to outside parties

and material taken on loan by the company from outside. The receipt and return of loan and receipt

and payment of security and hire charges are watched through this register.

Material Accounts Section works out every year the percentage of stores charges and stores reserve

applicable for issue of material for the year and intimates the same to the CSC(HO). For stores

reserve based on the guidelines, suitable entry has to be passed in the financial accounts on an

annual basis.

7.2.5 Reconciliation with control accounts

The priced stores ledger shall preferably be balanced every time and an entry is posted in the ledger.

So far as the numerical reconciliation of the balances in the bin cards and the ledger is concerned,

the closing balance as per bin cards indicated by the Stores department on each issue note should

be tallied with the closing balance as per ledger whenever an issue note is posted. The

discrepancies, if any, shall be settled immediately with the stores department.

In order to ensure the accuracy of the stores control account, the debit/credit postings in priced stores

ledger have to be reconciled monthly with the debits/credits sent to the accounts branch. This

reconciliation is accomplished as under:-



i) The priced stores ledgers are maintained according to each category of stores.

ii) A reconciliation register is maintained to which are transferred folio-wise details of opening balances,

receipts, issues and closing balances of each item of store as appearing in the priced stores ledger.

iii) The totals of receipts, issues and closing balances in the categorywise reconciliation register at the

end of each month should tally with the corresponding figures appearing in the sub-ledger of the

same category of stores.

The process of reconciliation consists in verifying if monthly totals of debits/credits for each category

of stores(viz. tools, general stores etc.) tally with corresponding totals of that category of store in the

sub-ledger. If the totals tally no further reconciliation is necessary, but where they do not, the stores

receipt vouchers/issue notes and return notes have to be checked into the stores received summary

registers, sorted out by category of stores and then checked with postings in the priced stores ledger

and eventually into the reconciliation registers till the errors are located and set right. By maintaining

categorised statement of receipts and issues of these stores, reconciliation is compartmentalised

and errors are easily located, since it is necessary to undertake a detailed reconciliation of the

category of stores totals of which have tallied with the corresponding totals of the priced stores

ledger.

7.3 VERIFICATION OF STORES

The discrepancies reported by the Stock Verification team as a result of physical verification of stores

shall be checked up with the quantity balances in the priced stores ledger and necessary

adjustments carried out after taking orders from the competent authority.

7.4 PRICED STORES LEDGER REVIEW

With the object of removing from the priced ledgers all irregular balances, the priced stores ledgers

should be reviewed by officers at least once in six months and all important irregularities noticed at

the time of review should be set right. Important descrepancies noticed are listed as under.

a) Credit balance in quantity or value.

b) Value without quantity.

c) Quantity without value.

In the following cases a report has to be made and sent to Materials Manager for comments.

a) Stocks not having been issued for more than two years.

b) Heavy stock as compared with normal issues.

c) Stocks of which no purchases have been made for three years or more.

d) Stocks for which maximum and minimum have not been prescribed.

7.5 LOOSE TOOLS

The purchase of loose tools is debited to general stores account and kept in stores. Whenever they



are issued, and drawn against Material Requisition, the loose tool account is debited and general stores account

is credited. At the end of the year 1/3rd of the balance outstanding under loose tools account is to

be charged to loose tools depreciation account.

7.6 Material accounts section will ensure that:-

a) All the stores transactions such as RR, MR, ARM, stores excess/short advice, adjustments

statement of odd combinations list and selection list are sent to CSC(HO) by the 10th of the following

month accompanied by the last document certificate.

b) By counter checking the control totals furnished to CSC(HO), all stores transactions are accounted

by Computer.

c) Rate for valuation of stores issue adopted by Computer are correct.

d) Excess/short adjustments made by computer are correct.

e) Debitable MRs have been checked and fully accounted.

f) Monthly Stores Ledger shows control totals tying up with the total of the debit to inventory statement

and RR statement.

g) Necessary follow up action is taken in respect of material loaned to/from parties, GRN and MRs

pending with stores and GRN pending with bills and bank section.

7.7 STATEMENTS AND RETURNS

Material accounts section gets the following documents from CSC(HO).

7.7.1 Monthly statements

a) Receiving report register in serial order of RRs.

b) Credit to suppliers (creditors journal) in serial order.

c) Debit to inventory account from RR.

d) Material summary in Account Number serial order of MRs.

e) Selected (unaccounted) MR/RR list.

f) Personal debit (debitable MR) summary.

g) Stores ledger

h) Odd balances list

i) Difference between bin balance and ledger balance for the Accounting year after the journalisation of

accounts.

Annual Statements

a) ABC analysis of inventory.



b) Moved/unmoved item list.

c) Closing balances list in serial order of item code numbers.

On receipt of receiving report register, material section compares the receiving report value with

journalised invoice value and variance, if any are noted in the RR register and advised to CSC(HO)

for adjusting individual stock through stores

adjustment memo. The number of the stores adjustment memo is also noted in the receiving report

register.

On receipt of stores ledger from CSC(HO) the variation of quantity balances between Bin balance and

stores ledger are investigated and necessary action taken to rectify them.

Immediately on receipt of the stores ledger, the material accounts section reconciles every month the

closing balances as per store ledger and the corresponding book balances as per general ledger.

The selected MR list and odd balances are checked and necessary adjustments are carried out.

The material accounts branch will also ensure that all the initial documents i.e. stores receipt

vouchers, issue/return notes and transfer adjustment vouchers received by it are sent duly valued

and scrutinised to the CSC(HO) on monthly basis.

Under the computerised system of stores accounting all documents, such as stores receipt vouchers,

issue notes, return notes and transfer vouchers shall be sent to the Computer Section after

exercising the prescribed controls. The CSC(HO) shall prepare all accounting abstracts with the

summary figures for the monthly journal entry. In addition, it shall also prepare the priced stores

ledger for all items moved during the month giving the opening stock, receipts, issues and closing

balance for the month, for review and passing the adjustment entries, wherever necessary. Stores

accounts section shall periodically reconcile the balances of all categories of stores with the store

control account in the financial ledger. The section shall draw out reconciliation programme in such

a manner that the work of reconciliation is spread out evenly during the year.

The Board approved Stores Management

Manual is given as Annexure 39.



CHAPTER-8

EXPORT OF MATERIALS AND RELATED BENEFITS 8.1 INTRODUCTION

Government has introduced various schemes to promote export of goods from India and to augment

the foreign exchange resources of our country. Since the indigenous demand for Caprolactam is

less than the indigenous production Caprolactam may have to be exported even at a price less than

the domestic price. FACT started exporting Caprolactam in 1993 and every year a target of around

10,000 MT. is considered for export. This is required to keep the production at maximum level and

to earn some revenue contribution out of exports.

8.2. EXPORT PROCEDURE

The export procedure and the various export benefit schemes are announced by the Government

through Export and Import Policy. The Government has released new Export and Import Policy

1997-2002 and new Handbook of Procedures applicable with effect from Ist April 1997. Eventhough

the policy and procedures are generally effective for a period of 5 years, some significant changes

are announced by Government from time to time.

8.3. REGISTRATION

Before commencing exports the exporter has to obtain certain registration certificates as mentioned

below:-

i) Registration cum Membership Certificate (RCMC)

These certificates are issued by various export promotion councils. We have obtained the certificate

from Federation of Indian Export Organisation (FIEO).

ii) Importer - Exporter Code No. (IEC No.)

The application for grant of IEC No.is to be given by the Registered/Head Office of the applicant to the

licensing authority. We have obtained the IEC No. from Joint Director of Foreign Trade (JDFT). Our

IEC No. is 1088000631.

iii) RBI Code

This is obtained from Reserve Bank of India. Our RBI Code No.is EF:000113

8.4 EXPORT ORDER - Procedure followed in our Company.

The Pricing Committee decides the quantity to be exported during the month and authorises Chief

Sales Manager (CSM) to float enquiries to customers given in the list approved by CMD. The

customers are asked to quote within a fixed time in sealed cover or by telex/fax. The proposal for

accepting the export offer of the customer who has quoted the highest price is put up by CSM

through the members in the Pricing Committee to CMD for approval. After obtaining the approval,

the customer is intimated about our acceptance of the offer and he is asked to open a Letter of

Credit payable at sight for the value of export.

8.5. APPLICATION FOR LICENSE



One of the benefits given under the Export Import Policy is the Duty Exemption License Scheme

under which we can import certain items given in the Handbook of Procedures without paying

Customs Duty. Earlier there were two schemes available viz. Value Based Advance License (VBAL)

and Quantity Based Advance License (QBAL). As per the new policy the VBAL Scheme has been

withdrawn and a new scheme known as Duty Entitlement Pass Book (DEPB) Scheme has been

introduced. We are now availing QBAL Scheme and as per this scheme for every MT.of

Caprolactam exported we are eligible to import certain quantity of Cyclohexanone or benzene or

ammonia without payment of basic customs duty. The quantity is prescribed as standard input-

output norm in the Hand book of Procedures (Vol.II). As per this Scheme we have to pay CVD, but

the same can be adjusted as Modvat credit. In addition to the quantity restriction mentioned above,

the duty free license should have a minimum value addition of 33%.

After receipt of Export Order or Letter of Credit an application for advance License is filed with JDFT.

We have to execute a Letter of Undertaking (LUT) in lieu of Bank Guarantee with JDFT for the

savings in customs duty. JDFT issues the License along with Duty Exemption Entitlement Certificate

(DEEC) Book as Part-I and Part-II. The details of imports and exports made are endorsed by

Customs Department in Part-I and Part-II.

8.6. EXPORT OF GOODS

In order to co-ordinate the activities of export of goods, clearing agent is appointed. The clearing

agent gets the Shipping Bill & GR Form, arranges the empty containers from the customs, brings the

Central Excise officials to supervise the stuffing and sealing of the containers, arranges the customs

clearance and shipment of the goods.

8.7. CENTRAL EXCISE FORMALITIES

The goods for exports are cleared from the factory without payment of excise duty under Bond. For

this purpose we have filed a Running Bond of Rs.3 crores with the Central Excise Department.

Before export we have to file an application for removal in Form AR4 with the Superintendent of

Central Excise. The FOB value of the goods and relevant excise duty amount are mentioned in the

AR4. The amount of duty is deducted from the Bond amount, which is again restored on submission

of proof of export. Towards proof of export we have to submit copies of AR4 signed by the Customs

Department, Copy of Shipping Bill, copy of Bill of Lading and the Customs Invoice.

8.8. SUBMISSION OF DOCUMENTS TO BANK

After the export, the documents such as Bill of Exchange for the value of export in dollars, Customs

Invoice, GR Form, Bill of Lading, Letter of Credit etc. are submitted to bank for collection of the

export proceeds. The foreign exchange realised by the bank is credited to our account and a

certificate from bank is obtained for the realisation of foreign exchange.

8.9 IMPORT OF GOODS UNDER DUTY FREE LICENSE

The duty free license mentioned above can be utilised for importing goods specified in the license.

After the export obligation is fulfilled we are also permitted to sell the license with a premium, in case

we are not importing the goods.

8.10. REDEMPTION OF LETTER OF UNDERTAKING

After the export obligation is fulfilled the LUT submitted with the licensing authority can be redeemed

on submitting documents such as Bank Certificate of Export realisation, DEEC containing details of

imports and exports duly endorsed by customs authority, statement duly certified by a Chartered



Accountant showing details of actual import and exports etc.

8.11. EXPORT BENEFITS

Apart from the Duty free license mentioned above, the exporter is eligible to get certain other benefits

as given below:-

i) Export House Benefit - Special Import License

The exporter is given the status of Export House on achieving a level of export performance. FACT

has obtained the Certificate of Registration as an EXPORT HOUSE from the Directorate General of

Foreign trade, Ministry of Commerce, New Delhi. Recognition on the basis of FOB criterion is given

by achieving turnover as given below:-

a) Average FOB Value of exports made

during the preceding three licensing

years, in Rupees. 20 Crores

b) FOB value of exports made during the

preceding licensing year, in Rupees 30 Crores

Exporter who is granted recognition as Export House is eligible for grant of Special Import License

(SIL) at 6% on the FOB value of exports. The SIL can be utilised for importing Restricted Goods or

can be sold in the market for a premium.

ii) Quality Certificate and SIL

Exporter who has obtained ISO 9000 quality status is entitled to get SIL at the rate of 5% of the value

of exports made during the preceding licensing year.

iii) Deduction U/S 80 HHC of the I.T.Act

Exporter can claim deduction U/s 80 HHC of the I.T.Act. while computing his taxable income. The

amount of deduction can be computed using the formula given below:-

Deduction Export Turnover = ——————— x A + (B) U/s 80 HHC Total Turnover A = Profits of the business less 90% of any profit on sale of as computed under the licenses, duty drawback or head “Profits and gains receipt of brokerage commission, of business or profession”. interest rent etc. included in the profits. B = Export Turnover ——————— x 90 % of any profit on sale of Total Turnover licenses and duty drawback.

iv) Sales Tax - Form H Benefit

We are obtaining Caprolactam bags on goods meant for exports without paying Sales Tax by issuing

Form H under Section 5 of Central Sales Tax Act.





CHAPTER-9

WORKS CONTRACT ACCOUNTS 9.1 INTRODUCTION

This chapter deals with the important functions of Bill Section in Accounts Department dealing with

contracts for execution of Civil works and other works for Construction/Erection/maintenance/service.

9.1.2 ACTIVITIES INVOLVED IN THE FINANCE SECTION

The activities involved in the finance section on works contract can be classified as under:-

i) Sale of tender form

ii) Remittance of Earnest Money Deposit (EMD)

iii) Remittance of Security Deposit (SD)

iv) Issue of Materials to the contractors

v) Sundry Advances to the contractors

vi) Receipts of Certified Bill in the Specified Format

vii) Scrutiny of Running Account Bill and Final bill

viii) Accounting of Running/Final Bill

ix) Statutory Procedures and Formalities in works contract.

9.2 SALE OF TENDER FORM

9.2.1 Cost of tender form

Proceeds from the sale of tender form will be credited to cost of tender documents account under the

head ‘Miscellaneous Income’.

9.2.2 Sales Tax on sales of tender form

Sales Tax collected on sale of tender form will be credited to Sales Tax account with specific sub

ledger and transferred to Marketing Division on a monthly basis with relevant details to enable them

to remit it to the Sales Tax authorities.

9.3 REMITTANCE OF EARNEST MONEY DEPOSIT (EMD)

9.3.1 Earnest Money

Earnest Money Deposit shall normally be as follows:-

PAC EMD



a) Upto Rs.25,000 Nil

b) Rs.25,000 to Rs.1 lakh Rs. 500

c) Rs. 1 lakh to Rs.2 lakhs Rs. 2,000

d) Rs. 2 lakhs to Rs.5 lakhs Rs. 5,000

e) Rs. 5 lakhs to Rs.10 lakhs Rs. 12,000

f) Rs.10 lakhs to Rs.25 lakhs Rs. 25,000

g) Rs.25 lakhs to Rs.40 lakhs Rs. 65,000

h) Above Rs.40 lakhs Rs.1,00,000

EMD upto and including Rs.10,000 shall be only in the form of cash deposited with the Associate

Finance Department or by Demand Draft from a Scheduled Bank in favour of FACT Ltd. payable

either to Udyogamandal, Ambalamedu or Cochin. When the EMD exceeds Rs.10,000 a Bank

Guarantee as per prescribed format from a scheduled or foroeign bank registered in India may also

be accepted.

9.3.2 Refund of earnest money

On the successful tenderer entering into an agreement and providing the Performance Bond, the

EMD will be refunded. EMD of unsuccessful bidders will be returned after acceptance of a tender is

finally settled. In case of payment, earnest money account will be debited through payment voucher

journal.

9.4 REMITTANCE OF SECURITY DEPOSIT (SD)

9.4.1 Within 15 days of the receipt of the order, the contractor shall remit Security Deposit of a sum calculated

at 10% of the Work Order Value towards Security for due and faithful performance of the contract.

The security deposit shall be released on satisfactory completion of the work.

The Security Deposit shall be in the form of Cash/DD or Bank Guarantee from a

Nationalised/Scheduled Bank in the prescribed format valid till the completion period.

9.4.2 Validity of bank guarantee

A watch is to be kept that the bank guarantees given remain valid upto the expiry of the maintenance

period. The section should maintain a register for the same. In this, the brief details regarding

documents received as security will be recorded, with specific mention of the validity period thereof.

The securities so received will be kept in safe custody.

9.4.3 Refund of Security Deposit

After the expiry of defects/liability/maintenance period as provided in the contract, on certifying that all

defects, accruing within the defects period have been made good by the contractor, the Security

Deposit will be refunded on the recommendation of the competent authority with the approval of the

Finance Manager either in cash/cheque or return of the document deposited in addition/lieu thereof.

In case of cash/cheque payment Security Deposit account will be debited through payment voucher.

9.5 ISSUE OF MATERIALS TO THE CONTRACTORS

9.5.1 Materials are issued to the Contractor from Company’s Store at site against appropriate indent in the form

provided by company ie. Material Requisition (MR), countersigned by the Engineer-in-charge. The



transportation cost of materials from store to place of work is met by the contractor. Contractor shall hold such

materials in safe custody and shall maintain proper accounts of its use. These accounts are

available for inspection by the company, if required. The contractor is not allowed to remove any

item of material from site with out written approval from competent authority of the company.

9.5.2 A maximum limit is fixed for wastage and cutting allowance for each item of material issued to the

contractor. Contractors are not entitled to receive quantities in excess of those material which

actually required including the cutting allowances and wastage. The company may refuse issue of

excess quantities required consequent to wastage in any manner by contractor. In such cases

contractor may have to make his own arrangement for the additional quantities required at his own

cost and carry out work within the agreed time. However, company may issue such additional

quantities, if available, and recover from the bills of contractor at the rates specified for this purpose

in the contract or in the absence of such rates at company’s book value or market rate whichever is

higher plus 15% thereof.

9.5.3 The excess materials drawn by contractor, but not used shall be returned to company’s store at site and

credit will be given for the quantity so returned.

9.5.4 Accounting of Issue of materials

All Material Requisition’s (MR) in respect of materials issued to the contractors are received in the

Finance Section through stores department. These MR’s are forwarded to CSC after checking

whether the GL & SL’s are given correctly in the MRs. The MRs are priced based on the value

appearing in the ledger plus stores charges. In the case of capital works, journal entries are

generated in the computer automatically to the debit of relevant job/work number GL-3900 (SL is job

number) and to the credit of stores material account. In the case of revenue works, journal entries

are passed to the debit of various revenue jobs and to the credit of stores A/c. When materials are

returned by the contractor a debit is given to stores and credit is given to respective job.

The various types of material issue and its accounting are given as follows.

9.5.4.1 Free issue of material

While the material is issued as “free issue”, the cost of the material is directly charged to the job. The

General Ledger and sub ledger codes in the Material Requisition (MRs) should be given correctly by

the person raising the MR. This should be checked in Finance before passing the MR to CSC for

journalisation. Normally the jobs are classified into capital and revenue. Separate job numbers are

given to each job. Initially the debits are given to capital work in progress (GL 3902) for capital jobs

and Jobs in progress (GL 4501) for revenue jobs, with respective job numbers as SL codes.

The debits in the capital work in progress will be analysed at the end of the year. On completion of

the job the same will be capitalised. Debits in the jobs in progress will also be analysed at the time

of journalising the final bill of the respective work order and transferred to the head ‘ Repairs to Plant

and Machinery - spares’. The debits in revenue jobs-in-progress at the end of the year, even if the

jobs are not completed, will be transferred to Revenue A/c such as Repairs and Maintenance etc.

9.5.4.2 Return of material by the contractors

Contractors are liable for the effective utilisation of materials issued to them on free issue basis.

Contractors should return the excess materials lying with them after completion of the work. If any



shortage of material is found in the reconciliation of material, the cost of the same will be charged from him at the

rate specified in the contract. A material reconciliation statement is also furnished along with the

final bill by the contractor.

9.5.4.3 Material issued to departmental jobs

If the maintenance department is undertaking any job, the material issued to the job shall be debited

to the respective job itself through the MR. The quantity used and man hours used will be certified

by the Engineering Department. If the jobs are under the supervision of FEDO, the debit note for the

man hour cost will be given by the FEDO Finance, which will be charged to the respective jobs.

9.5.4.4 Issue of material on chargeable basis

When the material is issued on chargeable basis, when passing the contractor’s running account bill,

a recovery statement will be prepared based on the issues made to him. Recoveries for the

materials issued to contractors will be made at the rates specified in the contract. This amount will be

debited to the party’s account ( Sundry creditors GL 6000, SL party code) and credited to the

respective job. The MRs for the actual issue of the materials are accounted at the stores ledger

price (weighted average). The same is automatically debited to the job account at the time of

journalisation of those MRs. Thus the difference between the issue rate at which the parties account

has been debited and actual recovery rate will get automatically credited/debited to the relevant job

work in progress account.

9.6 SUNDRY ADVANCES TO CONTRACTORS

9.6.1 Initial cash advance/Mobilisation Advance

Normally no mobilisation advance will be paid for the work. However, in case such advance is paid, it

will attract interest at the highest rate of cash credit prevailing on the date of disbursement of

advance, plus 2%.

This will be payable if provided in the contract against submission of bank guarantee in approved

form. Recoveries will be effected (together with interest, if recoverable) in the manner prescribed in

the contract.

9.6.2 Advances against security of materials

Advances upto an amount not exceeding 75% of the value of imperishable materials brought by the

contractors at site of work may be granted against application in writing from the contractor (in

prescribed form) duly recommended and certified by the Engineering Department. Advance will not

be paid on materials delivered at site in excess of requirement of work or too early as compared to

requirement of work. The recovery of advances will be made from the subsequent bills.

9.6.3 Advances against measured bills

Pending detailed checking of the bill, an advance payment to the extent of 75% of the certified value

of work done minus recoveries may be granted in special cases to the contractor on his request in

prescribed form with necessary certificate duly recommended by competent authority. The recovery

in full will be made from that very bill as soon as it is passed.

9.6.4 All the above advance payments will be duly recorded in the relevant abstract measurement books.



9.7 PRESENTATION OF CERTIFIED BILL IN THE SPECIFIED FORMAT

On completion of the work, the contractor submits the bill partly or fully in the specified format duly

certified by the competent authority to the Finance Department. Finance Department on scrutiny of

the bill will effect the payment after making various recoveries. Various recoveries to be effected

from the bill should be mentioned elementwise in the bill by the certifying authority. The following

recoveries are normally done from the bill.

9.7.1 Use of Mechanical Equipment

Charges for use of mechanical equipment by the contractors will be recovered from the contractor’s

bill by the Finance at the rates provided in the relevant contract or at normal hire rates. In case the

rates are not prescribed in the contract, the normal hire rates shall be advised by the cost accounts

section.

9.7.2 Electricity and water used on contracts

Recoveries shall be effected as per rates provided in the contract or if at actuals as per advice from

the concerned section. The proceeds will be credited accordingly to suitable accounts.

9.7.3 Allotment of residential accommodation, i.e. rent, electricity and other charges etc.

Recoveries shall be effected based on the advices received from concerned sections. The rates will

be as per the costing section’s advice or the rate agreed with the contractor.

9.7.4 Advances

Various advances paid to the contractor are deducted from the bill submitted by the contractor.

9.7.5 Statutory recovery

Statutory recoveries like Income Tax & Sales Tax, if applicable at the prevailing rate, ESI and

contractor’s contribution to the P.F for those employees working under him are recovered from the

bill. All the above mentioned recoveries are credited to the respective account and the same will be

remitted to the concerned authorities periodically.

9.7.6 If work orders specifies retention of any amount from the running bills, the same will be recovered

and subsequently released with the final bill.

9.7.7 If the contractor enjoys any services like company vehicles, canteen facilities, etc, recoveries shall be

effected based on the advices received from respective departments. The rate will be as per the

costing section’s advice or the rate agreed with the contractor. Recoveries of the above will be

credited to the respective account, debiting the accounts payable account. Debit note will be issued

for these debits.

9.8 SCRUTINY OF RUNNING ACCOUNT BILL AND FINAL BILL

9.8.1 Measurement sheet

In principle, quantities of work executed will be arrived at by computation from drawings. However, all

items of work carried out below ground which eventually get covered and those at inaccessable

locations will be measured jointly by Contractor and the company and the measurements recorded in



a measurement register maintained at site and attested by representative of contractor and Construction

Engineer-in-charge of work.

A duplicate of this will be available with the Contractor for his record and for preparation of bill. In

case of deviations made at site from the drawings the changes so made will be marked in two copies

of drawings and signed by both Contractor and the construction Engineer-in-charge and one copy

will be sent to quantity survey group and the other retained by contractor.

The measurements and/or the quantity of work billed for based on drawings will be check-measured

fully by the Construction Department at a level higher than the Officer who has certified the work as

described in the detailed procedure.

9.8.2 Preparation of bills

Bills will be prepared by Contractor in printed machine-numbered forms supplied by the company in

triplicate and submitted in duplicate. The bill shall contain the following.

i) Date of bill and date of measurement

ii) A statement of detailed measurement with computation of quantities for the part of work covered by

the bill.

iii) A bill containing abstract of work showing the item-wise quantities, corresponding rates and amounts

relating to work covered by the bill leading to the total value of work executed.

iv) This shall bear appropriate certificate in respect of disbursement of wages to workmen engaged by

contractor.

v) Details of material issue by Owner, use thereof and deduction therefor.

vi) Details of Owner’s construction equipment hired and hire-charges therefor.

vii) Details of use in work of those materials for which secured advance is drawn by contractor at time of

delivery and recovery of such advance.

viii) Request for on-account payment along with an abstract of bill showing the total value of work

executed, all deductions and recoveries, payments already made and net payment due.

9.8.3 Certification of Bills

The bill submitted by Contractor shall be verified by Construction Department in respect of under-

mentioned aspects, certified and forwarded to Finance Department in duplicate along with a

memorandum for payment:

i) Measurements - rates & units

ii) Quality of work and that all specified tests have been carried out

iii) That items covered by bill are executed. *

iv) Computation of quantity from measurements/drawings.

v) Issue and use of departmental supplies.



vi) Use of Construction Machinery lent by Owner.

vii) Recovery for proportionate use of materials delivered by Contractor for which secured advance is

given by owner.

- Recovery of mobilisation advance

- Recovery of security deposit/retention amount.

viii) Any penal recovery.

ix) Approval of rates for extra items, if any.

x) That payment recommended is within approved value of contract.

xi) That payment recommended is for work executed within agreed/extended time-schedule.

* (In case the claim includes quantities which are not completed as per specification, being work-in-

progress normally such claims will not be admitted. However, in special cases where part - rates

are recommended this must be supported by adequate data approved by RCM)

All the above verifications and certification will be reflected in the memorandum for payment so that

no omission are made.

9.8.4 Verification of bills by Finance Department

Finance department should check the bills from the following points of view.

i) Rates applied

ii) Approval of rates for extra items, if any.

iii) Computation of quantity.

iv) Computation of amount and arithmatical accuracy.

v) Rates used and computation of amounts for recovery for:

a) Departmental issues

b) Construction machinery lent

c) Secured advance on materials

d) Returnable container, tools, tackles etc.

e) Liquidated damages - applicable, if any.

vi) Approved contract value

vii) Agreed time-schedule

viii) Deduction of Income-Tax or any other dues

ix) Deduction for security deposit etc., if applicable.

x) Deduction for previous payments made where applicable

xi) Deduction for contribution to ESI, PF, ST on works contract etc. where applicable



xii) Recovery of any outstanding claims on contractor.

9.8.5 Payment of bills

After above scrutiny Finance Department will make a pay order and issue cheque to Contractor along

with a statement of any adjustments it has made in the bill and tax deduction certificate. A copy of

this statement along with the duplicate copy of bill and memorandum for payment will be returned to

construction department for its record and future reference.

On passing the bill for payment Finance Department will:

i) Prepare a statement of all adjustments made in the contractor’s bill

ii) Prepare the cheque for payment and issue to contractor’s assignee along with the statement of

adjustments and deduction certificate.

iii) Endorse a copy of the forwarding letter to Contractor to the SCA along with:

a) Copy of statement of adjustment

b) Duplicate of the Memorandum of payment and complete set of bill bearing the adjustment made and

payment details.

If required by Contractor, SCA shall issue to Contractor a copy of the relevant sheets in the bill where

adjustments are made.

9.8.6 Time schedule

Construction department shall forward the Running Bill to Finance Department latest within 7 working

days after receipt from contractor and Finance Department shall dispose the bill latest within 7

working days after receipt from Construction department. In case contractual commitments calls for

earlier payment an interim on account of payment upto 75% of the net amount payable against

running bills may be made on the basis of recommendation by Engineer-in-charge and approved by

authority as per Delegation of Powers. Running Bills shall be settled and payment released to the

contractor within 21 days from the submission of bills by the contractor.

9.9 ACCOUNTING OF RUNNING/FINAL BILL

After passing the Running Bills for payment and preparing the bank voucher for the net amount

payable, the Running Bills are journalised through works Journal (Journal-14), giving proper

narrations in the voucher.

9.9.1 Accounting of revenue running bill

Normally the running bills for revenue jobs are initially debited to jobs-in-progress (GL 4501) with job

numbers as SL. On completion of the job the same is charged to Revenue Accounts such as

Repairs & Maintenance etc (GL 7710 to 7729). At the time of year end, the debit balances of

incomplete revenue jobs are also charged to revenue a/c. At the time of closing of accounts

information regarding jobs completed/progressed but not billed are collected from various

Engineering Departments. Provision for such amounts are made in the accounts by debiting

respective expenses and crediting outstanding charges A/c (GL 6500).

9.9.2 Accounting of Capital Running/Final bill

The running bills in respect of capital jobs are debited to capital-work-in-progress (GL 3902 etc) with

the job numbers as SL. On completion of job the same is debited to the respective Asset A/c. At the



time of year end the information regarding jobs progressed but not billed are collected from the Engineering

Departments. Provision is made for the amount by debiting capital-work-in-progress and crediting

outstanding charges (GL 6500).

9.9.3 Provision at the end of the financial year

The amount credited to the outstanding charges account GL- 6500 will be reversed while journalising

the respective bill amount in subsequent accounting year.

9.9.4 Transfer of completed work to Asset account

When all the expenditure in respect of job has been booked, completion report received and final bill

passed the total cost of the work will be transferred from the relevant work in progress account to the

asset account concerned by a transfer entry. A copy of the entry together with other essential details

of the job completed will be furnished to record section. The account of the completed asset will be

kept in the record section.

9.10 PROCEDURE FOR TENDERING AND EXECUTION OF WORKS

9.10.1 The company is having a common tender procedure for all its divisions. This procedure includes issue

of enquiry, tendering, selection of tender, award of contracts, execution of agreement with the

contractors, measurement of work, billing and payment in respect of

construction/installation/maintenance services works undertaken by various Divisions of the

Corporation. The salient features of the procedure are given below:-

9.10.2 Approval of Estimate

9.10.2.1 Administrative Approval

When a approval is to be originated, the department intending to take up the work, will initiate the

same indicating the purpose and justification of the work, the description of the job and cost based

on preliminary estimate. This will be submitted to the competent authority for administrative approval

and allocation of funds in the budget.

In case, on detailed estimation at the time of implementation, the value of the job exceeds the value

for which administrative approval is obtained Revised Administrative approval shall be obtained from

competent authority.

9.10.2.2 Technical Approval

On the basis of the administrative approval obtained from competent authority, the originating

department shall furnish the scope of work to the Engineering Department/Technical Service

Department/Maintenance Department concerned who will prepare drawings, technical specification,

schedule of work and quantity bill of materials to be supplied departmentally and estimated value of

the total work and seek Technical Approval from Division Head where the cost is above Rs. 15 lakhs

and DGM concerned for works between Rs.5 lakhs and Rs.15 lakhs and Chief Engineers

concerned for works upto Rs.5 lakhs. After obtaining technical approval, these details shall be

furnished to the tender cell/concerned department for inviting tenders.

No item of work shall be included in the Schedule of Quantities of work without indicating estimated

quantity against the item.

9.10.3 Enquiry Documents

Once the approvals are obtained from competent authorities, the following documents shall be



compiled by the Construction Department/Technical Services Department/Maintenance Department as applicable

in the prescribed formats.

i) Notice Inviting Tender (NIT)

ii) Conditions of Tender

iii) Format of Bid

iv) Proforma Contract including schedules

The tender document shall be approved by the Chief Engineer-in-charge of the department which

issues the enquiry.

9.10.3.1 NIT shall be issued in the prescribed format containing details such as name of the work, PAC, EMD,

cost of tender documents, if any & date of issue, period of completion and last date, time & place of

receipt of tender, date and time of opening etc. Some of the definitions of the words used in the NIT

are given below:-

PAC

Probable Amount of Contract (PAC) is the value of the items of works to be tendered excluding cost

of any free issue of materials.

EMD

Earnest Money Deposit shall be as per clause No. 9.3.1 and 9.3.2 of this chapter.

Different kinds of tenders are invited such as Open tender, Limited Tender and Nominated Tender for

works to be executed.

i) Open Tender

Open tender is one which the Notice Inviting Tenders is:

a) advertised in newspapers/journals and displayed in Company Notice Boards in the case of jobs of

estimated cost of Rs. 10 lakhs and above, or

b) displayed in Company Notice Boards and sent to known

contractors with approval of authority competent to award the work, in the case of jobs of estimated

value upto Rs. 10 lakhs.

ii) Limited Tender

Limited tender is a tender invited from prequalified parties in the approved list and in case a

prequalified list does not exist, from a list specifically prepared for the job got approved by the

competent authority to approve award of the work. This is applicable only to jobs of repetitive/routine

nature of value upto Rs. 10 lakhs (exclusive of department materials issued free of cost).

iii) Nominated Tender

This is a tender invited from a single party without inviting competitive tenders where the tenderer is a

Public Sector Unit or where the work involved is complex or proprietory in nature or is supplementary



to an earlier contract executed by the same agency. Nominated tenders shall be invited only with the approval of

authority one level higher than authority competent to accept the tender or CMD whichever is lower.

iv) Petty Works

Works of an occassional nature costing Rs.3 lakhs or less.

9.10.4 Invitation to Tender

9.10.4.1 Prequalification

The construction department of FEDO is having an approved list of prequalified contractors for

various categories of works, which will be applicable to all the divisions of the company. However for

works of special nature such as Plant shut down and repairs jobs, petty jobs etc. the respective

divisions will maintain their own list of prequalified contractors. Wherever prequalified list is

available, limited tenders will be invited from the parties on the said list. Where prequalified

contractors list does not exist, a list may be specifically prepared by the Division concerned for the

specific case or may resort to open tender as approved and decided by the authority competent to

approve award of the work.

9.10.4.2 Issue of Tenders

In the case of Limited Tender, NIT shall be sent to prequalified contractors. Enquiry documents shall

be issued free of cost those who evince interest in quoting.

In the case of Open Tender, Enquiry form shall be issued on receipt of the price fixed for the

purpose. A full page of the Newspapers in which the advertisement inviting bids appeared should be

preserved, for all open tenders so that the date of which they appeared can be verified at any time.

Open tender will be resorted to wherever there is no approved list of prequalified contractors either

specifically or generally. Limited tender is proposed only for jobs of repetitive/routine nature of

estimated value upto Rs.10 lakhs. Nominated tenders will be resorted to only in cases which fall

under its definition.

Whenever NITs are sent to contractors they shall be sent by registered post only. When NITs are

exhibited in Company Notice Boards the inviting authority shall indicate upto what date the NIT is to

be exhibited in the Notice Boards (which will be the last date for issue of documents).

In the case of open tenders for specialised jobs of high value, where suitable contractors are known to

exist only in some areas of the country, advertisement of NIT may be limited only to those

newspapers/journals published in that area, with the approval of the division head.

9.10.4.3 Tender Register

The department concerned shall maintain details of issue of Enquiry documents and receipt of

tenders in a tender register.

9.10.4.4 Two stage bidding

The two stage bidding system involves obtaining unpriced technical and commercial bids in one

sealed cover and the priced bid in a separate sealed cover, the latter being opened separately after

completion of evaluation of the technical and commercial bids.

Two stage bidding shall be adopted in respect of all contracts of PAC above Rs. 10 lakhs and in the

case of other tenders also if considred necessary by the authority inviting tenders.

9.10.4.5 Time for bidding and Bid opening



Ordinarily 15 days from the date of enquiry shall be given for submission of bids. If extensive

preparation for bidding is necessary, additional bidding time may be allowed.

Extension of date for receiving bids may be granted with prior approval from the authority competent

to give technical approval for the offers.

9.10.4.6 Form of tender and its validity

Tenders shall be submitted by the contractors in the prescribed format. The conditions of the tender

and Proforma Contract shall be duly signed by Tenderer and any deviations from the Proforma

Contract shall be listed in a Schedule. The conditions of contract in the Proforma contract are the

standard conditions of contract approved by the company and any deviations therefrom, if to be

accepted, shall be with the approval of the Authority competent to decide on the award of the

contract or the Division Head in case such authority be below the Division Head.

Item Rate Tenders shall normally be invited for all project works. However, Percentage Rate Tenders

may be invited for routine Civil Maintenance works upto an estimated cost of Rs.10 lakhs. Price

variation clause as prescribed in the Tendering Procedure may be incorporated for all works where

PAC exceeds Rs.50 lakhs or the scheduled period of completion is 12 months or more.

Tenderers shall be required to submit tenders valid for a period specified in the NIT. In any case the

Bids shall be valid at least for a period of two months at the time of joining the Price Bids.

9.10.4.7 Receipt and opening of tenders

All tenders shall be in sealed envelopes superscribed with the name of work, tender number, due date

and time for receipt of tenders. All tenders shall be received in the Administrative Department or any

other department authorised for the purpose by Head of Division. Tenders received will be kept

under safe custody by the department receiving the tenders. On the due date for opening of the

tenders, an officer from the department holding the tenders shall open the tenders in the presence of

the representative of Finance and Project/Maintenance Departments as is applicable. All the

Officers present shall initial the covers and all pages of the tenders. The covers also shall be

preserved along with the tenders. Wherever there are corrections, in the tender or apparent

additions or alterations, these should be attested by the Officers who are present in the tender

opening. Where it is stipulated that tenders shall be opened in the presence of authorised

representatives of tenderers, one representative of each tenderer may also be present and they shall

sign the Tender Register.

Where technical and price tenders are stipulated to be received in separate envelopes, the tenderers

shall submit both the envelopes on or before the specified closing date and time.

9.10.4.8 Delayed tender, Late Tender and Unsolicited tender

Tenders which are received after the stipulated time but which are posted before the opening date

and time are classified as delayed tenders. Where there is satisfactory evidence that the tender has

been posted before the opening date and time specified, such tenders may be considered based on

such documentary evidence, after obtaining the approval of Officer competent to grant technical

approval for the work.

Late tenders are those which are posted after the date and time of opening of tenders and received

subsequently. Late tenders shall not be opened.



Unsolicited tenders shall not be considered.

9.10.5 Tender Evaluation, Negotiation And Award of Contract

9.10.5.1 After opening the commercial and technical bids, these shall be scrutinised and comparative

statement prepared by the department inviting tenders. The technical conditions submitted by each

party are analysed and evaluated for technical acceptability. The implications of commercial

conditions are also evaluated. Clarifications, if any, from the bidders shall be sought for evaluation.

The tenderers shall be informed of the last date and time to furnish all the clarifications and intimate

financial implications if any. Revised price bids or amendment to price bid consequent to changes in

technical/commercial part of the tender over the basic price shall be submitted simultaneously in

separate sealed cover as in the case of original tender. The technical/commercial evaluation is to be

completed and got approved by competent authority to accord technical approval, before opening of

the price bids which are technically and commercially suitable.

Reason for rejecting offers from contractors shall be clearly recorded in the Technical Commercial

recommendation.

9.10.5.2 Price bid opening & Evaluation

The price bids shall be opened by the authorised department at the specified time and date in the

presence of representatives of the concerned project/construction/maintenance group, Finance

Department and the tenderers or their authorised representatives who are present. After opening

the bids, financial evaluation shall be made by the department inviting tenders. The financial

implications of conditions if any stipulated by the tenderers shall also be evaluated and quantified in

the total price computed. Substantial deviations, either way, from the reasonable market rate for the

respective items should be brought forth clearly in the evaluation. In case bids are received at

abnormally higher or lower rates than estimated, recommendation for price negotiation or award of

work shall be routed through department which prepared estimate. If rates of L1 are seriously

unbalanced in relation to estimated rates, he may be required to produce his detailed price analysis

for any/all rates for verification.

9.10.5.3 Negotiation

a) Negotiation means discussion with one or more tenderers after opening the price bids on rates and/or

terms of payment and/or financial consideration receivable by the tenderer with a view to directly

arrive at mutually acceptable terms or to give a chance to quote a revised price as may be

applicable. Discussions on technical aspects of the tender, schedules, completion period and any or

all commercial condition shall be held prior to opening the price bids and such discussions are not

treated as “negotiation”.

b) Negotiation may be resorted to if it is in the interest of the company. Negotiation could be initiated

under circumstances like:

i) Where the lowest-tenderer’s rates appears to be unreasonable or where the individual rates vary

widely from the reasonable values/estimates.

ii) In the case of signle stage bids, tender other than lowest has distinct advantage to the company.

iii) In the case of signle stage bids, where completion period or other terms and conditions quoted are

not suitable in a tender which is otherwise suitable.

iv) Where the order has to be split among more than one tenderer in the interest of proper and timely



execution of the work.

v) In the case of works proposed to be entrusted to nominated agencies.

c) Negotiation shall be initiated only after approval of the concerned Director/Executive Director. The

justification and reasons for negotiation shall be put up by the Officer who invited the tender to the

Director concerned in a self contained note and approval for negotiation obtained. The negotiation

team shall also be approved by the concerned Director/Executive Director.

d) Negotiation shall be normally held with the lowest party and there is no need to ask all the bidders to

resubmit prices, especially after the prices are opened and each bidder knows the price of others.

e) Where negotiation is carried out with more than one Tenderer with the approval of Director concerned,

the revised price shall be obtained in sealed covers and these may be opened simultaneously in the

same manner as specified above.

f) Asking for revised price after opening original price bids shall be rare and exceptional rather than a

regular practice.

9.10.5.4 Approval for award of contract

After detailed evaluation, the recommendation shall be forwarded by Construction

Department/department inviting tender to the authority competent for approval, through project

department where required and Associate Finance which will indicate budget provisions and accord

financial concurrence respectively.

9.10.6 Award of Contract

9.10.6.1 As soon as approval has been obtained ‘Letter of Intent’ or ‘Letter of Acceptance’ shall be issued by

the Department inviting tenders by way of telex/telegram/letter. Letter of Intent shall stipulate the

deadline for providing security deposit where applicable, mobilization of work, completion period,

price and important terms and conditions. It shall call upon the Contractor to issue his acceptance

by return.

9.10.6.2 Work Order/Contract

A detailed order/contract in duplicate shall be issued soon after the letter of intent and normally within

15 days of issue of ‘Letter of Intent’. The contract may be either an agreement signed by both the

parties in the prescribed format or a work order issued by the company and accepted by the

selected tenderer. The contract /order shall be in the same format as the Proforma Contract

indicated in the Enquiry and shall contain all documents as per tender enquiry together with a

statement of agreed variations. Work order shall be serially numbered with the indication of

Division/Project and capital project/Revenue item. Construction/Maintenance Department shall

make available copies of the W.O to the engineer-in-charge, Finance Department and Project

departments concerned. All documents from the stage of request for the work to award of work shall

be available in the construction/maintenance department for future reference.

9.10.6.3 Amendment suspension, termination or cancellation of orders shall be issued in writing after obtaining

approval from the Authority who approved the award of work.

9.10.6.4 Agreement

Except for petty works, formal agreement shall be executed between FACT and the contractor as per

the proforma on stamp paper. The agreement shall be based on Proforma contract signed and



submitted by Accepted Tenderer along with the Agreed Deviations and appropriate schedules duly filled in.

9.10.7 Eexcution of Work

9.10.7.1 Work shall be carried out only on the basis of approved drawings, stamped ‘Good for Construction,

Work Order specifications and conditions.

9.10.7.2 Time Schedule and Extention of time

Before commencement of the work, a detailed programme highlighting all important milestones to

accomplish satisfactory completion of work within the stipulated completion period shall be jointly

drawn up by the Engineer-in-charge and contractor. Where necessary, detailed quantity-wise break-

up and programme for execution of major items of work shall also be jointly worked out. If it is found

necessary to extend the overall completion period, approval of competent authority as per

Delegation of Powers shall be obtained. However Divisional Heads shall be competent to grant

interim extention on time of completion irrespective of the value of work without prejudice to work

order conditions.

9.10.7.3 In case extention of time is required due to change in quantity, extra items, departmental delays or

Force Majeure conditions, the Engineer-in-charge/RCM shall furnish the reasons and impact on the

completion period on account of each and give his recommendation through the Chief Engineer who

shall obtain approval of competent authority.

9.10.7.4. Detailed measurements shall be done by both the contractor and the department which executed the

work. This detailed measurement will be the basis of accounts for works carried out. All

measurements, drawings and other documents used for billing purposes are maintained carefully by

the Engineer-in-charge. On completion of a work these documents and records are handed over to

the Central Records of the respective divisions.

9.10.7.5. Bills shall be prepared by Contractor in printed forms as per standard format supplied by FACT. The

bill should contain the statement of detailed measurements with computation of quantities for the part

of work covered by the bill.

9.10.7.6. Excess quantities

Quantities in excess of original schedule may result in certain circumstances. The Engineer-in-charge

shall initiate action for obtaining sanction of competent authority for the excess quantities.

9.10.7.7 Extra Items

Items of work that become necessary during execution of the work and not included in the original

schedule of items in the work order shall be termed as ‘Extra items’.

The details of extra items or work shall be intimated by the Engineer-in-charge/RCM as and when

they arise to the Resident Construction Manager/CE to obtain approval. Extra items may be

executed after obtaining approval of Chief Engineer concerned and acceptance of rates by both

parties.

9.10.7.8 Approval for variation in Contract Value

As soon as major construction drawings are released for construction, the Engineering Department

shall re-estimate the quantities and intimate the Project/construction department for working out the

variations in contract value and to seek approval of competent authority.



9.10.7.9. Termination or Off-loading of work

In the event of the contractor not performing as per the contract, issue of notice for off-loading

portions of work or termination of work shall be done with the approval of competent authority after

consultation with Legal Services Department, where required.



CHAPTER 10

PROVIDENT FUND

10.1. The Fund is called “The Fertilisers And Chemicals, Travancore Limited Employees’ Provident Fund”.

The procedural regulations have also been framed in which the books and forms to be maintained

have been prescribed.

10.2. The administration and management of the Fund involves broadly the following functions:-

a) Admission of eligible member to subscribe to the fund.

b) Recovery of members’ and corporations’ contribution and credit of interest to be allowed therefore.

c) Sanction of refundable and non-refundable advances, recovery of refundable advance within

prescribed number of instalments, obtaining relevant documents for non-refundable advances and

final payments.

d) Maintenance of individual accounts of members and financial and subsidiary account.

e) Investment/reinvestment of the monies of the fund in accordance with the pattern prescribed by

Central Government.

f) Submission of the prescribed return to the Regional Provident Fund Commissioner concerned under

the Employees’ Provident Fund Act 1952.

10.3. BANK ACCOUNT

Separate bank accounts shall be maintained for the Employees’ Provident Fund which will be

operated by the trustees.

10.4 CONTRIBUTIONS

Accumulation to the credit of the employee in his/her PF would comprise of:

a) Compulsory contribution of the member at prescribed rate.

b) Statutory contribution by the employer.

c) Any special contribution by the employer.

d) Voluntary contribution by the member in addition to compulsory contribution under the rules and

e) Transfer of balance of PF from other companies/organisation accepted by FACT.

10.5. RECOVERY OF CONTRIBUTIONS

Generally compulsory contribution of the member is recovered from the salary bill each month.

Voluntary contributions are also recovered from the employee in terms of clause contained in the PF

procedural regulations. Provident Fund Section is informed of the recovery made to enable it to

afford credit to the account of the employee. At the close of the month the salary section shall

prepare an analysis of PF recoveries made, company’s contribution added, adjustment done in

Page 1 of 4CHAPTER 10


respect of payments made on behalf of Trustees etc. and prepare a consolidated dockets entry indicating the net

amount payable or recoverable against suitable liability on debtors amount. In case the net result is

a sum payable to Trustees the amount shall be immediately paid by a cheque in the name of

Trustees. In case the net result is a sum recoverable the same shall be carried over for the next

month for adjustment.

In cases where subscriptions to the Provident Fund have been recovered in excess of the admissible

under the rule, whether due to wrong fixation of pay or irregular membership, the amount of

subscription credited in excess should be refunded to the subscriber, and the amount of

corporations’ contribution and interest thereon credited in excess, should be refunded to the

corporation as soon as the irregularity comes to notice. Interest or subscriptions credited in excess

should be written back to the reserve account in terms of provident fund rules.

10.6. WITHDRAWALS AND PAYMENTS

a) Some category of withdrawals are repayable by the members. These temporary withdrawals are

allowed on application received from individual member stating the purpose for which the fund is

required and the instalment rate at which it is to be repaid. The withdrawals shall be allowed for

specified purpose under the rules and from the members’ own contribution including voluntary

contribution.

b) Permanent withdrawals from the balances of the members’ own contribution including voluntary

contribution may also be allowed if applied for in the prescribed form for purpose of dwelling

site/house or construction of house etc. in terms of the clause of the rules.

Note: i) Before a non-refundable loan is sanctioned to the employee documentary evidence to the extent

available/possible, should be seen by the Secretary to satisfy himself about the genuiness of the

purpose for which the loan is being taken.

ii) Whenever it is found that the loan has not been used within the specified period for the purpose for

which it was drawn, it becomes payable at once. Efforts should be made to recover the amount

immediately. If in a particular case, this would create hardship to an employee, the Secretary may

use his discretion in allowing the employee to pay the amount in instalments but the number of such

instalments should be kept to the minimum.

iii) Where any non-refundable loan granted for a particular purpose, has been misused, no further non-

refundable advances should be granted in future for the same purpose.

c) Final payments/settlement of PF Account arises when a member is transferred from one unit to the

other or on retirement/resignation etc. In cases of transfer to other units or to an establishment

which is also covered by the recognised provident fund act or rules and in cases of death of a

member both company’s/employees’ contributions with interest upto the date of authorisation of

payment shall be settled in full. On any member voluntarily resigning the services of the company

and whose resignation is accepted by the company the trustees shall pay him the aggregate amount

subscribed by him to the fund together with interest thereon and in respect of the balance of

company’s contribution standing to his credit in the books of the fund.

A member who resigns service shall be entitled to the whole of such balance and interest thereon.

10.7 ACCOUNTS

The accounts of the fund shall be made up yearly at the end of the every financial year and audited by

a Chartered Accountant or a firm of Chartered Accountants and the audited statement shall be



submitted to a meeting of the trustees to be held not later than 30th June in every year and a copy of such

statement shall be filed at the office of the company and shall be open for inspection by the members

for a period of two weeks.

10.8 INVESTMENTS

The bank balance in the P.F.Account at the close of the month shall be invested as per P.F.rules in

terms of the notification issued by the Govt. of India from time to time after retaining not more than

10% of the balance to meet the needs of loan application etc.

10.9 INSPECTION CHARGES

Each month inspection charges shall be paid to the Regional P.F. Commissioner at the rate, fixed by

the Government from time to time, of the total wages of the establishment and as such a statement

of total wages paid shall be received from payroll to calculate the inspection charges payable and to

forward a return to the Regional Provident Fund Commissioner.

10.10. MEMBERSHIP

As per appointment order, eligibility register should be maintained by the personnel accounts for

determining the date of eligibility of membership to PF and recovery of the members’ contribution

shall be made according to prescribed rules. In case of transfer from one unit to the other or from

one establishment where the employee was a member of recognised PF, he shall be entitled to

membership from the date of joining provided the balances from his previous account is transferred

to his account in the establishment he joins afresh or if he submit declaration at the time of joining

that he was already member of the fund and applies for transfer in the prescribed form.

10.11. PAYMENT OF INTEREST ON ACCOUNT TRANSFERRED FROM ONE UNIT TO ANOTHER

CONSEQUENT TO THE TRANSFER OF THE EMPLOYEE

The account of a subscriber who is transferred without a break in service, from one division of the

company to another, should be transferred to the division concerned, with attested copy of the ledger

account in duplicate in the proforma showing totals of his subscription, withdrawal and company’s

contributions together with his nomination form in original. Credit advices for the transfer of P.F.

balance of employees transferred from one unit to another should be sent by the transferor unit

between 1st to 15th of the calender month, after giving credit of interest upto the end of the calender

month. The transfer of account should be effected simultaneously with the issue of last pay

certificate or soon thereafter.

10.12. NOMINATION

Each member shall make in his declaration in the form prescribed, (form attached) a nomination

conferring the right to receive the amount that may stand to his credit in the fund in the event of his

death before the amount standing to his credit has become payable or where the amount has

become payable before payment has been made.

A member may in his nomination distribute the amount that may stand to his credit in the fund

amongst his nominees at his own discretion. If a member has a family at the time of making a

nomination, the nomination shall be in favour of one or more persons belonging to his family. Any

nomination made by such member in favour of a person not belonging to his family shall be invalid.

If at the time of making a nomination the member has no family, the nomination may be in favour of

any person or persons but if the member subsequently acquired a family such nomination shall



forthwith be deemed to be invalid and the member shall make a fresh nomination in favour of one or more

persons belonging to his family.

A nomination made may at any time be modified by a member after giving a written notice of his own

intention of doing so to the trustees. A nomination in its modification shall take effect to the extent

that it is valid on the date on which it is received by the trustees. If the nominee predeceases the

member, the interest of the nominee shall revert to the member who may make a fresh nomination.

In the event of the appointment of more than one nominee the respective proportion of the fund

payable to each nominee shall be stated in the declaration and if no such proportion is mentioned all

the nominees shall be paid equally. These details will be entered in a register. The register shall be

reviewed monthly by a responsible officer and necessary action taken on the wanting nominations.

10.13. MONTHLY RETURN

Every month a return in the prescribed form shall be submitted to the Regional Provident Fund

Commissioner giving required statistical data regarding number of subscriber, wages contributions

and other transactions of the PF Account of the establishment.

10.14. COMPUTER SERVICE CENTRE

Since pay roll is printed by computer, some of the provident fund account ledgers are also maintained

by Computer Service Centre and some at Computer Terminal of PF Department itself.

a) The recoveries of members’ compulsory contribution is automatically calculated in the machine on

the basis of wages drawn.

b) List of charges in other instalment recoveries viz. amount payable against temporary withdrawals,

voluntary provident fund contribution are sent to C.S.C. for printing in the payroll.

c) The list of permanent withdrawals from members own account as well as the accounts finally settled

which are to be deleted from the member’s ledger are sent to the C.S.C.

d) after the payroll are printed a list of members from whom the recoveries are effected on account of

contributions, loans and interest is printed and sent to P.F. Accounts branch.

10.15. STATEMENT OF ACCOUNT

After each member’s account has been closed with interest accrued after the end of the year a

statement of account is prepared for distribution to each member showing the opening balance,

contributions during the year, permanent withdrawal during the year, interest accrued on the net

balance and the closing balance. This statement of account shall be distributed for information of

the members by 30th September of the year following the year to which the accounts relate. Before

distribution of the statement of account all the accounts should be reconciled with financial ledger.

10.16. BALANCE SHEET

The revenue account and the Balance Sheet are submitted to the Auditors for their audit and

certification before submission to the Board of Trustees.



CHAPTER 11

INSURANCE 11.1 GENERAL OUTLINES OF INSURANCE

11.1.1 It is necessary that the Properties of the corporation like Plant and machinery, Inventories, Cash etc.

are insured against various risks in accordance with the policy decisions of management,.

11.1.2 Timely action for renewal should be taken and renewal instructions should reach the insurers at least

one month before the expiry of the policy, so that the cover can be granted by the insurers before the

expiry of the current period.

11.2 INSURANCE COVER

The following types of insurance cover are taken by the Company in respect of the various assets of

the company. The list is subject to such additions and alterations that may be considered necessary

by the local management in individual circumstances.

11.2.1 Fire Insurance of fixed assets including earthquake and Boiler and Pressure vessels insurance.

a) Various plant and machinery, factory buildings, Electrical Fittings are insured against fire explosion

risks. Stock of finished goods and raw materials, general stores and spares, office and

administrative office buildings, some of the township residential buildings etc. are covered against

fire risks. The details for insurance cover are to be furnished to the insurers in consultation with CE

(Technical Services).

b) While working out the amount for insurance for assets, expenditure like cost of foundations, plinths,

ground parements, base stones, stones for column, stone floors, stone staircases, boiler beds,

chimnys, dust chimnys etc. shall be excluded from the cost of such assets for insurance purposes

provided this is possible and otherwise desirable and prudent. It is advisable to include foundations,

plinths etc. when earthquake cover is taken.

c) The first insurance shall be obtained on the original cost of the asset as worked out in aforesaid

manner. The insured value should be the replacement value of the asset for the subsequent years

and should be escalated as per the policy prescribed by the Management from time to time.

d) Every year for the purpose of renewal, value of the additions shall be added to insurable value.

e) Wherever Petrochemical Tariff is applicable, it should be ensured all discounts for which the

Company is eligible is availed. Also if adequate care should be exercised to ensure that there is no

loading for a warranty which is complied and provided for by the Company.

f) Fire Policy should be taken for all the Assets of the Company without any omission, except for such

assets for which Management consciously decides for not insuring the same.

g) The general fire policy for Chemicals Industries plants cover fire damage arising from explosion of all

items including pressure vessels. However the damage to steam generating boilers arising from

their own explosion has to be covered under a separate boiler policy.

h) For claims arising due to fire etc. immediate intimation shall be sent to the insurers giving the date,

time and location of the fire. If possible the extent of damage due to fire shall be mentioned in the

intimation to enable the insurers to decide regarding survey arrangements. When it is necessary to



take up the repair jobs immediately with a view to normalise production, the repair jobs shall be taken up

only after giving due advance intimation to the insurers. In case if any doubt the nearest officer of

the insurance company should be consulted.

i) In case of fire/explosion it will be the responsibility of the concerned department to send an

immediate intimation to the accounts section giving such details as may be necessary for intimation

to the insurers.

j) When the repair jobs are undertaken after fire, a separate account of all the materials cost of labour

and any expenses incurred directly in connection with the repairing of that job shall be maintained by

the maintenance department and these details shall be furnished to accounts department for filing

the claim bill with the insurers within a month of the completion of the repair job. The cost of the fire

fighting materials used shall also be included in the claim bill.

11.2.2 Machinery breakdown insurance

The Machinery Breakdown Insurance Policy provides indemnity against any unforeseen and sudden

physical loss or damage to the Insured Machines. The insured has the option to select specific items

of machinery for insurance under this policy where the breakdowns can occur frequently and the cost

of repairs can be very high. The details of the Insurance cover is to be finalised in consultation with

DGM(M). The sum insured should be the replacement value of the equipment. There is a decision

that this need not be covered by the Company.

11.2.3. Electronic Equipment Insurance

The Electronic Equipment Insurance Policy provides indemnity against unforseen and sudden

physical loss or damages from any cause to Computer and other connected equipment necessitating

repair or replacement of the equipment. The sum insured should be the replacement value of the

equipment. The details of the equipment to be covered under this policy should be finalised in

consultation with DGM(CS-HO) and DGM(TS). The policy can in addition to material damage,

provide coverage for the External Data Media and Increased cost of working.

When a loss occurs, the Insurance Company should be informed immediately and the survey should

be requested to be conducted.

11.2.4. Fidelity insurance and cash in transit/cash at safe/payroll insurance

a) Fidelity guarantee insurance policies for the employees handling cash shall be taken. The cover

granted under these policies indemnifies the employer against direct financial loss that the employer

may sustain by forgery, embezzlement and/or fraudulent conversion of money on the part of the

employees while acting in the capacities named in the schedule attached to the policy.

b) Particulars regarding the number of employees and designation etc. shall be furnished to the

insurers as per proforma prescribed by the insurers. Any change regarding handling of cash and

stores etc. shall be intimated to the insurers in time.

c) The conditions and warranties attached to the policy shall be complied with conditions normally

prescribed for a period within which the acts discovered have to be reported to the insurers. In case

the acts are discovered beyond the stipulated period, the insurer is not liable to indemnify the loss.

d) The quantum of cover will be determined by the Finance Manager from time to time, depending on

the volume of cash transactions handled by the Cashier/authorised employees.

e) Cash in transit policy is taken to cover transit risks, involved in bringing cash from bank to office and



vice versa, against risks of theft, embezzlement etc. The quantum of insurance is determined by the

Finance Manager based on the cash transactions involved, from time to time. Cash at safe/payroll is

also covered against risks of theft, embezzlement and the quantum is determined by the Finance

Manager, depending on the volume of cash held, from time to time.

f) Refunds of Premium should be obtained from the Insurer on the Declaration Policies promptly.

11.2.5 Insurance for vehicles and heavy equipments

a) For vehicles comprehensive insurance/third party insurance may be taken depending upon the

circumstances prevailing in the unit/division. The details of insurance cover are obtained from

Manager, Garage and furnished to the insurers.

b) While taking the insurance, details such as type of vehicles, registration number etc,. and the period

of coverage have to be intimated to the insurers.

c) A register is maintained showing particulars of insurance for the vehicles, vehicle registration nos.,

value, policy No., Date of expiry, premium payable etc. While making payments, it is ensured that:

(i) No claim bonus is allowed wherever applicable

(ii) Fleet discount is allowed on the vehicles.

11.2.6 Open transit risk insurance

(i) This covers

(a) All inland material purchases

(b) All foreign purchases

Foreign purchases include imports of spare parts and machinery etc.

The policies cover all risks of loss or damage including risks of theft, pilferage, non-delivery, war strike

and riot, civil commotion (SRCC), marine risks etc. The risk is covered from the warehouse of the

consignor to Company’s stores.

For foreign purchase, intimation is given to the insurer, by the supplier, immediately on despatch of

material, giving despatch particulars, approximate value of the consignment etc. and these are

covered under the open policy. Separate monthly statements of such foreign purchases are

furnished by us to the insurer on the basis of which separate specific policies are issued for each

consignment.

For inland purchases, details of materials viz. general stores, ,packing materials etc. despatched by

the suppliers giving value of the materials is prepared from the bills register every month and a

monthly statement giving the details of insurable items like spares, stores, breakables etc. with totals

to be covered is sent to the insurer to cover the risks and to raise premium bills. A flat rate of

premium is charged on all such items. While furnishing the value of the materials, the cost of duty of

10% thereof is added to cover freight, sales tax etc.

On the basis of the above declarations by us and by our various suppliers in case of imports, premium

bills are issued by the insurers. Premium bills received will be entered in a register and journal



voucher is; prepared charging the expenditure to appropriate accounts. A payment voucher is also prepared for

the payment. Alternatively if premium is paid on a estimated amount for a year, constant review

should be done to ensure that there is adequate insured value. At the end of each month, details as

to the actual transit should be declared to the Insurance Company. After the expiry of the policy,

refund of any excess premium remitted should be obtained.

(ii) Inland water transport risks for sulphur and rock phosphate are covered, for total loss while in transit

from Cochin Port to factory wharf. Details of the consignment like quantity, ,name of the ship, bill of

lading number and date, value etc. are given to the insurer by the time the ship arrives at Cochin

Port. Separate policies and premium bills are issued for each individual shipment.

(iii) Insurance cover shall be taken only for consignments which are transported at the risk of the

corporation.

(iv) In case normal conditions of open policy for transit insurance provide for a certain percentage of

excess clause in respect of different category of materials, then, according to the terms of the policy,

losses upto the percentage of excess prescribed in the policy are to be borne by the insured. Any

losses beyond the excess percentage prescribed are indemnified by the insurers.

(v) The monthly statement giving prescribed particulars for consignments covered under the policy shall

be filed by the Accounts Department to the insurers. It will be ensured by Accounts Department that

such declaration are sent to insurance promptly within the prescribed dates.

(vi) For imported consignments it is desirable to obtain insurance on “Warehouse to Warehouse” basis.

This is necessary because if two separate covers are obtained for ocean risk and inland transit risk, it

becomes extremely difficult for the insurers to apportion the liability between the two risks unless

each and every consignment is opened and surveyed at the port of landing before granting inland

cover. For the value coverage, the customs duty, ocean freight and incidental expenses shall be

taken into account.

Where consignments could not be cleared in time extensions of cover to cover delay should be

obtained promptly from the insurance company by payment of the appropriate extra premium for

such extension as any loss occurring after termination of the policy may not be recoverable under

the policy.

(vii) While placing purchase orders on foreign suppliers suitable instructions for declaring the insurance

particulars to the insurers shall be included in the purchase order itself where policy conditions so

require to avoid risk of loss arising due to non-compliance of insurance conditions.

(viii) Action for claims at the receiving port shall be taken by the purchase and liaison offices. For

shortages and breakages detected at site, the action shall be initiated by the Stores Department.

11.2.7 Loss on profit insurance

This covers the consequential loss of profits due to fire accident to plant and machinery. The amount

of loss of profit insurance will be decided by the Finance Manager with the approval of General

Manager/FD/CMD. The loss of profit claims will be worked out as and when necessitated with the

approval of the Finance Manager, General Manager, FD and CMD.

11.2.8 Personal Accident Insurance

This insurance is also known as group insurance and under this all the employees other than those

covered by ESI are insured. The rules of this insurance are attached in Annexure-29.



11.2.9. Public Liability Insurance Policy

This policy provides Indemnity against all claims upto the limits specified, for which the Insured shall

become legally liable to pay as compensation for:

(a) Accidental bodily injury to any person not being a member of the Insured’s family or engaged in the

service of the Insured.

(b) Accidental loss or damage to property not being property belonging to or in the custody of the

Insured or any person in the service of the Insured.

(c) All the costs, fee for defending any claim for compensation.

This policy is taken by Head Office for the Corporate as a whole. The policy is statutorily required to

be taken by the Public Liability Insurance Act, 1991. It is optional for any company to take additional

coverage under Market Agreement over and above the policy taken to comply with the Public

Liability Insurance Act, 1991.

11.2.10 Storage-cum-erection insurance

(a) During the construction period of a project it is necessary to take a storage-cum-erection insurance

policy to cover the risks of loss or damage to buildings, equipments and materials. The policy will

cover a period commencing from the date of arrival of first equipments and materials at the project

site and shall continue till the date of mechanical completion plus a further reasonable period for trial

run and maintenance. This policy is arranged in such a way that the Marine/inland transit policies

telescope into this policy so that no period remains uncovered from the time the ownership of the

equipment/material is passed on till the completion of erection and commissioning.

In turn key contracts, the storage-cum-erection insurance policies shall be taken in consultation with

the contractor at his cost as per our agreement with him.

(b) The rate of premium, term of policy etc. are to be settled with the insurers based on the details of the

materials brought in for the construction of the project.

(c) In the event of any occurrence which would give rise to a claim under the policy, the insurers shall

immediately be informed by telephone/telegram/telex as well as in writing, taking all steps to

minimise the extent of the loss/damage. The damaged parts shall be preserved and made available

for inspection by insurers on their surveyors and all relevant information and documentary evidences

as may be required by insurers, shall be forwarded to them. The maximum period for reporting the

occurrence under this policy shall be presented in the policy for a ratification being issued to

insurers, repairs or replacement of any minor damage may be carried out. Steps as are absolutely

necessary for the progress of protection may also be carried out. If the insurer does not carry out the

inspection within a reasonable period from the date of notification of the claim, repairs or

replacements may be undertaken only after giving due advance intimation to the insurers.

Where consignments arrive at destination in a damaged condition, open/survey delivery should be

obtained from carriers to protect the right of recovery from the carriers. The insurers assistance to

obtain open/survey delivery from carriers can be sought where necessary.

11.2.11. Insurance for stocks of Finished Goods, Raw Materials, Industrial Products and Stores

(a) Insurance for stocks of fertilisers/industrial products and stores is to be obtained against the risk of



fire only. Such insurance wherever possible shall be obtained in the form of declaration policy whereby the

stock of items covered under insurance will have to be declared periodically. Wherever it is not

possible to obtain a declaration policy, a fixed amount policy shall be obtained for the same.

(b) As far as possible, hazardous and non-hazardous goods shall be stored separately in the godowns

constructed in accordance with the norms laid down by insurers. Wherever such separate storage is

possible, the concessional rates for non-hazardous goods shall be availed of.

(c) Before insurance is taken, various categories of stores shall be reviewed with a view to select items

for which insurance is considered necessary. No insurance normally would be necessary for items

like steel, structural, steel, pipes and valves, refractory bricks etc.

(d) In the case of Stock Declaration Policy, all inventories held like Finished goods, Inventories, Raw

Materials, Fuel, Stores & Spares are declared every month to the Insurer. Refund should be

obtained for any excess premium remitted after the expiry of the policy based on the declarations

made during the tenure of the policy.

11.3 PROCEDURE FOR SETTLEMENT OF TRANSIT INSURANCE CLAIMS

Shortage, breakage intimations (First Information Reports - FIRS’) are prepared by the stores

department and based on the FIR, the Stores Department will place an initial claim with the carriers

and the Insurance Company, a copy of which shall be marked to Finance.

The claim on the carrier should be preferred within 7 days of the receipt and the claim on the

Insurance Company should be made within 6 months of the receipt of the item damaged. The claim

papers then shall be forwarded to the Finance Department by the Stores Department for the

submission of the claim bill. The Finance Department shall prepare the claim bill and along with

other necessary documents file the claim with the Insurance Company. Meanwhile the suppliers will

also be requested for replacement, value of replacement etc. by the Stores Department. In respect

of shortage from a sound packing case, no claim will lie with the insurer.

11.3.1 Rail, Road risks

In the case of shortage, breakage in transit, the claim is lodged with carriers/railways, as the loss

might be due to negligence or omission of the carriers/railways. These claims will be preferred with

the carriers/railways by the shipping office of the respective units. The Shipping Office will arrange to

obtain open delivery of the materials, wherever necessary and obtain open delivery

certificate/shortage certificate from the carriers/railways and intimate the insurers also. In the case of

door delivery of materials, purchase/stores department will arrange to obtain open delivery

certificate. In the event of claims with carriers/railways being turned down, the claims will be pursued

with the insurers for settlement. For this purpose, the open delivery certificate, shortage certificate,

details of consignment, nature of the package, internal condition of the packages at the time of

clearance value of the loss, claim bill etc. will be sent to the insurer within the period of limitation. In

the absence of a claim with carriers/railways for damage/loss in transit, insurers may reject our claim,

as the loss/damage may have occurred due to their negligence. If the claim is substantial, the

insurers will arrange for survey for which necessary assistance/details are furnished by us.

The following documents are to be sent to the insurer for the settlement of the claims:-

(a) Copies of correspondence with carriers/railways and the original replies received from them. Also

acknowledgement card for having registered the claim with carriers, received from carriers.



(b) Shortage/damage/open delivery certificate in original.

(c) Insurance Policy/declaration certificate discharged, if applicable or insurance policy No. declaration

details etc.

(d) Claim Bill in duplicate.

(e) Copy of invoice

(f) Claim form duly filled up.

(g) Letter of subrogation and power of Attorney where applicable or Letter of Authority and undertaking.

(h) Copies of correspondence with suppliers in case of shortage for which open delivery is not taken.

11.3.2 Marine Risks

Where materials are carried by water/sea, in the case of loss or damage apparent at the time of

discharge, a steamer survey will be called for and a claim on the steamer agent will be preferred for

the CIF value of the goods. In case the steamer agents fail to deliver the materials tendered for

carriage in full or in part, the shipping officer or clearing agents will write to the Port Trust Authority

informing about the short delivery of the materials and obtain a short delivery/short landing

certificate. This certificate is proof of non-delivery of the package. Sometimes, it may happen that

the package discharged from the ship is found missing. In such cases, a certificate of landed but

missing items will be obtained from the Port Trust and claim will be preferred on the Port Trust by the

Shipping Office, with copy to the insurers, under advise to Accounts Department. Action regarding

claim with steamer agents, Port Trust, Shipping Company etc. will be pursued by the shipping office,

Cochin under advice to Accounts and to the insurers. For a claim on loss on the insurers, the insured

has got the following important obligations, viz.

(a) give immediate notice to carrier of any loss or damage that might be apparent

(b) arrange for a joint survey with the carriers

(c) not to give a clean receipt for goods which are apparently damaged.

(d) Claim on Port Trust, steamer agent, shipping company, supplier etc. where necessary.

Copies of all correspondence with steamer agents, will be endorsed to the insurers for settlement of

claims. After registering a claim with insurers, the following documents are also sent to the insurers

to enable them to process the claim for settlement:-

(a) Insurance policy/declaration certificate duly discharged

(b) Bill of lading (non-negotiable copy)

(c) Copies of correspondence with the steamer agents

(d) Invoice with packing specifications

(e) Survey Report



(f) Bill of entry

(g) Port/steamer agents’ certificate for short delivery/ short landing/missing

(h) Letter of subrogation or power of Attorney or Undertaking where applicable.

The letter of subrogation may be necessary to enable the insurers to take up further action with

respect to legal proceedings, if necessary, when an action is taken by the insurer on the basis of the

letter of subrogation or Power of Attorney, by instituting legal proceedings, the suits are filed normally

in the joint name of the insured and the insurer. The expenses of the proceedings are met by the

insurer.

11.4. GENERAL GUIDELINES

When a claim is preferred on the insurer, particulars of the claim are entered in a register of claims

maintained, giving details of the loss/damage, claim No. Policy No., Declaration No. and particulars,

value of loss/damage, date of claim bill sent, date and value of claim settled, with a remarks column

giving details of Purchase Order No. and Date, Stores Recovery Report No. and Date, FIR No. and

Date and any other relevant particulars. The register will be reviewed periodically and follow up

action taken for settlement of outstanding claims within period of limitation. All claims are entered in

the claim register. No action is taken to prefer claim where the value of the loss/damage/shortage

does not exceed Rs.25/- in respect of each claim. Also for manufacturing defects in supplies

received, there will be no claim with insurers and the cost of such items of supplies will be recovered

from the supplier. Correspondence with carriers will also be sent to the insurers to explore the

possibility of recovering the loss from carriers.

Constant follow up is required with the insurers for settlement of claims. On the claim being admitted

by the Insurer, the debit standing to the debit of the supplier which is pertaining to the claim admitted

should be transferred to Other Factory General Charges. On the claim being accepted by the

Insurer, the claim amount allowed by the Insurer should be taken as Miscellaneous Income.

11.5. ACCOUNTING OF PREMIUM

As the period of one year for each policy is different and may fall in two financial years, the Premium

paid should be allocated between Insurance Premium Expenditure Account and Prepaid Insurance

Account. The opening balance of the Insurance Prepaid Account in a financial year should be

transferred to the Insurance Premium Expenditure Account. Schedules for Insurance Premium and

prepared as a part of the closing and finalisation of accounts. Any refund of premium due but not

received should be accounted by passing the necessary journal entry. Also any unexpected refund

of premium relating to prior years should be credited to the Insurance Premium Account as a

separate item and should not be taken as Miscellaneous Income.



CHAPTER 12

COST ACCOUNTS 12. COST CENTRES

12.1. Cost records in production divisions are maintained on the basis of cost centres. A cost centre is a

location or an equipment or group of both together for which cost can be ascertained separately. A

cost centre may be service oriented or production oriented or both together. Various expenditure

incurred will be analysed and collected under the relevant cost centre. This may be on the basis of

direct allocation or indirect allocation. An expenditure which is incurred exclusively for a cost centre

and can be identified as relating to a specific cost centre, will be allocated to that cost centre. Where

a direct allocation or identification to a cost centre is not possible, such expenditure will be

apportioned to different cost centres on an accepted or pre-determined basis.

12.2. COST OF PRODUCTION (PRODUCTION DIVISION)

The process cost system is followed in the production divisions for finding out the cost of production of

various products and services. The entire production process is divided into cost centres for

allocation of expenditure. Each cost centre and each expenditure is codified and allocation of

various expenses are made at source through finance records. In the case of direct expenses, they

are directly booked under the respective cost centres through the codes. Indirect expenses are

separately booked and allocated at the year end. The total cost of one cost centre is allocated to

other various cost centres on pre-determined basis. For eg. the total cost of pollution control cost

centre will be allocated to other cost centres on the basis of percentage of utilisation by other cost

centres.

Cost sheet is prepared in two ways. The items in the cost sheet is compiled on the basis of process

of the product or on the basis of elements of the product. Cost sheets of all the products are

prepared both in processwise and elementwise. In the case of processwise cost sheet, variable cost

of intermediates will be shown under variable portion and fixed cost of intermediate will be shown

under fixed portion of the end product. However, in the case of elementwise cost sheet, the cost of

intermediate product in the cost sheet will not be shown as the intermediate product but will be

divided into various elements and added with the other elements of cost of production.

The format showing the processwise cost sheet and elementwise cost sheet of a finished product is

given as Annexure-35.

12.3. THE COST CENTRE IN PRODUCTION DIVISIONS ARE AS UNDER:

COCHIN DIVISION 1) Process Water 8) Sulphuric Acid 2) DM Water-Ph.I 9) Phosphoric Acid 3) DM Water-Ph.II 10) Pollution Control 4) Steam 11) Urea 5) CPP-14 MW 12) DAP 6) CPP-12 MW 13) Ammonium Phosphate 7) Ammonia



UDYOGAMANDAL DIVISION 1) Process water 7) SO2/Oleum 2) DM water 8) Phosphoric Acid 3) Steam 9) Pollution control 4) CPP 10) Ammonium Sulphate 5) Ammonia 11) Ammonium Phosphate 6) Sulphuric Acid PETROCHEMICAL DIVISION 1) DM Water 6) Hyam 2) Steam 7) Pollution control 3) CPP 8) Ammonium Sulphate solution 4) Cyclohexane 9) Molton Lactam 5) Ammonia 10) Bagged Lactam

12.4 The cost of production of a product or service mainly consists of two parts one the variable cost and

another the Fixed cost. The various elements of cost and the basis of compilation in each cost sheet

is given below:-

12.4.1 Variable cost

12.4.2. Raw Materials

Raw Materials drawn by each plant/cost centre is directly charged to that plant or cost centre through

general ledger numbers and sub ledger numbers in the financial records. This is automatically

booked under the respective cost centre by use of Material Requisition (MR) accounting in the

financial ledger. The accounting of the Raw Material Consumption will be on a monthly basis. The

consumption of raw material for one month will be booked under the respective cost centre through

financial records. The production department gives the details of each type of raw materials

consumed in the plants. These will be charged to the respective cost centre and forms a part of the

cost of production. Raw Materials are charged on a monthly weighted average rates.

In the case of bulk raw materials like Sulphur and Rock Phosphate, the stock in hand is physically

verified at the end of each quarter but adjustment for the difference between physical stock and book

stock is made only on year end verification. The physical stock is compared with the book. The

excess/shortage in book stock over the physical stock is adjusted in the consumption or otherwise

thereby the book stock quantity is made equal to physical stock quantity.

12.4.3. Intermediate Product

In addition to raw materials, plant may consume intermediate products also in producing a product.

Intermediate product may be drawn either from the same division or from other divisions. An

intermediate product may be consumed in another intermediate product or in a final product. The

cost of intermediate product consumed will be shown separately as variable cost and fixed cost in

the end product under respective heads (in the case of process wise cost sheet). In the case of an

intermediate product transferred from other divisions which contains an element of profit, only the

variable cost and the fixed cost of the intermediate product will be considered in the cost sheet of the

end product. The profit element in the intermediate product consumed will be excluded in the end

product cost sheet.

12.4.4. Consumable Stores



Consumable Stores mainly consists of operating supplies and Catalysts. Operating supplies are

drawn by each plant/cost centre directly from the stores and are charged to the respective plant/cost

centre through financial records. However, certain operating supplies are not attributable to any

specific plant or cost centre. The total of such unallocated operating supplies will be allocated on the

basis of direct consumption of operating supplies.

In the case of Catalyst, it’s life will be for more than one year. List of Catalysts for which the no.of

years consumption to be adopted from 1998-99 are given as under:-

Catalyst’s Name Upto From 1997-98 1998-99 onwards ——————— ———— ———— No. of years No.of years 1. Ammonia Synthesis Catalyst 3 5 2. Primary Reforming Catalyst 2 2 3. Secondary Reforming Catalyst 3 4 4. HT Shift Catalyst 3 3 5. LT Shift Catalyst 2 3 6. Hydrogenation/Comox Catalyst 3 4 7. Zinc Oxide H2S Absorber Catalyst 3 4 8. Methanator Catalyst 3 4 9. Vandium Pentoxide Catalyst 5 5 10. Ammonia Cracker Catalyst (C-11-4S) 5 5 11. Benzene Hydrogenation Catalyst 5 5 12. Benzene Desulphurisation Catalyst 5 5 13. Titanium Oxide 5 5

It’s use will be spread over the period of years. In such cases the total value of the Catalyst will be

deferred over the period of it’s life. Every year a portion of the value is taken as cost of the product

by charging to the plant/cost centre through financial records. Thus the total cost of the catalyst will

be spread over the life of the Catalyst. The balance amount, after charging to the cost of

production in each year, standing in the account of each Catalyst will be taken to “Stores with Plant”

and included in the inventory of “Stores and Spares”. In addition every year some quantity is added

with the catalyst known as “Make up quantity”. The value of such make up quantity will be written off

in the same year.

12.4.5. Utilities

The next item in the cost of production will be utilities. Utilities mainly consists of water, power and

steam. Separate cost centres are maintained for production of each type utilities. The main

functions of a cost centre for utilities include production and distribution to other production plant/cost

centres. The total cost incurred in each utility cost centres is charged to different cost

centres/production plants based on quantities consumed in each cost centre/plant. In some cases

the consumption of utilities cannot be directly related to any specific cost centre/production plant.

Such utilities are allocated on the basis of consumption of direct utilities.

In the case of steam, in addition to production from boiler plant, steam is also exported from

Sulphuric Acid/SO2/Oleum Plants to other cost centres. Due credit is given to the steam exporting

plants for the quantity of steam exported.



12.4.6. Packing Materials

Packing Materials in production divisions mainly consists of bags made out of Jute, HDPE etc. for

packing fertilisers and Caprolactam. Packing materials are drawn by each plant under the respective

plant sub ledger code. The values are directly charged to the respective plants or cost centres. The

average cost arrived by dividing the total cost of packing materials by the quantity packed will be

taken as the cost of packing materials per unit. Physical verification of stock is conducted once in a

year or at the year end. The variation in physical stock with that of the book stock is taken and

adjusted in accounts.

12.4.7 Pollution Control Expenses

Pollution Control expenses mainly consists of the chemicals, operating supplies and other

consumables meant for treatement of various effluents discharged from different cost centres or

plants. In addition the pollution control cost centre also consumes utilities like power water and

steam. All these expenses clubbed together constitute the variable expenses. The fixed expenses

in pollution control are the salaries & wages, staff welfare, repairs and maintenance, factory

overhead, administrative expenses etc.

