Summer Internship Project Report

On
STUDY ON E-PROCUREMENT & IMPORT
PAYMENT OF ONC
Submitted in partial fulfilment for the award of the Post Graduate Diploma in Management
Su!mitte" #$
Mu%un" &um'r Mishr'
Ro(( No)* M+,-.,./
Un"er the 0ui"'nce o1
Mr) Run'% Sin0h'ni'
APEE2AY INSTITUTE OF TEC3NO4OY
SC3OO4 OF MANAEMENT & COMPUTER SCIENCE
REATER NOIDA
+,-.-+,-/
DEC4ARATION
The work in this summer internship project report is based on the original work carried out by me towards the
partial fulfillment for the award of Post Graduate Diploma in Management. No part of this report has been
submitted elsewhere for any other degree or qualification and it is all my own work.
5Mu%un" &um'r Mishr'6
Ro(( No)* M+,-.,./
2
Page|
CERTIFICATE
This is to certify that Mu%un" &um'r Mishr' oll No M+,-.,./ a student of Apeej'$ Institute o1
Techno(o0$-Schoo( o1 M'n'0ement & Computer Science7 re'ter Noi"' 5PDM +,-.-+,-/6 has done the
project work on 8or%in0 C'pit'( M'n'0ement & R'tio An'($sis under my super!ision and guidance. "
understand this project report is being submitted for award of Post Graduate Diploma in Management. To the
best of my knowledge# this report has not been submitted to any other "nstitute$%ni!ersity for award of any
other degree$Diploma$&ertificate.
During this period# " ha!e found his work satisfactory.
Mr) Run'% Sin0h'ni'
3
Page|
AC&NO84EDMENT
In ths hghy compex socety no work can be accompshed by a snge ndvdua
but needs nspraton and sncere gudance of nteectuas.
Wth an overwhemng sense of obgatons, I ava ths opportunty to express my
deep sense of grattude to Mr. Abh|t Saha who gave me the opportunty to work
wth nance secton attached wth corporate matera management, Scope Mnar
Deh.
I emphatcay express my profound thanks and heartfet grattude to my gude
Mr. Rounak Snghana for hs vauabe gudance, tmey suggestons and constant
encouragement durng the entre course of my tranng.
Fnay, I thank a those who heped me drecty and ndrecty durng the course
of my summer tranng.
5Mu%un" &um'r Mishr'6
4
Table of Content
Acknowedgement
Page No.
Chapter-1:....................................... Executve Summary
6
Chapter-2:......................................Ob|ectve
7
Chapter-3:......................................Introducton
8
Hstory of ONGC
10
Achevement
16
Msson & Vsson
20
Core Vaue
21
Chapter-4:.....................................Company proe
22
Chapter-5:.....................................Busness of ONGC
28
Prmary
28
Secondary
31
Chapter-6:....................................Matera Management
35
Introducton
35
ABC Anayss
43
ONGC Centrazed procurement
45
E-Procurement
48
5
Busness processes
56
E-Tenderng
57
Open Tender-2 bd system
57
Bref expanaton
57
Process Fow Chat
61
Genera expanaton
62
Ouck Tour of ONGC E-Procurement
76
Open Tender- snge bd system
87
Lmted Tender- snge bd system
88
Snge Tender
88
Payment Process
89
Indgenous Payment
89
Import Payment
90
Letter of Credt Openng
90
Vettng
122
Document Retrement
123
ICICI Tender Fees
124
Logstcs Invoce Vercaton (LIV)
125
6
Chapter-7:................................................Fnanca Prcng Pocy
130
Chapter-8:..............................................Fndng
134
Chapter-9:.............................................Suggeston
135
Annexure
137
Bbography
143
C3APTER - -
E9ecuti:e Summ'r$
"# 'weta# a student of "shan "nstitute (f Management )nd Technology# Greater Noida# got an
opportunity to carry out my internship project in (NG&# Delhi as a part of the curriculum.
This prestigious organi*ation is one of the nine Na!ratnas recogni*ed by the "ndian Go!t.
During my internship tenure at (NG&# " stri!ed to in!estigate and study the e+procurement
system , import payment of (NG& thoroughly. The objecti!e of my project is to highlight
the benefits of the e+procurement process to the parent organi*ation in terms of reduced
material and operating costs# impro!ed compliance# and increased total spend under
management and how company make payment nationally and internationally . This is a new
7
and e-citing area of study with unprecedented benefits if the opportunities are identified and
pursued.
"n order to achie!e the aforementioned objecti!e# " carried out a thorough preliminary
research of the entire procurement process. " had a detailed study of the e-isting documented
records of such procurement process. " also had the opportunity to study the impact of the
no!ice procedure of the no!el payment terms on international clients and suppliers by
analy*ing them indi!idually. " also had se!eral brainstorming sessions with my fellow
e-ecuti!e trainees and my senior company e-ecuti!es regarding the indispensable benefits of
this system
This report shows how new dimension such as e!erse )uction# ha!e been added to the
procurement system which enables the company to get the quality product at the most
reasonable prices. This work also reflects the process of making payments to the international
suppliers using a financial instrument known as .etter of &redit. "t also emphasi*es on the
!arious security concerned issues related to the /+Procurement
8
C3APTER - +
OB|ECTIVE
(01/&T"2/' (3 (NG& 4T5/ D6N)M"&' (3 '%&&/''7
The objecti!es of company play a !ital part in the success of e!ery company and it also holds
true in the conte-t of (NG& as it has a set of objecti!es which not only guide the company
towards success but also fulfill its corporate social responsibilities efficiently hence ensuring
that the !ision of the company 8To be a world class (il and Gas &ompany integrated in
energy business with dominant "ndian leadership and global presence9 can be fulfilled. The
objecti!es of (NG& are as follows:+
(ptimi*e production of hydrocarbons.
'elf+reliance in technology.
Promoting indigenous efforts in oil , gas related equipment# materials and ser!ices.
)ssist in conser!ation of hydrocarbons# more efficient use of energy and de!elopment
of alternati!e sources of energy.
/n!ironment protection.
Generate adequate resources for rein!estment.
De!elop scientifically oriented and technically competent human resource through
moti!ation and training
C3APTER - .
9
INTRODUCTION
Oi( 'n" N'tur'( 's Corpor'tion 4imite" 4ONC7 4incorporated on 1une ;<# =>><7 is an
"ndian public sector petroleum company. "t is a 3ortune Global ?@@ company ranked <<?th#
and contributes AAB of "ndiaCs crude oil production and D=B of "ndiaCs natural gas
production. "t is the highest profit making corporation in "ndia. "t was set up as a commission
on )ugust =E# =>?F. "ndian go!ernment holds AE.=EB equity stake in this company.
(NG& is engaged in e-ploration and production acti!ities. "t is in!ol!ed in e-ploring for and
e-ploiting hydrocarbons in ;F sedimentary basins of "ndia. "t produces about <@B of "ndiaCs
crude oil requirement. "t owns and operates more than ==#@@@ kilometers of pipelines in "ndia.
%ntil recently 4March ;@@A7 it was the largest company in terms of market cap in "ndia.
ONC is the 1u(($;inte0r'te" petro(eum comp'n$ in In"i'7 oper'tin0 '(on0 the entire
h$"roc'r!on :'(ue ch'in*
5olds largest share of hydrocarbon acreages in "ndia.
&ontributes o!er D@ per cent of "ndianGs oil and gas production.
)bout one tenth of "ndian refining capacity.
&reated a record of sorts by turning Mangalore efinery and Petrochemicals .imited
around from being a stretcher case for referral to 0"3 to the 0'/ Top <@# within a
year.
"nterests in .NG and product transportation business.
(NG& has single+handedly scripted "ndiaGs hydrocarbon saga by:
/stablishing F.F= billion tonnes of "n+place hydrocarbon reser!es with more than <@@
disco!eries of oil and gasH in fact# F out of the A producing basins ha!e been
disco!ered by (NG&: out of these "n+place hydrocarbons in domestic acreages#
%ltimate eser!es are ;.<F 0illion Metric tonnes 40MT7 of (il plus (il /qui!alent
Gas 4(I(/G7.
10
&umulati!ely producing ADD.;A< Million Metric Tonnes 4MMT7 of crude and EF<
0illion &ubic Meters 40&M7 of Natural Gas# from === fields.
(NG& has bagged D? of the =F; 0locks 4more than ?@B7 awarded in the F rounds of
bidding# under the New /-ploration .icensing Policy 4N/.P7 of the "ndian
Go!ernment.
(NG&Gs wholly+owned subsidiary (NG& 2idesh .td. 4(2.7 is the biggest "ndian
multinational# with EE (il , Gas projects 4A of them producing7 in =D countries# i.e.
2ietnam# 'udan# ussia# "raq# "ran# Myanmar# .ibya# &uba# &olombia# Nigeria#
Nigeria 'ao Tome 1DJ# /gypt# 0ra*il# &ongo# Turkmenistan# 'yria# 2ene*uela and
%nited Kingdom. (2. has a committed o!erseas in!estment of o!er ? billion %'
dollars.
Intern'tion'( r'n%in0
(NG& ranks as the Numero %no (il , Gas /-ploration , Production 4/,P7 &ompany in
the world# as per Platts ;?@ Global /nergy &ompanies .ist for the year ;@@D based on
assets# re!enues# profits and return on in!ested capital 4("&7.
(NG& ranks ;@th among the Global publicly+listed /nergy companies as per LP3& /nergy
?@9 41an ;@@D7
(NG& is the only &ompany from "ndia in the 3ortune Maga*ineGs list of the MorldGs Most
)dmired &ompanies ;@@A.
(ccupies =?;nd rank in 83orbes Global ;@@@9 ;@@> list 4up EF notches than last year7 of
the elite companies across the worldH based on sales# profits# assets and market !aluation
during the last fiscal. "n terms of profits# (NG& maintains its top rank from "ndia.
(NG& ranked <<?th position as per 3ortune Global ?@@ + ;@@D listH up from <F>th rank
last year# based on re!enues# profits# assets and shareholderGs equity. (NG& maintains top
rank in terms of profits among se!en companies from "ndia in the list.
11
3istor$ o1 ONC
1947-1960
Durng the perod of pre-ndependence perod, the Assam O Company n the
northeastern and Attock O Company n northwestern part of the undvded Inda
were the ony o Companes producng o n the country, wth mnma
exporaton nput.
After ndependence, the natona Government reazed the mportance o and
gas for rapd ndustra deveopment and ts strategc roe n defense.
Before 1955, prvate o companes many carred out exporaton of hydrocarbon
resources of Inda. In Assam, the Assam O Company was producng o at Dgbo
(dscovered n 1889) and the O Inda Ltd. (a 50% |ont venture between
Government of Inda and Burmah O Company) was engaged n deveopng two
newy dscovered arge eds Naharkatya and Moran n Assam. argey
unexpored.
In 1955, Government of Inda decded to deveop the o and natura gas
resources n the varous regons of the country as part of the Pubc Sector
deveopment. Wth ths ob|ectve, an O and Natura Gas Drectorate was set up
towards the end of 1955.
A deegaton under the eadershp of Mr. K D Mavya, the then Mnster of Natura
Resources, vsted severa European countres to study the status of o ndustry
n those countres and to factate the tranng of Indan professonas for
exporng potenta o and gas reserves. Foregn experts from USA, West
Germany, Romana and erstwhe U.S.S.R vsted Inda and heped the
government wth ther expertse. Fnay, the vstng Sovet experts drew up a
detaed pan for geoogca and geophysca surveys and drng operatons to be
carred out n the 2nd Fve Year Pan (1956-57 to 1960-61).
In Apr 1956, the Government of Inda adopted the Industra Pocy Resouton,
whch paced mnera o ndustry among the schedue 'A' ndustres, the future
deveopment of whch was to be the soe and excusve responsbty of the
12
state.
After the formaton of the O and Natura Gas Drectorate, t became apparent
that t woud not be possbe for the Drectorate wth ts mted nanca and
admnstratve powers as subordnate omce of the Government, to functon
emcenty. So n August, 1956, the Drectorate was rased to the status of a
commsson wth enhanced powers, athough t contnued to be under the
government. In October 1959, the Commsson was converted nto a statutory
body by an act of the Indan Parament, whch enhanced powers of the
commsson further. The man functons of the O and Natura Gas Commsson
sub|ect to the provsons of the Act, were "to pan, promote, organze and
mpement programmes for deveopment of Petroeum Resources and the
producton and sae of petroeum and petroeum products produced by t, and to
perform such other functons as the Centra Government may, from tme to tme,
assgn to t ". The act further outned the actvtes and steps to be taken by
ONGC n fung ts mandate.
1961-1990
Snce ts foundaton stone was ad, ONGC s transformng Indas vew towards
O and Natura Gas by exceng n the countrys mted upstream capabtes
nto a arge vabe payng ed. ONGC, snce 1959, has made ts presence noted
n most parts of Inda and n overseas terrtores. ONGC found new resources n
Assam and aso estabshed the new o provnce n Cambay basn (Gu|arat). In
1970 wth the dscovery of Bombay Hgh (now known as Mumba Hgh), ONGC
went ohshore. The most mportant contrbuton of ONGC, however, s ts sef-
reance and deveopment of core competence n exporaton and producton
actvtes at a gobay compettve eve.
AFTER 1990
After the berazaton of then Indan economy n 1991, the Indan Government
began to dereguate and de-cense the core sectors (ncudng petroeum sector)
wth parta dsnvestments of government equty n Pubc Sector Undertakngs
and other measures. As a consequence thereof, ONGC was re-organzed as a
mted Company under the Company's Act, 1956 n February 1994.
13
After the converson of busness of the erstwhe O & Natura Gas Commsson to
that of O & Natura Gas Corporaton Lmted n 1993, the Government
dsnvested 2 per cent of ts shares through compettve bddng. Subsequenty,
ONGC expanded ts equty by another 2 per cent by oherng shares to ts
empoyees.
Durng March 1999, ONGC, Indan O Corporaton (IOC) - a downstream gant and
Gas Authorty of Inda Lmted (GAIL) - the ony gas marketng company, agreed
to have cross hodng n each other's stock. Ths paved the way for ong-term
strategc aances both for the domestc and overseas busness opportuntes n
the energy vaue chan, amongst themseves. Consequent to ths the
Government sod oh 10 per cent of ts share hodng n ONGC to IOC and 2.5 per
cent to GAIL. Wth ths, the Government hodng n ONGC came down to 84.11
per cent.
In the year 2002-03, after takng over MRPL from the A V Bra Group, ONGC
dversed nto the downstream sector. ONGC w soon be enterng nto the
retang busness. ONGC has aso entered the goba ed through ts subsdary,
ONGC Vdesh Ltd. (OVL). ONGC has made ma|or nvestments n Vetnam,
Sakhan and Sudan and earned ts rst hydrocarbon revenue from ts nvestment
n Vetnam
HISTORY OF OIL IN INDIA AND ONGC
14
1867 Asas rst successfu mechancay o we was dred on 26
th
May 1867 at Makum.
1889 We No.s 1 spuded n Dgbo by the M/s AR&T Co. n Sep.
1893 A sma renery was erected at Margherta.
1901 Dgbo renery was commssoned whch s st runnng.
1931 Burma O Company Ltd. At we No.s 5 n Masmpur found
hgh- pressure gas.
1952 Assam O Company supded We No.s 1 at Nahorkatya on 26
th
May.
1955 The O & Natura Gas Dvson was set up by Govt. of Inda.
1956 O & Natura Gas Dvson converted nto a Drectorate n May
and Commsson n August.
1958 Gas struck n |awaamukh.We No.s 1 Cambay spuded n by
ONGC and competed as a producer.
1959 O Inda Pvt. Ltd., ncorporated on 18.02.59.ONGC converted
nto statutory body by Act of Parament.
1960 O struck at Ankeshwar and Rudrasagar by ONGC.
1961 O Struck n Kao by ONGC.
1962 Frst pubc sector renery started at Guwahat. Naharkota-
Guwahat ppene commssoned on 26.4.1962.
1963 O struck n Sanand and Nawagam n Gu|arat by ONGC.
Ohshore sesmc started n Guf of Cambay.
1964 O dscovered n Lakwa by ONGC.
1965 Ankeshwar to Koya ppe ne commssoned for o
dspatched to Gu|arat Renery
1966 O dscovered n Geek by ONGC.
15
1969 ONGC competed drng of 700 wes.
1970 Inda rst ohshore we spuded n the Guf of Cambay on 14
th

March.
1973 ONGC competed drng of 1000
th
wes.
1974 ONGC entered n ohshore drng on 31.1.74 usng the dr
shp Sagar Samrat.O struck on 19
th
February.
1976 Mumba hgh put nto commerca producton by ONGC, whch s st
deverng Goden Eggs to ONGC and Inda.
1978 Gas suppy from Mumba Ohshore started for commerca use .e.
power generaton and fertzer etc.
1980 Ratanagr structure found wth O and Gas wth Mumba Hgh.
1984-85 Drng commences at Narmanam n the Cauvery Basn and
O strkes.
1985-86 LPG pant commssoned by ONGC at Uran.
1986-87 O strkes n Tapt ohshore area and Namt structure n
Assam.
1987-88 Mumba-Oh-shore Gas started n HB| ppene.
1989-90 ONGC dscovered South Heera ed n Mumba Ohshore.
ONGC
western ohshore producton reached at a peak of 21.72 MMT.
1993-94 ONGC producton from western ohshore to ow at 15.73 MMT.
Neeam
deveopment competed. ONGC entered nto Venture Corporaton for
deveopment of
Ravva, Md and South Tapt, Mukta and Panna eds.
1994-95 Producton from Western Ohshore agan pcks up to 20.23
MMT wthn one year.
1995-96 ONGC o producton reached to 31.64 MMT and gas
producton of
16
BCM.
1996-97 Physca performance of ONGC remans mxed. There n
stagnaton n
o producton but severa poces decson has taken to ncrease the
producton and
growth through new ntatves and dverscaton. Few are as foows: -
- Deep-sea exporaton.
- Coo Bed Methane.
- Paraxyene Pant at Hazra.
- Lqueed Natura Gas Pant/Termna n |ont Venture.
- Strategy to enhance o recovery n Neeam ed.

2002-03 Crude producton ncreased by 0.5 mon Mt, neary 10%.
- Foregn currency oans of Rs 24,753 Mon pre-pad, wth sgncant
reducton n nterest charges and achevng "dept-free" status wth dept
equty rato of 0.02:1.
- Package nsurance cover for US$ 14 Bon renewed wthout any
reducton n scope, restrctng ncrementa premum beow other Indan
Corporate.
2004-05 Earned hghest prot regstered so far by any Indan
company, .e.12983.05 crores.
-Net saes ncreased to Rs. 4636294 crores.
2006-07 Hghest In-pace O & Gas reserve accreton of 169.52 MTOE
n eeven
years; nnth tme crossed the 150 MTOE mestones n 51 years of
operaton. Utmate
Reserve accreton stands at 65.56 MTOE.
17
Achevement of ONGC
(NG& has achie!ed the distinction of the countryGs Most 2aluable &orporateH this is an
unmatched performance by a Public 'ector /nterprise# perhaps even n the goba
context. Few of ts achevement s mentoned beow:
=. (NG& is the first N e!er and only "ndian company to ha!e featured in the list of
3(T%N/ M('T )DM"/D &(MP)N"/' 4;@@A7. "n this list the company has
been admired on nine attributes !i*. )bility to attract and retain talented people#
Ouality of management# 'ocial responsibility to the community and en!ironment#
"nno!ati!eness# Ouality of product or ser!ices# Mise use of corporate assets# 3inancial
soundness# .ong term in!estment !alue and /ffecti!eness in doing business globally.
;. (NG& ranks as the Numero %no (il , Gas /-ploration , Production 4/,P7
&ompany in the world# as per Platts ;?@ Global /nergy &ompanies .ist for the year
;@@D based on )ssets# e!enues# Profits and eturn on "n!ested &apital 4("&7.
<. (NG& ranks ;@th among the Global publicly+listed /nergy companies as per LP3&
/nergy ?@9 41an ;@@D7
E. (NG& is the only &ompany from "ndia in the 3ortune Maga*ineGs list of the MorldGs
Most )dmired &ompanies ;@@A.
?. (ccupies =?;nd rank in 83orbes Global ;@@@9 ;@@> list 4up EF notches than last year7
of the elite companies across the worldH based on sales# profits# assets and market
!aluation during the last fiscal. "n terms of profits# (NG& maintains its top rank from
"ndia.
F. (NG& ranked <<?th position as per 3ortune Global ?@@ + ;@@D listH up from <F>th
rank last year# based on re!enues# profits# assets and shareholderGs equity. (NG&
maintains top rank in terms of profits among se!en companies from "ndia in the list.
18
A. /stablishing F.F= billion tonnes of "n+place hydrocarbon reser!es with more than <@@
disco!eries of oil and gasH in fact# F out of the A producing basins ha!e been
disco!ered by (NG&: out of these "n+place hydrocarbons in domestic acreages#
%ltimate eser!es are ;.<F 0illion Metric tonnes 40MT7 of (il Plus (il /qui!alent
Gas 4(I(/G7.
D. &umulati!ely producing ADD.;A< Million Metric Tonnes 4MMT7 of crude and EF<
0illion &ubic Meters 40&M7 of Natural Gas# from === fields.
>. (NG& has bagged D? of the =F; 0locks 4more than ?@B7 awarded in the F rounds of
bidding# under the New /-ploration .icensing Policy 4N/.P7 of the "ndian
Go!ernment.
=@. (NG&Gs wholly+owned subsidiary (NG& 2idesh .td. 4(2.7 is the biggest "ndian
multinational# with EE (il , Gas projects 4A of them producing7 in =D countries# i.e.
2ietnam# 'udan# ussia# "raq# "ran# Myanmar# .ibya# &uba# &olombia# Nigeria#
Nigeria 'ao Tome 1DJ# /gypt# 0ra*il# &ongo# Turkmenistan# 'yria# 2ene*uela and
%nited Kingdom. (2. has a committed o!erseas in!estment of o!er ? billion %'
dollars.
In"i'<s Most ='(u'!(e Pu!(ic Sector Enterprise
=. anked as the most respected Public /nterprise in "ndia in ;@@A 80usiness Morld
'ur!ey# with =>th position in the league of the most+respected "ndian &orporate4s7.
;. ated L/-cellentG in M(% Performance ating for ;@@F+@A by the Department of
Public /nterprises# Ministry of 5ea!y "ndustries in Public /nterprises# G(".
19
<. (il "ndustry 'afety Directorate 4("'D7 has selected )hmedabad )sset and MP. for
the year ;@@F+@A 4as number one in Group+E category 4(il , Gas )ssets7 and 'econd
in Group+= efinery category respecti!ely7.
E. Topped the !isibility metrics in "ndian (il and Gas 'ector and the only P'% in the top
=@ list of "ndian &orporate newsmakers.
?. 8Golden Peacock Global )ward ;@@A for /-cellence in &orporate Go!ernance ;@@A9#
for the <rd consecuti!e time# conferred by Morld &ouncil for &orporate Go!ernance.
F. 0agged the co!eted winnerGs trophy of the maiden 8/arth &are )ward for e-cellence
in climate change mitigation and adoption9 under the category of G5G mitigation in
the small$medium and large enterprises.
A. &onferred with 8"nfraline /nergy /-cellence )ward9 for its ser!ices to the Nation in
(il , Gas /-ploration and Production category.
D. anked <;Fth in 3inancial Times Global ?@@ .ist by market capH first among "ndian
&orporates.
>. anked =<<rd in 3orbes E@@ Top Global &orporates by market capH first among "ndian
&orporates.
=@. anked =st in /conomic Times ?@@ &orporate .ist by net profit and market cap
==. anked =st in 0usiness Today ?@@ .ist by net profit.
=;. anked =st in 0usiness Today+'tern 'tewart 'tudy of ?@@ "ndian &orporates for
highest+e!er Market 2alue )dded 4M2)7. (NG& is the only P'% which has both
20
M2) and /2) positi!e.
=<. 0estowed with 8)mity )ward for /-cellence9 in &ost Management.
(NG& is the only fullyNintegrated petroleum company in "ndia# operating along the entire
hydrocarbon !alue chain:
=. 5olds largest share of hydrocarbon acreages in "ndia.
;. &ontributes o!er D@ per cent of "ndianGs oil and gas production.
<. )bout one tenth of "ndian refining capacity.
E. &reated a record of sorts by turning Mangalore efinery and Petrochemicals.
?. .imited around from being a stretcher case for referral to 0"3 to the 0'/ Top <@#
within a year.
F. "nterests in .NG and product transportation business.