The total of pollution control expenses are allocated to other cost centres or plants as variable cost

and fixed cost (processwise cost sheet). The allocation is made on the basis of utilisation of the

services of the pollution control plant on predetermined norms. The allocation may be based on

actual utilisation of the services of the pollution control plant or on a technical estimate.

12.5 FIXED COST

Fixed cost of a product mainly consist of conversion cost of the product. In addition to direct fixed

cost, the fixed cost element in the intermediate products consumed are also shown separately under

the Fixed Cost of the product. The various elements of Fixed Cost are given below:-

12.5.1. Salaries and Wages

Salaries and Wages includes Basic Pay (Basic + DA+ Allowances), Provident Fund, Ex-gratia, leave

encashment etc.of both Managerial and Non-Managerial. Salaries and Wages are broadly

bifurcated into (1) Direct (2) Indirect (3) Administration and (4) Maintenance.

Direct

The salaries and wages of employees working in a plant/cost centre is charged in that plant or cost

centres through the sub ledger in the finance records. These are taken as direct salaries and

wages. Where the salaries and wages of employees of more than one plant or cost centres are

booked under one Sub Ledger, the same will be allocated to different cost centres on the basis of

no.of employees working in each plant or cost centre. In the case of power, steam and water, the

salaries and wages are booked under one SL viz Utilities Department. The total salaries and wages

of this department will be allocated to power, steam and water on the basis of the number of direct

employees working in each cost centres.

Indirect

From the total salaries and wages after allocating the direct salaries and wages, the balance is taken

as indirect salaries and wages. The indirect salaries and wages are allocated to different cost

centres/plants on the basis of direct salaries and wages. While taking the total salaries and wages



for allocating indirect salaries and wages, the salaries and wages of Administration and Maintenance (as per

labour allocation) are excluded since these are allocated separately.

Administration

The salaries and wages of Administrative Departments are shown separately in the cost of

production. Administrative salaries and wages includes salaries relating to Traffic, CISF, Finance,

Administrative Office etc. The total of these salaries and wages are also allocated on the basis of

the direct salaries and wages.

Maintenance

Salaries and Wages of maintenance departments are taken to plant maintenance and shown

separately as “Labour Allocation” under plant maintenance. Maintenance salaries and wages are

allocated on the basis of direct salaries & wages.

12.5.2. Staff Welfare Expenses

Expenses incurred under different heads related to the welfare of the staff are clubbed and put under

“Staff Welfare Expenses” in the cost sheet. These expenses are incurred under different heads like

Cafeteria, Uniform and footwear, LTC etc.and charged through the respective GL nos. in the

financial records. These are expenses incurred for all the employees in the division and hence

cannot be charged to any particular cost centres/plant. The total staff welfare expenses are

charged directly in the cost sheet under staff welfare expenses on the basis of direct salaries and

wages.

12.5.3. Insurance

The premium paid on various insurance policies are booked under one GL in the finance records.

The insurance premium has to be allocated to different cost centres and plants. The allocation is

made on the basis of the gross block of various cost centres.

12.5.4. Plant Maintenance

The expenses incurred for maintenance of plants and equipments are mainly divided into two.

(1) Materials consumed and labour contract and

(2) Salaries and Wages of Maintenance staff.

1) Materials consumed and labour contract

Materials consumed for repairs and maintenance of various machineries and equipments are booked

under respective GL and SL and directly charged to the cost centre/plant. Such expenses are taken

as direct maintenance expenses. However certain maintenance expenses are not incurred for a cost

centre or plant which has a final output of service or product. Such maintenance expenses are to

be allocated to the cost centres with intermediate or end product output. These indirect maintenance

expenses are allocated to the intermediate or end product cost centres on the basis of direct

maintenance expenses. The treatment of contract labour is also on the same basis as that of the

maintenance expenses i.e. Direct expenses are taken to the respective cost centres directly and

indirect expenses are allocated on the basis of direct expenses.



2) Salaries and wages of Maintenance Staff

The salaries and wages of maintenance staff are shown as Maintenance Salary under Salaries and

Wages.These are allocated on the basis of direct salaries and wages.

12.5.5. Depreciation

Depreciation is directly charged to the respective assets according to the GL and SL number of the

asset. The total depreciation of various assets like Building, Machinery, equipments, furniture etc. in

a plant or cost centre as per the financial records are taken to the respective cost centre as total

depreciation. The depreciation on the assets other than the directly identifiable assets to a particular

cost centre are taken as indirect depreciation. The indirect depreciation is allocated to various cost

centres on the basis of direct depreciation.

12.5.6. Factory overhead

Factory overhead expenses are those items which are not directly identifiable to any plant or cost

centre but incurred for the factory as a whole. These include safety expenses, tools breakage, CISF

expenses, General factory expenses etc. A portion of the factory overheads are allocated to other

divisions of the company. These are allocated on the basis of pre-determined norms. The balance

amount after allocating to other divisions are taken to cost sheet. The factory overheads are

allocated to various cost centres on the basis of total conversion cost of each cost centre up to the

level of factory overheads.

12.5.7. Administrative overheads

Expenses like postage, telephone, bank charges, travelling, printing, stationery etc. are taken to

Administrative expenses. From the total of the administrative expenses the miscellaneous income is

deducted and the net administrative expenses is taken to cost sheet. Administration expense is

allocated to various cost centres/plants on the basis of total cost upto administration overheads (ie.

total cost excluding administration overheads, Head Office overheads, interest etc).

12.5.8. Head Office Overheads

Overhead expenses apportioned from Head Office is allocated to various cost centres on the same

basis as administration overheads.

12.5.9. Gratuity and Bonus

Total of gratuity and bonus are allocated on the basis of direct salaries and wages.

12.5.10. Interest

Interest includes interest on term loan and working capital from banks. Where the term loan is availed

for any particular plant or cost centre, the interest on such loan is directly taken to that cost centre.

Other interests are allocated to the end products on the basis of total cost upto interest.



CHAPTER-13

CENTRAL EXCISE AND SERVICE TAX

13.1 INTRODUCTION

Central Excise duty forms the single largest source of revenue for the Central Government of India. It

is an indirect tax which ultimately falls on the consumer. The duty is levied and collected by the

Central Excise Department under the authority of the Central Excise Act 1944 and Central Excise

Rules 1944. Taxable event for Central Excise Duty is manufacture or production of goods, though for

administrative convenience duty is actually collected at the stage of removal or clearance of goods

from the factory.

13.2 REGISTRATION

Every manufacturer of excisable goods is required to get himself registered before commencing

production. Every importer or dealer desiring to issue modvat invoices should also get himself

registered. Manufacturer or dealer having more than one premises is required to obtain a separate

registration for each premises, from the respective Range Superintendent having jurisdiction over

the premises, may it be a factory or a depot deserving to issue modvat invoices. If a manufacturer

desires to start production of a new product he should get his Registration certificate duly endorsed

to this effect.Our company is having separate Registration certificate for Udyogamandal Division

(including petrochemical Division and Ammonia project in a single certificate), Cochin Division and

FEW.

13.3 SELF ASSESSMENT PROCEDURE

Different types of procedures such as physical control, Self assessment procedure, compounded levy

scheme etc. have been prescribed for levy and collection of central excise duties keeping in view of

the needs of different industrial sectors. The self Assessment procedure is prevailing in our

company. Under this procedure, the assessee files a classification declaration for his goods in

quadruplicate under Rule 173 B to inform the Department of the claimed rate of duty applicable to his

goods. If the rate of duty undergoes a change or he commences manufacture of a new product, he

should file a new declaration or amendment to the earlier one. The assessee has to file such

declaration or an amendment thereto within 30 days of commencement of manufacture or alteration

in rate of duty etc. In addition, he should also file a fresh classification declaration at the beginning of

each financial year.

13.4 INVOICE

Invoice has replaced gate pass as the clearance document with effect from 1.4.1994. The invoices

should be machine serially numbered for each financial year beginning from 1st April. Each page in

the invoice book should be pre-authenticated by an authorised officer of the assessee with

company stamp/seal and his signature. The serial numbers in the invoice book should be intimated

to the Asst. Commissioner in advance. In a company, the Managing Director, company Secretary or

an officer of the company authorised by the Board of Directors by a resolution are authorised to pre-

authenticate invoices.

Invoices shall be issued in triplicate as prescribed in Rule 52 A, with respective marking of original,

duplicate and triplicate pre-printed (and not stamped). Normally, invoice books shall be maintained

in two sets, one for clearance for home consumption and other for clearance for export. If an



assessee needs to maintain more than two sets because he has clearance for home consumption from more than

one section of the factory he should apply to the Assistant Commissioner for permission to do so and

follow the procedure laid down in this behalf.

13.4.1 Dealer Invoice

The invoice issued from the Registered depot under Rule 57 GG is called Dealer Invoice. with effect

from 1.8.1995, dealer invoices should be in different colours, original in white, duplicate in pink,

triplicate in yellow and quadruplicate in green colour. Name, address and central Excise Registration

number of the registered person issuing the invoice, name of the jurisdictional

range/division/commissionerate etc and his Income tax and sales tax registration number should

also be pre-printed on 57GG invoices. Further, the first and last copy of the dealer invoice book

should be got pre-authenticated by the jurisdictional Range superintendent of Central Excise. In

addition to the above each foil of the invoice book should be pre-authenticated by the authorised

officer of the company.

13.4.2 Computerised invoices

Invoices generated through computer are also recognised. In that case, the serial numbers likely to

be used in the forthcoming quarter should be intimated to the Asst. Commissioner. As soon as the

said serial Nos.are exhausted, a revised intimation may be sent. In case of computerised invoices, Sl

No. can be printed at the time of printing the invoice and authentication can be done after printing but

before the invoice is assigned the date and time of removal.

13.5 RECORDS

There are various records prescribed in the Central Excise Rules that have to be maintained by the

manufacturer. Some of the Registers maintained by us are given below:-

13.5.1 Personal Ledger Account (P.L.A)

A register in the prescribed form has to be written for recording the transacitons in the Personal

Ledger Account. For maintenance of personal ledger account (rule 173 G) permission is to be taken

from the jurisdictional Assistant Collector to open a current account. When an account number is

allotted, payment can be made in a nominated bank or departmental treasury on a challan in Form

TR-6 showing the appropriate head of account. The deposits may be made either by cash/local

cheque/demand draft. In the case of payment by local cheques, the receipted challan will be issued

only on realisation of amount of the cheque by the receiving bank. A separate PLA has to be kept for

each separate excisable commodity but under the overall provisions of self-removal procedure, a

single account current for payment of duty due on all excisable goods may be maintained so long as

the Range Officer is one and the same for all these goods, and even where separate accounts are

maintained for each one of the excisable goods produced, amounts can be transferred from one

account to another subject to such conditions as the Collector may specify.

Payment of duty

The excise duty liability in respect of clearances of excisable goods during the first fortnight of the

month shall be paid by the twentieth day of that month. The liability on the goods cleared during the

second fortnight of the month, other than the month of March, shall be paid by the fifth day of the

succeeding month. The duty liability during the second fortnight of March shall be discharged in the

following manner:

1) The manufacturer shall pay, by the 31st day of March, a sum equal to the aggregate of -



A) the amount of duty payable on actual clearances made upto the twenty fifth day of March; and

B) an amount calculated, for the remaining six days of March, pro-rata of the actual duty payable under

(A) above.

2) Where the payment made in the manner specified in sub-clause (1) above

A) is less than the actual liability for the said second fortnight of March, the manufacturer shall pay the

balance amount of duty by the twentieth day of April of that year.

B) is more than the actual duty liability for the second fortnight of March, the excess amount may be

adjusted against the duty liability for the first fortnight of the month of April of that year and above

such adjustment is not possible for any reason, against the duty liability for any subsequent

fortnight.

While discharging the above duty liability, payment can be made for the net amount after utilising the

CENVAT Credit available.

13.5.2 RG 1 Register

The assessee should maintain an account of production and removals in form RG 1. The Register

has to be written daily for each excisable commodity.

13.5.3 RG 23 Registers

These registers are maintained for the purpose of availing modvat.

RG 23A - Part I

This register contains the stock account of inputs for use in or in relation to the manufacture of final

products.

RG 23A - Part II

This is the entry book of duty credit showing the opening balance of Modvat Credit, Fresh credit

allowed, Debits, balance of Modvat credit etc.

RG 23C-Part I

This register contains the stock account of capital goods to be used for or in relation to the

manufacture of final products.

RG 23C-Part II

This is the entry book of duty credit on capital goods showing particulars of opening balance of duty in

credit, fresh credit allowed, debits, balance of credit etc.

RG 23D

This register has to be maintained at the depot of the registered Dealer for recording the receipts of

duty paid goods and issues thereof.



13.5.4 RG 16 Register

This is the Register of excisable goods used without payment of duty (whole or part) for special

industrial purposes and of commodities manufactured therefrom. Separate entries should be made in

respect of each class of goods brought into the factory at concessional rate of duty under Chapter X

of the Central Excise Rules.

In Petrochemical Division, the Registers mentioned in para 13.5.1, 13.5.2 and 13.5.3 are

computerised with the approval of Assistant Commissioner.

13.6 RETURNS

The company is required to submit RT-11 and RT-12 returns monthly. RT-11 is for excisable goods

used without payment of the whole or part of the duty for special industrial purposes under chapter

X.

13.6.1 Details of RT-12 return

RT-12 is the return of excisable goods manufactured/received in and issued by the assessees

working under self-assessment procedure. Entries in RT-12 should include details of all goods

cleared whether out of the factory or for use within the factory. The returns should also show the

quantity manufactured, the quantity received from outside, quantity cleared on payment of duty,

quantity of duty free clearances etc.

It will also show the value of goods removed on payment of duty and the duty paid both under PLA

and modvat. Separate entries should be made for each tariff subheading. If within the same sub-

heading there are different rates of duty fixed by exemption notification, ratewise break-up should

be given in the return. The assessees are required to file RT-12 Return every month within five days

after the close of each month, accompanied by

a) Two copies of extracts of PLA.

b) Copies of RG 23 Modvat accounts in part I and II.

c) Receipted TR 6 Challans

d) Suppliers invoices on the strength of which Modvat credit has been availed during the month.

Invoice issued by the assesee under Rule 52 A for clearance of his goods need not be enclosed, but

the triplicate copies of the invoices shall be kept under safe custody by the assessees for inspection

by the Central Excise Authorities.

13.7 CENVAT CREDIT SCHEME

Since excise duty is now leviable practically on all goods (except on fertilisers), whether raw

materials, intermediates, components, capital goods and final products, the modvat credit scheme is

introduced to neutralise the cascading effect on price of the final products. This scheme provide for

the input duty relief. This scheme has been modified as CENVAT Scheme from 01-04-2000

onwards. CENVAT credit scheme can be classified into two viz: i) Modvat on inputs and

ii) Modvat on capital goods.

13.7.1 Eligibility



CENVAT credit scheme now cover almost all inputs and capital goods used in the manufacture. The

“input” means all goods, except high speed diesel oil and motor spirit, used in or in relation to the

manufacture of final products whether directly or indirectly and whether contained in the final product

or not, and includes accessories of the final products cleared along with the final product, goods

used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for the

manufacture of final products or for any other purposes, within the factory of production and also

includes lubricating oils, greases, cutting oils and coolants.

“Capital Goods” means (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90,

heading No.68.02 and subheading No.6801.10 of the First Schedule to the Central Excise Tariff

Act, 1985 (ii) components, spares and accessories of the goods specified at (i) above; (iii) moulds

and dies; (iv) refractories and refractory materials; (v) tubes and pipes and fittings thereof, used in

the factory and (vi) pollution control equipment, used in the factory of the manufacturer of the final

products. “Capital goods” do not include any equipment or appliances used in an Office.

13.7.2. CENVAT Procedure

CENVAT credit can be availed on Excise Duty and CVD paid on inputs and capital goods. The

CENVAT credit can be utilised for payment of excise duty on final products manufactured. CENVAT

credit in respect of capital goods received in the factory at any point of time in a given financial year

shall be taken only for an amount not exceeding fifty per cent of the duty paid on such capital goods

in the same financial year. The balance of CENVAT credit can be taken in the subsequent financial

year.

CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of

exempted goods, except in the circumstances mentioned below:-

Where a manufacturer avails of CENVAT credit in respect of any inputs, except inputs intended to be

used as fuel, and manufactures such find products which are chargeable to duty as well as

exempted goods, then, the manufacturer shall maintain separate accounts for receipt, consumption

and inventory of inputs meant for use in the manufacture of dutiable final products and the quantity of

inputs meant for use in the manufacture of exempted goods and take CENVAT credit only on that

quantity of inputs which is intended for use in the manufacture of dutiable goods. The manufacturer

opting not to maintain separate accounts shall pay an amount equal to eight per cent of the total

price of the exempted goods at the time of their clearance from the factory. No CENVAT credit shall

be allowed on capital goods which are used exclusively in the manufacture of exempted goods.

CENVAT credit shall be taken on the basis of invoice or bill of entry. The manufacturer shall maintain

proper records for the receipt, disposal, consumption and inventory of the inputs and capital goods.

A monthly return shall be submitted within five days from the close of each month to the

Superintendent of Central Excise.

13.8 SHOW CAUSE NOTICE & DEMAND

If the Central Excise Department feels that duty was due on any goods but has not been levied or has

been short levied or erroneously refunded, it has the right under Section 11 A to demand the duty.

Issue of a show cause notice detailing the basis of the demand and service of the said notice on the

assessee are a must before he can be called upon to pay the demand. The notice must be issued

within one year of the relevant date as defined in Section IIA which generally is the date of filing of

RT 12 Return for the month of the demand. Normally the show cause notice is given by the

Superintendent of the Range and the adjudication is done by the Assistant Commissioner in that

case. Reply to the show cause notice iss to be given to the Assistant Commissioner within 30



days. The adjudicating authority must grant a personal hearing before the matter is confirmed and then he is

required to pass a speaking order.

13.9 REFUNDS

For claiming refund of any duty of excise, an application in prescribed form ‘R’ has to be filed before

the Assistant Commissioner in duplicate within six months from the date of payment of duty. The

time limit of six months is not applicable where duty had been paid under protest. Refund, even if

otherwise due on merits, will be granted to the assessee only if he has not passed on the incidence

of duty to the buyer of his goods; otherwise, the refund would be sanctioned and credited to the

Consumer Welfare Fund. Burden to prove that he has not passed on the tax incidence to buyer is on

the claimant.

13.10. APPEALS AND REVISION APPLICATION

If a person is aggrieved by the order passed by a Central Excise Officer lower in rank than

Commissioner, he can file an appeal to the Commissioner of Central Excise (Appeals). A second

appeal lies to the Appellate Tribunal (CEGAT). However, if the order has been passed by

Commissioner or Principal Commissioner, appeal there against lies direct to the Tribunal. In respect

of disputes between a Government department and Public Sector Undertakings prior clearance from

a High Power Committee of Secretaries is required before the matter can be proceeded with before

a Court/Tribunal. A final appeal under Section 35 L lies to the Supreme Court against the Tribunal’s

Order if it relates to rate of duty or value of goods and in all other case only a reference on questions

of law lies to the High Court.

13.11 CHAPTER X PROCEDURE

Chapter x Procedure is contained in Rule 192 to 196 BB of the Central Excise Rules and regulates

accounting, use or disposal of the goods brought without payment of duty (or at concessional rate)

for further use in the manufacture of other excisable goods. The application for obtaining the

concession is submitted in writing with the relevant details to the Commissioner of Central Excise

through the jurisdictional Range Superintendent. The Commissioner will grant permission to the

manufacturer to avail the exemption if he is satisfied that the excisable goods are intended to be

used as contemplated in the relevant notification. The certificate for procurement of excisable goods

under Chapter x Procedure is given by the Superintendent of Central Excise in Form CT2. The

goods are removed under AR3A.

It should be ensured that all such goods brought under this procedure, are used only for the purpose

for which these were intended and for which prior approval had been obtained. The RG-16 register

has to be carefully maintained since all such goods not fully accounted for as above or not shown to

the satisfaction of the proper officer to have been lost or destroyed by natural causes or by

unavoidable accident during transport, handling or storage, will be charged to duty at such rates or at

such value as specified in rule 192 (2).

A return in Form RT-11 must be submitted within 7 days of the close of each month showing the

nature and quantity of goods used, commodities manufactured, the manner of manufacture and such

other particulars as may be required by a general or special order of the department.

If goods obtained under rule 192 are on receipt found to be defective, damaged or unsuitable such

goods should be stored separately. Such goods can be returned to the original manufacturer in

accordance with the procedure prescribed or can be destroyed where duty payable thereon has

been paid.



If any excisable goods obtained under remission of duty become surplus for any reason, the

Company can with previous permission.

i) Clear the goods on payment of duty;

ii) Return the goods to the original supplier/manufacturer;

iii) Clear the goods for export under 12,13, or 14 as the case may be (See Rule 196-A).

The provisions of rule 196-B should be followed in the matter of disposal of unit/defective goods

received under Chapter x Procedure.

13.12. TREATMENT OF SHORTAGES FOR EXCISE PURPOSES

All excisable goods manufactured or received for further manufacture have to be accounted for fully

to the satisfaction of the proper officer as under rule 49 and 196 but occasions do arise when there

are shortages due to natural causes like evaporation, handling/spilling etc.or by unavoidable

accidents like floods, cyclone, fire, riots, theft pilferage etc. before clearance or use of the goods in

further manufacture. Normal shortages due to natural causes will come out in the records whenever

inventory is taken and if explained satisfactorily to the proper officer, these will be accepted as under

the provision to rule 49 or rule 196. But whenever losses occur due to any special reason, intimation

should be given to the local Superintendent within 24 hours of the incident.

13.13. ACCOUNTING

13.13.1. Personal Ledger Accounts (GL 5401)

The amount remitted into the Personal Ledger Account is debited to GL 5401 (Deposit with Central

Excise). The RT 12 Return are journalised every month. The total amount utilised from PLA as per

the RT 12 return is debited to GL 7753 (Excise Duty) and credited to GL 5401. Thus the GL balance

of 5401 will tally with the PLA balance at the end of the month as mentioned in the RT 12 Return.

13.13.2. Modvat Receivable Account (GL 5403)

The Bill Section debits this account with the excise duty paid against purchases, which are eligible for

Modvat, through RR/GRNs. At the time of journalisation of RT 12 Return, the total amount of Modvat

credit utilised, is debited to GL 7753 (Excise Duty) and credited to Modvat Receivable Account. The

accounting is done sub-ledgerwise for which the SL Codes are prepared on the basis of different

products eligible for modvat. The debit balance in this account shows the unutilised Modvat credit at

the month/year end. This balance is reconciled periodically with the closing balance of the RG 23 (A

and C) Part-II.

13.13.3. Excise Duty Account (GL 7753)

The Excise Duty Account is debited while journalising the RT 12 Return as mentioned above. This

account is credited while journalising the Invoices for the Excise Duty amount charged in the

Invoices. At the end of the financial year this account will show a debit balance corresponding to the

goods cleared from the factory but not sold. Such excise duty paid on stock held outside is

transferred to GL 5326 at the year end. Thus the excise duty account (GL 7753) will show nil

balance at the year end.

13.14 SERVICE TAX



13.14.1. Introduction

The Service Tax was introduced in the year 1994 to augment the Government Revenue by collecting

the tax from those who render certain services, through Chapter V(Section 64-96) of Finance Act

1994 and Service Tax Rules 1994 (as amended). Initially this was made applicable to Telephone

Department, share brokers and insurance companies. In 1996, two more service providers, such

as, advertisement firms and courier firms, were brought into the tax net. In the Budget for 1997-98

and subsequent budgets it covered many other services which are listed at the end of this Chapter.

13.14.2. Registration

Every person responsible for collecting the service tax shall make an application to the concerned

Central Excise Officers in Form ST-1 for registration. Where an assessee is providing taxable

services from more than one premises or offices, separate application for registration in respect of

each such premises or office shall be allowed. The Central Excise Officer shall grant a certificate of

registration in Form ST-2 within seven days from the date of receipt of the application. If the

registration certificate is not granted within the said period, the registration applied for shall be

deemed to have been granted.

13.14.3. Records

The records (including computerised data) as maintained by an assessee in accordance with the

various laws in force from time to time shall be acceptable to the Department. Every assessee shall

furnish to the Central Excise Office at the time of filing his quarterly return for the first time, a list of

all accounts maintained by the assessee in relation to service tax including memoranda received

from his branch offices.

13.14.4. Payment of Service Tax

The assessee shall deposit with the bank designated by the Central Board of Excise and Customs for

this purpose in Form TR-6 by the 15th of the month immediately following the calender month, the

service tax collected by him on the value of taxable service.

13.14.5. Quarterly Return

Every assessee shall submit a quarterly return in Form ST-3 in triplicate along with

a) a copy each of the Form TR-6 submitted for the months covered in the quarter.

b) a memorandum in Form ST-3A giving full details of the difference between the amount of service tax

collected during a month and the actual amount deposited.

The Central Excise Officer shall, thereupon, assess the service tax payable and a copy of the return

shall be sent to the assessee.

13.14.6. ACCOUNTING OF SERVICE TAX ON TRANSPORTATION OF GOODS BY ROAD

Service Tax of 5% to be borne by the Company may be accounted, as mentioned below:-

Nature of Debit Credit

payment

—————— —————— ——————-



1. Raw Material Raw material GL No.4317

Transportation cost (Service Tax

payable on Trans-

portation of

goods by Road).

2. Other material Storage charges “

Transportation

3. Finished Goods Freight charges “

Transportation (in respect of

CD and UD, debit

on service tax

will be given

to Marketing

Divn. with full

details.)

4. Other Transport- Respective job “

ation identi- nos.

fiable with jobs

(FEW & FEDO)

Separate SL Nos. may be given by the Divisions under GL No.4317 for accounting the Debit and

Credit separately so as to ascertain the total service tax paid during the year.

On remittance of service tax, GL No.4317 may be debited. At the end of the accounting year, GL

No.4317 will show a balance which pertains to the amount accounted, but not remitted during the

financial year.

Account No.4317 is allotted for accounting Service Tax and the relevant Link Code is 681000.

LEVY OF SERVICE TAX

—————————————-

Services subject to Value for the purposes Rate of

Service Tax of Service Tax Service Tax

———————————— ————————————— —————-

(a) Advertising Services Gross amount charged 5%

provided by an by such agency from

advertising agency the client for

(including an services in relation

advertising consultant) to advertisement.

to a client in relation

to advertisements in any

manner.

(b) Air travel agent’s Gross amount charged 5%

services in relation to by such agent



the booking of passage excluding the

for travel by air. air-fare but

including the

commission received

from the airline in

relation to such

booking

(c) Architect providing The gross amount 5%

service to a client in charged by such

his progfessional architect from the

capacity. client for service

rendered in

professional capacity

in any manner.

(d) Chartered Accountant The gross amount 5% providing services to a charged by such client in his accountant from the professional capacity client for services rendered in professional capacity in any manner (e) Clearing and forwarding Gross amount charged 5% agent’s services in by such agent from relation to clearing and the client for such forwarding operations. services. (f) Company Secretary The gross amount 5% providing service to a charged by such client in his Secretary from the professional capacity. client for services rendered in professional capacity. (g) Cost Accountant The gross amount 5% providing service to a charged by such client in his Accountant from the professional capacity. client for services rendered in professional capacity. (h) Courier services Gross amount 5% provided by a courier charged by courier agency to a customer in agency from the relation to door to door customer in relation transportation of time to such services. sensitive documents, goods or articles. (i) Credit Rating Agency The Gross amount 5% providing service to a charged by such



client in relation to Agency from the credit rating of any client for services financial obligation, rendered in instrument a security. connection with credit rating of any financial obligatin, instrument or security. (j) Customs house agent’s Gross amount charged 5% services in relation to by such agent from the entry or departure the client for such of conveyances or the services. import or export of goods (k) Consulting engineer’s Gross amount charged 5%

services provided to a by such engineer from

client in relation to the client for such

advice, consultancy or services.

technical assistance in

one or more disciplines

of engineering. (l) Insurance service Total amount of the 5%

provided to a policy premium received by

holder in relation to the insurer from

general insurance policy holders.

business.

(m) Interior Decorator The gross amount 5%

providing service to a charged from the

client in relation to client for such

planning, design or interior decorator

beautification of for services rendered

spaces, whether man-made in professional

or otherwise. capacity.

(n) Management consultant The gross amount 5%

providing service to a charged by such

client in connection consultant from the

with the management of client for

any organisation. services rendered in

connection with the

management of any

organisation.

capacity.

(o) Mandap Keeper’s services Gross amount charged 5%

in relation to use of a by such keeper from

mandap. the client for the

use of mandap

including the

facilities provided

to the client in



relation to such use

and also the charges

for catering, if any.

(p) Market Research Agency The gross amount 5%

providing service to a charged by such

client in relation to agency from the

market research of any client for services

product service or rendered in

utility. connection with

market research of

any product, service

or utility.

(q) Pager Services provided Gross total amount 5% by the telegraph (including authorities to adjustments from any subscribers in relation deposits) received by to pagers. the telegraph authority. (r) Manpower recruitment Cross amount charged 5%

agency’s service in by such agency from

relation to the the client for such

recruitment of manpower services.

in any manner.

(s) Real Estate Agent The gross amount

providing service to a charged by such agent

client in relation to from the client in

real estate. connection with the

sale, purchase,

leasing or renting of

real estate including 5%

any advice

consultancy,

assistance, relating

to evaluation,

conception, design,

development,

construction,

implementation,

supervision,

maintenance,

marketing,

acquisition or

management, of real

estate.

(t) Rent a cab scheme Gross amount charged 5%

operator’s services in by such opeator from



relation to the renting such person for

of a cab services in relation

to the renting of a

cab and includes such

rental

(u) Security Agency The gross amount 5% providing service in charged by such relation to the security agency from the of any property or client for services personnel by providing rendered in security personnel or connection with the otherwise and including security of any the provision of property or person services of and including investigation, detection services or or verification of any investigation, fact on activity. detection or verification of any fact or activity including services of providing security personel. (v) Stock broker service Aggregate of the 5% provided by a stock commission or broker to an investor in brokerage charged by connection with the sale the stock broker or purchase of (including the amount securities listed on a paid by him to any recognised stock sub-broker) exchange. (w) Steamer agent’s services Gross amount charged 5% to a shipping line in by such agent from a relation to a ship’s shipping line husbandry or despatch or including commission any administrative work paid to such agent. as also booking, advertising or canvassing of cargo, including container feeder services. (x) Telephone service Gross total 5% provided by the amount(including telegraph authorities to adjustments from any subscribers in relation deposits) received by to telephone connections the telegraph authority. (y) Tour operator’s services Gross amount charged 5% in relation to a tour. by such operator from



the client for services in relation to a tour and includes the charges for any accomodation, food or any other facilities provided in relation to such tour.

Item Time prescribed Prescribed Form ———————————— ——————————— —————- Registration Immediate Form ST-1 Obtaining certificate of Within 30 days of Form ST-2 Registration above Payment of Service Within 15th of the TR-6 Tax next month Challan Quarterly Return of Within 15 days from Form ST-3 Service Tax the end of the quarter Provisional Deposit Not prescribed Form ST-3A of Service Tax Appeals to Commissioner Within 3 months from Form ST-4 of Central Excise the date of receipt (Appeals) of the order Appeals by the assessee Within 3 months of Form ST-5 against the order of the date on which the Form ST-6 Commissioner of Central order sought to be Excise(Appeals) to the appealed against is Appellate Tribunal. received. Appeal by the Board Within 3 months of Form ST-7 against the order of the date on which the Commissioner of Central order sought to be Excise (Appeals) to the appealed against is Appellate Triunal) received.





CHAPTER 14

DEPOSIT ACCOUNTS WITH RAILWAYS, CUSTOMS ETC. Since the Company is having regular dealings with public utilities like railways, customs, excise,

electricity board etc. we are having deposit accounts with these agencies to make the dealings more

easier.

a) Railway freight

Payment of Railway freight is arranged through the system of railway credit note for despatches for

Kalamassery and Cochin for which sanction has been obtained from the railways. Railway credit

notes are issued by officers of the company authorized to operate the railway credit note facility.

Railway credit notes issued for payment of freight are presented to our bankers for payment by the

railway authorities. A monthly statement giving particulars of railway credit notes issued by the

various officers will be sent to Finance Department. On receipt of the statement, adjustment entries

are passed allocating the expenditure to appropriate heads of account. Care should be taken that

any railway freight paid on behalf of outside parties on a ‘recoverable’ basis is debited to the party

concerned and recovery effected. A separate account is maintained with our bankers for payment of

railway credit notes. This account should be reconciled periodically by the respective divisions

issuing/accounting the Railway Credit Notes.

b) We are having deposit accounts for payments of customs duty, freight etc. with the collector of

customs and port trust authorities. Therefore, payments on accounts of customs duty, port dues etc.

are charged to the deposit accounts maintained by us with the respective authorities. The

correctness of payments on account of duty, port dues etc. are verified by our Cochin Office. After

clearance of the materials the copies of bills of entry, port dues vouchers and other documents are

sent to the Finance Department.

Adjustments for payments are made allocating the expenditure to current accounts. The bills of entry,

port bills etc. are entered in ‘Register of heads of account with collector of customs etc.’ from where

consolidated entries are passed on a monthly basis for adjustments of duty etc. paid.

The register is in a columnar form to facilitate allocation of expenditure. The allocation and entries in

the register should be verified by section head/accounts officer before passing the voucher.

Particulars of customs duty import of spares should be entered by the assistant concerned in the

‘Register of shipment’. This information will be required to find out the total cost of the imported

material.

Refund on account of customs duty should be watched till the amounts due are realised. The deposit

accounts are replenished periodically as and when necessary. Statement of accounts are received

for our deposit accounts. The assistant concerned should reconcile the statement of account

periodically and follow up action should be taken to clear outstanding items.



CHAPTER 15

ENGINEERING, DESIGNING & FABRICATION CONTRACT ACCOUNTS The company has an engineering and designing organisation (FEDO) and a fabrication unit (FEW).

These two units undertake jobs on turn-key and consultancy basis. Generally the accounting

system is same as that of other units, except in the case of maintenance of contract accounts,

preparation of cost sheet etc. The specialities of the system in operation in both the units are

explained hereunder:-

15.1. ADMINISTRATION OF THE PROJECT

Projects undertaken by FEDO and FEW are being executed under the administrative control of

Project Managers. For large projects undertaken on turnkey basis and involving huge cash &

cheque payments, a finance wing is provided for under the administrative control of the Project in

charge. As for the other projects, an imprest account and a bank account (wherever found

necessary) is maintained under the control of the Project in charge. The responsibility for the

maintenance of accounts, custody of cash and other assets is entirely with the Project in charge. He

may institute appropriate check/surprise physical verification etc. at the vulnerable points so as to

safeguard the interests of the Company.

The following books of accounts are to be maintained at each office of the turn key project site having

a finance wing.

(1) Cash book (2) Bank books (3) Stores Accounts for receipts and issues. For free issue of

materials supplied by the clients separate accounts shall be maintained (4) Ledger accounts (5)

Excise records if applicable (6) Invoices and its register (7) Log books of vehicles (8) Asset Register

(9) Time sheet (10) OT details.

The other project sites should maintain the following document:-

1. Cash book (2) Bank book (if bank account maintained at site) (3) Asset register (4) Other registers

to have necessary control at site.

Timely submission of invoice and prompt collection of dues from clients rests with Project in charge.

There should not be any delay. Monthly report on the progress of the project shall be forwarded to

Head Office which will inter alia contain a monthly profitability report vis-a-vis the budgets along with

reasons for variation.

The actual physical verification of stock, cash and other assets are conducted at every year end and

certificate (RCM) sent to Head Office in time. The materials which are the property of our clients

lying with us/in our custody are also physically verified and the statement/list of such items in

quantity and value prepared and certified and forwarded to Head Office every year end.

15.2. FEDO

The Accounting System of FEDO has been broadly devised to suit to the special needs of an

Engineering Division undertaking jobs on turn-key and consultancy basis.

For major consultancy and turn-key jobs, separate General Ledger Numbers are issued. Expenses

which are readily identifiable with a particular project are debited to respective projects under various

sub ledgers. Thus all direct expenses are debited to the project concerned under various sub



ledgers. The indirect expenditure (ie manhour cost and overheads) is allocated to the projects at the year end

based on the manhours spent on each job. Such costs are not actually debited to the concerned

project but are considered for the purpose of determining the overall cost of the job.

For small jobs and feasibility reports only separate sub ledger numbers are allotted. The general

ledger A/c No. is the same ie. 7299.

The expenditure position of each job is compared to budget, reported on a monthly basis and the

profitability on a quarterly basis to the management for appropriate corrective action. The progress

of project is assessed on a weighted average method taking into account the progress in respect of

each activity.

For the purpose of monthly budget comparison of projects, a provisional manhour rate is adopted

based on the Revenue Budget for the year and the anticipated manhour utilisation for the year.

Each Department will give a monthly statement of the manhours spent on each job by the

Engineers/Draftsman working in the department. These figures are consolidated to arrive at the total

manhours spent on each job for each month and FEDO as a whole. At the year end after accounting

all the expenditure, the manhour cost is determined based on the actual utilised hours to the total

salary and overheads of FEDO.

In the case of turn-key jobs, the cost of the equipment is debited to the project account concerned.

Instead of maintenance of centralised stores account a register is maintained at site showing the

quantitative details, P.O.No., date of receipt, date of issue, balance, remarks etc. The project budget

would show the estimated cost of equipments under the heads like machinery, vessels, piping,

electricals, instrumentation, civil etc. The Project in charge while requesting for Finance concurrence

for purchase of equipment would indicate the budget head and the provision available under the

budget. At this stage budgetary control is maintained at Finance Department. These details are

taken into account in the preparation of the monthly budget comparison statement for each project.

At the year end after accounting all the expenditure, the manhour cost is determined based on the

actual utilised hours to the total salary and overheads of FEDO.

15.2.1 Estimates for quotation for outside jobs

The specifications of the tenderer are circulated among the engineering departments to estimate the

manhours required by each department to do the job. For turn-key jobs, the cost of equipments are

estimated by Engineering Departments based on the quoted price obtained from our regular

suppliers/manufacturers. The estimated manhours are converted into rupees at the manhour cost

anticipated. Sufficient profit margin and provision for unforeseen items, contingent liability, and profit

margin are included in the quoted price.

15.2.2 Method of Invoicing

Invoices are raised as agreed upon between the client and FEDO. The income from each job viz

Lump sum fee, premium fees, site supervision, inspection & Expediting is credited under the General

Ledger Account No.7301, 7302, 7303,7304,7305 and the sub-ledger for the same shall be the

General Ledger Number allotted for the job.

Lumpsum fee GL No. 7301

Perdiem fee ” 7303

Inspection fee ” 7302

Reimbursement of ” 7304

travel etc.

Extra claims ” 7305



Method of Accounting Profit/Loss

(a) In respect of turn-key contracts of FEDO and contracts undertaken by FEW.:-

50% of the estimated proportionate profit is adjusted in respect of contracts which have reached

completion of 80% and above.

(b) Design and Engineering Consultancy contracts executed by FEDO:-

Profit is reckoned when the percentage of physical completion exceeds 25%. In such cases, 50% of

the estimated proportionate profit is accounted for in the year. Balance of profit is taken when it is

100%.

(c) Foreseeable losses on contracts are provided for in full, irrespective of the amount of work done.

15.2.3 Manhour Rate Calculation

Manhour rate is calculated for estimation purposes as well as to arrive at the manhour cost for

preparing the contract analysis/cost sheet for preparation of ascertaining the profit/loss made on

each job. Manhour rates are calculated separately for Engineers and Draughtsmen. While the

manhour rates for Estimation purposes is calculated based on the Revenue Budget, the manhour

rates for contract analysis is prepared based on actual expenditure.

The manhour rate comprises of two elements viz the salary/welfare expenditure and overhead

expenditure.

a) Salary/Welfare expenditure

Salary and Welfare expenditure is further segregated in to three parts viz that of Engineers,

Draughtsmen and of the Indirect category consisting of personnel, finance etc. The expenditure for

the indirect category is treated as overhead.

b) Overhead Expenditure

Expenditure under all heads other than those considered for salary and welfare are added up under

this head as overhead along with the salary and welfare expenses of the indirect category.

In short, all the expenditure of FEDO other than the direct expenses incurred for the various

contracts are brought together to one common factor ie. manhour rate.

For calculating manhour rate for estimation purpose, 80% utilisation is considered ie, the

salary/welfare and overhead expenditure divided by 80% of the available hours. But for calculating

the manhour rate for contract analysis/cost sheet purpose, the actual sold hours or 80% of the

available hours whichever is more is considered. As a result, if the sold hours is more than 80% of

the available hours, the actual sold hours is considered and if the sold hours is less than 80%, say

70%, then 80% utilisation is considered for calculating manhour rate. The portion ie.80% - 70% =

10% remains unabsorbed/unrecovered.

For estimation purpose, FEDO calculates the per diem rate and man month rate also.

15.2.4 Preparation of Contract Analysis

Contract analysis or cost sheet is prepared to determine the expected/actual profit of each project as

well as to find out profit for the accounting year. The contract price comprising of lumpsum fee,



perdiem fee, man month fee and inspection & expediting fee is compared with the total expenditure for completed

jobs and anticipated total expenditure at the time of completion for ongoing projects, to determine the

profit/loss. Total expenses include manhour cost, cash expenses and provisions made, if any.

The future manhours,cash expenditure and percentage of progress of the job is taken as certified by

the concerned project-in- charge. After arriving at the estimated profit, the proportionate profit is

determined in proportion to the percentage of completion of the job. In the case of Turnkey jobs,

50% of the estimated proportionate profit is accounted in respect of contracts which have reached

completion of 80% and above. For all consultatancy jobs, 50% of the estimated proportionate profit

is accounted; once percentage of progress exceeds 25%. The balance final profit is taken when the

project reaches 100% completion. However, the anticipated/forseeable loss on contracts is provided

in full during the year, irrespective of the amount of work done. After determining the accountable

profit, the value of work done is calculated by deducting or adding the accounted profit or loss to the

total expenditure of the project upto the year. After computing the value of work done, Work In

Progress (WIP) or Unearned Income is calculated. If the value of work done is higher than the total

billed income, the difference is treated as WIP, and otherwise, it is treated as Unearned Income.

15.2.5 Enquiries carried over/written off

Man hours spent at the enquiry stage, while quoting for a job and incidental cash expenses made for

such enquiry are booked under the particular enquiry number. Once the job is secured by FEDO,

the cash expenses and enquiry manhours are charged to the job itself. At the year end, if the final

outcome of some enquiries are not known, the manhours and expenses spend on such enquiries are

carried over to next year as enquiries carried over. The manhours and expenditure incurred on

enquiries in which FEDO is not successful, will be treated as enquiries written off and charged to P &

L A/c. The expenditure on the enquiries carried over are either transferred to job account, carried

over again or written off as expenditure as the case may be in the year in which the outcome of the

enquiry is known.

15.3. FEW

System of maintenance of accounts (separately for turn-key consultancy, fabrication etc)

A. Procedure for preparing estimates for jobs by FEW

(i) Material cost

This includes cost of all items required for the job at Market price and transportation and material

handling costs are assessed as required and included in the estimate. The cost of the consumables

required for the job like electrodes, gas, etc. is to be taken at 5 to 15% of the cost of the material

depending on the nature of the job and the quantity/quality of the consumables required. The cost of

material should include all expenses directly connected with the material including duty, taxes etc.

(ii) Labour

Based on the actual labour hour rate of the previous year, forecast for the labour hour rate for the

year is assessed at taking into account the possible increase in labour rate. The Labour hour rate

includes salary (including leave salary), S.D., O.T. and P.F.

The quantitative requirement of materials for the job and the labour time required is assessed by

technical personnel depending on the nature of job and quantity/quality of the material required.



(iii) Overheads

Till recently we were adopting charging of overheads as a percentage of labour cost. This

percentage is estimated by Finance at the beginning of each year and recommendation sent to

FD/CMD for approval. Once the rate is approved, it is applied until circumstances justify for a change

in the overhead rate.

The present practice is to charge overheads on capacities indicated separately both for shop jobs

and for various site jobs. The overheads for respective years based on budget are analysed and

bifurcated for shop jobs and project sites and projection is estimated accordingly for each job

depending in the year in which it is proposed to be completed.

(iv) Other direct expenses

Other direct expenses such as radiography charges, stress relieving charges etc.should be assessed

based on the nature of the job and added on to the cost.

(v) Contingencies

In order to meet any unforeseen expenditure/increase in the price, etc., a provision towards

contingencies shall be made in the estimate. This provision may be at 3 to 5% on cost excluding

overheads.

(vi) Profit

Generally a profit of 5% on material cost and 15% on other costs excluding overheads should be

added to the total cost.

The price quoted to the customers shall be the total of the above with our usual terms and conditions.

2. FM(FEW) should scrutinise the estimate before giving his concurrence. In the case of quotations,

the estimated value of which is more than Rs.100/- lakhs or where the approved percentages are

deviated, such estimate should be put up to ED/FD/CMD. However, in the case of jobs to FEDO,

Udyogamandal and CD where actual cost alone is debited without any profit margin added thereto,

the estimate need not be sent to FD/CMD irrespective of the amount involved.

3. As mentioned above, proposal should be submitted to FD/CMD by FM/FEW suggesting the labour

hour rate and overhead percentages for different jobs/sites at the beginning of each year. Once the

proposals are approved, such percentages/hour rate should be adopted during the year unless they

are revised. Whenever circumstances justify the revision FM(FEW) should submit proposals for

such revision to FD/CMD.

B. Preparation of cost sheet and workin progress

When contracts are awarded in favour of FEW,separate job order numbers are issued for each job.

All expenses directly incurred are booked against that job. Indirect expenses are allocated to each

job based on approved norms followed consistently. For all major jobs done outside, separate GL

account numbers are issued with various SL numbers under different heads so that the expenses

incurred under each head can be compared directly with our estimates/budgets prepared based on

estimate thereby control of expenditure can be exercised and proper remedial action taken if

variations are found.

A separate cost sheet of each completed job during year end is prepared and the profit/loss is also

arrived at separately. For jobs which are in progress during year end, details regarding cost are



analysed and the value of work-in-progress is assessed in the following manner:

(i) Total cost of completing each job is assessed taking into account the actual cost on a particular date

for completing certain percentage of the work plus estimated cost to complete the balance work

certified by the engineer-in-charge.

(ii) The estimated profit/loss is arrived at by deducting the total estimated cost of the work from market

price/contract price.

(iii) In respects of contracts undertaken by FEW, 50% of the estimated proportionate profit is adjusted in

respect of contracts which have reached completion of 80% and above. Foreseeable losses on

contracts are provided for in full, irrespective of the amount of work done.

Work in Progress = Cost Price + Profit/Loss

(-) Amount billed.

However work-in-progress is limited to cost or market price whichever is lower.

15.4 Procedure for Inter Unit assignments given to FEDO and FEW by other Divisions.

All engineering consultancy assignments required by the various divisions of FACT will be handled by

FEDO only. In case the Division Head wants the consultancy assignment to be handled by any

outside organisations, the Division Head shall obtain prior approval from CMD as per the existing

procedure.

In the case of fabrication/site engineering jobs the Division Head can decide whether any

fabrication/site engineering jobs will have to be assigned to FEW. In case the Division Head feels

that FEW is not competent to take up a work due to various reasons or FEW could be considered

along with other prequalified tenderers the Division Head shall prepare a suitable note recording

such reasons and obtain prior approval from ED(OP)/ED(CEW). ED(OP) and ED(CEW) shall

consider this matter and take a joint decision.

In case the decision is to negotiate only with FEW for the fabrication or site engineering work, such

negotiation can be done without prejudice to the existing rules and procedures. After conducting

such negotiation, in case the Division Head feels that the price quoted by FEW is still unreasonably

high, the matter shall again be referred to ED(OP)/ED(CEW) for a decision.

Based on the existing approved policy both FEDO and FEW shall charge only actuals for the

assignments carried out for the different divisions. However, if the Division Head feels that the

“actual” so charged is unreasonably high then an appeal can be made to ED(OP)/ ED(CEW) by the

Division Head. ED(OP) and ED(CEW) will examine the case both from the angle of owner division

and FEDO/FEW, call for additional information, if required and decide on whether the actuals so

charged is reasonable or not. ED(OP)/ ED(CEW) will also recommend, in case they find any

unreasonably high elements of charge, ways and means by which such charges could be

reappropriated, and put up for approval by CMD.

15.5 Accounting procedure for jobs given to FEW by other Divisions.

15.5.1. For Capital Jobs of the Divisions

FEW will debit the Divisions the expenditure incurred jobwise and the Divisions will show them under

capital work-in-progress or capital as the case may be. Divisions have to inform FEW whether a job

is capital or revenue in nature.



15.5.2. Revenue Jobs

a) As regards revenue jobs where only modification/repair is involved the expenditure will be charged to

revenue by the Divisions based on FEW’s debit notes.

b) Where it involves making a new equipment:

i) Divisions will transfer the value of “free issue” materials to FEW.

ii) For items fabricated and supplied by FEW upto 31st March, the valuation will be Purchase Order

value plus pro-rata value of free issues of material as estimated by FEW plus excise duty as

applicable. This will be transferred to the divisions concerned.

iii) In respect of works not completed as on 31st March the expenditure (including material) will be

retained in FEW under work-in-progress.

iv) On completion of such jobs in the subsequent year/years the Division will value the equipment

based on debit notes received from FEW.



CHAPTER - 16

COMPUTER SERVICES CENTRE 16.1. MISSION

To operate as a central agency for providing computer services to various divisions of FACT to aid in

management of information.

16.2. OBJECTIVES

i) Setup and maintain corporate network of computers called FACTNET.

ii) Process data and prepare relevant information for various levels of management for appropriate and

speedy managerial decisions.

iii) Identify and develop prospective areas for computerisation.

iv) To augment production by reducing breakdowns of plants and equipments through integrated

computerised maintenance and material management system

v) Cost reduction through standard costing and budgetary control monitoring through computer.

vi) Financial disciplines by applying various modern techniques through computerised system.

vii) Prompt and efficient service for meeting emoployees information requirements, payment of wages,

settlement of claims etc.

viii) Optimum solutions to engineering designs and use of techniques such as CAD, CAE etc. thereby

enhancing professional competency and aiding competitive quotes.

ix) To have a marketing management system for invoicing, credit control, marketing analyis etc.

x) To link the computer systems in FACT with the National Networkfor capturing environmental data

and information required by the company.

16.3. FUNCTIONAL STRUCTURE

16.3.1. CSC-HEAD OFFICE

A) Functions

i) Procurement and upgrade of computer resources for the organisation

ii) Setting up and maintenance of FACTNET

iii) Application software development for corporate level use

iv) System support to Head office, Corporate office, Udyogamandal division , Marketing division and

through sub centres to Cochin Division, Petrochemical division, FEDO, FEW and RAP

v) Organising man power support to main computer centre and sub centres

vi) Organising training for users at various levels in FACT



B) Hardware resources

i) Digital Equipment Corporation’s Alpha Server 2000 with

128 MB RAM,

20 GB hard disk,

2 line printers of 1400 lines per minute,

Unix Operating system

ii) Compaq Server with

32 MB RAM,

2 x 2.1 GB hard disk,

Windows NT Operating system

iii) Intranet server with

Pentium processor,

2 GB Hard disk,

32 MB RAM ,

SCO Unix Operating system

C) Main Software applications:

i) Payroll system includes

Processing of inputs from payroll departments,

Pay calculation,

Bank advice statement preparation.

Preparation of OT Hours statement and Man hour statement,

Preparing recovery and unrecovery statements,

Preparation of earning and deduction summaries,

Monthly non-managerial increment processing,

Automatic payroll journal generation for payroll accounting,

Pension computation,

Estate information reports,

Production bonus calculation,

Preparation of Half yearly and Yearly statements of pension details,

Preparing group personnel accident insurance scheme statement,

Generating gratuity data for actuarian,

Yearly attendance bonus calculation,

Yearly performance incentive computation for school staff and FEDO staff,

Contract employees’ monthly, half yearly and yearly statements preparation of PF, ESI and

Pension for UDL and PD

ESI Form 6 preparation

ii) Provident Fund application for

Loan request processing,

Automatic update entry generation for VPF direct remittance done for tax deduction,

Member’s balance statement preparation,

Monthly contribution statement preparation,



PF monthly financial ledger and trial balance preparation,

PF annual ledger preparation.

iii) Financial Accounting system includes

Preparation of monthly journal, ledger and trial balance,

Preparation of half yearly consolidation of ledger,

Link schedule preparation,

Profit and loss statement preparation,

Balance sheet preparation

iv) Material Accounting application for

Monthly pricing of Receiving reports, Material requisitions, Stores adjustment memos, Stock taking

vouchers and Advice of return of materials,

Preparing monthly ledger,

Annual age wise analysis, ABC analysis, XYZ analysis

v) Asset Accounting

Account the assets and calculate depreciation for the year,

Prepare asset register, fixed asset schedule and depreciation statement annualy.

vi) Personnel information system for

Updating employees master whenever requirement comes,

Providing MDC training details,

Managerial increment processing

vii) Share accounting for

Generating folio number, share certificate,

Processing transfer of shares,

Preparing proxy form for AGM,

Issue of dividend warrant etc.,

viii) Marketing application for

Financial accounting of regional offices,

Stock management,

MIS reports,

Interest calculation

16.3.2. CSC-UDYOGAMANDAL - FUNCTIONS IN CSC-HO

A) Hardware resources

DRS 6000 server with

64 MB RAM,

3 GB Hard Disk ,

Unix operating system

B) Main Software applications



i) Materials management application

ii) Maintenance management system

iii) Product despatch system

iv) Computerised attendance recording system

16.3.3. CSC-COCHIN DIVISION


DRS 6000 server with

64 MB RAM,

3 GB Hard disk,

Unix operating system


i) Materials management system

ii) Maintenance management system

iiv) Product despatch system

iv) Computerised attendance recording system

v) Production incentive processing system

16.3.4. CSC-PETROCHEMICAL DIVISION


i) DRS 6000 server with

64 MB RAM,

2 GB Hard disk

ii) Micro Vax server


i) Production information system

ii) Plant job monitoring system

iii) Materials management system

iv) Invoice processing system

v) Processing of MIS on Micro Vax

vi) Computerised attendance recording system

16.3.5. CSC-FEDO


i) Server with Novell netware 3.12

ii) Server with SCO Unix


i) Systems engineering and computer applications in Civil, M & MH, PCE, Piping, Machinery,

Electrical,

Instrumentation, Commercial, Inspection, Projects and Construction etc.



ii) Plant design and management software packages like AutoPlant, AutoVessel, Chemshare,

Primavera, Isogen, CAE PIPE, AutoCAD etc.

iii) Manhour accounting of FEDO employees

iv) Vendor information system

v) Stores management system for FEDO projects

vi) ISO document control

vii) Computerised attendance recording system

16.3.6. CSC-RAP


Terminal Server connected to Alpha Server at HO


i) Financial journal entry system

ii) Materials management system

iii) Contract employees wage bill

iv) ESI application

16.3.7. CSC-FEW


Server with SCO-Unix

B) Software applications

i) Work charged employees payroll system,

ii) Contract employees wage bill system,

iii) Purchase order monitoring system,

iv) Costing application

16.4. GENERAL PROCEDURE OF PROCESSING DATA IN CSC

Data from user departments will be received as batches or by online data capturing. The general

scrutiny for coding format will be done. Then data entry will be done according to priority. This data

will be given to operating group for processing. The outputs will be checked for accuracy and it will

be sent to user departments through Input/Output Control section and acknowledgement is received

for giving outputs. The input files given from departments also will be sent back and

acknowledgement is obtained in the I/O control register.

16.5. SOFTWARE DEVELOPMENT

The computer centre provides software for the different requirements of divisions when the request

comes from departments.

The existing system will be studied in detail and a new system will be designed. The detailed

documentation including system flowcharts, source code, input and output formats will be maintained

for reference in future .



16.6. MAINTENANCE

If any change in the existing software is required, it will be done by the concerned system group when

user departments inform CSC.

For the PCs and printers provided in the user departments if any maintenance is required, the user

departments will inform the Computer Centre and Computer Centre will contact the concerned

vendor and make arrangements for maintenance.

16.7. INTERNAL MANAGEMENT AND CONTROL

Staff from the rank of Data Processing Asst Gr III to Data Processing officer are posted in two

overlapping shifts from 8 AM TO 8 PM. Work allocation is made to DP Assistants, SR DP Assistants

on daily basis through work allocation register according to priority.

16.8. ACCOUNTING PROCEDURE

A) Financial accounting

In financial accounting,input documents called journal slips will be coming as set of files(batch) or

from on-line systems for a month.

Validation checks :

The user departments will give control total for each file.

It will be recorded and after data entry, the total amount in each file will be compared with control

total and if any error had occured in data entry, it will be corrected. This will be continued until the

totals tally with the control totals of each file.

With the journals, monthly ledger and trial balance is prepared. By tallying the total in the ledger with

control totals it is ensured that all the journals given from user departments are taken for accounting.

B) Marketing trial balance consolidation

The trial balances of all marketing regions which will be coming in floppies from regions in each month

will be consolidated in CSC-HO and reports will be given to Marketing Head Office.

C) Asset accounting

In asset accounting, depreciation of the fixed assets are computed annualy. For plant and machinery

items straight line method (a fixed percentage of the purchased value) and for other items written

down value method ( a fixed percentage of the residual value) is used.

D) Material accounting

In material accounting the pricing of Material requisitions (MR), Receiving reports(RR), Stores

adjustment memos (SAM) etc are done. Pricing is done on weighted average basis.

The petrol / diesel taken by employees from CD or UDL petrol bunk are priced according to current

price and advices will be used in payroll processing for salary deduction.

The journals of material accounting ( cost journal and creditors journal ) will be accounted through

monthly financial accounting.



16.9. DATA ARCHIVAL

Archival of payroll data will be done for six years for wage revision requirements. The archival of

financial accounting data will be for a period of two years.

16.10. COMPUTER CONSUMABLES PROCUREMENT

Compter centre will maintain inventory of different types of stationery, disks, printer ribbons, cartridges

etc. and minimum stock will be maintained based on past consumption pattern.

16.11. FUTURE PLAN

A compnay wide intranet is under implementation for online dissemination of information. Reference

documents like accounting manual, personnel manual and MIS reports are proposed to be put on

this internet.



CHAPTER 17

PUBLIC DEPOSIT SCHEME 17.1 PUBLIC DEPOSIT SCHEME

17.1.1. The Company is accepting deposits from public under the Companies (Acceptance of Deposits)

Rules 1975. Deposits from public are accepted in multiples of Rs.1,000 under various schemes

such as

a) Fixed deposit schemes with monthly/Quarterly/Half yearly interest payment with maturity periods one

year/two years/three years etc.

b) Cumulative deposits repayable after one year/two years/three years etc.

17.1.2. In addition to HO, centres at Bombay, New Delhi, Madras, Thiruvananthapuram and all other regional

offices of FACT are receiving deposit applications with DD/Cheque through our brokers and directly.

The amounts after receipt are transferred to HO thro’ High Value clearings (SBT) from Madras,

Bombay and New Delhi.

17.1.3. On receipt of application the acknowledgement (tear off portion of the application) is signed and

issued to the depositor subject to realisation of cheque/draft. The formal deposits receipt will be

issued within 8 weeks of receipt of the application. Interest is calculated from the date of realisation

by company and paid quarterly/half yearly and on maturity. If the interest credited or paid during a

financial year exceeds Rs.2500/- income tax at the applicable rate will be deducted at source. Tax

will not be deducted if 15-H form is furnished by the depositor as required under relevant rules.

17.1.4. Accounting

All accounts are maintained in HO with seperate ledger account for each scheme.



CHAPTER-18

COMPILATION OF ANNUAL ACCOUNTS Profit & Loss Account and Balance Sheet

Published accounts of the Company include:

(i) Profit and loss account and profit and loss appropriation account,

(ii) Balance Sheet

(iii) Auditor’s Report and

(iv) Board of Directors’ Report

(v) Information required as per BPE guidelines.

(vi) Information required as per stock exchange requirements.

18.1 Section 209 of the Companies Act, 1956 provides that the Books of Accounts should be so kept as to

give a true and fair view of the state of affairs of the company and to explain its transactions. Again,

Section 211 of the aforesaid Act provides that every Balance Sheet of a company shall give a true

and fair view of the state of affairs of the Company as at the end of the financial year and shall,

subject to the provision of the said section, be in the form set out in Part-I of Schedule VI or as near

there to as circumstances admit or in such other form as may be approved by the Central

Government either generally or in a particular case. In preparing the Balance Sheet due regard shall

be laid, as far as possible to the general instructions for the preparation of Balance Sheet under the

headings ‘Notes’ at the end of that part. The Profit & Loss Account shall give a true and fair view of

the profit and loss of the Company for the financial year and shall comply with the requirements of

Part-II of Schedule VI of the Companies Act 1956 so far as they are applicable.

The concept of “true and fair” implies that the Balance Sheet and the Profit and Loss Account should

be drawn up in conformity with the accepted standards of accounting principle consistently applied

from year to year. This would mean the proper distinction between fixed and current assets, capital

and revenue expenditure, capital profit and revenue profit, and a correct application of accounting

principles of valuation of current assets and proper principles of depreciation in regard to fixed

assets. It also implies the inclusion of all expenses and income relating to the year for which the

profit and loss is prepared. The annual accounts should also disclose all material facts and all

qualifications thereto which if not disclosed, will prevent the disclosure of a true and fair view. The

disclosure of fair view would also require that any unusual exceptional or non-recovery items of

expenditure or income, profits or losses must be disclosed separately so as to distinguish between

the normal and the abnormal occurrences effecting the trading and financial position of a company.

In modern practice, emphasis has shifted from horizontal form of presentation (as represented by the

form given in Schedule VI) to vertical form of presentation in which the same information is brought

out in a more pertinent manner and meaningfully, indicating the total investment in fixed assets and

in working capital, the net worth of the company (represented by the shareholders fund in the shape

of capital and reserves) and loan funds. Similarly, the profit and loss account can also be presented

in the vertical form, bringing out prominently the income from operations, cost of operations including

depreciation provision, interest and other provisions, profit before taxation, provision for taxation and

other appropriations.



18.2 TIME-TABLE FOR COMPILATION OF ANNUAL ACCOUNTS

The preparation of the final accounts of the corporation and its adoption by the Board and

subsequently in the Annual General Meeting is a task of considerable magnitude taking into account

the position of accounting centres spread over different areas and that the entire exercise has to be

done as per a time bound programme to comply with the requirements of the Companies Act 1956 in

regard to holding of the Annual General Meeting for adoption of the accounts of the Company within

six months of the close of financial year.

The compilation of the annual accounts falls distinctly into four stages:-

a) Finalisation of annual accounts at the unit/division level, together with statutory auditors report.

b) Consolidation of the annual accounts of the corporation at the Head Office level and its approval by

the Board, duly signed by the Statutory Auditors, together with their audit report.

c) Issue of preliminary comments by the C & AG to the Units and divisions, finalisation of the

comments and ultimately of final comments by the C & AG.

d) Adoption of the annual accounts of the Company in the Annual General Meeting.

With a view to present the accounts in the Annual General Meeting after its audit by Statutory

Auditors as well as by the C & AG within the prescribed time limit, the compilation of the Annual Final

Accounts shall be completed well ahead of that date. For that, target for the main items of work

relating to the closing of accounts would be laid down by the Management from time to time. In

order to adhere to the target dates laid down by the Head Office relating to the closing of accounts,

the units/divisions would also lay down the dates, for information/data to be received in Accounts

Department from other departments of units/divisions.

On receipt of the information from other department of the units and divisions, the Accounts

Department shall make efforts to see that all records are maintained properly and upto date, to

ensure smooth conduct of audit by auditors and preparation of final accounts, well within the time

schedule laid down by the Head Office. Past years observations should be borne in mind and efforts

be made to see that those are not repeated. The following items may especially be looked into by

the Accounts Department of the units and divisions:

a) Posting of subsidiary ledger and reconciliation of balances in general ledger.

b) Scrutiny of all account and adjustments thereof and preparation of final trial balance and compilation

of final accounts in the prescribed formats.

Obtaining confirmation of balances in respect of loans, advances, deposits and sundry debtors.

Letter requesting for confirmation of balances as on the year end may be sent under certificate of

posting requiring confirmation by a specific date.

c) Reconciliation of bank accounts, confirmation of the balance in bank accounts, outstanding item in

bank reconciliation statement except cheques issued but not presented should be scrutinised and

action taken for adjustment. The stale cheques in particular may be looked into and adjustment

made, wherever necessary.

d) Accounting of receipt vouchers, issue notes, return notes upto 31st March and review of irregular



balances in the priced stores ledger.

e) (i) The claims and outstanding dues from the parties should be vigorously

pursued for realisation before the end of the year.

(ii) Advance payments against revenue expenditure relating to next financial year should be

apportioned and taken in prepaid account, income received in advance should also be similarly

adjusted. Income accrued and not received should also be accounted.

f) Provision for all outstanding liabilities and expenditure relating to the year should be made in

accounts for the year.

g) The advices received from divisions should be responded promptly and reconciled.

h) The balance in suspense account should be reviewed and cleared before 31st March.

i) Capitalisation of all assets should be completed upto 31st March. Calculation and accounting of

depreciation and completion of asset register showing full particulars, including quantitative details

and location of fixed assets and their physical verification.

j) Preparation of statement showing:-

(i) Debts due by Directors or Officers of the Company either severally or jointly with any other person

or debts due by firms or private companies respectively in which any Director is a partner or a

Director.

(ii) The maximum amount due by Directors or Officers of the Company at any time during the year.

k) Preparation and valuation of detailed quantities of Stores, Raw Materials, work-in-progress, finished

products and materials at site as on 31st March and reconciliation of physical balances with the

priced stores ledger balances and material control account.

l) Completion of all schedule of advances, deposits, suspense, prepaid expenses, accrued income,

outstanding liabilities, contingent liabilities, sundry debtors etc.

m) Capital work in progress account should be examined in consultation with the technical department

concerned to ensure that there are no completed works or assets actually in use but lying/adjusted in

this account. All capital works in progress at the close of the year should be got measured/certified

and accounted for.

n) Physical verification at a reasonable periods in respect of finished goods, stores, spare parts and raw

materials and adjustments of the discrepancies in books of account, and also proper valuation of

stocks.

o) Determination of unserviceable or damaged stores and raw materials and provision for loss, if any, in

accounts.

18.3 The Balance Sheet shall be prepared in the forms prescribed along with Schedules 1 to 13. The

points to be borne in mind in the preparation of some of the schedules are discussed below:-

18.3.1. Schedule ‘1’ - Share Capital



The share capital should be classified into Authorised and issued, Subscribed and paid up. Under

‘Authorised Capital’, the number of shares and the face value of each share should be stated.

Similar information for the previous year should also be given.

Under ‘Issued and Subscribed Capital’ various classes of shares should be distinguished, and the

number of shares, their face value, the amount called up and paid up under each class should be

stated.

18.3.2. Schedule ‘2’ - Reserves & Surplus

This item should be segregated into ‘Capital Reserves’ and ‘Other Reserves’. The Capital Reserves

should be broken into the various categories of items of which it is constituted such as (i) subsidy on

industrial housing (ii) land received free of cost from Government grant received from Govt. of India

and so on.

In respect of ‘other reserves’, the nature of the reserve should be specified such as General

Reserves, Development Rebate Reserves etc.

In respect of the reserves so specified, the opening balance, additions during year,

deduction/utilisation during the year and balance at the end of the year should be stated. The

surplus carried from Profit and loss Account is also brought under this group.

18.3.3. Schedule ‘3’ - Secured Loans

In respect of secured loans, the nature of security should be specified in each case. The interest

accrued and due on ‘Secured Loans’ should be included under the appropriate sub-heads under the

head ‘Secured Loans’.

18.3.4. Schedule ‘4’ - Unsecured loans

In respect of loans received from Govt. of India or State Government, the amount due for repayment,

within a year, the corresponding figures for the previous year should be given in brackets under the

relevant sub-head. The interest accrued and due on ‘unsecured loans’ should be included under the

appropriate sub-heads under the head ‘unsecured loans’.

18.3.5. Schedule ‘5’ - Fixed Assets

Under this schedule, in respect of each head of fixed asset, the original cost, additions/adjustments

thereto, sales/adjustments therefrom during the year should be shown. The amount of depreciation

written off or provided during the year together with the total amount of depreciation written off or

provided upto the end of the year should be stated.

At the time of annual closing of accounts the departmental heads shall send to the Accounts

Department statement of assets in their control duly reconciled with the Accounts Department Capital

assets register. While preparing the statement they shall indicate separately the assets which have

either become obsolete or have been lost. For this purpose they shall conduct a special review of all

assets under their control in the month of March and send a report of their review to the Head of the

Unit/Division. As a result of this review, assets which are found to be obsolete or lost should be

noted in a separate statement and action taken to obtain competent authority’s sanction for their

write off. As far as possible this sanction shall be allowed sufficiently before the annual closing of

accounts, so that it may be written off in the year’s account.



Capitalisation of Assets

In the case of buildings, roads, bridges, water supply and sewage system, electrical installations etc.

the basis of capitalization shall normally be the completion report. All efforts shall, therefore, be

made to finalise these reports as soon as the assets are put to use. Even if the completion reports

are not ready in the case of some assets which are already in use these shall be capitalised.

18.3.6. Schedule ‘6’ - Capital work-in-progress and Schedule 6A-Expenditure Pending Allocation

This will include work-in-progress on purchase, installation and construction on capital assets like

machinery, stores, building or others which is directly chargeable to the capital jobs.

Expenditure on foreign technicians, erection charges paid to the foreign collaborators and also

income tax payments to foreign technicians shall be charged to the relevant work-in-progress

account. In respect of plant and machinery/capital stores/equipment, the amounts ‘in transit’ and

‘under inspection’ would be shown separately. Advances paid for procurement of items, mentioned

above have to be shown as “Advances considered good” with sub-headings Secured and Unsecured

advances.

Expenditure pending allocation

Apart from the expenditure during construction directly chargeable to the relevant capital work-in-

progress account, as mentioned above, there are other types of expenditure during construction

incurred on day to day administration upto the date of commencement of commercial production and

other expenditure incidental to construction such as interest on loan, interest on deferred payments,

depreciation on fixed assets etc. during construction period which will be charged to this head. The

expenditure charged to this head shall be allocated to the various assets, deferred revenue

expenditure accounts on commencement of commercial production as the case may be.

The expenditure during the construction period should be broadly classified under the following four

heads:-

(i) Salaries, allowances etc.

(ii) Other overhead charges

(iii) Interest and

(iv) Depreciation

The expenditure on salary and wages should be analysed departmentwise so that, if possible, it can

be identified to a particular sphere of activity. Salaries and allowances of employees directly

identifiable with a specific activity like land acquisition, land development, erection work, electrical

work, civil work etc. should be added to the cost of the respective assets at appropriate stages. The

expenses incurred initially upto the time of acquisition of land and taking possession thereof, should

be capitalised under land. The quantum of such expenditure incurred before acquisition of land may

be quite substantial and it may not be in order to book the whole expenditure to land.

The overall expenditure including salaries and allowances of persons which cannot be identified to a

particular activity like that of salary of the project office and its staff, accounts department etc. may be

allocated on completion of the project on the basis of the cost of the various assets before charging



of interest. Interest should be allocated on the basis of the cost of respective assets including land, weightaged if

possible, on the basis of the yearly progress of expenditure. Overhead and interest should not be

allocated on movable assets which were used during construction period since depreciation on them

would be capitalised and added to the other assets. These assets, therefore, should not be

burdened with any part of the revenue expenditure which should be allocated to the assets other

than movable assets.

Any sales proceeds/miscellaneous income out of final run production is to be credited to this account,

since the expenditure towards the same has already been charged.

18.3.7. Schedule ‘7’ - Investments

Investments shall be valued at their cost price and this fact shall be indicated on the face of Balance

Sheet. These should be classified as under:-

(i) Investments in shares/debentures or bonds

a) Shares fully paid-up

b) Shares partly paid-up.

These should further be distinguished under different kinds of shares.

The investments may further be classified into trade investments and non-trade investments. A trade

investment means an investment by a company in the shares or debentures of other company not

being its subsidiary for the purpose of promoting the trade or business of the company.

Aggregated amount of the quoted and unquoted investments shall be shown separately and in the

case of quoted investments, their market value shall also be stated in the schedule.

18.3.8. Schedule ‘8’ - Inventories

It shall be indicated in the Schedule in brackets that the Inventories are as taken, valued and certified

by the Management. The mode of valuation of stock shall be stated in the Significant Accounting

Policy. The amount in respect of raw materials shall be given separately. Stocks,stores and spare

parts and packing materials/raw materials shall be valued at or below cost and finished

goods/intermediaries at cost or market value whichever is lower. The amounts in respect of ‘in

transit’ and ‘under inspection’ shall be indicated in separately in the schedule.

A statement showing the reconciliation between the closing stock figures of raw materials, packing

materials, stores and spare parts as given in Schedule VI, shall also be sent to HO.

Provision for unserviceable or damaged stores, raw material etc. and for shortage in stores, raw

materials etc. shall be made in the accounts with the approval of management.

18.3.9 Schedule 9 - Sundry Debtors

The following particulars are to be exhibited in the accounts, in respect of the sundry debtors:

i) Debts outstanding for a period exceeding six months

ii) Other debts

Further, the debts are to be segregated and shown as:



i) debts considered good and in respect of which the company is fully secured.

ii) debts considered good for which the company holds no security other than the debtor’s personal

security and

iii) debts considered doubtful or bad

The amount shown under sundry debtors which includes amounts due in respect of goods sold or

services rendered or of other contractual obligations, should not include the amounts which are in

the nature of loans or advances.

The amount outstanding as on 31st March under the above head shall be carefully gone through to

ascertain the bad and doubtful debts for which a provision is required to be made in the accounts.

The provision in respect of bad and doubtful debts shall be shown by way of a deduction in the above

schedule. Such provision shall not exceed the amount of debts stated to be considered doubtful or

bad.

18.3.10 Schedule 10 - Cash and Bank balances

Cash in hand and balance with bank should be shown separately in the schedule. Cash in hand

includes Imprest, Cheques on hand, Stamps and Balances in franking machine. Remittance-in-

transit shall be shown separately. In regard to balance with the scheduled banks, the figures shall

be shown under the following sub classifications:

i) In current account

ii) In deposit account.

Deposits with Post Office savings bank account and Short Term Deposits with banks shall be shown

separately. If any of the above deposits are lodged with any authorities towards security the same

shall be disclosed in brackets.

18.3.11 Schedule 11 - Other current Assets

This schedule includes Interest accrued on investments and fixed deposits and other income

accrued.

18.3.12 Schedule 12 - Loans and advances

Loans and advances shall be shown with the following details:

i) Loans

ii) Advances (recoverable in cash or in kind for value to be received).

iii) Call and fixed deposits receipts and investments lodged by outside parties.

iv) Deposit with Customs, Port Trust etc.

Further, the loans and advances shall be segregated and shall be shown as under:-

i) The loans and advances considered good and in respect of which the corporation is fully secured.



ii) Loans and advances considered good for which the corporation holds no security.

iii) Loans and advances considered doubtful. The provision in respect of doubtful loans and advances

shall be shown by way of deduction in the above schedule.

Materials issued to contractors shall be grouped under “advances” (recoverable in cash or in kind for

value to be received).

Where conveyance advances are given to the employees against mortgage or hypothecation of the

vehicle to the corporation, such advances shall be treated as “advances for purchase of conveyance

- considered good secured”.

Miscellaneous Expenditure

The development expenditure and deferred revenue expenditure (in respect of training, sales

promotion etc.) which could not be adjusted or written off during the year shall be shown separately

as a Schedule.

18.3.13. Schedule ‘13’ - Current Liabilities & Provisions

The Schedule should include all those liabilities which shall become payable within one year from the

date of Balance Sheet under the different categories as specified in the schedule, receipts and

recoveries made for specific remittance to a third party eg. Provident Fund recoveries, Co-operative

Society recoveries, tax recoveries etc. shall be shown under ‘Other Liabilities’.

Interest accrued but not due on loans shall be shown under this Schedule. In the case of deferred

credits, where license and technical know-how fees are payable under contracts, the entire license

and know-how fee payable will have to be brought into the books irrespective of the payments

stipulated which may include payment of installments also beyond 31st March of the particular

accounting year. Where it is stipulated in the relevant agreements relating to license and technical

know-how that payment will be made only after certain services are rendered and that the last 10%

payment will be made after rendering certain services on establishing performance guarantees, the

amount involved may, however, be excluded but this should be included as part of ‘estimated

amount of contracts remaining to be executed on capital account and not provided for’ to be

incorporated in the notes forming part of the statements of accounts for the year.

Provisions made for Income Tax, proposed Dividend and for Tax on proposed dividend are shown

separately under the sub-heading “Provisions”.

18.4 THE PROFIT AND LOSS ACCOUNT SHALL BE PREPARED IN THE FORM PRESCRIBED

ALONG WITH SCHEDULE 14 TO 19

18.4.1. Schedule ‘14’ - Other Income

The income from trade investments and other investments should be shown separately. Other

income by way of interest must be separately stated specifying the nature of income . If the gross

income is stated in respect of these items, the amount of income tax deducted must be separately

shown. In regard to the item, interest on bank deposits and others, it is necessary that instead of

clubbing under one head the nature of such interest income should be separately shown such as

interest on bank deposits, interest on loans, advances, claims, overdues and so on. Profit on sale of

Assets, provision for doubtful debts written back, rent and other sundry receipts shall be shown

separately.



18.4.2. Schedule ‘15’ - Manufacturing, Trading, Contract Working, Administrative and Selling Expenses

i) Closing Stock/Opening Stock

It should be ensured that the closing stock of the previous year shown should be tallied with the

opening stock for the year. The variation, if any, may be explained, duly quantified in a separate

reconciliation statement.

ii) Materials consumed

The value of closing stock of the previous year should tally with the opening stock of the year.

Quantity as well as value of important basic raw materials are required to be shown in a separate

statement for the year and the previous year. This would leave out certain other raw materials which

are not important basic raw materials to be clubbed under ‘others’. A separate statement showing

the items clubbed under ‘others’ indicating both quantity and value for the year and the previous year

shall also be given.

iii) Salaries, Wages, Bonus

A foot note shall be given indicating the remuneration paid during the year to the Chairman and

other wholetime Director in the notes on accounts.

iv) Auditors’ Fee

The auditors’ fee should be classified under different sub-heads like for audit, for expenses, for cost

Audit for certification etc.,

18.4.3 schedule 16 - Interest

Interest paid on loans from Government of India , Inter Corporate Loans, cash credit/loans from banks

and others are shown separately.

18.4.4. Schedule 17 - Increase/decrease in stocks and work-in-progress

The opening stock and closing stock of finished goods/intermediate/trading products and work-in-

progress/contracts unbilled are shown separately and the net increase or decrease is displayed in

this schedule.

18.4.5. Schedule ‘18’ - Adjustments in respect of prior years

The accounts classifications under this schedule shall be as near to the classifications adopted for the

previous year. A separate statement may also be sent to HO by the units along with accounts

indicating the following:-

a) Brief description of each debit and credit. The general ledger classification is used for sub ledger

codes.

b) Amount involved.

c) Brief reasons why it could not be booked in the account of the relevant year and whether it is an

error or an omission. Connected back papers also may be sent to Head Office.

18.5 ACCOUNTING POLICIES AND NOTES



Significant accounting policies in respect of valuation of investments, valuation of inventories,

depreciation, deferred revenue expenditure, gratuity, profit on contract operations in FEDO/FEW,

Accounting for the effects of changes in foreign exchange rates, prior period adjustments, claims by

company etc. are mentioned in this statement.

18.6 Schedule 19 - Notes on Accounts

The notes on Accounts include the following:-

1) Contingent liabilities not provided for

i) Claims against the company not acknowledged as debts in respect of Excise duty, sales tax,

Customs duty, Income tax, ESI and others.

ii) Claims made for suppliers towards excess despatch money/additional demurrage, disputed by the

company.

2) Estimated amount of contracts remaining to be executed on capital accounts and not provided for

3) Any other disclosures to be given as notes in respect of Fixed Assets, loans & Advances,

Inventories, sundry debtors etc.

4) Remuneration to Chairman & Managing Director and other wholetime directors.

5) Effects of change in Foreign exchange rates.

18.7. SCHEDULE ‘20’ INFORMATION PURSUANT TO THE PROVISIONS OF PARAGRAPHS 3 & 4 OF

PART II OF SCHEDULE VI OF THE COMPANIES ACT 1956.

This schedule contains the following information:-

a) Break up of expenditure incurred on employees who were in receipt of remuneration for the period,

of not less than Rs.3,00,000/- per annum in the aggregate or at the rate of Rs.25,000/- per month.

b) Value of imported and indigenous raw materials and spare parts consumed and percentage thereof

to total consumption.

c) CIF value of imports item wise.

d) Expenditure in foreign currency.

e) Amount remitted in foreign currency on account of dividend.

f) Earnings in foreign currency

g) Capacities and production.

h) Particulars of opening and closing stocks, purchases, sales and consumption.

18.7.1 Detailed quantitative information in regard to the following in respect of each class of goods

manufactured shall be given:

a) Licensed capacity

b) Installed capacity



c) Actual production

The licensed capacity and the installed capacity shall be given as 31st March. The actual production

in respect of finished goods mentioned for resale shall be mentioned. Where semi-finished goods

(intermediate products) are also sold by the divisions, separate details thereof shall be given in

respect of licensed capacity, installed capacity and actual production. Actual production figures shall

be given both for the current as well as for the previous year.

18.7.2. A note indicating the following additional information both for the previous year and the current year

shall be given:

a) Value of imports calculated on CIF basis by the company during the financial year in respect of :

i) Raw Material

ii) Components and spare parts

iii) Capital goods

b) Expenditure in foreign currency during the financial year on account of royalty, know-how,

professional consultation fees, interest and other matters.

c) Value of all imported raw materials, spare parts and components consumed during the financial year

and the value of all indigenous raw materials, spare parts and components similarly consumed and

the percentage of each to the total consumption.

d) Earnings in foreign exchange classified under the following heads, namely:-

i) Export of goods calculated on FOR basis.

ii) Royalty, know-how, professional and consultation fees

iii) Interest

iv) Other income, indicating the nature thereof.

In respect of item (b) above, expenditure in the foreign currency on foreign travel shall also be

indicated as this would be covered by “other matters” stated therein.

18.7.3. The particulars of employees may be given along with breakup of remuneration for each and every

employee.

a) Salaries, wages and bonus will include encashment of leave, incentive payments, cash allowances

such as dearness allowance city compensatory allowance, project allowance, house rent allowances

honarariam etc.

b) In the case of employees employed throughout the year, no disclosure would be required even if the

rate of aggregate remuneration exceeds in some month or months Rs.25,000/- but the total

remuneration during the accounting year does not exceed Rs.3,00,000/-.

c) Where actual payments of pension/gratuity have been made directly by the Corporation, only such

payments are to be included.



18.8 SCHEDULE 21 - INFORMATION PURSUANT TO PART IV OF SCHEDULE VI OF THE

COMPANIES ACT 1956.

This schedule is given as per the requirement of Companies Act under the heading ‘Balance Sheet

Abstract and Company’s general business profile”. The details given are as under:-

i) Registration details: Registration No., Balance Sheet Date and status code.

ii) Capital raised during the year (Amount in Rs. thousands) through public issue, Rights issue, Bonus

Issue and private placement.

iii) Position of mobilisation and deployment of funds. The information shall contain Total liabilities, total

assets, sources of funds ie. paid up capital, Reserves and Surplus, secured loans and unsecured

loans, Application of funds ie. net fixed assets, Investments, Net current assets, Misc. expenditures

and accumulated losses.

iv) Performance of company.

Turnover, total expenditure, profit/loss before tax, Profit/loss after tax, earnings per share and

dividend rate are to be given under this heading.

v) Generic Names of 3 principal products/services of company as per monetary terms with Item code

No. have to be indicated.

18.9 OTHER STATEMENTS

Following statements are also included in the Annual Report.

i) Details of capital expenditure incurred on township and other social overheads.

ii) Details of maintenance and other revenue expenditures on township and other social overheads.

iii) Statement showing expenditure on public relations and publicity.

iv) Particulars of foreign travels for the year.

v) Cash Flow statement pursuant to clause 32 of the listing agreement, with Auditor’s certificate.

vi) Summarised accounts, changes in financial position (fund flow statement) and value added

statement for last three years.

vii) Highlights of Accounts or financial performance for the last ten years.

18.10. DIRECTOR’S REPORT TO THE SHAREHOLDERS

A report by the Directors of the Corporation must be attached to every Balance Sheet laid before the

company in the Annual General Meeting. The report must contain information with respect to:-

a) the state of the company’s affairs

b) the amount, if any, which the Directors propose to carry to reserves.

c) The amount, if any, which they recommended should be paid by way of dividend and

d) material changes and commitments, if any, affecting the financial position of the company which



have occurred between the end of relevant financial year and the date of the report.

The information in regard to companies (particulars of employees) Rule 1975 shall be sent in the

following proforma:-

a) Name of the employee

b) Designation and nature of duties

c) Age

d) Nature of employment (ie. regular or on contract)

e) Remuneration

f) Qualification

g) Experience

h) Date of commencement of employment in the company

i) Last employment held (designation & organisation)

Information shall also be given whether any employee included in the above statement is related to

any Director of the Company and if any, the name of such Director may be given.

For the purpose of disclosure in the Director’s Report, it is provided that ‘remuneration’ would have

the same meaning as is assigned to it in the explanation to Sec.198 of the Companies Act.

Perquisites are to be valued as per Sec.198 of the Companies Act., that is, at the cost thereof to the

Company for the purposes of statement under Sec.217 of the Companies (amendment) Act 1974.

Some of the important areas and points to be highlighted in the Directors Report are the following:

i) Production

Production figures for the last two financial years to be given together with reasons for

shortfall/variation in production of the current financial year as compared to previous year.

Uncontrollable areas to be separately highlighted. Process efficiencies in terms of Nitrogen in

percentage to be given. A brief para on maintenance expenditure, steps taken to improve production

performance in the coming year and also efforts made to reach the attainable capacity in the long

run, details of diversification and other schemes to be indicated along with the stage of

implementation. Efforts made for cost reduction/improved realisation may be given. Any other

aspect to be highlighted.

ii) Profit and Loss

The increase/shortfall in profit during the year as compared to the previous year, may be explained

with reference to the important reasons/factors contributing to the same, duly quantified with the

value.

Important steps taken to overcome limitations and outlook for the coming year may be mentioned.

Any other aspect that needs special mention may be included.

iii) Expansion Scheme etc.



A brief para on expansion, indicating the state of implementation, expected date of commissioning,

cost as per original project estimate (in terms of rupee component and foreign exchange

component), the capital expenditure at the end of current financial year, the salient features of

construction activities during the year, the limitation and problems experienced during the year and

also the latest anticipated date of commissioning etc. is included.

iv) Welfare

a) Township

Quarters planned, completed and occupied during the year and under construction may be

mentioned. Advantage to the subsidised industrial housing scheme may also be indicated.

b) Schools

The number of schools, strength of pupils on rolls as on 31st March, capital outlay, facilities of free

education provided etc. may be mentioned.

c) Hospitals

Their capacity and other facilities, such as family planning etc. may be indicated.

d) Other Welfare activities and workers’ amenities fund

The facilities provided such as subsidised canteens, clubs, sports, library, transport facilities and

other welfare activities may be indicated, along with a brief report on the operation of the workers’

welfare fund wherever applicable.

v) Industrial Relations

Any major settlement with the Union, any major outstanding issues with the Union, period of unrest, if

any, and their effect on production/construction activity etc. and steps taken to improve the relations

may be briefly mentioned. The state of industrial relations may briefly be indicated.

vi) Export of fertiliser and industrial products. Import of spares and import substitution

Details showing quantity and value exported separately for fertiliser products and industrial products

value of spares imported, value of import substitution effected by way of indigenous fabrication of

spares may be given. Any other aspect/feature which, requires special mention, may be given.

vii) Development of small scale industries

The role played by the unit in developing and sustaining small scale industrial units, to feed the

manufacturing programme of small scale industrial units may be furnished.

viii) Workers’ participation in Management

A brief note on workers’ participation in Management (eg. Jt.Management Council/Plant level

committees etc.) during the current year as well as other additional information considered relevant

may be given.



CHAPTER 19

VARIOUS TYPES OF AUDITS IN THE COMPANY 19. The accounts of our Company are subjected to various types of audits such as Statutory Audit,

Government Audit, Cost Audit, Income tax Audit, Sales Tax Audit and Internal Audit. Brief details of

these audits are given below:-

19.1. STATUTORY AUDIT

As per the Companies Act 1956, every Company incorporated under the Companies Act has to place

before every Annual General Meeting a Balance Sheet as at the end of the relevant financial year

and Profit & Loss Account for that period which is audited as specified under the Companies Act

1956. Statutory Audit is the audit of Accounts of the Company carried out as per the Companies

Act 1956. In the case of FACT, being a Government Company, Statutory Auditors and Branch

Auditors are appointed by the Central Government on the advice of the Comptroller and Auditor

General of India. (Section 619(2) of the Companies Act 1956).

The Statutory Auditors are appointed to audit the various divisions of FACT viz. UD, PD, HO, FEDO,

Marketing at Udyogamandal, CD at Ambalamugal and FEW at Palluruthy. In addition to this, Branch

Auditors are appointed to audit the accounts of Area Offices and Regional Offices of the Marketing

Divn. Usually Four Branch Auditors are appointed for the four areas viz. Kerala, Tamilnadu, Andhra

Pradesh and Karnataka. The Statutory Auditors incorporates the Audit Reports of the Branch

Auditors while preparing the Audit Report of the Company.

The Statutory Auditor appointed under the Companies Act as aforesaid has to make a report on

completion of his audit, to the shareholders of the Company, on the Balance Sheet and Profit and

Loss Account or on any other document annexed as part thereof, and the report shall, among other

things, state whether in his opinion and to the best of his information and according to the

explanations given to him, the said accounts give the information required by the Companies Act

1956 in the manner so required and give a true and fair view:-

(i) in the case of the Balance Sheet, of the state of the Company’s affairs as at the end of its financial

year; and

(ii) in the case of the Profit & Loss Account, of the profit or loss for its financial year.

The report shall also state:

(i) Whether he has obtained all the information and explanations which to the best of his knowledge and

belief were necessary for the purpose of his audit.

(ii) Whether, in his opinion, proper books of Account as required by law have been kept by the Company

so far as appears from his examination of those books, and proper returns adequate for the purpose

of his audit have been received from branches not visited by him.

(iii) Whether the report on the accounts of any branch office audited by a person other than the

Company’s Auditor has been forwarded to him and now he has dealt with the same in preparing the

report and

(iv) Whether the Company’s Balance Sheet and Profit & Loss Account dealt with by the report are in

agreement with the books of accounts and returns.



In addition to the above report, the Statutory Auditor has also to state in his report the matters as

required by the Manufacturing and other Companies (Auditors Report) Order 1988 issued by the

Company Law Board in terms of Section 227(4A) of the Companies Act 1956. The various matters

dealt within the said report are:-

1) Whether the Company has maintained proper records showing full particulars including quantitative

details and location of fixed assets. Whether there is a regular programme of verification which is

reasonable having regard to the size of the Company and the nature of its assets.

2) Whether any of the Fixed Assets have been revalued during the year.

3) Whether the stocks of finished goods, stores, spare parts and raw materials have been physically

verified during the year by the Management.

4) Whether the procedures of physical verification of stocks followed by the management are

reasonable and adequate, in relation to the size of the Company and the nature of its business.

5) Whether any discrepancies noticed on such verification between the physical stocks and the book

records were material and have been properly dealt within the books of account.

6) Whether the valuation of stocks is fair and proper, in accordance with the normally accepted

accounting principles, and is on the same basis as in the preceding year.

7) Whether the Company has taken any loans from Companies, Firms or Other Parties listed in the

register maintained under Section 301 of the Companies Act, 1956. As regards loan taken from

Companies under the same management within the meaning of sub Section (1B) of Section 370 of

the Companies Act, 1956 the rate of interest and terms and conditions of such loans are prima-facie

prejudicial to the interest of the Company.

8) Whether the Company has granted any loans to Companies, Firms or Other Parties listed in the

register maintained under Section 301 of the Companies Act, 1956 or to Companies under the same

management.

9) Whether the Parties to whom loans and advances in the nature of loans have been given by the

Company, are repaying the principal amounts as stipulated and are also regular in the payment of

interest. Loans and Advances include interest free advances also.

10) Whether there are adequate internal control procedures commensurate with the size of the Company

and the nature of its business with regard to purchase of stores, raw materials including components,

plant and machinery, equipment and other assets and with regard to the sale of goods.

11) Whether there are transactions of purchase of goods and materials and sale of goods, materials and

services made in pursuance of contract or arrangements entered in the register maintained under

Section 301 of the Companies Act, 1956 and aggregating during the year to Rs.50,000/- or more in

respect of each party.

12) Whether the Company has a regular procedure for determination of unserviceable or damaged

stores, raw materials and finished goods and whether adequate provision has been made in the

accounts for the loss arising on the items so determined.

13) Whether in respect of deposits accepted from public or renewed, the Company has complied with the

provisions of Section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits)

Rules, 1975.



14) Whether reasonable records have been maintained by the Company for the sale and disposal of

realisable by-products and scrap.

15) Whether, the Company has an internal audit system commensurate with the size and nature of its

business.

16) Whether the Central Government has prescribed maintenance of cost records in respect of certain

products under Section 209(i) (d) of the Companies Act, 1956 and on the basis of a broad review .

Whether prima facie the prescribed accounts and records have been maintained.

17) Whether Provident Fund and Employees State Insurance dues have been regularly deposited during

the year with the appropriate authorities.

18) Whether there are any undisputed amounts payable in respect of Income-tax, Wealth-tax, Sales-tax,

Customs Duty and Excise Duty which were outstanding as at the year end for a period of more than

six months from the date they became payable.

19) Whether any personal expenses of employees or directors have been charged to revenue account,

other than those payable under contractual obligations or in accordance with generally accepted

business practice.

20) Whether the Company is a Sick Industrial Company within the meaning of Clause (o) of sub-Section

(1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985.

21) Whether in respect of service activities, the Company has a reasonable system of recording receipts,

issues and consumption of materials and stores, commensurate with its size and nature of its

business and such system provides for a reasonable allocation of the materials consumed and man-

hours utilised to the relative jobs.

22) Whether there is a reasonable system of authorisation at proper levels with necessary control on the

issue of stores and allocation of stores and labour to jobs, and there is a system of internal control

commensurate with the size of the operations and nature of the business.

23) Whether in respect of the Company’s trading activities there are any significant damaged goods.

The Statutory Auditor is also required to comment on various items referred in the Supplementary

Audit Report under Section 619(3)(a) and (4) of the Companies Act 1956. The various items referred

in the Supplementary Audit Report are given in Annexure-38.

19.2. GOVERNMENT AUDIT

19.2.1. The accounts of a Government Company set up under the provisions of the Companies Act are

audited by the Comptroller and Auditor General of India under the provisions of Section 619 of the

Companies Act. The accounts certified by the Statutory Auditors appointed by the Central

Government on the advice of the C & AG under the Companies Act 1956 are subject to

supplementary or test audit by officers of the C & AG of India and the C & AG gives his comments or

supplements the report of the Statutory Auditors. The Companies Act, 1956 empowers the C & AG

of India to issue directions to the Statutory Auditors on the manner in which the Company’s accounts

shall be audited.

Reports in relation to the accounts of a Government Company are submitted to the Government by

the C & AG under the provisions of Section 19-A of the C & AG’s (Duties, Powers and Conditions of



Service) Act, 1971 as amended in 1984.

19.2.2. Three annual reports on the accounts of the Government Companies issued by the C & AG to

Government are:-

19.2.2.1. Report No.1 (Commercial)

Review of accounts gives an overall appreciation of the performance of the Companies as revealed

by their accounts and information obtained in audit.


Comments on accounts gives a resume of the important comments of the C & AG on the accounts of

the Companies and the reports submitted by the Statutory Auditors on the audit of the Companies in

pursuance of the directions issued by the C & AG.


Audit observations - contains the observations on individual topics of interest noticed in the course of

audit of the Companies and short reviews on aspects of their working.

Besides, Audit Boards are set up under the supervision and control of the C & AG of India to

undertake Comprehensive Appraisals of the performance of the Companies subject to audit by C &

AG. The reports of the C & AG based on such performance appraisals by the Audit Board and other

reviews are issued to the Government as separate reports in addition to the above three annual

reports.

19.2.3. The following three different types of audits are conducted by the C & AG through his officers:-

1. Supplementary Audit

This is otherwise known as Accounts Audit or Audit under Section 619(4) of the Companies Act.

If the accounts of the Company certified by the Statutory Auditors have misrepresented any facts or

overlooked any material facts, they are commented upon by C & AG’s audit. The supplementary

audit is aimed at ensuring that the accounts represent “true and fair view” of the financial position of

the Company and are in conformity with the provisions of the Companies Act.

Deficiencies noticed are issued as comments on the accounts and/or the Statutory Auditors Report

and are required to be placed before the Annual General Body Meeting of the Company, with the

reply of the Management, placed in Parliament.

2. Transaction Audit

The term transaction audit (also known as phase audit - when done in phases or spell audit) is used

to denote audit of transactions done from the point of view of efficiency, economy and effectiveness

and also performance evaluation and audit by propriety angle.

The scope and extent of this audit is determined by the officers working under the C & AG of India as

per his general directions.

3. Performance Appraisals and Audit Reviews



Appraisals of performance of Public Sector Undertakings are done once in 5 years to 10 years in

addition to the annual test audit. Such appraisals are issued to the Management and to the

Controlling Ministries or Departments and evaluated by the Chairman, Audit Board. Though the

appraisal is considered by the C & AG and issued as a report of the C & AG to the Government, the

Reports presented by the C & AG are examined by the Committee on Public Sector Undertakings

(COPU), which is a Committee of both the houses of Parliament.

19.2.4. Government Audit functions at our Company

In order to conduct the audit of our Company by the C & AG of India, a permanent Resident Audit

Office was opened in FACT at Udyogamandal in the year 1971. Now the Resident Audit Office is

under the supervision and control of the Principal Director of Commercial Audit and Ex-Officio

Member, Audit Board, Chennai - 600 034. The Resident Audit Office now consists of three Resident

Audit Parties under the supervision of three Resident Sr.Audit Officers with two to three subordinate

staff in each party, besides, a couple of supporting staff, like Steno & Clerk/Typists at Resident Audit

Office at Udyogamandal.

All the divisions of FACT have been proportionately shared by these audit parties to complete the

audits in time. By rotation, these divisions are changed from one audit party to the other once in two

years.

The transaction audit/phase audit/spell audit of a financial year of divisions of FACT are conducted by

the Resident Audit Parties in two spells of 6 months commencing from April to September and from

October to March of each year. Thus two separate Inspection Reports are issued to the

Management for one financial year for a Division. Inspection Report consists of three parts - Part I-A

- Introduction, Part I-B - Major irregularities and Part II - Objections of minor nature.

The observations made in audit in Part I-B of the Inspection Reports are subsequently developed as

individual Draft Paragraphs and first issued to the Management of the Company and thereafter to the

concerned Ministry of the Government. If the replies received to draft paragraphs are not

convincing/not satisfactory, the same are printed in Audit Report (Commercial) (ie. Report No.3) of

the Comptroller & Audit General of India in every year.

19.2.5. Accounts Audit/Audit under Section 619(4) of the Companies Act, 1956 or Supplementary Audit

The accounts certified by the Statutory Auditors and adopted by the Board of Directors of the

Company are subject to supplementary or test audit by the Resident Sr.Audit Officers on behalf of

the C & AG of India and the C & AG issues his comments or supplements the report of the Statutory

Auditors. The Review of Accounts and comments of the C & AG forms part of the Audited Accounts

of the Company and the same has to be placed before the Annual General Body Meeting of the

share holders of the Company.

In the normal course, the Annual General Body Meeting is to be held on or before 30th of September

each year for companies who close their annual accounts on 31st March of the year.

In addition to the above audits, the Resident Audit Office undertakes the work of Comprehensive

Appraisals and reviews on the working of the Company on behalf of the Audit Board in case the

Undertaking is selected for the same by the Chairman, Audit Board.

19.3. COST AUDIT




In the Company’s Act amendments were introduced in the year 1965 for maintenance of cost

accounting records and cost audit. For fertilisers the Cost Accounting rules were made compulsory

w.e.f. 5-3-93 and cost audit w.e.f. 1-4-93.

Costing in short, aims at making the organisation efficient and economical, by providing the minimum

of labour and materials and getting the full capacity of the machine output. The Cost Accountant

therefore, is concerned solely and mainly with the internal economy of the industry and renders

services essential to the day-to-day management of the undertaking.

19.3.2 Provisions RE : Cost Accounts and Audit

The 1965 amendments introduced two provisions with reference to cost accounts and cost audit. The

amendment to introduce compulsory maintenance of cost accounting records was achieved by

inserting sub-clause (d) in Sec.209(1) of the Companies Act, 1956. This section basically deals with

maintenance of books of account by a company.

It may be noted that by the introduction of the above sub-clause the central government has acquired

the power to prescribe certain cost particulars to be included in the accounting records by companies

engaged in specified industries as may be notified from time to time. Thus, the actual prescription of

cost data is not contained in Section 209(1)(d) but in the cost accounting record rules prescribed by

the Government from time to time.

The power to prescribe the cost accounting record rules is also derived by the Central Government by

the virtue of the General Power contained in Section 642 (1) of the Companies Act, 1956 which

provides that the Central Govt. may, by notification in the official Gazette, make rules to cover all or

any of the matters which are to be or may be prescribed by the Central Government and generally to

carry out the purpose of the Act. Thus the cost accounting record rules are prescribed in accordance

with Section 642(1) and Section 209 (1) (d) of the Companies Act,1956.

The second amendment in the Act in 1965 is the introduction of section 233 B by which cost audit is

sought to be enforced. This section provides for the following:-

(i) The Central Government gets the power to order any company falling under Section 209(1)(d) to get

the cost accounts audited by a Cost Accountant within the meaning of the Cost and Works Accounts

Act, 1959. If sufficient number of Cost Accountants are not available, the Central Government may

prescribe that specified Chartered Accountants may also carry out the cost audit for a specified

period.

(ii) The Cost Auditor shall be appointed by the Board of Directors of the Company with the previous

approval of the Central Government.

(iii) The powers and duties of the Cost Auditor in relation to this audit are the same as of financial auditor

but the cost auditor shall submit his report to the Central Government with a copy to the Company at

the same time. The report shall be submitted in the prescribed form and within the prescribed time.

(According to a latest notification, three copies should be submitted to the Government.)

(iv) All the disqualification which are applicable to a Financial Auditor are also applicable to a Cost

Auditor. In addition, a Financial Auditor himself cannot be appointed also as a Cost Auditor of the

same company. If a person is disqualified on the above grounds subsequent to this appointment, he

shall cease to conduct the Cost Audit of that company.

(v) It shall be the duty of the Company to give all facilities and assistance to the person appointed for

conducting the Cost Audit.



(vi) The company shall within 30 days from the date of receipt of a copy of the Cost Audit Report furnish

to the Central Government full information and explanations on every reservation or qualification

contained in such report.

(vii) The Central Government may after considering the report call for any further information or

explanation and there upon the company shall furnish the same within such time as may be

specified.

(viii) After receiving further information and explanation referred to above, the Central Government may

take such action on the report in accordance with any law for the time being in force.

(ix) The Central Government may direct the Company concerned to circulate to its members along with

the notice for the annual general meeting the whole or such portion of the Cost Audit Report as it

may specify.

(x) If a company contravenes the provisions of rule 3 the Company and every officer who is in default

including the persons referred to in sub-rule (3) of Rule 3, shall, subject to the provisions of section

209 of the Companies Act, 1956 (1 of 1956) be punishable with fine which may extend to five

hundred rupees and where the contravention is a continuing one with a further fine which may

extend to fifty rupees for every day after the first day during which period such contravention

continues.

19.3.3. Cost Accounting Record Rules

The cost accounting record rules framed from time to time since 1967 onwards for maintenance of

costing records for different industries follow generally a particular pattern. They deal with

maintenance of records for materials, salaries and wages, consumable stores, depreciation etc.

They also prescribe certain formats in which elements of cost have to be filled up. The rules are

generally divided into three parts:

(i) Part-I containing the descriptive rules with definitions applicability and penalty clauses;

(ii) Part-II which constitutes Schedule-I wherein description of procedures in respect of each element of

cost and proforma for service centers are included.

(iii) Part-III which constitutes schedule II wherein the cost statements for the products are prescribed.

19.3.4 What constitutes Cost Accounting Records

The records contemplated under Section 209(1)(d) of the Companies Act, 1956 would include all the

accounting records maintained by the Company and made available for audit by the Financial

Auditor. In addition, the following records would also have to be maintained.

19.3.4.1. Production

Raw Material Consumption Register/Report;

Production Report;

Rejections/Wastages/Scrap Report;

Report on stoppage of machines with reasons;



Idle time report with reasons;

Machine Utilisation Report.

19.3.4.2. Work-in-progress and finished goods

Process stock register - cost centerwise and productwise.

Finished goods stock register - productwise.

19.3.4.3. Repairs and maintenance

Works order register/card showing material and spares consumed and labour utilised;

In case of workshop, additional records as described under 1 (1) above.

19.3.4.4. Utilities (Steam, Power, Water)

Records of input and output;

Record of cost centerwise allocation of outputs.

19.3.4.5. Raw Materials and Stores

Goods Received Register

Bin Cards;

Materials/Stores Ledgers.

19.3.4.6. Wages and Salaries

Attendance Registers/Sheets;

Wages/Salary Sheets;

Leave and Gratuity payments

19.3.4.7. Overheads

Details such as production hours, labour hours, machine hours to facilitate distribution to production.

19.3.4.8. Cost Accounts

Overheads Analysis Register;

Cost Centrewise Assets Register;

Finished Product Ledger;

Annexures and Proforma as per the rules;

Reconciliation of Profit/Loss as per costing records and financial records.



19.3.4.9. Sales

Sale analysis by products

19.3.5. Cost Audit Report

1. General information about the Company.

2. Cost Accounting system

19.3.6. Financial position

Various ratios such as profit to capital employed and sales, current assets to current liabilities, net

worth to long term borrowings etc.

19.3.7. Production

Production of various products - Capacity utilisation, reasons for low capacity utilisation.

Process of Manufacture.

19.3.8. Raw Materials

Method of accounting Raw Materials - Various Raw Materials used - Total quantity and value of each

materials - quality of raw materials used for unit of production - comparison with standards and

previous two years figures.

19.3.9. Power and Fuel

Quantity and cost of various modes of fuel and power used (purchased and produced) - quantity of

fuel and power used per unit of various products - comparison with previous two years and standard.

19.3.10 Wages and salaries

Classified as:-

Direct Labour cost on production

Indirect labour cost on production

Employee cost on administration

Employee cost on selling and distribution

Other employee cost if any

Total employee cost

Mandays available - worked - average number of workers employed.

Direct labour cost per unit of various products.

Incentive scheme if any to be explained and commented.

19.3.11. Stores and Spares



1 Expenditure per unit of output on Stores and Spares.

2. Stores and Spares unmoved for more than 24 months as % of Stores and Spares at the end of the

year.

19.3.12. Method of charging depreciation - How absorbed on products.

19.3.13. Overheads under various heads for 3 years.

Factory overhead

Administration overhead

Selling and Distribution overhead

19.3.14. Royalty/Technical aid payment if any.

19.3.15. Sales

Quantity sold, sales realisation during the year and average realisation per unit for each product.

19.3.16. Abnormal cost

Due to strike, lock out, prolonged power cut etc. affecting production.

19.3.17. Other items

Special expenses if any.

19.3.18. Auditors observations and conclusions

(i) The Cost Auditor may here report on:-

(a) Matters which appear to him to be clearly wrong in principle or apparently unjustifiable;

(b) Cases where the Company’s funds have been used in a negligent or inefficient manner;

(c) Factors which could have been controlled, but have not been done resulting in increase in the cost

of production;

(d) Contracts or agreements, if any, between the Company and other parties relating to selling,

purchasing, bringing out any peculiar features, undue benefits;

(e) (i) The adequacy or otherwise of budgetary control system, if any, in vogue in the Company;

(ii) The scope and performance of Internal Audit, if any, and its adequacy or otherwise;

(f) Suggestions for improvements in performance, if any, eg. by:-

(1) Rectification of general imbalance in production facilities;

(2) Fuller utilisation of installed capacity;

(3) Concentration on areas offering scope for

(i) Cost reduction



(ii) Increased productivity

(iii) Key limiting factors causing production bottlenecks;

(iv) Improved inventory policies.

The opinions expressed shall be based on verified data, reference to which shall be made here and

shall, wherever practicable be included after the company has been afforded an opportunity to

comment on them.

19.3.19. Benefits of Cost Audit

(i) Cost Audit ensure regular maintenance of proper cost accounting records and preparation of cost

statements by companies.

(ii) It leads to scientific valuation of closing inventories and work-in-progress by Companies.

(iii) Audited figures are made available to Government authorities and agencies when they need cost

data for price fixation, price control, major economic policy decisions, etc.

(iv) Income Tax Department benefits in its tax assessment proceedings.

(v) With the submission of cost audit report to the Company Law Board, it will be possible to use data for

inter firm comparison.

(vi) The cost audit covers efficiency and propriety aspects on the various operation of the Company.

(vii) It helps the Government in introducing and implementing value added tax/modvat in place of multiple

and multi-stage taxation.

19.4. TAX AUDIT U/S 44 AB OF IT ACT, 1961

19.4.1. The Income Tax Act has made it obligatory for a person carrying on business to get his accounts

audited by an Accountant before the specified date (Nov. 30th of the ensuing financial year w.e.f. AY

94-95 for Companies) if the total sales turnover or gross receipts in business exceeds Rs.40 lakhs in

any year. Tax audit was introduced effective from AY 1985-86 with a view to reduce the scope for

malpractices by assessee and for ensuring that there is greater reliability in respect of books of

accounts produced before the tax authorities.

19.4.2. A Report of Audit has to be obtained in the prescribed form {Form 3(A) in respect of our Company in

which case the accounts are already subject to Statutory Audit} duly signed and verified by the

Accountant setting forth such particulars

(Form 3CD) as may be prescribed by Rules made in this behalf by the Central Board of Direct Taxes,

along with the Return of Income.

19.4.3. It may be noted that u/s 12 A (b) of the IT Act, audit is compulsory for Trusts {the Pension Fund Trust

and Gratuity Trust in respect of FACT} and Institutions claiming exemption u/s 11 & 12 of the IT Act,

1961 if the income exceeds the specified limit. (Rs.50,000/- w.e.f. AY 1995-96).

19.4.4. The required particulars as per Form 3CD are forwarded by the Division to Head Office for

consolidation. The particulars furnished by each division are subject to audit at their respective

divisions. At HO, the various allowances and disallowances for computation of Total Income under



the IT Act are finalised and the amount of tax payable/refundable is determined.

19.4.5. The broad guidelines for collection and furnishing of information by each division as per Form 3 CD

are outlined below:-

1. Books of account examined

A list of books maintained and related records along with the nos. have to be provided. In this

connection, the requirement of Sec.209 of the Companies Act 1956 regarding books of account to be

maintained by a Company have to be complied with.

2. Method of Accounting employed. Indicate whether there is any change from the method employed in

the immediately preceding previous year

Indicate whether Mercantile, cash or hybrid system of accounting is being followed. u/s 209(3) of the

Companies Act, accrual system of accounting is made mandatory for companies. Reference is to be

made to the disclosures made in the significant Accounting Policies and to the notes attached to the

Audited Accounts of the Company to the extent applicable. Change in method need be reported

only if the amount involved is material.

3 (i) Method of valuation of opening and closing stock in trade

(ii) State whether there is any change in the method of valuation as compared to the immediately

proceeding previous year

(iii) Specify the amount by which profit or loss for the year has been affected by such changes if any

The method of valuation being consistently followed by our company in respect of closing stock is

disclosed in the Significant Accounting Policies in the Annual Report.

For the purpose of arriving at cost, if any item of expense is included/excluded as compared to the

previous year, the reasons for such inclusion/exclusion must be given.

4. Amount of expenditure incurred by the assessee by way of, or on:

i) Capital Expenditure debited to P & L A/c.

a) List of item of Plant and Machinery or any other fixed assets costing upto Rs.5,000/- debited to P & L

A/c.

b) Any other capital items charged to P & L A/c. fully/partly.

c) In our Company, details of library books debited under Misc. expenses are given.

ii) Personal expenses debited to P & L A/c.

Payments, to the extent they are estimated to be of a personal nature along with basis of estimation in

respect of expenses on cars and other vehicles, Telephone charges, Travelling expenses,

Entertainment, Rent for residential premises, Sales Promotion expenses, General Expenses and any

other expenses may be provided.

The Statutory Auditors are required to comment on the above as per requirement of Sec.227(IA)(e)

of the Companies Act.



iii) Advertisement, publicity and sales promotion outside India in respect of the goods services or

facilities which the assessee deals in or provides in the course of his business

Copy of permission for grant of Foreign Exchange and utilisation of the same is to be provided.

Advertisement abroad incurred in Indian Currency need not be mentioned.

iv) Articles presented or intended for presentation where expenditure on each such articles exceeds -

Rs.1000 (w.e.f. 1/4/92)

Give quantitative particulars along with rate per piece and value and also the head of expenditure

under which it is booked.

v) Advertisement in any Souvenir, Brochure, Tract, Pamplet or like published by a political party

Give bill of advertisement along with a copy of advertisement, if any.

vi) Travelling including foreign travel -

Indicate separately the expenditure in excess of the limits laid down in Rule 6 D of the IT Rules, 1962

and attach a statement how such expenditure has been arrived at. Also attach a list of names of

persons in case of foreign travel.

Give a list showing Name of Employee, Place visited, purpose of visit, No.of days stayed at each

place, Fare, Hotel payments, Other expenses, total, amount admissible under Rule 6 D and amount

of disallowance.

Expenditure incurred on account of travel by air, road, rail or waterway is fully allowable,. In respect

of inland travel, Hotel expenses or travel allowance given are subject to the following limit:

i) Where the amount of such expenditure does not exceed Rs.1500/- per day the whole of such amount

is allowed.

ii) In any other case, Rs.1500 + 75% of such expenditure exceeding Rs.1500/- per day is allowed.

In respect of foreign travel, apart from details given for Inland travel, the following are to be furnished.

i) Foreign exchange awarded and surrendered if any with supporting papers.

ii) Copy of application to bank for release of foreign exchange and its utilisation.

iii) No.of days utilised for business and for personal purpose should be shown separately.

The amount allowable is calculated as follows:-

Foreign exchange granted x No. of days devoted for business purpose

——————————————

Total No.of days stay abroad

The number of days required for travel may be ignored.

vii) Maintenance of accommodation in the nature of guest house. Indicate the depreciation in respect of

the building used as a guest house and in respect of the assets in the guest house. Also indicate

separately the amount received from persons using the guest house.



Give details of expenses, recoveries and net expenditure.

viii) Entertainment including the amount of entertainment allowance paid to any employee or any other

person

a) Give details of hotel/restaurant expenses incurred on employees and others separately.

b) Payments made to clubs towards entertainment.

c) Entertainment allowance.

d) Give head of account under which entertainment expenditure is booked, if any.

ix) Scientific research - indicate separately expenditure of a capital nature

Give details of

i) research expenditure on capital items

ii) Revenue expenditure

iii) Contribution for scientific research to any association/institution.

x) Bonus or Commission paid to employees - Indicate whether bonus paid exceeds the amount of

bonus paid under the Act.

i) Give details of bonus paid to employees

ii) Give details of ex-gratia payments and any other type of bonus paid.

iii) Copy of agreement in respect of bonus

xi) Payments made to clubs

Details of entrance fees, annual subscription, residential accommodation charges and other facilities

are to be given.

5. Where the assessee is a firm, details of payments by way of interest, salary, bonus etc. to be

shown.

Not applicable to a Company.

6. Details of expenditure referred to in Sec.40 A

a) Details of payments made to persons specified u/s 40 A (2) (b) ie to directors and/or relatives of such

directors and concerns in which they have substantial interest. Details of expenditure distinguishing

between capital and revenue expenditure is to be given.

b) Particulars of payments (except in the cases and circumstances specified in Clauses (a) to (i) of Rule

6 DD of the IT Rules, 1962) in excess of Rs.20,000/- made otherwise than by a crossed cheque or

crossed bank draft - Sec.40 A (3)

Cash Payments made to a banking company, SBI, LIC, ICICI, IDBI, UTI, to Govt. etc. are outside the



purview of Sec.40 A(3). The details of payments made in excess of Rs.20,000/- along with the reason for

such payment has to be given.

(c) & (d) Omitted.

(e) Provision for gratuity - Sec.40 A (7)

Give the details of provision made during the year and details of contribution to fund showing annual

premium and contribution to fund separately.

In this connection it may be noted that the contribution made to LIC Group Gratuity Fund qualifies for

deduction from the total income.

(f) Sum paid by the assessee as an employer which are not allowable u/s 40 A (9)

Give details of payments made to any fund/trust of the Company other than to PF, Gratuity fund,

Superannuation fund or to any labour fund. Contributions made to FACT Managerial Welfare Fund

have to be given.

7. Any tax, duty or other sum -

i) Debited to P & L A/c. but not paid during the previous year

a) Details of Excise Duty, Muncipal taxes, sales tax, cess and fee or any other tax or duty provided in

the P & L A/c but remaining unpaid have to be given.

b) Any sum payable to employees as bonus or commission for services rendered.

c) Any sum payable as interest, service fees or other charges against borrowings from financial

institutions.

d) Sum payable towards contribution towards PF, Gratuity fund, Superannuation fund or any other

Welfare fund.

Give details of outstandings as at the beginning of the year, amounts paid during the year upto the

date of filing the return, allowance and disallowance. Proof of payment should also be produced.

ii) Paid during the PY but allowed as a deduction in any earlier year - Sec.43 B

Give details of amounts debited to P & L A/c during the relevant assessment year but already

allowed in any earlier Assessment Year.

8. Whether any amount is borrowed on a hundi and details of repayment other than thro’ Account

Payee Cheque

NA to our Company.

9. Particulars of proforma credit/draw back/refund of duties of customs or excise or both/refund of sales

tax where such credits, drawbacks or refunds are admitted as due by the concerned authorities but

net credited to P & L A/c.

In respect of above, give details of amounts admitted as due by the concerned authorities. (a) Credit

to P & L A/c. (b) not credit to P & L A/c. Give details of claim made with reason along with method of



accounting.

b) Particulars of expenditure/income of any earlier year dr/cr to P & L A/c. during the relevant year

Accounting standard 5 relating to prior period expenditure and extra ordinary item and changes in

accounting policies has been made mandatory. Details of expenditure/income of earlier years dr/cr.

during the relevant Assessment Year along with reasons/justification and proof of payment have to

be given. Reference may be given to any accounting policy of the Company in this regard. In FACT,

only expenditure/income exceeding Rs.1,00,000/- is considered for disclosure.

c) Particulars of any liability of a contingent nature debited to P & L A/c.

Details of contingent liabilities debited to P & L A/c and those not debited should be shown

separately. Claim made on the company irrespective of whether provision had been created or not

should be shown.

10. Particulars of each loan of Rs.20,000/- or more taken or accepted in the following form:

1) Name and address of depositor/lender.

2) Whether amount borrowed on hundi

3) Whether loan/deposit has been squared up during the year.

4) Maximum amount outstanding at any time during the year.

5) Whether loan/deposit was taken or accepted in cash.

6) Has any loan of Rs.20,000/- or more been repaid in cash.

In our Company, the details of Fixed Deposits accepted from public are not considered here due to

the high volume of transactions. Loans availed from banks and other financial institutions are also

not considered under this head.

11. Whether the assessee has deducted tax at source and paid the amount so deducted to the credit of

the Central Govt. in accordance with the provisions of Chapter XVII-B2 If not give details

A few of the type of payments from which TDS has to be deducted by a company are as follows:

Salary, Interest on Securities, Dividends, any other interest, payments to contractors and sub-

contractors, rent, fees for professional and technical services, payments to non-residents etc.

Particulars of payment showing amount on which tax is deducted, date of credit of the said amount,

amount of tax deducted, due date of payment and date of payment have to be furnished. Cause for

delay, if any, should also be provided.

12. In case of manufacturing concerns, full quantitative details of principal items of raw materials and

finished products.

Raw Materials

Opening stock, purchases, consumption, sales and closing stock.

Finished Products



Opening stock, purchases during the year, quantity manufactured, sales and closing stock. Details

of by-products should also be given.

13. i) Any expenditure which has resulted directly or indirectly in the provision of any remuneration,

benefit or amenity to the director or to a person who has substantial interest in the Company. or a

relative of the director or of such person.

ii) Any expenditure or allowance in respect of assets of the Company used wholly or partly for the

purposes of benefit of any of the persons referred to in (i) above. (State whether any such person

is an employee of the assessee or not)

Benefit or amenity may take the form of medical expenses, provision of residential house, provision of

car, education of children, supply of goods dealt in by the Company, LTC, Club Fees, Telephone

expenses and any other expenditure directly reimbursed to the person concerned.

The Audit Report in Form 3A, statement of total income, statement of particulars in Form 3 CD along

with annexures, copy of Annual Report, Challan showing remittance of advance tax, TDS Certificates

received and relevant certificates for claiming exemptions/deductions if any have to be filed along

with the IT Return under the Signature and seal of the authorised signatory before the due date ie.

November 30th.

19.5. SALES TAX AUDIT

19.5.1. As per Section 27 A of the KGST Act every Dealer whose total turnover in a year exceeds Rs.40

lakhs has to get his accounts audited by a Chartered Accountant. A copy of the audited statement of

accounts and the prescribed certificate is to be filed before the Sales Tax Authority before 31st

December of every year. The Govt. has prescribed form No.50 A as proforma for submission of the

audit report. The auditors will have to certify the trading/manufacturing account, the profit and loss

account and balance sheet as at the end of the year.

19.5.2. A statement showing the purchases and sales of taxable and non-taxable goods and those taxable at

different rates is to be prepared and submitted along with the report. In the case of a manufacturing

concern the raw materials used and the finished products manufactured for each item of goods is to

be submitted. Separate statement showing details of goods exported outside India sold inter state or

consigned as branch transfer to other states is to be certified by the auditors. A statement of sales

tax collected and remitted is also required to be certified by the Auditors.

19.5.3. The sales tax audit is conducted Division wise and consolidated and submitted to Sales Tax

Department. The audit is co-ordinated by Marketing Division. The sales as per audited accounts is

reconciled with the annual sales tax return and is submitted as an annexure. Details of local

purchases for sales, works contracts awarded by the Company are also submitted as Annexure.

19.6. INTERNAL AUDIT


19.6.2. In 1966 when there was only one production unit, a small Internal Audit Section was functioning in

the Head Office and it was mainly concerned with checking of payments. With the expansion of the

Company, the Internal Audit Wing was strengthened and inspection teams were formed to audit

various types of activities.

The staff was then mostly engaged in the inspection of the Area and Regional Offices and Mixing

Centres of Marketing Division and some departments of Head Office, Udyogamandal and Cochin

Division and also FEDO and FEW from time to time. The work carried out was in the nature of



financial audit.

19.6.3. On the basis of the recommendation of the Statutory Auditors that the Internal Audit must be

strengthened, steps were taken to gradually reorganize the Department. The Board of Directors of

the Company desired in 1971 that the Internal Audit should be not only for the routine audit of

accounts, but should be comprehensive to cover other important aspects also.

Accordingly a thorough reorganisation of the department has since been carried out.

19.6.4. Internal Audit has in the meanwhile got statutory recognition by the passing of the Manufacturing and

other Companies (Auditor’s Report) Order, 1975 issued under Sub Section (4A) of Section 227 of the

Companies Act, 1956. Para 4 (A) (XI) of the Order requires Statutory Auditors to comment in their

reports as to whether the Company has an Internal Audit System commensurate with its size and

nature of its business. This is in relation to those Companies whose paid up capital at the

commencement of the financial year concerned exceeds Rs.25 lakhs.

19.6.5. Objectives, Scope and Responsibilities

The broad objectives of Internal Audit can be summarised as follows:-

(i) To ensure by periodical checks that the accounts are maintained correctly and the periodical and

annual accounts are correctly compiled.

(ii) To ensure that the books of accounts and records of the Company maintained properly and upto

date.

(iii) To check and appraise the effectiveness of the accounting/operational procedures and of the

systems of internal checks and controls.

(iv) To examine and report whether Company’s regulations and executive orders issued from time to

time are being implemented.

(v) To check other procedures, not listed specifically which affect the flow of funds and the assets of the

company.

(vi) To furnish management with information based on the above checks, which will assist in planning

and formulating policies and procedures.

(vii) Moral checks.

19.6.6. Internal Audit is not vested with any responsibility for accounting functions or for carrying out any of

the accounting procedures laid down. On the other hand, it is to see whether,

(i) established management controls are adequate and are effectively maintained.

(ii) records and reports including financial accounting and others reflect the actual operations and are

made out accurately and promptly, and

(iii) each department/unit is carrying out the plans, policies and procedures for what it is responsible.

19.6.7. The Scheme of internal audit comprise of:

(i) Operational/Systems/Management Audit



Internal Audit keeps a master book of all manuals and management instructions and ensure that there

is no duplication in the procedures and that the systems involve the minimum of paper work. It is

particularly required to see that the management instructions facilitate easy and quick collection of

data and are specific and easily understandable. Internal Audit is authorised to recommend

changes. It also ensures that the procedures are strictly adhered to. Operational audit involves in

depth study of specific issues, from all angles objectively and coming out with clear cut solutions to

the specific issues. Management Audit is undertaken to ascertain whether the performance is

consistant with goals and strategies laid down by the management. This includes verification of

input data given to the Management for its correctness since wrong data will lead to wrong

Management decision.

(ii) Proprietary audit and audit of sanctions

Internal Audit will examine all major financial proposals and transactions to ensure that the decisions

taken are the best under the circumstances. It also checks that proper sanction exists for all

expenditure, is given by the authorised officer, is covered by budget provisions etc. The power to

incur expenditure and give sanctions are also audited.

(iii) Routine Audit

Internal Audit carries out materials audit, Budget Audit, Payroll Audit, Inventory Control and audit of

purchases and emergency purchases, warehouses/stocks, welfare account, transport and general

financial audit.

(iv) Surprise Verification of physical stocks

Surprise Verification of physical stocks at the Marketing Agro Service Centres/Mixing Centres is also

entrusted with the Internal Audit.

(v) Special audit and studies

Internal Audit will undertake special audits, investigations and studies of items that may be entrusted

to it from time to time.

19.6.8. The Units/Areas/Departments taken up for audit are drawn up on a quarterly basis by the General

Manager (Internal Audit) and implemented after getting the same approved by the Director

(Finance).

19.6.9. A performance report will be submitted by the General Manager (Internal Audit) to the Director

(Finance) immediately after the close of every quarter indicating the number of audits conducted

against programmed, the number of reports finalised and issued and also the status of reports

issued to the various units.

19.6.10 A half yearly report will also be submitted by the General Manager (Internal Audit) to the Director

(Finance) incorporating the important points thrown up by audit, action taken thereon by the Division

Head concerned etc. which will be furnished to the Chairman Cum-Managing Director/placed before

the Board of Directors.

19.6.11 ORGANISATION

The Internal Audit Department functions as a separate wing of the Head Office of the Corporation and



is under the charge of General Manager (Internal Audit). As the independence of Internal Auditing is necessary

for its effectiveness, the General Manager (Internal Audit) is to report to the Director (Finance) who is

not responsible for the maintenance of such books of accounts as are necessary and also not

involved in the day-to-day accounting of transactions, as per delegation of powers. The General

Manager (Internal Audit) is assisted by a Deputy Chief Manager (Internal Audit) and a Manager

(Internal Audit) who in turn are assisted by 6 Assistant Managers (Internal Audit) and one Assistant

Manager (Surprise Verification).

19.6.12. AUDIT REPORTS

19.6.12.1. Internal Audit Teams visit the various offices/audit points for conducting audit. The observations

which they have to make are contained in reports which are normally submitted to the Officer at the

audit point (Auditee) with copies to the Division Head and Associate Finance. The Reports shall be

divided into three parts and the contents of each part by and large, are broadly on the lines indicated

hereunder:

i) Part-I

This part contains major policy lapses, transactions due to which the company has been put to any

monitory loss, persistent lack of internal controls, purchase of stores unrelated to consumption,

production and other variations which are of significant nature and such other matters which require

the immediate attention of the Head of the Division.

In the case of audit of Marketing Offices, this part shall also contain observations on the credit control

procedures, major deviations, uneconomic stock transfers or inventory build up at distribution points

and control of funds transfer and utilisation, if any.

Part-I of the Report which contains major policy lapses transactions due to which the Company has

been put to monitory loss, persistent lack of internal controls, purchase of stores unrelated to

consumption, production and other variations which are of significant nature and such other matters

which require immediate attention shall be discussed with the Head of the Divisions and only

unsettled points should be incorporated in the report and sent to Head of Division.

ii) Part-II

This part normally contains discrepancies/mistakes of a routine nature observed during audit which

may not have been restricted by the time the audit is completed. If there is a matter of principle

involved, the Internal Audit team shall incorporate the same in this part of the report. This will also

contain comments relating to absence of proper sanctions for which action might/might not have

been taken by the point audited. This relates to incurring of expenditure in excess of delegation of

powers, payment of demurrage charges without proper justification and any other expenditure which

should have been avoided, non-observance of internal control etc. Normally an expenditure beyond

the delegation shall be reported in this part.

The part of the report will be sent in original to the Officer at the audit point (auditee) with copies to his

Controlling Officer and the Finance Manager of the Division concerned for follow up and ensuring

compliance with the procedures laid down therein, if any.

iii) Part-III

This is kept for the department’s record purpose and will indicate the extent of check exercised by the

audit staff, details of areas covered and general observations about the accounting procedures,

maintenance of various prescribed registers and whether the existing system of internal controls are

adequate. If any improvements are required, it is to be recorded whether suggestions are given or



not.

19.6.12.2. The face sheet of the Audit Report will include all relevant information such as:

a) Name of Office Inspected

b) Name of Controlling Officer with his designation

c) Name of Auditee with designation

d) Name of Audit Officer with designation, period selected for audit with dates of audit, dates when audit

queries are issued and the dates when replies are received, whether such replies are considered for

finalising the report.

e) Previous dates of audit with previous period of audit and whether last audit observations have been

replied fully etc.

19.6.12.3 General

i) The audit reports will be an effective tool for the Heads of Divisions for ensuring that the procedures

and controls are implemented in the interest of the Company.

ii) The skeleton audit reports as they are formulated during the course of the audit shall be discussed

with the Officer at the audit point.

iii) The Audit Officer will prepare his audit notes and at the end of each day the points raised are to be

discussed with the auditee and the clarifications/explanations of the auditee are to be noted.

iv) The clarifications/explanations of the auditee thus noted, are to be considered and if these are found

satisfactory, the points concerned need not be included in the final report. Points for which

satisfactory clarifications/explanations are not received or adequate action not taken, will be

incorporated depending upon the importance and significance in Part-I or Part-II as the case may be

of the final audit report.

If the replies given/action taken by the Division Head on points included in Part-I report are not

satisfactory, such points will be referred to the concerned Executive Director with copy to Director

(Finance) under Secret cover.

v) With respect to Part-II reports, the auditee must send replies through his Controlling Officer within a

fortnight of receipt of reports and must take prompt action with the concurrence of his Controlling

Officer to set right the irregularities and institute proper control measures for avoiding recurrence of

irregularities pointed out in the report. Cases of delay in action/inadequacy in the steps taken by the

Controlling Officer/Auditee, will be reported to the Head of the Division. Also discussions will be held

with the Division Head concerned on the points for which the replies/actions taken by the

Auditee/Controlling Officer are not satisfactory.

Matters on which proper or satisfactory replies have not been received from/steps have not been

taken by the Division Head even after holding the discussions as aforesaid, will have to be reported

to the concerned Executive Director and Director(Finance).

vi) However, important and serious matters that have come to notice during the course of audit will

have to be reported promptly and separately to the top Management depending on the nature and

circumstances of each case under Secret cover.



vii) While proceeding for audit, the previous report with the replies thereon, if any, received shall be

studied and carried to the place of audit for clearing the balance of audit queries. The previous

queries remaining thereafter uncleared shall from Part-I(a) of the Report. If the discrepancies are not

of a serious type, these are to be mentioned in Part-II(a).

19.6.12.4. GM(IA) will submit a monthly report to the Director (Finance) and Chairman & Managing Director

under Secret cover, incorporating, the important points brought out by audit during the previous

month.



CHAPTER 20

MANAGEMENT INFORMATION SYSTEM 20.1 INTRODUCTION

Management Information System is a systematic net work designed within the organisation to provide

regular information to the various levels of Management which can be used to take correct and

timely decisions. The specific objective of MIS is to provide all the vital facts which affect the efficient

running of the business for decision making on planning, organising and controlling the major

activities of the organisation and initiating suitable action.

The essentials of a good communication system are enumerated hereunder:

(i) Reports should serve a useful purpose and be in the form that best serves the purpose.

(ii) Information should be presented in an unbiassed manner and should not be affected by personnal

opinions.

(iii) Reports should be brief and to the point.

(iv) The principle of reporting by exception should be followed.

(v) In the case of cost reports clear distinction is to be made between controllable and non-controllable

costs.

(vi) Data relevant to each level of management need be reported to that level.

20.2. MONTHLY REPORTS

20.2.1. By Divisions

Each division generates two different reports for every month - one from the Finance Department

and another from the GM's Office.

20.2.2. The monthly report from the Finance Department generally contain the following information.

a) Statement showing profit or loss

This Statement shows the actual profit or loss for the month and the cumulative profit or loss upto the

month. Budget figures for the month and cumulative upto the month are given for comparing with

the actuals.

b) Analysis of Profit and Loss

Analysis/Reconciliation of Budgeted Profit and Loss with Actual Profit and Loss for the month and

cumulative upto the month are given in this statement along with variance analysis.

c) Production Performance of the division

This statement contains the installed capacity of various products and comparison of actual

production with Budgeted production for the month and cumulative upto the month. Reasons for



major variations and production highlights are also shown.

d) Inventory position

This statement shows the opening stock, closing stock and variation in quantity and value for the

month in the cases of Raw Materials, Intermediaries, Finished Products, Stores and Spares, Packing

Materials etc.

e) Cost of Production

The cost of production of various products - both actuals and budget for the month and cumulative

upto the month are shown in this statement. The elementwise cost of production is divided into two

parts viz. the variable cost and the fixed cost.

In addition to the general information mentioned above, the report of each division are containing

specific information relating to that division which are of importance to the management. In the case

of Fabrication Division, these additional informations are on performance of major projects, manhour

utilisation etc. In the case of consultancy division the additional informations are on status of major

projects, manhour statement, status of bids etc. The Marketing Division is giving information on

sales and inventory of finished products.

The formats of the above reports/statements are given as Annexure-36.

The monthly reports from the finance departments are sent to the Divisional Head, Head Office and

Internal Audit. Divisional Head is incorporating information from these reports in their monthly

reports. Head Office is consolidating these reports from all the divisions and preparing the Corporate

working result for the month with cumulative figures upto the month. (Both actuals and Budget).

Head Office is also preparing the consolidated statements on other informations in the same lines

as it is prepared by the Divisional Finance Departments. This consolidated monthly working result is

sent to CMD through GM(CF) and FD.

20.2.3 The Head Office Finance also generates a monthly report with the following details pertaining to the

entire Corporation.

1 Financial Performance showing working result for each division and the Corporate.

2 Monitoring of plan expenditure for the corporate under various schemes/jobs.

3 Payment of loan and interest instalments due to Govt.

4 Mobilisation of Internal and extra budgetory resources for each month.

5 Statement of inventories position

6 Status of budget estimates/revised estimates of the projects being implemented.

7 Cost of production of end products from each production divisions.

8 Statement on production

9 Statement on sales

10 Statement on stock of finished products



Wherever possible the above statement contains details regarding for the month and cumulative for

both budget and actuals, corresponding figures for the last year same month etc.

20.2.4 Monthly Reports from Division Heads

The monthly reports from Division Heads will generally contain the following information.

a) Production Division

Production Achievement

General Report on working of the division.

Industrial Relations

Financial Report

Pollution Control Analysis

Departmental enquiries - Status

Production Performance

Plan Projects and Renewals & Replacements - Monitoring of Capital Expenditure.

Specific Consumption Norms

Production Shortfall/downtime analysis

Inventory Status

Power - Plantwise consumption, interruption

Cost of production - Intermediaries and Finished Products

Performance evaluation - Variance analysis

Sales Performance.

b) Consultancy Division

Project Summary - Status of major projects

Performance summary - Expected profitability of individual projects, Manhour utilisation and

Profitability.

Detailed status of current projects

Status of Miscellaneous Jobs

Status of Bids

Report on Personnel

c) Fabrication Division



Performance of Major Projects

Manhour utilisation

Status of Inventory holding

Bidding Activities - External and Internal

Financial Performance

d) Marketing Division

Seasonal conditions of the Four Regions - Kerala, Tamilnadu, Karnataka and Andhra Pradesh

Sales turnover - Quantity and Value

Position of subsidy claims

Pending claims/issues with the Ministry

Overdue position

Sales Promotion

Sales Analysis - Areawise

Stock position

e) Plan Schemes/Major Projects

Project progress summary:-

- Physical Progress

- Financial Progress

- Areas of concern

Project profile

Project background information.

Milestone activity list.

Status of current critical activities

Milestones summary

Procurement summary

Status of Site Construction Activities



Manpower Status

Expenditure Status

Project Cost summary

Payments to Foreign Collaborators

Commitments and expenditure for the year.

Ordering and Delivery Status of major orders

20.2.5. Report from Internal Audit

Internal Audit Department generates a monthly consolidated report and furnishes to the Corporate

Office. The monthly reports from the Finance Departments of each division, the Head Office and the

division heads are consolidated by the Internal Audit Department in their monthly report. The report

generally contains the following:-

Production Performance - with divisionwise analysis.

Sales

Working Results - Divisionwise and total

Bank balance

Inventory

Sundry Debtors

Major Projects - progress summary

Overtime - Divisionwise Analysis.

Foreign Exchange - Explosive Risk Management.

Summary of areas of concern

Divisionwise observations - This contains the detailed analysis of the working of each division. The

production performance, working results, inventory level, sales, Manhour utilisation etc.

20.3 QUARTERLY REPORTS

Quarterly Reports are generated by the Finance Departments and the Offices of Division Heads in all

divisions.

These reports are meant for the Quarterly Review Meeting (QRM). The Head Office (Finance)

consolidates the reports from all the Divisional Finance Departments.

20.3.1. Quarterly Report from Finance Department

The Quarterly Report from the Finance Department contains the following information.



Elementwise cost of production- Actuals for the quarter, progressive upto the quarter (for the year)

and Budget estimates for the year.

Comparison of cost of production for the quarter with Budget estimates for the year and Actuals for

the previous year with reasons for variation, if any.

Reconciliation of Profit/Loss reported for the quarter ending. Product wise profitability of each product

and the cumulative profit/loss reported for the quarter.

20.3.2. Quarterly Report from Division Head's Office

The Quarterly Report from the Division Head's Office generally contain the following information.

Production

Analysis of performance of the division during the quarter with reference to the production of various

products. The actual production of various products are compared with targets and reasons for

variations are analysed. A reference is made to the major areas effecting the production

performance like plant shut down, power shortage, raw material availability etc.for the Division.

General functioning of the Division

A note on the general functioning of the division with specific reference to the industrial relations etc.

An assessment of the present quarter

An assessment of the present quarter and the expected performance of the division in the production

of various products.

Status note on Energy Audit and Energy Conservation Measures in the Division.

Quantitative details of production of various products viz. Chemicals, Intermediates and finished

products. Quantitative details under the following heads are given for each product.

a) Installed capacity

b) Capacity utilisation

c) Target production and actual production during the quarter and progressive up to the quarter for the

year.

Cost of production of various products with break up of variable cost, fixed cost and total cost.

Elementwise cost of production of finished products for the quarter and progressive upto the quarter

for the year.

Consumption efficiencies of various items viz. intermediaries, raw materials, utilities and consumables

consumed in various products with details of :-

a) Target ratios

b) FICC ratios (wherever applicable)



c) Actuals during last year

d) Actuals during this quarter and

e) Progressive actuals upto the quarter for the year.

Manpower productivity of various products, plants with details of

a) Total Manpower employed.

b) Percapita output during the quarter

c) Progressive per capita output upto the quarter for the year.

A detailed statement for the quarter on the reasons for shortfall in the production of various products

with reference to equipments, input, utilities and others due to the following:-

a) Shutdown and interruptions.

b) Stream days lost

c) The actual production lost (in MT) compared to target due to the above reasons.

Also a note/remark is given on the reasons for the above and the remedial steps taken by the

division.

CMD's Office consolidates all the Division Heads Reports and prepares the corporate report for the

Quarterly Review Meeting.



CHAPTER 21

PROCEDURE OF RECEIPT/CONSUMPTION OF RAW MATERIALS, REPORTING OF PRODUCTION,

DESPATCH OF FINISHED PRODUCTS AND FOR PHYSICAL VERIFICATION OF RAW MATERIALS AND FINISHED STOCK

21.1. RECEIPT OF RAW MATERIALS

Different types of raw materials are in use in the production of fertilisers. A list of such raw materials

is given below:-

i) Naphtha

ii) Sulphur

iii) Rock Phosphate

iv) Imported Ammonia

v) Imported Phos.Acid

vi) Benzene

vii) Caustic Soda

viii) Oleum

ix) Purchased Sulphuric Acid

The raw materials can be classified into solids, liquids and gases.

21.2. PROCEDURE RELATING TO RECEIPT OF RAW MATERIALS - SOLIDS

The raw materials are received by road, by rail, by pipeline and through barges. Imported raw

materials are unloaded at the docks and transported to factory site either by rail, or by road or by

barges.

21.2.1 Rail Receipts

All raw materials received by rail shall be weighed at the rail weigh bridge and record of such weight

furnished to the concerned raw materials department for posting in the appropriate raw materials

receipt register. The transportation department shall be made responsible for weighment of

incoming wagons. Wherever 100% weighment is not possible because of large receipts in a day,

test weighment shall be done on random sampling basis. If, at any particular time, the rail weigh

bridge goes out of order, the weight as shown in the railway receipt shall be taken as the basis for

recording of receipts, after applying the correction factor on the basis of past two to three months

ratio of RR weight to the actual weight of raw material.

21.2.2. Receipts by Road



Raw materials received by road in trucks shall also be weighed at the road weigh bridge and the

weight recorded. The procedure for receipt by road shall be the same as detailed in para 21.1.1.

above, except that, where the road weigh bridge goes out of order, weight as per MDA may be

accepted after applying a correction factor on the basis of previous 2-3 months ratio of MDA weight

and actual weights.

21.2.3. Receipts by barge

Raw materials received by barge shall be weighed by draft method and the weight recorded. The

procedure for recording shall be the same as detailed in para 21.2.1. above.

21.2.4. Maintenance of weigh bridge

The maintenance of weigh bridge may be entrusted to the manufacturers or any other reliable party to

ensure all time availability of weighbridges and their accuracy.

21.3. RAW MATERIAL - LIQUIDS AND GASES

Determination of weight of liquid depends upon the accuracy in determining the density of the liquid.

The value of liquid stored in tanks are readily determined from the dimension of the tank and depth

of liquid in the tank. Liquid raw materials shall be stored in any of the standard type of bulk storage

tanks fitted with 'dip measurement' taking device. The volume of the tank shall be precalibrated

against corresponding value of dip level in tanks. The weight of liquid at any instant is determined by

the depth of liquid in tank and density at the ambient temperature.

The flow of gaseous raw material into the plant battery limit shall be determined by one of the

standard type of flow meter recorder and computed for consumption on daily/hourly basis.

21.4. RECORDINGS OF RECEIPTS

The Bill of Lading weight is taken as receipts for Sulphur and Rock. The issues to Divisions are made

by Lorries/Barges/Valloms. The weight recorded by weigh bridge is taken for Lorry movement. The

Valloms and Barges are calibrated and draft survey quantity is taken as issue quantity. The draft

survey taken at W/Island for Valloms/Barges may not be accurate and influenced by the high waves

in the Port area. The figures taken at W/Island for the Valloms/Barges requires to be corrected with

the draft survey quantity taken at Ambalamedu/Udyogamandal and the quantity issued to Divisions

adjusted accordingly.

The issue of Rock and Sulphur to Divisions will be continued till the B/L quantity of shipment is

covered. In case there is no sufficient stock to cover the B/L quantity the issue will be stopped and

the same will be resumed only after receipt of the next shipment. Hence shortage/excess if any on

particular shipment is not made known.

Hence a suggestion has been made for accounting of the Raw Materials based on actual receipts at

factory gate is more realistic and we can ascertain the loss in transit from W/Island to Site. The

reconciliation of the actual receipts with Bill of Lading quantity on ship to ship basis will reveal the

Excess/Shortage in a particular shipment. The limitation for this, is, we have to provide separate

storage areas for consignments received in each shipment. This suggestion is under consideration.

21.5. CONSUMPTION OF RAW MATERIALS

21.5.1. Consumption of raw materials shall be recorded on the basis of weighing mechanism available at the

consuming point in the various plants. In cases where consumption cannot be recorded in this



manner, the consumption shall be reported on the basis of theoretical calculations with reference to the actual

output. Such theoretical calculation of consumption with reference to the actual output shall be

periodically be cross checked by ascertaining the input output ratio. This ratio shall be determined

by segregating a certain pre-weighed quantity of raw material and comparing with the actual

production there against. The results of such checks shall be recorded in a log book in the

consuming plant.

21.6 REPORTING OF PRODUCTION

21.6.1. Weighment of Finished Products

21.6.2. A Mechanical device shall be provided in the various plants to record actual weight of finished

products.

21.6.3. If the above device goes out of order due to mechanical faults etc., the reporting of production shall

be made on the basis of raw material input. In such cases it shall be necessary that a uniform

method is followed as to give reliable results, ie. when the plant is working under steady conditions

and the device is functioning normally the input-output ratio for the various raw materials shall be

closely watched and the ratio which gives reliable results shall be adopted for reporting of

production.

21.6.4. Calibration of Weighing Mechanism

i) There shall be consistency in the use of calibration tests.

ii) Calibration tests shall be conducted fortnightly.

iii) Log books shall be maintained to keep a record of zero weighment and calibration tests.

iv) Calibration of weighing instruments shall be recorded in the proforma prescribed.

The proforma shall also be submitted to the Chief Engineer (Instrumentation/Production) any time

such calibration is done. Failure to conduct tests on more than two occasions during a prescribed

period shall be reported to General Manager.

21.7. DESPATCHES

21.7.1. Despatches of the finished products from the factory shall be made only on the basis of despatch

instructions from the Marketing Department which register the orders from the field offices. The

despatches shall be made either by road or by rail.

21.7.2. Despatch by Rail

A copy of the despatch instructions shall be forwarded to the transportation department for making

available the necessary wagons for loading. Empty wagons shall be placed for loading at the

bagging plant by the transportation department. A loading order shall be issued indicating the wagon

number, carrying capacity and the number of bags which are to be loaded in the wagon. After

loading the wagon as per loading order, a copy of the loading order shall be returned to the

transportation department. A railway receipt shall be obtained from the railway staff against each

wagon. The RR particulars shall be entered in the appropriate column of the loading order. The RR

will be forwarded to the respective field offices.

21.7.3. Despatch by Road



On receipt of delivery challan from the transportation department which shall contain destination, truck

number and the quantity to be loaded, the bagging plant shall load the material in the trucks and the

number of trucks loaded shall be recorded in the daily log sheet of the bagging plant. After loading in

the truck, a material out-going gate pass shall be issued to the party showing the truck number with

quantity of material despatched as per delivery challan.

All incoming empty trucks required to carry material outside shall be weighed at the factory

weighbridge and the tare weight recorded along with the truck numbers. When the loaded truck is

sent outside with the finished products the trucks shall again be weighed and the gross and net

weight recorded in the weighment register. If, on such weighment the quantity despatched is found

to be in excess or short of the quantity stated in the delivery challan (beyond normal tolerance limit)

the truck shall be sent back to the bagging plant for unloading and reloading after proper check.

The total despatches of the day shall be entered in a loading statement separately by rail and road

showing the wagon number, truck number and quantity loaded. From the plant log book the total

despatches should also be posted in the finished products stock ledger. The stock ledger shall daily

be completed with opening balances, production, quantity despatched and closing balance.

21.7.4. Independent check of loading by security staff

Security department shall also be made responsible for counting of bags loaded in wagons/trucks.

21.7.5. Consumption of bags

Control over empty bags shall be used as a means of exercising control over filled bags. The total

number of bags consumed on the basis of the above despatches indicated in paras 21.6.1. and

21.6.2. shall be noted daily in the stock register of bags as consumption. The empty bags used

should regularly be reconciled with the filled bags despatched and those in stock. This reconciliation

shall be done periodically by the concerned department.

21.7.6. Finished Product Bagging

The concerned department shall carry out regular test check on weight in the wagon despatches as

well as on quantity of bags. To improve internal control test weighment of filled bag shall also be

done by the Industrial Engineering Department or any other department other than bagging plant.

21.8. PHYSICAL VERIFICATION OF STOCK

21.8.1. Stock Verification of Raw Materials and Finished Products

21.8.2. Frequency of verification

The physical verification of raw materials and finished products shall be carried out as per the

instructions issued by the management from time to time. In addition, the physical verification of

finished products on raw materials shall also be conducted when the ground balance is nil or very

low, which will enable identification of stock variations correctly.

21.8.3. Procedure for verification of stock

The verification of the stock shall be done by a team of officers. The results of the stock verification

shall be tabulated in the proforma prescribed.

21.8.4. Ascertainment of weight in silos/yards



Ascertainment of weight of the material lying in silos/yards depends upon the accuracy in determining

the volume and density of the heap. Total weight of the material is the sum of the product of

volumes and densities of the heaps into which the stocks have been divided. The volume of each

heap into which entire material has been divided shall be determined by 'prismoidal' method. The

heaps shall be leveled, and made as far as possible, in geometrical shapes. With the help of

Theodolite instruments level, scale, heights of the parallel sides and middle section shall be plotted

on a graph paper and determined by plamimeter. Sometimes instruments such as Dumpy level and

steel tapes are being used for determining the stock level. The volume shall then be calculated

using prismoidal formula, namely.

V = L

6 (A

1+A

2+A

3)

Where V = Volume of the heap

A1, A

3 and A

2 are the area of the two parallel sides and middle

section respectively.

L = length of the heap.

The bulk density of any material in heap would depend upon factors such as low crystallising property

of the material, the age of the heap and its height etc. In determining bulk density the following

procedure shall be followed.

i) A fixed bulk density factor shall not be used indiscriminately. Several samples shall be taken at

different points in the heap and varying density factors applied, if necessary.

ii) Determination of the bulk density shall be done by the chemical laboratory.

21.8.5. Losses due to monsoon and fire - accounting of Sulphur in the Sulphur sludge

Losses on account of leakage, due to monsoon and fire shall be appropriately estimated, evaluated

and reported after such event takes place.

The sulphur remaining in the sulphur sludge in the acid plant shall be separately estimated

periodically and allowed for in the appraisal of physical verification of stock. For this purpose, when

the sulphur pit is cleaned, sulphur sludge removed and fresh sulphur introduced, the sulphur

equivalent to the sulphur sludge shall be considered as part of consumption and adjusted

accordingly, wherever the accounting for sulphur consumption is based on back working from

Sulphuric Acid Production.

21.8.6. Board approved maximum percentage of shortage/excess is as follows:-(Ref: FD-M-1-22 dt.16-1-

1979).

Sl.No. Material Maximum % to total material handled ------ -------- ------------------ 1. Urea 1.5 2. NPK Fertilisers 2.00 3. Amm.Sulphate 1.00



4. Superphosphate 2.00 5. Rock Phosphate 2.50 6. Sulphur 1.50 7. M.O.P. 2.00 The quantity handled will be opening stock plus receipts during the quarter for raw materials. In the

case of finished products this will be opening stock plus production during the quarter.

21.8.7. Write off of stock difference The stock difference ascertained from each physical verification during the year should be properly

investigated by a committee (in cases where the variations are beyond the norms fixed by Board)

consisting of the officers from the following departments:

i) Production department

ii) Material handling department/concerned department

iii) Finance Department

The report of the committee shall be submitted to the General Manager through the Materials

Manager. The report shall identify the various factors contributing to the loss and recommend such

steps for tightening the procedures. The write-off should be sanctioned by the appropriate authority.

Stock difference ascertained during each physical verification shall be adjusted during the year itself.



CHAPTER 22

MAINTENANCE OF OLD RECORDS 22.1. This chapter deals with maintenance of old accounting records.

Section 209 (4A) of the Companies Act 1956 stipulates:

"The books of accounts of every company relating to a period of not less than eight years immediately

preceding the current year together with the vouchers relevant to any entry in such books of account

shall be preserved in good order".

The same section defines the books of account as follows:-

a) All sums of money received and expended by the company and the matters in respect of which the

receipt and expenditure take place.

b) All sales and purchases of goods by the Company.

c) The assets and liabilities of the company and

d) In the case of a company pertaining to any class of companies engaged in production, processing,

manufacturing or mining activities, such particulars relating to utilisation of material or labour or to

other items of cost as may be prescribed, if such class of companies is required by the central

government to include such particulars in the books of account.

It is therefore, mandatory to keep the books of account for a period of at least 8 years other than the

current year. The definition 'Books of Account' is wide enough to include vouchers relating to any

entry in such books of account and the records relating to 'cost compilation'.

22.2. Besides income tax cases if other cases like bonus payments to employees, litigations/ arbitration/

enquiries/ dispute with contractors etc. are pending relating to period earlier than 8 years, the

records for those years should also be kept beyond 8 years so that the same could be produced

before the appropriate authorities. Similarly, all documents and records relating to claims (Customs,

Port, Commissioners, Railways, Carriers, Insurance etc.) must be retained until settlement.

22.3. Records connected with expenditure of projects schemes or works not completed although beyond

the period of limitation fixed by law will not be destroyed.

22.4. All documents, correspondence etc.relating to accounts receivable must be retained as long as the

account remains outstanding.

22.5. Records relating to the leave account, provident fund accounts, earning record and family pension

etc.of each employee may be preserved for a period of 3 years from the date of final payment on

account of PF etc.on account of his/her resignation/retirement/death or till these have been audited

by the Statutory/Government Auditors and if there are any audit objections and disputes relating to

the above, till those are cleared to the satisfaction of the auditors etc.which is later. However, in the

case of deceased employee the PF and family pension accounts records including nomination forms

shall be preserved for a period of 12 years from the date of the death of the employee.

Based on the legal and corporation requirements a schedule of account records to be retained has

been prepared as follows:-



Record Title Period of retention ---------------- ---------

Books of account, as defined in Sec.209 of the Companies Act, together with vouchers relevant to any entry in such books of account:-

1. Asset Register Permanent 2. Audited and signed original/printed Balance Sheet and Profit and Loss Account statements. " 3. Sub-delegation of powers, procedures, orders and sanction of management of a permanent character, till revised " 4. Circulars of BPE etc. " 5. Circulars issued by Finance Dept./HO till revised " 6. Files relating to fixation of latest hire charges of vehicles, Guest House charges etc. till the rates are revised. " 7. General (Main) Ledger 9 years* 8. Sub-ledgers " 9. Journal entries/Journal registers " 10. Expenses Journal/Register " 11. Cash/Bank Book " 12. Advances/loans/sundry creditors / sundry debtors ledgers. " 13. Receipt voucher " 14. Payment vouchers along with supporting bills. " 15. Credit Notes and Debit Notes " 16. Purchase day book " 17. Sales day book " 18. Bills of entry and Customs, Port



Trust, Deposit Accounts. " 19. Stores receipt vouchers, issue notes etc. " 20. Bills payment register " 21. Muster rolls " 22. Overtime statement " 23. Payrolls and supplementary bills " 24. Time Office Records " 25. Godown stock register and stock reconciliation statement. " 26. Purchase Orders " 27. Measurement books "

28. Log Books "

29. Correspondence relating to audit report after their close " 30. Despatch and receipt registers " 31. Casual leave applications register " 32. Miscellaneous circulars/correspondence files " (*) 8 years immediately preceding the current year. This schedule is not exhaustive but should serve as a guide.

Record connected with expenditure which is within the period of limitation fixed by law shall not be

destroyed for the duration of life so prescribed.

22.6. For the preservation of old records the following procedure is suggested.

1. The sections may maintain with themselves besides the records for the current year, records of the

immediately two preceding years as well.

2. The older records may be sent to the old records section through a paper slip duly signed by the

Officer-in-charge of the section.

3. The record keeper should acknowledge such slip and they should be properly filed.

4. The old records may be kept yearwise and should be properly labelled in bold type so as to be

properly visible.

5. The issue from the record rooms should follow the same procedure as in the case of receipts ie. the

records keeper taking the acknowledgement of the receiver.

6. Old records should be parted with only on the specific authorisation of an officer not below the rank



of an accounts officer.

7. The record keeper should review once in every fortnight various records issued by him to various

officials which have not been returned back and should ensure that the same are received back by

him by giving suitable reminders to the official who has taken the same from the record room.

8. Disposal of the records which have levied the prescribed period of preservation shall with the

specific approval of the Finance Manager of the unit/division/office.

9. Details of the records which have been destroyed with the approval of the Finance Manager of the

Unit/Divn./Office shall be kept in a register by the record keeper on permanent basis.

22.7. In this connection the guidelines issued by the Management vide CMD's Office Order No.5/81 of 12-

10-1981 is given in Annexure-37.



CHAPTER-23

CALENDER OF REMITTANCES AND RETURNS

Sl. Description Duration Due date of Due date of Remarks/ No. remittance filing returns Certificate Time of deposit of tax deduct- of tax of tax ion/statement deduction Income Tax

1. Income Tax Monthly Within 7 Issue certi- recovered days of ficate in from salary tax deduct- Form No. 16 under Sec. 192 ion within one Remittance month from the close of the financial year

-Filing of Annual - By May 31st - Return (With - every year Form No. 24)

2. Income Tax - within 7 - Issue certificate recovered days of tax in Form No. 16 from deduction A within one dividends month from the under Sec. 194 - end of the month Remittance during which cheques or warrant for dividend payments are issued

- Filing of Annual - By April - Return (With 30th every From No.26) year

3. Income Tax If interest is Issue certi- recovered creditied to ficate in from the account From No. interest of the payee 16 A within

under Sec. on the last one month 194 A. day of account- from the - Remittance ing year: Within end of the 2 months month in which credit is given In any other case: Within one week from



the last day of the month in which deduction is made

- Filing of Annual - By June 30th Return (With every year. Form No. 26 A) 4. Income tax - Where amount - Issue certi- recovered is credited ficate in from payment to the payee’s Form No. to contract- account on 16 A within ors/sub cont- the last day one month ractors under of the account- from the Sec. 194 C ing year: Within end of the - Remittance 2 months from month in the end of which credit the month in is given which credit or the is made. In amounts any other is paid case; Within one week from the last day of the month in which deduction is made.

- Filing of Annual - By June 30th - Return (With every year From No. 26 C) 5. Income Tax - When amount is - Issue certi- recovered credited to the ficate in from payee’s account Form No. rent on the last 16 A within under Sec. day of account- one month 194 - I ing year: Within from the - Remittance 2 months from end of the the end of the month dur- month in which ing which credit is made credit is given or In any other the amount case: Within is paid. one week from the last day of the month in which deduction is made.

- Filing of Annual - By June - Return (With 30th every Form No. year. 26 J)

6. Income Tax - When amount is - Issue certi- recovered credited to the ficate in



from payee’s account Form No. fees for on the last 16 A within professional day of account- one month or technical ing year: Within from the services 2 months from end of the under Sec. the end of the month dur- 194 J month in which ing which - Remittance credit is made credit is given or In any other the amount case: Within is paid. one week from the last day of the month in which deduction is made.

- Filing of Annual - By June - Return (With 30th every Form No. year. 26 K) 7. Income Tax - If the amount Issue certi- recovered is credited ficate in from on the last Form No. payment to day of account- 16 A within Non-resident ing year: Within one month under Sec. 2 months from from the 195 the end of the end of the - Remittance month in which month dur- credit is made ing which credit is given or In any other the amount case: Within is paid. one week from the last day of the month in which deduction is made. - Filing of Annual - Within 14 - Return (With days from Form No. the end 27) of quarter. 8. Payment of advance tax (Corporate Tax) in specified instalments under Sec. 211(1) - Remittance Upto 15% On or before June 15

Upto 45% On or before Sept. 15

Upto 75% On or before



Dec. 15

Upto 100% On or before March 15 9. Filing return Yearly - Nov-30th of - of income by a relevant company under assessment Sec. 139(1) year

10. Tax on self Yearly 30th Nov. - - assessment before filing return

11. Wealth Tax- Annual On or before 30th Nov. Return 30th Nov. along with tax

12. Agricultural Annual - 30th Aug. Income Tax Return

13. Return of - - 31st Oct. Income Gratuity Fund 14. Professional Half Oct. & March - - Tax Yearly every year 15. Sales tax - Remittance Monthly 10th of - - succeeding month - Filing of Returns Annual - 30th April - 16. Excise Duty - With 5 - - RT 12 Return Monthly - days after - the close of every month - RT 11 Return Monthly - Within 5 days after the close of every month 17. Service Tax Monthly Within 15th - - -Remittance of the next month -Filing of Quarterly - Within 15 - Return days from the end of the quarter. 18. Provident Fund - Remittance Monthly 15th of - - of PF Cont- succeeding



ribution including month that of contract employees Filing of Monthly - 15th of - Monthly succeeding Report month (Annexure -A) to Regional PF Commissioner

- Statement Monthly 15th of - - of PF succeeding Commissioner’s month Inspection charges with challan from PF Section to Head Office (Finance)

- Annual - - With 1 Returns month from end of the financial year

19. ESI - Remittance Monthly Before 20th - Amount is of ESI Contri- of the directly bution (emplo- succeeding remitted yer’s+employees) month from including month payroll contract employees.