MISSION & VISSION
Vsson
To be a word cass O and Gas Company ntegrated n energy busness wth
domnant Indan eadershp and goba presence.
Msson
Word Cass
21
Dedcated to exceence by everagng compettve advantages n R&D and
technoogy wth nvoved peope.
Imbbe hgh standards of busness ethcs and organzatona vaues.
Abdng commtment to safety, heath and envronment to enrch quaty of
communty fe.
Foster a cuture of trust, openness and mutua concern to make workng a
stmuatng and chaengng experence for our peope.
Strve for customer deght through quaty products and servces.
Integrated n Energy Busness

Focus on domestc and nternatona o and gas exporaton and
producton busness opportuntes.
Provde vaue nkages n other sectors of energy busness.
Create growth opportuntes and maxmze sharehoder vaue.
Domnant Indan Leadershp
Retan domnant poston n Indan petroeum sector and enhance Indas
energy avaabty.
Core vaue
Patents
Strong brand names
Good reputaton among customers.
Favorabe excess to dstrbuton networks etc.

22
C3APTER - >
Comp'n$ Pro1i(e
OIL AND NATURAL GAS CORPORATION LTD
Kesha!a De!a Mala!iya reali*ed the importance of an indigenous petroleum industry and
laid the foundation of (". )ND N)T%). G)' &(P()T"(N .TD# 4(NG&7 in
)ugust# =>?F.
23
(". )ND N)T%). G)' &(P()T"(N .TD# 4(NG&7 today is the premier "ndian
industry effecti!ely participating in efficient implementation of both the economic as well as
the social mission of a national industry. "ts growth has been one of consistent stability and
ascending producti!ity# matching international performance makers# through inno!ati!e
approach and participati!e management.
(NG& operates in the upstream sector of the petroleum industry on the unstructured
premises of accepting the intellectual softwareGs# geological thoughts and perceptions of the
petroleum geoscientists# as its basic raw materials. %ntil today# there has been no tool or
technique that can directly oil within the earth crust. &onsequently# oil e-ploration has e!er
been a highly probabilistic and cannot be defined within the confine of the scales and
measures of the con!entional engineering "NP%T and (%TP%T ratios. "n oil e-ploration
acti!ity# input is deterministic# but output is probabilistic. "t is a high risk and possibly high
reward business.
3urther# oil e-ploration and production acti!ities are multi+disciplinary# and the industry
constantly operates under a syndrome of high+!alue high technology 4of high rate of
obsolescence7 that mostly create compulsions for massi!e in!estment in e-ploration
e-ponentially because the LNew 3indsG of oil deposits progressi!ely become more and more
scarce and reco!ery from LoldG fields become costlier.
"mpressions often are focused in the form that (NG& is an "sland of prosperity# and thus is#
e-pected to pro!ide high measures of !arious subsidies to all in !arious types of industries in
the national as well as the pri!ate sector. Milling or otherwise# (NG& has been pro!iding
such LsupportG ser!ices to many "ndian "ndustries# often at the cost of depletion of its logically
earned income and profits.
(NG& is a performing national industry# constantly achie!ing commanding heights of
performance. "ts attitudinal orientation is T( D( 0/TT/ T5/ T5"NG' 0/"NG D(N/
M/... "n this document# its structural fabrics# management perceptions# practices and
performance ha!e been briefly profiled. (NG& assures that its main aim is to accelerate the
progress of the "ndian petroleum industry that would lead to the consolidation of the "ndian
/nergy 'ecurity.
/-ploration for hydrocarbons is a comple- process starting with prognostication and
in!ol!ing the entire gamut of acti!ities like geo+scientific sur!eys# drilling drawing up
24
technological schemes# reser!oir assessment# field delineation etc. There is no pro!en method
of direct detection of hydrocarbonsH the only definite means of locating oil is through drilling.
The two key words in the business of oil e-ploration are perse!erance and ability to take risk.
CORPORATI?ATION OF ONC
@Oi( 'n" N'tur'( 's Corpor'tion 4imite"A B's incorpor'te" un"er the
companies )ct# =>?F on 1une ;<# =>><. The same was incorporated to the decision of the
go!t. to con!ert @Oi( 'n" N'tur'( 's Corpor'tion) Tr'ns1er o1 un"er t'%in0 'n" Repe'(
Act7 -CC.9 was passed on E
th
'eptember =>>< pro!iding that the undertaking of the
commission shall be transferred to and !ested in the corporation with effect from an
appointed day to be notified by the Go!t.# through a separate notification. The Go!t. notified
3eb. =# =>>E as the appointed day. )ccordingly with affect from 3eb. =# =>>E the undertaking
of the erstwhile 8(il and Natural Gas &orporation including all the assets# liabilities# rights#
25
obligations# employees# etc. stood transferred to and !ested in the @Oi( 'n" N'tur'( 's
Corpor'tion 4imite"A)
)ccordingly the accounts of the erstwhile 8(il and Natural Gas &orporation were closed on
<=
st
1anuary =>>E. The accounts for the 8(il and Natural Gas &orporation .imited9 for the
first year were prepared for the period ;<
rd
1une =>>< 4Date of "ncorporation7 to <=
st
1anuary
=>>E to coincide with the closure of accounts of the commission. 0etween the date of
incorporation of the corporation 4;<.F.><7 and the <=.=.>E# the accounts mainly related to
company formation transactions. The accounts of (il and Natural Gas &orporation .imited
for the financial year =>>E+>? therefore are for a period of =E months i.e. from =
st
3ebruary
=>>E to <=
st
March =>>?.
Mork in (NG& .td. has been organi*ed on the basis of functional business group with
commercial working relationship among these groups. The business is:
=. /-ploration
;. Drilling
<. (perations
E. Technical ser!ices
Directors concerned of the abo!e business groups assume effecti!e charge of all
functional aspects of materials management.
FEATURES
"ndiaGs largest /-ploration , Production &ompany.
Nearly >@B of "ndiaGs oil and gas production.
"ndiaGs largest listed company.
5ighest profit making company in the country.
anked amongst first ;? oil companies in the world in terms of oil and gas production
and reser!es.
'trong historical performance with significant upsides
"mpressi!e financial and operational results.
Major initiati!es to enhance efficiencies underway.
26
&lear upsides from liberali*ation.
Globally competiti!e with attracti!e !aluations:
.owest cost producer.
.argest pure /-ploration , Production &ompany a!ailable to in!estors.
)ttracti!ely !alued on an /nterprise 2alue $ 0oe basis.
Guided by se!eral en!ironmental laws and regulation:
Mater 4Pre!ention on and &ontrol of Pollution7 )ct# =>AE.
The )ir 4Pre!ention and &ontrol of Pollution7 )ct# =>D=.
The /n!ironment Protection act# =>DF.
The 5a*ardous Maste 4Management and 5andling7 ules# =>?D.
The /n!ironmental Pro!ision of Merchant shipping )ct# =>?D.
Three+tiered '/M organi*ation set+up to pro!ide safe and healthy working conditions
to the employees# maintain ecological balance and protection of the en!ironment.
/nergy conser!ation measures:
"nter+fuel substitution and proper capacity utili*ation of equipment.
%se of .ubrication (il )nalysis Kits.
%se of waste heat reco!ery equipment atH
(ffshore Platforms.
(ffshore igs.
.PG Plant 5a*ira , %ran.
%se of /nergy /fficient /quipment , De!ices and Turbo /-panders at 5a*ira ,
%ran.
5arnessed 'olar /nergy for total one+lac liters per day water heating capacity at
!arious places and use of solar Photo!oltaic )pplications.
&onducting /nergy )dults on regular basis.
"n+house training program on /nergy &onser!ation conducted through !arious
egional Training "nstitutes.
%sing top dri!e system for faster drilling operation at 'agar 1yoti.
%se of !apor absorption chilling unit for egional (ffice building and guesthouse
at 5a*ira.
27
WORK DIVISIONS OF THE CORPORATAION
During D@Gs a concept of 8&entrali*ed Policy making and Decentrali*ed )dministration9 was
introduced. To ensure better operational performance# greater coordination among the
functional group and accountability for o!erall performance in defined areas# F regional
business centers were created# each under a control of a regional director with o!erall
responsibility for the operation and achie!ement of gi!en targets in respecti!e region. The
registered office of (NG& .td. is at 1ee!an 0harti 0uilding# New Delhi. The head quarters of
(NG& .td. is at Dehradun# apart from "nstitute of eser!e (il 'tudies 4"'7# G/( data
processing and "nterpretation &enter 4G/(P"&7# "nstitute of Drilling Technology 4"DT7#
"nstitute of Petroleum /-ploration 4"P/7# "nstitute of Management De!elopment 4"MD7#
"nstitute of Petroleum 'afety and /n!ironment Management 4"P'/M7# "nstitute of
/ngineering and (cean technology 4"/(7# "nstitute of 0iotechnology and Geotectonic which
continued to functions at Dehradun and other regions. 'o the whole of the corporation is
di!ided into different regional business centers in "ndia !i*.
Mumbai egional 0usiness &enter 4M0&7# base at Mumbai.
&entral egional 0usiness &enter 4&0&7# base at &alcutta.
Northern egional 0usiness &enter 4N0&7# base at 1ammu.
'outhern egional 0usiness &enter 4'0&7# base at 0aroda.
/astern egional 0usiness &enter 4/0&7# base at Na*ira.
These business centers are further di!ided into basins# which ha!e their network in the
scorching desert of 1aisalmer# in the dense forest of )ssam# in the tricky terrains of Kutch# in
snow bond Kashmir and in Gulf of &ambay and also the )rabian 'ea.
28
C3APTER ; /
#usiness o1 Or0'nis'tion
-) Prim'r$
+) Secon"r$
Prim'r$*
29
Integrated Tradng Desk of O and Natura Gas Corporaton (ONGC) on behaf of
ONGC Group of Companes comprsng of ONGC Lmted, and ts subsdares
ONGC Vdesh Lmted (OVL), ONGC Ne Ganga BV (ONG BV) and Mangaore
Renery and Petrochemcas Lmted (MRPL) organzes Import/Internatona Sae
of Crude O, Export of Petroeum Products and Petrochemca Products through
Tenderng Procedure for a the Group Companes of ONGC. ONGC Group
presents a ot of busness opportuntes to prospectve Busness Partners n the
area of nternatona sae/mport of Crude O and Export of Petroeum Products
and Petrochemca Products
SUBSIDIARIES OF ONGC
ONGC VIDESH LIMITED (OVL): OVL s a whoy owned subsdary of ONGC
engaged n exporaton and producton of o and gas outsde Inda. OVL was
ncorporated as Hydrocarbons Inda Prvate Lmted on March 5, 1965. Therefore,
OVL became a deemed pubc company under Secton 43A of the Companes Act
wth ehect from Apr 1, 1975. OVL s no onger a deemed company pursuant to
amendments to the companes Act. It changed ts named from Hydrocarbons
Inda Lmted to ONGC Vdesh Lmted. Accordngy, a fresh certcate of
ncorporaton consequent upon change of name was ssued on |une 15, 1989.
The prmary busness of OVL s to prospect for o and gas acreages abroad.
The other actvtes ncude acquston for o and gas eds n foregn countres,
exporng, producng, transportng, exportng and carryng out other reated
functons of an nternatona petroeum company.
Currenty, OVL has partcpated n o and gas pro|ects n Vetnam, Sudan,
Russa, Iraq, Myanmar, Lbya, Angoa, and Syra. The Vetnam pro|ect s
producng natura gas and the Sudan pro|ect s producng o. The pro|ect n
Russa s n advance stages of deveopment and producton. The pro|ects n Iraq,
Iran and Syra are n varous stages of exporaton. In the Myanmar pro|ect,
where an exporatory we was dred, natura gas have been dscovered n
|anuary 2004.
SUBSIDRIES OF OVL
1. ONGC NILE GANGA B.V (ONGBV): ONGBV s a whoy owned
subsdary of OVL. ONGBV orgnay was n corporated as Supertest Hodng B.V.,
30
a Besoten Vennootschap (prvate company wth mted abty) n the
Netherands on September 29, 1995, and wad rst regstered n the Commerca
regster on October 10, 1995, wth statutory seat at Rotterdam. The name of
Supertest Hodng B.V was changed to State Petroeum Corporaton and then to
Tasman (Greater Ne) B.V., whch was a part of Tasman Energy Inc. of Canada
and owned 25 percent partcpatng nterest n the Greater Ne O Pro|ect n
Sudan. OVL acqured the entre share capta of ONGBV ehectve March 12, 2003
and the company was renamed as ONGC Ne Ganga B.V. ehectve from March
14, 2003.
2. ONGC NARMADA LIMITED (ONL): ONGC Narmada (ONL), a whoy
owned subsdary of OVL s engaged n E&P actvtes n Ngera. ONL hods
13.5% PI n deep water exporaton Bock-2 n Ngera-Sao Tome & Prncpe, |ont
Deveopment Zone (|DZ). The other partners n the Bock nter-aa ncude
Snopec (wth 28.67% PI)), Adex Petroeum (wth 14.33% PI), ERHC Energy Inc.
(wth 22% PI), Equator Exporaton (wth 9% PI), Foby (wth 5%PI) and A &
Hatman (wth 2.5%PI), wth Sngapore as the operator.
3. ONGC AMAZON AKLAKNANDA LIMITED (OAAL): ONGC Amazon
Aaknanda mted (OAAL), a whoy owned subsdary of OVL ncorporated on 8th
August, 2006 n Bermuda, s engaged n E&P actvtes and hods stake n E&P
pro|ects n Coomba, through Mansarovar Energy Coumba Lmted (MECL), a
50:50 |V Company wth Snopec of Chna. MECL s currenty producng o @
20,000 bbs/d. Durng 2006-2007, OVLs share of producton was about 0.297
MMT of o.
4) ONGC MITTAL ENERGY LIMITED (OMEL): OVL aong wth Mtta Investments
Sar (MIS) promoted ONGC Mtta Lmted (OMEL), a |ont venture company
ncorporated n Cyprus. OVL and MIS hods 50% shares of OMEL currenty.
However, the utmate sharehodng of OMEL s proposed to be n the rato of
51(OVL): 49(MIS) of 98% as between the promoters wth 2% shares to be hed by
a nanca nsttuton. OMEL hods PI n the AFPC Syran Assets through ONG B.V.
31
Further OMEL hods stake n two exporaton Bocks namey OPL 279 and OPL 285
n Ngera
Secon"r$*
MANGALORE REFINERY AND PETROCHEMICALS LTD. (MRPL): MRPL was
ncorporated on March 7, 1998 and commenced ts busness on August 2, 1988.
MRPLs regstered omce s ocated at Mudapadav, Kuthethoor P.O. va Katpaa,
Mangaore, Karnataka.
32
MRPL was ncorporated pursuant to a Memorandum of Understandng dated
|une 26, 1987 entered nto between the Presdent of Inda representng
Government of Inda, Hndustan Petroeum Corporaton Ltd. (HPCL) and Indan
Rayon and Industres Ltd. and ts amates (IRIL), for the purpose of settng up
Crude petroeum renery at Mangaore n the state of Karnataka. MRPL has a
renery capacty of 9.69 mon metrc tons per annum and s nvoved n
renerng crude o nto petroeum products. In vew of the osses ncurred by
MRPL n the ast few years, the peak net worth of MRPL was eroded by more than
50 percent as on March 31, 2002 and accordngy as requred under Secton 23
(1)(a) of the Sck Industra Companes (Speca provsons) Act, 1985, a report
was submtted to the Board for Industra and Fnanca Reconstructon (BIFR).
HPCL and IRIL each were hodng 37.39 percent shares n MRPL. The entre
37.39 percent of equty capta hed by IRIL was acqured by ONGC on March 3,
2003. Further t nfused a sum of Rs. 6000 mon through preferenta aotment
of equty shares to ONGC on March 30, 2003 thereby ncreasng ts stake n MRPL
to 51.27 percent of equty share capta of MRPK, makng MRPL ts subsdary and
aso a Government Company under Secton 617 of the Companes Act. ONGC
exercsed ts opton ncorporated n the opton agreement as part of the Debt
Restructurng Package for purchase of 358.2 mon equty shares aotted to the
enders under the Debt Restructurng Package at a cost of Rs. 3,811 mon. As a
resut, ts sharehodng n MRPL ncreased to 71.62 percent of equty share
capta of MRPL.
|OINT VENTURES OF MRPL
1. KAKINADA REFINERY AND PETROCHEMICALS Ltd. (KRPL): The nanca
apprasa report submtted by SBI Capta Market for the Kaknada Renery
ndcated that 7.5 MMTPA Renery pro|ect was not nancay vabe. However,
keepng n vew the ong-term scenaro n whch, the petroeum consumpton n
the country s expected to go up, as brought out n the market study conducted
by Nexant. A premnary n-house assessment was taken up, whch ndcated
that the pro|ect coud be vabe, f the capacty s enhanced to 15 MMTPA. KRPL
has therefore engaged EIL for conductng Techno Economc Feasbty Study for
settng up 15 MMTPA Renery at Kaknada. MRPL has 46% equty n the |ont
33
Venture Company and baance equty s hed by IL&FS and KRPL (51%) and APIIC
(3%).
2. KAKINADA SEZ Ltd. (KSEZ): Kaknada SEZ Ltd. (KSEZ) was ncorporated on
30th |une,2006 wth an equty partcpaton of 26% by MRPL, 26% by IL&FS 45%
by KSPL and 3% by APIIC.
KSEZ has been noted as SEZ by the Government of Inda on 23rd Apr, 2007.
B. |OINT VENTURES/ASSOCIATES
I. PETRONET LNG Ltd.(PLL): ONGC has 12.5% stake n PLL. The Dahe|
Termna s operatng at ts optmum capacty and s currenty meetng 25% of
Indas tota gas suppes. The company has started expanson of Dahe| termna
to 10 MMTPA and aso settng up LNG Recevng and Re-gascaton Termna of
%MMTPA at Koch. The turnover of PLL durng 2006-2007 s Rs. 55,089.5 mon,
prot before tax s Rs. 4,755.7 mon and prot after tax s Rs. 3,132.5 mon,
respectvey. PLL ha pad a dvdend of 12.5%.
II. ONGC TRIPURA POWER COMPANY Pvt. Ltd. ( OTPC): ONGC s settng up a
mega 740 MW (2x370 mw) gas based Combned Cyce Power Pant (CCPP) at
Paatana n Trpura to monetze ts de gas resource n Trpura state aong wth a
400 KV Transmsson ne up nkng the Power Pant wth PGCIL Grd at
Bongagoan. The estmated cost of the ntegrated Pro|ect s Rs. 38,440 mon
III. PETRONET MHB Ltd. (PMHBL): ONGC hods 23% equty stake n ths
product ppene Company nkng MRPL to Bangaore. PMHBL n ncurrng osses
due to ow capacty utzaton and sub-optma nanca structure. Accordngy,
ONGC has made an upfront payment of Rs. 2,276 mon as per corporate debt
restructurng and the Master Restructurng Agreement (MRA) has been sgned
wth the Bankers on 25th |anuary, 2007.
IV. PAWAN HANS HELICOPTERS LIMITED (PHHL): ONGC has 21.5% equty n
PHHL, whch provdes hecopter servces prmary to the company. PHHL s the
ony hecopter operator wth ISO 9001:2000 certcaton n Asa for ts entre
gamut of busness actvtes. PHHL earned a net prot of Rs. 473.86 mon
34
durng 2005-2006 and provsona net prot for the nanca year 2006-2007 s
Rs. 490.00 mon.
V. ONGC PETRO-ADDITIONS Ltd. (OPaL): A grass root ntegrated
petrochemca compex at an estmated nvestment of Rs. 135,400 mon has
been approved for mpementaton |onty by ONGC & GSPC hodng 26% & 5%
equty respectvey, wth baance equty to be ted wth strategc nvestors and
pubc oherng.
VI. DAHE| SEZ Ltd. (DLS): Dahe| Speca Economc Zone Lmted (DLS) has
been promoted by ONGC (23%) and Gu|arat Industra Deveopment Corporaton
GIDC (26%) to deveop a mut-product SEZ at Dahe| n coasta Gu|arat. Mnstry
of Commerce & Industry (MoCI), Government of Inda, has approved
deveopment of ths SEZ over 1,717 hectares of and.
VII. MANGALORE
SEZ Ltd. (MSL): ONGC has taken up deveopment of a mut-product SEZ n the
vcnty of MRPL Renery n coasta Mangaore through a SPV "Mangaore SEZ
Lmted (MSEZ)" n whch t hods 26% equty share. The other partners beng
Karnataka Industra Area Deveopment Board (KIADB) wth 23% equty share.
Kanara Chambers of Commerce And Industry (KCCI) and Infrastructure Leasng
Servces Lmted (IL&FS) has baance 51% share. ONGC envsages ocatng ts
upcomng Aromatcs Compex, and another LNG based pro|ects wthn ths SEZ.
VIII. ONGC MITTAL
ENERGY SERVICES Ltd. (OMESL): OMSEL, a |ont Venture promoted by ONGC and
MITTAL Investment Sar, s regstered n Cyprus and ntends to focus on tradng
and shppng of O and Gas (ncudng LNG).
IX. ONGC
MANGALORE PETROCHEMICALS LIMITED. (OMPL): ONGC has taken up an
mpementaton of an Aromatc Compex for manufacturng Paraxyene from
MRPLs Aromatc Stream through a SPV, "ONGC Mangaore Petrochemcas
Lmted (OMPL)" wth 46% equty partcpaton, 3% by MRPL and the remanng
35
baance of 51% by Banks and Fnanca Insttutons. OMPL has been ncorporated
n 19th December, 2006. Tota estmated nvestment n the pro|ect s proposed
to be Rs. 48,520 mon.
X. ONGC TERI
BIOTECH Ltd. (OTBL): ONGC formed a |ont venture n assocaton wth The
Energy Research Insttute (TERI) for addressng for requrements of
Boremedaton, Mcroba Enhanced O Recovery and Preventon of Wax
Deposton n tubuar for ts E&P operatons. The |ont Venture has been
ncorporated on 26th March, 2007.
C3APTER ; D
36
M'teri'( m'n'0ement
Intro"uction
equirement generation from plants
)s we know that (NG& generally work to e-tract oil and natural gas from !arious places like
Mehs'n'7 An%(eshB'r7 R'i0'"h7 Shi:s'0'r7 Ass'm7 A0'rt'(('7 N'h':'7 &'%in'n"'7
Si(ch'r.
so for that purpose they require some material like drilling pipes# casing pipes# liner hanger#
drill collars etc for the e-traction of raw material say oil and gas. )nd the requirement are
generated from !arious places from where the oil and natural gas could e-tracted.
"ndenter are the people who generally make the estimation of the material which can be
purchases for the e-traction of oil and gas# they just estimate the price from last yearGs price
and increase the rate of price from ?B to =?B and then ask them to gi!e their requirement
list so that they can consolidate the requirement from !arious places and forward purchase
requisition# pre qualification criteria# technical 0/&4bid+ e!aluation criteria7 to material
management. Now from then the work of material management starts
Purch'se ReEuisition 5PR6 * Purchase equisition 4P7 is a document created by the
"ndentor when he wants to utili*e budget for any e-penditure. 5e has to mention the 3und
&entre from where he wishes to draw the funds and commitment item where his fund is
lying in the fund centre. "t is to be released by the designated "ndentor and in the ne-t le!el by
the MP &ontroller. Then the P is forwarded to 3inance which concur the P and also
releases the P . The P is than submitted for final appro!al with the &ompetent )uthority.
The funds get automatically blocked after the creation of the Purchase (rder against that P.
#i" E:'(u'tion Criteri'5#EC6*
37
0efore in!itation of tenders# the technical as well as commercial 0id /!aluation
&riteria will be formulated by the tender committee.
0id /!aluation &riteria 40/&7 in general should ha!e a ejection 4both technical and
commercial7 criteria# and financial /!aluation methodology 4including .oading
criteria7 .
0/&s should be firm $ standardi*ed. 'tandard 0/& for goods and ser!ices were
issued !ide circular No.=>$;@@< and <F$;@@< respecti!ely. %pdations $ Modifications
to the same 4as appro!ed by /P&7 are also notified from time to time.
0/& once appro!ed should normally be adopted without any change for the
subsequent tenders for the same item$category of items. (nly the changes from
pre!ious 0/&$standard 0/& to be submitted for appro!al# with reasons.
Pre Fu'(i1ic'tion Criteri' 5PFC6*
Oualification shall be based on satisfaction of all the following minimum pass$fail
4qualification $ disqualification7 criteria by the bidders regarding their general and particular
e-perience# financial position# personnel and equipment capabilities and other rele!ant
information as demonstrated by the 0iddersG responses in the form attached to the 0id. The
qualification capacity and resources of proposed subcontractors shall not be taken into
account in determining the 0idderGs compliance with the qualifaction criteria.
MATERIALS MANAGEMENT
38
The man actvty of ONGC s exporaton and expotaton of hydrocarbons. Ths
nvoves varous actvtes ke survey, drng, producton, transportaton etc. and
t requres the technca expertse of experts and varous equpments of materas
to do the same.
Materials management is the branch of logistics that deals with the tangible components of a
supply chain. 'pecifically# this co!ers the acquisition of spare parts and replacements# quality
control of purchasing and ordering such parts# and the standards in!ol!ed in ordering#
shipping# and warehousing the said parts.
)im of the Materials Management (rganisation is to procure# preser!e and deli!er materials
in proper time to ensure smooth progress of the project works and administrati!e
machinery.
Every ehort s made by the Materas Management Organzaton to meet the
needs of the Engneers and the Scentsts wth regards to the Materas. But the
success of the aspraton of the Materas Management depends very much on
the proper pannng and tmey ntmaton by the concerned Engneers/Scentsts
to the Materas Management. It s therefore, essenta that these aspects are
kept n vew to ensure tmey procurement of materas/servces.
3irst the targets of the corporate are set based on the M(% 4Memorandum of %ndertakings7
entered with the go!ernment.
(nce targets are fi-ed action for implementation thereof is taken by working out the inputs
required for achie!ing these targets and necessary budget pro!ision is made in consultation
with attached finance for procurement of capital items# stores and spares etc.
0ased on the pro!ision in the appro!ed budget# proposals are initiated for obtaining appro!als
of the competent authority for indi!idual items of e-penditure with the concurrence of
attached finance where!er required.
)fter the competent authority appro!es e-penditure and funds are embarked by finance# the
purchase procedure commences.
Material Management at (NG&
39
5igh 2alue &apital items
'er!ices and Turnkey projects
0ulk stores items
'pares + (/M , Non (/M
(ther 'tores and &onsumables
;#D@#@@@ + Material master records
D@#@@@ + 2endor records