ANNEXURE-2

CALENDER OF INPUT TO CSC

LIST OF INPUT - DOCUMENTS 1. GENERAL ————————————————————————————————————————— Source Documents Due in Last Date Last Date for Other Mktg. Divisions Division giving in Floppy or through Network ————————————————————————————————————————— 01 Purchase Journal Vouchers 6th 6th 11th 02 Transfer Journal Vouchers “ “ “ 03 Cost Journal Vouchers “ “ “ 04 Payroll Journal Vouchers “ “ “ 05 Miscellaneous Invoice “ “ “ 06 Cash Receipt “ “ “ 07 Cash payment “ “ “ 08 Bank Receipt “ “ “ 09 Bank Payment “ “ “ 10 Invoice Journal “ “ “ 14 Works Journal “ “ “ Sales Tax “ 5th “ Labour Allocation “ “ “ Works Journal “ “ “ Contractors - Wage Roll 10th 10th 10th Sales Quantity - adjustments - 12th 12th Change in Rules if any for computation of Depreciation. April April April II. Material Accounting

Page 1 of 7ANNEXURE-2

1/2/2009http://192.168.1.5/acman/amx02.html

01 Receiving Reports 6th 02 Material Requisitions “ 03 Return of Material “ 04 Stock verification adjustments “ 05 Odd balance adjustments “ 06 Correction of unaccounted “ Material Requisition 07 Stores Ledger adjustments “ 08 Stores charges Percentage/ Yearly 1st April 09 Rate for pricing personal Debits 6th 10 Value range for A.B.C.Category,XYZ April The user departments will ensure an even flow of data to EDP so that Punching load is spread over through

out the month. A weekly flow of Document is therefore ordered. III. Payroll all units including Managerial Roll 01 Rate Changes 15th 02 Transfer and deletion “ 03 Other Master Card Design “ 04 New appointment “ 05 Fixed deduction 18th 06 Variable deduction 20th 07 Attendance outstation 20th 08 Attendance Executive 20th



09 Attendance regular staff 24th 10 Details of supplementary 10th payments 11 LTE List 15th 12 DA Rate for the month 20th 13 Rules for As and calculating when there Income Tax is change. 14 Annual Bonus percentage, minimum April 15 Other Details For Computation of Monthly Income Tax 15th IV. Provident Fund PF Refundable Loan 2nd/12th Financial entries 6th All entries connected with Payroll 23rd

ANNEXURE - 3

CALENDER OF OUTPUT FROM CSC I. LIST OF VARIOUS REPORTS ISSUING FROM CSC FINANCING ACCOUNTING:

————————————————————————————————————————— Sl. Name of Statement Divisions Due Date No. Other Mktg Divisions ————————————————————————————————————————— 1. Journal HO,UDL,CD,FEDO, 12th 12th FEW,Mktg.,PD 2. Financial Ledger -do- -do- -do- 3. Trial Balance -do- -do- -do- 4. Inter Unit Accounts -do- -do- -do- 5. Consolidated GL Trial Mktg. -do-



Balance 6. Sales Quantity Analysis A. Productwise Mktg. - 17th B. Areawise -do- - -do- 7. Sales Tax Mktg. - 10th 8. Plant Maintenance cost sheet UDL,CD 12th - 9. Depreciation Statement All Divns. Yearly Yearly 10 Labour Allocation UDL 10th - 11. Consolidated Ledger All Divns. 15th 15th April-September Nov Nov. 12. Consolidated Ledger -do- 15th 15th October-March May May 13. Consolidated Ledger -do- As As supplementary required required ————————————————————————————————————————— Sl. Name of Statement Divisions Due Date No. Other Mktg Divisions ————————————————————————————————————————— 14. Balance Sheet & All Div. Half Half Schedules yearly yearly 15. Balance Sheet & -do- Annual Annual Schedules II. MATERIAL ACCOUNTING ————————————————————————————————-———-———-—— Sl. Name of statement Addressed to Due date No. ——————————

——————————————————————-———-———-—— 1. R.R. Register All Divisions 12th 2. Creditors Journal -do- do- 3. Debit summary -do- -do- 4. Material cost Journal entry -do- -do- 5. Unaccounted MR/ARM list -do- -do- 6. Stores ledger -do- 18th 7. Odd balance list -do- 18th



8. Statement of difference between bin balance and stores ledger -do- Yearly 9. A.B.C. Analysis, X,Y,Z -do- Yearly 10. ABC analysis of stores balance with number of months for which stock held -do- -do- 11. Class-wise summary of item not moved between 1-2 years etc. -do- -do- ————————————————————————————————-———-———-—— Sl. Name of statement Addressed to Due date No. ——————————

——————————————————————-———-———-—— 12. Stores closing stock schedule -do- -do-

III. P.F.ACCOUNTING 1. Monthly PF ledger Secretary PF 10th 2. P.F earning list -do- 1st 3. Annual consolidated PF ledger -do- Yearly 4. PF closing balance schedule with computation of interest -do- Yearly 5. Monthly members balance -do- 1st 6. PF Journal -do- 10th 7. PF financial ledger -do- 10th 8. PF Trial balance -do- 10th 9. PF loan -do- 4th, 14th 10. Contract workers statement -do- Yearly 11. Work charged -do- Yearly IV. PAY ROLL 1. Pay Roll All divisions 28th For Feb.26th 2. Net pay summary and cash -do- -do- 3. Outstation roll & net pay analysis Mktg. 25th



4. Bank-wise net pay list (MPR) All divisions 28th 5. Earning summary and man hour statement All divisions Last day of the month ————————————————————————————————-———-———-—— Sl.No. Name of statement Addressed to Due date ————————————————————————————————-———-———-—— 6. Deduction summary of All divisions Last day of accounting entry the month 7. Fixed deduction schedule for correction and return as advice for the following month -do- 3rd 8. Income tax recovery schedule -do- -do- 9. Insurance Premium recovery policy No. order -do- 7th 10. ESI recovery schedule, monthly contractor’s employees -do- 12th 11. RD account numberwise -do- 3rd 12. PD analysis by head of a/c -do- -do- 13. List of all other variable deduction -do- -do- 14. Recurring deposit recovery schedule -do- -do- 15. List of unlinked deduction -do- -do- 16. List of deduction unrecovered -do- -do- 17. Computation of annual income tax payable All divisions periodically 18. Computation of annual bonus for provision -do- April 19. List of actuarial valuation of gratuity provision -do- April ————————————————————————————————-———-———-—— Sl.No. Name of statement Addressed to Due date



————————————————————————————————-———-———-—— 20. Production bonus roll All divisions 12th 21. Pay details for Panchayat All divisions Half yearly 22. Attendance Bonus All divisions Yearly 23. Income tax certificate -do- Yearly 27. Income tax schedule -do- Yearly



ANNEXURE-2

CALENDER OF INPUT TO CSC

LIST OF INPUT - DOCUMENTS 1. GENERAL ————————————————————————————————————————— Source Documents Due in Last Date Last Date for Other Mktg. Divisions Division giving in Floppy or through Network ————————————————————————————————————————— 01 Purchase Journal Vouchers 6th 6th 11th 02 Transfer Journal Vouchers “ “ “ 03 Cost Journal Vouchers “ “ “ 04 Payroll Journal Vouchers “ “ “ 05 Miscellaneous Invoice “ “ “ 06 Cash Receipt “ “ “ 07 Cash payment “ “ “ 08 Bank Receipt “ “ “ 09 Bank Payment “ “ “ 10 Invoice Journal “ “ “ 14 Works Journal “ “ “ Sales Tax “ 5th “ Labour Allocation “ “ “ Works Journal “ “ “ Contractors - Wage Roll 10th 10th 10th Sales Quantity - adjustments - 12th 12th Change in Rules if any for computation of Depreciation. April April April II. Material Accounting



01 Receiving Reports 6th 02 Material Requisitions “ 03 Return of Material “ 04 Stock verification adjustments “ 05 Odd balance adjustments “ 06 Correction of unaccounted “ Material Requisition 07 Stores Ledger adjustments “ 08 Stores charges Percentage/ Yearly 1st April 09 Rate for pricing personal Debits 6th 10 Value range for A.B.C.Category,XYZ April The user departments will ensure an even flow of data to EDP so that Punching load is spread over through

out the month. A weekly flow of Document is therefore ordered. III. Payroll all units including Managerial Roll 01 Rate Changes 15th 02 Transfer and deletion “ 03 Other Master Card Design “ 04 New appointment “ 05 Fixed deduction 18th 06 Variable deduction 20th 07 Attendance outstation 20th 08 Attendance Executive 20th



09 Attendance regular staff 24th 10 Details of supplementary 10th payments 11 LTE List 15th 12 DA Rate for the month 20th 13 Rules for As and calculating when there Income Tax is change. 14 Annual Bonus percentage, minimum April 15 Other Details For Computation of Monthly Income Tax 15th IV. Provident Fund PF Refundable Loan 2nd/12th Financial entries 6th All entries connected with Payroll 23rd

ANNEXURE - 3

CALENDER OF OUTPUT FROM CSC I. LIST OF VARIOUS REPORTS ISSUING FROM CSC FINANCING ACCOUNTING:

————————————————————————————————————————— Sl. Name of Statement Divisions Due Date No. Other Mktg Divisions ————————————————————————————————————————— 1. Journal HO,UDL,CD,FEDO, 12th 12th FEW,Mktg.,PD 2. Financial Ledger -do- -do- -do- 3. Trial Balance -do- -do- -do- 4. Inter Unit Accounts -do- -do- -do- 5. Consolidated GL Trial Mktg. -do-



Balance 6. Sales Quantity Analysis A. Productwise Mktg. - 17th B. Areawise -do- - -do- 7. Sales Tax Mktg. - 10th 8. Plant Maintenance cost sheet UDL,CD 12th - 9. Depreciation Statement All Divns. Yearly Yearly 10 Labour Allocation UDL 10th - 11. Consolidated Ledger All Divns. 15th 15th April-September Nov Nov. 12. Consolidated Ledger -do- 15th 15th October-March May May 13. Consolidated Ledger -do- As As supplementary required required ————————————————————————————————————————— Sl. Name of Statement Divisions Due Date No. Other Mktg Divisions ————————————————————————————————————————— 14. Balance Sheet & All Div. Half Half Schedules yearly yearly 15. Balance Sheet & -do- Annual Annual Schedules II. MATERIAL ACCOUNTING ————————————————————————————————-———-———-—— Sl. Name of statement Addressed to Due date No. ——————————

——————————————————————-———-———-—— 1. R.R. Register All Divisions 12th 2. Creditors Journal -do- do- 3. Debit summary -do- -do- 4. Material cost Journal entry -do- -do- 5. Unaccounted MR/ARM list -do- -do- 6. Stores ledger -do- 18th 7. Odd balance list -do- 18th



8. Statement of difference between bin balance and stores ledger -do- Yearly 9. A.B.C. Analysis, X,Y,Z -do- Yearly 10. ABC analysis of stores balance with number of months for which stock held -do- -do- 11. Class-wise summary of item not moved between 1-2 years etc. -do- -do- ————————————————————————————————-———-———-—— Sl. Name of statement Addressed to Due date No. ——————————

——————————————————————-———-———-—— 12. Stores closing stock schedule -do- -do-

III. P.F.ACCOUNTING 1. Monthly PF ledger Secretary PF 10th 2. P.F earning list -do- 1st 3. Annual consolidated PF ledger -do- Yearly 4. PF closing balance schedule with computation of interest -do- Yearly 5. Monthly members balance -do- 1st 6. PF Journal -do- 10th 7. PF financial ledger -do- 10th 8. PF Trial balance -do- 10th 9. PF loan -do- 4th, 14th 10. Contract workers statement -do- Yearly 11. Work charged -do- Yearly IV. PAY ROLL 1. Pay Roll All divisions 28th For Feb.26th 2. Net pay summary and cash -do- -do- 3. Outstation roll & net pay analysis Mktg. 25th



4. Bank-wise net pay list (MPR) All divisions 28th 5. Earning summary and man hour statement All divisions Last day of the month ————————————————————————————————-———-———-—— Sl.No. Name of statement Addressed to Due date ————————————————————————————————-———-———-—— 6. Deduction summary of All divisions Last day of accounting entry the month 7. Fixed deduction schedule for correction and return as advice for the following month -do- 3rd 8. Income tax recovery schedule -do- -do- 9. Insurance Premium recovery policy No. order -do- 7th 10. ESI recovery schedule, monthly contractor’s employees -do- 12th 11. RD account numberwise -do- 3rd 12. PD analysis by head of a/c -do- -do- 13. List of all other variable deduction -do- -do- 14. Recurring deposit recovery schedule -do- -do- 15. List of unlinked deduction -do- -do- 16. List of deduction unrecovered -do- -do- 17. Computation of annual income tax payable All divisions periodically 18. Computation of annual bonus for provision -do- April 19. List of actuarial valuation of gratuity provision -do- April ————————————————————————————————-———-———-—— Sl.No. Name of statement Addressed to Due date



————————————————————————————————-———-———-—— 20. Production bonus roll All divisions 12th 21. Pay details for Panchayat All divisions Half yearly 22. Attendance Bonus All divisions Yearly 23. Income tax certificate -do- Yearly 27. Income tax schedule -do- Yearly



ANNEXURE - 6

RATES OF DEPRECIATION ————————————————————————————————-——-——-——-—— GL Description Rate of Method of No. Depreciation Depreciation ——————————————————————————————————-——-——-——- 1000 LAND FREE HOLD - FACTORY Nil Nil 1001 LAND LEASE HOLD - FACTORY “ “ 1002 LAND DEVELOPMENT - FACTORY “ “ 1010 LAND FREE HOLD - TOWNSHIP “ “ 1011 LAND LEASE HOLD - TOWNSHIP “ “ 1012 LAND DEVELOPMENT - TOWNSHIP “ “ 1020 ROADS, BRIDGES & CULVERTS - FACTORY 10 WDV method 1021 DAM, WATER TANK 10 “ 1022 SEWAGE, DRAINAGE - FACTORY 10 “ 1030 ROADS, BRIDGES & CULVERTS-TOWNSHIP 5 “ 1031 DAM, WATER TANK - TOWNSHIP 5 “ 1032 SEWAGE AND DRAINAGE - TOWNSHIP 5 “ 1050 FACTORY BUILDINGS 10 “ 1051 FACTORY RESEARCH BUILDING 10 “ 1052 FACTORY TEMPERORY SHED 100 — 1060 OFFICE BUILDING 5 WDV method 1061 OFFICE TEMPERORY SHED 100 — 1062 RESIDENTIAL BUILDING 5 WDV method 1063 RESIDENTIAL BUILDINGS 5 WDV method (Less 80 Sqr. Met.) 1090 RAILWAY SIDINGS 13.91 “ 1100 PLANT & MACHINERY(CORROSIVE) 5.28 Straightline method PLAN & MACHINERY

Page 1 of 4ANNEXURE - 6


1101 POLLUTION CONTROL 5.28 “ PLANT & MACHINERY 1102 ENERGY SAVING DEVICE 5.28 “ 1110 PLANT AND MACHINERY NON CORROSIVE 5.28 “ 1140 PLANT & MACHIENRY RETIRED - - 1150 FURNITURE GENERAL 18.10 WDV Method 1151 FURNITURE SPECIAL 25.88 “ 1200 CARS AND CYCLES 25.89 “ 1211 JEEPS 30 “ 1212 VANS 30 “ 1213 MOBILE SOIL TESTING VAN 30 “ 1214 LORRIES & TRUCKS 30 “ 1215 CRANE 30 “ 1250 FARM EQUIPMENTS 13.91 “ 1251 EARTH MOVERS & TRACTORS 30 “ 1252 CRANE 30 “ 1260 DATA PROCESSING EQUIPMENTS 40 “ 1270 OFFICE EQUIPMENTS 13.91 “ 1280 LABORATORY EQUIPMENTS 13.91 “ 1281 PUBLICITY EQUIPMENTS 13.91 WDV method 1282 HOSPITAL EQIPMENTS 20.00 “ 1283 WELFARE EQUIPMENTS 13.91 “ 1284 DRAWING OFFICE EQUIPMENTS 13.91 “ 1285 WEIGHING MACHINES 13.91 “ 1286 SEWING MACHINES 13.91 “ 1287 CONCRETE MIXER 13.91 “ 1288 VIBRATORS 13.91 “



1289 OTHER CONSTRUCTION EQUIPMENT 13.91 “ 1290 MARINE TRANSPORT 13.91 “ 1300 ELECTRICAL FITTINGS 13.91 “ 1301 TELEPHONES 13.91 “ 1302 AIRCONTITIONERS 13.91 “ 1303 REFRIGERATORS 13.91 “ 1304 WATER COOLERS 13.91 “ 1309 MISC. EQUIPMENTS 13.91 “ 1310 BUILDING E.E.C. AID 5 “ 1311 FURNITURE E.E.C AID PROJECT 18.10 “ 1312 OFFICE EQUIPMENTS. EEC 13.91 “ 1313 ELECTRIC EQUIPMENT. EEC 13.91 “ 1314 TELEVISION/VIDEO. EEC 13.91 “ 1355 SERVICE EQUIPMENT. EEC 13.91 “ 1356 CARS & CYCLES. EEC 25.89 “ 1357 JEEPS. EEC 30 WDV method 1358 SOIL TESTING LAB-VAN 30 “ 1359 EEC PROJECT COMPUTER 40 “ 1360 LAB EQUIPMENTS 20 “ 1371 BUILDING. EEC PH-2 5.00 “ 1372 FURNITURE. EEC PH-2 18.10 “ 1373 OFFICE EQUIPMENT.EEC PH-2 13.91 “ 1374 ELE. EQUIPMENT. EEC PH-2 13.91 “ 1375 TV & RADIO EEC PH-2 13.91 “ 1376 LAB EQUIPMENT. EEC PH-2 13.91 “ 1377 SERVICE EQUIPMENT EEC PH-2 13.91 “ 1378 COMPUTERS EEC PH-2 40 “



1379 CAR EEC PH-2 25.89 “ 1380 JEEPS EEC PH-2 30 “ 1381 MOBILE TESTING VAN EEC PH-2 30 “ 1450 MINOR ASSETS 100 —



ANNEXURE 10

LEAVE RULES - NON-MANAGERIAL 10.1. CASUAL LEAVE

(a) An aggregate number of 12 days with full pay and allowance will be allowed to all permanent

workmen during a calendar year (January to December).

(b) For period less than one calendar year of service, permanent workmen shall be entitled to

proportionate causal leave.

(c) Casual leave will not be allowed to be accumulated beyond the end of the calendar year to which it

relates.

(d) Casual leave may be permitted to be combined with holidays provided the period of absence from

duty at any one time does not exceed 8 days. If, however, a workman proceeding on Casual Leave

combines some other leave in continuation, such leave will be held to have commence from the date

of commencement of casual leave.

(e) Holidays and weekly offs occurring during the casual leave period shall not form part of the casual

leave.

(f) CL can be availed for half day

(g) If an employee is discharged, dismissed or leaves the services in the course of the leave year, he

shall be entitled only to the leave for the period he had worked during that leave year.

(h) Casual leave can be combined with any other leave provided a weekly off or holiday intervenes

between them.

(i) The period of absence on CL at any one time shall not exceed 8 days.

10.2. SPECIAL CASUAL LEAVE (IRM/F-2/IC.344/76/13-9-76)

The following leave benefits will be available to all permanent employees who undergo sterilisation

operations or IUD insertion.

(i) Special casual leave not exceeding 6 working days to male employees who undergo sterilisation

operation (Vasectomy).

(ii) Special casual leave not exceeding 14 working days to female employees who undergo non-

puerperal tubectomy operation.

(iii) One day’s special casual leave to such female employees as have had IUD

insertion.

(iv) For Special Casual leave upto 7 days to male employees whose wives undergo non-puerperal

tubectomy operation subject to the production of medical certificate from the doctor who performed

the operation to the effect that the presence of the employee is essential for the period of leave to

look after the wife during her convalescence after operation. Sundays and closed holidays

Page 1 of 14ANNEXURE 10


intervening in the period of Spl. CL are not to be ignored for calculating the number of days of leave.

Casual leave or privilege leave can be prefixed to special casual leave connected with sterilisation

operation. However, privilege leave and casual leave both together cannot be prefixed or suffixed.

Employees covered under ESI Scheme will be eligible only for the benefits at (iii) and (iv) above, the

leave at (i) and (ii) already being available to them under ESI Scheme. If and when benefits at (iii)

and (iv) are also extended under ESI Scheme the said benefits stated in the circular will not be

available to those covered by ESI Scheme.

10.3. SPECIAL LEAVE WITH FULL PAY FOR APPEARING IN EXAMINATION - CPRM/IC.223/81 DT.2-

5-81)

Employees of the company who appear for examination approved by the Management will hereafter

be eligible for special leave with full pay for the actual number of examination days subject to the

following conditions:

(a) The employee should obtain prior approval of the Management before undertaking higher education.

(b) Only examinations leading to the qualifications prescribed for promotions to the higher post in the

discipline and promotion channel of the employee as per the Award/Recruitment and promotion rules

alone will be considered for the purpose of granting special leave.

(c) This special leave will be granted only twice for each examination.

10.4. SPECIAL CASUAL LEAVE FOR PARTICIPATION IN SPORTS

For participation in local/National/International sports/athletic events in a representative capacity or in

coaching or administration of the teams participating in such events - subject to a maximum of fifteen

days in a leave year.

CMD may grant special leave upto 30 days to those employees who are nominated for participation in

State/National/International Sports/athletic events and games in a representative capacity or for

coaching in such events, after satisfying himself with the merits of each case, regardless or whether

the events are organised and conducted by State/National/International Associations in the

respective field. Cases deserving grant of special casual leave in excess of 15 days will therefore be

referred to HO for CMD’s consideration. (GM(P)/IC.145/83 dt.9/3/83).

10.5. FOR BLOOD DONATION

Special leave with wages will be admissible for donation of blood as per the following conditions:

a) Special leave with wages will be limited to one day.

b) The blood donation must be to an employee of the Company (and no other person) and must be

authorised by CMS of the Company in Udyogamandal, or by the doctor treating the patient to whom

blood is donated at other places.

c) Where due to exigencies of the situation, prior authorisation as above could not be obtained,

subsequent ratification has to be taken.

d) Company will have no liability beyond sanction of the one day leave in such cases.

e) Leave should be applied for in the form prescribed for the purpose.



(CPRM/IC.62/80 dt. 23/1/80).

10.6. a) Leave of any nature shall be availed of only with previous permission. Leave shall be granted with

due regard to the exigencies of work. A workmen who desires to obtain leave of absence shall apply

to the Head of his Department or Division in the prescribed form. Orders on the leave application

shall be issued within 3 days of its submission. If the leave applied for is for a period less than 3

days orders thereon shall be passed within 24 hours. If the leave is refused or postponed the fact of

such refusal or postponement shall be recorded on the application.

b) If a workman after proceeding on leave desires an extension thereof he shall apply to the

Management who shall send a written reply to the workman either granting or refusing the extension

of leave if his address is available and if such reply is likely to reach him before expiry of the leave

originally granted to him.

c) If a workman absents without leave or remains absent beyond the period of leave originally granted

or subsequently extended, he shall lose his lien on his appointment unless he returns or applies for

leave within 3 days of such absence and explains to the satisfaction of the Management or other

Officers empowered in this respect his reasons for absenting without leave.

d) If the application is for sick leave the nature of the sickness must be specified in the application.

Applications for sick leave while on duty must be got initialled by the person in charge before being

presented to the Company Medical Officer. The initials of the person in charge is only to indicate

that the workmen has left the workspot with his knowledge and is not to be construed as a sanction

or a recommendation. The Company Medical Office will, after examination, recommend or refuse

the leave as conditions justify. Where leave has been recommended by the Company Medical

Officer, the leave shall be formally granted by the Departmental Head.

e) Any medical certificate by a duly Registered Medical Practioner other than the Company Medical

Officer should satisfy the following conditions:-

i) The certifying Registered Medical Practitioner should be fully convinced that the workman is, at the

time of the issue of the certificate, unable to work. The name of the Company and the workman

concerned, his badge or token number and also the Department in which he works should be clearly

specified.

ii) The details of the illness (ie. conditions, symptoms, reason and for how long the illness prevails)

should be noted by the Registered Medical Practitioner and the certificate is to be produced by the

workman within 3 days of its issue either in person or through Registered Post. Certificates

produced after three days are liable to be rejected.

iii) The recommendation of a Medical Practitioner for grant of leave from a date previous to his

admission for treatment by him is liable to be rejected.

Any absence by a workman beyond the periods of leave in his credit, if sanctioned, will be on loss of

pay excepting special leave granted for accidents while on duty. The Annual Increment to which a

workman might be normally entitled shall be delayed by the period of leave taken by him on loss of

pay during the year and he shall be given increment only from the wage period coming next after

adjustment of the number of days of leave on loss of pay.

10.7 PRIVILEGE LEAVE (EARNED LEAVE)

a) A permanent workman will be entitled to 30 days leave in a calender year.

b) The PL earned will be credited on a four monthly basis ie. on 1st May, 1st September and 1st



January.

c) The maximum accumulation of PL will be limited to 240 days.

d) PL cannot be taken more than 120 days at a time.

e) Holidays/weekly off days falling in between PL will not be counted as PL.

f) PL shall not be availed of on more than 15 times in a leave year and not less than one day at a time.

g) If a workman entitled to privilege leave is discharged before he has taken the entire privilege leave to

his credit, he shall be paid for the privilege leave due to him.

h) If a workman having applied for privilege leave due to him has been refused such leave in full or in

part, quits his employment before he has been allowed that privilege leave, he shall be paid only for

the period of privilege leave applied for and disallowed.

i) The payment of such privilege leave under (g) & (h) shall be made at a rate equal to the daily

average of his total full time earning exclusive of any overtime earnings and bonus but inclusive of

dearness allowance for the days at which he worked during the month immediately preceding in

discharge.

Note:Decision taken in the meeting held at CPRM’s Office on 13-10-78.

(a) For leave (PL) on Friday and Saturday 1.5 days PL will do.

(b) For Saturday and Monday, 2 days PL have to be applied for, because off is for Sunday only.

(c) PL beginning with Saturday is for one day.

(d) PL ending on Saturday will be treated as half day provided the employee attends duty on Monday.

(e) Half day PL on Saturday or loss of pay on Saturday also will be treated as full pay leave or full salary

loss of pay. In case of loss of pay on Saturday and in the forenoon on Monday, Sunday off also will

be treated as loss of pay.

(f) Extension of PL already sanctioned will not be treated as another chance but only as one chance till

he joins duty.

10.7. GENERAL

For computing days worked days of lay off, maternity leave, casual leave, PL half pay sick leave, ESI

leave with cash benefit will be deemed to be the days on which the employee has worked. However,

weekly offs, and festival holidays will not be treated as days on which the employee has worked.

ESI leave upto 91 days in a year will be deemed to be ESI leave with medical benefit. For days

beyond 91 days proof from ESI authorities for all days will be necessary.

10.8. LEAVE ELIGIBILITY FOR EMPLOYEES UNDER CONTRIBUTORY

HEALTH SCHEME

(CPRM/IC.614/78 dt.14-8-78)

10.8.1. Medical leave on half-pay

a) Entitlement - 20 days per leave year. For those who join the company during the first half of the



leave year, 20 days of medical leave on half pay is admissible and for those who join in the second half of

the leave year, 10 days of medical leave on half pay is admissible.

b) Medical leave can be accumulated without any ceiling.

c) When the medical leave is taken for a duration of two days or less at a time the application shall be

submitted directly to the sanctioning authority through proper channel and no medical certificate

need be attached. The application need not also be routed through the Company’s Medical Officer.

When a medical leave is taken for duration in excess of 2 days, proper medical certificate shall

accompany the leave application which should be routed through the Company’s Medical Officer.

The Company’s Medical Officer will scrutinise the leave application so as to satisfy himself/herself

about the nature of sickness requirement of the leave for the duration applied for etc. and if he/she

feels so necessary, call upon the individual concerned to undergo further medical examination. The

leave application with the medical certificate should reach the Company’s Medical Officer not later

than 3 days of the date the employee reports for work after the sickness, subject to requirements

about due intimation of sickness etc. being complied with as per rules in this behalf.

d) During the period of medical leave, the employee shall be allowed half of ‘Pay’ and full DA and other

allowances.

e) Medical leave can be availed in continuation of Casual/Privilege leave or by itself. Such leave can

also be prefixed or suffixed to holidays if such days are available.

f) Return to duty after medical leave will be permissible only with a fitness certificate issued by the

Authorised Medical Officer.

g) The Medical leave can be commuted into full if so desired by the employee by debiting the medical

leave account with twice the period of leave so commuted and also subject to fulfilling condition (c)

above. - (CPRM/IC/652/78).

h) Though the medical leave for a particular year will continue to be credited to the employees’ leave

account on the opening of the succeeding leave year i.e. on the Ist of January every year in respect

of the previous year, employees can be permitted to avail medical leave on pro-rata basis from the

leave due for the current year subject to the condition that the leave applications are duly endorsed

by CMS.

10.8.2. Accident Leave

(a) In the case of employees under the CHS who are disabled by injury during the accident incurred in

or inconsequence of his/her official duties or in consequence of his/her position, irrespective of leave

at credit or not he/she can be granted accident leave. (CPRM/IC.614/78 dt.14-8-78).

(b) Such leave will only be on a medical certificate granted by the Authorised Medical Officer, together

with a report from the Head of his Department indicating the circumstances under which disability

occurred. Such leave will be sanctioned only by Division Head.

(c) Periods of accident leave will be treated as duty for all purposes.

(d) In cases other than due to illness or disability due to accident while on duty, no special leave will be

granted except under the circumstances indicated in this order.

In respect of persons coming out of ESI Scheme, the benefits hereunder will be available only after



they have ceased to be eligible for similar benefits under ESIS which in the case of medical leave will be

calculated on a prorata basis for the initial half year.

10.8.3. Maternity Leave - (MD’s Order No.G.12/69 dt.10-6-69).

It has been decided that lady employees covered by Contributory Health Scheme of the Company

may be granted maternity leave as follows:

(i) The maximum period for which a female employee is entitled shall be 3 months from the date of

commencement of leave in all cases without the restriction of six weeks from the date of

confinement.

(ii) Such leave can be combined with other kinds of leave, but if the latter is in continuation of maternity

leave, it must be on medical certificate from the Authorised Medical Officer.

(iii) Maternity leave can also be granted in case of miscarriage, abortion etc. subject to:-

(a) the leave does not exceed 42 days.

(b) the application is supported by a medical certificate from an Authorised Medical Officer.

(iv) Such leave is granted only 3 times during the service of the employee.

10.8.4. Compensatory leave - for outstation work

(PM/IR/276/80 dt.29-3-80).

(i) An employee who is deputed for outstation work, who actually works on his weekly off days and or

declared holidays will be entitled for compensatory leave on the basis of one day leave for one

weekly off day or holiday worked there, over and above the usual admissible TA and Batta subject to

the following conditions.

(i) The granting of compensatory leave would be on the basis of certification by the Department Head

that the employee actually worked full day on such weekly off days/holidays.

In case where report writing, settlement of accounts etc. are to be attended to on return to Head

Quarters, Compensatory leave will be granted only on completion of this formality.

(ii) Compensatory leave should be applied for and granted before being availed. Compensatory leave

should not be availed as right without previous permission.

(iii) Compensatory leave should be availed within 14 days of return to Headquarters.

(iv) Compensatory leave should not be accumulated for more than 6 days and at no time at one stretch

can compensatory leave be taken for more than 6 days. Compensatory leave application with

sanction from Dept. Head should be forwarded to concerned payroll section for records. While

granting the compensatory leave the Controlling Officer and Dept. head should certify that the

person concerned is eligible for compensatory leave.

(v) Compensatory leave will not be given if the weekly off day/holidays falls on the days of travel.

Administrative staff who are entitled to only compensatory off ( and not OT wages) for working extra

hours in addition to their normal hours of work, are entitled to encash the number of days of

compensatory off standing to their credit at the end of the leave year. Such encashment of

compensatory off accrued in a leave year will be permissible during the succeeding leave year as

per the following conditions:



1) For compensatory off encashed the workmen will be paid an amount equivalent to the basic pay plus

personal pay plus dearness allowance as on the date of encashment calculated proportionately on

the basis of 30 days in a month. This amount will not be counted as wages for the purpose of PF,

Bonus or any other benefit.

2) The sanctioning authority will be the Department Head/Controlling Officer of the workmen

concerned.

Application for encashment of compensatory off should be made to the department head in the leave

application form as in case of leave encashment and must be forwarded to the Associate Finance

Department after sanctioning by the Department Head.

With the coming into force this order the earlier order IRM/IC/407/73 dt.15-10-73 will cease to be in

operation for encashment of compensatory off. If, however, the employee opts to avail the same

such availing of compensatory off should be within a period of two months from the date of overtime.

10.8.5. Temporary Appointments - Privilege Leave/Casual Leave

Leave is to be granted in such cases as under:

a) Casual Leave

Half day for every completed month of service during the first year of service. Unavailed CL cannot

be carried forward.

b) Privilege Leave

PL is to be credited as done in the case of permanent employees ie. on a four monthly basis at the

rate of 10 days per block. The leave can be availed after it is credited.

Non-Managerial Personnel are entitled to earn PL for the days worked. For computing the days

worked, days of Lay Off, Maternity Leave, Casual Leave, PL, Half Pay Medical Leave and ESI Leave

with cash benefits will be deemed to the days of which the employee has worked.

10.8.6. General

1) Leave sanctioning authority - Those Officers who have been delegated with such powers.

2) Leave of any nature shall be availed of only with previous sanction.

3) Earning of leave during CHS leave period - PM/IR/210/81 dt.26-3-81). The Udyogamandal and

Marketing Divisions, as per the present practice, employees who are covered by CHS do not get

privilege leave for the period they are on CHS leave. It has now been clarified that the employees

who avail CHS leave in their credit on half pay or on commutation will earn PL from now.

4) Absence on Saturdays -

PM(U)/IC.75641/7926-7-79 -

Decision taken at PM’s meeting on 21-6-79

An employee who is expected to work on half a day on Saturday has to avail half day CL for leave on

that day. In case of PL he has to apply for full days leave.

Attenders/Office boys who take duty off on Saturday afternoon here forth shall follow the rules

applicable to other administrative staff who work half day on Saturday, for the purpose of availing of



leave for absence on Saturdays (as per Memorandum of Settlement dt.28-11-84).

10.9. LEAVE ENCASHMENT SCHEME FOR WORKMEN

- CPRM/IC.212.82 DT.3-6-82.

The scheme applies to all workmen has come into effect from 16-5-1982. The scheme applies to all

workmen who are born on the permanent rolls of the divisions. As per the scheme, such workmen

can encash 50% of privilege leave standing to their credit subject to the following conditions.

(i) Privilege leave shall not be availed on more than 8 occasions in a leave year and shall be in multiple

of one day. Hence leave encashment will not be sanctioned if these conditions are not fulfilled on

the date of encashment. If after availing leave encashment it is observed that the number of

occasions of PL taken exceeds the permissible limit of 8 in the year, the occasion in excess of 8 will

be treated as loss of pay leave.

(ii) Leave encashment will be admissible only to those workmen who have earned attendance bonus

(minimum or above) in the previous leave year as per rules applicable to that scheme.

(iii) Leave can be encashed only once a leave year.

(iv) Leave shall be encashed for a minimum period of fifteen days, subject to there remaining a balance

of 30 days privilege leave to his credit.

(v) Total leave encashed plus privilege leave availed if any, shall not exceed 120 days at a time.

(vi) For leave encashed the workmen will be paid an amount equivalent to the basic pay plus personal

pay plus dearness allowance as on the date of encashment calculated proportionately on the basis

of 30 days in a month. This amount will not be counted as wages for the purpose of Provident

Fund, Bonus or any other benefit.

(vii) The leave sanctioning authority will be the Department Head/Controlling Officer of the workmen

concerned.

Application for encashment of leave is to be made in the form prescribed for the purpose.

10.10. ENCASHMENT OF MEDICAL LEAVE ON HALF PAY

Encashment of Medical Leave on half pay to employees eligible for the same under the Company’s

Leave Rules, subject to the following terms and conditions:

a) The entire quantum of Medical Leave on half pay to the credit of an employee eligible for the same

as per Company’s Leave Rules, can be commuted to full pay at the time of leaving the Company’s

service and can be encashed at that time.

b) Such encashment of Medical Leave on half pay will be applicable only to employees who are leaving

the Company’s service on attaining age of superannuation, resignation, voluntary retirement and

death while in service.

c) The encashment of Privilege Leave and Medical Leave on half pay, at the time of leaving the

Company’s service shall be so restricted that both put together the total shall not exceed 240 days of

full pay and of which the half pay leave component would be limited to 240 days ie. 120 days full pay

on commutation. Hence, an employee can encash the full PL to his credit and 240 days of half pay

leave commuted to 120 days full pay, at the time of leaving the Company’s service, provided such

encashment of PL plus half pay leave together shall not exceed total 240 days on full pay.



d) The salary for the purpose of encashment of half pay Medical Leave shall be the same components

taken as salary for the purpose of encashment of PL.

e) The encashment of half pay Medical Leave as above shall not be available for employees whose

services have been terminated consequent to disciplinary action, voluntary abandonment,

termination of lien etc.

f) The facility for encashment of half pay Medical Leave as above will be effective from 1-4-1994.

g) The above facility of encashment of Medical Leave on half pay will be applicable to all regular non-

managerial employees of all the Divisions of the Company, JNM Hospital and CD Township Hospital,

who are entitled to Medical Leave on half pay as per the Company’s Leave Rules. The above

encashment facility will not be applicable to employees in Schools establishments at Udyogamandal

and Ambalamedu who are eligible for half pay leave under KER/KSR.

10.11. AVAILING C.OFF FOR HOLIDAYS

It is decided that compensatory holiday permitted in lieu of National and Festival Holidays falling on

weekly off days need be availed at any time during the same leave year.

10.12. ENCASHMENT OF COMPENSATORY OFF FOR DAYS WORKED - DRIVERS REG

It is noticed that at present there is no fixed time limit for submission of claims for encashment of

Compensatory Off in lieu of working on off days in the case of Drivers who are paid fixed overtime

allowance. It is now decided that in the case of drivers paid fixed overtime allowance, all

applications for encashment of compensatory off for working on off days should be submitted within

three months from the weekly off days they worked but subsequent to the one month rule, since after

which only they become eligible to encash such compensatory off.

10.13. LEAVE DURING BUNDH - IRM/IC.1023/74 dt.8/10/74)

No workmen will be granted leave on any strike/bundh day. Any leave already sanctioned shall also

be cancelled in respect of these days. However, a person who has applied for continuous leave for

a period not less than 5 days inclusive of the Strike/Bundh day will be granted leave.

10.14. LEAVE DURING CURFEW - PM/IR/229/85 dt.26/2/85

Absence of employees on account of curfew imposed on the area may be treated as Special Casual

Leave.

10.15. EXTRA ORDINARY LEAVE WITHOUT PAY - GM(U)/IC.189/81 dt.4/9/81).

This leave may be granted at the discretion of the sanctioning authority and when no other leave is

available to the credit of the employee. (In Udyogamandal Division sanctioning power is limited to 10

days in a leave year as the sanctioning authority other than Division Head).

10.16. POLICY ON GRANT OF SPECIAL LEAVE WITHOUT PAY

10.16.1. Objectives

(i) To provide opportunity for employees in sparable category for seeking alternate employment as a



strategy for reducing manpower cost.

(ii) To provide opportunities to stagnating employees for seeking higher level opportunities to better their

career prospects.

(iii) To reduce manpower through out placement.

10.16.2. The Scheme

Employees seeking special leave without pay may be categorized into two groups as follows:

Group-I : Employees belonging to sparable categories/surplus due to restructuring, stoppage of plants

etc. and can be spared without replacement and without any financial commitment towards OT,

acting arrangements etc.

Group-II: Employees who cannot be spared without replacement (or can be spared only for short

duration with OT/acting arrangement etc.) involving additional financial commitment.

Employees belonging to group II will be further classified into four categories - A,B,C & D as below:

Category-A: Employees with 10 to 15 years of service in the Company. The Training period as

Management Trainees will be considered as service for this purpose.

Category-B: Employees with 16 to 20 years of service.

Category-C: Employees with 21 to 25 years of service.

Category-D: Employees with 26 years and more service.

Note:Service period of 6 months and above will be treated as 1 year for the above purpose.

10.16.2.1. Eligibility for special leave for various categories of employees

Employees in Group-I belonging to surplus/sparable category may be granted SLWP for upto 2 years

retaining lien in the Company.

For employees in Group-II who can be spared only with replacement, the minimum qualifying service

for grant of special leave under the scheme is 10 years. Depending on the categorisation of the

employees, special leave may be granted subject to payment of retaining charges at rates specified

below for retaining lien in the Company during the period of special leave.

Category Retaining charges as % of (Basic+DA) ———— —————————— A 100% B 75% C 50% D 25% The retaining charges ie. (basic + DA) at the time of availing SLWP, is to be paid on a

monthly/quarterly basis failing which lien will be terminated.



10.16.2.2. The organisational arrangements consequent to granting of special leave

Group-I Employees: Since these employees belong to the surplus/sparable category, no

replacement/alternate work arrangements will be made.

Group-II Employees: Since grant of special leave to employees belonging to this category is subject

to availability of replacement, the following arrangements will be made for providing replacement.

i) For grant of special leave for period not exceeding 6 months, only acting/officiating/OT arrangements

will be made as per requirement.

ii) Special leave for periods exceeding 6 months.

Since it may not be advisable to carry on without replacement beyond 6 months, action will be taken

to fill up the post following normal DPC procedure. Acting/charge arrangements including OT may

be resorted to till the post is filled by DPC.

10.16.2.3. DPC Procedure

The DPC procedure for filling up the post will be the same as that for normal promotion. For positions

to Chief level and above, corporate DPC will make recommendations for filling up of posts.

10.16.2.4. Status of employees on return after special leave

Group-I: Employees belonging to this category will be permitted to rejoin duty on expiry of special

leave in the same Department/Division or other areas as per Management requirement.

Group-II: Employees belonging to this category will be permitted to rejoin duty on expiry of special

leave in the same department and Division or in other areas as per Management requirement.

Wherever replacements have already been provided, employees who joined back after availing

special leave may be assigned to other areas/departments/divisions as per Management

requirement and may be held as supernumerary in the position/grade till they get regularised in a

future vacancy.

10.16.2.5. Eligibility for consideration for promotion

The employees availing special leave will not be eligible for consideration for promotion to higher

posts that become vacant during the period of their special leave, even if actual filling up of the

position is done after the employee joins back on expiry of special leave. However employees

availing special leave will be eligible for promotion to posts that become vacant after their rejoining

duty. In such cases there will not be any loss of seniority due to availing special leave.

10.16.2.6. Other terms and conditions for grant of special leave

i) For grant of special leave under the scheme, the employees should submit an application in the

prescribed format.

ii) The employee should submit no dues/clearance certificate from all Departments. In case of any

outstanding dues which are not cleared prior to relief, Bank Guarantee or surety by a permanent

employee of the company belonging to equal or higher rank is necessary.

iii) Employees proceeding on SLWP are to execute a bond to the effect that their lien is retained in the



company on the condition that they return and rejoin FACT at the end of the leave period failing which the

lien will be terminated and they will have no financial claim on the Company.

iv) Employees on SLWP will not be eligible for salary and other benefits from the company like leave,

PF, CHS, Company quarters, Uniforms, Interest subsidy, free schooling for children etc.

v) In case an employee wants to retain the company quarters he will be required to pay commercial rent

as determined by the Company for the period of special leave.

vi) The children of employees granted SLWP may be permitted to continue their studies in Company

schools on payment of fees, if requested by the employees.

vii) Maximum period of special leave that will be granted is 2 years. An employee can avail special

leave only 3 times (subject to the total limit of 2 years) during the service period.

viii) The period of special leave with retaining charges will be reckoned for the purpose of gratuity.

ix) The employee and his dependents will not be eligible for medical benefits during the period of special

leave

x) The Company will not be liable for any disability or injury incurred during the special leave period.

xi) The Company may call back an employee granted special leave at any time during the period of

special leave in case of exigencies. The refusal or inability of the employee to comply with the same

would lead to automatic termination of lien and in such cases the employee will have no claim

against the company financial or otherwise.

xii) The period of special leave will not be reckoned for earning increments in FACT.

xiii) Permission to rejoin duty before the expiry of special leave granted can be given by CMD on

recommendation of the Division Head considering the circumstances of the case.

xiv) An employee on special leave will not be considered for voluntary retirement from the services of the

company. However such employees may be considered for early retirement subject to other

conditions in this regard.

xv) The employee will be permitted to resign from the services of the company during the period of

special leave on payment of 3 months notice pay provided the resignation is submitted before the

expiry of special leave. Wherever resignations are accepted, the employee will be entitled for all

terminal benefits as applicable to resignations.

xvi) In the case of termination of lien, the employee will loose gratuity, PL in credit, etc. as in the case of

other cases of termination.

xvii) The approving authority for grant of special leave will be CMD for managerial employees and ED

(HRD) for non-managerial employees.

xviii) CMD will be the competent authority for making any deviation/modification of this scheme.

CPRM/IC.62/80 January 23 1980

ALL HEADS OF DIVISIONS



cc: FD : PM(IR) & MPA

Sub: Grant of special leave for blood donation.

As discussed in CMC on 1-1-80, special leave with wages will be admissible for donation of blood as

per the following conditions:-

1. Special leave with wages will be limited to one day.

2. The blood donation must be to an employee of the Company ( and no other person) and must be

authorised by CMO of the Company in Udyogamandal or by the doctor treating the patient to whom


3. Where due to exigencies of the situation, prior authorisation as above could not be obtained,


4. Company will have no liability beyond sanction of the one day leave in such cases.

5. A format to be used for applying for and sanctioning of the special leave is attached.

Kindly ensure that the format is used and that the special leave is sanctioned strictly in accordance

with the conditions mentioned above.

Sd/-

K.S.Menon CHIEF PERSONNEL MANAGER

For CHAIRMAN & MANAGING DIRECTOR. ENCL:

APPLICATION FOR GRANT OF SPECIAL LEAVE FOR BLOOD DONATION ——————————————————————————————————- Name B.No. Leave requested: One day ————————————————- Department Division On ——————————————————————————————————

1. I would like to donate blood to the following employee of our company who is undergoing treatment

at JNM Hospital/...............

Name :

B.No. :

Dept./Divn.:

2.* This blood donation has already been authorised by CMS of JNM Hospital/by the Doctor treating the

patient.



3. I agree that the company will have no liability beyond sanction of one day leave for this purpose.

Date Signature of Donor Employee ——————————————————————————————————-—-—-—-—-—- Authorisation Sanction ———————————————————————————————————-—-—-—-—- For treatment at For treatment at Leave sanctioned JNM Hospital other places ——————————————————- Blood donated on Blood donated on Yes Name of Doctor Name of Hospital No: reasons Date: Signature Date: Signature of Doctor of Doctor —————————————————————————————————-

(*) In case due to exigencies of the situation prior authorisation could not be obtained, the same should

be obtained subsequently.

Original : Finance

Duplicate : Department



ANNEXURE 11

LEAVE RULES - MANAGERIAL 11.1. These rules may be called The Fertilisers and Chemicals Travancore Ltd. (FACT) Manager’s Leave

Rules and are in supersession of all earlier orders and practice on the subject. These will come into

force from 1st January 1997 and will apply to all managerial personnel of the Company.

11.2. The sanctioning authority under these rules has the discretion to refuse, revoke or curtail leave at any

time based on exigencies of work. The company may at any time, without notice, alter or modify the

provisions of these rules.

11.3. Definition: In those leave rules -

11.3.1. ‘Company’ means the Fertilisers And Chemicals Travancore Limited.

11.3.2. ‘Completed’ year of service means continuous service of one year in managerial cadre in the

company.

11.3.3 ‘Leave Year’ means the year commencing from 1st January 1977 and each calender year thereafter.

11.3.4. ‘Manager’ means a person who holds a managerial position in the company and who are classified

by the Management as Managerial Personnel.

11.3.5. ‘Pay’ means the monthly pay drawn by the Manager as basic pay and includes special pay, personal

pay or any other emoluments which may be specifically classified as ‘pay’ in terms of rules of the

Government of India.

11.3.6. ‘Sanctioning Authority’ means the authority empowered to grant leave as may be notified from time to

time.

11.4 The following types of leave will be admissible to the managers of the Company.

11.4.1. Casual leave

(a) Entitlement:

12 days in a leave year. For those who join the company during the first half of the leave year, 12

days of casual leave is admissible and for those who join in the second half of the leave year, six

days of casual leave is admissible.

(b) This leave is granted for personal reasons to cover casual absence.

(c) Holidays and weekly offs occurring during the casual leave period shall not form part of the casual

leave.

(d) Casual leave cannot be combined with special casual leave or any other kind of leave.

It is clarified that in case a weekly off day or holiday intervenes between the casual leave and other

leave, such combination may be permitted.



(e) Casual leave cannot be accumulated and the unavailed balance at the end of each leave year shall

lapse.

11.4.2 Earned leave on full pay

(a) Entitlement

Thirty working days per leave year. Holidays/weekly offs falling in between leave will not be counted

as leave.

(b) The leave account of the manager shall be credited on 30th June and 31st December each year

with fifteen days each of Earned Leave if he has been in continuous service for the respective half

year or proportionate leave if he has not been in continuous service.

(c) The maximum accumulation of earned leave shall be restricted to 240 days as at the time of crediting

ie. 30th June/31st December as the case may be.

Note: MPA.IC-5400/79 dt.11-6-79 - Restriction on earned leave should apply only at the time of giving

credit and not on the basis of accrual.

(d) Earned leave to be availed of at a time shall not exceed 120 days. This limit shall not apply for

availing leave preparatory to retirement.

(e) Normally during the leave year, a manager can avail earned leave for three times only. However,

the sanctioning authority may relax this condition in special cases.

(f) Under special circumstances, the leave sanctioning authority may after 1st January of the leave year

permit a manager to avail a portion of the leave which will accrued due to the manager and be

credited to his leave account as on 30th June and 31st December of the same year. This portion of

leave shall not exceed the proportionate leave due to the manager for the leave year on the date of

his entering on leave.

Note: CPRM/IC/408/78 dt.27-5-78. It is hereby clarified that the mention of dates, 1st July and 31st

December is this clause in only for administrative purposes.

(g) When a manager has 240 days of earned leave at his credit, any earned leave applied for by him

should normally be granted and in case if it is to be refused, only the Division Head can refuse to

grant leave. If the Division Head refuse such leave, it may be added to 240 days for further

accumulation.

(h) Half a day earned leave cannot be granted and half working day will be taken as full day.

11.4.3. Medical leave on half pay

(a) Entitlement

20 days in a leave year. For those who join the company during the first half of the leave year,20

days of medical leave on half pay is admissible and for those who join in the second half of the leave

year, 10 days of medical leave on half pay is admissible.

It is clarified vide CPRM (HO) - 1374 dated 17-7-1995 that 10 days ML may be credited in the case

of those who are leaving the services in the first half of leave year and 20 days in the case of othere

who are leaving during second half of the year as in the case of new recruits.



(b) Medical leave shall be permitted to be accumulated without any ceiling.

(c) When the medical leave is taken for a duration of two days or less at a time the application shall be

submitted directly to the sanctioning authority through proper channel and no medical certification

need be attached. The application need not also be routed through the Company’s Medical Officer.

When a medical leave is taken for duration in excess of 2 days, proper medical certificate shall

accompany the leave application which should be routed through the Company’s Medical Officer.

The Company’s Medical Officer will scrutinise the leave application so as to satisfy himself/herself

about the nature of sickness requirement of the leave for the duration applied for etc. and if he/she

feels so necessary, call upon the individual concerned to undergo further medical examination. The

leave application with the medical certificate should reach the Company’s Medical Officer not later

than 3 days of the date the employee reports for work after the sickness, subject to requirements

about due intimation of sickness etc. being complied with as per rules in this behalf.

(d) During the period of medical leave, the manager shall be allowed half of ‘pay’ and full dearness and

other allowances.

(e) This leave can be commuted into full pay if so desired by the manager, by debiting the medical leave

account with twice the period of leave so commuted and also subject to fulfilling condition (c) above.

(f) CPRM/IC.459/81 dt.6-11-81 - As regards Medical Leave temporary/contract engineers may be

extended 12 days medical leave per annum with half basic pay and full DA, commutation being

allowed as per rules applicable to managerial employees and accumulation allowed upto 24 days.

(g) Employees who avail CHS leave in their credit on half pay or on commutation will earn PL for the

duration of that leave.

11.4.4. Extra-ordinary leave without pay

Entitlement

This leave may be granted at the discretion of the sanctioning authority and when no other leave is

available to the credit of the manager.

11.4.5. Special Casual Leave with full pay

(a) Entitlement

Managerial personnel are entitled to special casual leave with full pay for participation in

local/national/ international, sports/athletic events in a representative capacity or in coaching or

administration of the teams participating in such events subject to a maximum of fifteen days in a

leave year.

CMD may grant special leave upto 30 days to those employees who are nominated for participation in

state/national/international sports, athletic events and games in a representative capacity or for

coaching or administration of the teams participating in such events, after satisfying himself with the

merits of each case, regardless of whether the events are organised and conducted by

State/National/International Associations in the respective fields.

The existing practice may continue with regard to grant of special casual leave upto 15 days in a

year. Cases deserving grant of special casual leave in excess of 15 days may accordingly be

referred to the Head Office for consideration of CMD of each individual case.



(b) Management may provide from time to time special leave with full pay for sterilisation and other

family planning measures conforming to guidelines given by Government.

(c) A Scheme had been introduced granting special leave with full pay to Managerial employees for

appearing for examinations approved by Management. This special leave was applicable only for

acquiring qualifications that are prescribed as “essential” and “preferred additional qualification” as

per Promotion Policy.

Subsequently vide DGM(P)/171/84 dated 13-8-84, Management has fixed a ceiling for each division

on number of Officers to be permitted at a time to undertake other than job activities such as

teaching, architecture, evening classes etc. Since the Divisions/HO are receiving requests more

than the ceiling prescribed for each division, it has been decided to withdraw the quota system. In

view of the above liberalisation it has been decided to withdraw the facility of granting Special Leave

for appearing for examinations etc. The following changes are accordingly effected:-

11.4.6. Permission will be granted for pursuing studies to all employees applying for such permission to

pursue higher studies on the conditions that it will not conflict with their work performance or work

schedule in the Company.

11.4.7. No special leave will be granted for writing any examinations or attending contact classes.

Employees desiring to prosecute higher studies will have to avail of the leave in their credit for writing

examinations, attending contact classes etc. Such leave must be applied for and sanctioned in

advance as prescribed in the leave rules for Managerial personnel.

11.4.8. Incentive may be paid on acquiring qualifications as per existing rules.

11.5 Note: CPRM/IC.574/79 dt.12-7-79 - The following clarification regarding “management approval” are

issued in this connection:

11.5.1. The approval should invariably be given before the time of the employee undertaking higher

education.

11.5.2. For the purpose of approval examination leading to the qualifications prescribed as “essential” and

“preferred additional qualifications” in our rules for Recruitment and promotion policy alone could be

considered and these qualification must be in the discipline in which the employee is working.

Sanctioning authorities should satisfy themselves about the eligibility before they sanction leave under

this clause.

11.5.3. Study Leave

Study Leave is extended to managers, on the approval of CMD, deciding each case on its merits.

The period of study leave will be on loss of pay. It will not be reckoned for the purpose of gratuity,

provident fund and annual increment. Only the employees’ lien in the Company is retained during

the sanctioned period of study leave on the specific condition that the employee will rejoin duty on

completion of the study.

11.6. MATERNITY LEAVE

(a) The maximum period for which a female manager is entitled shall be three months from the date

of commencement of leave in all cases without restriction of six weeks from the date of confinement.

In the case of miscarriage including abortion, the leave shall not exceed 42 days.



(b) Maternity leave may be combined with leave of any kind, but leave applied for the continuation of

the former may be granted only if such applications are supported by medical certificates. Leave in

continuation of maternity leave in the case of illness of the newly born baby may be granted subject

to production of a medical certificate to the effect that the condition of the ailing baby warrants

mother’s personal attention and that her presence by the side of the baby is absolutely necessary.

(c) The maternity leave can be granted only three time during the service to the female manager.

11.7. ACCIDENT LEAVE WITH FULL PAY

A manager who is disabled by an injury accidentally occurred in, or in consequence of, due

performance of his official duties or in consequence of his official position, can be granted accident

leave, irrespective of leave at his credit. Such leave will be granted on medical certificate issued by

the Authorised Medical Officer, supported with a note from the Head of the Division indicating the

circumstances under which the disability occurred. Such leave can be sanctioned by the Head of the

Division and will be treated as duty for all purposes.

11.8. ENCASHMENT OF LEAVE - CPRM/IC/408/78 DT.27/5/78)

11.8.1.(a) Earned leave which accrues to an employee in the management cadre and stands to his credit

would be paid for in cash on cessation of his employment due to any reason whatsoever other than

the dismissal for misconduct. If the cessation is during the course of the leave year the manager

shall be entitled to be credited to his leave account with the proportionate earned leave due for the

year.

(b) In the case of an employee dismissed from service for misconduct, such earned leave shall not

normally be paid for in cash. However the Board of Directors may, at their discretion, permit

encashment of leave in exceptional case.

Application for encashment of leave is to be made in the ordinary leave form and submitted to the

leave sanctioning authority. In the reasons column ‘Leave encashment’ can be stated.

11.8.2. The leave encashable by a manager shall be 50% of the earned leave standing to his credit subject

to the following conditions.

(i) Leave can be encashed only once in a leave year.

(ii) Leave shall be encashed for a minimum period of 15 days, subject to there remaining a balance of

leave of 30 days (minimum) to his credit.

(iii) The total of leave encashed plus leave availed if any, shall not exceed 120 days at a time.

(iv) For the encashed earned leave, the manager shall be paid an amount equivalent to the total basic

pay and DA admissible on the date of application. The said amount will not be counted as wages or

salary for the purpose of provident funds, bonus etc.

Note: CPRM/IC/613/79 dt.23/7/1979. The word “admissible” in the above referred clause will mean the

amount due to the manager for the relevant period and therefore will include any changes in basic

pay, DA etc. that include for the period, but are granted on a subsequent date.

(v) The authority competent to sanction the leave shall be the authority competent to sanction leave

encashment after due verification.

Note: While calculating the balance of leave to the credit of an officer for purpose of clause 5.2. (ii) above,



leave accrued upto the date of application for encashment less leave availed shall also be taken into account,

keeping in view the clarification to clause4.2 (f) issued vide all concerned bulletin

No.CPRM/IC.408/78 dated 27-5-78 referred to above.

11.9 ENCASHMENT OF MEDICAL LEAVE ON HALF PAY







the Company’s service on attaining age of superannuation, resignation, voluntary retirement and

death while in service.













g) The above facility of encashment of Medical Leave on half pay will be applicable to all regular

managerial employees of the Company who are entitled to Medical Leave on half pay as per the

Company’s Leave Rules.

h) The management of the company reserves the right to require any of the manager to avail of any

leave standing to his credit in accordance with the programme drawn up.

i) For all calculations connected with encashment of leave thirty days will be treated as a month and

the encashed amount will not be taken into account for bonus and provident fund calculations.

11.10. GENERAL

11.10.1. The period of suspension and extra ordinary leave, if any shall not be reckoned as service for the

purpose of entitlement of earned leave and medical leave.

11.10.2. ESI leave shall also not be reckoned as service for the purpose of such entitlement.

11.10.3. Two or more of the following kind of leave may be combined together (i) earned leave (ii) medical



leave (iii) extraordinary leave, (iv) special casual leave (v) maternity leave, and (vi) accident leave.

11.11. ABSENCE WITHOUT LEAVE

A manager shall not absent himself from work without leave or beyond the period of leave originally

granted or subsequently extended. Unauthorised absence from duty or overstayal of leave will be

treated as misconduct. If the facts and circumstances of the case warrant such treatment, the

manager will be liable for disciplinary action.

11.12. APPLICATION FOR LEAVE

11.12.1. Any leave has to be applied for in the prescribed leave application form through the immediate

superior giving necessary details. The application should be submitted well in advance so that

arrangements for attending to normal work of the manager during his absence could be made before

sanctioning the leave. Extension of leave will not be automatically sanctioned. In exceptional cases

and at the discretion of the sanctioning authority it may be sanctioned.

11.12.2. Application for leave or extension of leave on medical grounds should be supported by a certificate

from the Company Medical Officer, Govt. Medical Officer, or any other recognised medical

practitioner. The medical certificate should specify the days for which the leave is recommended.

However the management has the right to instruct a manager who has applied for leave or extension

of leave on medical grounds to get himself examined and produce a medical certificate from the

Company Medical Officer or any particular Civil Surgeon or Medical Practitioner at his cost and the

manager on receipt of such instructions should act accordingly, failing which the leave or extension

of leave shall not be granted.

11.12.3. A manager who has been granted leave or extension of leave on medical grounds shall not be

allowed to resume duty unless he produces a certificate of fitness from the company’s Medical

Officer or from the doctor who recommended his leave.

11.13. CARRY OVER OF LEAVE ETC.IN THE EVENT OF MOVING OF AN EMPLOYEE FROM ONE

PUBLIC ENTERPRISE TO ANOTHER

When transferring of an employee from one public enterprise to another is effected with the consent

of both the organisations, the concerned employee may be allowed the benefits of transfer

expenses, carry forward of earned leave, gratuity etc. This will not apply to sick leave or half pay

leave.

11.14. OFFICERS COVERED UNDER ESI

In the case of managers who are covered under the employees State Insurance Scheme, the above

rules with regard to medical leave, maternity leave and accident leave will not apply.

11.15. RELAXATION IN LEAVE RULES APPLICABLE DURING ‘OFF WORK”

PERIOD

The Management of the Company may, in the event of the necessity to close/shut down all or part of

the production units and/or all or part of the auxiliaries and / or all or part of services and utilities due

to natural calamities and / or Acts of God and / or reasons beyond Management’s control including

but not limited to non-availability of power, non-availability of water, etc., issue orders for keeping “off

the work” (hereafter referred to as “off work”) any manager in any of its Divisions and / or Head Office



giving wherever possible 24 hours notice of the “Off work”.

When a manager is kept “off work” for a period of less than 7 days, the Management may at the

option of the manager concerned, treat such absence as under causal or privilege leave, if there is

such leave to his/her credit. If there is no such leave to his / her credit, the same will be treated as

leave without pay or at the discretion of the Management be set off against privilege leave to be

earned in future to a maximum of 15 days.

When a manager has to be “off work” for longer period but upto 45 days, the manager will be granted,

for all the days during which he is “off work” compensation equal to 50% of the total of the basic

wages and dearness allowance that would have been payable had the manager not been so “off

work” subject to the condition that the manager has put in not less than one year of continuous

service under the Company. Alternatively the Managemenr at the option of the manager, may agree

to adjust against privilege leave or to a Combination of adjustment against leave and compensation

as indicated in this para.

If the “Off work” continuous beyond a period of 45 days for any manager, the Management may

review the situation and take steps as deemed necessary.

Privilege leave can be taken for half-a-day for each of the days of lay off including Saturdays (where it

is a half working day) and weekly off days. When privilege leave is so availed, payment for half day

privilege leave will be added to lay off compensation of 50% already announced so that the Manager

will get full day’s salary;

In the same manner, casual leave can be availed by a manager for half day during lay off period so

that the manager can get full day’s salary for that day;

During this period, a manager under lay off will be allowed to avail of leave with half pay which will be

adjusted against the medical leave account of the manager. For each such day including Saturdays

(where it is a half working day) and weekly off day’s therefore, he will get paid full day’s salary

adjustable against medical leave account by one day.

It will be enough if privilege leave/casual leave is taken for half day and half-pay leave for one day for

declared holidays and weekly off days. It is not necessary to take privilege leave and casual leave for

one day and half-pay leave for two days for off days. Regarding compensation for the period of “Off

work” also, 50% of the total of the basic wages and dearness allowance will be paid for declared

holiday as well as weekly off days in case these are not covered by leave. In other words, all the

days of “off work” including declared holiday and weekly off day will be treated alike in these

respects.

11.16. ESIC TO CHS TRANSITION PERIOD - GM(P)/IC/140/85 DT.14/4/85)

On transition from ESIC to CHS, employees will be given medical leave for the relevant period from

the date he gets memberships of CHS. However, the medical leave given for this nine-month period

cannot be taken during the ESI benefit period. He can avail of the CHS medical leave given for the

nine-month period, after the expiry of the benefit period when he becomes subject in only CHS rules

and ESIC benefits cease to be available to him.

11.17. AVAILING C.OFF FOR HOLIDAYS

It is decided that compensatory holiday permitted in lieu of National and Festival Holidays falling on

weekly off days need be availed at any time during the same leave year.



11.18 COMPENSATORY OFF TO FIRST LINE MANAGERIAL PERSONNEL -

CPRM/IC.380/77 DT.8/9/1977

Managerial personnel in the grades below Assistant Manager level who are scheduled for round the

clock shift work are given compensatory off or payment in lieu thereof when they are required to work

a complete shift in addition to their normal duties. An employee who is required to work in a rotating

shift for 8 hours after performing his normal hours of duty in general shift will be allowed a day’s

compensatory off for the extra hours of work put in. Managerial personnel in the said work in shifts

will be given one off as and when they are require.

(GM-CD-1912-0135 dt.6-1-86).

11.19. POSTPONEMENT OF ANNUAL INCREMENT ON LOSS OF PAY

When leave is granted on loss of pay, for whatever purpose the leave is granted and irrespective

of the duration, annual increment is postponed proportionately for the period.

11.20. POLICY ON GRANT OF SPECIAL LEAVE WITHOUT PAY

11.20.1. Objectives

(i) To provide opportunity for employees in sparable category for seeking alternate employment as a

strategy for reducing manpower cost.

(ii) To provide opportunities to stagnating employees for seeking higher level opportunities to better their

career prospects.

(iii) To reduce manpower through out placement.

11.20.2. The Scheme

Employees seeking special leave without pay may be categorized into two groups as follows:

Group-I : Employees belonging to sparable categories/surplus due to restructuring, stoppage of plants

etc. and can be spared without replacement and without any financial commitment towards OT,

acting arrangements etc.

Group-II: Employees who cannot be spared without replacement (or can be spared only for short

duration with OT/acting arrangement etc.) involving additional financial commitment.

Employees belonging to group II will be further classified into four categories - A,B,C & D as below:

Category-A: Employees with 10 to 15 years of service in the Company. The Training period as

Management Trainees will be considered as service for this purpose. Category-B: Employees with 16 to 20 years of service. Category-C: Employees with 21 to 25 years of service. Category-D: Employees with 26 years and more service.



Note:Service period of 6 months and above will be treated as 1 year for the above purpose.

11.20.2.1. Eligibility for special leave for various categories of employees

Employees in Group-I belonging to surplus/sparable category may be granted SLWP for upto 2 years

retaining lien in the Company.

For employees in Group-II who can be spared only with replacement, the minimum qualifying service

for grant of special leave under the scheme is 10 years. Depending on the categorisation of the

employees, special leave may be granted subject to payment of retaining charges at rates specified

below for retaining lien in the Company during the period of special leave.

Category Retaining charges as % of (Basic+DA) ———— —————————— A 100% B 75% C 50% D 25% The retaining charges ie. (basic + DA) at the time of availing SLWP, is to be paid on a

monthly/quarterly basis failing which lien will be terminated.

11.20.2.2. The organisational arrangements consequent to granting of special leave

Group-I Employees: Since these employees belong to the surplus/sparable category, no

replacement/alternate work arrangements will be made.

Group-II Employees: Since grant of special leave to employees belonging to this category is subject

to availability of replacement, the following arrangements will be made for providing replacement.

i) For grant of special leave for period not exceeding 6 months, only acting/officiating/OT arrangements

will be made as per requirement.

ii) Special leave for periods exceeding 6 months.

Since it may not be advisable to carry on without replacement beyond 6 months, action will be taken

to fill up the post following normal DPC procedure. Acting/charge arrangements including OT may

be resorted to till the post is filled by DPC.

11.20.2.3. DPC Procedure

The DPC procedure for filling up the post will be the same as that for normal promotion. For positions

to Chief level and above, corporate DPC will make recommendations for filling up of posts.

11.20.2.4. Status of employees on return after special leave

Group-I: Employees belonging to this category will be permitted to rejoin duty on expiry of special

leave in the same Department/Division or other areas as per Management requirement.

Group-II: Employees belonging to this category will be permitted to rejoin duty on expiry of special

leave in the same department and Division or in other areas as per Management requirement.

Wherever replacements have already been provided, employees who joined back after availing

special leave may be assigned to other areas/departments/divisions as per Management



requirement and may be held as supernumerary in the position/grade till they get regularised in a future vacancy.

11.20.2.5. Eligibility for consideration for promotion

The employees availing special leave will not be eligible for consideration for promotion to higher

posts that become vacant during the period of their special leave, even if actual filling up of the

position is done after the employee joins back on expiry of special leave. However employees

availing special leave will be eligible for promotion to posts that become vacant after their rejoining

duty. In such cases there will not be any loss of seniority due to availing special leave.

11.20.2.6. Other terms and conditions for grant of special leave

i) For grant of special leave under the scheme, the employees should submit an application in the

prescribed format.

ii) The employee should submit no dues/clearance certificate from all Departments. In case of any

outstanding dues which are not cleared prior to relief, Bank Guarantee or surety by a permanent

employee of the company belonging to equal or higher rank is necessary.

iii) Employees proceeding on SLWP are to execute a bond to the effect that their lien is retained in the

company on the condition that they return and rejoin FACT at the end of the leave period failing

which the lien will be terminated and they will have no financial claim on the Company.

iv) Employees on SLWP will not be eligible for salary and other benefits from the company like leave,

PF, CHS, Company quarters, Uniforms, Interest subsidy, free schooling for children etc.

v) In case an employee wants to retain the company quarters he will be required to pay commercial rent

as determined by the Company for the period of special leave.

vi) The children of employees granted SLWP may be permitted to continue their studies in Company

schools on payment of fees, if requested by the employees.

vii) Maximum period of special leave that will be granted is 2 years. An employee can avail special

leave only 3 times (subject to the total limit of 2 years) during the service period.

viii) The period of special leave with retaining charges will be reckoned for the purpose of gratuity.

ix) The employee and his dependents will not be eligible for medical benefits during the period of special

leave

x) The Company will not be liable for any disability or injury incurred during the special leave period.

xi) The Company may call back an employee granted special leave at any time during the period of

special leave in case of exigencies. The refusal or inability of the employee to comply with the same

would lead to automatic termination of lien and in such cases the employee will have no claim

against the company financial or otherwise.

xii) The period of special leave will not be reckoned for earning increments in FACT.

xiii) Permission to rejoin duty before the expiry of special leave granted can be given by CMD on

recommendation of the Division Head considering the circumstances of the case.

xiv) An employee on special leave will not be considered for voluntary retirement from the services of the



company. However such employees may be considered for early retirement subject to other conditions in

this regard.

xv) The employee will be permitted to resign from the services of the company during the period of

special leave on payment of 3 months notice pay provided the resignation is submitted before the

expiry of special leave. Wherever resignations are accepted, the employee will be entitled for all

terminal benefits as applicable to resignations.

xvi) In the case of termination of lien, the employee will loose gratuity, PL in credit, etc. as in the case of

other cases of termination.

xvii) The approving authority for grant of special leave will be CMD for managerial employees and ED

(HRD) for non-managerial employees.

xviii) CMD will be the competent authority for making any deviation/modification of this scheme.

CPRM/IC.62/80 January 23, 1980

ALL HEADS OF DIVISIONS cc: FD : PM(IR) & MPA

Sub: Grant of special leave for blood donation.

As discussed in CMC on 1-1-80, special leave with wages will be admissible for donation of blood as

per the following conditions:-

1. Special leave with wages will be limited to one day.

2. The blood donation must be to an employee of the Company ( and no other person) and must be

authorised by CMO of the Company in Udyogamandal or by the doctor treating the patient to whom


3. Where due to exigencies of the situation, prior authorisation as above could not be obtained,


4. Company will have no liability beyond sanction of the one day leave in such cases.

5. A format to be used for applying for and sanctioning of the special leave is attached.

Kindly ensure that the format is used and that the special leave is sanctioned strictly in accordance

with the conditions mentioned above.



Sd/- K.S.Menon

CHIEF PERSONNEL MANAGER For CHAIRMAN & MANAGING DIRECTOR.

ENCL:

APPLICATION FOR GRANT OF SPECIAL LEAVE FOR BLOOD DONATION ——————————————————————————————————-—-—-—-—-—- Name B.No. Leave requested: One day ————————————————- Department Division On —————————————————————————————————-—-—-—-—-—-—-

1. I would like to donate blood to the following employee of our company who is undergoing treatment

at JNM Hospital/...............

Name : B.No. : Dept./Divn.:

2.* This blood donation has already been authorised by CMS of JNM Hospital/by the Doctor treating the

patient.

3. I agree that the company will have no liability beyond sanction of one day leave for this purpose.

Date Signature of Donor Employee

————————————————————————————————————————— Authorisation Sanction

————————————————————————————————————————— For treatment at For treatment at Leave sanctioned JNM Hospital other places ——————————————————-——————————————————————— Blood donated on Blood donated on Yes Name of Doctor Name of Hospital No: reasons Date: Signature Date: Signature of Doctor of Doctor —————————————————————————————————-

(*) In case due to exigencies of the situation prior authorisation could not be obtained, the same should

be obtained subsequently.

Original : Finance Duplicate : Department



ANNEXURE-12

CONVEYANCE LOAN RULES RULES FOR GRANTING OF INTEREST BEARING ADVANCE FOR PURCHASE

MOTOR CAR/MOTOR CYCLE / SCOOTER

12.1. An advance for purchase of Motor Car/Motor Cycle/Motor Scooter will be granted by the

Management under the following rules to the Officer/Staff of the Company. An advance for the

purchase of a car will be granted to an officer holding the position of an Asst.Manager or a higher

post. (IOM/456/63 dt.27-6-63 from MD). For others, loan for purchase of Motor Cycle/Scooter is

being allowed.

12.2. ELIGIBILITY

(a) The Officer/employee should normally have put in a minimum of 3 years service in the Company at

the time of application.

(b) The Officer/employee should normally be a permanent incumbent of the Company under the

Company’s rules. A temporary employee may be granted an advance provided the CMD is satisfied

that the possession of such a conveyance would add to the employees efficiency and provided a

permanent employee stands guarantee.

(c) No advance will be sanctioned to an officer/employee who is on leave. If an Officer/employee for

whom an advance had already been sanctioned is about to proceed on leave, he will not be allowed

to draw the advance earlier than a week before the expiry of the leave.

An officer who is on foreign service with the company can draw the advance from the Company on

the same conditions applicable to the officers of the Company but with the prior concurrence of his

parent department.

(d) No Officer / employee can claim the advance as a matter of right company may grant it as a matter

of concession to its officers/staff subject to availability of funds.

12.3. AMOUNT OF ADVANCE

(a) For the purchase of Motor Car, Rs.50,000/- or 16 months’ salary including Dearness Allowance or

the anticipated cost of the Car whichever is less. (1892/FM 1-1/25 dt.25-10-70).

(b) For the Purchase of a Motor Cycle/Scooter, Rs.10,000 or 12 months salary including Dearness

Allowance or the anticipated cost of the Motor Cycle/Scooter whichever is less and Rs.15,000/- for

purchase of Motor Cycle for field officers of

Marketing Division, Rs.5,000/- for purchase of Moped and Rs.12,000/- to employees of

Petrochemical Division.

(c) Advance will not be paid on piece-meal basis nor for deposits towards bank guarantee etc.

N.B. (i) The advance so drawn should be used only for the purposes for which it was drawn and not for any

other purpose ie. if the advance is drawn for the purchase of the Motor Car, it should be spent for

purchasing a motor car only and similarly if the advance drawn is for the purchase of Motor Cycle or

Scooter only.



(ii) The unspent portion of the advance if any, should be refunded to the company forthwith.

(iii) The actual cost of the motor car/motor cycle/scooter will not include the amount spent for any other

purpose such as repairing, registration charges, insurance etc.

12.4. MODE OF RECOVERY

(a) The advance granted for the purchase of Motor Cars, Motor Cycles & Scooters will be recoverable in

monthly installments not exceeding 72 in number.

(b) The recovery will commence with the 1st issue of the pay after the advance is drawn if the date of

drawal of the advance is on or before 15th of the month.

(c) The interest accumulated will be recovered in monthly installments of not more than the amount of

instalmental recovery after payment of the principal till such accumulated interest is fully realised.

12.5 INTEREST

The loan will carry interest at uniform rate for the entire period of the loan. This will be at the rate

fixed by the Govt. of India for the year in which the loan is availed.

(CM-LS/HO:LS:200 dt.18/6/92).

12.6 PROCEDURE AND CONDITIONS FOR DRAWAL OF ADVANCE

(a) The advance will be granted only on application.

(See Annexure-E)

(b) The officer/employee will be offered the terms and conditions for the grant of advance requested for

on accepting the terms and conditions in writing, the loan may be sanctioned by the Company

subject to the availability of funds.

(c) Before the advance is drawn, the officer/employee concerned will have to sign the following

documents:

(i) A memorandum of agreement on Stamp Paper of the value of Rs.50/- as per prescribed form

(Annexure-B) agreeing to the terms and conditions.

(ii) “On demand” Promissory Note on Re.1/- Revenue Stamp as per Annexure-A.

(d) If the amount of the loan availed is not utilised within one month the loan amount has to be remitted

back immediately on the expiry of the one month and inform whether the amount will be required and

utilised within next two months. If the amount once drawn is not used within a total period of 3

months, conveyance loan sanctioned will lapse and will not be disbursed thereafter to the individual.

If the amount drawn is not remitted back/used within the time specified above (ie.) one month of

drawal, loan amount and interest at the rate of 16% per annum will be recovered from amounts due

by way of salary etc. from date of drawal.

(e) The following documents should be produced for verification and return soon after the purchase of

the vehicle.

(i) Receipts for purchase of car,

(ii) Insurance Policy and

(iii) Registrations Book (FM-1-1/367 dt.5-5-77 - The vehicle should be hypothecated to the company with



an entry in RTC Book to that effect).

(f) (i) The vehicle should be covered by a comprehensive Insurance Policy within one month from the

date of its purchase or as soon as it is on the road whichever is earlier.

(ii) The Insurance Company should be informed of the Company’s Lien over the vehicle in writing

and a copy of the letter addressed to the Insurance Company should be arranged with the

company which is prepared to insert the following clause in the policy.

“I, it is hereby declared and agreed that Shri ............... (the owner of the Motor Car/Motor

Cycle/Scooter hereinafter referred to as the insured in the schedule to this policy) has hypothecated

the Motor Car/Motor Cycle/Scooter to the Fertilisers and Chemicals Travancore Ltd., Udyogamandal,

as security for advance for the purchase of the Motor Car/Motor Cycle/Scooter and it is further

declared and agreed that the said Fertilisers and Chemicals, Travancore Ltd., are interest in any

monies which but for this endorsement be payable to the said Shri ............... (the insured under the

policy) in respect of the loss or damage to the said Motor Car/Motor Cycle/Scooter (which loss or

damage is not made good be repair, reinstatement or replacement) and such monies shall be paid to

the Fertilisers and Chemicals, Travancore Ltd., as long as they are the mortgagees of the Motor

Car/Motor Cycle/Scooter and their receipt shall be full and final discharge to the company in respect

of such loss or damage.

Save as by this endorsement expressly agreed nothing herein shall modify or affect the rights or

liabilities of the insured or the Company respectively under or in connection with this policy or any

term, provision or condition thereof”.

(g) The particulars of the vehicle as required by the Company should be furnished when called for.

(h) The Officer/employee should execute an agreement on stamp paper of the value of Rs.50/- setting

forth the terms and conditions of the advance as per Annexure-C. The signature of the employee

should be on all pages of the agreement.

(i) When the vehicle is being sold only in order that another vehicle may be purchased, the

officer/employee should obtain the prior permission of the Company for such exchange and in that

event the Company may permit him to apply the sale proceeds to such purchase subject to the

following conditions.

(i) The amount outstanding shall not be permitted to exceed the cost of new vehicle and any excess

amount should be repaid forthwith.

(ii) The balance outstanding will be continued to be repaid at the rate previously fixed, and

(iii) The new vehicle should be insured and a fresh agreement as per Annexure-3 will have to be

executed by the officer/employee as required by these rules as in the case of the Ist purchase.

(j) In case the officer wishes to transfer the vehicle to another officer of the Company, the Company

may permit him to transfer the liability attached to the vehicle to the latter officer provided that the

latter records a declaration on stamp paper that he is aware that the conveyance transferred to him

is subject to the agreement given by the former and that he is bound by its terms and conditions.

(k) The Officer/employee should produce the Registration Book, Insurance Policy and any other relevant

documents as and when called for by the Company for verification.



(l) The “On Demand” Promissory Note will have to be renewed once in 3 years by endorsement on the

note.

12.7. SECOND ADVANCE

A fresh advance for replacing of motor car/motor cycle/scooter purchased out of the advance drawn

from the Company will not be sanctioned until a period of one year has elapsed, after the complete

repayment of the previous advance together with interest.

12.8 CLARIFICATIONS

13.8.1. Dy.CFM/R-7/42 dt.16-1-80 - addressed to MM

According to the present rules the officer should normally has to put in a minimum of 3 years service

in the company at the time of application for conveyance loan.

It is seen that the sales officers have completed only two years service.

Therefore your proposal that we may disburse the loan after getting a surety from a permanent

employee of the Company who has put in 3 years service or more in the Company may also be

obtained and the loan disbursed subject to other stipulations, is approved. It may also be noted that

the permanent employee should be in a grade not less than that of the borrower.

A proforma of the surety bond is also enclosed (See Annexure-D).

12.8.2. Dy.CFM/R-7/416 dt.17-7-80

No conveyance advance (Car/Scooter/Cycle) should be paid to an employee while on suspension or

pending enquiry/vigilance case.

12.8.3. Dy.CFM/R-7/88 dt.14-2-80

It has been decided that as security for the advance, in addition to the hypothecation of the vehicle,

the employee will also be required to provide a surety from a permanent employee of the Company.

The surety should have completed at least 3 years of service in the Company. No employee will be

allowed to stand surety for more than two employees. Wherever a surety is transferred out of FACT

or services are terminated or comes to an end for any reason, the borrower should produce another

surety in his/her place. The above will apply to scooter/car advance etc. sanctioned and disbursed

hereafter.

12.8.4. CFA/R-7/465 dt.23-8-82

We are taking surety bonds as security for the conveyance loans granted.

In the event of resignation/retirement/death of the surety, it is to be ensured that another surety is

provided as security for the loan. To keep a watch on this, the following steps may be taken.

(1) In the employee’s Register a note should be taken whenever an employee stands surety. At the

time of settlement of accounts this register should invariably be looked into to see whether the

employee has stood surety for any such loan, and if such is the case, action should be taken for

providing another surety by concerned.

(2) When a clearance paper is received while verifying whether there are any conveyance loans



outstanding it should also be verified whether the employee has stood surety to another.

(3) Either in the conveyance loan register or in any other appropriate manner sureties names may be

kept in alphabetical order for easy cross reference.

(4) Property Return to be submitted in the case of Managers and Vigilance Clearance has to be obtained

for both Managers and Non-Managers.

ANNEXURE ‘A’

PROMISSORY NOTE

ON DEMAND, I ................................(Name) ............. (Designation).....................Department.....................do

hereby promise to pay The Fertilisers And Chemicals, Travancore Ltd., (Registered Office : Eloor),

Udyogamandal P.O., Ernakulam District or order for consideration received Rs.............(in words

Rupees .................................) with interest at Government of India rate fixed for the year in which the loan is

availed on advance for purchase of motor cars or other conveyance granted to Government Servants.

Signature of Borrower Name and Signature of Witness:-

1. 2.

Udyogamandal

Date: 1) Renewed on

2) Renewed on

3) Renewed on

4) Renewed on

ANNEXURE ‘B’

I hereby state and declare that I have applied for grant of an advance of Rs. ...........(in words

Rupees .......... only) from the Fertilisers and Chemicals, Travancore Limited (Registered Office :

Eloor) Udyogamandal for the purchase of ...............and have executed an on Demand Promissory

Note in favour of the Company.



The Company has agreed for grant of an advance of Rs................ (In words

Rupees ....................only) not as a matter of right but as a matter of concession granted to its

Officers in accordance with the rules presently in force or to be subsequently amended. I hereby

agree to confirm and abide by the following terms and conditions, failing which the Company shall

enforce the Promissory Note.

1. That the repayment of above said advance shall be made in monthly instalments of Rs............. out of

monthly pay and remuneration payable tome and the FACT Ltd., Udyogamandal shall be entitled to

deduct the same out of my emoluments.

2. That the above said advance of Rs........ shall carry interest at Government of India rate fixed for the

current year on advance for purchase of Motor Cars or other conveyance granted to Government

Servants.

3. That the said advance shall be used for the purchase of ............. Any unused portion of the advance

shall be refunded to the FACT Ltd., forthwith.

4. That the .............. shall be purchased by me within one month from the date of drawal of advance.

5. That in the event of .............. not being purchased within one month from the date of drawal of

advance, the entire amount due, together with interest, shall be refunded to the FACT Ltd.

6. That the vehicle shall be covered by a Comprehensive Insurance Policy within one month from the

date of purchase of the vehicle or as soon as it is on the road whichever is earlier.

7.a) That insurance shall be arranged with a company which is prepared to insert the following clause in

the policy:-

b) It is hereby declared and agreed that Shri ......... (the owner of the .............................hereinafter

referred to as the insured in the schedule to this policy) has hypothecated the ................. to the

Fertilisers And Chemicals, Travancore Limited, Udyogamandal, as security for advances for the

purchase of the ...................... and it is further declared and agreed that the said Fertilisers And

Chemicals, Travancore Ltd., are interested in any monies which but for this endorsement be payable

to the said Shri........... (the insured under the policy) in respect of the loss or damage to the

said ................... (which loss or damage is not made good by repair, reinstatement or replacement)

and such monies shall be paid to the Fertilisers And Chemicals, Travancore Ltd, as long as they are

the mortgagees of the ....................... and their receipt shall be full and final discharge to the

company in respect of such loss or damage.

c) Save as by this endorsement expressly agreed nothing herein shall modify or affect the rights or

liabilities of the insured or the company respectively under or in connection with this policy or any

term, provision or condition thereof.

8. That the vehicle ................. shall not be pledged sold or parted with under any circumstances without

prior written permission from the Company so long as any money is payable in respect of the said

advance.