Casscaton of Materas:
For procurement, the materas may be cassed nto the foowng categores: -
a) Propretary Materas: - Propretary materas are those whch are
manufactured by the
makers of the man pants themseves such as spare parts for Wys
|eeps.
b) Non-Propretary Materas: - Non-Propretary Materas are those whch are
manufactured by many rms such as chemcas and aboratory
equpments.
c) Stock Items: - Fast movng tems of reguar consumpton as aso spares
requred for runnng repars and perodca overhau of machnery and
equpments are consdered Stock Items.
The senor most materas management omcer, not beow E-1 (M.M.Omcer) w
have fu powers to decare stores and spares as Stock Items.
d) Non-Stock Items: - Non-Stock Items are those whch are to be purchased
aganst specc requrements of the ndentng departments.
e) Capta Items: -
I) A the tems costng Rs. 5,000 or more and wth a fe of more than one
year are categorzed as Capta Items
II) Items costng ess than Rs. 5000 whch have a fe of more than one year
and can be regarded as compete unts n themseves (e.g. sma compressors,
40
pumps, eectrc motors, wedng sets, eectrc testng nstruments etc.) are
aso to be categorzed as Capta Items
The senor most materas management omcer, not beow E-1 (M.M.Omcer)
w have fu powers wth the concurrence of nance to decare an tem
costng ess than Rs. 5000 as Capta Items.
f) Stores and Spares: - A the tems, whch cost ess than Rs. 5000 and have a
fe ess than one year are to be treated as "Stores and Spares".

The procurement and stockng of materas s decentrazed to the respectve
busness groups (Exporaton, drng, technca and operatons) at headquarters
and regons. Every busness group has a structured materas management setup
wth sutabe structure at the regons and headquarters. The headquarters
materas management set up wth the concerned drector s responsbe for the
foowng: -
1) Procurement and reated work ncudng steerng commttee cases. Executve
purchase commttee cases. However pocy matters ncudng ason wth the
Govt. w be done by the materas set up under drector.
2) Provdng superntendence to the materas set up at the regons under the
concerned busness group wth regard to the dherent functons of Materas
Management for exampe, nventory contro, dsposa, codcaton,
standardzaton of speccatons, computerzed MIS and stock vercaton etc.
3) Bukng of a hgh vaue ndgenous and crtca tems to be procured centray
for takng maxmum advantage n prce dscount. Such exercse woud be done
by the headquarters materas set up for a the regons under the group.
The above functons are to be dscharged by personne of materas management
dscpne who w be so aocated to each busness group both at headquarters
and at the bases. However, the procurement of a ndgenous materas except
as mentoned above s decentrazed wth ther respectve busness group.
41
Materas procurement powers are to be exercsed ony be excepton by
functona executves other than materas management executves by speca
nomnaton by the Competent Authorty as a stop gap arrangement t such tme
materas personne are n poston.
The materas management support groups w functon strcty wthn the pocy
gudenes and such admnstratve norms as may be prescrbed by drector
(Technca).
Provsons of materas management are duy approved by Executve
Commttee/Steerng commttee and rated by the ONGC Board. Therefore, any
devaton from the prescrbed pocy gudenes or norms on materas
management w requre reference to drector (technca) through the drector
ncharge of the busness group for approva/ratcaton of Competent Authorty
wherever consdered necessary.
Frst the targets of the corporate are set based on the MOU (Memorandum of
Undertakngs) entered wth the government.
Once targets are xed acton for mpementaton thereof s taken by workng out
the nputs requred for achevng these targets and necessary budget provson s
made n consutaton wth attached nance for procurement of capta tems,
stores and spares etc.
Based on the provson n the approved budget, proposas are ntated for
obtanng approvas of the competent authorty for ndvdua tems of
expendture wth the concurrence of attached nance wherever requred.
After expendture s approved by the competent authorty and funds are
embarked by nance, ndents for purchase of equpments, stores and spares are
o be sent on STR_6 (Store takng recept) form to purchase department
preferaby on the annua requrement bass. The ndent shoud be routed through
MPPC and shoud be accompaned wth detaed speccatons and nanca
sanctons.
42
On recept of ndents, MM department ntates procurement acton as per
nstructons contaned n "Store Procedures".
Functons of Purchase Department: -
1) The vta functons of purchase department are as foows: -
() What quantty to buy
() When to buy
() From whom to buy
(v) At what prce to buy
(v) What quaty to buy
2) The purchase department whe makng any purchases shoud see that: -
(i) A the purchases are made for the propery authorzed requstons
carfyng the purpose for whch these are requred.
(ii) A the materas requstoned are duy ordered out from the rght source
after fu enqures.
(iii) The rght type and quaty of the materas are bought from the cheapest
source.
(i) Ony the rght quanttes are purchased n rght tme.
() Deveres of a the materas are receved by stpuated tme.
(i) Suppers bs are pad prompty to mantan good reatons wth the
trade.
(ii) Ad|ustments on cams due to shortage or due to any dscrepancy are
secured, and
(iii) Pre-Bd Conference:
(a) Sub|ect to (b) beow, Pre-Bd Conference shoud be hed as a practce
rather than excepton for procurement for a cases of
goods/servces/turnkey pro|ect above Rs. 25 akhs, Pre-Bd Conference
need not be hed n tenders vaung up to 25 akhs.
(b) Proposa to take excepton to (a) above, .e. ether to hod pre-bd
conference n a tender vaung over Rs 25 akhs, or to hod pre-bd
conference n a tender vaung up to Rs 25 akhs, shoud be ntated by the
43
ndenter who shoud record the reasons for such an acton and covey
approva of the Competent Purchasng Authorty (CPA) to MM executve.
Whe decdng whether or not to hod pre-bd conference n a partcuar
case, the foowng on mert, nteraa, are to be kept n vew: -

Compexty of that case,
Hstorca experence n respect of bdders' takng exceptons/devatons n
prevous tenders for such tems/servces.
(b) Hodng pre bd conference can be dspensed wth, n cases where pre-bd
conference has been hed n the past by the concerned work centre for the
procurement/hrng servces of the same tem and where no change has
been made n the BEC whch was adopted n the prevous tender
(!) In NIT, date for cosure of sae of bddng documents shoud be speced,
provdng sumcent tme for response. It shoud aso be ndcated n
NIT/bddng documents that a bdders who buy bddng documents are
nvted to attend the pre-bd conference. As soon as the sae of documents
s cosed, pre-bd conference s to be convened (the date and venue of pre-
bd conference shoud be ceary ndcated n the NIT and the bddng
document). In the NIT and bddng document as we as durng the pre-bd
conference, bdders shoud be advsed that ONGC expects the bdders to
compy wth the tender speccatons/condtons whch have been frozen
after pre-bd conference, and hence non-conformng bds w be re|ected
straghtaway. The ndentng omcer from the User department (who has
framed/sgned the speccatons) s to char pre-bd conference(s) wth
competent representatve from concerned technca department (ke E&C),
MM and Fnance.
(e) However, for EPC eve cases where mted tenders have been nvted due
to vad reasons, as per provsons of Materas Management Manua, second pre-
bd conference w be hed as a standard practce so as to ensure that the
bdders understood the requrement, terms and condtons ncudng the
amendments (f any) subsequent to rst pre-bd conference.
A#C ANA4YSIS
(NG& has to maintain se!eral types of in!entories. "t is not desirable to keep the same
44
degree of control on all the items. (NG& pays ma-imum attention to those items whose
!alue is the highest. (NG&# therefore# classifies in!entories to identify which items should
recei!e the most effort in controlling. The firm is selecti!e in its approach to control
in!estment in !arious types of in!entories. This analytical approach is called the )0&
analysis and tends to measure the significance of each item of in!entories in terms of its
!alue.
The high+!alue items are classified as &ategory 8)9 items and would be under the tightest
control. 8)9 class items which are critically important and require close monitoring and tight
control N while this may account for large !alue these will typically comprise a small
percentage of the o!erall in!entory count.
&ategory 809 items are in between 8)9 and 8&9 limits# defined by the respecti!e department
as required.
&ategory 8&9 represents relati!ely least !alue and would be under simple control.
The )0& analysis concentrates on important items and is also known as control by
importance and e-ception 4&"/7.
The following steps are in!ol!ed in implementing the )0& analysis:
&lassify the items of in!entories# determining the e-pected use in units and the
price per unit for each item.
Determine the total !alue of each item by multiplying the e-pected units by its
units price
ank the items in accordance with the total !alue# gi!ing first rank to the item with
highest total !alue and so on.
&ompute the ratios 4percentage7 of number of units of each item to total units of all
items and the ratio of total !alue of each item to total !alue of all items.
-
+
. TYPE GA< ITEMS 5FOR CENTRA4ISED PROCUREMENT6
>
=. Drill pipes of all si*es and grades
;. 5ea!y weight drill pipes of all si*es and grades
45
<. &asing pipes of all grades and si*es
E. .iner 5anger
?. Drill collars of all si*es
F. Drill bits of all rating and si*es
A. Drill hoses of all ratings and si*es
D. 3loating equipment
>. esignated .ignite
=@. &.'
==. K&.
=;. &hrome .ignite
=<. 'potting fluid
=E. /P lube
=?. 'ulphonated asphalt
=F. Drilling detergent
=A. Production tubings of all si*es
=D. Mell head of all pressure rating and si*es
=>. P+Mas tree of all pressure rating and si*es
;@. Perforation material
;=. Geophone strings of all types
;;. .ine pipes of all si*es
;<. Kelly all types
;E. )ll import substitution items
;?. P(. 4Diesel#lubricants etc.7
;F. &M&
;A. (il well cement
;D. 0entonite
;>. 0arytesThe list is not e-hausti!e and the items may get added or deleted as per the
decision of the management.
CENTRALISED / DE-CENTRALISED PURCHASES
46
In Drng Busness Group, purchase functons of the foowng tems woud be
handed as under:-

S. No. Item Base
1. Ppes of a sze Deh
2. CMC Dehradun
3. O We Cement and Cement addtves Mumba
4. Bts
Indgenous
Imported
Dehradun
Dehradun
5. Bow Out Preventors and accessores Dehradun
6. Rg (purchase and servce contracts)
Onand
Ohshore
Dehradun
Mumba
7. Spares and assembes for on-and rgs Dehradun
8. Spares and assembes for ohshore rgs Mumba / Chenna
9. We Heads
Onand
Ohshore
Dehradun
Deh
10. Imported mud chemcas and mud addtves Dehradun
11. Casngs 30" and 20" requred for ohshore
operatons excusvey
Mumba, Deh
12. Others - whether ndgenous or mported for on-
and and oh-shore operatons
Dehradun

An O:er:ieB o1 Purch'sin0 Proce"ure
47

ONGC CENTRALIZED PROCUREMENT
(NG& &orporate MM Department deals in centrali*ed procurement of L)G &ategory items.
These items are purchased for use in the work centers staggered length and breadth of the
country. To procure an item# the corporate MM Department# after recei!ing the demand with
necessary e-penditure sanctions# floats tenders to obtain 0ids for the required item. The
tenders are floated in .egacy 'ystem or /+Procurement 'ystem. The items are procured from
indigenous sources or imported sources.
4EACY SYSTEM
) Tendering Process by which (NG& seeks prices and terms for a particular project to be
carried out under a contract. The sealed offers themsel!es# including company information# a
project outline# and a price quote# are known as tenders or bids. These bids are obtained
physically as hard copies in the legacy system from the !endors.
48
E-PROCUREMENT
E-Procurement s the term to descrbe the use of eectronc methods n every
stage of the purchasng process from dentcaton of requrement through to
payment, and potentay to contract management. Eectronc enabement of the
purchasng process can be more speccay dented as:
E-Sourcng: - For contractua processes. Toos ncude e-tenderng, e-RFOs
(Request for quotatons/evauatons) and e-auctons.
E-Procurement: - For transactona processes. Toos ncude market paces
usng technques such as e-cataogues and punch-out.
E-Payment: - Toos ncude vrtua or embedded GPC (Government
Procurement Card), e-nvocng and sef-bng.
E-Sourcng s a sute of coaboratve, web-based toos that enabe procurement
professonas and suppers to conduct the strategc actvtes wthn the
procurement fecyce over the nternet. These strategc actvtes ncudng
requrements/speccaton denton, tenderng and supper seecton, and
contract award and management are desgned to dever vaue for money
procurement soutons to the pubc sector.
E-Sourcng heps to encourage consstency wth pocy and best practce and
ncrease sourcng and contract management emcency and ehectveness.
E-Sourcng devers the foowng benets to pubc sector procurement
professonas: The E-Sourcng servce w dever the foowng benets to
customers: -
Process emcences: - e-Sourcng reduces tenderng and contract
management tme and ehort for both buyers and suppers.
Improved pubc sector savngs: - e-Sourcng heps pubc sector
procurement professonas to focus on core, vaue-added procurement
actvty rather than admnstraton.
49
Pocy: - e-Sourcng heps users to ensure compance wth the
requrements of the emcency revew and the natona procurement
strategy for oca government.
Best practce: - e-Sourcng encourages users to adopt procurement
best practce, enabng a more consstent approach to sourcng.
Coaboraton and aggregaton: - e-Sourcng makes t easer for pubc
sector procurement professonas to work coaboratvey on common
sourcng pro|ects across geographcay dspersed unts and dherent
departments.
Direct costs 1or !u$ers 'n" supp(iers* -
e+'ourcing reduces the direct costs of preparing and issuing the "TT and responding with
tenders. Direct costs include paper# printing and distribution costs such as couriers.
&ollaborati!e working reduces the need for teams to tra!el for face to face meetings.
(NG& uses /+Procurement process for purchase of required &ategory 8)8 "tems. /+
procurement is the business+to+business or business+to+consumer purchase and sale of
supplies and ser!ices through the "nternet as well as other information and networking
systems# such as /lectronic Data "nterchange and /nterprise esource Planning.
(NG& e+procurement Mebsite allows qualified and registered users to look for requirement
of goods and ser!ices. &ompanies participating e-pect to be able to control parts in!entories
more effecti!ely# reduce purchasing agent o!erhead# and impro!e manufacturing cycles.
Ths process ncudes:
Seectng the supper.
Submttng forma requests for goods and servces to suppers.
Gettng approva from the buyer.
Processng the purchase order
Fung the order.
Devery.
Recept.
Payment.
50
Shppng.
Frst the targets of the corporate are set based on the MOU (Memorandum of
Undertakngs) entered wth the government. Once targets are xed acton for
mpementaton thereof s taken by workng out the nputs requred for achevng
these targets and necessary budget provson s made n consutaton wth
attached nance for procurement of capta tems, stores and spares etc.
Based on the provson n the approved budget, proposas are ntated for
obtanng approvas of the competent authorty for ndvdua tems of
expendture wth the concurrence of attached nance wherever requred.
After expendture s approved by the competent authorty and funds are
embarked by nance, ndents for purchase of equpments, stores and spares are
to be sent on STR_6 (Store takng recept) form to purchase department
preferaby on the annua requrement bass. The ndent shoud be routed through
MPPC and shoud be accompaned wth detaed speccatons and nanca
sanctons.
On recept of ndents, MM department ntates procurement acton as per
nstructons contaned n "Store Procedures".
Di11erent Steps o1 e-procurement