9. I further undertake to execute an agreement on stamped paper of the value of Rs.50/- with the

Company setting forth the terms and conditions for grant of the advance and hypothecating the

vehicle as security for the loans.



10. That in the event of failure to abide by any of the aforesaid terms and conditions, the amount

advanced together with interest shall be refunded by one forthwith or on demand; failing which FACT

Ltd. shall be at liberty to recover the said amount by deduction from my salary or from any other dues

payable to me.

Witness : 1. 2.

ANNEXURE ‘C’ This Indenture made this .............day of ......... Two thousand and .....................between ......

S/o ....................... (hereinafter called the borrower on the one part and the Fertilisers and

Chemicals, Travancore Ltd., Udyogamandal hereinafter called the Company on the second part).

WHEREAS the borrower who is now an employee of the Company has borrowed from the Company

a sum of Rs.......... (Rupees ................. ) as advance towards purchase of ............. as described in

the Schedule hereunder and has executed in favour of the Company an ‘On demand’ promissory

note dated .................. promising to pay the Company or its order on demand the said amount with

interest at Central Govt.rate fixed for the year in which the loan was granted for purchase of

conveyance granted to Govt. servants.

NOW this indenture witnesseth as hereunder:

In pursuance of this indenture and in consideration of the grant of the loan of Rs.............. as an

advance paid by Company on .......... before the execution of these presents to the aforesaid

borrower, the borrower doth covenant with the Company as follows:

1. The borrower guarantees repayment of the aforesaid sum of Rs......... and interest thereon at Central

Govt. rate fixed for the year in which the loan was availed on advance for purchase of conveyance

granted to Govt. servants per annum in the manner hereinafter set forth.

2. That the borrower hereby agrees that the Company shall, and shall be entitled to withhold Rs...........

from the salary of the borrower every month and appropriate the sum towards the principal amount

till such time as the amount is fully discharged and in addition withhold simple interest on the balance

of loan every month at Central Govt. rate fixed for the year in which the loan was granted on

advance for purchase of conveyance granted to Govt. servants. This interest shall be recovered in

monthly instalments of not more than the amount of instalmental recovery of the principal amount ie.

Rs.......... after the repayment of the principal amount till such accumulated interest is fully

discharged.



3. That the borrower doth hereby hypothecate and create a hypothecation or charge without possession

in favour of the Company over the vehicle more particularly described in the schedule as security for

the said loan and interest thereon.

4. That the borrower doth hereby further agree and declare:

a) That he has paid in full the purchase price of the said motor vehicle had that the same is his absolute

property and

b) That he has not pledged, and so long as any money remains payable to the Company in respect of

the said loan will not sell, pledge or part with the vehicle or possession of the said vehicle under any

circumstances.

Provided always and it is hereby agreed and declared that if any of the said instalments of principal

or interest shall not be paid or recovered in a manner aforesaid within ten days after the same are

due or if the borrower shall sell or pledge or part with the property in or possession of the said motor

vehicle or become insolvent or make any composition on arrangement with his creditors or if any

person shall take proceedings in execution of any decree or judgement against the borrower the

whole of the said principal sum which shall then be remaining due and unpaid together with interest

thereon calculated as aforesaid shall forthwith become payable.

5. That the Company may on the happening of any of the events herein before mentioned seize and take

possession of the said vehicle and either in possession thereof without remaining the same or else

may remove and sell the said motor vehicle either by Public auction or private contract and may out

of the sale moneys retain the balance of said advance then remaining unpaid and any interest due

thereon calculated as aforesaid and all costs, charges, expenses, any payments properly incurred or

made in maintaining, defending or realising his rights hereunder and shall pay over the surplus, if

any, to the borrower, his executors, administrators or personal representatives.

6. And the borrower hereby further expressly agree and undertakes that so long as any moneys are

remaining due and owing to the company will insure and keep insured the said vehicle against any

loss, either in full or in part, or damage by fire, theft or accident with an Insurance Company to the full

value of the said vehicle to be approved by the Company and will produce evidence to the

satisfaction of the company that the Insurance Company with whom the said vehicle is insured have

received clear notice that the company is interested in the Policy as per the terms of this agreement.

The borrower also agrees that the Insurance shall be arranged with a company which is prepared to

insert the following clause in the policy:-

“1. It is hereby declared and agreed that Shri ........... (the owner of the ................. hereinafter referred

to as the insured in the schedule to this policy) has hypothecated the .................... to the

Fertilisers And Chemicals, Travancore Ltd., Udyogamandal, as security for advance for the

purchase of the ............................ and it is further declared and agreed that the said Fertilisers

And Chemicals Travancore Ltd. are interested in any monies which but for this endorsement be

payable to the said Shri .............. (the insured under the policy) in respect of the loss damage to

the said .........(which loss or damage is not made good by repair, reinstatement or replacement)

and such monies shall be paid to the Fertilisers And Chemicals, Travancore Ltd., as long as they

are the mortgage of the ................. and their receipt shall be full and final discharge to the

company in respect of such loss or damage.

2. Save as by this endorsement expressly agreed nothing herein shall modify or affect the rights of

liabilities of the insured or the company respectively under or in connection with this policy or any

term, provision or condition thereof”.

7. That the borrower will not permit or suffer the said vehicle to be destroyed or injured or to deteriorate



in a greater degree than it would deteriorate by reasonable and legitimate wear and tear thereof.

8. That in the event of any damage or accident happening to the said motor vehicle the borrower will

forth with have the same repaired and made good.

9. That the borrower agrees to abide by all the rules and conditions stipulated by the Company from time

to time and in case of failure to comply with the same, the company shall be at liberty to recover the

loan amount together with the interest thereon from the salary or any dues payable to the Borrower.

10. The Company agrees that so long as the borrower continues to be in the service of the company and

deductions as above agreed are being made towards the amount due by him no other sanction shall

ordinarily be taken to enforce payment of the debit against the borrower.

In witness whereof the said Shri ................ hath hereinto set his hand the day and year first above

written.

(Borrower)

Signed by ————————————————————(Name) Signed by ——————————————————————— on behalf of the Fertilisers and Chemicals, Travancore Ltd.

THE SCHEDULE 1. Maker’s Name

2. Year of manufacture

3. Description

4. Cost price

5. No. of cylinders

6. Engine Number

7. Horse Power/Chasis No.

8. Registration No.

9. Name of Insurance Co.

10. No. of the Insurance Policy

(comprehensive)

11. Whether the Insurance Company has been informed of the Company’s lien over the motor vehicle in

writing.



S I G N A T U R E

ANNEXURE - D

SURETY BOND (Stamp Paper for Rs.100/- to be purchased in the name of the Surety) KNOW ALL MEN BY these presents that I, ............(Surety’s Name) Badge No..............

(Designation)..............of FACT Ltd., am held and firmly bound unto the FERTILISERS AND

CHEMICALS, TRAVANCORE LIMITED, Udyogamandal P.O., (hereinafter called “the Company”) in

the sum of Rs.............. (Rupees ..................only) to be paid to the said Company their successors or

assigns for the payment of which I bind myself and each and every of my heirs executors

administrators, representatives and assigns and every of them firmly by these presents.

WHEREAS Shri ............ (Borrower’s Name) B.No....... (Designation)......... of FACT Ltd.,. having

applied to be Company for the grant to him of a loan of Rs...... (Rupees ..........only) to enable him to

purchase a ........... the Company have been pleased to grant unto him a loan of Rs................. to

enable him to purchase a .............subject to the terms covenants and conditions contained in the

agreements appended to these presents and mutually agreed to between the said Shri .................

the said Shri .................. and the Company.

AND WHEREAS as security for the due observance and performance by the said Shri ............... of

the terms covenants and condition contained in the said agreements and which are or ought to be

observed and performed by him the Company have demanded that a surety bond in the sum of

Rs...........(in words) should be executed by a permanent employee/Government Gazetted Officer.

AND WHEREAS I a permanent Company employee have agreed to execute a surety bond as is

above written.

AND WHEREAS the company have accepted such a surety bond as is above written as such

sufficient security.

NOW THE ABOVE WRITTEN BOND IS conditioned to be discharged in either of the cases following

that is to say:

(1) If the said Shri ........................ shall from time to time and at all times hereafter during the

continuance of the said agreements perform fulfill and keep all and every all terms, covenants,

conditions, provisions, clauses and stipulations as in the said agreements are contained and on his

part to be observed performed fulfilled and kept according to the true intent and meaning thereof.

(2) If in the event of the non-observance, non-performance non-fulfillment or non-keeping by the said

Shri ............ of all or any of the terms covenants conditions provisions clauses and stipulations

contained in the said agreements or in the events of any other loss or damage caused to the

Company by any act, neglect or omission on the part of the said Shri ......... and his executors

administrators representatives or assigns or any of them or his heirs executors administrators



representatives or assigns shall pay to the Company their successors or assigns all and every sum of

money due to the Company on account of such non-observance non-performance non-fulfillment or

non-keeping by the said Shri .................. of all or any of the terms covenants conditions provisions

clauses and stipulations of the said agreements as well as any and all other loss and damages that

the Company may sustain by any such neglect or omission on the part of the said Shri ..................

otherwise it shall be in full force and effect.

“IT IS FURTHER UNDERSTOOD AND UNDERTAKEN by the SURETY THAT:-

(1) The finding of the Company as to the amount outstanding due to the Company from the Borrower

Shri ................... under the vehicle loan arrangements with him shall be final and conclusive as

against the SURETY and that the SURETY will, without denure and/or any reference to the

Borrower, forthwith pay such amount to the Company on demand, failing which the Company will

have the right to appropriate the same, either in lump or in instalments, from any amounts

outstanding in the credit of the SURETY with the Company’s accounts, including salaries and

allowances payable to him and/or otherwise realise the same (together with all incidental expenses

and costs) through appropriate legal proceedings from the SURETY and his assets.

AND

(2) The obligation undertaken by the SURETY as per this deed shall not be discharged or in any way

annuled or affected by any extension of time for repayment or any other indulgence whatsoever

granted by the Company to the borrower.

Stamp duty for this document is borne by the Borrower as agreed to by him.

Signed by the said .............(Surety) at ............ on this the ........... day of ..............(Month & Year) ............ In the presence of witnesses: (1) Name, Address & Signature.

Place:

Date:

ANNEXURE - E

APPLICATION FOR LOAN FOR PURCHASE OF MOTOR CAR/MOTOR CYCLE 1. Name of applicant :

2. Division, Department, B.No. :

3. Designation :

4. Address

(i) Permanent :

(ii) Present (Residential), }

if staying in Company }

quarters, please }

specify }



5. (i) Salary Scale/Date : (ii) Basic Pay and DA : 6. (i) Date of Joining Company : (ii) Date of superannuation : 7. (i) Amount applied for : (ii) Purpose of loan: For purchase of Motor Car/Motor Cycle/Scooter 8. Whether any vehicle is now }

owned by the applicant. If so, }

state full details (type of }

vehicle, year of manufacture, }

registration No. etc. should }

invariably be furnished) }

Reasons for changing it }

should also be stated. }

9. Justification for the need of

the vehicle : Signature

Date Recommended/Not Recommended Department Head Division Head

To: Dy.Chief Finance Manager,

FACT Ltd.

ANNEXURE - F

TERMS AND CONDITIONS FOR GRANT OF LOAN FOR PURCHASE OF VEHICLES

1. Loan for purchase of Vehicles will be granted to permanent employees of the Company. The

maximum amount of loan for purchase of motor car is Rs.50,000/- or 16 months salary including DA

or the anticipated cost of the car whichever is less. For purchase of motor cycle/scooter, the loan will

be limited to Rs. 10,000/- or 12 months salary including DA or the anticipated cost of the motor

cycle/scooter, whichever is less.

2. Unspent portion of the advance, if any, should be refunded to the Company forthwith. The cost of the

motor car/motor cycle/scooter will not include the amount spent for any other purpose such as

repairing, registration charges, insurance etc.

3. a) The advance granted for the purchase of motor cars, motor cycles and scooters will be recoverable

in monthly instalments not exceeding 72 in number. The interest accumulated will be recovered

in monthly instalments of not more than the amount of installment recovery after payment of the

principal till such accumulated interest is fully realised.

b) In case the applicant leaves the service of the Company on Superannuation, resignation, voluntary

retirement, termination, death etc., the full outstanding loan amount together with interest will be

recoverable from his settlement dues.



4. Advance for replacing the car, motor cycle, and scooter currently owned by the applicant may be

granted only if the vehicle currently owned is more than 10 years old.

5. a) A fresh advance for replacing of motor car/motor cycle/scooter purchased out of advance drawn

from the Company will not be sanctioned until a period of one year is elapsed after the complete

repayment of the previous advance together with interest.

b) Those who have not availed the loan in the past for the same mode of conveyance will be generally

considered first. Persons who have cleared the earlier loan with interest will be considered next,

in the order of such clearance.

6. The loan will be granted for the specific purpose of purchase of a motor car/motor cycle/scooter. The

vehicle should be purchased within one month of receipt of the loan amount.

If the amount of the loan availed is not utilised within one month, the loan amount has to be remitted

back immediately on the expiry of the one month and inform whether the amount will be required and

utilised within next two months. If the amount once drawn is not used within a total period of 3

months, conveyance loan sanctioned will lapse and will not be disbursed thereafter to the individual.

If the amount drawn is not remitted back/used within the time specified above (i.e.) one month of

drawal, loan amount and interest at the rate of 16% per annum will be recovered from amounts due

by way of salary etc. from date of drawal.

7. For this purpose “Purchase” means the actual purchase of a vehicle. Utilising the loan amount for

any other purpose including discharge of existing or prior debit charge or liability in respect of the

vehicle owned by the applicant will not be considered as “Purchase”.

8. The loan will carry interest at uniform rate for the entire period of the loan. This will be at the rate fixed

by the Government of India for the year in which the loan is availed.

9. The loan amount will be disbursed only on execution of a Promissory Note in favour of the Company

by the applicant which should be renewed once in three years till the loan is fully discharged.

10. While availing the loan an agreement in such form as may be prescribed by the Company shall be

executed.

11. The loan should not be utilised for purchase of a vehicle which is more than 10 years old.

12. The vehicle purchased should be such as can be of reasonable value not less than the loan amount.

If the sanctioning authority is satisfied that the vehicle is of a lesser value, such portion of loan

amount as is found by the sanctioning authority to be in excess of reasonable value will have to be

refund to the Company forthwith.

13. The vehicle shall as and when so required, be produced for inspection of the sanctioning authority or

such other officer as he may specify in this behalf, at any time during the continuance of the liability

under the loan.

14. The vehicle purchased out of the loan amount should be hypothecated in favour of the company and

the same shall be got duly endorsed by the concerned Regional Transport Officer on the

Registration Certificate Book of the vehicle. The Registration Certificate Book so endorsed shall be

produced for scrutiny of the sanctioning authority within reasonable time after purchase of the

vehicle.



15. The vehicle shall so long as any liability under the loan exists be duly kept covered by a

comprehensive Insurance Policy for an amount not less than the loan outstanding. The policy shall

be duly assigned in favour of the Company by proper endorsement to that effect by the insurer. The

policy shall be produced for scrutiny by the sanctioning authority.

16. The vehicle shall not be sold or other wise disposed off without the prior permission in writing of the

sanctioning authority at any time before the loan is fully discharged.

17. In case the applicant after availing the loan, fails to purchase vehicle within the specified time, or

fails, refuses or neglects to get the endorsement of the hypothecation of the vehicle by the Regional

Transport Officer in the Registration Certificate or fails or neglect to have the cover of the insurance

as stipulated or in any way violates or commits breach of any of the above terms and conditions or

any other rules regarding grant of vehicle loans, the sanctioning authority will be at liberty to forthwith

realise the entire outstanding dues from out of his salary or any other dues to the loanee besides

resorting to such other remedy as the sanctioning authority may deem fit.

18. All other rules and regulations prescribed by the company in connection with the grant of vehicle

loans to the employees are to be adhered to by the applicant.

19. Specific approval from CMD is required for any deviation in the rules.

I hereby undertake to abide by the terms and conditions mentioned above as well as the rules as are

or will be in force in the company regarding grant of loans to employees for purchase of Car/Motor

Cycle/Scooter if a loan is sanctioned to me.

Signature :

Name :

B.No. :

Place : Division :

Date : Department :



ANNEXURE NO.13

HOUSE RENT ALLOWANCE RULES

RULES REGARDING HRA AND CCA TO EMPLOYEES 13.1.A. RATE OF HOUSE RENT ALLOWANCE

(i) Cities and areas and rates applicable

Class of city/town Rate

a. A class cities - Delhi and 30% of basic pay

Bombay

b. Other A class cities 25% -do-

c. B1 and B2 class cities 15% -do-

d. C - class 10% -do-

e. Unclassified areas 10% -do-

(ii) In cases where the officers are not in a position to produce rent receipts or where the rateable value

of the self occupied portion of the house is either nominal or insignificant, HRA in accordance with

the rates applicable to them subject to an overall ceiling of Rs.1500/- in A, B1 and B2 class cities,

and Rs.750/- and Rs.450/- when posted in C-class cities and unclassified areas respectively will be

payable. However, in such cases the employee has to initially submit a declaration to Divisional

Head, valid during the pendency of the arrangement, stating that he is “incurring some expenditure

on rent/contributing towards rent” or he is “paying or contributing towards house/property tax or

maintenance of the house”.

Note: For claiming HRA without production of rent receipts may furnish certificates in the format given in

Annexure-II-A and II-B to order No.FM/P-8(A)/20/579 dt.20.10.1975 without any salary restrictions.

B. CITY COMPENSATORY ALLOWANCE

Class of city/town Rates

————————— ———-

1. A class 6% of pay subject to a maximum of Rs.100/-

2. B class 4.5% of pay subject to a maximum of Rs.75/-

3. B2 class 3.5% of pay subject to a maximum of Rs.20/-

13.2 DEFINITIONS

For purpose of these rules:

a. “Pay” means basic pay of the employee

Page 1 of 8ANNEXURE NO


b. (i) “ Rent” means the charges paid by an employee as consideration for unfurnished

accommodation occupied by him if he is a tenant, and the gross rental value of the house as

assessed for municipal purposes or otherwise without deduction of the rebate of 10% on account

of repairs if he is a owner, and shall, in both cases, include municipal and other taxes except

service taxes levied separately and described as such that are legally payable.

(ii) If furnished accommodation is engaged, the term ‘Rent’ shall mean rent as defined in (i) above by

2 1/2 % of the pay.

Note: Accommodation fitted with electric ceiling fans shall be treated as furnished if it is otherwise

unfurnished.

(iii) In the case of an employee who reside in a hostel or boarding house or resides and boards with a

private family as paying guest, ‘Rent’ shall be taken to be the amount equal to 40% of the lodging

and boarding charges or 80% of the lodging charges,if boarding is not availed of.

c. Employees means all monthly rated regular employees and shall exclude the following:-

(i) Casual and non-regular employees.

(ii) Employees on contract basis unless the contract specifies otherwise.

(iii) Apprentices and trainees

d. ‘Family’ means an employees wife/husband children and other persons residing with and wholly

dependent upon him/her. A husband/wife/child/parent having an independent source of income is

not treated as member belonging to the family of the employee except when such income including

pension (inclusive of temporary increase in pension and pension equivalent of death-cum-retirement

benefits) does not exceed Rs.250/- per month.

13.3. AREAS WHERE ADMISSIBLE

a. (i) The limits of the locality within which these orders apply shall be those of the name municipality

or corporation and shall include such of the suburban municipalities, notified areas or

cantonments as are contiguous to the named Municipality or Corporation of other areas as the

Central Government from time to time, notify.

(ii) The orders will automatically apply/cease to apply to areas which may be included

within/excluded from the limits of the named Municipality or corporation by the State Government

concerned from the date of such inclusion/exclusion.

b. (i) An employee whose place of duty falls within the qualifying limits of a city shall be eligible for both

the CCA and HRA, irrespective of whether his place of residence is within such limits or outside.

Note-1: Absence from place of duty during holidays, except those affixed to leave, will not affect the eligibility

for the CCA and HRA.

Note-2: For the period of tour, an employee’s entitlement to these allowance shall be regulated with

reference to his headquarters.

(ii) An employee whose place of duty is in the proximity of a qualified city, and who, of necessity

have to reside within the city, may be granted the CCA and HRA admissible in that city, provided

that:



c. (i) The distance between the place of duty and the periphery of the municipal limits of the qualified

city does not exceed 8 Kms. and

(ii) The staff concerned have to reside within the qualified city out of necessity, i.e. for want of

accommodation nearer to their place of duty.

(iii) Staff working in establishment within a distance of 8 Km. from the periphery of the municipal limits

of a qualified city will be allowed HRA and CCA at the rates admissible in that city even though

they may not be residing within those municipal limits, provided that:

d. (i) There is no other suburban municipality, notified area or cantonment within the 8 Kms. limit and

(ii) It is certified by the Collector having jurisdiction over the area that the place is generally

dependent for its essential supplies, e.g. foodgrains, milk, vegetables, fuel etc. on the qualified

city.

Such a certificate will remain valid for a period of three years after which a fresh certificate will be

required.

Note: Those occupying or refusing company accommodation (where they are required by the Management

to stay in the Township) not eligible for HRA.

The grant of HRA shall be subject to the following conditions:

e. (i) The allowance shall not be admissible to those who occupy accommodation provided by the

Company or who refuse or surrender company accommodation allotted to them by the

Management in the interest of work of the company and who cause loss to the company on

account of such refusal/non-occupation resulting in quarters remaining vacant.

(ii) The HRA drawn by an employee who accepts allotment of company accommodation shall be

stopped from the date of occupation or from the eighth day after the date of allotment of company

accommodation whichever is earlier.

(iii) Refusal by an employee of a quarter of a different class from that for which he is eligible shall not

constitute refusal for the purpose of these orders unless he has the option to apply for

accommodation of a class next below the one to which he is entitled by virtue of his emoluments

and he refuses such accommodation when allotted on the basis of his application.

(iv) A workmen will be entitled to draw HRA during any type of leave not exceeding 120 days at the

same rates at which he was drawing these allowances before he proceeds on leave. No HRA

will be payable during leave preparatory to retirement and terminal leave. The limit of 120 days

shall be extended to 8 months for grant of HRA when the workman suffering from T.B, Cancer or

other similar ailments during the period of leave taken on medical certificates of the Company’s

Chief Medical Officer. In the case of workman who goes on leave whether on medical grounds

or otherwise does not join duty after leave and resigns he shall not be eligible for HRA for the

entire period of such leave. (applicable to non-managerial employees only.)

(v) An employee who on transfer has been permitted to retain company accommodation at the old

station on payment of normal rent or penal rent, will be eligible for HRA at the new station.

f. (i) For cases of transfer from a lower HRA station to higher HRA station, HRA at the higher rate will

be admissible from the date of accommodation is taken at the new station. Until then HRA



payment of the old station will continue, subject to the relevant rules, declaration, etc.

(ii) For cases of transfer from a higher HRA station to a lower HRA station,

a) HRA will be admissible at the lower rate applicable to the new station from the date of

accommodation is taken at the new station.

b) If accommodation is retained for occupation of the family at the old station, HRA at the rate

applicable to the old station can be given, for a period of six months or until the end of the

academic year, whichever is earlier, as long as company accommodation is not provided at the

new station.

(iii) When an employee transferred from one station to another retains the accommodation at the old

station for accommodation of the family and avails of bachelor accommodation at the new station

(FACT House, Guest House etc.) the HRA admissible for the accommodation at the old station

will be limited to 75% of the eligible amount of HRA for that station.

(iv) In the case of HRA claims without producing vouchers, the existing rules will continue.

(v) An employee who was not in occupation of company accommodation at his old station and who

on transfer leaves his family behind at the old station because he has not rented a house or has

not been allotted company accommodation at the new station will be eligible for HRA for a period

of six months from the date of assumption of charge at the new station or till he rents a house or

is allotted company accommodation at the new station, whichever is the earliest. The HRA will

not exceed the rate at which it was being drawn by him at the onld station or the maximum

amount that would have been admissible to him at the new station, had he taken a residence on

rent there, whichever is less.

(vi) During the period of transfer not exceeding 90 days an employee shall draw CCA and HRA at

the same rates at which he was entitled to them at the time of transfer. The quantum of the

allowances shall however, be determined with reference to the pay which an employee would

have drawn but for the transfer. For period of transfer exceeding 90 days the grant of these

allowance shall be regulated with reference to the new head-quarters. If a transfer, initially made

for a period not exceeding 90 days is later extended the HRA and CCA shall be paid upto the

date of issue of orders extending the transfer or for a period of 90 days, whichever is less.

Note For temporary transfer, initially made for a period not exceeding 90 days but later extended beyond

this period, the benefit of the provisions contained in para (4) (vi) above shall be allowed to the

employee from the date of issue of the order converting the transfer into a permanent one or at the

end of 90 days, whichever is earlier.

13.4. CONDITIONS FOR DRAWAL OF HOUSE RENT ALLOWANCE

a. Subject to the provisions of sub-para (b), no employee will draw HRA in excess of the amount by

which the rent actually paid by him exceeds 10% of his pay.

b. (i) If the employee sub-lets or shares a part of his accommodation with one or more adults not

belonging to his family, whether employee [s] or not, a reduction of 40% or the actual rent

charged by him from the sub-tenant/co-sharer, whichever is higher, shall be made from the rent

actually paid by him to the landlord for the purpose of computing the amount of HRA admissible

to him.

(ii) If the sub-tenant or co-sharer is also employee HRA will be admissible to him also, the amount of



such allowance being calculated on the rent actually paid by him to the main tenant.

Note-1: Keeping of servant in the house shall not be deemed to be subletting or sharing a part of the

accommodation.

Note-2: As an exception of the above rule in cases where an employee who shares his/her accommodation

with his wife/her husband/parent/son/daughter/unmarried sister who is also an employee of

FACT/Central Government/State Government/Autonomous Public Undertaking/Semi-Government

organisation such as Municipality, Port Trust, Nationalised Banks, LIC of India etc. he/she

(employee) may be allowed the option to draw HRA without a reduction of 40% from the rent actually

paid by him/her subject to the condition that the other spouse/parent/son/daughter does not draw

any HRA.

Note-3: The reduction of 40% referred in sub-para (b) (i) above, will not be made where

spouse/parent/son/daughter/unmarried sisters are employed in the private sector or are self-

employed or/and is/are having income exceeding Rs.250/- per month from any property investment

and/or is/are or pensioner/s getting pension exceeding Rs.250/- per month.

13.5 An employee shall not be entitled to HRA if:

i) He shares company accommodation allotted rent free to another employee, or

ii) He/she resides in accommodation allotted to his wife/her husband or to his/her parent/son/daughter

by FACT/the Central Government, State Government, an autonomous Public Undertaking or Semi

Government organisation such as Municipality, Port Trust, Nationalised Banks, LIC etc.

iii) His wife/her husband has been allotted family accommodation at the same station by FACT/the

Central Government, State Government, an autonomous public undertaking or semi-Government

organisation such as Municipality, Port Trust etc. whether he/she resides in that accommodation or

he/she resides separately in accommodation rented by him/her.

Note: In case where husband/wife/parents, children, two or more of them being FACT employees, Central

Government servants or employees of State Government, autonomous public undertakings or semi-

Government organisations like Municipality, Port Trust, nationalised Banks, LIC etc. share

accommodation allotted to another FACT employee, Government servant, HRA will be admissible to

only one of them, at their choice.

The term ‘accommodation’ includes the accommodation allotted to the employees of FACT/State

Government’s autonomous public undertakings, semi-Government organisations such as

Municipality, Port Trust etc. Regulation of allowances in different circumstances like leave

deputation abroad, training, suspension, etc. will be as per rules as amended from time to time.

13.6 EMPLOYEES OWNING HOUSE

(i) An employee living in a house owned by him, his wife, children, father or mother shall also be

eligible for HRA under these rules. In such cases, the gross rental value of the house or if he is not

in occupation of the entire house, of the portion of the house actually occupied by him (as

ascertained from its assessed value for municipal purposes or otherwise) without deduction or rebate

of 10% on account of repairs and including municipal and other taxes that are legally payable by the

owner other than service taxes levied separately and described as such, shall be taken as the rent

paid by him for private accommodation for the purpose of these rules.

When seperate amount of assessed value is not available in respect of a portion of a house, it will be

calculated proportionately with reference to the Plinth area actually in the occupation of an



employee.

If the house is situated within a municipality/local board/notified area/cantonment boards, grant of

HRA in above cases should invariably be regulated on the basis of gross rental value assessed by

these authorities. Only when assessment by such an authority is not possible assessment made by

other local authorities may be accepted as the basis for the grant of HRA.

(ii) In the case of an employee living in a house owned by a Hindu undivided family in which he is a co-

parcener, HRA will be regulated with reference to the gross rental value, as in (i) above, of the

portion of the house actually in his occupation and not on the basis of the rent which he claims to pay

to the Manager of the Hindu undivided family.

Note: The grant of HRA to employee referred to in (i) & (ii) will be subject to the fulfilment of the same

conditions as apply to employee residing in private rented accommodation.

(iii) In case of an employee who owns a house at a place of duty but resides in a rented house instead,

HRA shall be paid in respect of the rented house, if otherwise admissible.

13.7. CERTIFICATES

a) Every employee shall furnish to his department head along with his first claim for HRA, a certificate in

the forms appended to these rules, whichever is applicable to him. If however, there is a change in

any of the provisions of the certificate last given, resulting in increase or decrease of the allowance

payable to him, a fresh certificate should be furnished as soon as the change occurs.

b) The certificate furnished by the employee claiming HRA should be certified by the Departmental

Head as follows and duly counter signed by the Division Head.

“Certified that the certificates prescribed by the company have been obtained from the officer

claiming HRA and to the best of my knowledge and belief the claims are in accordance with the

orders in force” I have also certified the rent receipts produced by the employee and found them in

order.

Declaration by the employees claiming HRA/CCA

I declare that,

1. I am eligible for the HRA & CCA as per clauses 3,4,5 & 6 of the orders No.FM/P.8(a)/20/579

dt.October 20, 1975.

2. I declare that I have not been provided with company accommodation and that I have not refused to

comply with Management’s orders requiring me to stay in company quarters.

13.8. HRA DURING LEAVE WITHOUT PAY AND ABSENCE

a) The HRA rules regarding entitlement for the allowance during period of leave reads as under.

“A workman will be entitled to draw HRA during any type of leave not exceeding 120 days at the

same rates at which he was drawing these allowances before he proceeds on leave. No HRA will be

payable during leave preparatory to retirement and terminal leave. The limit of 120 days shall be

extended to 8 months for grant of HRA and when the workman is suffering from T.B, Cancer or other

similar ailments during the period of leave taken on medical certificates of the Company’s Chief



Medical Officer. In case of a workman who goes on leave, whether on medical grounds or otherwise, does

not join duty after leave and resigns he shall not be eligible for HRA for the entire period of such

leave”.

In the course of discussion with unions in 1979 on matters relating to implementation of the long term

settlement, the implication of the above provision was also discussed. It was then clarified that while

HRA would be due for periods of all types of leave upto the stipulated period, HRA would not be

payable for periods of absence. Some problems have been mentioned by the unions about applying

the above distinction in practice. It was stated that some department heads deny leave when there

is no leave to the credit, while others sanction leave for the period as loss of pay leave. Besides, the

employee has no intimation whether his request for leave has been sanctioned or not. The

employee comes to know about non-sanction of leave only when HRA is cut. In the light of these

difficulties, the matter was further discussed with the unions. The Standing Orders have provision

where by habitual absence or absence without leave for more than 3 days constitute s a

misconduct. Also absence on loss of pay leave for over a month in the aggregate in a calendar year

is a misconduct. Relying on the provisions of the Standing Orders, we can distinguish leave from

absence for purpose of HRA payment and we may follow the following guidelines uniformly:-

b) When an employee absents himself from work for a period in excess of 3 days without submitting

any leave application and without any intimation and/or sends in an application after remaining so

absent, and no leave is due to him against which the absence can be regularised subsequently, the

period in excess of 3 days may be treated as absence and no HRA be paid for that period. The

employee is to be informed in writing about this.

c) HRA may be paid for period up to 30 days on loss of pay leave in the aggregate in a calendar year.

No loss of pay leave will ordinarily be sanctioned for period in excess of 30 days. In such cases the

period in excess of 30 days may be treated as absence, for which no HRA will be payable. The

employee to be informed in writing accordingly.

d) There may be cases where absence for periods in excess of 30 days, may be for a bonafide reason

such as prolonged illness of self or members in the family. Any request for such leave in excess of

the 30 days should be submitted to the Head of the Division with supporting evidence like medical

certificate and, only when approved and to the extent of the approval, the period may be treated as

leave and the HRA paid. When such sanction is not given for whole or part of the period, that portion

for which sanction is not given may then be treated as absence and no HRA paid.

e) Days of strike will be clear cases of absence and HRA will not be payable for those days.

f) All cases of leave applied being refused by the sanctioning authority and the employee even then

remaining absent, will be treated as ‘absence’ for this payment also.

13.9. GENERAL These rules will come into effect from 1.4.1974.

Non observance of any of the basic conditions of entitlement of HRA on the part of the employee will

render him/her non-eligible for this allowance. Any false statement/suppression of facts etc. with a

view to secure the benefits under the scheme in certificates/declarations submitted by the employee

will also make the employee liable for disciplinary action

If any dispute arises as to the interpretation of these rules, the decision of the Chairman & Managing

Director shall be final.





Annexure-14

Various Formats used by Payroll A - Punch Clock Card

B - -do- - Consolidation

C - O.T. Authorisation

D - Leave Register

E - Format No. 60 (New Appointment/Retirement/Transfer).

F - Format No. 61 (Pay rate, [Basic, PP, PPP, DA, FDA]).

G - Format No. 62 (Allowances)

H - Format No. 63 (Miscellaneous Benefits/Recoveries)

I - Format No. 64 (Estate Information)

J - Format No. 65 (Personnel Information)

K - Format No. 67 (Salary through Bank)

L - Format No. 68 (Recoveries of Recurring Nature)

M - Format No. 69 (LTE Details and Bank)

N - Format No. 71 (Cumulative Leave Details)

O - Format No. 72 (Earning Yearly - Part I)

P - Format No. 73 (Earnings Yearly-Part II

Q - Format No. 74 (Actual Direct remittance for Income

Tax [Full exemption])

R - Format No. 75 (Actual Direct Remittance Income Tax

section 88 rebate)

S - Format No. 82 (Monthly Supplimentary Attendance)

T - Format No. 83 (Short/Excess Payment)

U - Format No. 84 (Fixed Deduction)

V - Format No. 85 (Variable Deduction)

Page 1 of 2Annexure-14


W - Salary Statement / Pay Slip

X - Conveyance Loan Register

Y - Medical Re-imbursement form

Z - Request for Travel Advance

AA - Travelling Allowance Bill

AB - Travelling Allowance Bill

AC - Medical Advance.

Page 2 of 2Annexure-14


ANNEXURE - 15

Various Recoveries through payroll - Code Numbers

1. Variable deduction - Code Number

Code No. Name Code No. Name ———— —— ———— ——— 30 KLWF 401 Automobile Asstn. 40 ESI 410 W.Fund-1/2 day salary 50 EPF 411 Wel. Fund - JNM 51 VPF 420 Furniture Hire 69 Pension Suppl. 421 A/c Charges 70 Pension 430 Usufructs 71 Pension Leave Recovery 440 Food 80 Family Relief Fund 441 Save FACT Fund 81 Death Relief - CD 460 School PF 90 Court attachment 461 Women Wel. recovery 160 Retirement Benefit 470 W.Fund Recovery- Mgr. 161 Prof. Tax - UD 475 Donation 162 Prof. Tax - FEW 480 Film club 163 Corp. Tax - CD 490 Technical Society 164 Prof. Tax - CD 500 Kalakendra 169 Income Tax 510 Udl. Club 200 Pre paid 520 Ambal. Club 210 Excess Paid 525 Silver Jubilee - CD 211 Indira Vikas Pathra 530 Agri-Horti society 220 Bus pass recovery 540 Housing society - UD 240 Medical Contribution 541 Housing Society - CD 241 Dependant CHS 550 Sports 300 Meals 551 Tamil Mantram 301 Mgrl. Meals recovery 560 PF Loan interest 310 Rent 570 PF Loan 320 Personal debit 580 Fine Arts Forum 330 Mgrl. Serv. charges 581 FACT Officers Assoc 340 Petrol 582 FACT Employees Asso 350 Hospital 590 Co.opp. Society - UD 360 Telephone 591 Co-opp. Society - CD 370 FACT House 600 Credit Society - UD 380 Guest House 601 Credit Society -FEDO 390 TA Advance 602 Credit Society - CD 391 LTC Advance 650 Stamp recovery 400 Garage 2. FIXED DEDUCTION - CODE NUMBERS

Code No. Name

——— ——

110 Insurance New

111 LIC Annuity Plan

120 PLIP



121 Jeevandhara

130 CTDS - 5 years

140 CTDS above 5 years

141 PPF

150 Recurring Deposit

292 Cable TV - UD

3. LOAN RECOVERY - CODE NUMBER

Code No. Name Code No. Name ———- —— ——— —— 170 Onam Advance 291 Cable TV Advance-CD 171 Arrear Recovery 293 Cable TV Advance-UD 172 Addl. Advance DA 294 Cable TV - CD 173 Addl. Adv.Onam 93-94 295 FACT Soc.Serv.league 174 Festivel Adv. 94-95 450 Welf. Fund Loan-Mgrl 180 Excess Bonus 451 W.Fund Loan-Non-Mgrl 181 Excess Bonus 91-92 452 W.Fund Loan - School 182 Excess Bonus-DA Arr. 453 M.Welf. Facility loan 183 Excess - LTS 1990 454 WLN-HM 230 Car Loan 455 WLN-HN 231 Scooter Loan 456 Cancer care 232 Cycle Loan 457 Fees-Computer study 233 Excess Prod. Bonus 630 HDFC Recovery 234 Bus pass Arrears 631 House Loan Repay-Ind 250 School Advance 632 House Loan Repay-SBT 260 Rent Advance 633 House Loan Repay-SBI 261 Rent Advance-Mktg.- HO 634 House Loan Repay-SBH 270 IR - 86 recovery 635 House Loan Repay-BOB 280 Pension Arrears 636 House Loan Repay-BOI 281 FACT Shares 637 Hous.Loan Repay-Dena 287 Vishu Advance 638 Hous.Loan Repay-CANB 288 Ramzan Advance 639 Dewan Housing 289 Christmas Advance 640 Football Ticket 290 Festival Advance 645 House Loan - GIC



ANNEXURE-16

LOCAL TRAVEL ALLOWANCE

RULES FOR PAYING COMPENSATORY ALLOWANCE TOWARDS LOCAL TRAVEL EXPENSES

(FM/T-2/8/556 dt.8.10.75 and subsequent amendments)

16.1. The allowance is intended to reimburse expenses incurred on maintenance and use of own vehicles

(registered in their names) by the officers for local travel (i.e. travel within a radius of 10 KM from the

working place) for company purposes.

16.2. The basic minimum allowance for local travel expenses within a radius of 10 KMs who maintain

motor vehicles for the performance of official duties will be as follows;-

Salary grade Type of vehicle Allowance Rs.5400 - 9050 and above Motor car Rs.1400/-p.m. Rs. 4800-8275 Motor cycle/ and below Scooter Rs.500/- p.m. Rs. 4800- 8275 Mopped Rs.120/- p.m. and below 16.3. For claiming this allowance the eligible officers have to furnish a declaration through their respective

controlling officers to the Associated Finance in the prescribed proforma as per Annexure for the first

claim and thereafter at half yearly intervals on 1st April and 1st October.

16.4. The basic minimum allowance will be disbursed separately by means of credit to the respective bank

account of the officers along with salary.

16.5. For travel for Company purposes beyond the radius of 10KM additional mileage allowance (include

for the first 10 KM) at the rates usually charged by the company for personal purposes (at present

Rs. 3.50 per KM) is allowable in the case of motor car, at Rs.1.75 per KM in the case of motor

cycle/scooter and 75 ps. in the case of mopeds.

16.6. Officers who are in reciept of compensatory allowance for local travel expenses for maintenance of

own car will normally be required to use their cars for local travel.

16.7 Clarification given in FM.T-2/668 dt.8.12.75 & CPRM/IC /92/81 dt.11.2.81.

A question has been raised whether batta is also permissible to officers who undertake travel and

claim mileage allowance as provided for in the rules: and who return to headquarters the same day.

This matter has been carefully considered and it has been decided that compensatory allowance for

local travelling expenses shall be subject to the following conditions:

16.7.1. No allowance shall be admissible during:-

a. Joining time, leave and any period of temporary transfer, including holidays prefixed to leave or

holidays suffixed to leave.



b. Any period of not more than 15 days at time during which an officer does not maintain a motor car or

the motor car maintained by him remains out of order or is not used for official journeys for any other

reasons:

Note:The allowance sanctioned will not be admissible for any period of more than 15 days at a time

during which on account officers absence from Head quarters on tour or for any reason whatsoever,

the motor car maintained by him is not used by the officer for official journeys.

16.7.2. Drawal of allowance is subject to the officer owning and maintaining a motor car in good running

condition and using it for all official journeys for which the allowance is granted.

16.7.3. The officer who are granted allowance will not be entitled to any other travelling allowance i.e. daily

or mileage allowance for journeys upto 10 KMs for the usual place of work at the head quarters. The

travelling allowance for journeys beyond 10 KMs will be admissible as under:-

a. If the journey is performed otherwise than in his own conveyance, the travelling allowance,

admissible under the rules, may be drawn in full. CPRM/IC.92/81 dt.11.2.81.

b. Management has been pleased to decide that for actual journeys performed on company work

reimbursement of LTE at the revised mileage rates as in TA rules shall be made without the

automatic ceilings.

c. However where an officer drawing LTA uses his own vehicle for journey on company work beyond 10

KM limit and claims mileage for the journey, a deduction at the rate of 1/30th of the monthly LTA

payable to him will be made from his TA bill for each days journey while sanctioning the TA Bill.

16.8. REIMBURSEMENT OF LOCAL TRAVEL EXPENSES-SUBMISSION OF

HALF YEARLY CERTIFICATES

Please read carefully and note:-

16.8.1. Every officer who has to claim reimbursement towards local travel expenses is required to give the

above certificate on the 1st of April/October every year to Associated Finance the Proforma below

@ and the allowance is liable to be stopped in case this is not received on the due dates.

Certificates are to be received latest by 15th April/15th October as the case may be and back claims

will not be admitted. If declarations are received late, reimbursement will be made only for the

period commencing from the date of receipt of the declaration.

16.8.2. As and when the vehicle is sold, the loan shall forth with be liquidated with the sale proceeds and

otherwise.

16.8.3. The declaration should be complete in all respects for entertaining claims.

* Fill up (car/scooter/motor cycle/moped as the case may be)

** Fill up (Rs.1400/Rs.500/Rs.120/- as the case may be)

*** Delete if not applicable.

@PROFORMA

THE FERTILISERS AND CHEMICALS, TRAVANCORE LIMITED, UDYOGAMANDAL

Form of certificate for claiming reimbursement towards local Travel Expenses for the Half Year



being.....................

I here by certify that:

1. I am maintaining a(*)................. bearing Reg.No.............. which is registered in my name from..........

2. I am using the vehicle for the purpose of official duties and expenditure incurred is not less than the

amount of Rs.(**).....................per month claimed as reimbursement.

3. I have used the vehicle for the purpose of official duties, during the preceding half year

ended ..................... (or from the date of purchase) i.e from ..................... to the end of the previous

half year ended .................and expenditure incurred per month is not less than the amount stated in

2 above.

4. (***)

In cases the loan from the company is availed for purchase of vehicle and balance is still outstanding,

certified that:-

i) Comprehensive insurance policy duly hypothecated in FACT’s favour has been taken/renewed Policy

No. ................. dated ................. with ..................... Insurance company and period of insurance

from .................... to ...............

ii) The sureties given in this connection are still in FACT’s service as on date:-

a. Name :

Designation :

B.No. :

b. Vehicles purchased with company’s loan assistance will not be disposed off without the prior

approval of the company.

iii) The Promissory Note is current upto .................... (To be renewed every three years)

iv) The Registration Book has been duly endorsed by the RTO as required in circular No.FM/1-5/2/826

dt.2.10.1974.

v) Monthly installments of loan are being paid regularly.

5. I will immediately inform the company if the vehicle is sold or in case I am not eligible for

reimbursement towards local travel expenses for any reason under the rules. If it is found that I am

not eligible for reimbursement made towards local travel expenses for any period, reimbursement

made may be recovered from any amount due to me otherwise.

Name of officer :

Signature :

Designation :

Division, Dept., B.No. :

Name of Bank/Branch :

Account No. :



Place : Date : 16.9. RULES RELATING TO GRANT OF CONVEYANCE ALLOWANCE (LTE)

16.9.1. These rules will apply to all workmen who are on the permanent rolls of Head Office and the

Divisions of the Company i.e. those given regular scales of pay and badge numbers and are covered

by Long-term Wage Settlements.

16.9.2. The amounts of allowance admissible for local travel expenses for company work within a radius of

10 Kms. from place of work for those who maintains motor cycle/scooter/moped for such work are as

follows:-

Type of vehicle Allowance

———————- ————-

Motor cycle/scooter Rs.500/-p.m.

Moped Rs.120/-p.m.

The need for grant of the above allowance will be approved by the Division Head or person

designated by him on the basis of recommendation of the Department Head.

16.9.3. An employee drawing LTE will not be paid any travelling allowance including mileage for official trips

upto a distance of 10 Kms. from place of work. If an employee drawing LTE is required to use his

vehicle for official trips to distance beyond 10 Kms. from place of work he will be eligible for payment

of mileage at rate and subject to conditions to be notified by the company from time to time.

16.9.4. For claiming this allowance the eligible employees have to furnish a declaration through their

respective controlling officers to the Finance Department of the Division in the prescribed proforma

as per Annexure-B for the first claim and thereafter at half yearly intervals on 1st April and 1st

October every year.

16.9.5. Grant of LTE will be subject to production of proof of possessing the vehicle at the time of submission

of the declaration or when called for by the Management at any other time.

16.9.6. The registration book of the vehicle should be produced by the concerned employee to the

respective Finance Department (should not be sent with the declaration). In respect of Area Offices,

Regional Offices/ ASCS, etc. the documents can be produced and got verified by the Area Manager,

Regional Manager, or Sales Officer as the case may be.

16.9.7. No LTE will be admissible during:-

a. Joining time, leave and any period of temporary transfer including holidays prefixed to leave or

holidays suffixed to leave. (Subject to Note below)

b. Any period of more than 15 days at any time during which an employee does not maintain a

motorcycle/moped or the motor cycle/scooter/moped maintained by him remains out of order or is

not used for official journeys for any other reasons.

Note The LTE will not be admissible for any period of more than 15 days at a time during which on account

of the employees absence from Head quarters on tour or for any reason whatsoever, the vehicle



maintained by him is not used by the employee for official journeys.

Drawal of LTE is subject to the employee owning and maintaining the vehicle in good running

condition and using it for all official journeys for which the allowance is granted. When the vehicle is

sold or transferred or becomes unserviceable for any reason the matter is to be promptly reported to

the Management and the LTE will cease to be payable to the concerned employee from the relevant

date.

The above rules with regard to LTE takes effect from 1.1.1984.

It has been decided that henceforth the definition of Moped shall be “a motorised cycle with pedaling

facility” and there will be no demarcation on the basis of engine capacity. A fresh declaration is to be

obtained from all employees drawing LTE for Motor Cycle/Scooter and Moped taking into account

the above definition.

It has also been decided that the verification of the type of vehicle would henceforth be done by the

respective Finance Department since the verification of RC Book for payment of LTE is done by the

Finance Departments.

Proforma for claiming LTE is given in Annexure ‘B’.

ANNEXURE-B

THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED REQUEST FOR REIMBURSEMENT OF LOCAL TRAVEL EXPENSES

(for claiming of LTE for Non-Managerial Employees as per

clause 8 of Memorandum of Settlement dt.November 28, 1984)

——————————————————————————————

Name :

——————————————————————————————

Badge No. : Designation :

——————————————————————————————

Department : Division :

——————————————————————————————

IMPORTANT

* Every employee who has to claim reimbursement towards Local Travel Expenses (LTE) is required

to give this certificate on the 1st April & October every year to the concerned Personnel

Department. If declarations are received late, reimbursement will be made only for the period

commencing from the date of receipt of the declaration at the Personnel Department.

(This does not apply to the period 1.1.84 to 31.12.84)

* Those who are extended reimbursement of LTE will not be entitled for company transport facilities

or Transport Subsidy.

* Grant of LTE will be subject to rules which will be prescribed by Management from time to time

including production at periodical intervals of proof of possessing the vehicle.



—————————————————————————————— I hereby certify that I am possessing a vehicle as per details given below and using the same for the

purpose of company work and the expenditure incurred is not less than Rs.500/-/Rs.120/- p.m.

—————————————————————————————— Vehicle type: Motor cycle/Scooter/Moped**

——————————————————————————————

—————————————————————————————————————— PERSONNEL MANAGER Eligible amount of

LTE w.e.f. Rs.

Date: FINANCE MANAGER

—————————————————————————————————————— Registered in the name of: From:

—————————————————————————————————————— Amount claimed as reimbursement:

(limited to Rs.500/- p.m. for Scooter/motor cycle and Rs.120/-p.m. for moped)

—————————————————————————————————————— 2. I have used the vehicle for the purpose of official duties during the period from ........... to ................

and the expenditure incurred was not less than Rs.500/-/Rs.120/- p.m.

3. I will immediately inform the company if the vehicle is sold or in case I am not eligible for

reimbursement of LTE for any reason under the rules. If it is found that I am not eligible for

reimbursement of LTE for any period, reimbursement made may be recovered from any amount due

to me.

** Strike out whichever not applicable

—————————————————————————————— In case transport subsidy is availed of for part of the period and LTE for balance period please state:-

a. Period for transport subsidy From........ To ..........

Amount Rs.............

b. Period for availing of LTE From......... To...........

Amount Rs..............

—————————————————————————————— I hereby certify that the above information is true to the best of my knowledge.

Date: Signature of Bank Account No.

employee Name of bank/Branch

————————————————————————————————————————— FORM PROCESSING SEQUENCE: EMPLOYEE PERSONNEL DEPT. FINANCE DEPT ————————————————————————————————-—————————



Received at Personnel Verified RC [ ] (please tick)

Dept. on:

Amount towards LTE Rs......... (Less) transport subsidy paid, if any Rs.............. ————————————————————————————————-—————————

Date: PERSONNEL MANAGER Eligible amount of LTE

w.e.f. Rs.............

Date: FINANCE MANAGER



ANNEXURE-17

CONTRIBUTORY HEALTH SCHEME 17.1 The object of the Scheme is to look after the continued good health of the member employees and

their dependents and also to make them recover from illness within the minimum time possible.

How the above objective is to be achieved, will be decided by the Chief of Medical Services and other

full-time Doctors employed by the company.

17.2. RULE 1.

17.2.1. Definitions:

17.2.2. “Company” means the `Fertilisers and Chemicals, Travancore Ltd.’

17.2.3. “Authorised Medical Officer” means the Chief of Medical Services or in his absence any other

Medical Officer nominated by him with the concurrence of the Management.

17.2.4. “Specialist” for the purpose of the scheme means a Doctor who is specialised in a particular branch

of medicine and recognised by the All India Medical Council.

17.2.5. “Hospital” means

17.2.6. Any Hospital maintained by the company or Hospital approved by the Chief of Medical Services for

treatment of the members or their dependents.

17.2.7. In respect of employees who reside outside Udyogamandal, Ambalamedu, Tripunithura, or at any

other place beyond a radius of 8 KMs. from JNM Hospital/CD Hospital, any Government or Private

Hospital of the locality or nearby area where they are stationed/staying.

17.2.8. “Member” means an employee of FACT, not covered by ESI facilities and includes.

17.2.8.1. An employee on deputation from Central or State Government or any other Public Sector

Undertaking who has to be given free medical facilities under the terms of his/her deputation.

17.2.8.2. Permanent or probationary employees working in the Regional or Field Offices, outside the Factory

premises and who are not covered by the Employees State Insurance Act, 1948.

17.2.8.3. Staff of JNM Hospital.

17.2.8.4. Staff of FACT Schools Establishment who are not covered by ESI.

17.2.8.5. A paid apprentice undergoing training in FACT and admitted as non-paying member (for self only).

17.2.8.6 A member of FACT Sports Team admitted as non-paying member on approval of General Manager

(Udyogamandal)/General Manager(Cochin Division) (for self only).

17.2.8.7. Any other member admitted by the company Management to the scheme.

17.2.8.8. Employees who are normally covered by ESI Rules, but who are stationed in such locations where

ESI facilities are not available, provided they opt for the Contributory Health Scheme.



17.3..a) The extension of medical facilities for both inpatient and outpatient treatment under the FACT CHS

rules that are applicable to FACT Officers and Staff, to the Govt. Audit team in FACT is permitted in

CD Hospital also. However in respect of treatment in outside hospitals/institutions will have to be

borne by them. They could get reimbursement from the Govt. for such cost.

b) FD has approved medical facilities to the Govt. Audit Staff from Company hospitals on free of cost

who are otherwise eligible from Govt. of India.

c) All the CISF Personnel deputed in FACT and their dependents will be considered as non-paying

member.

17.4. Members are divided into three categories:

17.4.1. Those who are normally residing with their families in and around Udyogamandal, Ambalamedu,

Tripunithura or at any other place within a radius of 8 Kms, from JNM Hospital.

17.4.2. Those who reside in the above places but whose families reside in places other than those

mentioned in Rule 17.4.1. as above.

17.4.3. Those who reside with families elsewhere such as Marketing Staff, Construction Staff, etc.

a) All covered by group 17.4.1 shall have treatment at JNM Hospital or Ambalamedu Hospital, except in

emergencies or while on duty/vacation elsewhere.

b) In respect of those covered by group 17.4.2. the members shall get treatment at JNM Hospital or

Ambalamedu Hospital, except in emergencies or while on duty/vacation elsewhere; dependents may

get treated elsewhere and submit bills for reimbursement to CMS with a certificate from the

Hospital/Doctor who treated them.

c) In respect of those covered by group 17.4.3. members and dependents may get treatment at their

respective places and submit bills for reimbursement to CMS with a Certificate from the

Hospital/Doctor who treated them.

NOTE; For deeming a situation as an ‘emergency’ under (a) and (b) above.

i) The member has to convince CMS that it was an emergency as such.

ii) The matter should be reported to CMS as early as possible and not later than ten days of starting the

treatment.

17.5. “Family” means.

17.5.1. Wife or husband totally dependent on the employee and not having employment elsewhere. Provided

that the spouse of the employee who is employed elsewhere and who is not claiming any benefits

under any medical scheme under that employer can be admitted into the scheme at the option of the

employee on payment of separate monthly subscription at the rate applicable to employee.

The spouse of an employee employed elsewhere can be admitted into our contributory Health

Scheme based on a declaration from the employee that the spouse employed elsewhere is not

claiming benefits under any medical scheme of that employer will be adequate for the purpose; the

requirement that the claim for reimbursement must be made only on one source. The spouse can

accordingly be admitted to the scheme based on such certificate on payment of the requisite monthly



subscription.

17.5.2. Unemployed male children wholly dependent on the member.

17.5.3 Female children till they are married or employed.

17.5.4. Parents mainly dependent on the member and not enjoying any similar benefit from any other

sources or either the parents or both of them together are not having a monthly income of Rs.500/-

or above by way of pension, income from interest or agriculture provided the member gives a

declaration to this effect.

17.6. “Patient” means.

17.6.1 Persons to whom these Rules apply and who need medical treatment.

17.7. “Medical Attendance” means.

17.7.1 Attendance by Medical Officers of the Company at its Hospital or Dispensaries.

17.7.2 Attendance by an approved specialist in JNM Hospital or at his consulting room or residence with

prior authorisation of CMS.

17.7.3 Attendance by Medical Officers at Hospital approved by CMS in respect of employees staying in

Udyogamandal, Ambalamedu, Tripunithura or at any other place within a radius of 8 KM. from JNM

Hospital/CD Hospital, and in respect of outstation employees, attendance by Medical Officers of

Hospital of the locality, either Government or private.

17.7.4. Normally all medical investigations shall be done in JNM Hospital for employees residing in

Udyogamandal, Ambalamedu, Tripunithura or at any other place within a radius of 8 KMs from JNM

Hospital/CD Hospital, unless otherwise authorised by CMS or in emergencies/special situations

warranting investigations in other Hospitals. In respect of outstation employees, such investigations

may be undertaken in the Hospitals in their locality either Government or Private, or in case of non-

availability of investigation facilities in the local Hospitals in such other Hospitals, where these

facilities are available.

17.7.5. Doctors of JNM Hospital/CD Hospital/Specialists will attend to a patient at his residence, if approved

by CMS.

17.7.6. As far as possible the employees/dependents (other than those in outstation locations) will avail of

medical/surgical treatment from JNM hospital/CD Hospital.

In cases where the CMS having due regard to any particular treatment, feels that the facilities

available in JNM hospital/CD Hospital are not adequate such cases could be referred by Sr.MO to

any Hospital/Specialist having adequate expertise to treat such cases. In such a situation the

employees will be reimbursed fully for the permissible medical/surgical expenses incurred (ie.

excluding expenses which are not allowed under the rules). On production of bills duly verified and

approved by CMS. This reimbursement will be subject to such guidelines as may be issued by

Management from time to time.

In cases where such an employee/dependent desires to avail of treatment outside JNM Hospital and

prefers a particular hospital/specialist for the purpose, CMS if satisfied that particular

hospital/specialist is capable of attending to the needs of the patient, may allow the same. In such a

situation however reimbursement of expenses will be limited to the rates prescribed and approved by



management from time to time for such reimbursement purposes.

17.8. “Medical Treatment” means.

17.8.1. The use of medical, surgical and other facilities available in JNM Hospital/CD Hospital or

Dispensaries of the Company or such other Hospitals as approved by CMS in respect of employees

staying in Udyogamandal, Ambalamedu, Tripunithura or at any place within a radius of 8 KMs. from

JNM Hospital/CD Hospital. In respect of outstation employees, the use of such facilities in Hospitals

in their locality either Government or private, or such other Hospitals in other places where the

required facilities are available.

17.8.2. Any investigation needed for diagnosis in JNM Hospitals or such other Hospitals as approved by

CMS in respect of employees staying in Udyogamandal, Ambalamedu, Tripunithura or at any other

place within a radius of 8 KMs. from JNM Hospital/CD Hospital. In respect of outstation employees,

investigation in Hospitals in their locality either Government or private, or such other Hospitals where

the required facilities are available. However admission into hospitals for such investigation except

in the case of emergency treatment, requires the prior approval of CMS.

17.8.3. Supply of medicines and other therapeutic drugs as are available and considered necessary for

recovery.

17.8.4. Supply of dentures in case of dental injuries arising out of accidents while on duty at the discretion of

CMS.

17.8.5. Medicines not available in the Hospital or Dispensary can be prescribed to be purchased by any one

of the Company’s Medical Officers to cover an emergency. In respect of outstation employees,

medicines could be either bought from the Hospital where they are getting treated or from outside as

per prescriptions from the concerned Doctor.

17.8.6. Treatment includes admission in JNM Hospital/CD Hospital or to company dispensaries or to any

other Hospital as approved by CMS. In respect of outstation employees, treatment shall include

admission to any Hospital in their locality either Government or Private, or such other Hospitals

where the required facilities are available.

NOTE-1: Emergencies have been defined under 17.4 Bills submitted in respect of non-emergency cases,

where prior authorisation of CMS was not obtained, will be disallowed. However at the discretion of

CMS, such bills may be considered for ratification and reimbursement by CMS based on the

genuiness of the treatment undertaken.

NOTE-2: Treatment under these rules also includes other systems of medicines like Ayurvedic Homeopathic,

Unani and Sidha approved by CMS or authorised Medical Officers of the Company. For this

purpose, a panel of approved physicians and institutions and the reimbursement limits for

consultation etc. will be separately notified by the Management from time to time. For the purpose of

Clause 17.14, the Medical Officer for other systems will be the approved physicians and their

qualification, rank etc. will be as decided by Management generally keeping in view the qualification

rank etc. as prescribed for similar purpose by the Government of India.

NOTE-3: The following guidelines are issued for taking treatment and reimbursement of expenses claimed.

17.9. AYURVEDIC TREATMENT

17.9.1. Ayurvedic treatment was recognised under the FACT CHS Rules as per Order No. GM(P)/IC.237/84

dt. 19.7.84. Under clause-3 of the order under reference it was clarified that treatment under



Ayurvedic system is to be approved by CMS or the Authorised Medical Officers of the company.

Note:a) The basic system of medical attention under FACT CHS Rules will continue to be Allopathic system.

However, in cases of sickness, which are not responding to Allopathic treatment for a reasonable

period of time and/or are having side effects of Allopathic medicines, CHS members could request

CMS/Authorised Company medical officers for permission to get treated under the Ayurvedic System

(Ref. Circular No. GM(P)/IC.005/86 dt. 13/2/86)

Note:b) An Ayurvedic Specialist will be available for consultation to CHS members and their families on

being referred to him by the Medical Officers of the Company. Reimbursement will be only for

treatment of sickness, where the patient has been so referred. If a CHS member/dependent consults

the specialist without such a reference then there will be no reimbursement.

Note:c) In respect of CHS members residing in places beyond a radius of 8 Kms from JNM Hospital/CD

Hospital, treatment under Ayurvedic system could be requested for, with clear indication of the

diagnosis and the Ayurvedic treatment recommended by a qualified Ayurvedic Physician. In such

cases, the first consultation charges subject to limits which are prescribed under CHS rules will be

reimbursed on the basis of submission of claims with supporting vouchers issued by the physician

consulted. However, in respect of further consultations, and for purchase of medicines for the

treatment prescribed, the cost will be reimbursed only on the basis of the prior approval given by

CMS for undertaking the prescribed Ayurvedic Treatment (Ref. circular No. GM(P)/IC.005/86 dt.

13/2/86).

17.9.2. The treatment envisaged under the Ayurvedic system as per CHS rules is for out patient treatment as

authorised by CMS/authorised company medical officers. For inpatient treatment when found

absolutely essential, specific amount approved by CMS for inpatient treatment on the basis of

diagnosis and recommendation of treatment from the attending Ayurvedic physician is essential.

(Ref. circular No. GM(P)/IC.005/86 dt. 13.2.86).

If the medical treatment under the Ayurvedic system as approved by CMS/authorised company

medical officer is to be continued beyond a period of 3 months, such extension of the treatment will

require approval of the CMS which will be based on the recommendation of the attending Ayurvedic

Doctor with detailed clarifications relating to progress/prognosis of the disease (Ref. GM

(P)/IC.005/86).

Members/dependents mentioned in clause 17.4.2 and 17.4.3 of the CHS Rules, (i.e. those who reside

in places beyond a radius of 8 KMs from JNM Hospital/CD Hospital) can avail treatment under the

Ayurvedic system for which reimbursement can be claimed only with prior permission from the CMS

indicating the diagnosis and treatment recommended by a qualified Ayurvedic doctor. The first

consultation charge for consulting a qualified Ayurvedic doctor will be paid in their case, but

reimbursement for subsequent consultations and for purchase of medicines etc.will be permitted only

on the basis of specific approval from the CMS for undertaking the Ayurvedic treatment.

Note:a) Massage treatments like Njawarakkizhi, pizhichil etc. will not be allowed and the cost for such

treatment is not reimbursable under the CHS Rules pertaining to Ayurvedic system (Ref. GM

(P)/IC.361/84 dt. 5.11.84)

b) Similarly, treatment for old age conditions, maintenance of health, post confinement and mental

diseases are not allowed under the CHS Rules pertaining to Ayurvedic system.

c) When a CHS member/dependent is given approval for ayurvedic Treatment, allopathic medical

attention either as out-patient or inpatient is not permissible during the period of Ayurvedic treatment

(Ref. GM(P)/IC. 361/84 dt. 5.11.84).



d) For ayurvedic treatment under FACT CHS rules, recognised Hospitals/Vaidyasalas are as per

indications given in circular No. GM(P)/IC.361/84 dt. 5.11.84. GM(P)/IC.005/86, GGM

(P&A)/IC.309/86, ED(HRD)/CO.F.48/051 dt. 21.7.89 - Please see Annexure.

e) In this connection, it is clarified that only the Head/Main Office of the recognised Ayurvedic

institutions/Hospitals and their branches are the recognised sources for supply of medicines for

treatment. The agencies of any such institutions are not recognised under CHS Rules for supply of

medicines and cost reimbursement (GGM(F&S/IC.309/96).

f) Item of Ayurvedic medicines which are listed in the enclosed Annexure are normally non-permissible

items, However, in respect of diseases where the treatment requires specific use of these medicines

the CHS member/members will have to produce a supporting certificate to this effect from the

treating Ayurvedic

physician clearly indicating as to the reason/requirement of use of these medicines for the treatment

of the particular disease. For reimbursement of the cost of these medicines purchased such

certificates will be scrutinized by the Company Ayurvedic consultant.

g) Reimbursement claim not conforming to the guidelines given above and also not conforming to rules

which are already prescribed and which will be prescribed from time to time will not be entertained.

h) All are requested to ensure that reimbursement claims are submitted as per stipulations and in the

prescribed formats with required supporting documents. Reimbursement claims for medical

expenses under Ayurveda will have to be supported with original bills, prescription and valid

authorisation/permission for the treatment taken, without which no claim will be entertained.

For the purpose of Ayurvedic treatment, hospitals/vaidyasalas recognised for the purpose of

reimbursement will be as under:-

FOR MEMBERS/FAMILIES COVERED UNDER CLAUSE 1.6.1. OF THE CHS RULES:

1. All Government Ayurveda Hospitals/Dispensaries.

2. Arya Vaidyasala, Kottackal and all its branches.

3. Arya Vaidya Pharmacy (Coimbatore) and all its branches.

4. The Kerala Varma Ayurvedic Co-operative Pharmacy Ltd., Trichur (Oushedi, Trichur) and branches.

5. PNVM Pharmaceuticals, Ernakulam.

6. Vaidya Ratnam Oushadhasala, Ollur.

7. ETM Vaidya sala, Trichur.

8. Vaidyamadhom Vaidyasala and Nursing Home, P.O.Mezhethur, Thrithala.

9. SNA Oushadhasala, Trichur.

10. Vayaskara Ayurveda Pharmacy, Kottayam.

11. Quilon District Ayurvedic Oushadha Nirman Vaidyasala Co-operative Society Ltd., Quilon.



12. Kerala Ayurvedic Co-op. Society Ltd., Meenchantha, Calicut.

13. Trivandrum Ayurvedic Co-op. Pharmacy, Trivandrum.

14. Ayurvedic Co-op. Pharmacy, Alleppey.

15. The Kerala Pharmacy, Alwaye and all its branches.

16. The Amruthum Ayurveda Hospital, Alwaye.

17. Indian Medical Practitioners co-op. pharmacy & Stores Co., Adayar, Madras and all branches.

18. Indian pharmaceutical Works Ltd., Gojhalu Road, South Bombay and its branches.

19. Ayurveda Rasashala, Poone and all its branches.

20. Zandu Pharmaceutical Works Ltd., Bombay.

21. Nagarjuna Herbal Concentrates Ltd., Elandeson P.O. Alakkode,

Thodupuzha-685 588.

22. C.K.K.M.Pharmaceuticals, Tripunithura.

23. Santhigiri Ayurveda Vaidyasala, Santhigiri Ashram, Koliyakkode P.O., Venjanamoodu (Via),

Trivandrum Dist.

24. Cochin Ariya Vaidyasala, Head Office, Eroor P.O., Tripunithura,Pin-682 306, Ernakulam Dist.

25. New Udaya Pharmacy & Ayurvedic Laboratories, Kadavanthara Junction, Cochin - 682 020.

It is to be noted that only the Head/Main Office of the above institutions and their branches are

recognised for the purpose of reimbursement. No agency of any institution is recognised for the

purpose of reimbursement. If it is found necessary to add to the approved pharmacies, it will be

included later.

17.9.3. LIST OF AYURVEDIC MEDICINES NORMALLY NOT PERMISSIBLE FOR REIMBURSEMENT

I. Asava & Arita

1. Draksarista

2. Draksasava

3. Mrigamadasava

4. Mridvikarista

2. AVALEHA OR LEHA AND PAKA

1. Cyavanaprasa

2. Drakasavaleha

3. Mridvikadi Lehya

3. GHRITA

1. Chagaladya Ghrita



4. TAILA

1. Kunkumadi Taila

2. Ksirabala Taila (Satapeki)

3. Dhanavanterim Taila (Satapaki)

5. VARTTI NETRABINDU AND ANJANA

1. Muktadi Mahanjana

6. KUPIPAKVA RASAYANA

1. Makaradhavja

2. Svarna Sindhuna

7. PARPATI

1. Svarna parpati

8. PISTI

1. Mukta pisti

9. BHASMA

1. Mukta Bhasma

2. Svarna Bhasma

10. RASA YOGA

1. Brihat kasturi Bhairava Rase

2. Brihat Vata Cintamani Rosa

3. Brihat Garbha cintamani Rasa

4. Caturbhuja Rase

5. Chintamani Caturmukha Rasa

6. Kumara Kalyana Rasa

7. Mahalakshmivilasa Rasa

8. Muktapancamrita Rasa

9. Navaratnaraja Mriganga Rasa

10. Ratnagiri Rasa

11. Resaraja Rasa

12. Rajamriganka Rasa

13. Svarnabhupati Rasa

14. Sutasekhara Rasa (with Svarnabhasma)

15. Vasantemalati Rasa

16. Vasantakusumakara Rasa

17. Vatakulanteka Rasa

18. Yogandre Rasa

17.10. HOMEOPATHIC TREATMENT

The employees are permitted to get treated by any qualified Doctor. The consultation fee allowable



will be as follows:-

1. For Doctors holding Diploma in

Homeopathy (DHMS) Rs.5/-

2. For Doctors holding Degree in

Homeopathy (BHMS) Rs.10/-

3. For Doctors holding Postgraduate

Diploma (DF.Hom) Rs.25/-

The above fee is for first consultation. In addition, actual cost of medicines including subsequent

consultation within a total ceiling of Rs.50/- per patient per month will be reimbursed.

General Conditions

1. When a patient is under treatment under the above modes, treatment in JNM Hospital either as

inpatient or outpatient will not be allowed.

2. Patients/CHS card holders will have to obtain the special authorisation form from CMS or Medical

Officers authorised by CMS before undertaking such treatment.

3. In order to facilitate scrutiny of medical claims the following details are also required to be submitted

along with the bills.

a) Name of the Manufacturing firm against item of medicine.

b) A certificate that the price charged is according to the latest price indicated in the catalogues of

pharmacies.

4. The above guidelines shall be deemed to have come into effect from 19th July 1984.

RULE 2

17.11. VERIFICATION OF MEMBERSHIP

17.11.1. Due verification regarding the dependency of those declared as dependents to be covered will be

done by the Personnel Department and an Identify Card issued to the member by Personnel

Department which shall be produced before the CMS for getting Membership card. An employee

who has hitherto been covered by the ESI and who becomes member of CHS shall produce his

Identify Card to CMS from the Personnel Department after surrendering his ESI card. Scrutiny about

his dependents shall be done by the Personnel Department. An employee who was an ESI member

and becomes a member of CHS shall be taken into the CHS only on his completion of the

contribution period in the ESI.

17.11.2. For adding or deleting a name from the Card:

E.g.Adding: When a member gets married or gets children or adopts children legally or adding a

widowed mother.

Deleting: When a dependent dies or gets employed or is given in marriage, etc. he/she shall

automatically cease to be beneficiary of the scheme.



Deletion shall be done on intimation from the member within four weeks of occurrence failing which

the CHS card of the member is liable for cancellation by CMS.

NOTE The employees whose spouse is employed elsewhere will be given a one time option to opt out of

CHS subject to the following conditions.

a) The employee will not be eligible for medical treatment and/or reimbursement of medical expenses

as admissible under CHS from the Company.

b) The employee has to continue to pay monthly CHS subscription at the rates as applicable from time

to time.

c) The employee will continue to be eligible for medical leave maternity leave and accident leave from

the Company as per rules.

d) For medical leave for period exceeding two days, leave, application should be supported by Medical

Certificate from qualified Doctors (as defined in CHS Rules) and endorsed by CMS.

17.12 RULE 3.

17.12.1. Monthly subscription:

17.12.2. All the CHS members has to contribute Rs.15 p.m.

17.12.3. An employee ceases to be a member when he/she ceases to be on the Company’s rolls by reason of

leaving the services due to resignation, retirement, dismissal, discharge etc.

17.13 RULE 4.

17.13.1. A member will be entitled to free medical attendance and/or treatment or reimbursement of

reasonable cost thereof, subject to these rules. Supply of food, tonics with food value, toilet articles

or disinfectants shall not be allowed/value of which are not reimbursable unless otherwise

specifically found necessary by CMS.

17.13.2. Treatment will ordinarily be at the Hospital or Dispensaries of the Company, except when otherwise

authorised by CMS or in his absence by any Medical Officer of the Company. In respect of

outstation employees, treatment will be in the Hospital of their locality either Government or private

or such other Hospital where required facilities are available.

17.13.3. In cases of emergencies when it is not possible to contact the authorised Medical Officer, the

member may seek the advice of any Doctor with minimum qualifications of MBBS. In such cases,

the matter should be reported to CMS within 48 hours of admission or starting of treatment. CMS will

decide whether the patient shall be allowed to continue treatment in that Hospital or by that Doctor or

transferred to JNM. This provision, however, will not apply in the case of outstation employees.

17.13.4. When a member or dependent resides in a place other than Udyogamandal, Ambalamedu,

Tripunithura, or any place within a radius of 8 Kms. from JNM Hospital/CD Hospital, reimbursement

for medical attendance and treatment shall be on the basis of original bills from the Hospitals/Doctors

and original bills for purchase of medicines with prescription for such medicines from the

Hospitals/Doctors who have attended/treated the patient and also with a certificate from the

Hospitals/Doctors to the effect that they have attended/treated the patient.



17.14. RULE 5

17.14.1. Confinement:

17.14.2. Treatment includes confinement of a female member or wife of a member in JNM Hospital or

residence of a member, No medical attention shall be given by the Medical Staff of the company for

delivery at home. Prenatal and post-natal treatment shall be allowed.

For confinement in other institutions, prior sanction has to be obtained from CMS, specifying the

Hospital in which the patient will be admitted. In respect of outstation employees, Hospital of their

locality either Government or private may be chosen. In case where the required facilities are not

available and in cases where confinement is arranged in institutions in the home-town of the

members, prior sanction of the CMS shall be obtained.

17.14.3. In cases where CMS has given such prior sanction, the confinement charges reimbursable shall be

based on actuals or a maximum of Rs.500/- whichever is less, In respect of forceps delivery, vacuum

evacuation or ceasarian, the bill amounts, even if they exceed the maximum limit Rs.500/-, shall be

reimbursed as per applicable CHS rate from time to time.

17.14.4. No member or wife of a member should be entitled for maternity benefit including leave, for more

than 3 children. For those who already have more than 3 children while joining the Company, these

benefits shall not be extended.

17.15. RULE 6.

17.15.1. Reimbursement:

17.15.2. Members have been divided into three groups for purposes of treatment and under specified

circumstances, treatment has been allowed outside JNM Hospital or Company Dispensaries,

provided the Medical Officer has a minimum qualification of MBBS.

i) These categories of members who are eligible for reimbursement shall submit an application in the

prescribed form, produce a certificate from the Medical Officer who treated giving diagnosis and

other details of the cases, original prescriptions and vouchers thereof, within three months of

completion of treatment in case of inpatient treatment.

ii) For outpatient treatment/acute illness it should be within 3 months of taking treatment or within 3

months of purchase of medicines.

iii) In Chronic cases like T.B., Asthma, Heart diseases like HTN, CAD, Renal, Neuorological and

Endocrine disorders like Thyroid, Diabetes etc. when treatment has to be continued for many years

or life long, sanction should be obtained from CMS for treatment for a particular time say 6 months or

1 year and shall be renewed periodically.

Medical Advance

CMS may recommend payment of an advance in case of prolonged or costly treatment and the

Director (Finance) may grant such advances.

3) Applicable to payments Rs.5000/- and above only.

4) Attach approved permission/Authorisation or information letter earlier obtained from CMS for



undergoing the treatment.

5) Advance amount to be applied thro’ Department Head forwarded to Division Head/CMS/FD for

approval.

6) Advance forms to be filled in triplicate and one copy to be submitted to the concerned Medical Centre

where the Bill is processed.

7) No subsequent advances will be given unless the First Advance is cleared by submitting the bills in

time.

8) Approved advance amount will be given to the hospital concerned thro’ a Cheque/DD.

17.16 Consultation fee allowable (CMO/D/87/81 dt.19.6.81)

i) Whenever members get attended/treated by outside Hospitals/Doctors other than Government

Hospitals, the consultation fee allowable will be limited to actuals or the minimum as indicated below

whichever is lower. Claims for reimbursement shall be supported by vouchers.

a) Graduates Ceiling

i) First consultation Rs.15/-

ii) Second & subsequent consultations Rs.10/- each

b) Post Graduates

Specialists (1) Diploma Rs.20/-

(2) Degree Rs.30/-

c) Super specialists consultations }

in special hospitals like } Actuals

Vellore/other specialists }

Hospitals. }

In respect of consultation with specialists, consultation fee shall be reimbursed provided members

have obtained prior sanction of CMS is satisfied of the circumstances.

17.17 Charges for special or general accommodation when a member has gone to hospital other than JNM

Hospital with prior authorisation by CMS, will be allowed at actuals in the case of Government

Hospital and rates prescribed from time to time by the Management in respect of other Hospitals. In

special circumstances, CMS, in his discretion, may allow higher charges if medically found

necessary. The guidelines given in this regard are as follows:

17.17.1. Room Rent

Rs.50/- per day in class A cities and Rs.30/- per day in other places. No separate reimbursement is

admissible for any other charges, e.g. charges for electric light, fan, heater, air-conditioning, etc. In

special cases, CMS is authorised to sanction payment for air-condition, if separately charged,

keeping in view the nature of the illness, etc. Where the room rent charges are inclusive of diet

charges, reimbursement shall be for the amount as reduced by the diet charges. Where break-ups

are not available, reimbursement shall be made deducting 25% towards diet charges.



Further an amount of Rs.5/- and Rs.7.50 per day will be reduced from the bills in respect of room rent

paid depending on whether it is non-air-conditioned or air-conditioned.

NOTE-1: Reimbursement of medical expenses incurred in Outside Hospitals/Specialities

1) As for as possible, the employees/their dependents (other than those in outstation location) will

avail of medical/surgical treatment from JNM Hospital/CD Hospital.

2) In cases where the CMS having due regard to any particular treatment, feels that the facilities

available in JNM Hospital are not adequate, such cases could be referred by the CMS to any

Hospitals/Specialists having adequate expertise to treat such cases. In such a situation, the

employee will be reimbursed fully for the permissible medical/surgical expenses incurred (excluding

expenses which are not allowed under the Rules) on production of bills duly verified and approved by

CMS. This reimbursement will be subject to such guidelines as may be issued by Management from

time to time.

3) In cases where such an employee/dependent desires to avail of treatment outside JNM Hospital and

prefers a particular Hospital/Specialist for the purpose, CMS, if satisfied that the particular

Hospital/Specialist is capable of attending to the needs of the patient, may allow the same. In such a

situation however reimbursement of expenses will be limited to the rates prescribed and approved by

Management from time to time for such reimbursement purposes.

NOTE-2 Where a CHS member seeks treatment from outside hospitals, it is desirable that the CHS member

establishes his identity by presentation of CHS cards.

iii) Operation & Investigation charges

Applicable CHS rates will be provided, the CHS rules in this regard like getting prior permission, etc.

are followed wherever applicable.

iv) In the case of various types of in estimations, biochemistry, F.T.M., X-ray, E.C.G., Film size etc.

reimbursement will be on actuals or the ceiling limit whichever is less.

For investigations not covered by the above CMS may reimburse reasonable rates on the basis of

vouchers.

Deviation from the above will be considered by CMD on merits, with approval of GM.

Charges for special or general accommodation when a member has gone to Hospital other than JNM

HOspital with prior authorisation by CMS, will be allowed at actuals in the case of Government

Hospitals and rates prescribed from time to time by the Management in respect of other Hospitals. In

special circumstances, CMS, in his discretion, may allow higher charges if medically found

necessary.

NOTE-3 Provision for Escort for CHS member and dependent at Outside Hospitals

1) Provision of escort for CHS member and his dependent for outside treatment is to be considered

only when the patient is not in a position to take care of himself. Situations envisaged would be:

a) Patient being unconscious.

b) Critically ill patient needing super-speciality treatment in neuro-surgical, cardio-thoracic or renal unit.

c) Orthopaedically crippled patient who needs assistance for movement while at transportation.



2) In the case of dependent children for outside treatment, normally mother will be considered as

escort. Additional escort will not be paid for.

3) Sanction for escort should be taken in advance from the CMS.

4) Escort will not be permissible for any follow-up treatment.

5) Escort taken in any other connection will not be allowed.

17.18. Traveling allowance and incidentals will normally be allowed only for the patients and not for

escorts. No daily allowance is admissible in such instances. For this, prior sanction should be

obtained from the Head of the Division on the recommendation of CMS. In such cases, the rates of

T.A. shall be the class to which the employee is entitled as per TA rules. In special circumstances,

CMS may authorise travel on medical grounds in a class higher than what the employee is entitled

to. CMS may also allow an attendant in the same mod/class of transport in such of those cases

where he is fully satisfied that an attendant is required to travel along with the patient for taking care

of the patient. In cases where usual mode of transport is found by CMS not sufficient to take care of

the patient, either free ambulance will be provided or charges incurred for arranging special transport

will be reimbursed on certification of CMS.

17.19. Taxi fare from Railway Station/Bus stand/Airport to the Hospital:

Taxi fare is reimbursable from the residence to the Railway station/bus stand/airport at the place of

departure and similarly at the place of arrival as per T.A. Rules. The same Rules shall apply for

return journey as well.

17.20. Railway Concession to CHS members while referred for specialised treatment

For the convenience and benefit of the following categories of patients it is informed that travel

concession is extended by the Railways for their travel to the specialist hospitals & medical colleges,

for the investigation and treatment when referred.

Category Concession given in the fare

(approximately)

———— ———————————————

1. Cancer Patients 75% of the fare

2. Tuberculosis patients 75% of the fare

3. a. Blind persons 75% of the fare

b. Orthopaedically

handicapped persons 75% of the fare

4. Blind students 75% of the fare

5. Mentally retarded persons 75% of the fare

6. Deaf & Dumb persons 50% of the fare

It is also made known that these patients will get preference over others for reservation and allotment



of seats/berths, for travel on medical ground.

The concession as mentioned above in rail fare is also applicable for an escort accompanying the

patient for travel on medical ground.

For extending the railway concession as above, it is necessary to produce a medical certificate from

the attending doctor for the onward journey to the referral hospital and back.