51
ONGC Centralised
Procurement
MM Dept.
ONGC Centralised Procurement
Finance User/Indenter
New Dmensons Ohered by e-Procurement soutons
Reverse Aucton
Eectronc Markets
Eectronc sourcng
Reverse Aucton:
Process of reverse aucton: -
May use purchasers own servers or a hred aucton ste
Aucton open to those who are authorzed to access the ste
Prequacaton
52
Procurement
Payment
Legacy System
!procurement
Indigenous
Imported
"enders
"ransportation
# s$ipping

Eectrc bddng takes pace for speced set tme perod
Advantages of reverse aucton
Process Emcency - Reducton of Negotaton Cyce tme
Transparency wth ncreased compettveness
Each bd s a negotaton n tsef, expanded market
Rea Tme Submsson of bds and Compettve Response
Perfect Competton - Market s the Prce Drver
Supper negotates wth market, not wth buyer
Dsadvantages of reverse aucton
Suppers dssatsfacton
Not sutabe for tems wth mted competton
53


Norma Aucton Reverse Aucton
Seer conducts aucton Purchaser conducts aucton
Process contnued t Process contnues t
hghest bd s receved owest bd s receved
The seer, buyers The purchaser and seers
physcay present at the are present on web and each
pace of aucton partcpant can see the bds
gven by others
Eectronc Market Pace
It s a facty that aows buyer and seers to exchange vaue.
Run by ndependent agences- Access gven by regstered buyers and
seers.
Cataogue and speccaton drven
Purchaser seects the oher for an tem and conveys hs acceptance.
Independent agency handes the transacton and conrms the contract
to the supper.
Needs a contract between ndependent agency and cents.
Bg buyers may set up hs own market pace.
Advantages of eectronc market pace
Cost reducton
Convenence to sma buyers
Sutabe for sma and fuy dened tems ke spares, mantenance,
servces, etc.
Dsadvantages of eectronc market pace
54
Inadequate facty for quafyng the supper
Fear of unknown rms oherng vasty dherent rates
Inadequate facty for anayzng the ohers
Refusa of supper to accept the contract
Unsatsfactory contracts
E"P#o!$#e%ent at ONGC
5igh 2alue &apital items
'er!ices and Turnkey projects
0ulk stores items
'pares + (/M , Non (/M
(ther 'tores and &onsumables
;#D@#@@@ + Material master records
D@#@@@ + 2endor records
E"P#o!$#e%ent Co%&onent
55
Busness Processes
For procurement of matera through onne process the company w foow
foowng steps:
1. Vendor Access Authorzaton for E-Tenderng Appcaton
56
Reduced Spent
2. SRM: E-Tenderng
Open Tender wth 2 Bd system
Open Tender wth Snge Bd system
Lmted Tender - 2 Bd system
Lmted Tender - Snge bd system
Snge Tender
Vendor Access Authorzaton for E-Tenderng Appcaton
Bref Expanaton :
Vendor access authorzaton for e-tenderng appcaton s the process n
whch the vendor requests access for submttng bds through the e-
tenderng appcaton. The process resuts n a vendor code created n R3
and SRM for the vendor or f the vendor code n R3 aready exsts, the
same w be repcated to SRM.
E-TENDERING
Open Tender - 2 Bd Systems
Bref Expanaton:
Open tenders are restored to when tender vaue s more than Rs. 25 akhs
except for the cases fang under snge tender and mted tender
categores. For a arge and compex bds, open tender 2-Bd system s
foowed. In a 2-Bd system, bdder submts the bd documents n 2 seaed
covers. One cover conssts of technca bd and the another cover conssts
57
of prce bd. The bd openng date s dherent for both the bds. The
technca bd s opened rst and a short stng of bdders based on the
technca crtera s done. Prce bds of short sted bdders w be opened
on the prce-bd openng date.
In a open tenders, certan payments are nvoved at tenderng stage.
Vendors need to pay Tender Fees to purchase/downoad the Tender
Document. Durng the submsson of tenders, vendors need to pay
"Earnest Money Depost" (Ether as payment or bank guarantee). Certan
categores of bdders are exempted from payment of Tender fees and/or
EMD (NSIC regd., CPSU etc)
Open Ten"er Bith TBo #i" S$stem
58
59
PROCESS FLOW CHART
60
Genera Expanatons
Note: The compete process s expaned step wse. In each step, rst paragraph
detas the process n genera rest of the paragraph refers to system mappng of
the process.
61
1. Recept of approved Indent: - Approved consodated ndent to be transferred
from SAP-R/3. Detaed requrements documents etc. s created n Coaboraton
Foders (c-Foders).
Requrements are transferred automatcay based on the matera code, matera
group and purchasng group combnaton mantaned n the Purchase requston.
The matera group and purchasng group combnaton s mantaned n a
structure n SAP-MM by SRM Master Data admnstrator. Matera code for SRM s
determned by assgnng cass n matera master. Requrements can aso be
manuay transferred to SRM by executng the report provded for ths purpose.
2. Form Tender Commttee: - Ths s optona and manua process. A tender
commttee s formed to recommend changes from standard/prevous approved
BEC (Technca Evauaton Matrx, Commerca Evauaton Matrx and Prce
Format) and speca condtons. If requred, POC (Pre-Ouacaton Crtera) s aso
recommended by TC.
3. Fnaze BEC, POC & Speca Condtons: - The tender commttee or Tender
Deang Omcer nazes Bd Evauaton Crtera and Pre-Ouacaton Crtera. Bd
evauaton crtera are set of documents consstng of crtera for both technca
and commerca evauaton. BEC aso conssts of a matrx whch need to be ed
by bdder wth compance Yes/No and Specc Detas. The BEC aso conssts of
prce format n whch he needs to submt the prce-bd. The evauaton of bd s
done based on these crtera. Sometmes, Pre-Ouacaton Crtera are aso
requred. Vendor shoud conrm compance to POC before obtanng tender
document.
The BEC documents and POC documents are created n c-Foders. Evauaton
matrx s mantaned as Data Sheets n c-Foders.The prce format s typcay the
prcng condtons as mantaned n R/3 prcng procedure. Prcng condtons are
mantaned n SRM.Tender Commttee mnutes are kept n c-Foders.
4. TC recommendatons and approva: - The documents shoud be approved by
the competent purchasng authorty. Competent purchasng authortys
comments are mantaned n c-Foders.
62
Approva Procedure n the system: - A status proe w be assgned to the
documents foder. The status proe conssts of compete approva route wth a
seres of statuses (e.g. Prepared TC Revew Endorsement by Chef-MM
Approved by EPC) and authorzatons for each of the status. Deang omcer sends
notcatons to the approvers from the foder contanng tender documents. The
approver can access the foder wth the nk n the notcaton and set the status.
If the approver needs carcaton before approvng, then a notcaton s sent to
the deang omcer or any other omcer wth the comments.
5. Prepare Tender Document: - A tender document s prepared wth detas of
requrements/speccatons, standard condtons whch ncude checkst and
appendces of ONGC tender booket, speca condtons and BEC. Tender fee
amount, EMD amount, ast date of seng tenders, tender submsson dates, pre-
bd conference dates etc are mentoned.
The approved tender document(s) are dgtay sgned and upoaded n c-Foders
by the deang omcer. The foowng documents w be n c-Foders:
Standard Instructons to Bdders
Standard Condtons wth Checkst & other Appendces
Speca Condtons
BEC
Technca/Commerca Evauaton Matrx
Speccaton Sheets
Ouantty Dstrbuton Chart, f requred
For the documents that need to be ed by the vendor such as technca
speccatons, an exce sheet wth protected ces to be used. The eft sde
coumns of the exce sheets contans the ponts/speccatons ed by the ONGC
omcer for whch vendor need to gve nputs. These coumns shoud be protected.
Vendor s hs nputs n the rght sde of the coumns and for each pont vendor
can hs response. Ths foder w be shared wth vendors. A bd nvtaton n
SRM s created wth reference to the ndent (PR). C-Foders are nked to the bd
nvtaton. Bd nvtaton s sgned by deang omcer. In SRM, dgta sgnature of
deang omcer woud be requred.
63
Some Man eds n Bd Invtaton: -
Bd nvtaton No: System generated sera number.
Descrpton of tender: The tender number generaton n R/3 s used and
coped n ths ed so that unformty s mantaned n tender numberng.
The entry n SRM s vadated wth the tender number n R/3.
Type of tender
Bddng System (Snge or 2 Bd system)
Tender Vaue (INR)
Tender Fee (INR)
Tender Fee (INR)
Date and tme of cosure of tender seng
Last date and tme to receve queres for carcaton
Last date and tme to appy for access to e-Tender Appcaton
Date of PBC (optona)
Cosng date and tme for submsson of bds
Openng date and tme of unprced techno-commerca bds (ony n 2
bd system).
Openng date and tme for prce bds (ony n 2 bd system)
Openng date and tme of Bd (n case of snge bd system)
Bd Vadty Date
EMD/Bd Bond/ Bd Securty (Gven n tender documents n c-Foders)
Securty deposts/Performance bank guarantee (Gven n tender
documents n c-Foders)
Address for correspondence
Port consgnee (Header and for each tem)
Utmate consgnee (Header and for each tem)
Devery dates (Gven n tender documents n c-Foders)
Payment terms (Gven n tender documents n c-Foders)
Item detas (Matera descrpton, UOM, Oty, Prce, Devery date,
Vauaton type, Port consgnee, Utmate consgnee etc)
64
Prce reated documents, f any, w be attached wth Bd nvtaton (Not n c-
Foders).
6. Pubsh notce nvtng tenders (NIT): - NIT s pubshed n eadng newspapers
(goba or oca dependng upon the type of bd). NIT aong wth the Tender
document s pubshed n ONGC webste (www.ongctenders.net).
Deang omcer sha downoad the bd nvtaton detas requred for NIT and
upoad n ONGCtenders.net for pubshng. The NIT conssts of a nk to SRM
appcaton. A prospectve bdders can ogon to SRM appcaton wth Guest user
ID and vew the documents. If the prospectve bdder wants to partcpate n
bddng, access to SRM s requred and the process of obtanng access s
expaned n process Vendor Access Authorzaton for e-tenderng appcaton.
7. Send advance ntmaton to prospectve bdders: - Advance ntmaton s sent
to prospectve bdders n case of open bddng.
Prospectve bdders are mantaned n Bd nvtaton. As soon as the bd nvtaton
s pubshed, an ema s sent to the vendors.
8. Receve Tender fees and POC Compance from prospectve bdders: - Ths step
s requred ony n open tenders. Prospectve bdders need to submt DD/Pay
order for the tender fee amount and buy the tender document from the tender
seng counters of the organzaton. The tender fee s normay waved for
seected categores of vendors. In cases where POC s requred, bdders have to
certfy that they compy wth POC. Tenders documents are sod t the prescrbed
ast date and tme of seng tenders.
When vendor ccks on Buy Tender for a bd nvtaton, payment gateway
nterface s actvated to coect tender fee. Access to bd w be provded after
the payment of tender fees.
For the vendors who want a waver need to request ONGC for the same wth
supportng documents. ONGC omcers enter the detas n the tender fee
appcaton n R/3 and generate a transacton number to aow vendors wthout
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payment of tender fee. The bdder w then have to be ncuded n the SRM Bd
nvtaton as a prospectve bdder.
9. Gve tender document to bdder: - Covered n the above step.
10. Recept of Oueres from bdders: - Optona. Ths step s common n arge and
compex requrements. Bdders who bought tender documents mght need
carcatons and hence submt ther queres to tender deang omcers.
Bdders can access c-Foders coaboraton foder and upoad the query
documents up to a speced tme n c-Foders.
11. Forward Oueres to a concerned and form sutabe repy: - Copes of the
queres from bdders are forwarded to tender commttee or a concerned
departments/peope n the organzaton (Engneerng or technca, nance and
purchase). The response from dherent departments s coated and sutabe
repes are framed for a the queres.
A concerned users sha be gven authorzaton to specc foders n c-Foders for
the bd nvtaton. Users can vew the documents from varous bdders n c-
Foders. Fna document consstng of sutabe repes s upoaded nto c-Foders.
Ths document s not shared wth vendors.
12. Pre-Bd Conference (PBC): - Optona. A Pre-bd conference s organzed on the
pre-determned date to carfy a the queres of prospectve bdders.
13. Process PBC mnutes: - The mnutes of the pre-bd conference are prepared.
Mnutes of PBC are kept n c-Foders. These mnutes w be approved by CPA.
Approva Procedure n the system: A status proe s assgned to the documents
foder. The status proe conssts of compete approva route wth a seres of
statuses (e.g. Prepared TC Revew Approved by CPA) and authorzatons
for each of the status. Deaer omcer sha send notcatons to the approvers
from the foder contanng PBC mnutes. The approver can access the foder wth
the nk n the notcaton and set the status. If the approver needs the
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carcaton before approvng, then a notcaton s sent to the deang omcer or
any other omcer wth comments.
An abstract of approved PBC mnutes s prepared and ths abstract s shared wth
a vendors.
14. Modfy tender documents and crcuate: - The modcatons to tender
documents, f any, are deberated by tender commttee and approved by
Competent Purchasng Authorty. The modcatons to tender documents
crcuated to a bdders who bought the tender documents.
Amendments to tender documents and approved abstract of PBC mnutes and
carcatons are kept n c-Foders after dgtay sgnng them. Bd nvtaton s
moded, f requred. Last date of submsson aso may be moded, f requred.
An ema s sent to a bdders nformng the modcatons.
15. Receve Bds, EMD: - Vendors submt techno-commerca bds and prce bds
n separate seaed covers. When vendors eectroncay submt bds, nobody
shoud be aowed to open the documents t the pre-determned tender openng
date and tme. Aso, whe openng the techno-commerca tenders, prce shoud
not be vsbe to anybody. Prces shoud be vsbe ony after pre-determned prce
bd openng date and tme. EMD may be receved n the form of a Bank
Guarantee or DD/Pay Order. EMD w be forwarded to accountng department.
Bds: Vendor sha the bd nvtaton wth requred nputs (Dynamc attrbutes,
prce etc detas). The compete tender document (technca & commerca
documents ony) wthout prce detas sha be upoaded after dgtay sgnng
nto c-Foders. The data sheets, f any, are ed n c-Foders.
Compete check sts, appendces and any other documents sha be upoaded n
c-Foders. Bdders can submt bds t the ast date of submsson gven n the bd
nvtaton. Once a bd s submtted, vendor w not be abe to submt the bd
agan. However, he may request the deang omcer through ema to return the
bd for resubmsson. In such cases, deang omcer sha return the bd (Deang
omcer w not be abe to vew the bd) by gvng the bd number. Deang omcer
w be abe to return the bds ony before ast date of submsson.
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Prce detas (a prce condtons) shoud be ony n Bd nvtaton. Any prce
reated documents sha be attached n bd nvtaton (not n c-Foders) ony.
These documents have to be dgtay sgned. A set of prcng condtons reevant
for vendor entry are mantaned n the system. Instructons are gven to vendor
on the prce condtons appcabe n a bd nvtaton.
Bdder s requred to sgn on the bd as we as a documents attached wth bd.
Accordngy provson for dgta sgnature as per IT Act 2000 requred on bd
submsson as we as documents n c-Foders. These sgnatures are to be vered
upon tender openng.
In SRM tenders, a vendors sha be nssted to submt bds aong wth a
appendces nvovng dynamc attrbutes, evauaton matrx, check st etc
through SRM ony. Bdders woud be aowed to submt ony the foowng
documents physcay pror to date/tme of unprced bd cosng:
Documents essentay requred n physca form:
Tender fee n foregn currency, f appcabe
Bd bond n orgna
Sovency Certcate n orgna
Any other certcates/documents requred to be furnshed n orgna or as
certed true copy as per tender requrement (mandatory)
Documents whch can be submtted ether n e-form or n physca form
Annua reports
Supportng documents for past experence
Technca cataogues
Any addtona nformaton/document bdder wants to furnsh.
16. Open Techno-commerca bds (unprced): - On the pre-determned date and
tme of openng technca bds, the technca bds sha be opened n the
presence of vendor representatves.
The system shoud aow the bds to be opened wth due smutaneous eectronc
authorzaton of representatves from purchasng & nance departments.
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Currenty SRM does not support ths functonaty. The technca/commerca
foders are avaabe ony for vewng after openng of techno-commerca bds.
Vendors sha be abe to vew ony ther respectve documents. Summary of the
documents receved from each bdder (ether through SRM or manuay) prepared
and kept n c-Foders for vewng by respectve bdders.
17. Prepare & Sgn Evauaton Matrx: - The evauaton matrx comparson s
prepared and sgned by the tender commttee.
In c-Foders Data sheet comparson gves an exce based report of the vaues
ed by a the bdders. Ths report s saved as an exce e and kept n c-Foders
for addng the ONGC comments. Thus ths new e gves the compete detas of
the data gven by vendors and aso the comments of the ONGC omcers.
18. Forward bds to a concerned for technca/commerca evauaton and obtan
comments wth approva: - The technca bddng documents are prnted and sent
to technca evauaton commttee or ndenters, as requred. The reevant omcers
sha receve the copy of bddng document and deberate. The omcer n charge
sha approve the comments and return the documents. The approved
documents are upoaded nto c-Foders.
Reevant omcers are authorzed to vew the technca documents n c-Foders.
The omcers make a document wth ther comments and on approva upoad the
approved document n c-Foders. Ths s an nterna document and not shared
wth bdders.
Smary, the deang omcer veres the commerca documents and prepares an
evauaton document whch s vetted by a nance omcer. The vetted document s
upoaded nto c-Foders. Ths document s not shared wth bdders.
19. TC meetng for conrmatons and approva: - The comments are receved and
a TC meetng s convened to prepare TC recommendatons for short stng of
bdders or to seek further conrmatons from the bdders. The recommendatons
document s sgned by TC members and endorsed by chef MM and approved by
CPA (f CPA s not Chef MM).
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The document s upoaded n c-Foders and an approprate status proe s
assgned by the deang omcer/admnstrator for approva process.
20. Seek carcatons from bdders: - Optona. Deang omcer sha make a
document on carcatons to be obtaned from each bdder and send t to
respectve bdders. The bdders shoud submt ther carcatons before a cut-oh
date.
Fna approved document s upoaded nto pubc c-Foders for the vendors to
vew. A notcaton s sent to vendors to nform then regardng the document.
Bdder can see the documents and provde the conrmatons. The bdders
conrmaton document s upoaded n c-Foders n hs prvate area.
20a. Obtan carcatons from bdders and consodate: - Optona. Carcatons
receved form a the bdders are comped and crcuated to a concerned n the
organzaton.
Bdders carcatons are comped and the consodated document s kept n c-
Foders. A notcaton s sent by deang omcer to a concerned nformng the
recept of carcatons from bdders.
It s recommended that a requred carcatons are obtaned once wthout
repeatng the process of seekng carcatons many tmes to cut cyce tme.
21. Fna technca comments from a concerned: - Optona. If requred, the step
18 s repeated.
22. TC meetng for short stng of bdders & approva: - Optona. Ths step s
smar to step 19. The comments are receved and a TC meetng s convened to
prepare TC recommendatons for short stng of bdders. The recommendaton
etter s sgned by TC members and approved by CPA or endorsed by Chef MM
and approved by CPA (f CPA s not Chef-MM). Prce bds of these short sted
bdders ony w be opened.
The document s upoaded n c-Foders and an approprate status proe s
assgned by the deang omcer/admnstrator for approva process.
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The short stng of bdders s ndcated n c-Foders by settng status for unshort
sted vendors and an nterface program between SRM & c-Foders sha update
the bds n SRM. The re|ecton ndcator n SRM w be checked n SRM for the
unshort sted bds. The re|ecton ndcator s renamed as Under Revew.
23. Intmaton of prce-bd openng date and tme to short sted bdders: - Prce
Bd openng date & tme s ntmated to short sted bdders.
The prce bd openng date s moded, f requred and nformed to a short-sted
bdders.
23a. (Optona) As per ONGCs tender condtons varatons of tendered quantty
up to 20% s aowed for each tem at ONGCs optons pror to prce bd
openng. In case ths opton s avaed, tender quantty s moded and ntmated
to short sted bdders.
Modcaton to bd nvtaton after the submsson date s not aowed n the
system and hence ths cannot be done n SRM. However, the same s nformed to
vendors through c-Foders notcaton.
23b. Ad|ustment Prce Bds: - Optona. In exceptona cases, bdders need to
submt ad|ustment bds (Deta prce ony) based on the modcatons to the bd.
Sometmes, they are aowed to submt ony decrease n prce.
Modcaton to bd nvtatons/bds after the submsson date s not aowed n the
system and hence ths cannot be done n SRM. However, obtanng the
ad|ustment bds detas can be done through c-Foders and update the detas n
comparson statement.
24. Openng of prce bds: - Prce bds of short sted bdders w be opened n the
presence of vendors representatves.
The system shoud aow the bds to be opened wth due smutaneous eectronc
authorzaton of representatves from purchasng & nance departments.
Currenty, SRM does not support ths functonaty.
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Bds as gven n SRM and ad|ustment prce bd, f any, receved n c-Foders
shoud be opened.
Bdders present are nformed of the prces quoted by other short sted bdders at
ths stage.
25. Prepare & sgn comparatve statement: - A comparatve statement s
prepared and sgned by deang omcer and checked by one hgher omcer.
The prce comparson statement s generated by the BW system whch s seen
from SRM. Domestc prce/purchase preference factors etc, f any, are apped
whe makng the comparatve statement. Landed cost s determned n the
comparatve statement for each tem (or group of tems, as the case may be) n
the bd aso for overa bd. Rankng for each tem or group of tems as the case
may be, s done. The comparson statement s downoaded from the report;
oadng factors are apped and upoaded nto c-Foders for further processng.
Comparsons are aso made of L-1 rates (Evauated rates) wth respect to
correspondng ast purchase rates (LPR) as we as estmates for breng TC/CPA.
Last purchase rate s taken from R/3 and estmates are taken from PR vaues and
comparson sheet s prepared n BW.
25a. Vettng of comparatve statement: - The comparatve statement s vetted by
approprate nance authorty.
25b. Preparaton of bref to TC: - Tota nanca mpcaton for pacement of
orders at L-1prces s to be worked out both vendor wse and work centre wse.
Comparson to be made w.r.t requred fund and avaabe funds for each work
centre. In ntmaton/aert to ndenter and concerned work centers to be made for
addtona funds.
The comparson sheet wth LPR and PR vaues as descrbed n pont 25 s
provded.
25c. TC meetng & Approva: - A TC meetng s convened and recommendatons
are prepared and sgned by TC members. The recommendatons document s
sgned by TC members and approved by CPA or endorsed by Chef MM and
approved by CPA (f CPA s not Chef-MM)
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26. Negotatons wth L1: - Ths step s optona. CPA/Drector sha authorze prce
negotatons as per nterna gude nes. In case, order for same tem s to be
dstrbuted between more than one bdders, same s speccay spet out n
tender. In such cases, negotatons wth bdders (say L-2, L-3) .e. other than L-1
bdder w be nvoved.
Prce may be changed as a resut of negotatons. Prce comparson w.r.t
LPR/Estmates (step 25a) and TC bref (step 25b) are to be repeated, f requred.
Modcatons to bd nvtatons/bds after the submsson date are not aowed n
the system and hence ths cannot be done n SRM. However, obtanng the
ad|ustment bds detas can be done through c-Foders and update the detas n
downoaded comparson statement.
27. Proposa for successfu bdder: - Successfu bdder s decded based on the
rankng n comparatve statement or to the L1 bdder based on the negotaton.
Sometmes, mutpe bdders are decared as L1 bdder.
A proposa s prepared and kept n c-Foders. Ths s not shown to bdders.
28. TC meetng for award of contract and approva/endorsement: - A forma TC
meetng decdes to award the contract to successfu bdder(s) and the contract
terms are nazed. The proposa s approved by competent authorty. If the bd
requres approva of EPC, then steps 25a and 25b are aso requred.
Necessary documents are kept n c-Foders and approvas are obtaned n c-
Foders.
28a. Preparaton and submsson of EPC bref: - A proposa for EPC approva s
prepared wth summary bd data. Ths proposa s forwarded to EPC members.
These are specc formats for check st, summary and annexure of bref to EPC.
SRM to generate these documents.
System sha provde reports from ob|ectve data ke comparson sheets. These
reports can be downoaded and kept n c-Foders aong wth other necessary
documents. These documents are ether prnted and sent to EPC or can be
accessed from the c-Foders.
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28b. EPC approva: - EPC members deberate on the proposa and approve the
document. Sometmes, EPC may ask for revew of the proposa. Then the entre
process (or some steps n the above process) may have to be repeated based on
the comments of EPC. Wthn two days of EPC meetng, EPC ce wth approva of
drector ssues a summary of EPC decson. Detaed mnutes of EPC meetng s
ssued ater on by EPC ce. These approvas are condenta and to be accessed
by seect few ony.
EPC record note can be kept n c-Foders. Based on the EPC record note some of
the steps descrbed above may be repeated.
29. Issue of LOI to successfu bdder(s): - Letter of Indent or Letter of Authorty s
ssued to successfu bdder(s). (In EPC cases, upon the recept of summary of
decson).
The bd nvtaton n SRM s accepted based on the approvas o CPA/EPC.
Then a PO s created n the backend R/3 system based on the acceptance.
30. Reease of EMDs of unsuccessfu bdders: - EMD of unsuccessfu bdders s
reeased.
Ths step s done n R/3 and current R/3 process s contnued.
31. Receve securty depost from successfu bdders and reease EMD: - Securty
depost (Ether Bank Guarantee or DD/Pay order) s receved from the successfu
bdders before awardng the contract.
Ths step s done n R/3 and current R/3 process s contnued.
32. Prepare PO/Contract: - A PO/Contract s prepared based on the successfu bd.
Ths step s done n R/3 and current R/3 process s contnued.
33. Sgn PO/Contract & Transmt: - The PO/Contract s approved (may be more
than one vendor) and transmtted to vendor.
New Dmensons Ohered by e-Procurement soutons
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Reverse Aucton: -
Process of reverse aucton: -
May use purchasers own servers or a hred aucton ste
Aucton open to those who are authorzed to access the ste
Prequacaton
Eectrc bddng takes pace for speced set tme perod
Advantages of reverse aucton
Process Emcency - Reducton of Negotaton Cyce tme
Transparency wth ncreased compettveness
Each bd s a negotaton n tsef, expanded market
Rea Tme Submsson of bds and Compettve Response