In the case of CHS members and their dependents availing treatment at the Company Hospital at

Udyogamandal and Ambalamedu, the required medical certificate for getting the concessional rate in

entitled class of railway travel for the onward journey to the specialist hospital will be issued from

JNM hospital or Ambalamedu Township Hospital as the case may be. For the return journey, a

medical certificate is to be obtained from the attending doctor at the specialist hospital.

The outstation members and dependents can also avail the above concessions by obtaining a

certificate for traveling on medical ground from the doctor for onward journey to the hospital.

17.21 Time for submission of bills

All claims for reimbursement must be submitted within three months of completion of the in-patient

treatment. Any bill submitted after that will not normally be allowed.

For outpatient treatment/acute illness it should be within 3 months of taking treatment or within 3

months of purchase of medicines.

Part bills should not be submitted. In chronic cases like tuberculosis, etc. sanction should be obtained

from CMS for treatment for a particular time, say, 6 months or 1 year, etc. For such a sanction, the

member should apply with a medical certificate and other supporting proofs to CMS, within 3 months

of commencement of the treatment. Part bills can be sent in such case every month or as approved

by CMS.

17.22. RULE 7

17.22.1. When both the husband and wife are employed in the Company, and one is governed by CHS and

the other by ESI, such member shall be eligible for treatment as per their entitlement viz. CHS or ESI

only. However, their children shall be covered under CHS.

17.23. RULE 8

17.23.1. Only Allopathic treatment by a Doctor with a minimum qualification of MBBS is allowable under this

Scheme. CMS may however recommend for CMD’s approval in deserving cases treatment by other

modes like Ayurvedic, etc. CMD has delegated powers to FD for giving such approval (CFA/J-1/1 dt.

1.1.83).

17.24. RULE 9

17.24.1. For any interpretation of these Rules or decision/s in respect of matters arising out of these Rules,

the decision of the Chairman & Managing Director shall be final.

17.25. RULE 10

17.25.1. The Management will have the sole and absolute discretion to modify, amend and bring out suitable

changes to these rules from time to time, as may be considered necessary.



17.26. In respect of any points not covered by the above rules in regard to medical attendance/medical

reimbursement, etc. the Central Services Medical Attendance Rules and the Rules regarding the

Central Government Health Scheme of the Government of India will apply.

17.27. Suitable administrative guidelines will be given by Management from time to time to CMS to enable

him to approve investigations/treatments in outside Hospitals other than Government Hospitals

within India.

17.28. Any investigation/treatment in Hospitals outside India territory will be treated as a special case

requiring prior Management approval.

RULE 11 - Processing of Medical Bills

1. Ref: CMS-UD-Medi-0019 dt.10-3-1994 &

CMS-UD-Medi-0037 dt.25-4-1994

With reference to this CMS - order, medical claim bills will be processed in the respective divisions

and signed by the designated Senior Medical Officers authorised by CMS with effect from April 1994.

HO, FEDO & UDL Divn. by Sr.MO (UD)

FEW, MARKETING by Sr.MO(JNMH-MKTG)

P.D. by Sr.MO (PD)

C.D. SMed-CD

2. Medical Bill amounts more than Rs.10,000/- will also be processed in the respective divisions and

signed by CMS.

17.29. CMS(HO)/JNMH/26/45 Dt. 24.1.91

CMD in his endorsement dt.8.1.91 a note CPRM(ASCL)/AC/PER/3205 dt. 27.11.90 has approved the

following.

1. Till Welfare fund is introduced, the expenses incurred in JNM Hospital (in accident cases) is waived.

2. The expenses incurred towards treatment in other Hospital, when the person is referred by JNM, may

be reimbursed to the person concerned so that he should not suffer financially also on account of

the work accident.

17.30. INCOME TAX EXEMPTION FOR REIMBURSEMENT OF MEDICAL BILLS IN EXCESS OF

Rs.10,000/- PER ANNUM

Hospitals other than those maintained by Government or any Local Authority which have obtained the

status of ‘Exempted Hospital’ from the Income Tax Authorities are given below:-

Kerala

1. Dr.Kunjalu’s Nursing Home,Ernakulam



2. Medical Trust Hospital, Ernakulam

3. Lakshmi Hospital, Ernakulam -

For Cancer-upto Chemotherapy. All other diseases mentioned under Rule 3(A) (2) of the I.T. Rules

except Acquired Immunity Deficiency Syndrome and the disease or ailment of the heart.

4. Lisie Hospital, Cochin

5. Krishna Nursing Home, Cochin.

6. Sree Sudheendra Medical Mission, Cochin.

7. Cochin Hospital, Ernakulam

8. Vathakat Orthopaedic Hospital, Cochin

9. Malankara Orthodox Syrian Church Medical Mission Hospital, Kolencherry

10. P.N.V.M.Hospital and Research Centre, Ernakulam.

11. Ernakulam Medical Centre (P) Ltd., Ernakulam.

12. Lourdes Hospital, Ernakulam

13. Sree Uthradam Thirunal Hospital, Trivandrum

Tamilnadu

1. Kovai Medical Centre,Coimbatore

2. Institute of Cardio Vascular Diseases, run by the Madras Medical Mission for the treatment,

surgical and medical, of the diseases or ailments of the heart.

3. Appolo Hospital, Madras-6 -

For all ailment and diseases included in Rule 3(2).

4. The Christian Medical College Hospital, Vellore -


5. Tamilnadu Hospitals (P) Ltd. -


6. Institute of Cardio Vascular Diseases(Madras Medical Mission), Madras-26. -

Heart Diseases

7. The Kuppuswamy Naidu Charity Trust, Coimbatore-37. -

Cancer, Heart Diseases, Gynecological or Obstetric ailments, Pediatrics treatment.

8. K.G.Hospital,Coimbatore -

For all ailments and diseases included in Rule 3A(2).



9. Vijaya Hospital, Madras-26. -


10. Sri.Gokulam Hospital, Salem-4 -


11. Sri.Ramachandra Medical College & Research Institute, Madras-600 116.


12. Trinity Acute Care Hospital, Madras-4


13. Medical Research Foundation, Madras-6

Disease of eye.

14. K.S.Hospital, Madras-10 -


15. Kumaran Hospital Pvt.Ltd., Madras-10 -


16. Sri Ramakrishna Hospital -


17. The Voluntary Health Services, Adayar, Madras-600 113 -


18. Malar Hospitals Ltd. -


19. Dr.Agarwal’s Eye Institute, Madras-600 086 -

Diseases of eye.

20. The Child Trust Hospital, Madras - 600 034 -

All diseases except Gynecological (or) Obstetric ailment (or) disease requiring Medical treatment in

hospital for atleast 3 continuous days.

21. Devaki Hospital, Madras-4 -


22. The Guest Hospital, Madras-10


23. Sooriya Hospital, Madras-93. -


24. M/s.Balaji Hospital, Madras-32. -


25. Aysha Hospital (P) Ltd., Madras-10


26. Sundaram Medical Foundation, Madras-40




27. Dilroth Hospital, Madras-30


28. Lakshmi Nursing Home, Madras-43


29. M.V.Diabetics Specialities (P) Ltd., Madras-14

For ailments of Eye, Heart, Blood, Central Nervous System, Urinary System, Endocrine Glands

requiring Surgical operation, Insulin Shocks, Drug reaction and other allergic manifestation.

30. Sugam Hospital, Madras-19


31. St.Isabel Hospital, Madras


32. Shifa Hospital and Research Centre, Madras-5


33. K.H.M.Hospital, Madras-40


34. Willington Hospital, Madras-6


35. K.J.Hospital, Madras-84


36. Meenakshi Hospital, Lake Area, Melur Road


37. Hospital Property (P) Ltd., (National Hospital), Madras-1.


38. Aravind Eye Hospital, Madurai - 625 020.

Diseases of Eye.

Karnataka

1. Wockhardt Medical and Research Centre, Bangalore-560 052


2. Manipal Hospital,Bangalore-560 017.

3. Wockhardt Hospital & Heart Institute, Bangalore-560 052

4. Sushruta Medical Aid & Research Hospital Ltd., Bangalore-560 004.

5. St.John’s Medical College & Hospital, Bangalore-560 034.

6. Mallya Hospital - Bangalore 560 042



7. Lakeside Medical Centre & Hospital, Bangalore-560 042

8. Mallige Medical Centre, Bangalore-560 001

9. St.Martha’s Hospital, Bangalore 560 009

10. Mangalore Nursing Home, Mangalore

11. Ramakrishna Nursing Home, Bangalore-560-011.

12. Bangalore Kidney Foundation, Bangalore-560 070

13. Bhagawan Mahavir Memorial Jain Trust, Bangalore

14. Basappa Memorial Hospital, Mysore.

15. ‘St.Philomenos Hospital, Bangalore

16. Fr.Mullers Hospital, Mangalore

17. Hebbar Nursing Home, Bangalore

18. Sevashetra Hospital, Bangalore

19. Bangalore Institute of Oncology, Bangalore

20. Yellama Dasappa Hospital, Bangalore

21. M.S.Ramaiah Medical Hospital, Bangalore

Andhra Pradesh

1. Deccan Hospital Corporation Limited, (Appollo Hospitals), Hyderabad-500 034.

2. Modwin Hospitals, Hyderabad

3. Sathya Kidney Centre, Hyderabad-500 029.

4. CDR Health Care Ltd., Hyderabad - 500 029.

5. Durgabai Deshmukh Hospital & Research Centre, Hyderabad-500 044.

6. Share Medical Care, Mediciti Hospital, Hyderabad-500 004.

7. Mahavir Hospital & Research Centre, Hyderabad-500 004.

8. Hyderabad Eye Institute, Hyderabad-500 034

9. Secunderabad Health Care Ltd., Secunderabad

10. Kamineni Hospitals Ltd., Hyderabad

11. Premier Hospital, Hyderabad



12. Pinnamaneni Poly Clinic run by Kumari Varalakshmi Memorial Trust, Vijayawada

13. Nagarjuna Hospitals Pvt.Ltd., Vijayawada-7.

14. Swami Health Care Centre, Hyderabad -500 016

15. Sri Ramana Hospitals, Hyderabad

16. CDR Hospital, Visakhapatnam.

17.31. MEDICAL LEAVE ON HALF PAY

a) Members are entitled to medical leave on half pay for 20 days in a leave year. For those joining the

Company during the first half of the year 20 days of such leave is admissible and for those joining

during the second half of the year, 10 days of such medical leave would be admissible.

b) Accumulation of medical leave shall be unlimited.

c) Sanctioning of Medical Leave

Medical leave taken for a period of more than two days would require submission of proper medical

certificate along with the leave application which should be routed through Department Head. This

should reach CMS not later than 3 days from the date on which the employee reports back for duty

after the sickness.

Medical Leave upto 10 days Medical Officers

“ from 10 days to 3 weeks Medical Supdt/DyCMS

“ more than 3 weeks CMS

d) The payment during medical leave would be half of ‘pay’ and full Dearness and other allowances.

e) The medical leave can be availed of in continuation of casual/privilege leave or by itself. Such leave

can also be prefixed or suffixed to holidays if such days are available.

f) Return to duty after medical leave will be permissible only with a fitness certificate issued by the

authorised Medical Officer.

g) The medical leave may be commuted into full pay if so desired by the employee by debiting the

medical leave account with twice the period of leave so commuted and also subject to fulfilling

condition (c) above.

17.32. ENCASHMENT OF MEDICAL LEAVE ON HALF PAY









the Company’s service on attaining age of superannuation, resignation, voluntary retirement and death

while in service.













g) The above facility of encashment of Medical Leave on half pay will be applicable to all regular non-

managerial employees of all the Divisions of the Company, JNM Hospital and CD Township Hospital,

who are entitled to Medical Leave on half pay as per the Company’s Leave Rules and also to all

regular managerial employees of the Company who are entitled to Medical Leave on half pay as per

the Company’s Leave Rules. The above encashment facility will not be applicable to employees in

Schools establishments at Udyogamandal and Ambalamedu who are eligible for half pay leave

under KER/KSR.

17.33 ACCIDENT LEAVE

a) In the case of employees under the Contributory Health Scheme who are disabled by injury during

the accident incurred in or in consequence of his official duties, or in consequence of his official

position, irrespective of leave at credit or not, he can be granted accident leave.

b) Such leave will only be on a medical certificate granted by the Authorised Medical Officer, together

with a report from the Head of his department indicating the circumstances under which the disability

occurred. Such leave will be sanctioned only by Division Head.

c) Periods of accident leave will be treated as duty for all purposes.

d) In cases other than due to illness or disability due to accident while on duty, no special leave will be

granted except under the circumstances indicated in this order.

e) In cases of Accident on duty the concerned employee should report to the designated Authorised

Company Medical Officer within 2 days of the occurrence of the Accident. After the initial First Aid

treatment given at the Company Medical Centres or at JNM/CD Hospitals or to be informed to the

Sr.MO through their department in cases of an employee who is unable to report due to the nature &

severity of the injury.

Similar rule will be applicable to on duty outside Accident cases also.

In both cases employee should report as soon he is in an ambulatory condition.

17.34. HIGHLIGHTS OF UPDATED C.H.S. RULES FOLLOWING ADMINISTRATIVE INSTRUCTIONS



FROM TIME TO TIME.

I. DOCUMENTATION

For In-patient treatment, CHS member has to take permission from CMS except in case of Cochin

Division wherein SMed. is authorised to extend permission on behalf of CMS.

Note: Application has to be accepted at the different Division Medical Centre with a receipt note by affixing

the date stamp and also permission stamp such as:-

[ ] Apply with Doctors Certificate

[ ] OK Reimbursement to the extent of CHS limit.

[ ] Place of Residence

NOTE(i): The member has to convince CMS or the authorised Medical Officer that it was an emergency and

the matter should be reported to CMS as early as possible and not later than 10 days of starting the

treatment.

NOTE(ii): Bills submitted in respect of non-emergency cases, where prior authorisation of CMS/SMed. was not

obtained, will be disallowed, by affixing the stamp - ‘Not entertainable under CHS Rules’.

(Ref.Rule 1.6.3 Note(i) & Note(ii) Rule 1.10.6 Note I).

II.. REFERRAL vs PERMISSION:

Within 8 kilometers of JNM and CD Hospital, CHS member and their dependent have to report to the

respective hospital. While on referral cases, reimbursement is usually on actual except certain non-

reimbursible items, such as:

1) Diet and tonic, food articles.

2) Disposable Item - Syringes, I.V. Canula, Urosac Catheter.

3) Suture Materials - Catgut, Vickryl, Offsite Dressing, Ethilon, etc.

While CHS members obtain prior permission and or within 10 days of commencement of treatment,

medical bill will be reimbursed on approved rate.

III. HIGH-TECH TREATMENT

Hi-tech surgical intervention such as Extra-corporal Lithotrypsy, Laproscopic Cholescystectomy Laser

Surgery for Cancer, etc. are not recognised under CHS rule and not reimbursed. However, Magnetic

Reasonance Imaging (MRI) in selected cases can be considered with a certification from attending

Neuro Physician/Neuro Surgeon.

IV. SPECIAL INVESTIGATION

Special investigation such as Ultra Sound, CT Scan can be reimbursed at the rate which is approved

by JNM Hospital on contract basis. Hence CHS member should encourage to take authorisation

from JNM Hospital or CD hospital as the case may be. In emergency situations, scanning charges

can be reimbursed even if prior approval is not taken on the discretion of CMS.



V. In emergency situations scanning charges can be reimbursed even if prior approval is not taken, on

the discretion of CMS.

VI. MEDICINE

As a policy, certain drugs - Lodagil, Hyderazine, Nootrophil are normally not reimbursable. In

selected cases on discretion of CMS, it can be reimbursed for a stipulated period. However,

medicine such as Imuran, Anti-haemophilic drugs, injection strepto kinase/Uro kinase can be

reimbursed with proper certification from the attending qualified doctor.

Vitamins and liver support medicine (Liv.52, Kamilari, Hepin) as part of treatment in case of debilated

condition and chronic disease such as Hyper tension, Diabetes and liver disease will be reimbursed.

A course of vitamin can be reimbursed for short duration along with antibiotic treatment.

VII. PHYSIOTHERAPY

As JNM Hospital is maintaining a well equipped Physiotherapy Department with a qualified

Physiotherapist, it is desirable that the CHS member should utilise the facility when Physiotherapy is

needed. While on Inpatient in any hospital, Physiotherapy for a short duration can be reimbursed

with the approved rate otherwise the cost of Physiotherapy is not reimbursed as per CHS Rule.

VIII. STERILITY

Sterility/Infertility is not a disease and hence the treatment cost is not reimbursible under CHS rule.

Particularly, Hormonal Assey to establish the diagnosis as a part of investigation is also not

reimbursible.

IX. ALTERNATIVE SYSTEM OF MEDICINE

CHS rule has recognised Ayurveda and Homeopathy as an alternative system of medicine.

NOTE:i) For Ayurveda system of medicine, only out-patient treatment will be permissible only for 3 months and

on exceptional case for another 3 months.

ii) Certain Pharmacies have been approved for taking treatment/medicine under the Ayurveda system.

Treatment taken or medicine purchased from unapproved Pharmacies or Agencies of any Institution

will not be considered for reimbursement in Ayurveda system. List of approved Pharmacies are

attached.

iii) Polypathy treatment - As per CHS rules treatment taken under different system of medicine (i.e.

Homeopathy, Allopathy, Ayurveda, etc.) from the same doctor and or the same time, is not covered

under CHS Rules and hence not permissible.

iv) Naturopathy, Allergy tests, Accupuncture, Magnetic Therapy, TABE treatment etc., are also not

recognised for reimbursement.

(Ref. Rule 1.10.6 Note 2,3 & 4)

X. ARTIFICIAL APPLICANCES



As a life saving measure, only Pace-Maker is provided to CHS member and their dependent when

attending Cardiologist certificates and urgency of such device. Other artificial appliances such as

Hearing Aid, Artificial Denture, Contact Lens are not reimbursible in CHS rule.

However, Orthopaedic appliances can be reimbursed on case to case basis by CMS.

17.35 ARRANGEMENT FOR CT SCAN FOR CHS MEMBERS

In condition of circular on the subject dated 25.3.92, we are glad to inform all concerned that we have

made arrangements with M/s. Vita Diagnostics Ltd., Cochin and M/s. Medivision, Cochin for CT scan

of our CHS members/dependants on concessional rates.

The CHS members/their dependents can get referral forms from company Hospital with Medical

Officer’s signature & the seal of the respective hospital (JNM Hospital/Ambalamedu Hospital) for CT

scan.

CHS members/dependents availing treatment from other hospitals can also get the CT Scan done at

the above centres on establishing their identity as members/dependents of FACT Contributory

Health Scheme from the SrMS/CMS.

In the interest of our CHS members, it is advised to get the scan done at the above centres to avoid

procedural delay and also to avail the concessional rate and credit facility offered by the centres.

17.36 Upper Ceiling for reimbursement of Major surgery and other special treatment

I. Major Surgery

i) Resection of Lung including }

Bronchospcopy & CT Scan } Rs. 25,000/-

ii) Spinal Surgery including }

MRI } Rs. 25,000/-

iii) Arthroscopy/Arthropic surgery }

of the Knee joint } Rs. 25,000/-

iv) Permanent pacing including }

the cost of Pace Maker as } Rs. 30,000/-

life saving measure }

v) Open Heart Surgery with

Valve replacement

a) Single Valve } Rs. 60,000/- - Rs.85,000

b) Double Valve } Rs. 1,25,000/-

vi) Kidney Transplantation

including the cost of Inves-

tigation for the donor } Rs. 1,00,000/-

vii) Crantiotomy for tumour }



resection with embolisation } Rs. 25,000/-

including CT Scan & MRI }

II. Special Note

1) Neonatology - care of premature baby - one time - Rs. 20,000/- as upper ceiling reimbursement.

2) Treatment for the stunted growth (growth hormone) - one time upper ceiling - Rs. 25,000/-.

3) In case of Kidney failure for the treatment of Refractory anaemia where patient is not fit for dialysis

or Kidney transplantation - medicine ‘Erythropoitin’ to be reimbursed as 1:1 (ie. 1 purchased by the

patient party, one reimbursed from the company).

Considering the various angle, management fix the upper ceiling of reimbursement limit for major

surgeries and special treatment.

In this connection it may be noted that management has already fixed upper ceiling for coronary

Bypass surgery including coronary angiogram as Rs. 1 lakh.

III. Admissibility of Hi-tech surgery

The following Hi-tech surgery is not permissible in CHS rule:

i) Lengthening of bone by Illizaro’s technique

ii) Surgery for Scoliosis/Kyphosis

iii) Valvuloplasty/Angioplasty

iv) Hip joint/Knee joint replacement.

MRI SCAN

MRI scan is NOT recognised as a normal mode of investigation like CT Scan or Ultrasonography, in

our CHS rules. However, in selected cases MRI scan can be permitted on the merit of the case,

provicded the attending Neuro Surgeon/Neuro Physician/Orthopaedic Surgeon certifies the

essentiality of the investigation for CHS members.

CHS members will be permitted to draw advance with the production of estimated cost from the MRI

Centre with the stipulation of Sree Chithira Tirunal rate. (Medical advance for treatment can only be

drawn when the expenses is Rupees Five thousand and above. This is the only exemption).

17.37 CATARACT OPERATION

As per the revised order the cost of cataract operation for each eye with IOL to the maximum limit of

Rs. 3500/- shall be reimbursible to the employees only. However the dependant of the CHS member

will be reimbursed at the conventional rate applicable. CHS rates and IOL cost will not be

reimbursed.

MEDICAL ADVANCE

1) Question of medical advance usually consider when the treatment cost is towards higher side. Since

our CHS Scheme is essentially a reimbursement scheme, hence medical advance can be



recommended only on referral cases with the certification from the attending doctor about the approximate

cost of treatment from the referral hospital.

2) Under no circumstances, the amount will be released in cash, only through Cheque/DD in the name

of the hospital.

Note: i) Considering the exigency and financial assistance to CHS member under 3 circumstances medical

advance can be recommended conforming to the usual procedure mentioned above.

(1) Heart attack (2) Cerebrovascular Accident and (3) Road Traffic Accident.

3) While forwarding the advance form in duplicate to CMS, the newly introduced form must be filled in

by the employee and the respective Finance Department of the divisions, should incorporate the

amount released, Cheque/DD No. and the same should be forwarded to respective hospitals.



ANNEXURE - 18

LEAVE TRAVEL CONCESSION RULES 18.1 LTC RULES - MANAGERIAL PERSONNEL

18.1.1 Extent of Application

The FACT Leave Travel Concession rules will be applicable to employees of the following categories

after they have put in one year of continuous service with the Company for Home Town LTC and two

years of continuous service for LTC to anywhere in India.

(i) All full time employees of the company.

(ii) All officers on deputation from Central and State governments of other Public Sector Undertakings

unless their conditions of deputation state otherwise.

(iii) All officers on contract for periods exceeding one year with the company.

18.1.2 This will not be applicable to:

(i) Part Time employees:

(ii) Employees paid from contingencies or other wise employed on a casual basis.

(iii) Employees eligible to any other form of travel concession during leave or otherwise.

18.1.3 Periodicity

This concession will be admissible once every alternative year for visiting the ‘Home Town’ of the

employees.

18.1.4 The concession to go to any place in India is allowed once in a block of a calendar years. This

concession is in lieu of one of the two concessions available to them to visit home town in a block of

a calendar year i.e. sub blocks of two calendar years each.

Note- (a) The employees as well as his/her members of the family should avail the same concession and split

up of LTC to anywhere in India to one group, and home town to another group will not be permitted.

(b) The concession is based on calendar year and was brought into effect from the block of 2 years

1977-78 forming part of a block of 4 years 1977-80. Further blocks of 4 years for purpose of this

concession are 1981-84, 1985-88 and so on. For home town journey the two year blocks are 1977-

78, 1979-80 and so on.

18.1.5 (i) The crucial date for assessing use will be the date of start of journey from place of posting e.g. if the

journey begins in December 1988 and return is in February 1989 use will be booked to 1988.

(ii) The concession not availed during the block may be availed within the grace time of next year in the

first year of next block.

Note: The onward journey should commence before end of the grace period and it is not necessary that the

return journey should be undertaken or completed within the grace period. For administrative



convenience however, it is necessary that the return journey should be completed within a period of 6 months

from the end of the grace period both for LTC to Home Town and to anywhere in India. For example,

for the 4 year block 1989-92 the onward journey should commence before 31.12.1993 (including the

grace period), but it is enough if the return journey is completed on or before 30.6.1994.

18.1.6 Entitlement

(i) The concession will be in the form of reimbursement of actual fares for the employee and his/her

family by the class admissible for journeys on tour from the place of posting to the home

town/anywhere in India and back, by the short route both ways. For the purpose of this concession I

class will be deemed to be the highest class admissible. Managers who are presently eligible for I

class rail way choose travel by II class AC sleeper in lieu of I class.

(ii) The journey need not necessarily commence at the place of posting. The amount admissible will be

actuals limited to published fares admissible for journeys indicated in Rule 6.

(iii) In all cases the onward journey must end in the home town or the declared ‘destination’ as the case

may be. (as per clause18.9)

(iv) Employees will also be eligible for reimbursement of fare from residence (from starting station to

railway station/bus station to and fro as per entitlement under the TA rules in force from time to time).

Note: (a) It is necessary that there must be clear and acceptable proof of the journey actually undertaken by

the employee and the family members before the claim can be accepted. As regard proof of the

expenditure actually incurred, the claim must be supported by cash receipt/vouchers from the

Railway (see note (b) below) and/or other transport authority. Transport Authority for this purpose

will be only State Road Transport or other recognised Transport system as contemplated in any

other transport agency will not be accepted as proof of journey.

(b) Generally it is accepted that the journey will be undertaken by Rail as envisaged in clause 6. Since

the Railways are no longer issuing receipts, it will be sufficient proof of the expenditure incurred on

rail fare, if information about ticket numbers and reservation ticket numbers for each of the persons

who traveled is clearly indicated in the claim form. The claim will not be admitted if this information is

not given.

(c) If, however, road journey is undertaken, the fare admissible for road journey will be limited to the

amount charged by State Road Transport Corporation or other recognised transport system. The

employee must produce, as proof of expenditure incurred, the bus ticket issued by the Transport

Authority for the journey of self and each entitled member of the family. The employee must also

give in the claim form all the information called for therein. Forms which are incomplete in any

respect will be rejected. Completed form will be subject to strict scrutiny and verification.

Bills/vouchers issued by travel agents, contract carriers and other transport agencies will not be

substitute for the above mentioned proof/details.

(d) Claim for reimbursement of actual expenditure incurred shall be made in the format prescribed.

(e) All claims for travel by Road shall be scrutinised by the Division and approved by the Head of the

Division. Thereafter such claims shall be forwarded to Head Office for clearance by CPRM.

18.1.7 FAMILY

For the purpose of the concession, family is defined to mean only the wife/husband of the employee



and their children (including step children/adopted children wholly dependent on the employee, and parents

wholly dependent on the employee. Where both husband and wife are employees the concession

will be admissible only to one of them, class of travel being determined by the higher of the two.

Note: (a) LTC can be availed by dependent parents only from the place of work of the employee.

(b) Employees availing LTC for the dependent parents will be required to submit a certificate on

following lines:

“I hereby certify that my parents (name.................

age........) are wholly dependent on me and they have not availed the facility from any other source.

(c) If either father or mother is employed both of them are to be treated as not dependent on the

employee subject to their income being more than Rs.500/- per month. Also father/mother in receipt

of a monthly income of Rs.500/- or more by way of pension etc., will not be considered as dependent

on the employee.

(d) The rules provide that when both husband and wife are employees the concession will be admissible

only to one of them, class of travel being determined by the higher of the two. In case where the

spouse of the employee is employed in government/any other Public Enterprises/Autonomous body

etc. LTC facilities are available, the admissibility of LTC for the spouse should be decided depending

on whether the spouse has availed similar facilities from his/her employer or not for the

period/block. The period for this purpose will be block period as for LTC in the Company.

Accordingly the employees concerned will have to give a declaration as below at the time of applying

for LTC both for actual and declaration basis:

“My wife/husband for whom LTC is claimed by me is employed in ..........................

(Govt/PSU/Corporation/Autonomous Body etc.) which provides LTC facilities but he/she has not

preferred and will not prefer any claim in this behalf to his/her employer for himself/herself and for

members of family”.

18.1.8 Home Town

18.1.8.1 Home town will be the place declared as such by the employee and accepted by the company. Such

a declaration and acceptance should be based on the following consideration in the order of priority

given below:

(i) Normally it should be the place given as the permanent address of the employee in the official

records of the company.

(ii) This place is usually the place he would have resided at but for service with the company.

(iii) Ownership of immovable property or membership of joint family having property in that place;

(iv) Permanent residence of parents, brothers.

(v) Place where his presence is required at intervals for discharge of various service or domestic

obligation and where he has been visiting frequently for these purposes even during service.

(vi) Where there are two such places the employee can choose where he would like to indicate as his

home town.



(vii) The declaration by the employee is to be finally accepted by the company after such verification or

call for proof as it may desire to have.

(viii) Once the declaration is made and accepted it can be altered only once during the service of the

employee on application with sufficient reason. Applications for change giving reasons therefore

should be sent by the Head of the Department through the Personnel Manager of the Division and

head of the Associate Finance, to the Head of the Division. The Head of the Division can accept, or

reject these applications as per rules finally. Appeals against the decision of the Head of the Division

will be sent by the latter to FD/CMD for final orders.

(ix) Where a husband and wife are both employees they have to choose the home town of either. They

cannot declare separate places as home towns.

18.1.8.2 In lieu of Home Town

An employee including his family may visit his home town once in a block of 2 years. In lieu of home

town facility the employee may also visit any place in India upto a distance of 750 KM each way.

But this facility is admissible only to the employee, his spouse and dependent children limited to 4

adults inclusive of the employee.

18.1.9 ANYWHERE IN INDIA

(i) Whenever an employee proposes to avail of LTC to visit any place in India, he has to declare in

advance the intended place of visit as and when the concession is proposed to be availed of by the

employee and/or members of family. After the intended place of visit is declared he and/or members

of family is/are free to go by any route to the declared place of visit but the claim will be regulated

with reference to the shortest direct route on a through ticket basis between the Head quarters and

the declared place of visit.

(ii) The expression “any place in India” will cover any place within the territory of India whether it is on

the main land or overseas. If there are any local restrictions on visits to places in border areas, it is

the responsibility of the employee undertaking the visit to fulfill the conditions for visits to such

places.

(iii) The declared place of visit cannot ordinarily be changed after the commencement of journey.

Exemptions can however be made when it is established that the request for change in the place of

visit could not be made before commencement of journey owing to circumstances beyond the control

of the employee concerned. This relaxation can be done only by Division Head concerned.

(iv) In the alternative block of 2 years an employee including his family members may visit any place in

India as per existing rules.

18.1.10 Method of Assessing Reimbursement

Reimbursement for travel will be as detailed in these rules the fare being the “through” fare between

place of posting and home town even if the employee and/or his family broke journey route or took a

longer route.

18.1.11 Where the employee/family travels in a lower class, the claim should be limited to actuals subject to

the ceilings prescribed in Rule 5, 6 and 13.

18.1.12 Where the employee travels by air or steamer between two places connected by rail, the claim will be

limited to what would have been admissible had he traveled by rail or actuals whichever is less.



18.1.13 Where the journey is between 2 places not directly connected by rail, the claim will be limited to the

amount charged for the appropriate class by the State Road Transport or other recognised transport

system for the road portion to the nearest rail head and then as in rules for Rail Travel.

18.1.14 Reservation charges for travel by train will be admissible. Incidental expenses like porterage, batta

etc. will not be admissible.

18.1.15 For the purpose of this concession the employee and his family members may travel separately and

there will be no time limit for the journey to be undertaken both ways. However, the journey should

be performed during the currency of the block in respect of which the first group performed the

journey. For example in respect of block ending 1992 if one group performs the outwards journey

sometime in 1991 the last or other group can perform its outward journey any time during 1992.

Carry forward of LTC would be permitted to the employee and his family independent of each other.

Note: (a) Employees and their families may choose different places or destination for availing the concession

to visit anywhere in India.

(b) Children prosecuting studies elsewhere in India are permitted to visit home town or the Head

quarters of the employee on LTC in lieu of the LTC facility to home town limited to actuals by the

eligible class.

(c) Children living away from employee for prosecuting studies elsewhere in India may avail LTC to

anywhere in India from the place of his studies subject to eligibility of the employee.

18.1.16 Leave for which concession permitted

(i) Employees may be permitted to avail of this concession for journeys performed by them during

regular leave (PL or CL) for a minimum of 6 working days in duration. The concession is also

admissible during leave preparatory to retirement both for self and family both ways provided the

return journey is completed before the expiry of the leave. The concession is not admissible to an

employee when the employee proceeds on leave and then resigns the post without returning to duty.

(ii) In the event of a employee being refused available leave and claim for LTC for administrative

reasons close to the date of his retirement the CMD may permit such employee to avail of the

facilities to the extent eligible under these rules within a maximum period of 6 months after the date

of retirement of the employee concerned.

(iii) The claim should be preferred within one month of the completion of the return journey. In all cases

the claim will stand forfeited or deemed to have been relinquished if the same is not preferred within

one year of the date of completion of the return journey. The controlling officer shall have the

powers to condone any delay in submission of the claims beyond the stipulated period upto one year

from the date of the journey.

18.1.17 Payment of advance and procedure

(i) The amount of travel advance to be granted will normally limited to 80% of the estimated

expenditure. The travel advance can be drawn by the employee 60 days prior to the

commencement of the outward journey. In case the outward journey is not commenced, within 60

days from the date of approval of advance or the claims are not submitted within 30 days of

completion of journey the advance should be refunded in full and interest at 18% per annum will be

charged on the entire amount of advance from the date of approval of advance.



(ii) Further to the above provisions, it has also been decided that an employee would forfeit his LTC

facility if he cancells the LTC advance availed by him twice in a single block period. Thus an

employee availing LTC advance and refunding the same twice in a block year period would not be

eligible to claim LTC in the concerned block period. In addition, if an employee is found to be

misusing the LTC advance facility, disciplinary action is liable to be initiated against him in

accordance with the Standing Orders/Conduct Rules applicable.

(iii) The advance may be drawn both for the outward and return journeys at the time of commencement

of the outward journey, provided the period of leave taken by the employee or the period of

anticipated absence of the members of the family does not exceed 3 months (90 days). If this limit is

exceeded, then the advance may be drawn for the outward journey only. If the limit of 3 months is

exceeded after the advance had already been drawn for both the journeys one half of the advance

should be refunded to the company forthwith.

18.1.18 Request for availing concession under this scheme shall be made to the concerned personnel

department. The place proposed to be visited shall also be stated.

18.1.19 Reimbursement of expenditure for LTC anywhere in India (on declaration basis)

(i) This will be admissible once in a block of 4 years in lieu of LTC for anywhere in India. Instead of

LTC to any where in India, the employee can claim reimbursement of expenditure after completion of

the journey by giving a declaration that the expenses incurred by him have not been less than the

amount admissible and claimed on the basis of which reimbursement will be made as under:

(ii) Encashment of LTC will be permitted only in respect of the once in four year all India LTC Scheme.

Such encashment will be limited to 1500 KMs each way by the entitled class by rail travel not

exceeding 1 class. For this purpose family will be limited to only the employee, his or her spouse

and children subject to a limitation of 4 full tickets and such encashment would be limited to 75% of

the entitled rail fare.

(iii) Reimbursement shall be claimed in the format prescribed.

(iv) While the journey for which the claim is made will be accepted on the basis of declaration,

information about the entitled family members of the employee will be subject to scrutiny and

verification.

(v) The amount due on the basis of declaration will be calculated and paid without the employee having

to produce further proof/evidence about the journey after verification and scrutiny as above.

(vi) The full claim for LTC for the employee as well as his eligible family members (if any) will have to be

either as per this provision or under clause 18.1.9 of this scheme. It cannot be partly under one and

partly under the other.

Note:- The required minimum leave for availing LTC on declaration basis will be 3 days only.

18.1.19.1 Clarifications

(a) As per clause 18.1.19 of the existing LTC rules the reimbursement on declaration basis will be

“twice the Ist Class fare for a distance of 1020 KMs each way” being 60% of 1700 KMs. However,

the Government order on pay revision clearly states that the reimbursement is revised as 75% of the



fare for 1500 KM. We are therefore of the view that the method of calculation hitherto followed has to be

changed as below:-

The fare for 1500 KM may be calculated and 75% of this fare can be reimbursed.

(b) The restriction of four tickets is applicable only while availing LTC limited to 750 KM in lieu of LTC to

Home Town. For LTC to home town the existing rules will be applicable.

18.1.20 An employee under suspension cannot avail of the concession if he proposes to undertake the

journey either by himself or with his family. However, the family may avail of the concession

independently of him.

18.1.21 Any misuse of these facilities, submission of false information etc. will entail not only forfeiting the

privilege of the concession but also open the employee to disciplinary action.

18.1.22 The final authority to interpret these rules will be the Chairman and Managing Director.

18.1.23 The management reserves the right to amend these rules at any time without notice. The Chairman

and Managing Director shall be the competent authority to issue such orders as may be necessary

with regard to interpretation of rules and shall be the final authority on interpreting any of the

provisions contained in those rules.

18.2 LTC RULES - NON-MANAGERIAL 18.2.1 General

(i) The rules regarding Leave Travel Concession/journey to Home Towns as per MD’s Order No.49/67

is liberalised with effect from 1-1-1977 to permit employees to travel to any places in India once in a

block of 4 calendar years subject to other prescribed conditions in the Company’s existing scheme.

ii) This concession is admissible to all workmen including those who are not entitled to Home Town

concession as per the existing rules. In case of those who are eligible for journey to Home Town as

per the existing rules, the new concession will be in lieu of one of the 2 concessions now available

during a block of 4 calendar years.

iii) The concession relating to travel to any place as per clause (i) above will be subject to a distance

limit of 1500 KM each way. Reimbursement of railway fare for such travel will be limited to the total

to and fro fare for each member of the family by the class to which the employees is entitled to travel

by rail as per TA rules.

iv) Where the journey is between two places not directly connected by rail, the claim will be limited to

the amount charged for the appropriate class by the State Road Transport system or other

recognised transport system for the road portion to the nearest rail head and thereafter as in TA

rules for rail travel. Reservation charges for travel by train will be admissible. Incidental expenses

like taxi, porterage, etc. or batta will not be admissible.

(v) The concession to travel to any place in India will not be admissible to an employee who has not

completed 2 years continuous service on the date of journey.

18.2.2 OPTION TO CHOOSE BETWEEN ALTERNATIVE I AND ALTERNATIVE II

As from the block year starting from the calendar year 1981, the workmen will be permitted to

exercise one time option between the following two alternatives.



18.2.2.1 ALTERNATIVE-I

Existing Scheme of LTC to Home Town and to anywhere in India included in the memorandum of

Settlement dated 23-1-1978 (Ref.18.2.1 above).

18.2.2.2 ALTERNATIVE II

(a) LTC Home Town by entitled class (available once in two years) and

(b) LTC to anywhere in India by entitled class for entire distance both ways without deduction available

once in a block of 4 years in lieu of one LTC for home town.

18.2.3 LTC on declaration basis

Instead of LTC to anywhere in India, workmen can once in 4 years claim reimbursement of

expenditure after completion of the journey by giving a declaration that the expenses incurred by him

have not been less than the amount admissible and claimed on the basis of which reimbursement

will be made as under:-

i) For workmen entitled to second class fare - as modified by Cl.11.1 (i) and (ii) of Agreement dt.28-11-

84 - twice the second class rail fare for a distance of 1275 KMs (being 75% of 1700 KMs).

ii) For workmen entitled for first class fare - as modified by Cl.11.1 (i) and (ii) of Agreement dt.28-11-84 -

twice the first class rail fare for a distance of 1020 KMs. (being 60% of 1700 KMs).

iii) The above facility of reimbursement will be calculated in accordance with the railway tariff in force

from time to time, for self and each entitled family member of the employee.

Workmen who are transferred from a place which is less than 400 Kms. from their home town to a

place which is more than 400 Kms from their home town will be permitted to exercise a fresh option

between alternatives I and II above at the time of their transfer. The option must be made before the

completion of the block year in which the transfer is effected.

LTC will henceforth be allowed only subject to the condition that the workmen avails privilage leave

or casual leave for a minimum of 3 working days in duration.

18.2.4 Grace period for availing LTC

LTC not availed in a block year will be permitted to be carried over to the first year of the next block

period.

Reimbursement of fare from residence (from starting station) to Railway station/Bus stand to and fro

as per entitlement under TA rules in force from time to time will be allowed as from the date of

signing of the settlement.

Claim submitted by workmen for LTC to home town and anywhere in India as per Clause 18.2.1

above, will be subject to strict scrutiny and proper verification of travel and any false claims submitted

in this behalf will entail disciplinary action under the rules of the company.

Claim submitted by workmen for LTC to home town and anywhere in India as per Clause 10.1 of the

settlement will be subject to strict scrutiny and proper verification of travel and any false claim

submitted in this behalf will entail disciplinary action under the rules of the company.



18.2.5 Clarifications

18.2.5.1 When travels are undertaken by routes which are not direct/shortest

The settlement provides for a distance limit of 1500 Kms. each way. There is however, no

requirement in the settlement that this must be by the shortest or direct route, the limiting factor being

the distance. Therefore upto a limit 1500 Km each way, the employee has the option to choose the

route he wants to adopt. However, the travel must be to a place which must be declared and the

inward journey must commence from that place. The essential requirements will therefore be:-

1. Distance limit of 1500 Kms. each way;

2. Travel to a “ PLACE “ which has to be declared.

3. The fare payable will be as per the railway fare table for the entitled class for the distance of 1500

Kms or actual distance whichever is less for the onward journey, and similarly, distance upto same

limit by the route taken by the employee for the inward journey. If the respective distance for the two

journeys equals 1500 Kms or more, then fare for 1500 Kms. will be payable. If on the other hand,

the journey to the place involved is 1600 Kms and returns journey involved is 1400 Kms only fare for

2900 Kms (1500 + 1400) will be payable.

Where the journey is between two places not connected by rail, the claim will be limited to the amount

charged for the appropriate class by the State Road Transport or other recognised transport system

for the road portion to the nearest head as provided in the settlement.

18.2.6 Procedure/Rule for scrutiny and verification of LTC claims

Reimbursement of expenditure for LTC to anywhere in India (on declaration basis) as per clause 10.2

of long term wage settlement.

i) This will be admissible once in a block of 4 years in lieu of one LTC for home town.

ii) Reimbursement due as per provisions of the scheme/settlement shall be claimed in the format

prescribed.

iii) While journey for which the claim is made, i.e. 1020 Kms. each way by 1st Class or 1275 Kms each

way by 2nd class, as the case may be, will be accepted on the basis of the declaration, information

about the entitled family members of the employee will be subject to scrutiny and verification.

iv) The amount due on the basis of declaration will be calculated and paid without the employee having

to produce further proof/evidence about the journey, after verification and scrutiny as above.

v) The full claim LTC for the employee as well as his eligible family members (if any) will have to be

either under clause 10.1 or under 10.2: It cannot be partly under 10.1 and partly under 10.2.

18.2.7 LTC to home town/LTC to anywhere in India as per clause 10.1 of the settlement.

i) With the introduction of the simplified system of payment as above, the procedure and rules

applicable to LTC as per clause 10.1 of the settlement will be strictly enforced superceding all

clarification/relaxations issued/made in the past.

ii) It is necessary that there must be clear and acceptable proof of journey actually undertaken by the

employee and the family members before the claim can be accepted. As regards proof of the

expenditure actually incurred, the claim must be supported by cash receipts/vouchers from the



Railway (refer clause (iii) below) and/or other transport authority as required by rail concerned

No.1163/FM-11/16 dt.August 16, 1971. Transport authority for this purpose will be only State Road

Transport or other recognised transport system as contemplated in clause 12 of the scheme

introduced in 1967. Accordingly, vouchers from any other transport agency will not be accepted as

proof of journey.

iii) Generally it is expected that the journey will be undertaken by rail as envisaged in clause 6 of the

1967 scheme. Since the railways are no longer issuing receipts, it will be sufficient proof of the

expenditure incurred on rail fare, if information about ticket numbers and reservation ticket numbers

for each of the papers who traveled is clearly indicated in the claim form. The claim will not be

admitted if this information is not given.

iv) if, however, road journey is undertaken, the fare admissible for road journey will ordinarily be limited

to the amount charged by State Road Transport Corporation or other recognised transport system.

The employee must produce, as proof of the expenditure incurred, the bus tickets issued by the

transport authority for the journey of self and each entitled member of the family. The employee

must also give in the claim form all the information called for in the claim form. Forms which are

incomplete in any respect will be rejected. Completed forms will be subject to strict scrutiny and

verification. Bills/vouchers issued by travel agents, contract carriers, and other agencies will not be

substitute for the above mentioned proof/details.

v) Claim for reimbursement of the actual expenditure incurred shall be made in the format prescribed.

vi) All claims for travel by road shall be duly scrutinised by the Division and approved by the Head of the

division. Thereafter such claims shall be forwarded to the head Office for Clearance and Clearance

will be given by GGM (P&A).

vii) Any false claim submitted by an employee will entail disciplinary action under the rules of the

Company, as a major misconduct.



ANNEXURE-19

REIMBURSEMENT OF FOOTWEAR EXPENSE TO MANAGERIAL PERSONNEL

With effect from 1.1.1989 a scheme has been introduced to supply footwear to all Managerial

Personnel who are presently eligible for uniforms, subject to the following conditions:-

1. Managerial personnel of the Company will be supplied with Footwear once in two years at the rate of

one pair of shoes per person in respect of male Managers and two pairs of chapels per person in

respect of female Managers.

2. The Managerial personnel are allowed to purchase shoes/chapels from any shoes/chapels

manufacturing companies.

3. The Managerial personnel will be reimbursed for purchase of footwear at the following rates:

a) For purchase of one pair of shoes by male mangers at the rate of Rs.700/- including ST.

b) For purchase of two pairs of chapels by female managers at the rate of Rs.700/- including ST.

4. Reimbursement to the managerial personnel will be made by respective Finance Department, and for

this purpose the managerial personnel will submit a declaration through the controlling officer in the

enclosed format along with the bill for purchase of footwear.



ANNEXURE-20

CHILDREN’S EDUCATION ASSISTANCE

MANAGERIAL

20.1. Applicable to all permanent managerial personnel without pay limit but restricted to two children.

20.2. “Child” means employee’s child (including step/adopted children wholly dependent on the employee).

20.3. “Recongnised School” - The assistance is admissible only if the children study in a recognised

school.

(i) School which is recognised by the Department of Education or the Educational Authorities of the

Jurisdiction in which the School is situated; or

(ii) A School which prepares students for the Matriculation Examination conducted by a University and

which is affiliated to and is recognised by such a University; or

(iii) A School which is affiliated to the Central Board of Secondary Education, New Delhi or

(iv) A recognised School (including Public Schools) which prepare students for Indian School Certificate

Examination, or

(v) A College affiliated to a University conducting PUC/Pre-Degree.

20.4. GENERAL CONDITIONS

20.4.1. If both husband and wife employed

In the case of both husband and wife being employed the assistance is applicable to only one of

them. If the husband or wife is employed in another Organisation, the assistance is admissible only

if that spouse is not entitled to the benefit from his/her employer and a declaration to that effect is

furnished by the Officer.

20.4.2. Age of child for admissibility

Between the age limits of 5 and 20 years but admissible in respect of a child upto the half way

through the academic session.

20.4.3. Child studying in the same class

Not admissible for a child for more than two academic years in the same class.

20.4.4. School Attendance

Admissible only if the child attends the school regularly. Not admissible for the period of absence

from school without proper leave, if it exceeds one month even in the name remains on the roll.

20.4.5 Children in receipt of scholarship

Admissible also for children who are in receipt of scholarship. The amount of tuition fee/hostel

subsidy will be limited to the extent of fees actually paid.



20.4.6. During leave/suspension etc.

Admissible while on duty or on leave (including extraordinary leave) or under suspension, but not

admissible during the period treated as “Special leave without pay”.

20.4.7. Retirement/Resignation/Death, etc.

If an officer cease to be in service in the course of an academic year due to resignation/ retirement/

discharge/ dismissal/ death, the assistance will be admissible till the end of the academic year in

which the event takes place.

20.4.8. Same child eligible for more than one assistance

Subject to eligibility both reimbursement of tuition fee and hostel subsidy can be drawn in respect of

one and the same child. If Children Educational Allowance is drawn for any child, reimbursement of

tuition fee or payment of hostel subsidy will not be admissible for that child.

20.5 REIMBURSEMENT OF TUITION FEES

20.5.1. Amount reimbursable

Tuition fees payable and actually paid for each child of -

Classes Subject to a maximum

——— ——————————

I to X Rs.20 p.m. per child

XI to XII/Pre-Degree/First ]

year Class of an intermed- ] Rs.25 p.m. per child

iate college/Technical ]

college/Polytechnic ]

Classes I to XII in respect ]

of Physically handicapped/ ] Rs.50 p.m. per child

mentally retarded children ]

Parallel Colleges

Tuition fees paid by officers on behalf of their children being educated in Parallel Colleges shall be

reimbursed subject to the limits mentioned above after the child or children has/have registered as

students with the Universities and appeared for the examination, on production of documents relating

to payment of fees and appearance in the relevant examination.

Special provision for handicapped children

The maximum of Rs.50 p.m. per child is applicable if the institution in which the child is studying has

been recognised/approved/aided by the Central/State Government/Union Territory Administration,

but the fees charged are not approved. If, however, the fees charged are also approved by the

Central/State Government/Union Territory Administration, then the fees payable and actually paid

will be reimbursed.



20.6. CHILDREN’s EDUCATIONAL ALLOWANCE

20.6.1. Rate of allowance

Rs.50/- per month per child for primary, secondary and higher secondary classes of a “Recognised

School”.

20.6.2. When admissible

a) When an officer is compelled to send his child/children to a school away from the station at which he

is posted and/or residing owing to the absence of a school of the requisite standard at the station.

b) When the nearest school of the requisite standard is so situated that there is no convenient train or

bus service to take the child from his residence near the time of the opening of the school and bring

him back not too long after the school is closed; and the train/bus journey takes more than an hour,

one way.

20.6.3. On Transfer

1) On the transfer of an officer from a place where there is no school of the requisite standard to a place

having such a school, the officer can continue to draw the allowance until the close of the academic

year of the school if the child continues to study for the period in the same school.

2) When, on transfer, the officer is compelled to keep his child/children studying in the final year of the

Secondary/Higher Secondary/Senior Secondary classes at the old station for Board Examination in

the interest of continuity of studies, the allowance can be continued to be drawn.

20.6.4. Denial of admission to a school of requisite Standard in an employee’s place of posting/residence, for

want of a vacancy or for any other reasons shall be regarded as absence of a school of the requisite

standard at that station.

20.6.5. Period during which the allowance is admissible

Throughout the year including vacation. For a child successful at the final secondary/higher

secondary/senior secondary examination, the allowance is admissible upto the end of the month for

which the school fees were charged or upto the end of the month in which the examination is

completed, whichever is later. In the case of a child failing in the final examination, the allowance is

admissible for the vacation period intervening, if fees are paid for the period of vacation.

20.6.6. The allowance will be admissible during any period not

exceeding four months when -

a) the employee goes and stays with the concerned child/children while on

leave/suspension /temporary transfer;

b) the child comes to live with the employee if it is certified by a Registered Medical Practioner that the

child is forced to remain away due to illness;

c) the child comes to live with the employee during vacation provided the child continues to be on the

rolls of the school.

20.7 HOSTEL SUBSIDY

20.7.1. When Admissible



When the employee is obliged to keep his children, because of transfer, in the hostel of a

“Recognised School” away from the station at which he is posted and/or resides. If the children are

already admitted to the hostel of a Recognised School, hostel subsidy will be admissible from the

effective date of the employee’s transfer.

Rate: Rs.150 p.m. per child.

Payable upto 10 plus 2 stage in States and Union Territories, where the pattern of 10 + 2 + 3 exists

and upto Higher Secondary/Senior Secondary stage in other states and Union Territories

irrespective of the fact that the children study in Kendriya Vidyalaya or any other recognised school.

The above changes are in supersession of the facilities available at present including subsidy for

purchases of books which is discontinued.

20.8 In respect of interpretation of any of the rules and in respect of any points not covered by the above

rules with regard to the conditions for grant of the assistance, CMD will be the Competent Authority

to decide. Division Head will be the competent authority to sanction the Educational Assistance

under the scheme. In the case of officers at the level of Division Heads and above, CMD will be the

sanctioning authority.

20.9. NON-MANAGERIAL

20.9.1. The Scheme envisages the following types of education assistance to the children of FACT

Employees.

(a) Reimbursement of tuition fees

(b) Hostel subsidy

(c) Subsidy for purchase of books

20.9.2. Definitions

For the purpose of this Scheme.

(a) “Workmen” means all employees who are borne on the permanent rolls of the Company. ie. those

given regular scales of pay and badge number and who have put in a minimum of one year’s

continuous service.

(b) “Pay” means basic pay of the employee and includes personal pay.

(c) “Children” means sons and daughters wholly dependent upon the employee including legally

adopted children.

(d) School means

(i) School which is recognised by the Department of Education or the Educational Authorities of the

jurisdiction in which the School is situated; or

(ii) A School which prepares students for the Matriculation Examination conducted by a University and

which is affiliated to and is recognised by such a University; or



(iii) A School which is affiliated to the Central Board of Secondary Education, New Delhi or

(iv) A recognised School (including Public Schools) which prepare students for Indian School Certificate

Examination, or

(v) A College affiliated to a University conducting PUC/Pre-Degree.

(e) “Parallel College” means an institution preparing students for pre-degree examination of a University

through a system of regular classes.

(f) “Primary Classes” means classes (Standard) I to IV and does not include Kindergarten and infant

classes.

(g) “Secondary Classes” mean Classes (Standard) V to X.

(h) “Higher Secondary Classes” means Classes XI and XII or the two years of Pre-University/Pre-degree

class upto the stage of entry into three year degree course.

20.10 REIMBURSEMENT OF TUITION FEES

Rate of reimbursement:

The tuition fees payable and actually paid by workmen on behalf of their children limited to the

following ceilings:

(a) For workmen posted and working in Udyogamandal and Ambalamedu and neighbouring

establishments, ie.Willington Island, Ernakulam, Kalamassery and Alwaye presently.

Classes V to VIII Rs.5 per month

Class IX Rs.6 per month

Class X Rs.7 per month

Class XI Rs.8 per month

Class XII Rs.9 per month

(b) For other workmen (Workmen posted and working in other places, ie. places which are away from

Udyogamandal or Ambalamedu).

Primary Classes Rs.15 per month

Secondary/High School

and Higher Secondary Rs.20 per month.

The total tuition fees admissible to a workman at one time shall not exceed Rs.60 per month. The

reimbursement is admissible to children between the age limits of five and eighteen years.



(c) Tuition fees paid by workmen on behalf of their children being educated in Parallel Colleges shall be

reimbursed subject to the limits mentioned in (a) above after the child or children has/have registered

as students with the Universities and appeared for the examination, on production of documents

relating to payment of fees and appearance in the relevant examination.

(d) Reimbursemet is restricted to tuition fees only and will not cover special fees like library fees, games

etc. No reimbursement of tuition fees is admissible in respect of Primary Classes, except as

provided herein.

20.11 HOSTEL SUBSIDY

(a) Admissible to workmen who on account of a transfer are obliged to keep their children in a Hostel of

a residential school away from the station to which they are posted and/or residing.

(b) Subsidy is only for food charges and not for lodging, electricity and water charges, admissible for

education upto Higher Secondary stage in any recognised school.

Rate of subsidy: Uniform rate of Rs.60 per month per child.

20.12 SUBSIDY FOR PURCHASE OF BOOKS

Admissible to workmen who are transferred in the middle of an academic session to another station

and are compelled to shift their child or children to a school requiring purchase of new set of books.

This will be a lumpsum payment.

Rate of Subsidy

Primary Class Rs.20 per child

Secondary Classes Rs.40 per child

Higher Secondary Classes Rs.60 per child

20.13 OTHER CONDITIONS

(a) The children should be studying in a School as defined in the Scheme.

(b) Reimbursement of tuition fees and subsidy for purchase of books are admissible only to workmen

whose pay does not exceed Rs.1200 per month. This ceiling is not applicable for grant of hostel

subsidy.

(c) Any particular type of assistance will not be admissible to more than three children at a time. If more

than one type of assistance is involved the admissibility is restricted to four children at a time.

(d) The assistance will not be admissible for more than two academic years in the same class for any

child.

(e) Assistance will not be applicable in respect of children in receipt of any scholarship.

(f) Where both husband and wife are employed in the Company, the assistance will be admissible in

respect of one of them only, and also subject to satisfying other conditions for eligibility. But if the

pay of either of them exceeds Rs.1200 per month, no assistance other than hostel subsidy will be

admissible. Such assistance will also be stopped from the month in which the pay of the employee



or of his/her spouse, if employed in the Company, exceeds Rs.1200 per month. If the spouse of the

employee is in service with the Government or any other Public Sector Company, the employee

should also give a declaration that the spouse is not availing such Education Assistance.

20.14 Employees claiming any of the above Childrens Education Assistance will forward the application

with necessary certificates in the prescribed form shown in Annexures through proper channel to the

Personnel Manager of the Division. This has to be renewed every half year. The employee will

intimate the Personnel Manager immediately on ceasing to be eligible to draw the Children’s

Educational Assistance. It is also incumbent on him to produce the certificates as prescribed.

Company also reserve the right to verify the certificates if found necessary.

20.15 Sanctioning Authority for Children’s Educational Assistance is the Division Head.

20.16 For any point of doubt, interpretation or clarification areas with regard to the scheme, the decision of

the Chairman and Managing Director shall be final in all such matters.



TRAVELLING ALLOWANCE RULES

APPLICABILITY These rules will be called “FACT Travelling Allowance Rules” (TA Rules) for Managerial and non-Managerial Employees.

The TA Rules will be applicable to all regular Managerial and Non-Managerial Employees of the Company including those on deputation from Central/ State Governments and other Public Sector undertakings to the Company and to Management trainees/Sales Officer trainees, except those who draw fixed ‘batta.

1. DEFINITIONS

1.1 “PAY” – means basic pay of the employee on the date of commencement of the

journey and includes any personal pay payable as per terms of employment. 1.2 “TRAVELLING ALLOWANCE” – means an allowance drawn by the employee in

connection with the company’s work towards reimbursement of expenses while on travel.

1.3 “TRANSFER” – means movement of the employee from the place at which

he/she is posted to another station to which his/her former Headquarters has been changed or where he/she is ordered to take up the post.

1.4 “FAMILY” – means an employee’s spouse, legitimate children and step-children

and legally adopted child in the case of an employee who has no child, dependent on the employee, but limited to 4 adults inclusive of the employee.

In respect of transfers and for travelling to hometown on retirement from service the family would also include parents who are wholly dependent on the employee and are residing with the employee.

1.5 “HEADQUARTERS” – means the place to which the employee for the time

being is posted. 1.6 “CONTROLLING OFFICER” – for the purpose of TA Rules will be as per

Delegation of Powers in force, from time to time.

1.7 “DAY” – means a calendar day beginning 6 AM and ending with 6 AM.

1.8 ANNEXURE shall mean Annexure (M) for Managerial employees and Annexure (N) for Non-Managerial employees.

Page 1 of 9TRAVELLING ALLOWANCE RULES


2. MODE OF TRAVEL

2.1 Travel by Rail

a) Charges for reservation and bedding and any surcharge for sleeper, if incurred

by the employee will be reimbursed on actual basis. Service charges paid to travel agencies for rail bookings will be reimbursed as given in the Annexure.

b) The railway fare, reservation charges etc. permissible under rules will be

payable normally on production of cash receipt or furnishing ticket numbers. 2.2 Travel by Road

(a) In cases where the points of journey are not directly connected by rail the employee shall normally travel by road taking a single seat in a public conveyance including an Express/Deluxe bus/Coach.

(b) Officers in the grade of Chief Manager and above may travel by own car/taxi

with the approval of HOD. If the journey is performed by road between places connected by rail using own car/taxi charges will be limited to the rail fare that would have been admissible, had the journey been performed by rail.

(c) Where an Officer uses his own vehicle for official journey, he will be eligible for the distance actually travelled, for payment as per Annexure.

(d) Those officers who have been allotted staff cars and officers in the rank of Chief Manager and above, with the permission of HoD may use Company cars for official tours and they will be eligible for TA as applicable to other modes for the duration of the journey.

2.3 If an employee travels by a class lower than his entitlement, the claim will be

limited to the class by which he actually travelled. 3. DAILY ALLOWANCE

(i) This is an allowance intended to cover charges incurred on account of boarding,

lodging, and out of pocket expenses while travelling and staying at places other than Headquarters.

(ii) Daily Allowance is to be calculated for the period of absence from

Headquarters. (iii) Full daily allowance will be granted for each completed calender day of absence



reckoned from 6 AM to 6 AM.

(iv) In case the period of absence from HQ falls on two calender days it is reckoned as 2 days and daily allowance is calculated for each as above. Similarly daily allowance for days of departure from and arrival at HQ will also be regulated accordingly.

(v) For the time spent in journey the rate of DA applicable to the relevant destination

will be admissible. (vi) Daily allowance will be admissible for Sundays and Holidays while on tour but

not for any period of leave availed during tour.

4. ACTUAL EXPENSES 4.1 Actual expenses for lodging may be paid to employees for stay in hotel provided

that the claims are supported by vouchers. In places where company guest-house is situated, actuals for stay in hotels will be allowed to Managers only if accommodation in company guest-house is not available.

4.2 While claiming actual expenses for lodging, expenses towards boarding will be

a lumpsum allowance of 125% of the applicable Daily Allowance. Officers in the level of Chief Manager and above are eligible to claim either actual boarding plus 25% allowance or cash allowance at 125% of the eligible amount. This option may be exercised on a day to day basis in the same tour.

4.3 Officers claiming the actual expenses in place where company guest house is

situated, shall have to produce a certificate from the Guest House–in-charge that no accommodation was available in the guest house, except in the case of CMD/Directors who may in their discretion stay in hotels as above.

4.4 The Manager on return from tour should record in his TA bill that

accommodation in our guest-house was not available when claiming reimbursement of actual boarding and lodging expenses for stay in hotel.

5. USE OF TAXI/AUTO

5.1 Actual taxi/auto rickshaw charges paid by Officers while on tour will be

reimbursed to the Officers for travel as under:-

(a) From Headquarters to Railway Station/Airport and vice versa. (b) At the station of tour, from Railway Station/Airport/to Guest House/Hotel/place of

work and vice-versa.

(c) At the station of tour, from the place of stay to place of work and from one place of work to another and vice-versa.

(d) In the case of Non-managerial employees, hiring of autos for journeys from



railway station/bus stand to hotels/place of stay and vice-versa subject to a maximum of 20 kms one way is admissible.

5.2 The entitlement for taxi/auto rickshaw shall be as under:-

(a) Officers in categories of Asst.Manager and above are entitled to use taxi as above, while on tour.

(b) Officers in categories below Asst.Manager are eligible to travel by auto rickshaw.

(c) In the case of non-managerial employees, actual expenses incurred by taking a

single seat in a public conveyance including an express/delex bus/coach from place of stay to place of work and vice-versa while on tour also will be reimbursed.

(d) Heads of divisions (Head of the Department, who shall be of the rank of Chief

Manager or above, in the case of HO) may however, sanction use of auto rickshaw/taxi by officers not eligible to use the same provided they are satisfied that other modes of transport are not available and/or that the auto rickshaw/taxi is required to be used in the interest of official work such as for carrying official documents/materials or when accompanying Company guest etc.

(e) Officers who are entitled to claim taxi/auto rickshaw charges while claiming the same should invariably furnish the following particulars in the TA bill, if necessary by attaching a separate statement:-

Date/From/To/Distance/Mode of transport/Amount paid/Purpose.

6. LOCAL TRAVELS

Travel within a distance of 40 KMs from Headquarters, one way, is termed as local travel.

6.1 For journeys beyond 10 KMs from headquarters when night halt is not involved, the employee will draw for journey involved, the actual fare incurred for the journey and in addition, daily (cash) allowance as per Annexure attached herewith.

6.2 Taxi/auto-rickshaw charges will not be payable where reimbursement under the

Local Travel Expenses for maintenance of motor car/scooter/moped is made for journeys upto 10 KMs and return. Mileage Allowance admissible under the rules will be paid for local travels beyond 10 KMs in full.

6.3 In the case of employees who make more than one trip a day (without night

halt) total DA for all trips together will be limited to a full day’s batta admissible under these rules.

6.4 For Non-Managerial employees who are deputed for duty within 10 KMs of



headquarters where the duty point lies outside the Island of Eloor in the case of employees working in Udyogamandal and three KMs in the case of employees stationed at other places out of pocket expenses will be admissible at the rates given in Annexure.

This will not be applicable to employees who are eligible for payment according to incentive scheme on trip basis/fixed DA basis.

7. TRANSFER TRAVELLING ALLOWANCE 7.1 Every employee on transfer from one station to another exceeding a distance of

15 KMs and involving shifting of residence on account of the transfer shall be entitled to draw one fare for self and one full fare or half fare as the case may be appropriate for each member of the family by the class of accommodation to which they are entitled to, but limited to actuals.

7.2 In the case of Managers If the journey is performed by road, between places

connected by rail using taxi, public conveyance etc. actual expenses/road mileage as provided in Clause 2.2(c) limited to the rail fare admissible, had the journey been performed by rail, will be payable.

7.3 PERSONAL EFFECTS

(a) For carriage of personal effects from residence to railway station/ lorry parcel booking office and vice versa, the employee will be entitled to draw mileage allowance at the rates specified in the Annexure.

(b) Employees in possession of motorcar, motor cycle or scooter shall be allowed to

claim the transport charges for the same separately limited to the railway freight by passenger train. If the employee transports his motorcar, motor cycle, or scooter by road under its own power, he may claim 40 paise per KM in the case of car and 10 paise per KM in the case of motor cycle or scooter towards its transport charges but limited to the freight by passenger train. If the employee himself and/or his family travels in the own car, he may draw mileage allowance and incidentals as given in the Annexure.

(c) All claims of transport of personal effects, on transfer either by rail or by road

shall be supported by receipts and vouchers without which no payment shall ordinarily be admitted. No separate claim shall be entertained in respect of expenses such as porterage, packing etc. which are incidental to transportation over and above the incidental fares and lumpsum payment.

(d) Whenever personal effects are transported by road, the reimbursement will be

the actual expenditure incurred or as per entitlement shown whichever is less.

(e) Whenever goods are transported by road, the goods shall be booked through a parcel lorry service and vouchers for the same must be produced by the employee.



7.4 Heads of Divisions are authorised to approve TA claims on transfer where the fare claimed for the families of the employees is to a station other than the place to which the employee is transferred, for good and sufficient reasons subject to the following conditions: -

(i) The station to which the TA is claimed for the family is nearer than the station to

which the employee is transferred to and the journey is actually performed. Where the station to which the journey performed is farther in distance than the transferred station the TA will be restricted to the distance between the employee’s original place of work and the transferred location.

(ii) The TA claims for the employee as well as the family is to be preferred together

and incidentals as given in the Annexure will be limited to the actual mode of travel and distance travelled.

(iii) The claims for packing and transport of personal effects will be restricted to the

actuals within limits prescribed in the Annexure.

(iv) When a further transfer of the employee takes place and the employee wishes to take his family to a second place on transfer, transfer TA can be allowed only on the basis of actuals restricted to the amount that would be payable if the family had moved from the first place of transfer.

8. JOINING TIME

8.1 Joining time shall be allowed subject to a limit of a maximum of four days for

preparation and one day for every 350 Kms or part thereof in the case of travel by rail and one day for every 250 KMs or part thereof in case of travel by road, towards journey time.

8.2 Where the transfer does not necessarily involve the change of residence from

one station to another, joining time allowed shall not be more than one day.

8.3 Where the actual joining time exceeds the limit due to reasons beyond the control of the employee, the actual time taken for travel shall be admissible for the journey.

8.4 The Controlling Officer may in special circumstances reduce the period of

joining time admissible as above. In such a situation the concerned employee shall be allowed by the controlling officer to avail of the full or balance of the joining time as the case may be on a subsequent occasion, which may be combined with CL/PL. This may be availed in combination with CL/PL if required.

8.5 Sundays accruing in the period of joining time shall be excluded for counting joining time.

8.6 If air travel is performed, there will be restriction on joining time as decided by

the Controlling Officer.



8.7 Whenever employees are transferred from one station to another at their request, they will be paid normal TA & DA for self only. They will also be eligible for joining time as per Transfer TA Rules. Family members will not be eligible for any TA/DA.

9 RETIREMENT/DEATH

9.1 An employee shall be entitled to Travelling Allowance admissible, as given in the

Annexure, without the limitation of 15 KMs to enable him to proceed to his Home Town.

9.2 Upon retirement by an employee from company service on reaching the age of

superannuation, the employee and the dependent members of his family will be entitled the traveling expenses to go to the declared Home Town of the employee on the same basis as would be permissible under rules in case of his transfer which would include incidental expenses as well. The claim should be based on actuals and will be reimbursable on production of receipts.

9.3 Claims with regard to transportation of household articles by road submitted by

employees on Superannuation/Death should be supported by the following documents.

(i) Receipt issued by the Lorry Parcel Service acknowledging the amount paid by

the employee towards transportation charges. (ii) Lorry Way Bill of the Lorry Parcel Service in their stationery indicating the

charges for transportation of the household articles mentioning the date, place of commencement of transportation, the destination and the registration number of the vehicle.

9.4 If an employee intends to settle down in a place other than his declared home

town, the amount of TA admissible will be the actual expenses incurred by him or the amount admissible had he proceeded to his declared home town on the basis of his entitlement whichever is lower.

9.5 This concession may be availed at any time during six months prior to or six

months after the date of retirement. 9.6 This concession will also be admissible to employees who have become invalid

and/or retrenched from service without being offered alternate employment provided they have put in a service of not less than 10 years at the time of retirement/invalidity/retrenchment.

9.7 This concession applies to travel undertaken by members of the family of a

deceased employee in the unfortunate event of an employee dying while in service.

9.8 If both husband and wife are employed in the company only one of them will be entitled to the concession, the class of travel being based on the higher of the two entitlements.

9.9 This concession will not be applicable to cases of Voluntary Retirement.



10. TRAVEL ADVANCE

10.1 All employees shall, on application be granted against approved tour

programme, an advance for meeting expenditure on travel. Such application should be sanctioned and countersigned by their Controlling Officers.

10.2 The advance will normally be restricted to full train fare to and fro plus daily

allowance eligible for the days of tour. Normally an advance will not be granted if a previous advance is remaining unadjusted.

10.3 No advance should be taken from any Office other than from Headquarters

Office except on very rare occasions when there is an emergency. 10.4 Excess of travel advance drawn shall normally be remitted within 7 days from

the completion of the tour.

11. SUBMISSION OF TA BILLS

11.1 TA Bills countersigned by the respective Controlling Officers shall be submitted normally within 10 days from the completion of tour but in no case later than 30 days.

11.2 If the accounts are not submitted within the specified time the Company shall

have the right to deduct the entire outstanding amount from the subsequent month’s salary of the employee.

11.3 All claims on transfer shall be submitted within six months of the date of

transfer. Claims submitted after this period shall require the special sanction of the Division Head.

11.4 Where the time limits are provided for submission of claims and/or TA bills, the Controlling Officer may at his discretion condone the delay in submission of bills for bonafide reasons.

12. ENTITLEMENTS

12.1 The entitlement of Mode and class of travel, Hotel accommodation, Room rent, Daily Allowance, Composite Allowance and Allowance for Local Travel are given in the Annexure.

12.2 Rates of Incidental expenses, Packing Allowance, Carriage of Personal effects

and class of travel applicable to cases of Transfer/Retirement/Death are as given in the Annexure.



13. GENERAL

13.1 TA Rules applicable to officers in the Layer-I / Sub-layer be made applicable to

Temporary/ Contract Engineers. However, the approving authority in such cases shall be the Head of the Division.

13.2 The rates of DA shall not apply to employees posted to Project Sites in whose

case the management will decide from time to time the amount of allowance if any to be paid depending on the circumstances of each case.

13.3 Employees on tour are expected to stay at a centrally located place with

reference to their place/s of work with a view to minimize taxi/auto rickshaw charges.

14. COMPETENT AUTHORITY

14.0 The Management reserves the right to amend these rules at any time without notice. The Chairman and Managing Director shall be the competent authority to issue such orders as may be necessary with regard to interpretation of rules and shall be the final authority on interpreting any of the provisions contained in these Rules.

14.1 These rules supersedes all previous rules on the subject.

<<<<<<>>>>>>



TA/DA rates applicable to MANAGERIAL EMPLOYEES

Accomodation in

Unclassified Hotels

Travel

Hotel (Lodging) (A)

Daily Allowance

Category By air By rail By road Accommo- Principal Other locat- Principal Other locat dation City (Rs.) ions(Rs.) City (Rs.) ions(Rs.)

CMD/ Executive Any Train - Own car/ Any where No ceiling No ceiling 300 250

Directors Class Any Class Taxi

ED/GM Economy Any Train - Own car/ Upto No ceiling No ceiling 250 200

Class Any Class Taxi 5 star

Any Train - Upto

DGM/CM Economy Any Class Own car/ 4 star 1400 1200 225 175

Class Taxi

Any Train - Upto

Layer II - I class / Public 3 star 950 800 200 150

Officers IIAC / III AC Transport

Any Train - Upto

Layer I/ - I class / Public 2 star 900 750 175 125

Sub Layer IIAC / III AC Transport

Officers

Note:

1. For travel by Rajadhani / Sadabdi Express DA will be restricted to 25% of the applicable allowance.

DA rates for absence from head quarters:- Upto 12 hrs = 50% and above 12 hrs = 100%.2. Principal cities are Bombay,Calcutta,Delhi,Madras,Hyderabad,Ahamedabad,Bangalore,Pune,Kanpur,Lucknow,Coimbatore, Madurai and Nagpur. Principal cities include other State Capitals also.

3. Travelling Allowance will normally be admissible by the shortest route. However Controlling Officer may relax this condition, wherever justified.4. Day is reckoned from 6 AM to 6AM

5. Travel by air by employees who are not eligible otherwise to be undertaken only with the prior approval of CMD thro' FD/ Functional Director

6. Claim for reimbursement of hotel charges are to be supported by individual bills forming part of the main bill. Company's own guest house lodging charges will be reimbursed at actuals.

7. Service charges paid to Travel agencies for rail bookings will be reimbursed subject to a maximum of Rs.30 per ticket on production of documentary evidence.

8. For using own vehicle for official journey {Ref.Cl.2.2(c) } payment shall be @ Moped – Rs.1.25/KM, Motor Cycle/Scooter Rs.3.50/KM.9. Public Transport include Express/deluxe bus/tourist coach.

10.While staying in Company Guest Houses, only applicable DA is payable.

(A) Rates are excluding Luxury changes. Service charges and other statutory charges will be reimbursed at actuals.

(B) Employee can opt for Composite Allowance instead of Hotel accommodation and daily bata claim.Composite Allowance

Page 1 of 2

1/2/2009http://192.168.1.5/acman/annexm1.html

where no separate claim for lodging is made. This allowance cannot be claimed for stay at Company Guest Houses.

Page 2 of 2


ANNEXURE

TRANSFER TRAVELLING ALLOWANCE applicable to MANAGERIAL EMPLOYEES

Category Incidental Packing

Grade Travel Expenses Allowance

As per entitlement One extra full fare if unmarried / two extra Actuals

CMD / Directors shown in full fares if married and spouse is alive

Page 1 of OR

Annexure-M Rs.3000/- plus daily allowance for self and family as

admissible as shown in Page 1 of Annexure-M #

ED / GM -do- One extra full fare if unmarried / two extra

full fares if married and spouse is alive Limited to

OR Rs.1200

Rs.3000/- plus daily allowance for self and family as


DGM & CM One extra full fare if unmarried / two extra Limited to

(18500-23900 & -do- full fares if married and spouse is alive Rs.1000

17500-22300) OR



Dy.CM -do- One extra full fare if unmarried / two extra Limited to

(16000-20800) full fares if married and spouse is alive Rs.900

OR



Officers on grades One extra full fare if unmarried / two extra Limited to

14500-18700 & -do- full fares if married and spouse is alive Rs.750

13000-18250 OR



Officers on grades One extra full fare if unmarried / two extra Limited to

10750-16750 -do- full fares if married and spouse is alive Rs.600

8600-14600 OR

6550-11350 Rs.600/- plus daily allowance for self and family as


#. Children below 12 years will be allowed daily allowance at half of the rate for adults.

* Mileage allowance for carriage of Personal Effects from residence to Railway Station/Lorry Parcel Booking Office and

Page 1 of 1


TA/DA RATES applicable to NON-MANAGERIAL EMPLOYEES

Accommodation

in unclassified

Travel Hotel ( Lodging ) Daily allowance

Composite AllowanceCategory By rail By road Accommo- Principal Other locat- Principal Other locat- Principal

Dation City (Rs.) ions (Rs.) City (Rs.) Ions (Rs.) City (Rs.)

4800-8100 }

5100-8735 } Any Train Public

5400-9360 } I class / Transport 1 star 600 400 150 125 200

5700-10005} IIAC / III AC

6100-10775}

Elongated sc

16, 17 & 18

4300-6050}

4500-6950}

4600-7300} Any Train Public 1 star 600 400 125 100 175

4700-7690} &

I class / Transport

Elongated IIAC / III AC

scale 14 & 15

3800-4790} Public

3900-5280} II class Transport 1 star 600 400 115 90 150

4100-5655}

Note:

a) For travel by Rajadhani / Sadabdi Express DA will be restricted to 25 % of the applicable allowance.DA rates for absence from head quarters:

b) Principal Cities:- Bombay,Calcutta,Delhi,Madras,Hyderabad,Ahemedabad,Bangalore,Pune,Kanpur,Lucknow,Coimbatore,Madurai & Nagpur.

c). Travelling Allowance will normally be admissible by the shortest route. However Controlling Officer may relax this condition, wherever justified.

d). Day is reckoned from 6 AM to 6AM

e) Claim for reimbursement of hotel charges are to be supported by detailed bill. Company's own guest house lodging charges will be reimbursed at actuals.

f) Rates for Hotel Accommodations indicated above are excluding Luxury charges. Service charges and other statutory charges will be reimbursed at actuals..

g) Employee can opt for Composite Allowance instead of Hotel accommodation and daily batta claim.Composite Allowance is payable only in cases where no separate claim

for lodging is made. This allowance cannot be claimed for stay at Company guest houses.

h) Service charges paid to Travel Agencies for rail bookings will be reimbursed subject to a maximum of Rs.10/- per ticket on production of documentary evidence.i) For using own two wheeler for official journey, with prior permission of the Controlling Officer, payment shall be @ Motor Cycle/Scooter

j) DA for Local Journey – between 7.30 AM to 9.00 AM – Rs.2.00, 11.30 PM to 1.00 PM – Rs.4.50, 3.00 PM to 4 PM

k) Public Transport includes Express/deluxe bus/tourist coach.

l) While staying in Company Guest Houses, only applicable DA is payable.

Page 1 of 1

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ANNEXURE-N 2

TRANSFER TRAVELLING ALLOWANCE applicable to NON-MANAGERIAL EMPLOYEES

Category Travel Incidental Packing Carriage cost of

Expenses Allowance Personal effects*

4800-8100 As per One extra full fare if

Actual transportation

5100-8735 entitlement extra fares if married and

Limited to Expenses limited to

5400-9360 shown in OR Rs.600.00 2 tonnes

5700-10005 Page 1 of Disturbance allowance

Train or by parcel

6100-10775 &

Annexure - N Daily allowance for self and family as Lorry service.

Elongated Scale 16,17

Admissible as shown in

Annexure-N #

4300-6050 One extra full fare if


4500-6950 As per extra fares if married and


4600-7300 entitlement OR Rs.600.00 2 tonnes

4700-7690 shown in Disturbance allowance

Train or by parcel

Elongated Scale 14 &

Page 1 of Daily allowance for self and family as Lorry service.

Annexure - N Admissible as shown in

Annexure-N #

3800-4790 As per One extra full fare if


3900-5280 entitlement extra fares if married and


4100-5655 shown in OR Rs.450.00 2 tonnes

Page 1 of Disturbance Train or by parcel

Page 1 of 2


allowance of Rs.450/- Annexure - N Daily allowance for self and family as Lorry service.

Admissible as shown in

Annexure-N #

(#) Children below 12 years will be allowed daily allowance at 50%.(*) Mileage allowance for carriage of Personal effects from residence to Railway Station/Lorry Parcel Booking Office and vice versa @ Rs.3 per KM.

Page 2 of 2


ANNEXURE-23

GRATUITY SCHEME

THE FERTILISERS AND CHEMICAL TRAVANCORE LTD. EMPLOYEES GROUP GRATUITY SCHEME

23.0 INTRODUCTION

The Fertilisers And Chemicals Travancore Ltd. Employees Group Gratuity cum Life Assurance

Scheme is applicable to all employees of FACT, both managerial as well as Non-managerial, with

effect from 26.3.1996. Prior to this, the employees were covered by three different sets of rules and

regulations as follows.

1. Managers covered by FACT Managerial employees Gratuity Scheme.

2. Non-managers covered by the provisions of the Gratuity Act.

3. Non-managers not covered by (2) above, were covered by the company’s scheme for non-

managerial employees.

The company entered into a Group Gratuity Scheme with Life Insurance Corporation of India and

created the FACT Employee’s Gratuity Fund. A Trust Deed was executed by the company with the

trustees of the FACT employee’s Gratuity Fund on 26.3.96. As per the existing scheme, the

company contributes to the Gratuity Fund set up with LIC for which LIC provides death-cum-

retirement gratuity benefits to those employees who shall be eligible for membership of the fund.

23.1. PRACTICAL GUIDELINES

1 Minimum Eligibility

In case of resignation or retirement minimum eligibility shall be continuous service of 5

years. This is not applicable in the event of death.

2. Computation

Gratuity will be paid as per the payment of Gratuity Act 1972 - 15 days salary based on salary drawn

for every completed year of service subject to a ceiling of Rs. 3.5 lakhs with effect from 24.9.97.

i) Salary includes Basic + DA

ii) The No. of days in a month is reckoned as 26 days.

iii) Service for a period of 6 months and above shall be reckoned as one year.

iv) The ceiling was enhanced from Rs. 1 lakh to Rs. 3.5 lakhs w.e.f. 24.9.97 by the payment of

Gratuity Act (Amendment) Ordinance, 1997.

In the event of death of an employee while in service, full gratuity, as if the employee has been in

service till the date of retirement would be paid. The company initially settles gratuity for the actual

completed services of the deceased employee submits its claim to LIC and thereafter settles the

balance amount on account of anticipated services.



The benefits payable under this scheme are strictly personal and cannot be assigned, charged or

alienated in any way by the members or the Nominees.

23.3 ACCOUNTING

Gratuity is paid to the employees at the time of their severen from the company by the respective

division, debiting Head Office. HO puts up claim with LIC. The details required to be forwarded to

HO are given vide Annexure-I. LIC settles the amount by cheque drawn on the trustees, the FACT

Ltd. Employees Group Gratuity Trust which in turn reimburses the same to the company.

In the event of death, the following additional particulars are to be forwarded to HO.

1) Claim Form GB of LIC typed out and complete in all respects under the signature and seal of the

employer (personal Manager/Dy. Personal Manager.)

2) Xerox copy of Death certificate duly attested by a gazetted officer.

3) Whether Managerial employee or Non-managerial employee.

Normal retirement date of 58 years for all managerial staff and Non-managerial staff who joined after

23.1.78 and 60 years for other staff members.

23.4 PREMIUM

Premium is due to LIC on the 26th of March every year (15 days grace is allowed). It is calculated by

LIC based on the staff data provided to them during the middle of March each year. The complete

details of employees name and Badge No., Date of Birth, date of joining and salary classified into 3

data files (1) with retirement age 58 (2) with retirement age of 60 and (3) those who joined after

26.3.96 are provided to LIC. Actuarial valuation is done by LIC. The premium payable comprises of

1) OYRT premium (One Year Renewable Term) to secure the life assurance benefits to the members.

2) Initial contribution to secure gratuity benefits relating to past services of the members.

3) Amounts payable every year as are required to secure the balance gratuity in respect of the

members (Annual premium).

The premium is credited to the Gratuity Fund A/c maintained with LIC. Settlements are debited to this

A/c. This fund with LIC fetches interest at the rate determined by the corporation (12.7% for 1996-

97). Interest calculated on daily balance is credited to the fund a/c at the end of the year.

Investment of the fund money is the sole responsibility of the LIC. If the Gratuity Act undergoes

change, premium will be reworked and settlements will be effected at revised rates.

23.5 ADVANTAGE OF OPERATING THE SCHEME - THROUGH LIC

1) The initial contribution as well as annual premium paid is allowable as an admissible deduction while

computing the taxable income and to that extent there will be a reduction in the amount of tax

payable under the Income Tax Act. The group gratuity scheme with LIC was initiated as a tax saving

measure at a time when the company was making profits and the carried forward business loss was

coming down.

At times of losses, it is possible to defer the payment of premium to a future date. Payable of OYRT

premium is compulsory inorder to secure full gratuity benefit in the event of death.



2) Investment of the fund money rests with LIC. Company is absolved from this responsibility.

3) In case of death, gratuity for anticipated services is available only under the LIC scheme.



ANNEXURE-24

DEPARTMENT CODE NUMBERS HEAD OFFICE

Code Department

01 CMD

02 Director(Finance)

03 Director(Technical)

04 ED(HRD)

05 ED(P)

10 ED(M)

11 CMD’s Office

12 FD’s Office

15 ED(P)’s Office

16 ED(CEW) Office

17 ED(V) Office

21 Corporate Finance

22 Internal Audit

23 Computer Services

24 Personnel Office

25 Management D. Centre

26 Legal Service

27 Public Relations Office

28 Materials

29 Secretariat

30 Administrative Office

31 Tech. Service

32 Hindi Office

33 TD’s Office

34 PF.Department

35 Delhi Office

36 Bombay Office

37 Madras Office

38 TVM Liaison Office

39 Statistics

40 Man power Planning

41 FT Trainee

50 R & D Centre

UDYOGAMANDAL DIVISION COCHIN DIVISION Code Department Code Department

01 Ammonia Division 01 Ammonia

02 Gas Division 02 Urea

03 Chemical Control 03 Water Treatment

04 Instrumentation 04 Steam Generation



05 Acid Division 05 Power Generation

07 Phosphate 06 Sulphuric Acid

08 Workshop 07 Phosphoric Acid

09 Civil Maintenance 08 N P K

10 Mat conservation 09 Raw Water

11 Fabrication 20 Raw Material

12 Plant maintenance 21 Product handling PHA I

13 Transportation 22 Product handling PHA II

15 Garage 23 Raw material

16 Traffic 24 Mechanical Maintenance PHA I

17 Utility 25 Mechanical Maintenance PHA II

19 Technical Office 26 Electrical Maintenance PHA I

20 Construction 27 Electrical Maintenance PHA II

21 Saftey 28 Instruments PHA I

22 Administrative Office 29 Instruments PHA II

26 Cafeteria 30 Civil Maintenance PHA I

28 Finance Dept. 31 Civil Maintenance PHA II

29 Medical Office 32 Workshop

31 Personnel Office 33 Process Control

34 Purchase Office 34 Technical Services

35 Stores 35 Saftey

39 Welfare 37 Pollution control-2

40 Estate 38 Township Maint-Civil

41 FACT House 39 Township Maint-Ele.

42 Estate Admn. 40 Ship unloader

43 Transportation 41 Phosphoric Acid TNL

45 GS Office 42 NH3 Storage-W.Island

46 Training Department 50 Dispensary

55 Apprentice 51 Medical

59 Cochin Office 52 Transportation

61 Kalamassery office 53 Stores

62 Composite Ammonia 54 Traininees

64 Pollution control 55 Training Centre

Code Department Code Department

70 New Ammonium Sulphate 70 Purchase

90 JNM Hospital 71 OM office

91 Other Schools 72 Finance

97 Udyogamandal School 73 Personnel 101 RAP 74 Welfare 75 Estate 77 School 78 Stock verification 79 Provident Fund 80 Canteen 81 Ambalamedu House 82 Computer Service Centre FEDO FEW



Code Department Code Department

01 Mech. Engg. Machinery 42 CE’s Office (SHPP)

02 Mech. Engg. Vessels 43 Site Engineer

03 Mech. Engg. piping 44 SHPP Engineer

05 Project Planning 45 Rigger

07 Project Managers 46 Manager Inspection

08 Pre-projects 47 FACT Engg. Works AD

10 Purchase 48 Machinist

11 Chemical Engg. 49 Welder

12 Civil Engg. 55 Fitter

13 Elect. Engg. 75 CE’s Office (Proj)

14 Instrumentation 76 Mech. Maintenance

15 Finance 77 Elec. Maintenance

16 Administration 81 Crane/Forklift PPR

17 Draughtsman Civil 82 Prod. Planning

18 Draughtsman Mechanic 83 Design

20 Draughtsman Electric 84 Tool Crib

21 Personnel 85 NDT Tech.

22 Model making 86 Radiographer

23 Welfare 90 Workshop

25 Construction 91 Admn.

26 Inspection 92 Personnel

48 Admn. Eng. Department 93 Purchase Code Department Code Department

49 Admn. Blue Print 94 Finance

50 Admn. Process 95 GM’s Office

51 Admn. Proj. Gen. 98 FACT Engg. Workshop

52 Admn. pre proj. Comm. 99 Estimation

53 Admn. Construction

54 Admn. Caprolactum

55 Admn. GM’s Office

56 Admn. documentation

57 DGM(S)’s Office

58 Ammonia Project MARKETING DIVISION PETROCHEMICAL DIVISION Code Department Code Department

24 Madras Office

28 DGM(F)’s Office 10 Administration

30 CDM’s Office 11 Finance

32 MPS’s Office 12 Personnel



33 Agronomy 13 Welfare

34 Sales Chemicals 14 Admn. Office

35 Sales(F) 15 Marketing

36 Marketing Accounts 20 Materials

37 Stock Taking 21 Purchase

38 Market Research 22 Stores

39 Mktg. Pers. Office 23 Traffic

40 Coimbatore Office 24 Heavy Equipment

41 Trichy Office 30 Production

42 Vellore Office 31 Anone

45 Madurai Office 33 Hyam

50 Bangalore Area Office 34 Lactum Flaking

51 Bangalore Regional Office 40 Offsite

52 Hospet 41 Pollution control

53 Belgaum 50 Utility

54 Mangalore Office 61 Mech. Maintenance

56 Nellore 62 Electrical Code Department Code Department

57 Vijayawada 63 Instrumentation

58 Kakinada Regional Office 64 Workshop

60 Hyderabad Area Office 66 Civil

61 Trivandrum Office 71 Process & Engg.

62 Alleppey Regional Office 72 Training

63 Palaghat Regional Office 81 Process Control

64 Kottayam Regional Office 90 Fire

69 GGM’s Office 91 Safety

70 IMP Handling

71 Hyderabad Region Office



ANNEXURE - 26

ACTING, OFFICIATING & CHARGE ARRANGEMENTS

CHARGE ALLOWANCES - MANAGERIAL 26.01. ACTING/OFFICIATING ARRANGEMENTS IN MANAGERIAL POSTS

(CPRM/IC.409/78 DT. 27-5-78 & CPRM/IC.50/80 DT.5/3/80)

Occasions arise where managers of the Company go on leave or deputation, etc. and it becomes

necessary to make alternate arrangements for ensuring that the work of the manager proceeding on

leave/deputation etc. is effectively carried out. In such circumstances, competent authority may, at

his discretion, make acting/officiating arrangements in the managerial post from which the

permanent incumbent is absent. Such arrangements, which made shall be subject to the following

provisions/conditions.

26.1.1. Acting/officiating arrangement shall be made only with the approval of the competent authority as

provided in the delegation of powers. Such arrangement shall ordinarily be made from the grade

which is next lower to the post for which the arrangement is made.

26.1.2. The person authorised to officiate in the higher post must have the minimum qualifications and

experience prescribed for the post and he should not be one who has been found to be unfit to

shoulder higher responsibilities of a higher post.

26.1.3. Officiating arrangements will be purely stop gap in nature and will be without effect on seniority nor

will it confer any right on the person so appointed for permanent promotion to the post at any time.

26.1.4. Other things being equal, normally the senior most person within a Division (out of those with the

requisite qualification and experience) will be asked to officiate unless such arrangement is found

administratively not feasible.

26.1.5. Management has always the right to operate a post on a grade lower than that provided in the

Organisation Chart. Such an arrangement will not be construed as officiating and there will be no

officiating pay for the incumbent of that post.

When an officiating arrangement is later made in the post which is operated on a lower grade as

above, the officiating pay will be determined on the basis of the grade in which the post is operated

and not grade of the post provided in the Organisation Chart.

26.1.6. Acting/officiating arrangements may be made for vacancies of any duration, but the employee will

become eligible for payment of officiating pay/allowance only if the arrangement lasts for a

continuous period of two months or more.

26.1.7. When the period is more than 30 days, the officiating person will be paid the minimum of the scale of

the higher post in which he officiates. If he is already drawing the minimum or more, he will be paid

an extra allowance equivalent to one increment in the higher scale.

26.1.8. Officiating arrangements shall be made in managerial posts in such a manner that it is restricted to

one level with no chain officiating arrangements.

26.1.9. Deviations from any of the above provisions/conditions when they become necessary in exceptional

circumstances, will require the previous approval of the Chairman and Managing Director.



26.1.10. These rules will come into operation with effect from 1st June 1978and will supersede all earlier

orders on the subject.

26.1.11. The management reserves the right to amend these rules at any time without notice. The Chairman

and Managing Director shall be the final authority in the interpretation of these rules.

26.2. CHARGE ARRANGEMENT AND CHARGE ALLOWANCE

(CPRM/IC.633/79 dt.7-8-79 & CPRM/IC.150/80 dt.5-3-1980)

Occasions arise when a manager of the Company is given additional charge of another managerial

position. It has been decided that a charge allowance may be granted to persons who hold charge

of an additional post in addition to performing his own normal duties and responsibilities. The charge

arrangement, when made shall be subject to the following provisions/conditions.

26.2.1. When a manager is on leave/absent, the normal practice to cover the gap should be by suitable

officiating arrangement. Charge arrangement as per this bulletin should be considered only if

officiating arrangement is not feasible.

26.2.2. Charge arrangement shall be made by entrusting the work additionally to a suitable person in the

same grade as that of the post for which charge arrangement has become necessary and will not

confer any claim on that post.

26.2.3. No person at a time shall be in charge of more than two posts including his normal post.

26.2.4. Charge arrangement may be made for vacancies of any duration, but the employee will become

eligible for payment of charge allowance only if the charge arrangement lasts for a continuous period

of 30 days or more and subject to satisfactory discharge of duties entrusted.

26.2.5. When the charge arrangement is carried on for a period of more than Thirty days, the person holding

charge will be paid 10% of his basic pay for the duration of the charge arrangement. However, no

charge allowance or other additional remuneration will be payable to persons in the salary scale of

Deputy General Manager and above, holding additional charge of any other post.

26.2.6. When the work of a post is entrusted additionally to more than one manager, then the charge

allowance will be admissible to each of them but the percentage rate of 10% will be proportionately

reduced, e.g. if the work is distributed to two managers to be performed in addition to their own work,

the charge allowance admissible to each will be 5% of his basic pay.

26.2.7. The authority competent to sanction charge allowance will be the appointing authority for the post

concerned.

26.2.8. These rules will come into force with effect from 1st August 1979.

26.2.9. The Management reserves the right to amend these rules at any time without notice. The Chairman

and Managing Director shall be the final authority in the interpretation of these rules.

Clarification: (CPRM/IC.416/82 dt.1-10-82).

Managerial personnel holding acting/officiating position of a higher post or holding additional charge

of a post for a period exceeding 30 days are eligible to certain monetary benefit as stipulated in the

bulletins referred to above. A question has not been raised, whether such a person will be eligible to

the benefit for the period when he himself is on leave. It is hereby clarified that a person who is

acting/officiating in a higher position or holding additional charge of a post will not be entitled to the

benefit for the duration of leave in case the period of such leave exceeds 6 working days or more



consecutively. In such cases, the benefit will be admissible only for the balance period (i.e. total period of leave)

even when the acting/officiating arrangement is not cancelled and the person on resumption of duty

after leave continues to hold the higher/additional responsibilities as he was doing before proceeding

on leave..



ANNEXURE - 27

KIT ALLOWANCE

(MD’s Order No.1/66 dt.11-1-1966) 27.1. The following rules shall apply for grant of kit allowance to staff who are deputed by the Company for

advanced training or for other purposes in or outside India.

i) Normally no kit allowance shall be paid, if the stay is in India and the period does not exceed one

month.

ii) For staff sent abroad a kit allowance of Rs.1800/- shall be paid. No further allowance shall be paid if

a second foreign journey is undertaken within an interval of five years of the first journey. For any

journey undertaken after five years a kit allowance of Rs.900/- shall be paid. No kit allowance shall

be paid thereafter.

iii) A kit allowance of Rs.500/- shall be paid for staff deputed for training to the Administrative staff

college Hyderabad provided he has not drawn any kit allowance during previous five years for

journeys abroad.

iv) For training in other places in India for a period exceeding one month the question of kit allowance

shall be fixed on the merits of each case by the Managing Director.

27.2. CLARIFICATION GIVEN VIDE MD’s ORDER No.F-1/67 dt.27-3-67

1) According to MD’s Order No.G.1/66 dt.11-1-66 kit allowances, admissible for dress when staff are

sent for training have been stipulated. In the case of training in India for more than one month, kit

allowance is to be sanctioned at the discretion of the Management.

2) Normally, in such cases kit allowance will be granted only where the sponsors of the course fixed

special dress regulations or where special clothing is required, for example the courses held in winter

in North India. Kit allowances will not be granted in other cases. Recommendation for kit allowance

should be sent up only where either of the conditions indicated above, is satisfied.

27.3. WINTER KIT ALLOWANCE - VIDE CPRM/IC.96/80dt.4-2-80

(Clause No.11 of the Annexure)

Both Managerial and Non-Managerial Employees at Project Sites shall be entitled to the following

winter kit allowance:

a) If the Project site is situated Rs.400/-

north of great Bombay, Nagpur (Rupees Four

or Vizag or at a Hill station in hundred only) Once

the south. in 3 years.

b) In other places where the Rs.300/-

temperature falls 12oC and (Rupees Three

below on any day during the hundred only)

past 4 years - (vide Once in 3 years.

CPRM/IC.376/80 dt.2-7-80)



For becoming eligible for the winter kit allowance the employee will have to serve continuously in the

above places for a period not less than 30 days during the period from Ist November to 31st March.



ANNEXURE - 28

TRAINING - OFFICERS DEPUTED FOR TRAINING EXECUTION OF BOND, PERIOD OF

OBLIGATORY SERVICE AND AMOUNT OF LIQUIDATED DAMAGES - ORDERS REGARDING -

MD’s ORDERS No.G52/67 DATED 1-12-1967.

28.1. All Officers of the Company sent abroad for training under the various training programmes will be

required to execute a bond in the form appended, before they are relieved for training. Travelling

advances, kit allowances and other advance payments due to the officers concerned will be effected

by the Finance Department only after a certificate from the concerned personnel officers/Assistant

Personnel Manager is obtained to the effect that the required bond has been got executed and

accepted. Before any officer is relieved of his duties for training abroad, the Controlling Officer will

also ensure that the required bond has been got executed. In all cases a copy of the bond so

executed should be sent to MPA.

28.2. The amount of liquidated damages to be specified in the bond will include.

a) the salary and allowance during the period of deputation

b) Kit allowance or other payments made by the Company.

c) cost of travel upto the post of embarkation,

d) any other cost incurred by the Company in connection with the training, and estimated expenditure

incurred by the foreign aid agencies, including to and from international travelling cost.

28.3. The period of compulsory service to be rendered by the officers on return from training which should

be specified in the bond will be as follows:-

Period of training Period of obligatory

service prescribed

1. Less than one year 3 years

2. One year or more, but not

exceeding two years 5 years

3. Exceeding two years 7 years

28.4. In case of persons on deputation from Govt. or from other Public Sector enterprises the bond will be

the same, subject to the parent employer being willing to permit his continued employment with the

Company for the said period.

28.5. The period of training and the actual time taken for to and from journey will be treated as on duty, the

period being countered also for leave and increments.

28.6 Clarification given vide CPRM/IC.406/82 dt.6-8-1982

28.6.1. The work in relation to sponsoring of employees for training abroad is usually handled by the

Management Development Centre. Execution of bond is done through MPA in Head Office.

Relieving Order is issued by the Controlling Officer. Payment of advance is done by Finance



Department.

28.6.2. In all such cases MMD should invariably ensure that MPA is informed as and when an employee is

sponsored for training and when he is accepted. Based on this intimation MPA will take steps to get

the bond duly executed and to issue the required certificate to the controlling office through the Head

of the Division after the bond is executed. A copy of this intimation will also be sent to the concerned

Finance Department.

The Controlling Officer will issue the relieving order only after receiving the certificate from the MPA’s

Office. Advance should be paid from Finance only after getting a similar advice.

28.6.3. It may kindly be ensured the above procedure is complied with so as to ensure that the requirement

of MD’s order referred to above are fully complied with.

BOND FOR OFFICERS OF THE FERTILISERS & CHEMICALS, TRAVANCORE LIMITED PROCEEDING ABROAD ON

DEPUTATION FOR TRAINING KNOW ALL MEN BY THESE PRESENT THAT I .................. resident of ...................in the District

of ............... at present employed as ...............in the Fertilisers and Chemicals, Travancore Ltd. do

hereby ....... myself and my heirs, executors and administrators to pay to Messrs. Fertilisers &

Chemicals, Travancore Limited (hereinafter called ‘the Company’) on demand the sum of Rs......

(Rupees........) in consideration of my having been placed on deputation for training connected with

(particulars of the nature of training) for the period from .............. to............. at (names of countries)

at the cost of a training scheme sponsored by the Company together with interest thereon from the

date of demand at State Bank rates for the time being in force or, if payment is made in country other

than India, the equivalent of the said amount in the currency of that converted at the official rate of

exchange between that country and India.

Dated this ............. day of .......................of two thousand

and ...................

WHEREAS the above bounden ............ is placed on deputation by the Company.

NOW THE CONDITION OF THE ABOVE WRITTEN OBLIGATION IS THAT in the event of the

above bounden resigning or retiring from service without returning to duty after the expiry or

termination of the period of training or at any time within a period of ..............years after his return to

duty, he shall forthwith refund to the Company or may be directed by the Company to refund on

demand the said sum of Rs............(Rupees.......) on account of his having been placed on

deputation as aforesaid together with interest thereon from the date of demand at State Bank rates

for the time being in force.

AND upon the above bounden........... making such refund the above written obligation shall be void

and of no effect, otherwise it shall be and remain in full force and virtue.

Signed and delivered by the above

bounden .................in the

presence of ...................



Accepted

For and on behalf of The Fertilisers & Chemicals, Travancore Limited.



ANNEXURE-29

GROUP INSURANCE SCHEME IN LIEU OF EDLIS 1976. 29.0. This group Insurance Scheme is applicable to all Provident Fund members of Udyogamandal PF

Trust and Cochin Division PF Trust and all work charged employees. This has been introduced

w.e.f. 1st May 1993. The benefits under the Scheme is available to the nominees upon the death of

a member whilst in service.

29.1. DEFINITIONS

1. Scheme - Scheme shall mean The Fertilisers And Chemicals Travancore Ltd.,

Udyogamandal Employees Group Insurance Scheme.

2. Grantees- Grantees shall mean F.A.C.T. Udyogmandal.

3. Rules- Rules shall mean, the Rules of F.A.C.T. Udyogamandal Employees Group

Insurance Scheme

4. Employee- Employee shall mean an Employee of the Grantees, who is a member of the

Grantees’ Provident Fund.

5. Member- Member shall mean an Employee who is admitted to the benefits of this policy.

6. Beneficiary- Nominee shall mean the person/persons appointed by the Member under the

Rules of the Provident Fund to receive the benefits upon his death.

29.2. GENERAL CONDITIONS

1. An employee shall be admitted to the benefits of this policy with effect from the date of his admission

as a Member of the Provident Fund of the Grantees and the Grantees shall advise the Corporation to

this effect and furnish the relevant particulars of the employee.

2. Evidence of age of the Member satisfactory to the Corporation will be required before any benefits of

him are paid under this policy.

3. If the Grantees do not renew this policy on any Annual Renewal date by paying the premiums then

talling due as set out in the Schedule, they may resume payment of premium only with the consent

of the Corporation and subject to such conditions as may be prescribed by the Corporation.

4. The corporation shall not be liable for any action taken in good faith upon any statements and

particulars furnished by the Grantees which shall be proved to have been erroneous. Such of the

Grantees records in original as in the opinion of the Corporation have a bearing on the benefits

provided or the premiums payable hereunder shall be open for inspection by the Corporation

whenever required.

5. It shall be a condition of employment for all future employees of the Grantees that they must become

Members hereunder on the respective dates of their admission to the Grantees’ Provident Fund and



the Grantees shall take effective steps to ensure that relevant information is furnished to the Corporation and that

appropriate Assurance are effected hereunder. In the event of breach of this condition, the

Corporation shall be entitled to give written notice to the Grantees terminating this Policy.

6. Variations in the benefits assured hereunder as on the Annual Renewal Dates Shall be given effect to

by endorsements over the signature of a duly authorised Officer of the Corporation.

The Corporation may vary the rates, terms, conditions and provisions of this policy upon giving to the

Grantees three months’ notice in writing. Such variation shall apply to all Assurances with effect

from the Annual Renewal Date coincident with or next following the date of expiry of notice.

29.3 BENEFITS

1. When the sum Upon death of the Member whilst in

assured becomes Service of the Grantees, provided the

payable Assurance is in force at that time.

2. To whom payable The Grantees, for the benefit of the

Nominee.

3. When the assurance On the Member ceasing to be in the

terminates Service of the Grantees.

4. Surrender & paid- The Assurance effected under this policy

up values will not acquire any surrender or paid-

up values.



ANNEXURE - 30

PER DIEM LIVING ALLOWANCE PER DIEM LIVING ALLOWANCE TO PERSONNEL POSTED OUTSIDE FOR INSPECTION,

SUPERVISION, ERECTION, COMMISSIONING ETC. OF PROJECTS OF FEDO/FEW

30.1. The following rates of allowance will be paid to staff posted to places beyond 25 KMs. from their

normal place of work for a period exceeding 30 days in connection with inspection, supervision,

erection,commissioning etc.of FEDO/FEW for jobs or contracts.

—————————————————————————————————-—-—-—-—-—-—- Places other than Principal Principal Cities Cities ————————————— ———————-—-—-—-—-—-—-

Gr.I Gr.II Other Gr.1 Gr.II Other Offi- Offic- Non Offi- Offic- Non cers ers & mana- cers ers & mana- Non-Mngl. gerial Non-Mngl gerial staff staff staff staff drawing drawing basic basic Rs.3040 Rs.3040 and above and above

————————————————————————————————-—-—-—-—-—-—-— (1) (2) (3) (4) (5) (6) (7)

————————————————————————————————-—-—-—-—-—-—-—

Rs. Rs. Rs. Rs. Rs. Rs.

1. Where free 100.00 85.00 65.00 120.00 100.00 80.00

boarding &

lodging

not pro-

vided

2. Where 90.00 75.00 55.00 110.00 90.00 70.00

simple

furnished

bachelor/

family

accommod-

ation is

given 3. Where free 25.00 21.00 16.00 30.00 25.00 20.00 boarding and lodging is given

30.1.1. Daily Cash Allowance and other benefits under the TA Rules will be admissible for site posting upto

and including 45 days instead of the present 30 days.

30.1.2. The perdiem living allowance rates applicable to employees who are located at a radial distance of



more than 25 KM from Head quarters are revised as given in the Annexure.

30.1.3. The cities of Lucknow, Coimbatore, Madurai and Nagpur are included under the category of principal

cities for the purpose of per diem allowance.

30.1.4. The rates of reimbursement of the charges incurred for water and electricity where Company

accommodation is provided at the Project Site is revised as Rs.30/- per month for bachelor

accommodation and Rs.50/- per month for family accommodation irrespective of winter/other

seasons.

30.1.5. The disturbance allowance payable to an employee on posting to Project sites is revised as given

below:-

Category Amount

Rs.

Gr.I Officer (Officers with a basic pay

above Rs.5400/-) 750

Gr.II Officer (Officers with a basic pay

Rs.5400/- and below and Non-Managerial

staff with a basic pay above Rs.3040/-) 625

Non-Managerial Staff with a basic pay Rs.3040/-

and below 500

30.1.6. Employees who were occupying Company accommodation at the time of site posting or who were

allotted Company accommodation but were unable to occupy the same due to the site posting will be

given priority for allotment of Company accommodation on return to Head Quarters after the site

posting.

30.1.7. Reimbursement of expenses for transportation of personal effects by road also will be permitted for

Site postings subject to rates in the TA rules, in addition to the present facility of transport by rail.

30.1.8. The Winter Kit Allowance payable once in three years is revised as follows:-

Project sites situated north of }

Greater Bombay, Nagpur & }

Visakhapatnam or at hill stations } Rs.600/-

in the south }

Other places where the temperature }

falls below 10oC on any day of } Rs.450/-

the previous year }

30.1.9. The Managerial personnel posted to Project Sites which are located between 8 KMs to 25 KMs from

their normal place of work will be eligible for outstation allowance in lieu of travel allowance

benefits such as daily cash allowance etc. payable when the period of posting is more than one

month but does not exceed six months, at the revised rates as follows:

Gr. I Officer (Officers with a basic pay } Rs.350/-

above Rs.5400/-) } per

} month.



Gr.II Officer (Officers with a basic pay } Rs.300/-

of Rs.5400/- and below } per

} month.

30.2. GRANT OF ACCOMMODATION/HRA

a) In cases where the employee is not shifting his family from his usual place of work prior to posting to

site, he will continue to be eligible to retain company accommodation (where provided) and draw

HRA if any applicable to that place as the case may be.

b) Where the posting is for more than 180 days, the employee at his choice may shift his family to site

or any other place, in which case he will surrender Company accommodation if already provided and

will also cease to be eligible for HRA/CCA at the original Headquarters. Instead, he will be eligible

for HRA/CCA for the place to which the family is shifted as admissible under the HRA/CCA rules in

force from time to time.

c) The employee who was occupying Company accommodation at the time of site posting or who has

been allotted Company accommodation but could not occupy the same because of site posting, will

be given priority for allotment of Company accommodation on return from the site posting and his

children will as far as possible be given preference for admission to FACT Schools.

d) Normally the Company will try to provide simple furnished bachelor accommodation at the work site

or in a nearby location. Family accommodation will ordinarily be provided to the employees only if

the same is made available by the client free of cost as per terms of the contract.

e) Where the Company provides bachelor accommodation, it is understood that the employee will

utilise that accommodation. If on the other hand he chooses accommodation other than that offered

by the Company, the rate of allowance admissible to him will be the same applicable to the

accommodation provided by the Company.

f) The decision of the Company on types standard of accommodation, the facilities given and the rate

of allowance with regard to the type of accommodation provided will, in all cases, be final.

30.3. TRAVEL TO WORK SITE

a) An employee, if assigned to a Project site intermittently or other wise, shall be entitled to only a one-

time disturbance allowance as indicated below:-

Grade-I Officers Rs.625/-

Grade-II Officers and

Non-managerial staff

drawing basic pay of

Rs.925/- and above Rs.500/-

Other Non-Managerial

Staff Rs.375/-

Eligibility for disturbance allowance will be available both ways only where the employee takes his

family also to the site and duration of the stay of the family is not less than 180 days.

b) When the posting is for more than 180 days and employee shifts his family to work site/a different

location, he will be paid TA/DA for the journey for self and family as per Clause VII 1,2 and 3 of TA



Rules for managerial personnel and Clause VI 1,2 & 3 of TA rules for non-managerial personnel as

applicable to him on the date of journey, subject to deduction of disturbance allowance if already

availed under Clause 2(a) above.

30.4. TRANSPORT OF PERSONAL EFFECTS

The employee posted to site for period exceeding 180 days will be eligible for reimbursement of

actual expenses for transport of personal effects limited to his entitlement for the same by rail only as

per Clause VII 4,5,6 and 10 of the TA Rules for Managerial personnel and Clause VI 4,5,8 and 10 of

the TA Rules for non-managerial personnel. It is normally expected that shifting of employee’s family

members or transport of personal effects will be to the same station ie. either to the place of posting

or to a different location. If, however, transport of personal effects is done partly to the place of

posting & partly to a different location, reimbursement will be made only for expenses incurred for

either of the above two and not for both. Where the employee transports his personal effects by

using other agencies, the reimbursement will be limited to entitlement by rail, only for the actual

weight transported.

30.5. LEAVE DURING SITE POSTING

In case the employee posted at sites is on leave and if he continues to live at the site, he shall be

entitled to the full site living allowance provided the duration of such leave is not more than a period

of 15 days in a calendar month. There will be no site living allowance beyond the above period.

30.6. TRAVEL FROM SITE

When employee travels from site, he will be eligible for TA and DA as per TA rules in force from time

to time. In such cases, the perdiem living allowance will be proportionately reduced for the day(s) or

part of the day as the case may be, for which the daily allowance is paid under the TA rules.

30.7. REIMBURSEMENT OF LOCAL TRAVEL EXPENSES FOR USE OF OWN VEHICLES

An employee will be eligible for reimbursement of local travel expenses as per prevailing rules if he

uses his own vehicle for Company’s work at site and is entitled to this benefit at Headquarters. Such

an employee shall be allowed to transport his vehicle to site at Company cost where the period of

posting exceeds 30 days, with the permission of the Division Head. In such cases, the employee will

be eligible to claim transport charges for his personal vehicle from HQ to site as per provisions of TA

rules.

30.8. MEDICAL FACILITIES

Medical facilities for self and family members as per the prevailing rules of the Contributory Health

Scheme shall be provided. In cases where the project sites are not covered under the ESI Scheme,

the employees falling within the ESI limits will also be eligible to become members of the

Contributory Health Scheme. Otherwise such employee will continue to be covered by the ESI

Scheme.

30.9. LEAVE TRAVEL CONCESSION

For purpose of leave travel concession, the project site shall be the headquarters of the employee. In

cases where the employee has shifted his family to a place other than his place of posting, the

employee will be eligible to choose and avail of the facilities of leave travel concession rules to visit

the place of stay of the family in lieu of a visit to the home town. In cases where the employee does



not choose to visit the place of stay of the family under leave travel concession rules, the employee and the family

will separately be eligible to avail of the facilities of LTC rules to visit home town from their respective

places of stay (for employee, place of posting and for family, place of stay).

30.10. CASES OF HIGHER PAYMENT OF ALLOWANCE

In case an individual employee is presently receiving higher payment than the allowance now laid

down, he will continue to get the higher amount for the duration of his current posting. Future

postings will be as per these rules.

30.11. OVERTIME PAYMENT

The non-managerial employees posted to work at sites will be compensated by rate equivalent to

single overtime wage for working beyond 8 hours in a day or on holiday/off days or they may be

given compensatory off in lieu thereof.

30.12. WINTER KIT ALLOWANCE

Both the managerial and non-managerial employees at project site shall be entitled to the following

winter allowances:

a) If the project site is situated )

north of Greater Bombay, Nagpur ) Rs.400/- once in

and Vizag or at a Hill Station ) three years

in the South )

b) In other places, where the tem- )

perature falls below 12oC on ) Rs.300/- once in

any day during the past four years ) three years.

For becoming eligible for the Winter Kit allowance, the employee will have to serve continuously in the

above place for a period of not less than 30 days during the period 1st November to 31st March.

30.13. FAMILY

Family means an employee’s spouse, legitimate children, step children, legally adopted child in the

case of an employee, who has no child dependent on the employee and parents who are wholly

dependent on the employee.

30.14. SCOPE

Employees posted to any branch/region or such other office of FEDO/FEW will not come under the

scope of these rules.

30.15. COMPETENT AUTHORITY

The Management reserves the right to amend these rules at any time without notice. The Chairman

and Managing Director shall be the competent authority to issue such orders as may be necessary

with regard to the interpretation of rules and shall be final authority on interpreting any of the

provisions contained in these rules.



ANNEXURE-31

HOUSE BUILDING ASSISTANCE - INTEREST SUBSIDY SCHEME

(Ref: GM(P)/IC.268/83 dt.16-5-1983) 31.1. A Scheme for House Building Assistance was introduced in the Company effective 1st January

1983. It comprises of two parts viz:-

i) A House Building Loan Scheme to employees for provision of loan from the Company for purchase

of a ready built new house/flat or construction of a house or enlargement of an existing house, the

loan amount varying from Rs.25,000/- to Rs.2,50,000/- related to the salary of the employee and his

repaying capacity; and

ii) An Interest Subsidy Scheme to employees who avail loan from outside approved agencies for the

purpose of purchasing or building a house/flat.

Due to the present financial stringency of the Company, the scheme for granting House Building

Loans from the Company mentioned at (i) can be taken up for implementation only at a later stage,

when the situation improves. The Scheme for grant of Interest Subsidy, for loan availed from

approved agencies is implemented as from 1st January 1983, for such loans taken on and after 1st

January 1983.

The salient features of this scheme are as follows:-

1. The Company will pay interest subsidy to the employee, the subsidy being difference between the

rate of interest actually levied by the approved agency limited to 14.5% at present and the interest

payable on loan from the Company had the loan been taken from the Company.

It may be noted that the interest rate of 14.5% mentioned above is the rate charged by Primary Co-

op.Societies and excludes portion that is set apart for Insurance premium for the property which will

have to be borne by the employee in all cases.

31.2. COST CEILING

a) Cost ceiling for house to be purchased/built. 150 times the basic pay subject to a minimum of Rs.2.5

lakhs and a maximum of Rs.6 lakhs.

Effective Date

Employees who had earlier availed loan from the approved agencies for building/purchasing house

which cost more than Rs.3 lakhs on or after 1-11-1991 will now be eligible for interest subsidy

prospectively from 19-10-1994. (Amended vide CPRM-HO-2427 dated 7-12-1994).

b) Amount of Loan

The revised maximum loan amount for which interest subsidy will be admissible, related as salary of

the employee and his repaying capacity is as under:

(i) Purchase of a ready built ) 100% of cost limited

house.flat or construction ) to 50 times the



of a house/first including/ ) monthly basic pay of

excluding cost of plot ) Rs.2.5 lakhs which-

ever is lower.

(ii) Enlargement of existing ) 100% of cost limited

house ) to 50 times monthly

) basic pay limited to

) Rs.60,000/-.

c) Rate of Interest

For the purpose of payment of interest subsidy interest payable on loan, had the loan been taken

from the Company, will be as follows:-

For a loan upto Rs.50,000 : 7.5%

For a loan upto Rs.1 lakh : 9.0%

For a loan upto Rs.1.5 lakhs : 10.0%

For a loan upto Rs.2 lakhs : 11.0%



(amended vide CPRM-HO-406 dated 3-3-1995).

31.3 The approved agencies for availing loans are Life Insurance Corporation of India, State Housing

Corporation/Boards, State Appex Co-operative Housing Finance Societies and House Building Co-

operative Societies affiliated to them and the Housing Development Finance Corporation.

Other approved agencies are as follows:-

1. State Bank of India

2. State Bank of Travancore

3. State Bank of Hyderabad

4. Bank of Baroda

5. Bank of India

6. Dena Bank

7. Canara Bank

8. GIC Griha Vitta Ltd.

9. Dewan Housing Development Finance Corporation.

10 Can Fin Homes.

In addition to the above the following Institutions are also included in the list of approved agencies

under the Interest Subsidy Scheme with effect from 09/09/1999 subject to the condition that salary

recovery of loan instalment will not be made vide DGM(P-EST)-PER-HO-1067 dt.16-09-99.

1. Indian Overseas Bank

2. Union Bank of India

3. SBI Home Financial Ltd.

4. Corporation Bank

31.4. The maximum rate of 14.5% mentioned above and the rate of interest reckoned for subsidy are

subject to revision by the Company, based on interest rates of Primary Co-operative Societies and

interest rates for Housing loans granted to Government employees by the Government of India

respectively.



31.5. The principal amount of loan for the purpose of interest subsidy will be notionally determined each

year on the basis that the loan will be repaid by the employee in equal monthly instalments within the

period allowed by the financing agency, but not exceeding 20 years or the employee’s balance

period of service in the Company whichever is earlier.

31.6. All permanent employees who have put in a minimum of 5 years continuous service in the Company

are eligible to apply. In case both husband and wife are employees of the Company, only one of

them will be eligible for the loan or interest subsidy. The employee or his./her wife/husband or minor

child should not already own a house. The House Building Loan/Interest Subsidy is admissible only

once during the service. Employees’ spouse if employed in Government or other Public Sector

Undertakings should not have availed a House Building Loan or Interest Subsidy. The detailed rules

and procedure are given below:-.

Ref:GM(P)-IC-453/83 dt.7-9-1983.

31.6.1. Employees availing such loans should submit their applications to the concerned Personnel

Department through their Department Heads in the proforma which has been evolved for the

purpose. Copies of the proforma will be available from the Personnel Departments. If based on

experience the format requires any modification, the same will be considered and carried out in due

course. While submitting the applications employees are requested to study and abide by the

provisions and stipulations pertaining to the Scheme as Published therein. The Management may at

its discretion call for any other information from the employee if so deemed necessary.

31.6.2. The grant of subsidy initially ie. for the year 1983 will be done on the basis of the first application.

31.6.3. Interest subsidy will be paid once a year. The amount of interest paid for the year (showing the

different slabs for variable rates of interest) and the amount of subsidy claimed should be stated in

the appropriate column(s). The claim must be supported by receipts for the amount paid or

Certificate from the Agency confirming receipt of the interest with details.

31.6.4. In case the employee is required to pay any penal rate of interest, the penal portion must be

specifically shown in the column “any other payment”, as such payment is not reimbursible.

31.6.5. When a house/flat is purchased outright, the cost of the house/flat mentioned by the employee must

be supported by the letter of allotment or other document relating to the transaction which inter-alia

should give the purchase price. This must be submitted along with the first application for interest

subsidy.

31.6.6. When a loan is availed for construction of a new house or expansion of an existing house, the

employee must give copy of the estimate of construction along with the first application. When the

construction/expansion is completed the actual cost of construction/expansion should be established

by a similar statement which should be authenticated by the Agency.

31.6.7. Employees who dispose of the house or otherwise transfer the ownership of the house in between

has to intimate the Finance Department promptly and the excess subsidy received has to be

refunded. In other words an employee will be eligible for interest subsidy only if the house is under

his/her possession and the moment he/she transfers the ownership, the payment of interest subsidy

would cease.

31.6.8. Furnishing of wrong or incorrect information, failure to intimate changes as may be applicable (e.g.

transfer of ownership) will be viewed seriously and entail disciplinary action apart from the stoppage

of payment of subsidy under the Scheme.



31.6.9. The grant of subsidy will be subject to allocation of funds in the budget from time to time.

31.6.10. The Management reserves the right to amend these rules at any time without notice. The Chairman

& Managing Director shall be the competent authority to issue such orders as may be necessary with

regard to interpretation of rules and shall be the final authority on interpreting any of the provisions

contained in these rules.

31.7. Some of the clarifications given by Personal Department are as under:-

(Ref:GPM/IR/730/84 dated July 26,1984)

31.7.1. Effective Date for payment of interest subsidy

Interest Subsidy is permissible for loans availed from approved agencies on or after 8-10-1981 but

the scheme is effective only from 1-1-1983.

a) For loan drawn before 8-10-1981 no interest subsidy will be payable under any circumstances.

b) Irrespective of the date of sanctioning of loan, amount drawn after 8-10-1981 will qualify for interest

subsidy.

c) Where the loan has been drawn in instalments, the instalment amount drawn on and after 8-10-1981

alone will qualify for interest.

d) In respect of the above loan, subsidy will be payable for interest accruing from 1-1-1983. For

example, where the interest period for the loan is from 1-4-1982 to 31-3-1983, subsidy will be

payable only in respect of the period 1-1-1983 to 31-3-1983.

31.7.2. The year, whether it should be calendar or financial year

The system of payment could vary with different agencies. Therefore, for facilitating uniform

computation the ‘year’ for the purpose of the Scheme will be the financial year.

31.7.3. Purpose of Loan and Ceiling of Total Loan

a) While sanctioning the interest subsidy it is to be ensured that the conditions mentioned in Clause 2

(a) & (b) of the FACT Scheme for House Building Assitance are complied with.

b) The loan amount qualifying for interest subsidy will be subject to the ceiling laid down in Clause 3(a)

of the FACT Scheme for House Building Assistance, ie.50 times of basic pay plus DA/Rs.60,000/- or

60 times basic pay plus DA/Rs.2.5 lakhs as the case may be. Where loan is taken in excess of such

limits, only such portion within the above limits will be eligible for interest subsidy. Loan amount for

the purpose of interest subsidy will also be restricted according to the repaying capacity of the

applicant. For determining the repaying capacity, the monthly instalment of repayment shall be

reckoned as one half of the basic pay of the individual and the repayment period will be a maximum

of 20 years from the date of first disbursement of the loan or the balance of service till the date of

superannuation whichever is less.

The principal amount of the loan (the amount of loan on which interest subsidy is to be calculated

from year to year) will be determined each year on the basis that the loan will be repaid by the

employee in equal monthly instalments within the period allowed by the financing agency, but not

exceeding 20 years or the employees’ balance period of service in the Company The amount of



interest at the two sets of rates for deriving the subsidy amount will be calculated on annual basis on the

mean of the notional balance of loan at the beginning and at the end of the year. For example, an

employee who has got 10 years of service for retirement takes a loan for Rs.60,000/- the entire

amount being eligible for interest subsidy as per the conditions stipulated above. The repayment

instalment will be notionally calculate on this basis as Rs.60,000/- divided by 120 ie.Rs.500 per

month. In the first year opening balance of the loan will be Rs.60,000/- and closing balance will be

notionally Rs.54,000/- (Rs.60,000 - 500 x 12). The mean of the two will be Rs.57,000/-.

31.7.4. Default in Payment of Interest/Loan amount

An employee may default payment of loan amount as well as interest to the approved agency.

Indefinite defaulters are not to be encouraged. Therefore, default for a period of only upto one year

will be condoned for payment of interest subsidy. In other words if interest is due in April 1983 and it

is paid by the employee before April 1984, then we will permit interest subsidy to him after he has

paid the interest. But if he defaults beyond April 1984, he should lose the interest subsidy for the

year 1983. The subsidy is to be paid only after the employee has paid the interest and produces the

receipt in proof of payment.

31.7.5. Loan under Joint Names

When the loan is taken from an approved agency taking into account the repaying capacity of both

the husband and wife, interest subsidy will be payable only for that part of the loan which is granted

by the approved agency to our employee. In other words, for calculating interest subsidy, the loan

amount sanctioned to the spouse who is not employed by us will not be taken into consideration.

For example, if the approved agency sanctions a loan of say Rs.40,000/- to our employee and

Rs.20,000/- to the spouse of that employee, who is not employed by us for constructing the same

house, we will be paying interest subsidy only for the amount of Rs.40,000/-. In case both the

husband and wife are employed by FACT and loan is sanctioned by the approved agency to both,

the loan amount in respect of only one of them will qualify for interest subsidy. This could be the

higher of the two amounts sanctioned by the approved agency. This will be subject to the limits vide

clause 3 (a) and 3 (b) 1 of the scheme. For example, after taking into account the repaying capacity

of the husband and wife, the approved agency sanctioned a loan of Rs.50,000/- to the employee

and Rs.40,000/- to spouse of that employee who is also our employee, our interest subsidy will be

limited to 60 times basic and DA of the employee or Rs.50,000/- (being higher of the two loan

amounts) whichever is less.

31.7.6. Loan from Different Agencies for the same purpose

When the loan is taken from different approved agencies (for example, Housing Development

Finance Corporation, LIC of India, etc.) the loan from both will qualify for interest subsidy subject to

the limits applicable to the employees as per Clause 3 (a) and 3 (b) (ii) of the House Building

Advance Scheme.

31.7.7. Computation of Interest Subsidy

As per the scheme the principal amount of loan for the purpose of interest subsidy is to be notionally

determined each year on the basis that the loan will be repaid by the employee in equal monthly

instalments within the period allowed by he financing agencies, but not exceeding 20 years or the

balance period of service in the Company whichever is earlier.

A notional computation of interest subsidy based on the following criteria, whichever works out less,

can be adopted as follows:-



a) No. of instalments (months) as allowed by the financing agencies.

b) 20 years service (months)

c) Employee’s balance period of service (months)

(Only employee who have atleast 3 years service remaining from the date of eligible drawal of the

loan till their superannuation are to be made eligible for payment of interest subsidy).

As consequence of notional calculation of the principal amount, the principal amount on which interest

subsidy is paid will be higher than the amount on which interest is actually paid by the employee in

the earlier stages of loan repayment and towards the latest stages, the principal amount for notional

calculation will be significantly less than the amount reckoned by the approved agency where the

approved agency makes the payment on a system of equated interest calculation. So, compared to

an employee who retires within, say, 10 years of availing the loan, an employee with 20 years of

service who resigns after 10 years of availing the loan will get an unintended advantage. In such a

case of resignation where the approved agency calculates interest on the basis mentioned above,

the interest subsidy will be recalculated as if the employee has retired on completion of 10 years

service (as in the above example) and if the amount is calculated is less than the amount of subsidy

already paid to the employee, the excess amount will be recovered from his final settlement. The

objectives here is to ensure that an employee who resigns should not get an advantage over and

employee who retires after long service in the Company.

31.7.8. Voluntary Repayment

The repayment instalments for interest subsidy is notionally calculated and the subsidy is to be

worked out on that basis. In that event, it is possible that an employee on a sound financial position

may sometimes repay a lumpsum amount voluntarily. In such cases considering the administrative

convenience and uniformity the voluntary repayment by the employee is to be totally ignored and

interest subsidy is to be worked out and paid on notional basis like other cases, but upto the year for

which an employee could produce proof of interest remittance.

31.7.9. Employees residing in Company Quarters

One of the conditions for grant of interest subsidy is that the employee availing of this facility will not

be entitled to get a house in the Company’s township and he will have to vacate the Company

quarters if already occupied within one month of completion of construction of the house. In view of

the various difficulties raised by the employees in this regard, it has been decided that for availing

interest subsidy, the employees will have to vacate the Company quarters within a maximum period

of six months of the completion of the house, failing which they will not be entitled for interest subsidy

at all. In these cases, where the employees vacate the quarters only after one month of receipt of

the completion certificate but within six months, they will not be eligible for interest subsidy till the

date of vacation of quarters, subject to such other terms and conditions as specified in the scheme.

31.7.10. Additional Data in Application Form

In the existing printed application form, there are certain more details to be added for facilitating

computation of interest subsidy. For example, columns on proof of interest remittance, name of

approved agency, declarations to be obtained from the employee etc. is not complete. Hence an

additional data sheet is to be obtained from the employee as per Annexure ‘A’ along with the claim

form.

31.7.11 Interest Subsidy Control Register



A Control Register as given in the Annexure ‘B’ shall be maintained for such interest subsidy claims

on the folio - one applicant basis which will facilitate the calculation of interest subsidy by a simple

procedure.

The above guidelines may be followed in processing/settling the claims received in the divisions at the

divisional level.

ANNEXURE ‘A’

ADDITIONAL DATA SHEET

DECLARATION

* a) The house herein referred for which interest subsidy is claimed is situated beyond 30 KM from my

place of work.

b) I understand that I am not entitled to get Company Quarters since the house which I am constructing

now is within 30 KM from my place of work.

c) I am at present residing in Company Quarters No..... FACT Township, Udyogamandal/Ambalamedu

P.O. and I undertake that I will vacate this quarters within one month of completion of construction of

the herein referred house for which this interest subsidy is claimed. (in case the house under

construction is within 30 KM from my place of work).

(*) Strike out whichever is not applicable.

1. My basic pay and DA Basic DA Date of first

as on the first eligible drawal

loan drawal —— — ——————-

2. The name and address of

approved agency from whom

loan was availed together

with name of State Apex

Society or Board to which

it is affiliated

3. The No.of receipts/ Enclosures

vouchers indicating the Receipt/ Period for

period of which interest Voucher which inter-

has been paid. No. est was paid

———— ——————

Signature of the Employee



ANNEXURE-33 A

DELEGATION OF POWERS TO THE CHAIRMAN & MANAGING DIRECTOR

33.1. GENERAL MANAGEMENT

SUBJECT to the policy and principles of the company the General Management of the company shall

be in the hands of the Chairman & Managing Director, who shall, within the sanctioned budget

provision and other limitations prescribed (in the Articles) have power and authority on behalf of the

company to make all purchases and sales and to enter into all contracts and do all other things

usually necessary or desirable in the management of the affairs of the company or in carrying out its

objectives.

33.2. CREATION OF POSTS

TO CREATE posts of all levels except that of the General Managers (i) if it makes for economy or (ii)

if required for limited contract periods of (iii) if required for periods not exceeding six months within

the sanctioned budgets.

All posts so created shall be reported to the Board.

In the context of implementation of projects:-

To create posts carrying the pre-revised grade of Rs.2425-100-3425. Creation of all such posts on

the basis of this delegation be reported to the Board at its next meeting.

33.3. APPOINTMENT TO POSTS

Appointment authority for all posts upto and including the post of General Manager.

To determine their powers and duties and fix their emoluments and to grant not more than two

advance increments to any employees at any time and to require security to be paid in such instance

and to such amounts as he thinks fit.

33.4. CHANGE IN RECRUITMENT AND PROMOTION POLICY

The power to make deviation from the Green Book (Recruitment and Promotion Policy) in exceptional

cases at his discretion in the interest of the organisation.

Managers in and above level of the pre-revised scale of Rs.2425-100-3425 are considered to be

Corporate Managers and will not be identified as belonging to any category-Technical Administrative

or Finance. CMD will have the power to assign them any Division and/or function as necessary

within the whole of the Corporation.

33.5. TERMINATION OF SERVICES

To suspend, discharge, dismiss or otherwise punish any employee of the Company for good and

sufficient reasons and on departmental proceedings:

To terminate the services of any officer or other employee of the Company by giving such notice as

required under the terms of his appointment on salary in lieu of such notice with or without assigning

Page 1 of 4ANNEXURE-33 A

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reasons for termination of such employment, provided that all cases of discharge dismissal or termination of

service of personnel in scales of pay the maximum of which exceeds Rs.2000/- per month shall be

reported to the Board for information.

33.6. APPROVAL FOR FOREIGN TRAVEL

To authorise foreign travels keeping in mind the need for utmost economy; a list of personnel so

deputed shall be submitted for information of the Board at the next meeting by indicating the dates of

approval.

33.7. CAPITAL EXPENDITURE

To sanction expenditure and authorise disbursements within the allocations made for specific

purposes in the approved Revenue and Capital Budget.

To sanction Capital Expenditure upto Rs.400 lakhs relating to works and projects already approved by

the Board.

To grant administrative approval to new projects costing upto Rs.200 lakhs.

To approve enhanced payment over and above the contract value to vendors/bidders upto 10% value

of the original purchase orders contract even in cases where original award of purchase/work was

approved by the Board, such enhancement in value can be due to any extra claim, due to increase in

quantities, scope of work, change in specifications, fluctuations due to foreign exchange the currency

values or due to extension of time after following the normal procedure.

A report would be made to the Board of such authorisation for enhancement, for information at the

subsequent meeting.

33.8. ACQUISITION OF IMMOVABLE PROPERTY

To purchase or otherwise acquire for the Company any immovable property, right or privileges which

the company is authorised to acquire at such price and generally on such terms and conditions as he

may deem fit subject to an overall ceiling of Rs.50 lakhs for such purchases; provided that the cost of

such purchase of immovable property right or privileges shall not exceed Rs.10 lakh in each case.

33.9. EXECUTION OF DEEDS

To execute contract deed instruments and assurance of property and in particular (a) all service

agreements (b) security bonds for the due performance of their duties by the company’s servants (c)

leases of houses, lands or other immovable property (d) assurances required by law or otherwise

authorised by the Board.

33.10. EXECUTING COUNTER GUARANTEE

To execute Standing Counter Guarantee in favour of SBI/subsidiaries of SBI and other

nationalised/scheduled banks upto a total limit of Rs.10 crores and to affix the common seal of the

company in the presence of the Company secretary.

33.11. CUSTODY OF PROPERTY

To be in charge and custody of all property, books of accounts, documents and effects belonging to

the company.



33.12. NEGOTIATION OF CHARGES, DRAFTS ETC.

To draw, accept, endorse and negotiate cheques, drafts, Government promisory notes and other

instruments as shall be necessary to carry on the business of the company.

To make and give receipts, releases and other discharges for the claims and demands of the

company.

33.13. BORROWING FROM SBI

a. To borrow from the State Bank of India by way of temporary accommodation upto a limit of Rs. 20

lakhs in the aggregate over and above the overdraft facilities allowed by the Bank on a permanent

basis and to execute the documents required for that purpose; provided the fact is reported to the

Board at its next meeting.

b. To execute documents relating to borrowal of funds from SBI/subsidiaries of SBI and other

nationalised/scheduled banks. Upto a limit of Rs.60 crores in 1991-92 and upto Rs. 80 crores in

1992-93.

33.14. INVESTMENTS

To invest upto Rs.1000 lakhs amounts not immediately required as all deposits or short term

deposits with the State Bank of India, Cochin; State Bank of Travancore, Udyogamandal.

33.15. OPENING BANK ACCOUNT

To open bank accounts with State Bank of India, State Bank of Travancore, any subsidiary of State

Bank of India or any other nationalised bank.

33.16. TO TAKE ADVANCES FROM CUSTOMERS

To take such advances from the Company’s customers on such terms and conditions as considered

appropriate from time to time.

33.17. INTEREST SUBSIDY SCHEME

To include any organisation in the list of approved agencies for the purpose of interest subsidy

scheme of the company.

33.18. ACCEPTANCE OF TENDER

Where purchases are made or contracts awarded on the basis of a tender, the reasons for not

accepting the lowest tender shall be recorded and report make to the Board where the value of the

accepted tender exceeds Rs.10 lakhs.

33.19. PAYMENT OF FESTIVAL ADVANCE

To grant such festival advance to employees as may become necessary.

33.20. LEASING ACCOMMODATION FOR OFFICERS

To approve leasing of accommodation to officers posted to important cities in circumstances similar to

that of Chief Manager (Business Development) and Resident Manager, New Delhi each being dealt

with on a case to case basis.



33.21. CONVEYANCE LOANS

To grant loans for employees for purchase of cars/scooters upto Rs.10 lakhs per financial year.

33.22. LEGAL PROCEEDINGS

i) To commence and carry on or defend abandon or compromise any legal proceedings whatsoever;

ii) To engage or appoint solicitors, advocates, attorneys or other law agent for the above purposes.

iii) To approve proposals for out of court settlements in regard to disputes of dismissal/discharge of

workmen.

33.23. WRITE OFFs

i) Value of items upto Rs.5000/- at a time provided particulars of such write off are reported to the

Board in each quarter.

ii) Value of shortages of products reported from Godowns/Mixing Centres upto Rs.25000/- in each case

with the concurrence of the Finance Director.

iii) Value of shortage of finished products, purchased materials and packing materials upto Rs.5000/- in

each case with the concurrence of the Finance Director.

iv) Sundry Debtors in all the Divisions upto an amount of Rs.2,00,000/- in each case provided a

quarterly statement of such write off of over Rs.50,000/- and upto Rs.2,00,000/- is put to the Board

for information.

33.24. APPROVAL OF DEMURRAGE CHARGES

To approve demurrage charges upto Rs.3 lakhs in each case.

33.25. GRANT OF SPECIAL CASUAL LEAVE

To grant special casual leave upto a period to one month to managerial/non-managerial employees

selected for participating in sports, cultural and social activities after satisfying himself the merits of

each case.

33.26. CONTRIBUTION TO CHARITIES/DONATIONS

To make a donation to a maximum of Rs.1,00,000/- in any year each individual case not exceeding

Rs.10,000/-.

33.27. SHORT-TERM BORROWALS

To borrow surplus funds from Cochin Refineries Ltd. and through SB capital Markets Ltd. etc. at the

best possible interest rate not exceeding 16.5%.

33.28. SUBDELEGATION OF POWERS

To subdelegate any of the above powers and such subdelegation need not be reported to the Board.



DELEGATION OF POWERS

PREAMBLE

1

* * * * * *

The Powers delegated shall be exercised by the Officers concerned subject to The overall interests of the Company. The objectives of the Company and the stipulations laid down in the Memorandum & Articles of Association of the Company. Directions issued by the Govt. of India from time to time. Directions, Policies/Guidelines laid down by the Board of Directors/Chairman & Managing Director from time to time. Budget provisions (except where indicated otherwise) and observance of all canons of propriety in exercise of all financial powers. Company procedures, rules, standing orders and statutes in force at that time.

2

The Powers delegated are or ensuring smooth and efficient operations and it should be the endeavour of all concerned to ensure that these powers are exercised in a fair manner and for promoting the interest of the Company to the fullest extent. ‘Full Power’ shall mean the authority to exercise the Powers to the extend delegated to the subordinate Officers. Disposal of assets and declaring as surplus items of stores should have the prior approval of the Board/CMD as specified in Description/Remarks Column. Wherever Powers have been delegated only upto Eds/Functional Directors, no sub-delegation is permitted. Abbreviation shall mean: P : Production Division O : Others With FC : With concurrence of Finance Department. With PC : In consultation with Personnel Department following the prescribed procedure.

Page 1 of 1DELEGATION OF POWERS

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ANNEXURE – 33-C


DESCRIPTION OF THE POWER

DELEGATED TO

FUNCTIONAL DIRECTORS

EXECUTIVE DIRECTORS

HEADS OF DIVISIONS

DY GENERAL

MANAGERS

CHIEF MANAGERS

REMARKS

1 2 3 4 5 6

1.00

ADMINISTRATIVE POWERS

1.01

Appointments, etc.

Make appointment to all posts determine their duties and powers and transfer/post them with or without change of Headquarters within the Division. Recruitment to the Managerial categories in Group-II and above would be at the Corporate Level.

Upto and including Group-III Officers

Upo and including Group-II Officers

Non-Managerial and upto and including Group-I Officers

Nil

Nil

With PC

Head of

the

Division

will have

power to

transfer

and post Officers

upto any

level

within

the

Division.

1.01A

Approval of Select Panel

Upto Managerial Gr.III

Upto Managerial Gr.II

Non-Managerial Panels in the Divisions & Managerial Gr.I

Nil

Nil

Page 1 of 31ANNEXURE – 33-C

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DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

1.01B

Revalidation of Select Panel

Non-Managerial made by HO, Managerial Gr.II & III for period not exceeding 2 years subject to maximum 1 year at a time.

Non-Managerial & Managerial Gr.I for period not exceeding 2 years subject to maximum 1 year at a time.

Non-Managerial & Managerial Gr.I for period not exceeding 2 years subject to maximum 1 year at a time.

Nil

Nil

1.01C

Confirmation of employees

Officers in Group IV, V & VI

Officers in Group IV, V & VI

Others (Managerial) and Non-Managerial

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

1.02

Creation of Temporary Posts

Sanction/Creation of tempora-ry posts to be stationed at project sites and to fill them up for the period of projects with the concurrence of

Full Powers

Full Powers

For periods not exceeding 3 months.

Nil

Nil




the concerned Personnel Depart-ment within the approved man hour requirements for the project and also following rules regarding engagement of contract labour/work charged employees for such assign-ments, approved by the CMD.


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

1.03

Increments

Grant annual increment to personnel Note: Sanctioning

authority for Group-VII Officers and above will be the CMD.

Upto and including Group-VI Officers

Upto and including Group-V Officers


Non-Managerial employees & Officers including Group-I Officers

Non-Managerial employees & Officers including Group-I Officers

Any denial of increment will be with the concurrence of the HOD/ ED/ FDR as the case may be.




1.04

Assessment

Accept Performance Appraisals Note: CMD

will be the Accepting Authority for Officers in Group VII and above.

Upto and including Group-VI Officers

Upto and including Group-V Officers


Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

1.05

Disciplinary Proceedings

Suspend, discharge, dismiss or otherwise punish any employee for good and sufficient reasons and on prescribed Departmental Proceedings.


Upto and including Group-II Officers

Non-Managerial & Managerial Group-I Officers

Nil

Nil

With PC




1.06 Leave 1.06A

Grant eligible leave subject to availability of employees under their control within the overall Company Policy.

Full Powers

Full Powers

Full Powers

Full Powers

Full Powers

1.06B

Grant extra ordinary leave without pay, when no other kind of leave is available subject to Corporate Policy in this regard.

Full Powers

Full Powers

Full Powers

Nil

Nil

With PC


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

1.07

Travel Approvals

Authorise travel for personnel working under their control within approved norms and mode of travel and for reasons recorded in writing.

Full Powers

Full Powers

Full Powers

Full Powers

Full Powers

1.08

Travel, Deviation in Mode

a.

Authorise

Full Powers

Full Powers

Full

Full Powers

Nil




deviation in mode of travel or reasons recorded in writing other than travel for attending Seminars/Training Programmes etc.

Note: For Air travel, approval from Functional Direc-tor to be obtained.

Powers

b.

Authorise deviation in mode/class of accommodation for reasons recorded in writing.

Full Powers

Nil

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

1.09

Travel Expenditure

Approve travel expenditure of candidates called for interview within the approved norms and he interview has been done with clearance from competent authority.

Full Powers

Full Powers

Full Powers

Nil

Nil

1.10

Telephone

Sanction Office/Residential Telephone within

Full Powers

Full Powers

Full Powers

Nil

Nil




the overall sanction for a Division.

1.11

Factory Visit**

a.

Entry of Visitors (Indian Nationals only) into factory premises.

Full Powers

Full Powers

Full Powers

Full Powers

Nil

b.

Entry of Foreign Nationals into factory premises

Full Powers

Full Powers

Nil

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

2.00

FINANCIAL POWERS

2.01

Budgetary Approvals

To accord administrative approval for inclusion in Capital Budget.

Upto Rs.300 Lakhs in each case.



Upto Rs.20 lakhs in each case.

Upto Rs.10 lakhs in each case.

Wih FC

2.02

Capital Expenditure

To enter into contracts and place orders for the procurement of capital items as approved in the Capital Budget.

Rs.300 Lakhs

Rs.200 Lakhs

Rs.100 Lakhs

Rs.20 Lakhs (P) Rs.10 Lakhs (O)


Wih FC




2.03

Revenue Expenditure

To enter into contracts and place orders for the procurement of revenue items as approved in the Revenue Budget.

Rs.300 Lakhs

Rs.200 Lakhs

Rs.100 Lakhs



Wih FC


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

2.04

Purchase of Raw Materials and Utilities

A.

Procurement of Naphtha, Furnace Oil, LSHS, Benzene & Caustic Soda.

Full Powers

Nil

Nil

With FC

B. **To

approve movement contracts for raw materials and finished products – where the period of contract is one year.

Full Powers

Nil

Nil

Nil




C.

Procurement of Packing Materials

Full Powers

**If for any reason the contract period has to be upto two years, the justification for the same must be recorded in writing and prior approval of the Functional Director obtained before the Tender Notice (NIT) is issued. Where the duration exceeds two years, approval from CMD should be obtained before issue of NIT.


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

2.05

Cash Purchase

To make cash purchase as per approved purchase procedure upto

Rs.10,000

Head of Materials Rs.6,000

Nil

2.06

Local Purchase

To make local purchase as per approved purchase procedure upto

Rs.50,000

Head of Materials Rs.25,000

Nil

2.07

Negotiations & Appointment of Committee

To sanction negotiation and

Full Powers as in Column(1)



Full powers as in Column(1)

Nil

With FC




appoint Committee for the same (both for Capital and Revenue) for orders within the power delegated to the next lower authority.


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

2.08

Consultancy, Design

To undertake consultancy, design, fabrication, erection and commissioning of works on contract basis as per norms laid down by the Board/CMD.

Rs.200 Lakhs

Rs.150 Lakhs

Rs.100 Lakhs

Rs.25 Lakhs

Rs.10 Lakhs

2.09

Remittance of Earnest Money

To sanction remittance of earnest money deposit (for taking jobs on contract) upto

Rs.20 Lakhs

Rs.10 Lakhs

Rs.5 Lakhs

Nil

Nil

2.10

Opening Price Bids

To accord approval of the technical/commercial reco-mmendation

Full Powers

Full Powers

Rs.100 Lakhs


Nil





and authorize opening of price bids for value upto


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

2.11

Enhancement of Order Value

To approve enhancement in value, including for extra or non-scheduled items of jobs not covered in the original order/contract, over the original amounts sanctioned by them.

Upto 10% of the original contract value or Rs.2 Lakhs whichever is higher.

Upto 10% of the original contract value or Rs.1 Lakh whichever is higher.

Upto 10% of the original contract value or Rs.50,000 whichever is higher.

Upto 10% of the original contract value or Rs.10,000 whichever is higher.

Nil

2.12

Waiver etc. of Penalties

To waive or relax penalties/ compensation/losses due to failure of contractor/supplier in cases where the Company has not suffered any loss on account of the delay or failure of the contractor/supplier for reasons to be recorded in writing in respect of contracts upto.

Rs.25 Lakhs with the concurrence of FD

Rs.15 Lakhs with the concurrence of GM(CF)

Rs.10 Lakhs with the concurrence of Associate Finance

Nil

Nil


DELEGATED TO

FUNCTIONAL EXECUTIVE HEADS OF DY CHIEF




DIRECTORS DIRECTORS DIVISIONS GENERAL

MANAGERS MANAGERS

1 2 3 4 5 6

2.13

Extension of Time

To grant extension of time upto 50% or two months, whichever is higher of the period stipulated in the original order approved by them for execution of work or supply of materials, plant, machinery, equipment etc. provided the original tender was not higher and accepted on account of earlier delivery and there will be no loss to the Company. (Reasons to be recorded in writing.)

Full Powers with the concurrence of FD

Contracts upto a value of Rs.15 Lakhs with the concurrence of GM(CF)

Contracts upto a value of Rs.10 Lakhs with the concurrence of Associate Finance

Nil

Nil

2.14

Exemption from Security Deposit

a.

To exempt supplier/contractor from making initial Security Deposit and permit recovery of it from progressive bills.

Full Powers

Full Powers

Full Powers

Nil

Nil

b.

To exempt supplier/contractor from making Security Deposit

Full Powers

Nil

Nil

Nil


DELEGATED TO

FUNCTIONAL EXECUTIVE HEADS OF DY CHIEF




DIRECTORS DIRECTORS DIVISIONS GENERAL

MANAGERS MANAGERS

1 2 3 4 5 6

2.15

Exemption from EMD/SD

To waive requirement of providing EMD/SD by Vendors of Proprietary item, Govt. Dept./PSU/National Small Scale Industrial Enterprises/ Khadi Board / Registered Labour Contract Cooperative society.

Full Powers

Full Powers

Full Powers

Nil

Nil

2.16

Relaxation of Financial Guarantee

To relax the condition of providing financial guarantees/security for performance of plant, machinery, equipment etc., in respect of contracts upto a value of

Rs.5 Lakhs

Rs.2 Lakhs

Rs.1 Lakh

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

2.17

Write off of Shortages & Damages

To write off shortages/ damages of raw materials, intermediates, finished produ-

Rs.20,000

Rs.10,000

Rs.5,000

Nil

Nil




cts, purchased products, packing materials, mixing ingredients and stores & spares after due investigation.

2.18

Write off of Bad Debts

Write off bad debts/advances after exhausting all efforts for recovery in each case upto

Rs.20,000

Rs.15,000

Rs.5,000

Nil

Nil

2.19

Write off of Assets

To write off other assets of value in each case upto

Rs.25,000

Rs.20,000

Rs.10,000

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

2.20

Demurrage

To approve demurrage charges in each case upto the limits specified, subject to quarterly report to be sent to CMD

Rs.25,000

Rs.10,000

Rs.10,000

Nil

Nil




2.21 Emergent Expenditure

Emergent Expenditure for Capital/Revenue

Rs.5 Lakhs

Rs.4 Lakhs

Rs.3 Lakhs

Rs.25,000

Rs.10,000

2.22

Legal Advisors

To engage legal advisors in outstations (other than legal advisors of the Company) on casual basis in emergent cases and to fix their remuneration including for consultation, drafting of necessary papers and execution of the case

Maximum fee Rs.50,000 per case in a year.



Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

2.23

Imprest Accounts

Sanction opening of imprest accounts.

Rs.5,000

Rs.5,000

Rs.5,000

Nil

Nil

2.24

Advances

Sanction advance in running contracts against bills of suppliers/contractors.

75% of the bill amount in respect of jobs completed.

60% of the bill amount in respect of jobs completed.

Nil

2.25

Conveyance Loan




Sanction conveyance loan to employee within the budget provision.

Full Powers

Full Powers

Full Powers

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

2.26

Recovery of over payment

To fix instalments not more than 10 for recovery of over payment or other dues from employees.

Full Powers

Full Powers

Full Powers

Not more than 5 instalments for Divisional Finance Heads.

Nil

2.27

Forfeiture

Forfeit the earnest money deposit, retention money etc. in terms of contract/tender within their respective powers.

Full Powers

Full Powers

Full Powers

Full Powers

Full Powers

2.28

Discharge

Power to make and give receipts and other discharges.

Full Powers

Full Powers

Full Powers

Full Powers

Full powers






DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

2.29

Hundies, etc.

Draw, accept, endorse and negotiate draft hundies, usance bills etc.

Full Powers

Full Powers

Full Powers

Full Powers

Full Powers

3.00

SCRAP DISPOSAL

3.01

Disposal of Scrap/Containers

To sanction disposal of scrap/containers received in the course of procurement thro’ sale upto

Full Powers

Full Powers

Full Powers

Rs.5 Lakhs

Rs.1 LakhNote: For

CMat only.

3.02

Disposal of Surplus/Fixed Assets

Declare and to dispose off surplus/unserviceable fixed assets where the book value (WDV) does not in each case exceed

Rs.5 Lakhs

Rs.3 Lakhs

Rs.2 Lakhs

Nil

Nil


DELEGATED TO


EXECUTIVE DIRECTORS

HEADS OF DIVISIONS

DY GENERAL

MANAGERS

CHIEF MANAGERS

1 2 3 4 5 6

3.03

Declaration of Non-Moving Stores

To declare

Full Powers

Nil

Nil

Nil

Nil

With the




non-moving stores and spares not moved for more than 10 years as surplus and/or unserviceable. In respect of slow moving stores and spares (items which have not moved for more than 5 years but less than 10 years), such approval to be taken from CMD.

concurrence of Director (Finance)

3.04

Sale of unused Stores & Spares

Approve sale of unused stores and spares (non-moving and slow moving) which have already been declared for sale by Functional Director/CMD, original value not exceeding

Rs.1 Lakh

Rs.75,000

Rs.50,000

Nil

Nil

With FC


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

3.05

Disposal of Temporary Structures




Demolish and sell, temporary structures, where individual original cost is not more than

Rs.2 Lakhs Rs.2 Lakhs

Rs.2 Lakhs

Nil Nil With FC

3.06

Disposal of Miscellaneous Properties

To dispose miscellaneous properties like old buildings, structures etc. after they are declared as unserviceable and surplus by a Committee constituted for the purpose.

Full Powers

Full Powers

Full Powers

Nil

Nil

With FC


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

4.00

LOAN MATERIALS

4.01

To sanction loan of materials to other organization

Rs.15 Lakhs

Rs.10 Lakhs

Rs.5 Lakhs

Rs.2 Lakhs

Nil

With FC




(s) with due safeguard and upto a value of

a) Other than raw materials against a Security Deposit of 150% of the cost

b) Raw materials against a Security Deposit of 200% of the cost

Full Powers

Full Powers**

Full Powers**

Nil

Nil

With FC**With approval from Functional Director

4.02

Obtain loan of materials from other organisations upto a value of

Full Powers

Rs.10 Lakhs

Rs.5 Lakhs

Nil

Nil

With FC

4.03

To convert loans at 4.01 above into sale and loans at 4.02 above into purchase for reasons recorded in writing, at the price of the day.

Rs.2 Lakhs

Rs.2 Lakhs

Rs.2 Lakhs

Nil

Nil

With FC


DELEGATED TO




FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

5.00

HIRING OF EQUIPMENTS/BUILDINGS

5.01

a) Fix hire charges

for mobile equipment, other machi-nery etc. of the Company.

b) To approve charges for taking equipment on hire for use by the Company, within budgeted limits.

Full Powers Full Powers



Nil Nil

Nil Nil

5.02

Rates for Transport

To fix rates for transport of goods without obtaining quotations/tenders in emergency and to incur expenditure thereon in each case upto

Rs.2 Lakhs

Rs.1 Lakh

Rs.50,000

Nil

Nil

5.03

Rent for Shop

Fix rent for shop, buildings, quarters etc. occupied by private parties/contractors.

Full Powers

Full Powers

Full Powers

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

5.04

Rent out Articles




To rent out articles of assets to Managers, Employees and also organizations connected with them at rates fixed by Corporate Office.

Full Powers

Full Powers

Full Powers

Nil

Nil

5.05

Accommodation and Godowns

Hire accommodation and go-downs/warehouses and office rooms, if any, attached to such premises for the business of the Company within budgeted limits.

Full Powers

Full Powers

Monthly rent of Rs.15,000/- in each case

Nil

Nil

6.00

INSURANCE

6.01

To take Insurance Cover for Plant & Machinery, Buildings, Raw Materials, Stores/Spares, Finished goods, Work-in-Progress and Public Liability Policy with the approval of Director (Finance)

Full Powers

Full Powers

Full Powers

Nil

Nil


DELEGATED TO


EXECUTIVE DIRECTORS

HEADS OF DIVISIONS

DY GENERAL

MANAGERS

CHIEF MANAGERS

REMARKS

1 2 3 4 5 6

6.02

To take Insurance Cover for Cash/Fidelity, Burglary, Tran-sit

Full Powers

Full Powers

Full Powers

Nil

Nil

With FC




(other than Raw Materials), Vehicles and other Miscella-neous Policies with the approval of Director (Finance)

7.00

ADVERTISEMENT/PUBLICITY

7.01

Incur advertisement and publicity expenditure within the sanctioned budget, excluding Souvenir advertise-ment.

Full Powers

Full Powers

Full Powers

For DGM(PR) upto Rs.5,000 per case/ Rs.50,,000 per year

Nil

7.02

Souvenir Advertisement

Incur expenditure on Souvenir advertisement (to be coordinated by Public Relations Department) within the sanctioned budget.

Full Powers

Full Powers

DGM(PR) with approval from ED

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

7.03

Sales Promotion Expenses

Incur expenditure on Agronomy Services, Sales Promotion and

Full Powers

Full Powers

Rs.75,000

Nil

Nil




Market Development within the sanctioned budget in each case upto

8.00

SALES ADMINISTRATION

8.01

To approve/authorise of sale of products and fix rates for dealer margin, transport rebate, cash rebate, discount etc. subject to budget provision

Full Powers

Full Powers

Nil

Nil

Nil

8.02

Appointment of Dealers

Appoint dealers, stockists, agents etc. as per guidelines and fix trade terms.

Full Powers

Full Powers

Full Powers

Nil

Nil


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

8.03

Free supply of Finished Products

To authorise free supply of finished products, pesticides etc. for demonstration/ research/sales promotion purposes as per budget provisions.

Full Powers

Full Powers

Full Powers

Nil

Nil




8.04

Expenditure connected with Dealers

To sanction expenditure connected with dealers, sales conferences, training classes etc. within the budget limits.

Full Powers

Full Powers

Full Powers

Nil

Nil

8.05

Opening & Closing of Depots

To authorise opening and closing of Depots/Agro Service Centres within budget limits.

Full Powers

Full Powers

Full Powers

Nil

Nil


DELEGATED TO


EXECUTIVE DIRECTORS

HEADS OF DIVISIONS

DY GENERAL

MANAGERS

CHIEF MANAGERS

1 2 3 4 5 6

9.00

ENTERTAINMENT EXPENDITURE

9.01

To incur/sanction entertain-ment expenses as per rules and regulations prescribed.

Full Powers

Full Powers

Full Powers subject to monthly report to the Functional Director

Nil

Nil

10.00

LEGAL

10.01

Service Agreements

Execute employees service agreements.

Full Powers

Nil

For CPRMs only.





10.02 Security Bonds

To execute Security Bonds for due performance of duties.

Full Powers

Nil

For CPRMs only.


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

10.03

Returns & Applications

File Returns, sign all papers/applications for import/export concessions and on all Tax matters.

Full Powers

Full Powers to Divisional Finance Heads.

Full Powers

10.04

Legal Proceedings

Institute, conduct, defend or withdraw any legal proceedings or Civil Suit by or against the Company or its Officers.

Full Powers

Nil

Nil

10.05

Declaration of Documents

To execute and sign for and on behalf of the Company applications, documents, declarations etc. duly authorised by competent authority.

Full Powers

Nil

Nil





DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6

10.06

To execute documents and to sign for and on behalf of the Company, documents applica-tions, declarations etc. including those requiring attestation by a Magistrate and do any other act in connection thereof, with the approval of competent authority.

Company Secretary & Chief Manager (LS)

10.07

Agreements

Execute contracts/deeds/ instruments in respect of assurance of property, lease of house, land, immovable properties, trees etc. after approval by the competent authority.

Full Powers

Nil

Full Powers to CSECY


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS

1 2 3 4 5 6




10.08

Hypothecation of Vehicles

Hypothecation of vehicles purchased by employees out of advances granted by the Company.

Full Powers

Full Powers to Divisional Finance Heads

Nil

11.00

EXTERNAL TRAINING

11.01

Programmes organized in and around Cochin by Professional Bodies.

Full Powers subject to: (a)The Partici- pation fee is Rs.2,000 or less per Programme. (b)Number of nominations per Pro-gramme does not exceed 2. (c)Availability of Budget provision at the Division level.


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL

MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

11.02

Programmes organised at any place within Kerala State.

Full Powers subject to: (a)The Partici- pation fee is Rs.3,000 per Participant. (b)Number of

Through MDC. Not to exceed 4 for a programme for the Company as a whole.




nominations per Progra-mme is 4 or below. (c)Availability of Budget provision at the Corporate level.


DELEGATED TO

FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

11.03

Programmes organised outside Kerala State excluding foreign nominations.

Full Powers subject to:

(a)The Partici- pation fee is Rs.5,000 per Participant. (b)Availability of Budget provision at the Corporate level. Number of nominations one only.

Full Powers subject to:

(a)The Partici- pation fee is Rs.5,000 per Participant. (b)Availability of Budget provision at the Corporate level. Number of nominations one only. In Head Office, Direc-tor (Finance) will be the approving authority for Officers of those disci-

In Head Office, Direc-tor (Finance) will be the approving authority for Officers of those disci-pline where there is no ED.

Through MDC. Not to exceed 2 for a programme.





pline where there is no ED.

General: 1. For attending the training programmes the nominees are invariably required to travel by their eligible class of travel except in the case of air travel.

2. At the end of each quarter, MDC to report to GM(P) the expenditure on nomination fee paid/commited.


DELEGATED TO


EXECUTIVE DIRECTORS

HEADS OF DIVISIONS

DY GENERAL

MANAGERS

CHIEF MANAGERS

1 2 3 4 5 6

12.00

MISCELLANEOUS

12.01

Acting/Officiating/Co-Ord. Arrangements – Chief & above upto DGM

Full Powers

12.02

Constitution of various Advisory Committees like Hospital Advisory Committee, School Advisory Committee, etc.

Full Powers

Full Powers**

12.03

Granting of incentive for acquiring higher qualifications whilst in service: Layer II & above.

Full Powers to GM(P)


DELEGATED TO



FUNCTIONAL

DIRECTORS EXECUTIVE

DIRECTORS HEADS OF

DIVISIONS DY

GENERAL MANAGERS

CHIEF

MANAGERS REMARKS

1 2 3 4 5 6

12.04

Granting of permission for apply for outside employment: Employees without Bond obligation.

Full Powers

12.05

Wherever the Power to be exercised is by Functional Directors, Director (Finance) will accord the finance concurrence. In respect of Executive Directors, it will be the General Manager (Corporate Finance) who will give finance concurrence and in the case of approvals by the Heads of Divisions, the Associate Finance will give the finance concurrence.



ANNEXURE-34

PURCHASE PROCEDURE 34.1 INTRODUCTION

The Board of Directors at its 209th meeting held on 20.5.78 had approved a Purchase Procedure for

the procurement of goods and services and for the execution of civil works at the Head Office and

various Divisions of FACT. It has now been found necessary to review and up-date the same to

account for the changes which have taken place since then and hence this new procedure is being

issued.

34.1.2 SCOPE

This purchase procedure covers the following areas of procurement of goods and services for the

company:

a) Capital items (for projects and other purposes)

b) Raw materials, Intermediates, Stores and Spares etc.

c) Services

d) Package items involving design, supply erection and commissioning.

This procedure does not apply to Civil Works and contracts for

Construction/Erection/Maintenance/Engineering works for which a Tendering Procedure is being

issued separately.

34.1.3 This purchase procedure covers all purchasing activities of the Corporate Head Office and all

Divisions of the company except ASCL Project until the completion of the project. For procurement

on behalf of clients for consultancy contracts where the placement of orders and payment to

suppliers are done by the clients themselves, the procedure laid down in the contracts with the

clients shall be applicable. However, where clients do not insist on any special procedure, this

purchase procedure shall be applicable to the extent these do not come into conflict with the

contracts. This procedure shall be effective from the date it is issued for implementation and shall

supercede the procedures hitherto followed.

34.1.4 CMD shall have the power to authorise/approve deviations from this procedure.

34.1.5 Definitions

Unless the context otherwise requires, following expressions shall have the meaning stated against

each herein below:-

34.1.6 Capital Items

These are items of capital nature and shall include plants, machinery, equipment and such other

items.