Perfect Competton - Market s the Prce Drver
Supper negotates wth market, not wth buyer
A Ouck Tour of ONGC e-Procurement
Lst Open Bd Invtatons
Cck on Process Bd n the eft Pane to nd Bd Invtatons reevant for you.
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Process Bds Page appears n the rght pane as shown beow. Cck on Start
button to see the st of Bd Invtatons reevant for you aong wth Submsson
Deadne and the processng status. If you want to restrct the number of Bd
Invtatons dspayed, pease cck on Extended Search hypernk.
Seect the Sub Deadne from the st as requred and cck on Start button
A
st
of
Bd
Invtatons appears n Search Resut. Cck on any Bd Invtaton number hypernk
to vew the Bd Invtaton.
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The seected Bd Invtaton w be dspayed (Pease see the screen shot beow).
The Bd Invtaton s dspayed n mutpe screens (Genera data-Basc Data,
Genera data-Informaton from Purchaser, Item Data etc).
Genera Data-Basc Data
Basc detas of Bd Invtaton, mportant dates and Tender Fee detas are shown
here.
Genera Data-Attrbutes
Cck on ths tab to see mportant queres to be reped before submttng a Bd.
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Bd Invtaton Documents (Attachments)
Lnk to Attachments
Genera Data - Informaton from Purchaser: Cck on ths tab to see the nk to
documents pertanng to the Bd nvtaton.
Purchase Omcers aso may gve mportant nformaton about the Bd nvtaton
under the headng - Vendor Text.
Cck on the Coaboraton Bd Invtaton to see document attachments pertanng
to the gven Bd Invtaton. Pease note that you shoud aow pop-ups on ths ste.
A pop-up Appcaton s startng.. appears. Cck on OK button n the pop-up.
The document attachments ste w open n a new wndow. You mght see a
Securty Aert wndow as shown beow. Cck on Yes button to proceed.
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Documents Foder Structure
The Document Attachments wndow appears as shown beow.
The Document Attachments wndow appears as shown beow.
Note1: If you get a screen to enter user d and password, pease enter User Id
Guest and password Guest.
Note2: If you get a screen wth an error No Coaboraton exsts. Cck on Home
nk beow the ONGC ogo. From there, seect the Coaboraton Bd Invtaton
Zxxxxxxxx where Zxxxxxxxx s the current bd nvtaton.
The eft pane shows the foders and rght pane shows the contents of the actve
foder. Cck on the arrow to see the compete foder structure.
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The compete foder structure s shown as beow. Cck on any foder to see the
foder contents. The Tender Documents foder contans a the documents
pertanng to the gven tender except amendments. The Amendments to Tender
Documents foder conssts of a Amendments. The Booket foder contans
Tender Booket. Bdders Documents foder contans the outne of mandatory
documents to be submtted by the bdder.
Documents - Vew & Downoad
Each foder conssts of documents. The attachment nk s gven under Current
Verson coumn aganst each document name. The documents w normay have
an extenson .SSIG ndcatng that they are dgtay sgned and encrypted. To
vew or downoad any document, cck on the nk under Current Verson coumn.
Pease note that pop-ups shoud be aowed on ths ste.
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The dgta sgnature of the attachment s vered before aowng you to vew the
contents of the document. The vercaton wndow s opened as shown beow.
Cck on OK button n the pop-up.
Dgta Sgnature Vercaton wndow appears as foows. The dgta certcate of
the person who dgtay sgned the document appears n ths wndow. Cck on
Vew Content nk at the bottom of the wndow to vew the attachment. To
downoad the attachment, rght cck at Vew Content hypernk and cck on
Save Target as
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Once a the documents are vewed, cose the wndows to return to Dspay Bd
Invtaton screen.
Bd
Invtaton - Item Data
Item Data: Cck on Item Data tab to dspay Lst of Items and ther detas n the
Bd Invtaton. Item Overvew screen appears as shown beow on cckng on Item
Data.
Cck on Item number hypernk to see detas of the tem as shown beow.
Item Data - Basc Data: The tem detas ke descrpton, quantty, and Group and
Consgnee wse dstrbuton of the quantty are shown n Basc Data. Port
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Clic% on Item Num&er $yperlin%
to see item details
Consgnee wse quantty (Pt Consgn and Oty coumns) and Utmate Consgnee
wse quantty (Ut. Consgn and Oty coumns) are dspayed here.
Item Data - Informaton from Purchaser: More detas about the tem ke
speccatons are shown here under Vendor Text.
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Open Tender - Snge Bd System
Bref Expanaton:
Open tenders are restored to when tender vaue s more than Rs. 25 akhs except
for the cases fang under snge tender and mted tender categores. For some
open tender snge bd system s foowed. In a snge bd system, bdder submts
the bd documents n one seaed cover, both technca bds as we as prce bd.
There s ony one bd openng date for both technca & commerca bds.
In a open tenders, certan payments are nvoved at tenderng stage. Vendors
need to pay Tender Fee to purchase/downoad the Tender Document.
Durng submsson of tenders, vendors need to pay Earnest Money Depost
(ether as payments or Bank Guarantee). Certan categores of bdders are
exempted from payment of Tender fee and/or EMD (NSIC regd., CPSU etc.)
Lmted Tender - 2 Bd System
Bref Expanaton
Lmted tenders are restored to when tender vaue s ess than Rs. 25 akhs
except for the cases fang under snge tender and mted tender categores.
Some hgh vaue cases may be taken as Lmted tender aso. For a arge and
compex mted tender bds, 2-Bd system s foowed. In a 2-Bd system, bdder
submts the bd documents n 2 seaed covers. One cover conssts of technca
bd and the another cover conssts of prce bd. The bd openng date s dherent
for both the bds. The technca bd s opened rst and a short stng of bdders
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based on the technca crtera s done. Prce bds of short sted bdders w be
opened on the prce-bd openng date.
In a mted tenders, certan payments are nvoved at tenderng stage. Durng
submsson of tenders, vendors need to pay "Earnest Money Depost" (Ether as
payment or bank guarantee).
Lmted Tender - Snge Bd System
Bref Expanaton
Lmted tenders are restored to when tender vaue s ess than Rs. 25 akhs
except for the cases fang under snge tender and mted tender categores.
Some hgh vaue cases may be taken as Lmted tender aso. For some mted
tender, snge bd system s foowed. In a snge-bd system, bdder submts a
the bd documents n a snge seaed cover whch conssts of both technca bd
and prce bd. The bd openng date w be common for both the bds.
In a mted tenders, certan payments are nvoved at tenderng stage. Durng
submsson of tenders, vendors need to pay "Earnest Money Depost" (Ether as
payment or bank guarantee).
Snge Tender
Bref Expanaton
In case of snge tender there s ony one bdder. Generay, snge tender s
oated n the foowng cases: -
PAC tems (Purchase of propretary artces).
OEM n case there are no authorzed deaers/dstrbutors.
On nomnaton bass.
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Payment Process
1.Indgenous payment
2.Import payment
INDIENOUS PAYMENTS
The term "ndigenous Payment refers to making payments to the !endors for the supplies
made with in "ndia. )fter placing the purchase order and when the required material is ready
after inspection with the supplier# supplier sends intimation to (NG& that the items are ready
to be transported and seeks for the decision on transport. (NG& either arranges the transport
or requests the !endor to transport on their transportation depending on the cost of
transportation.
The supplier sends the material to the concerned (NG& Department. )fter sending the
material# the !endor submits the documents as per the Purchase order conditions to (NG&
work center for payment along with the in!oice and .orry receipt or rail receipt through the
bank. )fter receipt of the documents the concerned finance section of the work center !erifies
the documents and the payment is released through the bank if no discrepancies are obser!ed.
"f there are any discrepancies the matter will be sorted out by &orporate MM section with the
supplier and the payments are released accordingly.
Thus# the material reaches work centre from the !endor by rail or road as the case may be.
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Import Payment
"mported Payments refer to the payments made to the !endors who are in foreign countries.
3or making imported payments# some financial tools are used which are describes below:
4ETTER OF CREDIT
) letter of credit 4also called .& or Documentary &redit7 is a secure payment method
undertaken by the buyerGs bank on behalf of the buyer# to pay a seller a gi!en amount of
money. (n presentation of specified documents representing the supply of goods within
specific time limit.
The documents in!ol!ed conform to terms and conditions set out in the letter of credit. )nd
are to be presented at a specific place.
Documentary letter of credit are usually regarded as low risk# as the bank only pays the
beneficiary upon presentation of the documents e!idencing that the shipment of the goods has
been made of the ser!ices pro!ided.
Commerci'( 4etter o1 Cre"it
&ommercial letters of credit ha!e been used for centuries to facilitate payment in
international trade. Their use will continue to increase as the global economy e!ol!es.
.etters of credit used in international transactions are go!erned by the "nternational &hamber
of &ommerce %niform &ustoms and Practice for Documentary &redits. The general
pro!isions and definitions of the "nternational &hamber of &ommerce are binding on all
parties. Domestic collections in the %nited 'tates are go!erned by the %niform &ommercial
&ode.
) commercial letter of credit is a contractual agreement between a bank# known as the
issuing bank# on behalf of one of its customers# authori*ing another bank# known as the
ad!ising or confirming bank# to make payment to the beneficiary. The issuing bank# on the
request of its customer# opens the letter of credit. The issuing bank makes a commitment to
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honor drawings made under the credit. The beneficiary is normally the pro!ider of goods
and$or ser!ices. /ssentially# the issuing bank replaces the bankCs customer as the payee.
E(ements o1 ' 4etter o1 Cre"it
) payment undertaking gi!en by a bank 4issuing bank7
(n behalf of a buyer 4applicant7
To pay a seller 4beneficiary7 for a gi!en amount of money
(n presentation of specified documents representing the supply of goods
Mithin specified time limits
Documents must conform to terms and conditions set out in the letter of credit
Documents to be presented at a specified place
#ene1ici'r$
The beneficiary is entitled to payment as long as he can pro!ide the documentary e!idence
required by the letter of credit. The letter of credit is a distinct and separate transaction from
the contract on which it is based. )ll parties deal in documents and not in goods. The issuing
bank is not liable for performance of the underlying contract between the customer and
beneficiary. The issuing bankCs obligation to the buyer# is to e-amine all documents to insure
that they meet all the terms and conditions of the credit. %pon requesting demand for
payment the beneficiary warrants that all conditions of the agreement ha!e been complied
with. "f the beneficiary 4seller7 conforms to the letter of credit# the seller must be paid by the
bank.
Issuin0 #'n%
The issuing bankCs liability to pay and to be reimbursed from its customer becomes absolute
upon the completion of the terms and conditions of the letter of credit. %nder the pro!isions
of the %niform &ustoms and Practice for Documentary &redits# the bank is gi!en a
reasonable amount of time after receipt of the documents to honor the draft.The issuing
banksC role is to pro!ide a guarantee to the seller that if compliant documents are presented#
the bank will pay the seller the amount due and to e-amine the documents# and only pay if
these documents comply with the terms and conditions set out in the letter of credit.Typically
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the documents requested will include a commercial in!oice# a transport document such as a
bill of lading or airway bill and an insurance documentH but there are many others. .etters of
credit deal in documents# not goods.
A":isin0 #'n%
)n ad!ising bank# usually a foreign correspondent bank of the issuing bank will ad!ise the
beneficiary. Generally# the beneficiary would want to use a local bank to insure that the letter
of credit is !alid. "n addition# the ad!ising bank would be responsible for sending
thedocuments to the issuing bank. The ad!ising bank has no other obligation under the letter
of credit. "f the issuing bank does not pay the beneficiary# the ad!ising bank is not obligated
to pay.
Con1irmin0 #'n%
The correspondent bank may confirm the letter of credit for the beneficiary. )t the request of
the issuing bank# the correspondent obligates itself to insure payment under the letter of
credit. The confirming bank would not confirm the credit until it e!aluated the country and
bank where the letter of credit originates. The confirming bank is usually the ad!ising bank.
4etter o1 Cre"it Ch'r'cteristics
Ne0oti'!i(it$
.etters of credit are usually negotiable. The issuing bank is obligated to pay not only the
beneficiary# but also any bank nominated by the beneficiary. Negotiable instruments are
passed freely from one party to another almost in the same way as money. To be negotiable#
the letter of credit must include an unconditional promise to pay# on demand or at a definite
Time. The nominated bank becomes a holder in due course. )s a holder in due course# the
holder takes the letter of credit for !alue# in good faith# without notice of any claims against
it. ) holder in due course is treated fa!orably under the %&&.The transaction is considered a
straight negotiation if the issuing bankCs payment obligation e-tends only to the beneficiary of
the credit. "f a letter of credit is a straight negotiation it is referenced on its face by Qwe
engage with youQ or Qa!ailable with oursel!esQ. %nder these conditions the promise does not
pass to a purchaser of the draft as a holder in due course.
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Re:oc'!i(it$
.etters of credit may be either re!ocable or irre!ocable. ) re!ocable letter of credit may be
re!oked or modified for any reason# at any time by the issuing bank without notification. )
re!ocable letter of credit cannot be confirmed. "f a correspondent bank is engaged in a
transaction that in!ol!es a re!ocable letter of credit# it ser!es as the ad!ising bank.(nce the
documents ha!e been presented and meet the terms and conditions in the letter of credit# and
the draft is honored# the letter of credit cannot be re!oked. The re!ocable letter of credit is not
a commonly used instrument. "t is generally used to pro!ide guidelines for shipment. "f a
letter of credit is re!ocable it would be referenced on its face.The irre!ocable letter of credit
may not be re!oked or amended without the agreement of the issuing bank# the confirming
bank# and the beneficiary. )n irre!ocable letter of credit from the issuing bank insures the
beneficiary that if the required documents are presented and the terms and conditions are
complied with# payment will be made. "f a letter of credit is irre!ocable it is referenced on its
face.
Tr'ns1er 'n" Assi0nment
The beneficiary has the right to transfer or assign the right to draw# under a credit only when
the credit states that it is transferable or assignable. &redits go!erned by the %niform
&ommercial &ode 4Domestic7 maybe transferred an unlimited number of times. %nder the
%niform &ustoms Practice for Documentary &redits 4"nternational7 the credit may be
transferred only once. 5owe!er# e!en if the credit specifies that it is nontransferable or
nonassignable# the beneficiary may transfer their rights prior to performance of conditions of
the credit.
Si0ht 'n" Time Dr'1ts
)ll letters of credit require the beneficiary to present a draft and specified documents in order
to recei!e payment. ) draft is a written order by which the party creating it# orders another
party to pay money to a third party. ) draft is also called a bill of e-change.There are two
types of drafts: sight and time. ) sight draft is payable as soon as it is presented for payment.
The bank is allowed a reasonable time to re!iew the documents before making payment.)
time draft is not payable until the lapse of a particular time period stated on the draft. The
bank is required to accept the draft as soon as the documents comply with credit terms. The
issuing bank has a reasonable time to e-amine those documents. The issuing bank is
obligated to accept drafts and pay them at maturity
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St'n"!$ 4etter o1 Cre"it
The standby letter of credit ser!es a different function than the commercial letter of credit.
The commercial letter of credit is the primary payment mechanism for a transaction. The
standby letter of credit ser!es as a secondary payment mechanism. ) bank will issue a
standby letter of credit on behalf of a customer to pro!ide assurances of his ability to perform
under the terms of a contract between the beneficiary. The parties in!ol!ed with the
transaction do not e-pect that the letter of credit will e!er be drawn upon.The standby letter
of credit assures the beneficiary of the performance of the customerCs obligation. The
beneficiary is able to draw under the credit by presenting a draft# copies of in!oices# with
e!idence that the customer has not performed its obligation. The bank is obligated to make
payment if the documents presented comply with the terms of the letter of credit.'tandby
letters of credit are issued by banks to stand behind monetary obligations# to insure the refund
of ad!ance payment# to support performance and bid obligations# and to insure the
completion of a sales contract. The credit has an e-piration date.
The standby letter of credit is often used to guarantee performance or to strengthen the credit
worthiness of a customer. "n the abo!e e-ample# the letter of credit is issued by the bank and
held by the supplier. The customer is pro!ided open account terms. "f payments are made in
accordance with the suppliersC terms# the letter of credit would not be drawn on. The seller
pursues the customer for payment directly. "f the customer is unable to pay# the seller presents
a draft and copies of in!oices to the bank for payment.The domestic standby letter of credit is
go!erned by the %niform &ommercial &ode. %nder these pro!isions# the bank is gi!en until
the close of the third banking day after receipt of the documents to honor the draft.
Proce"ures 1or Usin0 the Too(
The following procedures include a flow of e!ents that follow the decision to use a
&ommercial .etter of &redit. Procedures required to e-ecute a 'tandby .etter of &redit are
less rigorous. The standby credit is a domestic transaction. "t does not require a correspondent
bank 4ad!ising or confirming7. The documentation requirements are also less tedious.
Steps in the (etter o1 Cre"it Process
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". 0uyer and seller agree to terms including means of transport# period of credit offered
4if any7# and latest date of shipment acceptable.
"". 0uyer applies to bank for issue of letter of credit. 0ank will e!aluate buyerCs credit
standing# and may require cash co!er and$or reduction of other lending limits.
""". "ssuing bank issues .&# sending it to the )d!ising bank by airmail or electronic
means such as tele- or 'M"3T.
"2. )d!ising bank establishes authenticity of the letter of credit using signature books or
test codes# then informs seller 4beneficiary7.
2. 'eller should now check that .& matches commercial agreement and that all its terms
and conditions can be satisfied.
2". 'eller ships the goods# then assembles the documents called for in the .& 4in!oice#
transport document# etc.7.
2"". The )d!ising bank checks the documents against the .&. "f the documents are
compliant# the bank pays the seller and forwards the documents to the "ssuing bank.
2""". The "ssuing bank now checks the documents itself. "f they are in order# it reimburses
the sellerCs bank immediately.
"P. The "ssuing bank debits the buyer and releases the documents 4including transport
document7# so the buyer can claim the goods from the carrier.
St'n"'r" Forms o1 Document'tion
Mhen making payment for product on behalf of its customer# the issuing bank must !erify
that all documents and drafts conform precisely to the terms and conditions of the letter of
credit. )lthough the credit can require an array of documents# the most common documents
that must accompany the draft include:
Commercial Invoice
The billing for the goods and ser!ices. "t includes a description of merchandise# price# 3(0
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origin# and name and address of buyer and seller. The buyer and seller information must
correspond e-actly to the description in the letter of credit. %nless the letter of credit
specifically states otherwise# a generic description of the merchandise is usually acceptable in
the other accompanying documents.
Bill of Lading
) document e!idencing the receipt of goods for shipment and issued by a freight carrier
engaged in the business of forwarding or transporting goods. The documents e!idence control
of goods. They also ser!e as a receipt for the merchandise shipped and as e!idence of the
carrierCs obligation to transport the goods to their proper destination.
Warranty of Title
) warranty gi!en by a seller to a buyer of goods that states that the title being con!eyed is
good and that the transfer is rightful. This is a method of certifying clear title to product
transfer. "t is generally issued to the purchaser and issuing bank e-pressing an agreement to
indemnify and hold both parties harmless.
Letter of Indemnity
'pecifically indemnifies the purchaser against a certain stated circumstance. "ndemnification
is generally used to guaranty that shipping documents will be pro!ided in good order when
a!ailable.
Common Defects in Documentation
)bout half of all drawings presented contain discrepancies. ) discrepancy is an irregularity in
the documents that causes them to be in non+compliance to the letter of credit. equirements
set forth in the letter of credit cannot be wai!ed or altered by the issuing bank without the
e-press consent of the customer. The beneficiary should prepare and e-amine all documents
carefully before presentation to the paying bank to a!oid any delay in receipt of payment.
&ommonly found discrepancies between the letter of credit and supporting documents
include:
.etter of &redit has e-pired prior to presentation of draft.
0ill of .ading e!idences deli!ery prior to or after the date range stated in the credit.
'tale dated documents.
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&hanges included in the in!oice not authori*ed in the credit.
"nconsistent description of goods.
"nsurance document errors.
"n!oice amount not equal to draft amount.
Ports of loading and destination not as specified in the credit.
Description of merchandise is not as stated in credit.
) document required by the credit is not presented.
Documents are inconsistent as to general information such as !olume# quality# etc.
Names of documents not e-act as described in the credit. 0eneficiary information
must be e-act.
"n!oice or statement is not signed as stipulated in the letter of credit.
Mhen a discrepancy is detected by the negotiating bank# a correction to the document may be
allowed if it can be done quickly while remaining in the control of the bank. "f time is not a
factor# the e-porter should request that the negotiating bank return the documents for
corrections.
"f there is not enough time to make corrections# the e-porter should request that the
negotiating bank send the documents to the issuing bank on an appro!al basis or notify the
issuing bank by wire# outline the discrepancies# and request authority to pay. Payment cannot
be made until all parties ha!e agreed to jointly wai!e the discrepancy.
Tips for Exporters
&ommunicate with your customers in detail before they apply for letters of credit.
&onsider whether a confirmed letter of credit is needed.
)sk for a copy of the application to be fa- to you# so you can check for terms or
conditions that may cause you problems in compliance.
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%pon first ad!ice of the letter of credit# check that all its terms and conditions can be
complied with within the prescribed time limits.
Many presentations of documents run into problems with time+limits. 6ou must be
aware of at least three time constraints + the e-piration date of the credit# the latest
shipping date and the ma-imum time allowed between dispatch and presentation.
"f the letter of credit calls for documents supplied by third parties# make reasonable
allowance for the time this may take to complete.
)fter dispatch of the goods# check all the documents both against the terms of the
credit and against each other for internal consistency.
The Bho(e process o1 openin0 o1 4)C) 'n" m'%in0 p'$ment :i' 4)C) is shoBn throu0h '
1(oB ch'rt*
95
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TYPES ! L"C
Re:oc'!(e
) re!ocable letter of credit allows for amendments# modifications and cancellation of the
terms outlined in the letter of credit at any time and without the consent of the e-porter or
beneficiary. 0ecause this places the e-porter at risk# re!ocable letters of credit are not
generally accepted.
Irre:oc'!(e
)n irre!ocable letter of credit requires the consent of the issuing bank# the beneficiary and
applicant before any amendment# modification or cancellation to the original terms can be
made. This type of letter of credit is commonly used and preferred by the e-porter or
beneficiary because payment is always assured# pro!ided the documents submitted comply
with the terms of the letter of credit.
(NG& opens irre!ocable .etter of credits.
Tr'ns1er'!(e
)n irre!ocable letter of credit may also be transferable. Mith a transferable letter of credit#
the e-porter can transfer all or part of his rights to another party. Transferable letters of credit
are often used when the e-porter is the importerCs agent or a middleman between supplier and
importer# and not the actual supplier of merchandise. Mith a transferable letter of credit# the
e-porter uses the credit standing of the issuing bank and a!oids ha!ing to borrow or use his
own funds to buy goods from a supplier. 5ence# it is a !iable pre+e-port financing !ehicle.
(NG& has tied up with 'T)T/ 0)NK (3 "ND") to open .etter of &redit on its behalf.
(NG& has paid )ppor- s.A?@ &rores as the .& 3ee to '0" in 36+;@@A+@D.