34.1.7 Raw Materials, Stores & Spares



These items are of Revenue nature and shall include raw materials, operating supplies, lubricants,

intermediates, packing materials, catalysts, components, parts, stores, spares etc.

34.1.8 Services

Services shall include those for transportation of raw materials, finished products etc. stevedoring,

movement and handling of equipment and materials and shall include all services except

those which can be considered either as Civil/Construction/Erection/Maintenance/Engineering

works or as consultancy/professional advice.

34.1.9 Purchase Manager

Purchase Manager shall mean any officer designated for the purchase function and authorised to

procure goods and services for the company.

34.1.10 Head of Division

Head of Division shall mean the head of Udyogamandal Division, Cochin Division, FEDO, FEW,

Marketing and P.D.

34.1.11 Head of Materials Department

Head of Materials Department shall mean the heads of Materials Depts. of Udyogamandal Division,

Cochin Division, FEDO, FEW and P.D.

34.1.12 TYPES OF PURCHASE

34.1.13 Cash Purchase

This can be resorted to only for non-routine petty purchases and for emergency purchases of small

value. The financial limit for this type of procurement shall be Rs.1500/- per indent. Cash purchase

shall be authorised only by the Head of the Materials Department or any other person authorised for

the purpose by the Head of Division. Certified bills for the expenditure incurred shall be submitted to

the finance Department along with the imprest/advance account.

34.1.14 Local Purchase

i) Items which are urgently required and available in the local market may be procured by local purchase,

subject to a monetary limit of Rs.10,000/- per indent. In exceptional cases the Head of Division may

authorise local purchase upto a value of Rs.25,000/- per indent.

ii) Before effecting local purchase, enquiries shall be made regarding the availability of the materials

from 3 or more local suppliers. Normally 3, otherwise 2, quotations shall be obtained in sealed

covers. If the purchase is proposed to be made on a single quotation, the approval of the Division

Head shall be obtained. The quotations shall be opened by the officer authorised for the purpose

who shall place orders on the lowest priced technically suitable bidder in consultation with the

indentor.

iii) If the material is available only from one local supplier, this fact shall be recorded by the Purchase

Manager and prior approval obtained for placement of Purchase Order from the Head of Materials

Department, provided that when the Head of materials Department is below the level of CMat or

equivalent, such approval shall be obtained from Head of the Division.



iv) It has been ensured by the Purchase Manager that wherever authorised dealers or manufacturers

are available in the local market, procurement shall be made only from such authorised dealers and

deviations to this shall be done only with the approval of the Head of Materials for reason recorded in

writing.

v) The purchase of an item through local purchase once shall not be the basis for procurement of the

same item through local purchase on future occasions avoiding competitive bidding from pre-

qualified vendors.

34.1.15 Emergency Purchase

a) In the case of emergencies which affect production or completion schedule of projects/turn-around

jobs, etc. Emergency purchase may be resorted to, in such cases, a delegation of duly authorised

officers nominated by the Division Head, including a representative of Finance Dept. for purchase

values exceeding Rs. 25,000/- shall visit the market centre/centres for on-the-spot purchases.

Formal enquiries shall be given to those vendors who can meet our requirements. After reviewing

the bids received, on the spot decision shall be taken by the team and orders shall be placed on the

lowest acceptable bidders. The value of such purchases shall be limited to the financial powers

delegated to the Division Head. For higher values, the committee to be delegated for Emergency

Purchase shall be nominated by a Functional Director/CMD depending on the delegation of powers

for the value of purchase intended. All emergency purchases shall be submitted for ratification by

the competent authority immediately after the purchase.

b) Mode of Communication

In the case of Emergency Purchases, to shorten the administrative lead time,

telex/telegraphic/telephonic enquiries can also be made by the Purchase Manager with vendors and

procurement action can be initiated on the basis of telex/telegraphic/telephonic quotations. In the

case of telephonic quotations the same shall be recorded by an officer of the rank of Purchase

Manager or above and this shall be treated as confirmation of quotation.

34.1.16 Limited Tender

Limited tender shall be the system of procurement from among prequalified vendors in the approved

list or from a list specifically approved for this purpose by competent authority, if there is no approved

list already existing in FACT. Further selection of vendors from the prequalified vendor list may be

made with approval of competent authority for a specific enquiry if an item to be purchased requires

sophisticated manufacturing technology, special manufacturing facility or substantial financial

resources. Similarly for purchase of quantities which are too small for major suppliers sub-lists as

above may be made with the approval of Division Head/Head of Corporate Materials

Department/Functional Director/Executive Director/CMD.

For purchases, where the estimated value is less than Rs.5 lakh, where no pre-qualified vendor list is

available, procurement may be made by resorting to limited tender system from among the list of

vendors specifically got approved for the purpose, functional Director/Executive Director/CMD.

34.1.17 Open Tender

i) Open Tenders shall be resorted to where approved vendor lists are not available and also the

estimated value of purchase exceeds Rs. 5 lakhs. All Open tenders shall be advertised giving

relevant details such as title of item, approximate cost estimate, delivery schedule, EMD, cost of

tender documents etc.



ii) Open tenders shall be invited with the explicit condition that details (to be spelt out) required for

evaluating the capabilities of the Bidder shall be submitted with the bid. In such cases the

qualifications of Bidders shall be examined first and the list of those to be considered for award of

contract got approved by the authority competent to sanction the purchase and only bids submitted

by those who are adjudged as competent shall be evaluated further. Global tenders under Import

Policy/DA/OECF/Foreign credits etc. shall also be handled according to the rules of the credit

agency.

In the case of open tenders, a copy of the advertisement together with a covering letter may also be

mailed to the likely bidders as known to the Indentor, Purchase Manager etc.

iii) Advertisement for Open Tenders shall be released through the Public Relations Department of the

Head Office.

34.1.18 Nominated Purchase

i) Procurement by nomination shall be done only for proprietary items. However, in other cases if

attempts to get competitive offers as per the procedure does not succeed, procurement may be

resorted to on the basis of any available single tender with the approval of competent authority.

ii) Purchase without obtaining quotations but based on authenticated price lists can be resorted to for

proprietory items or for purchases from Public Sector/Government agencies or other agencies where

the prices are fixed by the Government, or under DGS&D rate contracts. This procedure may be

resorted to where procurement is directly from the manufacturer or where no dealer is authorised to

sell below the listed price.

34.1.19 Long Term Contract

Long term contract may be entered into, wherever supplies are required in phased manner, spread

over a period based on approval of the competent authority for the total value of purchase. In such

cases the contract period, delivery schedule with unit rates/pricing formula and quantities shall be got

approved by the competent authority and specified in the Purchase Order.

34.2 VENDOR LIST

34.2.1 Prequalification

Prequalified vendors list shall be maintained by the FEDO for items whose annual corporate

consumption or individual purchase is Rs. 2 lakhs or more. For other items the divisional purchase

department shall maintain the up-to-date list of suppliers, which shall be vetted by the Corporate

Materials Department. These list shall be reviewed and updated constantly with reference to reports

in newspapers, trade journals, directories, DGTD Hand book etc. and by constant market contact.

34.2.2 Categorisation for Pre-qualification

Lists of pre-qualified vendors/contractors shall be prepared by the Corporate Materials Department

which will be reviewed by a committee constituted for this purpose by CMD or his nominee. The

recommendation of the committee will have to be approved by CMD and the approved vendor list of

FACT will be issued and maintained by the Corporate Materials Department. All divisions shall use

this Corporate List. Where a supply or service is available in a wide range of specifications, separate

panels of prequalified parties can be maintained for convenient ranges of specification and scales of

operations. The vendors lists shall comprise all pre-qualified vendors under each category stating



clearly the respective capability in terms of volume of work, specification, level of technology, etc. with rating of

the vendors.

34.2.3 Additions/deletions to vendor lists shall be made on a continuous basis on the criteria already stated. As

and when any Division wants addition/deletion, the same shall be referred to the Corporate Materials

Department with sufficient justification for the same. The approved Vendor list shall be followed

strictly by all Divisions. Any deviation shall be permitted only with the approval of CMD or his

nominee. The original vendor list and information on additions/deletions shall be communicated

regularly by the Corporate Materials Department to all concerned in all Divisions. Revised editions of

the vendor list incorporating all additions/deletions shall be issued by the Corporate Materials

Department once in a year.

34.2.4 Advertisement for prequalifying vendors shall be originated by the Corporate Materials Department and

released through the Public Relations Department of the Head Office. Advertisements shall be

released for each item/groups of items in a phased manner so that one cycle of prequalification can

be completed over a period of 3 years. Also the lists can be revised /updated as and when

considered necessary by the Corporate Materials Department.

34.2.5 Vendor Information

For the purpose of prequalification of vendors/contractors, to have regular monitoring of the

performance of the vendors listed and to update the vendor lists continuously, the Corporate

Materials Department shall maintain a Vendor Information Cell (VIC) which shall be the focal point for

supply of information of Vendors/Contractors.

34.3 PURCHASE REQUISITION

34.3.1 Scope and Types of Purchase Requisition (PR)

There shall be three types of PR as follows:-

i) For projects and major capital equipment.

ii) For stores, including stationery and office supplies, spares and minor capital procurement.

iii) For services.

34.3.2 PR for capital items for projects shall be originated by the concerned Engineering

Department/Specialist Group and forwarded to the Purchase Department through the Project

Manager together with detailed technical specification, cost estimate and all other relevant

information, in respect of FEDO and FEW. For other Divisions PR shall be originated by

officers/User Department specifically authorised for the purpose. In all cases the PR should be

approved by an Officer not below the rank of a Chief Engineer or equivalent.

34.3.3 PR for Stores and spares under automatic replenishment shall be originated by the Manager

(Stores). The timing/ schedule of these requisitions shall be based on a scientific inventory control

system.

34.3.4 PR for Stores and spares not included in the automatic replenishment system shall be originated by

the User Department or the Material Planning Department. All such PR’s shall be first forwarded to

Stores Department wherein the present stock position and the annual consumption for the previous

3-5 years and details of incoming items for which indents have already been raised and supply has

not yet been effected shall be indicated and returned to the Originator who shall review and if the



originator still considers purchase as necessary, then forward them to the Purchase Department through the

Competent Authority and Stores. In all cases, PR’s should be approved by an officer not below the

rank of a Chief Engineer/equivalent.

34.3.5 PR for Services shall be originated by the Head of the Department responsible for the performance of

the relevant service with the approval of an officer in the rank of at least a Chief Engineer/equivalent.

34.3.6 Purchase on Corporate basis

In respect of raw materials, packing material and other items which shall be purchased on a

Corporate basis, the Corporate Materials Department shall collect all relevant data and shall ensure

timely procurement and uninterrupted availability of these materials.

34.4. INVITATION TO BID

34.4.1 Bids shall be invited by Purchase Manager in the Divisions/project Task Force/Project Site/Corporate

Materials Department.

34.4.2 ENQUIRY

34.4.3 Enquiry Documents

Separate enquiry documents shall be made for the following:

i) For projects and major capital items.

ii) For stores, spares and minor capital items.

iii) For services.

34.4.4. ENQUIRY CONDITIONS

The signed enquiry shall be accompanied by the following:-

1. Full detailed scope of supply.

2. Technical specification/documentation

3. Special Instructions to Bidders

4. Standard Terms & Conditions

5. Spare Parts requirements, where needed.

The enquiry shall clearly mention that if there are any conditions in the Standard Terms and

conditions which are in conflict with any special instructions, the latter shall prevail.

34.4.5 Earnest Money Deposit

In case of open tenders, where the estimated value of the order exceeds Rs. 5 lakhs and service

contracts of estimated value above Rs. 10,000/- normally EMD at 2.5% of the estimated value of the

order, subject to a maximum of Rs. 1 lakh shall be obtained.

EMD shall be in the form of Cash/DD. However, for EMD exceeding Rs.10,000/- a Bank Guarantee

may also be accepted. Reduction of EMD can be authorised by Executive Directors or Functional

Directors. Waiver of EMD can be authorised only by CMD. For supplies from proprietary/public-

Sector sources, Executive Directors/Functional Directors also shall have the power of waiver of



EMD.

34.4.6 Security Deposit

Security deposit shall be 5% of the order value (excluding taxes/duties and departmental free issue of

materials) for orders exceeding Rs. 5 lakhs and Service Contracts above Rs.10,000/-. However,

reduction of Security deposit can be authorised by Executive Directors/Functional Directors. Waiver

can be authorised only by CMD. For supplies from proprietary/public sector sources, Executive

Director/Functional Director also shall have the power of waiver of security deposit.

34.4.7 Security deposit shall be in the form of cash/DD/Bank Guarantee.

34.4.8 EMD and/or security deposit may be exempted in the case of steel/cement (at Government control

price), pool catalysts and canalised items.

34.4.9 Bidding Time

34.4.10 Normally 30 days from the date of enquiry shall be given for submission of bids in limited tenders. For

open tenders 30 days from the date of appearance of advertisement shall be prescribed. In case of

emergency the time for bidding may be reduced with the approval of the Head of Materials

Department, but special efforts required for expediting the bids shall be undertaken. In the case of

purchases where it is felt that extensive preparation for bidding is necessary, additional bidding time

may be allowed as recommended by indentor/project Manager and approved by the Head of

Materials Department.

34.4.11 Closing date, time for receipt and opening of bids shall be clearly stipulated in the enquiry.

34.4.12 Extension of time for bidding may be granted by the Head of Materials Department where this step is

considered necessary to generate adequate competition in consultation with the indentor/project

Manager.

34.4.13 In case of open tenders, the extension need be notified only to those parties who have requested for

the enquiry documents and need not be advertised in newspapers.

34.4.14 Price of Enquiry Documents

Enquiry documents shall be issued free of cost in the case of limited tenders. In the case of open

tenders enquiry documents may be priced by the Head of Materials Department in consultation with

Divisional Finance. Waiver of price, if found necessary, will be authorised by Head of the Division.

34.4.15 Validity of Bids

Normally bids should be valid for 90 days from the date of bid opening. Extension shall be sought by

the Purchase Manager wherever necessary. However, in appropriate cases a shorter validity period

may be specified in consonance with the market conventions/commercial practice.

34.4.16 Correspondence with Vendors

All correspondence with vendors shall be done by the Purchase Department upto the placing of

Purchase Orders in co-ordination with the concerned Department wherever necessary. Any

clarification or additional information given to any vendor shall be communicated to all the vendors

who are invited to bid.

34.5. RECEIPT AND OPENING OF BIDS



34.5.1 All bids are to be obtained in duly stated and superscribed envelopes indicating enquiry number, due

date and time for receipt of bids. The bids shall be received in the administrative department or any

department authorised for the purpose by the Head of Division. On the due date for receipt of bids

and before the due time, the bids shall be handed over (with a covering note giving the number and

names of bidders) to the Officer in Purchase Department responsible for opening them. The said

Officer shall open the bids in the presence of the authorised representatives of Finance and

Purchase and indentor where necessary.

In the case of FEDO, representative of Projects shall also be present. All the officers present shall

initial the bids opened. Wherever there are corrections in the bid or apparent additions or alterations,

these should be initialed by the officers who are present at the bid opening.

34.5.2 Delayed, Late & Unsolicited Bids

Bids which are received after the prescribed opening time, but which are posted before the opening

date and time, are classified as delayed bids. Delayed bids may be considered where the response

has been poor or for other reasons to be recorded in writing by, Purchase Manager, with the

approval of the Head of Corporate Materials Department or Head of Division (at the level of GM) or

Executive Director/Functional Director. Delayed bid shall be opened as stated in 5.1 above.

34.5.3 Late bids are those which are posted after the date and time of opening of bids and received

subsequently. Normally late bids shall not be opened. However, in exceptional cases late bids may

be considered with Division Head’s approval for reasons to be recorded in writing.

34.5.4 Where technical and price bids are stipulated to be received in separate envelopes, the bidders shall be

asked to submit both the envelopes on or before the specified closing date and time.

34.5.5 Unsolicited bids shall not be considered without the approval of CMD or his nominee.

34.5.6 Bids in damaged Envelopes

I) Bids delivered by hand may be refused if the seal is broken or the envelope is damaged or tampered

with.

ii) Bids received other than by hand in broken/open, or tampered envelopes shall be immediately brought

to the attention of the Officer who is authorised to receive the bid and he shall record the matter on

the envelop itself, sign and put the bid in a separate envelope with the tender particulars

superscribed on it and seal it for opening as per para 5.1 above.

34.5.7 Reading of Bids

The following information may be read out to the bidders’ representatives:

a) Prices, taxes and duties

b) Payment terms

c) Delivery period

d) Performance guarantee

e) Brief description, where relevant



34.5.8 Bid Register

A Bid Register/Bid opening form shall be maintained by the Officer opening bid and all those who

attend the bid opening must sign it with date.

34.5.9 Two Stage Bids

Two stage bidding system involves obtaining unpriced technical and commercial bids in one cover

and the price bids in a separate cover. The technical/commercial evolution shall be completed and

got approved by the competent authority before the opening of the covers containing price bids. If

during technical/commercial evaluation, there is any change in specifications or scope of supply or

major commercial terms, the vendors shall be required to submit fresh price bids and evaluation shall

be made on that basis.

34.5.10 First only the covers containing technical and commercial bids shall be opened. Price bids shall not be

opened till the technical and commercial evaluation are completed and technically/commercially

approved list is finalised by Competent Authority.

34.5.11 Two stage bidding shall be adopted in respect of all purchases above Rs. 10 lakhs except for packing

materials and other routine procurement of consumables/maintenance supplies with well defined

specifications. In respect of equipment/package units where lumpsum offers are invited, two stage

bids shall be called for irrespective of value. Any deviation will have to be decided by the Divison

Head who will record reasons.

34.6 BID EVALUATION AND FINANCIAL CONCURRENCE

The technical part of bids shall be forwarded to the indenting department by the Purchase department

as soon as the bid opening formalities have been completed. For project purchases, distribution of

bids shall be made as prescribed in the Project Co-ordination procedure.

34.6.1 The steps involved in bid evaluation shall be:

a) Technical evaluation by indentor in consultation with other technical experts where necessary.

b) Commercial evaluation by the Purchase Department in consultation with other concerned

departments.

c) Review and approval of technical and commercial evaluation by competent authority to determine the

bids which are technically and commercially suitable.

d) Opening of price bids of the parties whose bids are technically and commercially suitable.

Note: (c) and (d) above shall apply for two stage bids only.

e) Comparison of prices and financial evaluation by Purchase Department in consultation with other

concerned departments.

f) Preparation of purchase Recommendation combining technical and commercial aspects, prices and

financial evaluation by the Purchase Department.

34.6.2 Where additional information/clarifications are required, these shall be obtained by the Purchase

Department/Department that invited the bids. Where considered more effective, bidders may be



invited by the Purchase Department to attend discussions and minutes of such discussions recorded by Purchase

Department and got signed by the Bidders.

34.6.3 The approving authority can have the technical evaluation performed by a committee or agencies other

than the indentor, where this is considered necessary.

34.6.4 In respect of 2 stage bids, price bids of those bidders whose offers are found

technically/commercially unsuitable shall not be opened and shall be returned to the bidders, within

30 days of finalisation of the tender.

34.6.5 Final Review and Recommendation

34.6.6 The Purchase Department shall review the complete evaluation and shall recommend the bid to be

accepted.

34.6.7 The recommendation shall bring out clearly the following aspects:

i) Whether the bid recommended for acceptance is the lowest or not; and if not the specific reasons for

recommending the same.

ii) In the case of single bid, whether the price recommended is reasonable.

iii) Whether it is desirable to conduct negotiations and if so why.

34.6.8 Financial Concurrence

For purchase above Rs. 25,000/- the Purchase recommendation shall be forwarded to Associate

Finance Department for according financial concurrence before it is put up to the competent authority

for sanction. If there is a difference of opinion that cannot be sorted out between Purchase

Department and Finance, the matter shall be referred to the Head of Materials Department who shall

review the proposal and take action for submitting it to the competent authority for approval.

34.7 SANCTION FOR PURCHASE

34.7.1 Authority

Sanctioning Authority shall be as per the Delegation of Powers. After Financial Concurrence by

associated Finance, the proposal for sanction shall be forwarded to the Sanctioning Authority

through proper channel.

34.7.2 Documents to be submitted

A self-contained note shall be submitted with the following for approval:

a) Purchase Recommendation with relevant documents consisting of technical, financial and commercial

evaluation.

b) Financial concurrence.

The self contained note mentioned above shall bring out all relevant particulars such as description of

item, project/user reference, estimated value in the case of project and capital purchases, enquiry

response, bid evaluation, recommendation, name of vendor, value, taxes/duties, payment terms,

guarantees, delivery and validity. The note shall be accompanied by all the necessary documents



and shall give proper reference.

34.7.3 Sanction by Board

In case of Sanctioning Authority is Board of Directors, the proposal for sanction shall first be

submitted to the Chairman & Managing Director along with draft Board Note.

The custodian of the original sanction shall be the Purchase Department or such other department

which issues the order, and copies shall be made available to other concerned departments.

34.7.4 Approval of Sanctioning Authority shall be obtained for amendments having financial implications and

termination/cancellation involving alternative procurement in the same manner as prescribed above.

34.8 NEGOTIATION

Negotiation shall mean discussion with one or more bidders after opening the price bids on financial

consideration receivable by the Bidder with a view to directly arriving at mutually acceptable terms or

to give a chance to quote a revised price as applicable. Discussions on technical aspects, delivery

periods and any or all commercial conditions prior to opening the price bid shall not be considered as

‘negotiation’.

34.8.1 Need to Negotiate

Negotiation shall be resorted to only if it is considered that this will be in the interest of the Company.

Under the following circumstances, negotiations may be considered.

a) Where the lowest bid itself appears to be unreasonable.

b) Bid other than lowest has distinct advantage to the Company (if the lowest offer is not being

accepted negotiations shall normally be first conducted with the second lowest bidder and then with

the next lowest bidder and so on. However, in case of necessity the number of bidders to be called

at a time will be decided with the approval of Division Head)

c) Where the order has to be split among more than one bidder in the interest of proper execution of the

contract approval should be obtained for such splitting the orders from GGM or Executive Director or

Functional Director.

34.8.2 Negotiation shall be initiated only after approval of the Sanctioning Authority or CMD in case the

sanctioning authority is the Board. The justification for negotiation, and the names of the Officers

who shall be empowered to conduct the negotiation shall be put up to the Competent Authority in a

self-contained note and the approval obtained.

34.8.3 If the negotiations are to be held with more than one bidder, after the discussions with the parties the

revised prices and terms and conditions which affect the price shall be obtained in sealed covers just

as tenders and shall be opened at the appointed time as per the procedures for opening of price

tenders.

34.8.4 Negotiationing Committee shall not make commitments to the vendors without the approval of the

Sanctioning Authority.

34.9. ORDERING

As soon as sanction has been obtained a “Letter of Intent” shall be issued by way of



telex/telegram/letter. Letter/telex of intent shall stipulate effective starting date of the contract, scope of work, the

deadline for providing security deposit where applicable, delivery period, price and important terms

and conditions. It shall call upon the vendor to issue his acceptance immediately. Where the

detailed Purchase Order can be issued promptly, the letter of Intent can be dispensed with.

34.9.1 Purchase Order

Detailed Purchase Order shall be issued soon after the Letter of Intent, and normally within 30 days

of issue of Letter of Intent. The order shall comprise:

a) Order stating description of items, prices, delivery and specific terms and conditions agreed between

the parties.

b) Standard conditions of Purchase with a statement of agreed variations. Separate sets of terms and

conditions shall be issued for project/major capital purchase, minor capital purchases, stores, spares

& consumables.

34.9.2 The Purchase Order shall be technically and commercially clear and a complete document.

34.9.3 In respect of services, Work Orders may be issued instead of Purchase Orders.

34.9.4 Purchase Order/Work Order shall be serially numbered and shall also have reference number which

clearly indicates the divisions/Project and also whether the order relates to capital, project or revenue

item.

34.9.5 Copies of the Order/amendments/cancellation shall be distributed as follows and sufficient number shall

be provided as required by each department.

a) Finance

b) Indentor

c) Stores

d) Inspection/Expediting Department

e) Other departments/Agencies as stipulated in the project co-ordination procedure where applicable.

34.9.6 Purchase Orders/Work Orders/Subsequent Amendments shall be got duly accepted by the

vendor/contractor.

34.10 EXPEDITING AND INSPECTION

34.10.1 Expediting

Expediting of Orders shall be performed by the Materials Department (Purchase Dept./Inspection and

Expediting Department) or other agencies appointed for the purpose. The object of expediting and

inspection shall be to ensure that the vendor performs his obligations as per the order.

34.10.2 Extension of time

Materials Department (Purchase Department/Inspection Department as the case may be) shall

continuously monitor vendors’ performance to ensure timely delivery and periodic



status/progress/trouble reports shall be made available to all concerned departments. In case extension of

delivery is necessary, the same shall be granted only after detailed scrutiny by all concerned

departments and obtaining approval from the competent authority.

34.10.3 Inspection

Scope if Testing/Inspection shall be clearly stipulated in the Purchase Order.

34.10.4 Agency for Inspection

Inspection may be carried out by FACT or by third party Inspection Agencies, depending on the

nature of the item and facilities available. If third party inspection is required,the vendor shall be

asked to have the inspection done by our nominated Inspection Agency or one among a panel of

competent agencies approved by FACT for shop jobs. For site jobs the Inspection Agency shall be

appointed by FACT.

34.10.5 Where inspection by statutory bodies, such as IBR, is required, the vendor shall be made responsible

for arranging the same at his cost and providing the required certificates.

34.10.6 Clearance for Despatch

Where an item is subject to inspection/test in shop, it shall be despatched by Vendor only after such

inspection tests are carried out successfully or waived with approval from the competent authority,

when the Inspection Agency issues final release certificate, the material shall be despatched along

with certificate. Copy of despatch clearance shall be communicated to Traffic and Stores.

34.11 CLEARANCE OF GOODS AND RECEIPT OF MATERIALS

34.11.1 Receipt of Despatch Documents

The Despatch Documents shall be received by the Department authorised for the purpose.

34.11.2 The department responsible for clearance shall maintain a register for Despatch Documents and up-

date entries on a day-to-day basis. It shall be the responsibility of this Department’s Head to ensure

that the goods are cleared promptly. Ratification for demurrage if paid shall be obtained by this

Department from competent Authority.

34.11.3 Payment of freight/Certification of freight bills shall be the responsibility of the Department Head

entrusted with clearance of goods.

34.11.4 Clearance of goods

Where there are apparent damages, open delivery shall be resorted to and open delivery certificate

shall be obtained. The instructions in the relevant transit insurance policy shall be strictly complied

with in this regard.

34.11.5 Receipt and inspection of goods

34.11.5.1 All goods cleared from the Carrier shall be forwarded to the Receiving Section of the Stores

Department or the Department authorised for this purpose. All goods received shall be accompanied

by relevant documents covering the despatch with details of the consignor of the material and the

purchase order reference.



34.11.5.2 In case of bulk raw-materials/intermediates the goods may be directly received by the consuming

Department in respective storages. Accounting of these arrivals shall be through the Stores

Department on certification by the custodian of stock.

34.11.5.3 Materials received against turn-key jobs awarded to agencies responsible for supply, transport,

storage and erection, shall not be taken into stock by Stores Department. Such deliveries shall be

verified and certified by the Head of the construction Department at Site. For such supplies, part

payment, if any, shall be paid by the Finance Department and as per certificates issued by the Head

of the Construction Department at Site/Head of User Department and as per contract conditions.

34.11.5.5 The Stores Department shall, on receipt of a consignment, link the consignment to the purchase

order concerned. On opening the cases and properly identifying the consignment through,

identification tags all connected papers shall be forwarded to Inspection Section for Inspection, if

items haven’t been already inspected and cleared.

34.11.5.6 If no damages/shortages are noticed, the Goods Received Note (GRN) will be prepared, for items

that have passed inspection. Copies of GRN will be distributed to Finance, Stores, Purchase

Department Indentor and Inspection.

34.11.5.7 Based on GRN, the goods accepted will be taken into stock and subsequent storage and issue of the

stock shall be as per the procedure laid down in the Stores Manual.

34.11.6 REJECTED GOODS

34.11.6.1 Rejected consignments shall be kept separate and a First Information Report shall be sent by the

Stores/Receiving Department to the Supplier with copy to Finance and Purchase Departments.

34.11.6.2 Where the rejection is apparently due to reasons attributable to supplier, the matter shall be further

taken up with the Supplier by the Purchase Department.

34.11.7 INSURANCE CLAIM

34.11.7.1 In all cases of rejection/shortage/damage other than for reasons attributable to supplier, the Stores

Department shall take up the matter with the Insurers under advice to Finance Department. Initial

claim shall be raised with the Insurers by Stores Department along with the First Information Report

itself. Wherever split up values have to be furnished the same shall be determined by the Stores

Department in consultation with the Indentor/Inspection/Finance Departments for fixing the value of

the claim.

34.11.7.2 Follow up of the claims and settlement with insurers shall be done by Finance Department. As soon

as the claim is settled the matter shall be communicated to the Stores Department and the Purchase

Department by the Finance Department.

34.11.7.3 Wherever insurance claim has been made due to loss or damage in transit, final payment may be

released as if the item has been supplied fully.

34.11.8 Where differences are likely between the quantity ordered and supplied due to variation between

weight, volume and dimension or due to standard packing/size, such variations upto 5% of the

ordered quantity subject to a maximum of Rs.5,000/- can be accepted by the Stores Manager and

the payments made for actual quantity without PO amendment and/or referring to sanctioning

authority.

34.12 PAYMENT OF BILLS



34.12.1 BILLS

Payment to Suppliers/Contractors for supplies made or services rendered are to be made against

Bills submitted for the purpose in accordance with the payment terms stipulated in the concerned

Purchase Order/Work Order.

As far as practicable, a detailed ‘billing schedule’ giving break-down of the order values in convenient

smaller packages relating to probable delivery/work instalments could be agreed upon and

incorporated in the Purchase Order itself. If such a billing schedule is not included in the original

P.O., then the schedule agreed upon later shall be incorporated in the P.O with prior approval of the

Division Head. A copy of the billing schedule so incorporated later shall also be sent for information

to the Authority who approved the purchase.

34.12.2 The original bills of the vendors shall be sent to the Materials Department of the concerned Division

who had placed the order. The bills of the vendors shall be addressed to the Head of the Materials

Department of the concerned Division.

The Head of Materials Department with the assistance of Purchase, Inspection, Transportation,

Stores and other agencies concerned will ensure that the bills are in line with the terms of the

purchase order and are accompanied by the relevant documents as per instructions in Purchase

Order. Also he will ensure that the materials have been received in the Stores and are in good

condition and that necessary action is taken with regard to the insurance, re-ordering etc. in case it is

necessary. With his comments/concurrence and certification the bills will be forwarded to the

concerned Finance Department who will make the payments. Finance will countercheck where

necessary.

34.12.3 PAYMENT

34.12.3.1 Purchase of Goods

i) Bills may be accepted either through bank or direct as per the payment terms in the order. In case of

payment through bank, the Materials Department shall verify the correctness and completeness of

the documents when intimation of arrival of documents is received from the Bank. Documents shall

be cleared from Bank by Finance. Over-due interest may be paid if the delay is not due to supplier.

For payments to be released after receipt of material, the Materials Department will verify the

correctness of the bills vis-a-vis the Purchase Order and Finance Department shall make payment

based on the Goods Received Note.

ii) Wherever necessary, arrangements shall be made to issue all Purchase Order amendments, including

delivery extension if any, prior to despatch of the goods, so that the vendors’ invoices do not conflict

with the Purchase Order terms.

iii) All Bank Guarantees/Securities shall be kept in safe custody of the Finance Department and action

should be taken by the Head of Finance for prompt renewal of the Bank Guarantees and to prefer

claims wherever required under advise to the Purchase Department.

iv) The cheques/DD shall be forwarded to parties by the Finance Department with a covering memo

showing the details of payment such as Bill No., date, amount, deduction if any, net amount paid etc.

and a copy of the same shall be sent to Purchase Department.

34.12.3.2 Contracts for services



In case of payment to Contractors for Services, the Bills shall be sent to Finance Department by the

Department in charge of executing the work duly checked and certified as per the Billing Procedure

and Finance Department shall scrutinise the Bills and pass the same for payment. While making

payment to the contractor under intimation to the department executing the work, a statement of

deduction, if any, made in the Bill and Income-Tax Deduction Certificate shall also be given.

34.12.3.3 Payments to Overseas Parties

i) For purchase of goods and services from foreign sources the payments to be made to the parties

should comply with the Procedures laid down by the Government/Reserve Bank of India from time to

time.

ii) Where payments are made by opening Letters of Credit, Finance Department shall arrange for the

same on intimation from Purchase Department or other concerned Department. Extension of any

such Letter of Credit shall also be arranged by the Finance Department as may be required by the

Purchase/other concerned department. Payments shall be made only in accordance with the terms

and conditions of L/C.

34.13 CORPORATE LEVEL PURCHASE OF SPECIAL CATEGORY ITEMS 34.13.1 The Corporate Materials Department shall handle the procurement of specified items for which

centralised procurement is considered desirable by the Management. Such centralisation shall

normally be done for items such as raw-materials and Jute/HDPE bags for packing finished products

because of the high values involved and the need for having a single agency to deal with the

canalising agencies for import.

34.13.2 The current list of items for which the above department is responsible for procurement are the

following.

i) Sulphur

ii) Rock Phosphate

iii) Ammonia

iv) Phosphoric Acid

v) Steel items covered by allotments by the Ministry

vi) Cement based on allocation from the Ministry

vii) Jute/HDPE bags for packing finished products

viii) Transport Contracts for finished products

Further additions, deletions, modifications can be made to the above list as per decision of the

Management.

34.13.3 In the case of the above items some of the Standard Conditions and Procedures for Procurement

outlined earlier are not fully relevant and certain special conditions/deviations may have to be

added. This will be done from time to time by General Materials Manager with the approval of CMD

or his nominee.



34.14 CONCLUSION

Efficient, timely and economic purchasing is the aim of this Procedure and therefore all concerned

Officers shall take action as appropriate to achieve this objective. The Procedure shall not be quoted

as an excuse for delay or inefficient purchase nor should it be construed to limit the responsibility of

any Officer entrusted with specific functions.

34.14.1 CMD shall be the final authority for interpretation of any of the provisions in this procedure.



ANNEXURE-36

FORMATS OF VARIOUS MIS REPORTS

I. Statement showing Profit or Loss for the month.

II. Details of consumption of Raw Materials etc.

III. Details of Transfer Price (Expenditure)

IV. Details of Transfer Price (Income)

V. Details of Other Expenses in Fixed Expenditure.

VI. Reconciliation of Working Results for the month -

(With Budget)

VII. Raw Material/Intermediate usage variance -

(with Budgeted Ratios)

VIII. Inventory Position.

IX. Production Performance.



ANNEXURE-38

ITEMS REFERRED IN THE SUPPLEMENTARY AUDIT REPORT UNDER 619(3)(a) SYSTEM OF ACCOUNTS

1) Examine the following systems and give your views as regards their deficiencies along with

suggestions for remedial measures:- .

a) Recording of receipts and expenditure.

b) Drawing periodical Trial Balance.

c) Compilation of accounts.

d) Recording procurement and disposal of stores.

e) Reconciliation of inter-office accounts.

2) Indicate whether expenditure during construction is appropriately accounted for with proper allocation

between capital and revenue expenditure?

3) Are the Bank accounts of the company reconciled with the bank statement regularly? If not,describe

the failures.

4) Are control accounts and subsidiary accounts upto date and reconciled regularly? If not, describe

failures.

5) Examine the accounting policies of the company. Are these in confirmity with the Accounting

Standards(National and in absence of National Standards on certain issues, the corresponding

International Standards) ? Give particulars of material departures from these standards, if any, along

with their effect on the financial statements; quantify the impact wherever possible.

SYSTEM OF FINANCIAL CONTROL

1) Examine the delegation of financial powers and indicate whether these are clearly and legally made

within the company. If not, describe the defects in the delegation of powers and suggest remedial

measures.

2) Indicate whether the credit obtained (including overdrafts) from banks were necessary and monitored

regularly ?

38.03 ASSETS AND INVESTMENTS

1) Have the dates of installation and commissioning of plant and machinery been clearly fixed by the

authority to whom the powers have been delegated by the Board.

2) Indicate whether the property and assets registers are posted upto date and are reconciled with the

financial books?

3) Examine and indicate whether the Company has a system of monitoring the timely recovery of

outstanding dues? Highlight the significant instances of failure of the system, if any.

4) Indicate whether the cash and imprest balances were physically verified during the year on a regular

basis by an authorised officer? Highlight the inadequacies in this regard, if any.

5) Indicate whether the Company has laid down an investment policy? If yes, please indicate the



following:-

a) Authority which approved the policy.

b) Is it in accordance with the laws, rules and regulations

applicable to the Company?

c) In your opinion, are there any defects in the policy?

d) Has the company followed it in case of all material

investments made during the year?

e) Were the investments made by the company in its best interest?

f) Is the short-fall in market value of the current investment

and permanent diminution in the value of long term

investments reflected in the books? If not, describe the failure.

6) Indicate whether the deposits with Banks/Financial Institutions and others have been in accordance

with laws, rules, regulations etc. applicable to the Company? Further state, whether these were

properly authorised by the competent authority?

38.04 LIABILITIES AND LOANS

Give the total amount of loans (including interest and penal interest separately) where defaults were

made in repayment as at the end of the accounting period.

38.05 PROFIT AND LOSS ACCOUNT

Does the Company prepare segment-wise accounts and profit/loss statement? If so, indicate the loss

making segments, if any; and if not, whether in your opinion, it would be in the overall interest of the

company to prepare segment-wise profit/loss statement?

38.06 INVENTORY AND CONTRACTING

1) Examine whether the Company has prescribed the following in regard to the management of Stores:-

a) Maximum and minimum limits of stores and spares etc.

b) Economic Order Quantity for procurement of store.

2) Indicate whether the Company usually makes advance payments to suppliers/contractors? If so,

indicate whether the company has an efficient system for monitoring and adjusting such advances?

38.07 COSTING

1) Does the company prepare cost accounts and reconcile them with financial accounts?

2) Indicate whether the company is following the proper system of costing and is computing the cost of

major operations, jobs, products, processes and services regularly? If not, describe the failures .

3) Indicate whether the company has an effective system for identification of idle labour hours and idle

machine hours?



4) Was cost audit ordered in the case of the Company? If so highlight the major deficiencies pointed out

in the latest cost audit report.

38.08 INTERNAL AUDIT

Give your comments on Internal Audit system stating whether its reporting status, scope of work, level

of competence, etc. are adequate? If not, describe the shortcomings thereof. Is there an adequate

compliance mechanism on internal audit observations?

38.09 AUDIT COMMITTEE

Does the Company have an Audit Committee of the Board of Directors? If so, give your comments on

its functioning.

Annexure to Supplementary Audit Report under Section 619(3)(a) and (4) of the Companies Act

1956.

1) Indicate the areas where the company has computerised the account system. Have the General and

Application controls been reviewed periodically to derive assurance that the system is producing

results that can be relied upon by the auditors? State the deficiencies reported by internal

auditors/statutory auditors along with the remedial measures being taken by the management.

2) Indicate whether the shares of the company are quoted in the market? If so, give the following

information:-

a) Lowest and highest quotations during the year.

b) If shares have not been traded during the year, mention

the date when they were last quoted in the market along

with the amount of quotation.

3) Indicate the break-up of the equity share capital held at the end of the financial year by:-

a) Government of India and Government of states.

b) Indian Banks and Financial Institutions.

c) Foreign Banks and Foreign Companies/Institutions.

d) Public in Indian and/or outside.

4) Is the Company facing any legal action on account of default of repayment of debts? If so, give brief

description.

5) Are the accounts of the Company in arrears? If so state the reasons therefore and the action

taken/being taken to bring the accounts upto date.

6) Is any product in which the company deals subjected to statutory or other price control? If so, list the

products and nature of control.

7) Does the Company remit royalty or other payments to collaborators or others abroad or make inter-

company transfer abroad. If so, give details.



*3 employed in excess of norms, if any, fixed by the Company? If so, the scheme introduced, like VRS,

or steps taken by the company to bring the manpower position within norms may be indicated.

8) Manufacturing and Production account

a) Indicate whether the company has entered into a Memorandum of Understanding with its

Administrative Ministry? If yes, have the targets in MOU been split unit-wise? If so, attach a unitwise

statement of targets and achievements against the parameters in MOU.

b) Does the Company present a case for energy audit? If yes, has the audit been conducted by a

specialized agency?

c) Has the company provided anti-pollution devices for guarding against pollution of land, water and

air? Has the company taken up any measure to repair environmental degradation caused by it? If

not, describe significant failures pointed out by internal auditors/statutory agencies along with the

remedial measures being taken by the management.

d) Has the company or any other authority fixed norms for losses/wastages for

(i) raw materials for manufacture of major products.

(ii) in storage, transit etc.?

When were these norms last reviewed? Do the norms require revision?

9) Does the Company have adequate system for regularly indentifying and monitoring disposal of non-

moving, obsolete or surplus raw materials, stores and spares (excluding insurance spares) finished

goods? What is the age-wise analysis (upto two years, two to three years, three to four years, four to

five years and over five years) of such items?

10) Has the company defaulted in payment of loans during the last three years? If so, attach a list of

such loans as at the end of each of the period showing the amount of interest, penalty etc.

11) Indicate the percentage of rejections to Production/Sales at the end of the last three years giving

comparative norms/standards set in this behalf.

12) Is the manpower employed in excess of norms, if any, fixed by the Company? If so, the scheme

introduced, like VRS, or steps taken by the company to bring the manpower position within norms

may be indicated.



Accounting Policies

(as decided in Meeting Dt. 5.5.88)

With reference to the Report forwarded by BPE, FD constituted a committee to review the Accounting Policies of the Company. The Report submitted by the committee was reviewed. After detailed discussion, the following decisions were taken.

I. Salient Accounting Policies of the company were formulated in

the following lines :

1. Depreciation

Depreciation is charged on Plant & Machinery on straight line method and on other assets (excluding land) on written down value method.

2. Expenditure during Construction Period

All expenditure incurred during construction upto the date, the plant is ready for commercial production, is capitalised.

3. Inventory Valuation

i) Raw Materials and Stores and Spares are valued at or below cost.

ii) Materials in process are not valued.

iii) Finished goods are valued at lower of cost or net realisable value excluding receipts under Retention Price Scheme.

iv) Loose Tools are taken at depreciated value.

v) Contracts and works-in-progress/contracts unbilled are valued at cost or estimated realisable value.

4. Recognition of Revenue

Receipts under Retention Price Scheme

This is accounted on clearance of finished goods from the factory as per procedure prescribed by the Government.

5. Retirement Benefit

Gratuity

Provision for gratuity is made on the basis of actuarial valuation.

6. Valuation of Investments

Page 1 of 28Extracts from Minutes of FM's Meetings


All investments are valued at cost.

7. Recognition of Profit on Construction Contracts/

Incomplete contracts.

a) In respect of contracts undertaken by FEW and Turnkey Con- tracts of FEDO, 50% of the proportionate profit is adjusted in respect of contracts which have reached completion of 80% and above.

b) In respect of Design & Engineering Consultancy Contracts executed by FEDO, profit is reckoned on the value of major components exceeding Rs.20 lakhs individually, when the percentage of physical completion exceeds 25%. In such cases 50% of the estimated profit is accounted for in the year.

c) Foreseeable losses on contracts are provided for in full, irrespective of the amount of work done.

8. Fixed Assets - Valuation

Fixed Assets are stated at cost of acquisition or construction less depreciation. Plant and Machinery and certain other category of Fixed Assets costing Rs.5000 or less individually are charged to revenue in the year of purchase.

9. Accounting for R & D

The expenditure for R&D, except on Fixed Assets, is charged to revenue.

10. Accounting for Subsidies / Grants

Grants utilised for acquisition of Fixed Assets are credited to Capital Reserve.

11. Prior Period Adjustments

Income and Expenditure, relating to prior period, exceeding Rs.20000/- in each case, is accounted under prior period.

12. Accounting for Claims

Claims on under items, carriages and on customs and Central Excises Departments are taken into account on acceptance.

13. Deferred Revenue Expenditure

Deferred Revenue Expenditure is written off in five equal monthly instalments.

14. Income from Investment

The interest on investment is accounted on cash basis. (At present, income from investment is accounted, on accrual basis. The new accounting policy will be with effect from 1-4-88).



II. Separate policy statement was not considered necessary for the following items.

1. Treatment of contingent liabilities, including liquidated damages. But wherever a need arises, provision or disclosure in account will be made as required, depending on the facts of the case.

2. Significant events after Balance Sheet Date. It was also decided that the cut off date upto which events are recognise need not be mentioned in the Notes on Accounts.

3. Inter-Divisional Services:

Profit or loss is not recognised in inter-divisional services, and will be mentioned in the Notes on Accounts.

Accounting Policy - Reckoning of Profit - FEDO

Item No.9(b) of the "Significant Accounting Policy" in the final accounts is to be reworded from the year 1995-96 as follows:-

" In respect of Design & Engineering Consultancy and turn- key contracts executed by FEDO, profit is reckoned when the percentage of physical completion exceeds 25%. In such cases, 50% of the estimated profit is accounted in the year".

Meeting dt.18.12.95 - No. 8

Festival Advance - Accounting

Festival Advance 1994 & 1995 (Rs.500 & 850 per head respectively) will remain as advance as already informed to Divisions by GM(CF).

Meeting dt.14.5.96 - No. d

Advances - Notes on Account

The Notes on Accounts - Item No.5 (d) discloses the amount of advances which are covered by Bank Guarantee though classified as unsecured. Since the advances may be coming under "Loans & Advances" or "Capital work in Progress", the present disclosure has to be changed by showing it as a separate Item - No.6 as follows:-

Item No.6 - Rs......Lakhs outstanding as advance through covered by Bank Guarantee, is classified as "Unsecured and considered good."

Meeting dt. 8.6.96 - No.13

Staff Advance - Waiver of 50%

1986 Advance (staff) - HO, Marketing & CD - Provision may be restricted to 50% only, pending final decision.




Staff Advance - Waiver of 65 %

Staff Advance 1996-97 Waiver of 65% of advance is to be accounted/written off after considering the provision already available.

Meeting dt.10.5.95 - No. 6(ii)

Arbitration Award - Accounting

Payment towards arbitration award will be accounted as current year expenditure.


Bank Guarantees from Non-nationalised Banks - Acceptance of

A uniform decision on the above cannot be taken. Divisional Finance head may take decision in accepting the Bank Guarantee from Non-nationalised banks depending on the circumstances in each case.

Meeting dt.12.11.86 - No. II.8

M.I.S & Budget

GM(CF) requested that in future, while forwarding budget proposals, comparative figures of actuals for the previous year and budget are also to be given by the Divisions as per the proforma alongwith monthly break-up (showing quantity, rate/MT and cost/income for all variable cost/income including increase/decrease in stock). In the monthly report also, reconciliation of the quantity of products transferred alongwith profit reconciliation statement is to be submitted by all the Divisions. The concerned divisions to tally the transfer price/intermediates transfer before forwarding the monthly report to Head Office.

Meeting dt.14.5.96 - No. h

Budget

For items... Finance concurrence of capital expenditure proposals for which there is no specific provision in the approved budget, can be given (provided the same has been proposed for inclusion in the Capital Budget) upto the overall approved amount for R&R items, subject to Division heads' approval. This, however, does not apply to items like vehicles, Computers, Air conditioner's, etc. requiring CMD's approval.

Meeting dt. 23.10.96 - No.9(b)

Budget - Payments against commitments

It was mentioned that due to lapsing of Capital Budget on 31.3.83 and [the requirement that] payment against the commitment of 82- 83 can be made only after getting HO approval, creates problems and confusion in payment of bills for suppliers/contractors. FD explained that payments can be made for 82-83 commitments during 83-84, but the total expenditure for 83-84 should not exceed the Govt. sanction



for 83-84.


Budget - Spill over of RE

Regarding spill over items of RE, FD clarified that no expenditure should be incurred without HO approval after 31st March in cases where there is no provision in BE for next year.


M.I.S. - Profitability

It was decided that profitability may be worked out on the basis of the input costs prevailing at the beginning of the accounting year (ie, 1st April) and the corresponding retention price and income. He was also requested GM(CF) to issue a circular in this regard to all Divisions.


MIS - Profitability Statement of FEDO & FEW

FEDO & FEW should show the "Excess over agreed cost" separately in their MIS-Profitability statements, so that comparison of actuals vs. budget becomes more realistic


Capital Work-in-Progress

Any item of capital expenditure, which is subsequently abandoned will be charged to Factory General Charges.

Capital expenditure on a review, charged to revenue expenditure, the opening balance will be charged to prior period expenditure and expenditure of the current year will be charged to the relevant heads.


Cash & Bank balances

Review action taken on Govt/Statutory audit comments in the accounts of 1994-95.

e. It was decided that cheques received but not deposited for various reasons will be taken into account only if deposited with the banks within a reasonable time.


Cash Balance

On a review of Govt.Audit Comments on the annual accounts for 1995-96, the following decision was taken:-



In order that the divisions may ensure that the physical balance of cash as verified conform to the cash book and ledger balances, GM(IA) may please make a copy of the year end cash verification report to all the Divisional Finance Heads. Finance Heads should ensure that the physical cash balance, cash balance as per cash book and ledger are correct as on 31st March.

Meeting dt. 23.10.96 - No.4(ii)

Cash Balance - Unpaid Salary

On a review of Govt.Audit Comments on the annual accounts for 1995-96, the following decision was taken:->

Entries with regard to unpaid salary are to be specifically checked by the Divisions to ensure that the correct cash balance is reflected in the ledger.

Meeting dt. 23.10.96 - No.4(iii)

Cash Discount - Marketing

For a proper assessment of Marketing performance, expenditure under Cash Discount is to be excluded and taken as expenditure towards interest on Working Capital by HO (to be allocated to divisions on the basis of utilisation of Working Capital) for assessment of divisional performance...


Cash Flow projections

GM(CF) requested all the divisions to give realistic cash projections for February 97 and March 97 immediately and thereafter every month (in the prescribed proforma with details of previous month's projections and actuals) to FM(HO) for effective management of Overdraft. Management of Overdraft has become very important, as we have to pay penal interest if projected OD is exceeded or pay commitment charges if projected OD is not fully utilised.

Meeting dt.24.1.97 - No.7(a)

Cash Payment above Rs. 20,000/-

Divisions not to make any cash payment above Rs.20,000/- other than by crossed cheque/DD as per the Income Tax Act. Approval to be obtained specifically from GM(CF) for exemption to the rule.

Meeting dt.19.12.96 - No.1 (h)

Cash Rebate payable - Accounting

The special cash rebate payable in respect of advances received from customers is to be accounted under the head "Discount & Commission."




Catalyst - Loading Charges


Only specialised loading charges will be added to the catalyst cost and written off over the period of its useful life. All normal loading charges will be charged to revenue as before.

Meeting dt. 23.10.96 - No.4(v)

Central Excise

Common Factory Licence (under Central Excise Act) will be obtained for Ammonia Project considering the various advantages.


Excise Duty Gate Pass

It was decided that we need not insist for excise duty gate passes and other documentary evidences for payment of excise duty in normal cases, if such amounts are shown in the invoice itself and the purchase order provides for payment of excise duty. But when the vendors put up claims for increase in excise duty or when the division has to avail the benefit, the required excise documents may be insisted upon.

Meeting dt.29.11.88 - No. B-4

Cheques in hand


(i) Cheques on hand: Cheques received upto 31st March in favour of FACT by all Departments should be passed on to the concerned Finance Departments for accounting as on that date. Refer circular No.GM(CF)-CO-A03 (95-96)-173 dt.10.10.96 from GM(CF). Divi- sional Finance Heads should issue a circular to all concerned with copy to GM(CF). In the case of PD, a report listing out cheques that can be accounted by depositing in our Bank accounts and those that are to be kept pending as on 31st March is to be obtained from CSM alongwith a letter from the parties concerned advising us not to present the cheques for payment.

Meeting dt. 23.10.96 - No.4(i)

Cheques in hand - Accounting

Cheques/DDs received in other departments : Finance to advise all departments to handover the cheques/DDs received upto 31st March to Finance for accounting by 31.3.97. These are to be cross checked with entries in April 97 so as to ensure that all cheques/DDs received upto 31.3.97 are accounted. In the case of bids opened on or before 31.3.97, all DDs for EMD are to be accounted by 31st March. If bids are opened only after 31.3.97, even DDs, though dated on or before 31st March 97, need be accounted only in April 97 when the bids are opened.



Meeting dt.7.3.97 - No.8

M.I.S - Valuation of Cl. Stock

Closing stock, in the monthly reports is to be valued correctly. To arrive at the cost of production, variable cost is to be taken at actuals upto the month and fixed cost based on actual production upto the reporting period and projections for the balance period.

Meeting dt. 21.11.96 - No.11(vi)

Closing Stock - Caprolactam - Valuation

The valuation of closing stock of Caprolactam will be as under:

Stock covered by export orders confirmed and backed by LCs opened before the cut off date will be valued at the export prices. Other stocks will be valued at cost.


Closing Stock - Chemicals & Op. Supplies

Chemicals, operating supplies and other small items (other than packing materials and catalysts) in Petrochemicals Division Plant as on 31st March need not be valued or shown as "Stores with Plant" for uniformity with Udyogamandal & Cochin Division.


Closing stock - Finished/Intermediate products

Review of CAG's comments of accounts for the year ended 31-3-85. Comment - 1 - Valuation of Finished/Intermediate Products Transport, loading and unloading charges at the receiving points will be estimated and stock value adjusted suitably.

Meeting dt.29.4.86

Physical verification of Stock - Notes on Accounts

Item No.6(a) of the Notes on Accounts, which is forming part of schedule to accounts is to be reworded suitably to correct the impression that the stocks physically verified before or after the close of the year (not on the close of the year) are taken as closing stock as such.


Closing Stock - Shortage/Excess of Bulk Raw Materials

Shortage/Excess noticed on physical verification of bulk raw materials will be adjusted in stock only after getting approval from competent authority (CMD/Board)




Closing Stock - Shortage/Excess of Bulk Raw Matls.

It is noted that different rates are adopted by CD & UD for accounting of excess/shortages of bulk raw materials noticed on physical verification at the year end. It is decided that the rate to be adopted for accounting of excess/shortage noticed at the year end will be the weighted average consumption rate for the entire year. excess/shortage will be adjusted at the year end and monthly adjustment in consumption need not be done henceforth.

Meeting dt.24.1.97 - No.5(b)

Closing Stock - Shortage/Excess

Raw Material excess/shortages to be accounted based on quantity handled for Udyogamandal, CD and Marketing Division respectively as done in last year.


Closing Stock - Valuation

Intermediate transfer from one Division to another Division : For valuation of closing stock, the actual cost of Production of transferor unit may be adopted. Because of the above, the valuation of Factamfos at CD & Marketing, Phos Acid at CD, Ammonium Sulphate Solution at Udyogamandal, Oleum at PD may be reworked.

Meeting dt.18.6.94 - No. 4 (With auditors for Closing of Accounts)

Closing Stock - Valuation

Stock is to be valued at cost or net realisation whichever is lower. Cost to be worked out excluding interest but including administrative overheads. The element of interest will be shown separately in the cost sheet.


Closing Stock - Value of Molten Sulphur

Decision taken based on Govt. Audit comments on 1982-83 accounts:

Value of molten Sulphur is now included in the year end stock. From 83-84, value of molten Sulphur need not be included in the stock of Sulphur.

Meeting dt.25.10.83 - No. 5(i)

Closing Stock Valuation - Imp. P2O5 and Ammonia

Valuation of closing stock of Imported Phosphoric Acid and Im- ported Ammonia may be done at March weighted average rate.




Closing Stock valuation - Ammon. Sulphate

The field stock of Ammonium Sulphate is to be valued at net realisable value. Petrochemicals Division and Udyogamandal Division may make necessary entries to adjust the same. This will be discussed with auditors for final clearance.


M.I.S - Stock Value

Henceforth all the Divisions are to compute the opening stock value as at the beginning of the year reported in the monthly MIS as soon as previous years' accounts are finalised. Divisions should furnish product wise details of opening and closing stock of intermediates and finished products as at the beginning of the year, beginning of the month and close of the month (with quantity, rate and value) separately as Annexure, alongwith the MIS report from October 1996 onwards. This should tally with the stock difference shown in the working results.


Contingent Liability - Contracts remaining to be executed

Estimated amount of contracts remaining to be executed on capital account should include the jobs under R&R in Capital Budget also. For this purpose, contracts costing above Rs.5 lakhs may be considered.


Contingent Liability

Whenever demand notices are received and the same is contested by us, the same should be shown under 'Contingent Liabilities'.


Contracts - Extension of time

Problems arising out of strict implementation of Circular No.FD/I-1/54 dt.5-3-84 were discussed. Normally, prior approval of competent authority will be obtained in cases of extension of time for completion of contract. It for valid reasons, such approvals are not taken in time, in the interest of work, payments may be made, recovering liquidated damages as provided in the contract. (Also refer FM's meeting 14-2-84 Point No.1).


Contracts - Extra items on Civil work

When extra items are to be taken up for civil works, the En- gineer-in-charge will derive rates for such items in the prescribed manner (as per contract conditions), get the same accepted by the contractor and obtain prior approval/finance concurrence wherever necessary.




Free Issue Materials to Contractors - Accounting

Contractors should continue to furnish quantitative utilisation/stock statements alongwith their each Running Bill. However, settlement of stock accounts for the materials issued to the contractor will be done alongwith the final bill or as advised earlier for recoveries.


Contracts - Increase in value

Some contracts have a provision for variation of quantity/value upto a specified percentage (plus or minus). In such cases also, if the contract value exceeds 10% over the original value, sanction of HO will be obtained as per Delegation of Powers. In- crease in contract value will be determined as specified in paragraph 2 of Circular No.FD/D-4/24 dt.22-1-1980.


Sanctioning Authority - ascertaining of

Value of Contract : A doubt was raised whether customs duty, Cen- tral Excise, Sales Tax, etc. at actuals should be included in the cost of imported or indigenous items for the purpose of ascertaining sanctioning authority. It was decided that, for this purpose, the basic cost alone will be taken into account, and customs duty, central excise and sales tax will be excluded wherever, they are shown separately. However, for the purpose of financial evaluation of bids, the above will be taken into account.


Cost Audit - Standard Cost

CD and UD are to develop standard costs for all products. Cost of production as per RE may be taken as standard costs and shown in the Cost Audit Report.


Cost of production - Computation

Extraordinary items are not to be included for computation of "Cost of Production".


Demurrage and Despatch Money - Accounting

DGM(FA-CD) to ..... Demurrage claims from parties will be provided in the accounts only to the extent it is acceptable to FACT. The difference between the amount of demurrage claimed and accepted (and Provided) will not be disclosed as Contingent Liabilities.



In the case of FOB contracts, Despatch Money claim on the carriers is to be accounted only on acceptance of the claim, as per Accounting Policy.

In the case of C & F contracts, Despatch Money may continue to be accounted on assessment by us based on time sheets. The ....


Depreciation - application of

Full depreciation will be charged from the month in which the asset in put into use. For assets disposed off during the year, depreciation will be charged, including for the month in which the asset is disposed. Equipments/machineries purchased against a specific project/job will be deemed to be put into effective use on the date on which the project/job is completed and put into use, irrespective of the date of erection of individual equipments/machineries/components under the job. For furniture, etc, the Receiving Report date will be considered as the date of effective use.

Meeting dt.29.11.88 - No. A-3

Depreciation - Committee recommendation

After discussion, the recommendation of the Committee on Depre- ciation is accepted except the following :- ie, Asset transferred to another division during the year Depreciation with respect to assets transferred in the middle of the year is to be provided by the division to which assets are transferred. Trans- ferring division will not charge depreciation for the year in their books. (To take copy of the committee's recommendation).


Depreciation - Godowns, Culverts, Bridges, etc.

Depreciation @ 5% for `Field Godowns' at Marketing Division, 10% for 'Plant Godowns' at PD and @ 10% for 'Culvert & Bridges etc.' will continue to be at the same rates eventhough only 5% need to be charged as per Companies Act and give suitable notes in Annual Accounts.


Depreciation on Energy Saving and Pollution Control Eqpt

Depreciation on energy saving devices and pollution control equipments - Depreciation rates as per Income Tax Rules are to be charged for the assets listed out in the IT Rules under the above assets category from the year 83-84 onwards. This is to be debited to the account of depreciation/prior period expenses - depreciation, as the case may be.


EMD & Security Deposit - Unclaimed balances

Earnest Money Deposit & Security Deposit amounts remaining unclaimed for more than 5 years



should be reviewed and written back during 1994-95.


EMD and Security Deposits - Write back

EMD/Security Deposits outstanding more than three years be reviewed and be adjusted if there are no claims. Area/Regional Offices may be advised to examine the details also.


F I C C Entries

All entries connected with FICC are to be signed by the Depart- ment Head of Associate Finance.


F I C C - Annual Cost Data

Annual Cost Data.....Marketing overheads is to be allocated on the basis of sales quantity.


F I C C - reimbursement of additional costs

It was decided that additional repairs and maintenance cost and increase in raw material and power cost reimbursible by FICC will be accounted on accrual basis.


Financial Concurrence (Purchase Budget)

Purchase Budget : Udyogamandal Division is giving financial concurrence taking into consideration, payments made against budget provision whereas Cochin Division does this as commitment basis. For the sake of uniformity, both divisions will follow payment basis for this purpose.


Financial Concurrence - Limits

The limits fixed to the various finance officers in the divisions have been reviewed. It was decided to fix the following limits to the officers in Finance Departments.

AFMs - Items requiring the approval of Chief Engineers level & below.

DFMs/SDFMs - - do - DGMs level & below.

FM/DGM(FA) - - do - GMs level & above.



The date of receipt of the files for financial concurrence is to be recorded in the FC Register maintained by Finance.


Financial Concurrence for work order

The practice for issuing financial concurrence for work orders was reviewed. It was decided that the work orders upto a valve of Rs.10,000/- in each case need not be sent to finance for concurrence.


Financial Powers of GMs

As per delegation of powers to General Managers, consultation/ concurrence of Finance Managers should be had before exercising financial powers. Whenever the views of the Finance Manager are not accepted, such cases will require submission to the CMD for review. While the Finance Managers would normally act on the basis of the General Manager's decision in all such cases, they have been advised, that whenever any difference of opinion exists between the GM and the FM, in any case, the payments thereon should be held back, if possible, till CMD's decisions are available in each case.


Finished Goods - Non receipt after despatch

With regard to road movement of finished products, Marketing Division is to inform the production divisions the non-receipt of the materials after one month of despatch to effect recoveries from the contractors.


Finished Goods - Report on road movement

With regard to road movement of finished products, Marketing Division is to inform the production divisions, all cases of delay in delivery beyond two months of despatch to effect recoveries from the Contractors. The report is to be sent monthly to DGM(FA-CD) and FM(U) by DGM(FA-M). Nil report is also to be sent. The first such report showing the position as on 30.9.96 is to be sent by 31st October 1996 and thereafter every month by the last day of next month for the above purpose.


Finished Goods - Shortages

In Marketing Division, proposal for write off of shortage are to be put up within 30 days of the occurrence of the shortage without waiting for the completion of the backlog.

Meeting dt. 23.10.96 - No.12(c)

Minor Assets - Accounting



Assets costing less the Rs.5000/- Plant & Machinery and other items costing less than Rs.5000/- may be booked under separate GL Account with SL.

This is to be brought into the Asset schedule and 100% depreciation charged. CSC will be asked to modify the program.

"Minor Assets charged off Account" will not be operated.


Minor Assets - Accounting

Minor assets charged off should be shown as 100% depreciated instead of direct write off, which is being followed now. Action from 1994-95 onwards. In other words, such assets also to be entered through the Asset Register and written off.


Fixed Assets - Elec. Fittings - Classification

Electrical fittings of office buildings (first installations which are not treated as part of buildings), be booked under èlectrical fittings' and not buildings from the year 1988-89 onwards.


Fixed Assets - Land - Valuation

In respect of land taken in possession before cut off date, the value of the same will be calculated pro-rata and capitalised. The balance amount paid will be shown under capital work-in- progress.


Fixed Assets - Land - capitalisation

In respect of advance paid for the procurement of land, the amount will be capitalised if possession of land is taken before the cut off date.


Fixed Assets - New Quarters

The date of capitalisation of new quarters constructed will be the date on which the quarters are ready for occupation.


Fixed Assets - Profit on sale

Capital profits on sale of assets is to be credited to Capital Reserve Account.




Fixed Assets - Profit/Loss on sale

Profit on sale of assets and loss on sale of assets are now shown separately. From 1983-84, the net profit or loss on sale of assets need be shown.

Meeting dt.2.12.83 - No. XIV

Fixed Assets - Realisation on sale

In respect of sale of assets, the value received over and above the original cost will continue to be treated as Capital Reserve.


Fixed Assets - Retired Plant

Plants declared as scrap by the Board to be classified and booked as `Retired Plant'.


Ship Unloader - Classification

Ship Unloader facility is directly used in the plant and kept in a fixed position. It is not a movable equipment like other service equipment. Hence to be taken as part of Plant & Machin- ery.


Fixed Assets - Withdrawal of

The practice followed hitherto was to write off value of assets withdrawn as and when the asset is dismantled and sold. From 86-87, such write off will be made when the withdrawal is approved by the competent authority. Where break-up costs are not available, adjustments will be made on the basis of technical estimate.

Meeting dt.24.9.86 - No. 1.a

Assets Schedule - Furniture

Furniture brought from Project which was written off in earlier years and now taken into stock may be shown under sales/adjustment in the assets schedule instead of as àdditions' during the year. (FEW)


Foreign Currency - Exchange rate for accounting

In respect of raw material payments in foreign currency for which forward cover is arranged, the provision of liability will be on the basis of the exchange rate as per the forward cover. As regards other



cases, the exchange rate as on 31.3.93 will have to be taken. In case the payments are effected upto the cut off date, the actual payment is to be provided as liability.


Foreign Currency Expenditure

In the FM's meeting held on 25-10-83, it was decided that expenditure in foreign currency will be shown at gross value. CFA/HO stated that there are two types of contracts (a) where fee includes tax and (b) where tax is not included in the fee. It was decided that in respect of the former type of contracts, gross amount and in respect of the latter type of contracts net amount (excluding tax) will be shown as in the latter case the fee is payable without any deduction of amount.


Foreign Currency Liability

All liability in foreign currency will be converted at the exchange rate prevailing as on 31.3.93. In case forward cover is taken before 31.3.93, liability will be provided at the exchange rate prevailing as on 31.3.93.

Goods in transit/goods pending inspection for which payment has not been made as on 31.3.93 will be converted on the above rates.


Foreign Currency translation

For the foreign currency transactions, if the forward cover is taken after 31.3.93, the exchange rate prevailing as on 31.3.93 is to be adopted.

In respect of foreign currency transactions where the payment is to be made after 31.3.93 but before the cut off date, accounting will be on the basis of actual payment effected.

Meeting dt.23.5.93 - No. 1(a) & 1(b)

Foreign Exchange - effects of change in rates

GM(CF) asked the divisions to prepare the statements in respect of effect of changes in foreign exchange rate, as in last year, as per the Accounting Standard. The effect of changes on Stores and Spares need not be worked out as it will be difficult to identify consumption, etc.

Meeting dt.19.2.97 - No.2(e)

Forward Cover - Import of Spares

With regard to taking forward cover on purchase of imported spares under L/C it was noted that the total value of such imports (above Rs.25 lakhs value in each case), was Rs.2.5 crores only.



Further, the imports are from different countries (other than US$ also) and the weakening of the rupee against such currencies are not significant in the recent past. It was decided that forward cover need not be arranged for such imports also considering that the due dates are not exactly ascertainable and forward cover would not be effective even if taken.


Goods-in-transit - valuation

Calculation of CIF value with respect to goods in transit, duty and freight should be taken only if paid. For the purpose of goods in transit, bill of lading should be the basis and not the invoices.


Gratuity Payment - Procedure

Consequent to the formation of Gratuity Fund w.e.f. 26.3.96 the gratuity payment to employees is to be regulated as under:

Divisions have to calculate the gratuity as usual and pay the same to the employees. The amount paid as gratuity is to be debited to HO.

The amount of the Gratuity payment made alongwith the details such as - Name of the employee, the amount of gratuity, Last pay, No. of years of service are to be given so as to enable HO to claim the amount from the Fund/LIC. A copy of the statement of account duly discharged by the employee is also to be submitted as a proof for the payment.

For this purpose, Divisions may debit HO account No. GL 0700 with SL as 5352 for easy identification.


Imprest

Imprest Statements are to be counter signed by controlling officer. If any amount spent from the imprest is beyond the power of the controlling officer, approval from the competent authority is to be separately obtained by the imprest holder.

Meeting dt. 23.10.96 - No.15

Insurance - Earthquake Cover

Earthquake insurance cover need not be taken for the stocks/assets in the field godowns of Marketing Division since the contingency of risk is perceived to be low as the locations of the godowns are spread over four states.


Insurance - Overage Commission



The amount paid to Insurance Companies towards overage commission is to be accounted in Indian currency as receivable. On receipt of the amount in foreign currency, if there is any difference, the same will be adjusted appropriately in the respective years.


Insurance - Overage Premium

Claims made on account of overage premium will be accounted as per the actual amount paid. Whenever we get more than the actual amount incurred in Indian rupees due to exchange rate variation, the excess will be treated as "miscellaneous income."


Insurance charges - Accounting

Transit insurance premium paid for stores and spares is to be accounted under the head Ìnsurance Charges.'


Transit Insurance Claims

It was reported that debits for the payments made to suppliers are retained in the supplier's account even in the case of insurance claims lodged against items rejected on account of transit damage. The following accounting treatment is to be followed:

a) Where it is established that it is transit damage, the debit has to be removed from the supplier's account by charging to Factory General Charges / other General charges as the case may be.

b) However, the insurance claims against such transit damage will be removed from the claims Register only after getting approval from the competent authority.


Insurance/Railway claims - accounting


The insurance/railway claims will be treated as current year income on admittance.

Meeting dt.25.10.83 - No. 5(viii)

Inter Unit Account - Manual Register

GM(CF) informed that all the Divisions to maintain a register of inter-unit account manually and reconcile the transactions to avoid delay. (In respect of March Supplimentary entries.)

Meeting dt.14.5.96 - No. j



Interest & Bank Charges - Bill Discounting

Bill Discounting Charges: For bill discounting, there are two types of charges - one involving bank charges and the other relating to interest in respect of the period for which money is advanced by banks. The bank charges may be debited in the year in which it is incurred and the interest related charges is to be charges to the P&L Account of the respective years to which it relates. In other words, the unexpired portion of interest related charges have to be carried forward as on 31st March as prepaid expenses.


Interest & Cash Rebate - Allocation

The Interest and Cash Rebate incurred/earned by the Divisions will be transferred to HO for further allocation.


Interest & Cash Rebate - Allocation

Marketing and PD will transfer cash rebate and interest to Head Office. The cash rebate may include the entire expenditure including mixture portion. Similarly, the interest recovered on overdues by Marketing also will be transferred to HO. These transfers will take place through allocated overheads. Heads office will consider this as cash credit interest and allocate to various divisions as per the existing practice.


Interest on Suppliers' Credit

In respect of interest paid for the procurement of raw materials eventhough shown separately in the invoice/debit note, the same is to be treated as raw material cost as per the earlier practice. Cancellation charges of forward cover in respect of imported raw materials also to be taken as part of purchase cost.


Interest paid to Oil Companies - Accounting

Interest paid to Oil Companies will be treated as ìnterest' and not as `procurement cost'. Divisions to ensure that the same vendor does not change different interest rates for different divisions. Where stage-wise payments are stipulated in purchase orders, 5 days to be excluded for interest calculation purposes when interest payment is made.



Review of Ledgers

Review of ledgers should be made by officers in the level of AFMs and SDFMs on a monthly basis.



Meeting dt.27.3.89 - No. B-3

Liquidated Damages - Accounting

Liquidated damages refund received from clients of FEDO/FEW will be taken as income of the current year.


Liquidated Damages on contracts

Liquidated damages on contracts will be calculated on the actual value of contract and this may be made clear in the conditions of contract.


Liquidated Damages/Bonus for early completion


Treatment of liquidated damages for delay in completion / bonus for early completion will be as under :

a) On Civil/Electrical/Erection, etc., contracts of a revenue nature, the LD/Bonus will be credited/debited to the particular work.

b) On supply contracts, the amount will be taken to Other Income/Other Expenditure.

c) In respect of normal capital works and new projects, such income/expenditure will be credited/debited to the capital item.

If after capitalisation, there is a change in another financial year (on account of waiver of LD recoverede) the income/expenditure will be charged to revenue of the particular year. The price to be adopted for computation of LD will be as per the terms of the particular contract.

Meeting dt.25.10.83 - No. 5(vi)

Medical Advance adjustment & TDS

In the case of Medical Advance paid before 31.3.97 for which bill was not submitted, it will be carried over as Advance to the next financial year in respect of Income Tax computation also and will be treated appropriately in the computation of taxable income in the next year.

Meeting dt.19.2.97 - No.7(b)(ii)


Medical Reimbursement - CISF

CISF medical expenses will be included under medical expenses and not shown as CISF expenses.




Medical Reimbursement

Computerisation of taxable medical reimbursement will be implemented as per the report submitted by FM(F). Provision is to be made for intimation of medical reimbursement expenditure alongwith LPC to the respective divisions in the case of transfer of an employee. Committee report will be circulated to all divisions.

Meeting dt. 21.11.96 - No.11(v)

Medical Reimbursement - Procedure

As per DGM(P)EST-HO-118-dt.8.4.96, medical reimbursement above Rs.10,000/- to an employee for treatment in hospitals not approved under IT rules is to be treated as perquisite and liable to income tax. In order to streamline the procedure to implement the above, it has been decided as under:

a) Medical reimbursement expenditure is to be booked under two GL Nos. instead of one at present w.e.f. 1.4.96. The two new GL Nos. are 7888 and 7889.

b) All reimbursement of expenses incurred through "Approved Hospitals" is to be booked under GL 7888 with badge No. as SL. Reimbursement of expenses incurred other than "Approved Hospi- tals" as above are to be booked under GL No.7889 with Badge No. as SL.

c) The present GL No.7878 is withdrawn. When the reimbursement exceeds Rs.10,000/- in GL No.7889, the amount in excess of Rs.10,000/- is to be included in the Gross earnings of the employee as perquisite and income tax to be reworked accordingly. In the medical reimbursement Form, employee should indicate whether the hospital is approved or not. Finance should counter check this and accounting is to be made accordingly, based on the detailed list of approved hospitals made available by Personnel Department.


Medical Reimbursement

The cut-off date for payment of Taxable Medical reimbursement will be 15th March of each year. No payment will be effected of the taxable medical reimbursement claims received after the 15th March till the end of the Financial Year.


Medical Reimbursement - TDS

In some divisions, recovery of Income Tax on medical reimbursement exceeding Rs. 10,000/- from employees may not be possible before March 97 in view of heavy tax amount. In such cases, Income Tax will be paid by the Company and will be recovered from employees in instalments.

Meeting dt.19.2.97 - No.7(b)(i)



Own Jobs - capitalisation

Review of CAG's comments on accounts for the year ended 31-3-85. Comment 5. Service for own units:

The practice of capitalisation of jobs at agreed price will continue.

Meeting dt.29.4.86

Own Jobs - Debit Notes

It is decided that all Divisions other than FEDO & FEW are to raise debit notes on actual basis for work/service to other Divisions and not on man-hour rates adopted by FEDO. For calculation, actual salary, PF + 200% overheads may be taken. FEDO/FEW to raise debit notes based on man-hour cost (without profit) as followed now.

Meeting dt.14.5.96 - No. k

Inter-divisional jobs - Debit Notes

Debit Notes for inter-divisional jobs undertaken by FEDO & FEW may be finalised on a provisional basis with a reasonable accuracy. The debits thus finalised need not be reopened for minor differences found subsequently.


Own jobs - Debit Notes by FEDO & FEW

Every year, by 1st week of October, FEW and FEDO should send Debit Notes to concerned divisions for expenditure (actual/provisional) incurred upto September for works carried out for the Divisions, where the jobs are not completed.


Work-in-Progress - inter-divisional jobs

For inter-divisional jobs, the work-in-progress is to be shown in the books of division to which it pertains, except with regard to certain jobs where expenditure is incurred by FEDO. In such cases, this may be continued in FEDO. It was mentioned that in recent jobs, respective divisions are incurring the expenditure.


Passing of vouchers - limit

The following limits have been fixed among the Finance Officers for passing of vouchers.

AAOs(Mgl) - upto Rs.25,000/-

AOs - upto Rs.1 lakh



AFMs - No limit.

The voucher passing officer should be different from the person who has prepared the voucher. The above limits are not applicable to Area Offices and Regional offices of Marketing Division.

Meeting dt.30.12.86 - No. I.1


Issue of post-dated cheques for raw materials

It is decided to pass entry of the post dated cheques only on the date of the cheques.


Power transferred from PD to UDL

For captive power transferred from ASCL to Udyogamandal, ASCL may raise debit in Udyogamandal at the same rate adopted by Udyoga- mandal for power to ASCL.


Profit/ Loss (FEDO) - reckoning of

In respect of FEDO contracts, the existing policy of reckoning profit on the value of major components exceeding Rs. 20 lakhs individually at 50% of the estimated profit in a year after physical completion exceeds 25% will be continued. Losses arising on contracts will be provided in the accounts in the proportion to the stage of completion.


Profit/ Loss (FEW) - reckoning of

In respect of FEW contracts, 50% of the profit will be taken after physical completion exceeds 75%. Losses arising on contracts will be provided in the accounts in the proportion to the stage of completion.


Profit on FEDO jobs - reckoning of

In respect of Design & Engineering Consultancy Contracts undertaken by FEDO, profit will be reckoned at the following rates effective from 1984-85.

Extent of Completion Profit to be taken

Upto 25% No Profit

25% to 50% 50% of estimated profit





On Completion 100% of estimated profit

In working out estimated profit, all known liabilities including liquidated damages, if any, would be taken into consideration. A provision of 1% of the value of contract will be made for contractual obligations in respect of completed contracts under warranty. Losses arising on contracts will be adjusted based on estimated evaluation proportionate to the stage of completion.


Profit on FEW jobs - reckoning of

In respect of contracts undertaken by FEW, 50% of the estimated profit on jobs, the extended completion of which reaches 75% will be taken. In working out estimated profit, all known liabilities including liquidated damages, if any, would be taken into consideration. A provision of 1% of the value of contract will be made for contractual obligations in respect of completed contracts under warranty. Losses arising on contracts will be adjusted based on estimated evaluation proportionate to the state of completion.

Meeting dt.13.11.84 - No. 10

R & R and Goods-in-transit - Classification

As discussed in the earlier meeting dated 14.5.92, Para No.8, R&R items including goods-in-transit are to be classified under Current Assets.


Salary - CISF - Classification

It was clarified by DGM(FA-CD) & DGM(FA-U)that the expenditure on CISF salary is classified under "Salaries & Wages." It was decided to continue that existing practice of classification. This is in supercession of Point No.II-8 recorded in the 36th meeting (30-12-86) where it was decided to classify the expenditure on CISF salary under Factory General Charges).

Meeting dt.31.1.87 - No. I.4

Sales Tax - Accounting

Surcharge on Sales Tax passed on by Marketing Division to the other Divisions will be accounted under Rates and Taxes. Surcharge on Sales Tax of contract works incurred by FEDO and FEW will be accounted as cost of the job.


Sales Tax - Issue of Form 18



As per legal opinion obtained, Form 18 is to be issued from 1.1.97 only to the extent of Naphtha purchases used for manufacture of Urea & NP 20:20 proportionate to the sale within Kerala. Formal communication of the decision accordingly will be issued on approval of the proposal put up to CMD. The modus operandi of issue of Form 18 will be as follows :

Marketing Division will inform both UD & CD the proportion of sales of Urea and NP 20:20 in Kerala every month. As the above data will not be available for the immediate preceding month, the data will be given for the month before the immediately preceding month. For example, for the month of june, data for April will be given and so on. UD & CD will apply this proportion for determining the quantity of Naphtha for which Form 18 can be issued within Kerala as reported by Marketing in May and the Oil Compa- nies will be requested to make necessary adjustments and pass on debit/credit to us. UD & Cd will discuss ....


Sales Tax Exemption - Form H

PD has to avail ST. exemption for bags procured for Export Sales, by issuing Form H. DGM(FA-PD) is to ensure that the Form H register is presented for Sales Tax assessment purpose in future.

Meeting dt. 23.10.96 - No.12(e)

Capital Stores

Unutilised Capital Stores - After completion of a project, immediate action is to be initiated to review and account the left over capital stores by -

i) Transfer to General Stores under existing code numbers.

ii) If it is a new item, transfer to General Stores after certification.

iii) To advise Division heads for disposal action on ascertaining store items that are not required to be retained for use.

Meeting dt. 23.10.96 - No.12(a)

Stores - Damaged Materials returned

From 1-4-1986, a value will be assigned to damaged materials returned to salvage stores.

Meeting dt.24.9.86 - No. 1.d

Stores - Excess Packing Materials


Excess of Packing Materials found on physical verification will continue to be credited to Other Income.

Meeting dt.25.10.83 - No. 5(ii)



Stores - Missing GRNs.

It was decided that Finance Department will inform the stores Department regarding the missing of GRNs on a month to month basis.

Meeting dt.29.3.89 - No. 9 (at C.D. on Stores)

Provision for Obsolescence of Stores

Provision for obsolete/surplus stores is made based on Stock schedule as at the end of the previous year. In order to have a more realistic provision, the book value of sales and consumption of such stores items during the year should be considered while making provision at the end of the current year.


Stores - Security for Loan of "Controlled Items"

In respect of controlled items like Cement, Steel, etc., security for loaning these materials will be 150 % of the open market value and not the actual cost.


Stores - left over by Projects

Left over capital items pertaining to completed projects remaining in stores in Cochin Division to be taken into stock on technical evaluation.


Stores with Plant - Packing Materials

Packing materials and catalysts only will be considered as stores with plant.

Meeting dt.24.9.86 - No. 1.c

Physical Verification of stores - shortages

Physical verification shortage noticed is to be adjusted against the consumption consistent with past practice.



Transfer Price - Changes

The transfer price is to be changed, whenever there is a change in selling price finalisation of transfer price on stocks held at the time of change in price.




Transfer price - Accounting entries

From 1984-85 accounting entries for transfer price will be made at budgeted rate on a monthly basis, necessary adjustments being made at the year end based on actuals.


Welfare Expenses - Electricity to Township


Electricity supplied to township will be taken under Welfare expenses from 83-84. Whenever necessary, apportionment will be made on the basis of technical assessment. For final accounts, appropriate reclassification for 82-83 should also be done.

Meeting dt.25.10.83 - No. 5(iv)

Meeting dt.29.4.86

Work-in-Progress - Valuation

For the valuation of work-in-progress (outside jobs), interest may be excluded.




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