'0" offers .etters of &redit to facilitate purchase of goods in international trading operations.
0acked by '0"Cs strong reputation (NG& is able to build better trust in trade and forge
business relationships faster.
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The bankCs !ast network of branches and correspondent banks enables (NG& to sustain a
seamless flow of business on a wide platform.
The Documents reEuire" 1or openin0 o1 4C Bith the !'n% 're :+
Purchase order with all its amendments 4if any7
0ill of .ading
%ndertaking
1udicial stamp paper of s =@@
.$& co!er note which includes all the clauses of P( :
P( no. and Date.
Deli!ery date and negotiation date.
Transshipment allowed or not allowed
&ertificate of test , inspection and recent manufacturer
0eneficiary address , its banker name
P(. !alue in figure , words.
Port of e-port
Port of unloading
&ertificate of warranty to quality.
3orwarding letter showing the P( no.# date# !alue , party name# and chapter no ,
item no. is mentioned as per import , e-port policy.
INSPECTION
The ndependent nspector s kened to a ed representatve, nvestgator and
poceman reporter and anayst. He may be apponted to attend a vesse at
oadng or dscharge, or a termna nterfacng wth shp, ppene or renery. The
roe the ndependent nspector has to pay w depend on the nstructons and
nvovement of the cent n the shpment.
In attendng a oadng at a crude termna where the cent s an fob seer, the
nstructons may smpy refer to attendance to ascertan quantty/quaty oaded
s as per nstructon to termna and vesse, and matches documentaton
produced. It may be a condton of the contract that nspecton s ether shared
between buyer and seer or pad for by the party requestng t.
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The roe of the nspector s truy to be ndependent so t s worth estabshng that
the nspector so apponted has a record of provdng quaty servce. Most
occasons the work of the nspector w provde back-up to other nformaton. On
the odd occason - when there s an operatona probem or n more extreme
cases a dspute eadng to tgaton - the nspector w be vauabe n
ascertanng the roe payed by the shp.
It s crtca that a partes - shp, shore, buyer, and seer - are aware of the
nspectors roe. Smpy put, an nspectors roe s EITHER to act as wtness to the
quantty determnatons made by vesse and shore OR to actuay determne
quantty and quaty hmsef. It s worth nothng that the saes contracts of some
ma|or o companes ca for the nspector to be a wtness n the cases of
transactons at any termna owned by that company wth the O/O determnaton
beng carred out by the termna, whereas f the company s buyng or seng at
a thrd party termna they w request determnaton by the nspector.
DEMURRAGE
Demurrage - charge for excess aytme ncurred n oadng or dschargng a
vesse - s a specazed sub|ect and often assgned to a specast. Operatons
w encounter demurrage as they may be the rst company stah to see a vesse
tme sheet or sang teex.
There are essentay two forms of demurrage:
1. SUPPLY OR CONTRACT DEMURRAGE: that assocated wth an o saes
contracts or termnang arrangement where a supper or a recever of the
cargo (or termnang company as the case may be) has a duty to turn the
vesse oadng or dschargng around wthn the speced aytme- typcay
36 hours for a straght forward crude o shpment. Ths may be reated to
the charter party demurrage rate (see the exampe gven beow), or a rate
to be determned by an accepted source - for exampe the London Tanker
Brokers Pane, or a pubshed rate as AFRA. AFRA - Average Freght Rate
Assessment - s pubshed monthy by the AFRA pane and sts rates n
Word-scae terms appcabe to key tankers szes. Access to AFRA rates s
by subscrpton.
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2. CHARTER PARTY (CP) DEMURRAGE - that assocated wth the Charter Party
as speced between owner and charterer and typcay 72 hours for the
voyage. The exact terms (rate) w be speced n the CP.
There are occasons where the shpper may prot from demurrage. Take for
exampe the case where the vesse takes 48 hours aytme at the oad port
resutng from deays caused by the shore supper but ony 24 hours at
dscharge port. If 36 hours s aowed under a suppy contract, the shpper may
be abe to cam 12 hours demurrage from the supper but not abe to any CP
demurrage. In some cases, suppers may nsert a cause ehectvey mtng
ther abty to a porton of any CP demurrage ncurred. Some suppers do not
pay demurrage at a!
Operaton stah shoud be aware of the foowng. Many Charter part Demurrage
causes contan a tme-bar - usuay 60 or 90 days. In other words, a cam has to
be aunched n wrtng a certan tme of the event takng pace. Aso more
companes are ncorporatng causes denng payment demurrage wthn a
speced tme after recept of nvoce and documentaton. In the past ths
tended to be an area whch was forgotten about and substanta sums can
accrue. Demurrage cams are st overooked, sometmes put at the bottom of
the paper pe; but ths can be an expensve practce.
SHIPPING - RISKS AND OPPORTUNITIES:
In todays tradng envronment, even the smpe purchase of a cargo of crude o
can generate a wde varety of optons for the operatons coordnator. For
exampe, a West Afrcan cargo has been purchased fob. The ob|ectve s to trade
t to the US Guf. A company controed vesse s baastng to West Afrca, whch
ooks as though t coud meet the schedued ftng date range.
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The crude prce rsk management aspects-hedgng the purchase on Brent,
coverng the dated/forward rsk wth a contract for dherence swap, hedgng the
WTI-based sae prce- coud a be put n pace at the tme of the dea or any tme
thereafter. But the physca transport of the cargo to the US ohers both rsks and
opportuntes.
In the 1970, the pattern woud have been predetermned by supper and
recever pannng. Now the combnatons coud be as foows, the seecton of
na devery mode w depend on severa factors and ob|ectves:
Se the cargo fob; charter out the company vesse on the market.
If sumcent prot (whch may be hedged) can be made between the nta
purchase and fob sae, then no further nvovement may be consdered usefu.
Shppng nvovement may not be seen as an advantage n ths partcuar dea.
Se the cargo fob and charter out the company vesse to the buyer of the
cargo.
A varaton of the rst case, agan eavng the buyer wth shppng responsbty.
Load the cargo on the company vesse and se CFR (Cost and Freght), CIF
(Cost , Insurance, Freght) or DES (Devered exshp)
A shppng nvovement may appear to oher greater prot potenta. Contnued
contro up to the pont of sae n the rght knd of market may be beneca.
There may be an opportunty to prot from freght- for exampe by usng a arger
vesse than typca for the route and on whch the anded market vaue of the o
s generay assessed. The company may wsh to rase ts proe as a seer of o
wth devery capabty. The decson to go for CFR, CIF or DES then depends on
the eve of rsk the company fees t wshes to take on versus addtona prot,
DES of course gvng most rsk on B/L versus out-turn voume.
Charter n a vesse to oad the cargo and se CFR, CIF, DES; charter out
the company vesse on the market.
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There may be an opportunty to prot from the cargo sze avaabe for oadng
and add prot by oadng on another vesse.
Now-a-days many smaer tradng companes combne o and shppng
operatons; to some extent t s st fragmented n the ma|ors for management
reasons, but anyone who has worked n a sma tradng omce w have
recognzed the vaue of combned operatons. Knowedge of shppng
movements provdes usefu ntegence on deas done and other companes
suppy patterns. Addtonay t shoud be noted that some companes specaze
n provdng a tanker trackng servce.
SINGLE VOYAGE
Havng ased wth charterng personne to arrange a spot xture, operatons w
have to tak to broker/owners on the post xture operatons asde, together wth
agents and termna personne. Voyage orders to chartered vesses w be sent
va brokers through to owners and vesse. Athough owners pay for agency n
voyage charter, agents may, dependng o n the terms of the n voyage charter
party (CP), be apponted by charterer. In any event, the charterer may wsh to
appont hs own "protectve" agents as n fact occurs occasonay wth some fob
saes on cargoes where there are a number of nterests.
The sgncance of vesse ETAs (Expected Tme of Arrva) n reaton to a snge
voyage charter cannot be overstressed. If the vesse s, or s antcpated to be,
arrvng after ay days and thus, presumaby, after the FOB purchase ftng
wndow, ths stuaton coud create a breach of contract for the charterer as o
buyer. The charterer s then faced wth severa optons to remedy the stuaton:
Get agreement from seer t o defer the ftng wndow;
Fnd an aternatve potenta buyer wth a vesse and carry out an
exchange; or
Charter an aternatve vesse to meet the ftng wndow- f possbe.
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Recovery from the tanker owner of any damages on the o tradng sde s ony
key f the vesse had msed the charterer over the ETA or was aware of
crcumstances that woud ater the ETA and dd not dscose them.
Consder aso the mpcatons for any hedgng programme, whch mght as a
resut of deay on voyage requre a roover of a hedgng month wth consequent
transacton costs or ncrease n bass rsk. Agan t s unkey that the charterer
w be abe to recover these, provded that deay was outsde the owners contro
and ETAs were advsed n accordance wth the CP.
TIME CHARTER
Orders to tme chartered vesses w be sent drect to the vesse and coped to
the owners. The operator handng the tme chartered vesse needs to ensure
that agents are apponted and nstructed for each port. From tme to tme,
owners may prefer to appont (and pay for) ther own agents at a port to hande
matters for owners purposes such as crew change.
The agent w aso be a source of up-to-date nformaton on port condtons
rangng from berth and harbour physcas dmensons to outook for deay and
port costs and requrements or restrctons.
The operator of a tme charter vesse w be payng attenton to servces
requred by the vesse n addton to other cargo aspects- such as baast factes
and bunkers. Athough not drecty responsbe for owners and vesses needs, t
s n hs nterest- as t may save probems and tme ater- to be aware of the
suppes of stores and water and whether or not repar factes are avaabe or
whether repars can be carred out aongsde.
A orders shoud ncude consgnor and supper, grade and quantty of cargo n
compance wth Charter party (CP) terms, outward destnaton (port or area),
name of consgnee and recever at dscharge port (f known). The operatons
personne w have to consder restrctons that may cause dead freght at oad
port (such as draft or cubc capacty of vesse), on passage (such as canas), and
at dscharge port, and evauate whether these can be overcome most
economcay by, for exampe, ghterng or short-oadng. Care must be taken on
103
routng f orders are to be changed (wthn charter terms) to ensure that the
vesse s abe to enter a dherent oad ne zone wth the cargo on board.
Operatons personne may aso be requred to keep an eye on a vesses voyage
performance a part of the ongong performance audt process and wth a vew to
nputtng to a company database on tankers for future reference n charterng
actvty.
Such voyage performance w ncude the abty of the owner to react to the
charterers nstructon wth deay as we as Charter Party performance aspects
such as the speed and consumpton of the vesse and dschargng capabty,
whch n the case of a tme chartered vesse are essenta n revewng CP
performance aganst descrpton.
In the event that a vesse on voyage charter arrves at the dscharge port and
documents are not avaabe, as frequenty s the case n these days of chans,
the master/owner w requre a etter of ndemnty- part of an exampe of whch
s gven n APPENDIX I. The wordng s usuay ncorporated nto the Charter party.
At ths stage the LOI wordng may ncorporate a cause requrng the LOI to be
ssued by a rst cass bank (on behaf of the charterer) whch s acceptabe to the
owner.
Deay n presentaton of a B/L or LOI w be for the charterers account.
VESSEL ARBITRAGE
Vesse arbtrage can take the form of mprovng tmng or sze wth consequent
freght savngs.
In the case of the tmng arbtrage, the payer w re-et (charter-out) on
expectaton that the rate he w obtan w be the same (perhaps mprovng hs
deay stuaton) or greater than that obtaned for a smar vesse at the
subsequent charter-n.
For exampe, a cargo has to be oaded 17-19 November. A company vesse
shows ETA at the oad port of 14 November. If the vesse can be chartered out at
Wordscae 70 for oadng 17 November then 3 days deayed w be saved.
104
The sze arbtrage pays on the nomnazaton aspect of charterng can be seen
n regonay estabshed markets.
For exampe, s a 125,000 tonner (a vesse wth cargo carryng capacty of
125,000 tonnes) w charter on trade (n the freght sense) at Wordscae 65,
then a 130,000 tonner w be key to trade at Wordscae 62.5.
In other words, tonnage mutped by freght s a constant wthn reasonabe
bounds- n a gven trade route and wthn a smar sze and type category vesse.
Thus a thngs beng equa, f you have a 125,000 tonner and t ts a cargo,
charter t out and repace t wth a 130,000 tonner charter-n, then try to out
the cargo, whch may be avaabe anyway on the purchase toerance.
Of course there are other dmensona mpcatons: does the vesse t the
dscharge port? W addtona ghterng be requred- f so at what cost?
ALTERNATIVE ON DISCHARGE
A payer has oaded a cargo of Araban crude for the West. Leavng asde cargo
prcng ramcatons he has decded to dever to the US Guf. The optons coud
be as foows:
Dscharge at LOOP (Lousana Oh-shore O Port) for on-shpment by
ppene assumng capacty through LOOP s avaabe.
At around Wordscae 60 n 2001 terms the freght woud work out around
$1.70/barre. However, to ths has to be added the cost of dstrbuton through
LOOP whch woud of course depend on destnaton and for oca US Guf area ths
coud be $0.30-$.60/barre.
Lghter n the US Guf.
In 2001 terms, and assumng the ghterng was a 12 day exercse, tota devery
cost woud approach $2.10/barre
Hod n oatng storage (vesse) and ghter as approprate.
Cost as above pus oatng storage charges, whch woud be about $0.30-
$0.50/barre per month
105
Trans-shp across the |etty n the Carbbean to a shutte shp deverng
drect to the renery on the Guf Coast.
Assumng a shutte cost of Wordscae 150, agan at 2001 rates, ths woud work
out at around $2.25/barre.
Put nto storage n the Carbbean and shutte as approprate.
Tota devery costs woud approxmate to $2.30-2.50/barre for say 10 days
storage and woud escaate wth the storage perod. Storage costs may work out
between $0.15 and $0.30/barre per month.
A word on the assumptons: there s aso a sma n-transt oss when any
ghtenng or trans-shpment takes pace (0.2 percent based on typca ndustry
averages) whch s not ncuded n the costs dented above. The Carbbean has
been assumed to cover the area ncudng the ower Netherands Antes to the
Bahamas. The Bahamas may work out a few percents per barre more than
ghtenng for US Guf devery dependng on the reatonshp between VLCC and
shutte freght costs. It s, however, partcuary we paced for servcng the US
Atantc Coast reneres (such as Phadepha).
TRANS-SHIPMENT ACROSS |ETTY
Dependng on tramc congeston, many termnas w oher the user the
opportunty to trans-shp across the |etty to avod addtona handng oses n
and out of tankage, whch w attract ower fees than short term spot storage.
In the case of crude o, ths may aso be usefu as a repacement for ghterng,
beng possby more secure, athough t may be more or ess expensve
dependng on the overa ogstcs pattern of the vesses nvoved and freght
rates.
Exampe: cargo from Persan Guf to Phadepha.
$/bb
s
Route a) VLCC trans-shp across |etty at Bahamas as @ W60 11.99/7.3 = 1.64
Shutte Bahamas to Phadepha @ W115 = 0.49
106
Across |etty fee = 0.08
Tota = 2.21
Route b) 130,000 tonner moves PG to Phadepha (va Suez)
130,000 tonner Md East Guf to Phadepha @ W100 = 2.50

TERMINAL REGULATION
Regardess of the type of dea, the Termna Reguatons w form part of the
contract. These w ncude advce on areas such as:
Potage and tugs
Avaabty of servces: baast, bunkers, stores, water, repars etc.
Nomnaton, ETA and NOR procedures.
Laytme and demurrage - demurrage may be dened as dependent on
parces oaded, whether or not reated to AFRA or another freght
determnaton, whether mted to the charter party demurrage cacuated
or charged.
Vesse routng - of ncreasng mportant n a pouton conscous
envronment.
GENERAL POINTS
Anyone nvoved n storage or trans-shpment on a reguar or term bass shoud
gve consderaton to an nspecton of the termna n the same way as one woud
nspect a tanker pror to charterng. Areas of partcuar mportance are as
foows-
TANKS: Number and sze, whether or not xed wth bottom dran, some
companes ony provde gross n and out servces f a bottom Cran s
tted, free water can be drawn oh, roof dran provson gven oca cmate
condtons, whether heatng and mxes are avaabe.
DEBALLASTING FACILITIES: Whether cean baast has to be pumped
ashore nes: vaue separaton, externa nterfaces and meterng.
POWER RSUPPLY: whether sef generated or dependent on thrd party.
107
MARINE FACILITIES: re and pouton contro.
LABORATORY: range of test that can be performed, whether a truy
ndependent nspecton servce s avaabe.
ADMINISTRATION: contro room factates, securty and safety.
DISCHARGE
Pror to a shps arrva at the dscharge port, the operators (shpper, buyer, seer
as approprate) shoud check the status of tte documents and executon of any
etters of ndemnty that may be requred and n the case of DES terms possby
any out-standng etter of credt requrements that shoud be fued.
The vesse w have gven ETAs under ts charter party terms and the
operators w have ensured that, wth or wthout ghterng as approprate, the
vesse s abe to enter the port and proceed to a safe berth as agreed.
Once a berth the vesse has to dscharge cargo, baast and vacate the
berth as expedtousy as possbe. A ths must be done wth the nterests of
charterer, cargo recever, cargo owners and shp owner n mnd. The cargo
owner may be concerned that the vesse strps as much cargo out as possbe as
he wants to ensure any osses are mnmzed. The cargo recever may be
concerned about contract demurrage abty; he may have other vesses to
servce. The charterer may want the vesse turned around as qucky as possbe
to avod any Charter party demurrage abty.
At ths pont t s aso essenta to estabsh that the vesse s aware of port
reguatons and practces. For exampe, the practce of crude o washng may be
mted for reasons of berth occupancy (n some cases charges may be made for
excess berth occupancy) or mtaton on oss of ght cargoes. A partes and n
partcuar the vesse must be aware of such practces n advance to prevent
nterrupton that may be otherwse caused by the need for dscusson wth
seer/recever/buyer/shpper nvoved durng the actua cargo operaton. In ths
respect, whst ntay operators may rey on agents for eary advce, the
servces of an nspector on the ground at dscharge can be usefu n ensurng the
vesse meets the requrements and w provde vauabe feedback to operatons
108
personne for future movements nto the port. Of course, n some cases, a
company may have ts own empoyees fung ths roe.
Contnung on the theme of nspecton, t s mportant that the sampes of
matera on board the vesse at arrva, n any nes between vesse and tank, and
n recevng tanks, are taken pror to dscharge. In case of product shpment ths
acton s crtca.
In the event of mutpe port dschargng, t s necessary to gve the vesse
advance notce of dscharge quanttes and grades at each port at the earest
opportuntes and grades at each port at the earest opportunty. In the case of
compex cargoes such as cean products and ubrcants, the approprate tme
may even be pror to oadng.
In the event that a grade s dscharged at 2 or more ocatons, dependng
on contractua arrangements, ths may requre the reaocaton of Bs of Ladng.
For exampe, a vesse oads 100,000 tonnes net of gaso for dscharge,
60,000 tonnes to a consgnee at port A and 40,000 tonnes to a consgnee at port
B. Assume port A receves 60,500 tonnes based on out-turn and port B receves
39,300 tonnes based on out-turn. A tota of 99,800 have been dscharged yet on
the face of t, A has made a .08 percent gan and B a 1.8 percent oss.
Ceary there has been an overa oss whch shoud be borne equay.
Reaocated bs of adng woud pro rata ths and show 100,000 tonnes oaded
bass 60,621 tonnes for port A and 39,379 tonnes for port B. Thus ths way A
and B w both have experenced a 0.2 percent oss on out-turn - a more
equtabe souton.
Fnay, have competed dscharge, the cargo owners and spot charterer
w have no further nterest n the vesse, save that regardng any cams foow
up on cargo quantty, quaty oss or demurrage. The vesse owner or tme
charterer w be ookng to expedte port departure, as tme wthout cargo means
tme wthout freght earnngs.
#u$er
) buyer is one who requires material and in order to fulfill its requirement he purchases the
109
same from the supplier.
3low of e!ents that takes place in making payment !ia ..&. are as follows:
=. 0uyer and seller agree to conduct business.
;. The seller wants a letter of credit to guarantee payment.
<. 0uyer applies to his bank for a letter of credit in fa!or of the seller.
E. 0uyerCs bank appro!es the credit risk of the buyer# issues and forwards the credit to its
correspondent bank 4ad!ising or confirming7. The correspondent bank is usually located in
the same geographical location as the seller 4beneficiary7.
?. )d!ising bank will authenticate the credit and forward the original credit to the seller
4beneficiary7.
F. 'eller 4beneficiary7 ships the goods# then !erifies and de!elops the documentary
requirements to support the letter of credit. Documentary requirements may !ary greatly
depending on the percei!ed risk in!ol!ed in dealing with a particular company.
A. 'eller presents the required documents to the ad!ising or confirming bank to be processe
for payment.
D. )d!ising or confirming bank e-amines the documents for compliance with the terms and
conditions of the letter of credit.
>. "f the documents are correct# the ad!ising or confirming bank will claim the funds by
debiting the account of the issuing bank.
=@. )d!ising or confirming bank will forward the documents to the "ssuing 0ank.
==. "ssuing 0ank will e-amine the documents for compliance. "f they are in order# the "ssuing
0ank will debit the buyerCs account.
=;. "ssuing 0ank then forwards the documents to the buyer.
=<. 0uyer than send the documents to the respecti!e ports and thus the material is recei!ed.
Incoterms
The current Incoterms are:
110
EXWEx works
FCA Free Carrer
FAS Free Aongsde Shp
FOB Free on Board
CFR Cost and Freght
CIF Cost, Insurance and Freght
CPT Carrage pad to
CIP Carrage and Insurance Pad To
DAF Devered At Fronter
DES Devered Ex-shp
DEO Devered Ex-Ouay
DDU Devered Duty Unpad
DDP Devered Duty Pad
It shoud be noted that Incoterms ony cover a mted range of ssues and they
shoud not be reed upon to answer a ssues wth respect to the sae. For
exampe, they do not ncude any force ma|eure denton, destnaton
restrctons, etc.
FOB
In contract the term fob s foowed by a named port (e.g. fob Augusta) or an
agreed range of ports (e.g. fob ARA). In the basc fob o sae contract the seer
must, durng the stpuated devery perod, put the o on board a vesse
nomnated by the buyer at the agreed port named n the contract. The seer s
responsbe for a changes and rsks up to the tme the goods cross the shps ra
at whch tme the property and rsk pass to the buyer. The buyer must nomnate
a shp and s responsbe for a charges after the goods cross the ra, ncudng
stowage, freght, marne nsurance, unoadng charges, and mport dutes.
It shoud be noted that under Engsh aw, n addton to the obgatons of
the seer set out n Incoterms, a fob seer must, under s.32(3) of the UK Saes of
Goods Act 1979, gve the buyer - n crcumstances n whch t s usua to nsure -
due notce enabng hm to nsure the o tradng sea transt. If the seer f as to
do so the o s deemed to be at the seers rsk durng the sea transt.
111
The abtes of the partes under a fob contract are aso dened by ay
specc trade custom or custom of the port. For exampe: n o tradng a trade
usage exsts accordng to whch a fob buyer has to gve the seer tmey notce
of oadng.
It shoud be noted that n the Unted States, the term fob s no onger
soey reated to vesses, and under s.2-319(1) of the Amercan Unform
Commerca Code (UCC), fob has become a genera devery term, (ke free
devery at named destnaton) whch, on occason, can cause some confuson. It
has been sad that the equvaent of a fob contract, as that term s understood n
the UK and the Commonweath, s "Fob Vesses" n the US.
CIF
Under a cf contract the buyer pays a combned prce coverng the cost of the o,
an nsurance pocy coverng ts carrage and the cost of the carrage (.e. freght
cost) to the port/termna of destnaton. The seers obgatons are performed
by transferrng to the buyer, n return for the prce, the documents representng
the goods: the nvoce for the prce, the nsurance pocy and the b of adng
receved from the carrer durng the contract perod. Ths s consdered to be
equvaent to the devery of the goods themseves.
The seers obgaton therefore ncudes makng a the necessary
arrangements for the safe carrage of the o to a named destnaton (e.g. cf
Hamburg). Ths ncudes shppng the goods wthn the proper tme under a
reasonabe contract of carrage and marne nsurance pocy (under whch the
buyer w be entted to make cams and receve the proceeds of such cams n
the event of cargo oss) and then tenderng the documents to the buyer who
then n turn becomes obged to pay the agreed prce wthn
an agreed tme. Once the documents are accepted the tte and rsk pass to the
buyer, and the buyer s then responsbe for any mport censes, mport dutes
and subsequent costs of unoadng, etc.
The utty of the cf contract es not ony n the fact that the buyer
receves the documents and thus the o wth a expenses pad to ther
destnaton, but that the buyer may, before the o s shpped or whe aoat,
rese t before t reaches ts destnaton.
112
There are severa varants on the cf contract, the most mportant n the o
trade s the cf out-turn contract deveoped n the US. Here, by means of a pece
ad|ustment, the buyer ony pays for the actua amount of o devered, rather
than the amount oaded as per b of adng. Because ths s ntended ony to
reate to the determnaton of prce, US courts have rued that such causes do
not ahect the charterer of the contract, whch remans a true cf contract.
FORMAT FOR 4ETTER OF CREDIT5FO#6
FROM *5 NAME & ADDRESS OF OPENIN #AN& 6
TO *5 NAME & ADDRESS OF AD=ISIN #AN& 6
5FOR 3'("i' Shipments 6 STATE #AN& OF INDIA O=ERSEAS #RANC3 &O4&ATA
S8IFT CODE
S#ININ##-,D
5FOR =iH'0 Shipments 6 STATE #AN& OF INDIA O=ERSEAS #RANC3 =I?A
S8IFT CODE
S#ININ##-+.
E@) T6P/ (3 .$& :"/2(&)0./
;@ .$& Number :
<=& D)T/ (3 "''%/ :
<=D DT. , P.)&/ (3 /PP"6 : RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR"N "ND")
?@ N)M/ , )DD/'' (3 T5/:
)PP."&)NT
?= N)M/ , )DD/'' (3 T5/: 'teel )uthority of "ndia .imited#
0/N/3"&")6 &entral Marketing (rganisation#
E@ 1.N.oad# &alcutta+A@@@@=# "ndia
113
<;0 )M(%NT (3 &/D"T "N :
%' D(..)' $/%($)N6
(T5/ 3//.6
/P&5)NG/)0./ &%/N&6
4"N 3"G%/' , M(D'7
<>) P/&/NT)G/ &/D"T : )' P/ &(NT)&T
)M(%NT T(./)N&/
E=) &/D"T )2)".)0./ M"T5: 'T)T/ 0)NK (3 "ND")# K(.K)T)$2"J)G
&/D"T )2)".)0./ 06 : P)6M/NT
E;& %')N&/ (3 T5/ D)3T' : )T '"G5T
E;) D)3T' T( 0/ D)MN (N:
E<P P)T"). '5"PM/NT : )' P/ &(NT)&T
E<T T)N'5"PM/NT : )' P/ &(NT)&T
EE) '5"PM/NT 3(M :
EE0 '5"PM/NT T( :
EE& .)T/'T '5"PM/NT D)T/ :
E?) D/'&"PT"(N (3 G((D' :
a7 Description of Materials
b7 'i*e 4 in mm7 4e-cept for Pig "ron7 and Ouantity 4in MT7
c7 'pecification
d7 Tolerance 4e-cept for Pig "ron7
e7 Ouantity
f7 Ouantity Tolerance
g7 Price per MT 4in %'D$/uro$any other freely e-changeable currency7
EF) D(&%M/NT' /O%"/D :
=. 0eneficiaryGs &ommercial "n!oice + one original plus two signed copies co!ering materials
shipped.
"n!oices will be raised on the basis of 4T5/(/T"&).$ )&T%).$ D)3T '%2/67
M/"G5T.
;. 3ull set <$< original on board ocean or charter party 0ills of .ading 4&(NG/N7 issued to
the order of
114
the 'hipper and blank endorsed marked 8'towed under deck9 further more marked 8freight
prepaid$freight payable as per
charter party$ freight to pay9 e!idencing shipment from RRRRRRRRRR Port# "ndia to RRRRRRRR
Port in RRRRRRRR . 0ills of
.ading 4&(NG/N7 with remarks 8Materials partly rust stained$ rusty edges$ wet before
shipment$ rust stained$ some rusty
edges9 and$or 8unprotected cargo9 and$or 8said to be9 and$or 8said to weigh9 and$or 8stored
in open area prior to loading9
are acceptable.
<. Morks Test &ertificate in duplicate issued by the 'teel Plant 4s7 of the beneficiary and
confirming that
the materials are as per contracted specification.
E. Pre+ shipment "nspection certificate issued by M$s .# 4herein after referred to as 7
certifying the following:
4a7 The materials were inspected prior to loading at the load port and that the markings were
as per General Terms
and &onditions for /-port43(07 between beneficiary and the opener.
4b7 Ouantity loaded on board the !essel.
4c7 The materials were loaded on board the !essel without apparent damage and were found
to be in good order
and condition. That the loading was done under their super!ision # and were properly lashed
and secured 4e-cept for pig
iron7 inside the hatches $ holds of the !essel.
emarks such as 8materials partly rust stained$ rusty edges$ wet before shipment$ rust
stained$ some rusty edges9
and$or 8stored in open area prior to loading9 and$or 8unprotected cargo9 appearing on Pre+
shipment inspection certificate
are acceptable.
?. 0eneficiaryGs packing list 4e-cept for pig iron7 indicating details of the materials shipped +
< copies.
F. &ertificate of origin.
A. &opy of Tele-$e+mail or 3a- from 'teel )uthority of "ndia .imited# RRRRRRRR $
&).&%TT)$ N/M
115
D/.5" addressed to the openerGs 3)P No. RRRRRRRRRR within 3"2/ working days after the
on board 0ill of .ading
4&(NG/N7 date ad!ising the name of the !essel# 0ill of .ading 4&(NG/N7 number and
date# materials and quantity#
destination ports in RRRRRRRRRR 4&ountry7.
EA) )DD"T"(N). &(ND"T"(N' :
=. (cean freight is payable by the openers o!er and abo!e the !alue of this .etter of &redit.
;. Marine "nsurance to be co!ered by the opener.
<. "n the e!ent of 4a7 the failure of the opener to nominate a suitable !essel within ;= days#
including lay days # from
the date of beneficiaryGs Notice of eadiness of cargo 4herein after referred to as N(7 (
4b7 the !essel nominated by the
opener and accepted by the beneficiary failing to arri!e at RRRRRRRRRR port within ;= days
including lay days from the date
of N( for reasons other than 3orce Majeure as defined under &lause =@ of the said contract
( 4c7 the !essel 4nominated
by the opener and accepted by the beneficiary7 being found unsuitable after its arri!al at
RRRRRRR Port as certified by
independent marine sur!eyors# this credit is payable at sight at your counters in
Kolkata$2i*ag against presentation of
beneficiaryGs draft drawn on oursel!es for =@@ per cent !alue of in!oice accompanied by the
following documents:
a7 0eneficiaryCs commercial in!oice in duplicate.
b7 &opy of 0eneficiaryGs Notice of eadiness#
c7 (ne copy of Morks Test &ertificate issued by the 'teel Plant 4s7 of the beneficiary.
d7 &ertificate issued by M$' ...............# certifying that the materials were inspected at the
storage yard of the
beneficiary at RRRRRR Port and that the markings are as per requirement of the said contract
and that the materials are in
good condition and further that the materials and quantity as per the &ommercial "n!oice are
ready for shipment.
emarks such as 8materials partly rust stained$ rusty edges$ wet before shipment$ rust
stained$ some rusty edgesG and$or
116
Lstored in open area prior to loadingG and$or Lunprotected cargoG appearing in the Pre+
'hipment "nspection &ertificate are
acceptable.
e7 0eneficiaryGs declaration that suitable !essel has not been nominated by the opener within
;= days including lay
days from the date of N( ( that the !essel nominated by the opener and accepted by the
beneficiary failed to arri!e at
RRRRRRRR Port within the agreed lay days for reasons other than 3orce Majeure as defined in
&lause No. =@ of the said
contract ( that the !essel 4nominated by the opener and accepted by the beneficiary7 being
found unsuitable after its
arri!al as certified by the independent Marine 'ur!eyors 4copy of certificate of Marine
'ur!eyors to be presented in such an
e!ent7 as the case may be.
f7 0eneficiaryGs declaration that 4i7 the materials as mentioned in the commercial in!oice will
be held in custody by
the beneficiary at the risk and responsibility of the opener at the storage yard of the
beneficiary at 5aldia$2i*ag Port. 4ii7
The materials will be co!ered by tarpaulin at the cost of the opener. 4iii7 The Materials shall
be held by the beneficiary free
of ground rent for a period of <@ days from the date of payment 4against documents
negotiated under this clause7 and for
storage e-tending beyond <@ days from the date of payment the ground rent calculated at the
rate of %'D =.@@ per metric
tonne for =? days or part thereof upto <@ days shall be paid by the opener to the beneficiary
and for the period beyond this
till the date of acceptance of !esselsGs N(# when the !essel finally calls at the loadport# the
cost of holding the materials
shall be paid by the opener to the beneficiary at the rate of %' S = per metric tonne for e!ery
week4s7 4A days7 or part
thereof. 4i!7 %pon nomination of suitable !essel within reasonable time by the opener for
taking deli!ery of the materials for
which payment has been reali*ed by the beneficiary as aforesaid and subject to such !essel
arri!ing at 5aldia$2i*ag Port
117
within the agreed lay days# the beneficiary shall at his cost deli!er 3(0 4'towed7 as per terms
of the said contract the
materials for which payment has been reali*ed by the beneficiary as aforesaid.
E. )ny amendment to the letter of credit without the prior written consent of the beneficiary
shall not be taken cogni*ance of
under this letter of credit.
A=0 &5)G/' :
)ll 0ank charges incurred outside "ndia shall be borne and paid for by the opener.
)ll 0ank charges incurred in "ndia shall be borne and paid for by the beneficiary.
ED P/"(D 3( P/'/NT)T"(N :
Mithin ;= days from the date of 0$..
E> &(N3"M)T"(N "N'T%&T"(N':
Paying 0ank may add their confirmation to this .etter of &redit at the request and e-pense of
the beneficiary and
such confirmation shall also apply to any amendment 4s7 to this credit.
AD /"M0%'/M/NT "N'T%&T"(N':
%pon presentation of documents complying in all respects to .etter of &redit terms# the
negotiating bank is
authorised to claim on us by tested tele- certifying that all terms and conditions ha!e been
complied with and that the
relati!e documents ha!e been forwarded to us by egistered )irmail$ &ourier. Me undertake
to remit within two working
days after receipt by us of your tested tele-$swift claim in %' Dollars$/uro$any other freely
e-changeable currency in
accordance with your instructions. This .etter of &redit is subject to the %niform &ustoms
and Practice for Documentary
&redits 4=>>< e!ision7 "nternational &hamber of &ommerce 0rochure No. ?@@. This
tele-$swift may be treated as the
operati!e instrument.
)ll apparent spelling mistakes$mistakes in .& documents# which do not alter
meanng/speccaton/descrpton/Ouantty/vaue of goods are acceptabe and
w not count as a dscrepancy.
118
VETTING:
Vettng s a process of checkng the documents whch come under openng of
etter of credt.
Process of vettng:
1. Purchase order made by matera management department
2. The document now send to the bdder.
3. The crtera made by the m.m department s mandatory for the L-1 bdder.
4. The bdder prepare a requred documents accordng to purchase order
and send to the bank.
5. At the tme of openng of etter of credt the concern bank of ONGC(SBI)
send the documents to nance department of ONGC.
6. Now t s the work of nance department to tay the documents of both
the party .e. M.M and the L-1 bdder.
7. Durng vettng process f the nance department found that the necessary
document s not there then the ntmaton send to the bank and the bank
ntmate to the concern party.
119
Document Retrement
Document retrement s a process of retrng the documents by the concern
nance department.
Process of retrng a documents:
1. Frsty the L-1 bdder send to a the documents to ts concern bank.
2. The bdders bank send the document to the concern bank of ONGC say SBI
3. Then SBI check a the documents and send to the nance department of
ONGC.
4. The nance department check the documents and make two copes of
documents one orgna copy of documents s send to the port to coect
the matera. And another copy they keep wth themseves.
5. The deay of retrement of documents cost a ot for the company so t s
very much necessary to retre the documents n a stpuated tme.
ICICI Tender fees
The ICICI Bank gves the facty to a the ONGC bdders. ICICI Bank s a
gateway to a the bdders to enter n the tender process wth ONGC. ICICI
Bank charge some cost to the ONGC.
At the tme of appyng for the tender the bdder s to gve some maney
caed Earnest Money to the ONGC through ICICI Bank because the conern
bank of ONGC .e. SBI do not provde ths facty to the bdders.
The ICICI tender fees s done through the SAP n ONGC.
120
Logstc Invoce Vercaton
Purpose
.ogistics "n!oice 2erification is a part of Materials Management 4MM7. "t is situated at the
end of
the logistics supply chain that includes Purchasing# "n!entory Management# and "n!oice
2erification. "t is in .ogistics "n!oice 2erification that incoming in!oices T'eite ==U are
!erified in
terms of their content# prices# and arithmetic. Mhen the in!oice is posted# the in!oice data is
sa!ed in the system. The system updates the data sa!ed in the in!oice documents in Materials
Management and 3inancial )ccounting.
Inte0r'tion
.ogistics "n!oice 2erification is closely integrated with the components 3inancial )ccounting
43"7 and &ontrolling 4&(7. "t passes on the rele!ant information about
payments or in!oice analyses to these components.
Fe'tures
121
"n Materials Management# .ogistics "n!oice 2erification has the following features:
"t completes the material procurement process# which started with the purchase
requisition and resulted in a goods receipt.
"t allows in!oices that do not originate in materials procurement 4such as ser!ices#
e-penses#course costs7 to be processed.
"t allows credit memos to be processed# either as in!oice re!ersals or return deli!eries.
)n in!oice can be processed in .ogistics "n!oice 2erification in !arious ways:
"n!oice 2erification (nline T'eite =>U
6ou recei!e an in!oice and enter the information contained in it in the system# comparing
the data 4such as quantities and !alues7 suggested by the system with that in the in!oice
and making any necessary corrections. 6ou then post the in!oice. "n the ')P 'ystem# a
distinction is made between the following types of in!oices:
"n!oices with purchase order reference
)ll the items in a purchase order can be settled. Mith purchase+order+based "n!oice
2erification# all the items of a purchase order can be settled together# regardless of
whether an item has been recei!ed in se!eral partial deli!eries.
"n!oices with goods receipt reference
/ach goods receipt is settled separately.
"n!oices without purchase order reference
"n!oices can be posted directly to G$. accounts or material accounts.
Parking T'eite F@U T'eite F@U
6ou recei!e an in!oice# enter the data in the system# and sa!e the in!oice document.
The system does not make any postings. 6ou can change this parked document. Mhen
you ha!e finished changing the document# you can post the parked document.
Use
)n in!oice contains !arious information# such as:
Mho issued the in!oiceV
Mhich transaction does the in!oice refer toV
5ow much ta- do you ha!e to payV
(ne of the basic questions is the in!oice reference# which enables you to clearly allocate the
122
in!oice to a business transaction. "f such a reference e-ists# the system uses 8knowledge9 that
it
already has and proposes the appropriate !alues when !erifying the in!oice# for e-ample:
)greed terms of payment
Ouantities to be in!oiced
)mounts e-pected for each item
"f the !endor in!oice contains different information# you can o!erwrite the data proposed.
The
system checks whether your entries are allowed and displays a warning or error message if
anything is incorrect.
Structure
"n .ogistics "n!oice 2erification N as in other applications N the ')P system often needs to
retrie!e stored data at many points# change this data where necessary# or add new
information.
Depending on the type of information# the data in the ')P 'ystem is stored in different
master
records# such as the material master record or the !endor master record. This central data
storage function a!oids redundant data and ensures that the different departments use the
most
up+to+date information from !arious departments 4Material equirements Planning#
Purchasing#
"n!entory Management# Ouality Management# .ogistics "n!oice 2erification# and so on7.
The import'nt "'t' 1or In:oice =eri1ic'tion is*
Master data
Transaction data
M'ster D't'
Master data is permanent data on objects# for e-ample materials# in the ')P 'ystem. /!ery
object is gi!en a unique number by which it can be identified in the system.
123
M'teri'( D't'
Material data is information on the materials bought by or produced in the company. This
includes the material number# material name# units of measure# stock data# o!erdeli!ery
4o0istics In:oice =eri1ic'tion 5MM-I=-4I=6
Incomin0 In:oice
-+ Apri( +,,-
and underdeli!ery tolerances# reminder keys# price control data# and prices. Different
departments in Materials Management maintain material data.
=en"or D't'
2endor data pro!ides information on the suppliers that a company deals with. 2endor
data includes the address# bank data# possibly also the name of the bank head office# the
currency of the !endor# as well as the terms of payment and terms of deli!ery. The
Purchasing department and )ccounting department maintain !endor data.
Accountin0 D't'
)ccounting data is used to define G$. accounts. "t includes the account name# the
account type# the currency in which the account is managed# information as to whether
an account may be posted to directly# and which financial budget it is allocated to. The
accounting data is maintained in 3inancial )ccounting.
Tr'ns'ction D't'
Transaction data records transactions in the ')P 'ystem. Mhene!er you post a purchase
order#
scheduling agreement# goods receipt# or in!oice# the system automatically creates a
document.
The document data of a transaction depends on the application area that the transaction
belongs
to. /!ery document recei!es a document number by which it can be uniquely identified.
Purch'sin0 Document
) purchasing document contains information such as the !endor number# the purchase
order date# the terms of deli!ery# the material number# and the order quantity.
M'teri'( Document
) material document is created when a goods receipt is posted. "t includes the posting
date# the quantity deli!ered# and perhaps also the deli!ery note number and the
purchase order number that the goods receipt refers to. "t documents the quantity+based
124
changes.
Accountin0 Document
)n accounting document is created when a goods receipt 4unless the goods receipt is
not !aluated7 or an in!oice is posted. "t contains details of the indi!idual postings with the
account number, postng key, and the amount. It documents the vaue-based
changes.
8or%in0 Bith 4o0istics In:oice =eri1ic'tion
Use
The Logistics Invoice Verification interface has been reduced to a single screen. 0elow you
will
find an o!er!iew of the screen areas and their functions.
Fe'tures
2endor
data
P( structure
or
Morklist
"n!oice
items
5eader
)llocation
Transaction 0alance
Messages
5elp
125
CHAPTER- 7
Fnanca Prcng Pocy
The prcng of the controed products ke petroeum, dese, LPG and kerosene s
many controed by the government n Inda and thus gvng no berty for the
formuaton of ndvdua prcng pocy to the O Marketng Companes (OMCs).
Pror to Apr 1, 2002 - when the new regme set n - domestc prces of some of
the petroeum products were partay `nsuated' (protected) from voate
nternatona crude o prces (from whch these products are derved) and certan
products ke kerosene and LPG were subsdsed.
The o companes were tod how much to se and at what prce.
To get a cearer pcture et us take a quck ook at the seng mechansm of the
four man petroeum products used n Inda - petro, dese, kerosene and LPG.
Petro (motor sprt)
Earer, due to government contro, prce of petro was aways hgher than that of
other fues (ke dese). Petro prces have been kept at Rs 33 per tre whe for
dese t stands at Rs 17 per tre.
Further, over the years, both petro and dese have been amongst the hghest
taxed of a commodtes through state-reated saes tax and customs and excse
dutes.
A these factors have ed to an overa hgher consumpton and usage for dese
compared to petro. Petro accounts for a sae of 9.3 m tonnes though margns on
sae of petro are hgher than that of dese.
126
(Hgh speed) dese
Ths s the hghest seng amongst the fues accountng for 85 per cent of the
automotve fues.
Saes are through two forms - at the whoesae eve to state-owned corporatons
ke the raways and transport companes, and secondy through reta pumps to
heavy commerca vehces and the agrcutura sector.
Ths s the market, whch has caught the eye of most of the eadng domestc and
nternatona o companes, where they vsuase greater expanson.
Superor Kerosene O (Kerosene) Ths s sod through the pubc dstrbuton
system (PDS) of varous state governments and through reta saes outets.
Because of ts wde-scae usage the government has and w contnue the
subsdy for the PDS kerosene.
LPG (qued petroeum gas) Ths s one of the fastest growng segments for o
companes and the consumer base and the dstrbuton/penetraton of the
product has grown over the past three years.
Wth ehect from |une 16, 2008 the prcng mode for petro and dese has
undergone a change, wth the Petroeum Mnstry decdng to mgrate from the
exstng mport party regme to a trade party regme.
The trade party prce n ehect woud mean that the ntegrated reners - Indan
O Corp, Bharat Petroeum Corp, and Hndustan Petroeum - and standaone
reners such as Reance Industres, Mangaore Renery and Petrochemcas may
take a margna ht n ther gross renery margns (GRM) as the renng transfer
prce woud be reduced.
The renery transfer prce (RTP) s the prce at whch o marketng companes
(OMCs) ft products from the reneres. Under the trade party mode, the
weghted average of the mport and export party prces s taken n the rato of
80:20. In trade party, prcng s ower than the mport party to the extent of
freght cost and other taxes and dutes.
127
PRICING MECHANISM
The mport party prcng mechansm forces rms to pay Customs and ocean
freght for the entre purchase.
Though the new mechansm was adopted on |une 5 when the recent prce hke
on petro and dese was announced, t has come nto ehect ony from |une 16
foowng a forma notcaton by the Fnance Mnstry reducng Customs duty on
the two products from 10 per cent to 7.5 per cent.
A reducton n Customs duty on petro and dese formed part of the package
approved by the Government to hep o companes cover ther under-recoveres
due to the surge n nternatona crude prces.
THE TRANSITION
Accordng to IndanO sources, the mpact of ths move woud be margna snce
the reneres oher a 40 per cent dscount on the mport and export party
dherenta. The transton from the mport party prce regme to trade party
prce and cut n Customs duty w mpact the GRM of reners by $1.7 per barre.
Snce the reneres had ohered a 40 per cent dscount on the mport and export
party dherenta, resutng n a dscount of $1.5 a barre ast year, the net
mpact on the GRM of o marketng companes was estmated to be 20 cents per
barre for ths nanca year.
The tota mpact of Customs duty reducton and shft from mport party to trade
party woud be Rs 6,500 crore (Rs 4,100 crore for the former and Rs 2,400 crore
for the atter).
Apart from the duty reducton, the Cabnet had recenty decded on an ntegrated
package nvovng a prce ncrease n petro and dese, ssuance of o bonds
worth Rs 28,000 crore, mtng PDS kerosene suppy to ony beow poverty ne
fames, and movng to a trade party prcng mechansm for petro and dese to
ba out the beedng OMCs.
128
The prevous to the above prcng pocy was approved by the Cabnet on the
recommendatons of the Rangara|an Commttee n md-2006.
The Rangara|an Commttee had ncuded a sma ncrease n prce of petro and
dese, a cut n customs duty on petro and dese (from 10.5 per cent to 7.5 per
cent), and ntroducton of trade party prcng (based on 80 per cent mport and
20 per cent export prces) at renery gate for petro and dese, and the baance
under-recoveres were to be party made up by o bonds to be contrbuted by the
ONGC and GAIL.
For exampe, f mport party prce s $100 and export party prce s $90, the o
companes woud get 80 per cent of $100 and 20 per cent of $90 totang to $98.
The government, by ths method coud reduce under-recovery by $2.
The man drawback wth ths method s that consumers are payng nternatona
prces ndrecty and then taxes on these prces. There s no ratonae for o
marketng companes to get mport party and export party prces, especay
when these companes are renng products n Inda. Many argue that what s
the purpose of settng up a renery and mportng crude when these companes
have to be gven mport prces. It woud be better to mport products drecty
rather than dong the whoe renng process f the nternatona prces have to be
pad.
However for other products ke naphtha and ndustra fueng o companes
have berty to formuate ther own prcng poces based on the cost of freght,
taxes and other OMCs prces.
129
CHAPTER - 8
Fndngs
/nterprises today are using e+procurement to manage more requisitions# spend categories#
and
suppers than ever before. Launchng an e-Procurement souton can hep n
reducng both drect costs and ndrect costs. Through ths company can ncrease
purchasng emcency; reduce overa producton tme; and mprove purchasng
contros.
The key benets of E-Procurement are: -
Improved Supper Management: - E-Procurement soutons enabe your
company to ocate suppers wth the best prce and quaty, and hep
streamne the negotaton and contractng processes.
Cost Reductons and Procurement Savngs: - E-Procurement heps to ncrease
the productvty and ower the cost of purchasng stah. Company can reduce
reance on paper-based documents, such as request for proposas, responses
and purchase orders. It can aso everage companys buyng power by
quafyng for voume dscounts or speca ohers. On average, E-Procurement
cost reductons and savngs range from 15 to 35 percent, dependng on your
eve of ntegraton.
Improved Documentaton: - E-Procurement heps mprovng reportng and
record keepng by eectroncay trackng and recordng transactons. Ths
heps to ncrease order fument accuracy and emnate untracked or
sporadc buyng habts.
Increased Speed: - e-Procurement heps empoyees automate many routne
purchasng tasks, emnate redundant tasks (such as requston approva),
and ncrease purchasng emcency.
130
CHAPTER - 9
SUGGESTION
Concern about securty and prvacy s one of the ma|or factors restrctng the
growth of e-Procurement. In summary, an organzaton shoud consder securng
tsef aganst:
Damage to busness reputaton
Faure to compy wth nterna poces, natona requrements and the aw
Loss, corrupton or sharng of commercay senstve or busness crtca
nformaton
Loss of busness contnuty due to oss of busness crtca systems or
nformaton
Loss of commerca poston due to napproprate sharng of commercay
senstve nformaton or the nabty for potenta suppers to partcpate.
In genera, the types of securty breaches that may occur ncude:
Fraud and nanca oss, ncudng msappropraton of funds and eakng of
senstve nformaton (e.g. prcng nformaton).
Lack of commerca awareness amongst empoyees.
Theft of data on aptops or other hardware tems.
Thus sumcent care must be taken to prevent such knd of thefts. Some of the
measures are as foows:
When transferrng nformaton over the Internet you must be assured of:
Condentaty - no one apart from authorzed partes can read any of the detas
of the transacton. To ensure condentaty over the Internet, encrypton shoud
be used.
Integrty - ensure no one has tampered wth the transacton en route. Ths s
typcay done through the use of agorthms and check dgts. If a transacton s
found to be corrupt, then t can automatcay be re-sent.
Authentcaton - both sendng and recevng partes can postvey dentfy each
other. The use of user ds, passwords and dgta certcates ensures that
eectronc mpersonaton cannot occur.
131
Non-Repudaton - evdence of the detas of a transacton can be provded, so
that nether party can deny t has taken pace, .e. the audt tra. Souton
provders determne how ths w be done n each case.
Backup and Recovery
The ncreasng dependence on systems and technooges for busness crtca
processes s makng organsatons vunerabe. Ths s enhanced by the trend of
usng systems and technooges that are outsde our IT departments mmedate
contro. More and more systems are beng hosted and managed by thrd partes,
.e. Appcaton Servce Provson (ASP), and devered to end users usng the
Internet nfrastructure. From a Procurement pont of vew ths ncudes Internet
servces such as marketpaces, suppers web stes and e-Sourcng soutons, but
t can aso ncude the externa hostng of core busness systems such as Fnance.
Organsatons ntendng to use Internet-based soutons need to satsfy
themseves that:
System functonaty s accessbe at a tmes that t s needed by a
stakehoders
The servce provder has adequate contngency pans n case of physca or
technca dsaster and that these are reguary tested.
Company must have a contngency pan whch can be mpemented n the
case of the system provder ceasng tradng (a very rea rsk n todays
technoogy sector)
Any servce provder used has the same eves of condence and
contngency wth ts thrd party technoogy provders.
132
Annexure-A
The actvty-wse responsbtes n the e-procurement system.
11 Actvty Manua
(M)/
Eectronc
(E)
Responsbe omcer(s)
1 Consodaton of PRs
generated n SAP R3/MM.
E In Charge P&E Secton of
Corporate MM for Type-A
tems.
2 BEC formuaton M T.C.
3 BEC approva M CPA
4 Creaton of Bd Invtaton n
SRM
E Deang Purchase Omcer(s).
5 Upoadng of scanned copes
of a reated
notng/documents of T.C after
approvas n C-foders (nterna
foders)
E Deang Purchase Omcer(s).
6 Reease of tender document n
system for pubshng tender.
E I/C MM
7 Amxng dgta sgnature on
documents and Pubshng of
tender n SRM
E Deang Purchase Omcer(s)
8 Issue of authorzaton on
nterna documents and e-bds
to other ONGC omcas as
necessary n process of e-
tenders.
E Deang Purchase Omcer(s)
9 Access Authorzaton to new
vendors.
E I/C MM
10 Aowng tender fee exempted
vendors to partcpate n
partcuar tender aganst
request.
E Deang Purchase Omcer(s)
11 Return of E-Bd before the due
date for bd submsson
aganst specc request from
the vendor mentonng Bd
number.
E Tender Admnstrator.
12 Pre-Bd Conference M T.C.
13 Upoadng of mnutes of pre-
bd conference after due
approvas wth restrcted
access to those bdders who
have pad tender fee or who
have been aowed to
partcpate n partcuar tender
wthout tender fee.
E Deang Purchase Omcer(s)
14 Issue a amendments to
tender documents n system
wth necessary approvas.
E Deang Purchase Omcer(s)
133
11 Actvty Manua
(M)/
Eectronc
(E)
Responsbe omcer(s)
15 E-Bd openng on speced due
date and tme
E Automatc
16 Openng of orgna documents
permtted to be submtted n
physca form on due date and
tme. (Manua process).
M Nomnated tender openng
omcers
17 Upoadng of bd openng
report wth restrcted access
to bdders who have
submtted the bds for
unprced bds and short sted
bdders n case of prce bds
E Deang Purchase Omcer(s)
18 Compaton of Bd Evauaton
Matrx.
M TC
19 Upoadng the evauaton
matrx n nterna Foders.
E Deang Purchase Omcer(s)
20 Technca Evauaton of E-Bds. M P&E secton / Technca
evauaton commttee
21 Prce Comparatve statement
generaton.
E Deang Purchase
Omca/Omcer.
22 Checkng of C.S E Purchase Omcer at the
requred eve, based on the
monetary mts as speced
n MM Manua.
23 Vettng of C.S E Fnance Omcer at the requred
eve, based on the monetary
mts as speced n MM
Manua.
24 A correspondences to bdders
through system (C-foders)
E Deang Purchase Omcer(s)
25 Seekng Ad|ustment prces
from bdders, f any pror to
prce bd openng wth
approva of competent
authorty
E Deang Purchase Omcer(s)
26 Prce Negotatons wth L-1
wherever appcabe
M T.C
27 Purchase reated
Recommendatons after
vewng E-bds.
M T.C
28 Approva of T.C
recommendatons.

M Competent Authorty
29 In case of EPC cases,
upoadng EPC agenda n
specc foder n the system
E Deang Purchase Omcer(s)
134
11 Actvty Manua
(M)/
Eectronc
(E)
Responsbe omcer(s)
after endorsement of Drector
30 Upoadng Scanned copes of
technca comments approved
T.C mnutes and EPC decsons
mmedatey on recept of
same n approprate nterna
foders n system.
E Deang Purchase Omcer(s)
31 Acceptance of bds n SRM
for pacement of order as per
approva of CPA.
E P.O Sgnng authorty
Annexure-B
Comp'r'ti:e st'tement 5technic'(7
Comp'r'ti:e St'tement o1 Ten"er No)------------- 1or supp($ o1 ------------- 5Un-price"
#i"s6
Tender no:
Tender opening officers: =.
;.
/stimated 2alue:
Date of opening:
No. of tender documents 'old:
No. of tender sets recei!ed in time:
No. of late tenders recei!ed:
Techno+commercial
points
Name of the 0idders
"tems Ouoted
'ubmission of bid in
e+portal and Physical
documents within
scheduled date and
135
time
&ategory of 0idders
'ubmission of 0ack
up authority .etter
&urrency of Ouote
'ubmission of
8&ertificates of
&ompliance9 for
ha!ing necessary
financial strength
)cceptance to (NG&
tender conditions
'ubmission of
80idders esponse
'heet+)ppendi-+>
'ubmission of
/!aluation Matri-
'ubmission of
certificate of
declaration that the
firm is not under
banning orders.
'ubmission of Power
of )ttorney
/MD$0id 0ond
0id 0ond 2alidity
2alidity of offer
Deli!ery 'chedule
Payment
"ntegrity Pact
"ndian )gent
&ommission P)N
136
No.
&'T $ 2)T
"nsurance
(ctroi
Documents submitted
towards 3inancial
'trength
3inancial strength
42etted by 3inance#
copy at sl. 7
ii7 )!erage
Turno!er
ii7Net Morth
Name of
Manufacturer
Place of offer
)cceptance of terms
, conditions of
tender as well as
0ooklet
(NG&$MM$@=
.etter from
manufacturer for
ha!ing testing
facilities and agree
for inspection by TP".
Prepared 0y: &hecked 0y:
2etted 0y:
Annexure-C
137
BID EVALUATION MATRIX
Tender no:
for supply of Tender opening officers: -)
Date of opening:
+)
Estim'te" Ten"er ='(ue*
No. of tender documents
No. of tender sets recei!ed in time:
No. of late tenders recei!ed:
S4)
NO)
#EC I TENDER REFUIREMENTS &ompany
)
&ompany
0
&ompany
&
=
0idders to confirm that they ha!e not
taken any e-ception$de!iations to the
bid document e!en after Pre+bid
conference.

;
&onfirm that the product offered
strictly conform to the technical
specifications as appended in the
tender documents V.

0.= T/&5N"&). &"T/")


0.=.= "s the bid complete in all aspects
co!ering entire scope of supply for each
item quoted and conform to the
technical specifications indicated in the
bid document duly supported with
catalogue$technical literature where!er
applicable V

0.=.; Mhether manufacturer has submitted
documentary e!idence for offered
item4s7 along with the techno+
commercial bid for the following:

4a7 Minimum< years of e-perience of
manufacturing drill collars. 3or this
purpose the period reckoned shall be
the period prior to the date of opening
of the techno+commercial bid.

4b7 'hould ha!e manufactured and
supplied drill collars at least =@B of
tendered quantity to !arious oil and gas
specific companies in the last A 4'e!en7
years.

138
BIBLIOGRAPHY
(NG& Mebsite
(NG& )nnual eport ;@@A+@D
3inancial /-press: http://www.nancaexpress.com/news/Focus-on-EampP-
ONGC-tod/221214/#
)le-anders Gas and (il &onnections: 1anuary =;# ;@@FH
http://www.gasando.com/goc/company/cna60207.htm
&") Morld 3act book: =#=;>#DFF#=?E 4;@@A /st.7
6ahoo 3inance: http://bz.yahoo.com/c/57/57106.htm
'trategic Management: &ase 'ection Pg ;A<
%ni!ersity of )lberta: December ;=# ;@@? euters#
http://www.uofaweb.uaberta.ca/chnansttute/nav03.cfm?
nav03=44239&nav02=43874&nav01=43092
6ahoo 3inance: http://bz.yahoo.com/c//120mkt.htm. This site gi!es all the
major players in the oil and gas industry.
6ahoo "ndia News: http://n.news.yahoo.com/050727/139/5z9q.htm
139
140