STORES MANAGEMENT

1.

Management is to plan, organise and execute given resources to

achieve the target.

2.

Target- In respect of stores section, the target is to make materials

available for
production, maintenance and services, whenever required, at
minimum expenses.
3.

Availability of material means that it should be:

(a)

Serviceable and

(b)
Of correct quantity.
4. Whenever means that it should be available without time lag, i.e.
quantity and quality should be up to date.
5.
Minimum expenses means economy in stores management is to
be observed.
FUNCTIONAL DIAGRAM:
This can be represented as under:

Receipt

Stores Stock

Stores Stock Issue

(Unwanted) Disposal items

7.

Stores Management is a vital part of material management. It acts

like a custodian similar to a cloak room of railways. It forms a main
link between material planning procurement and Inventory
Control. Its functions are combination of field work and office work
which arc diferent from other wings of material management,

8.

Relation with cost of productionThe cost incurred on stores Management is separately charged in
estimates under the head "Store-Indirect Charges. Earlier, the
constituents of variable overheads were mainly Power & Machine
(P & M), Non Productive Charges (NP) & Store Indirect Charges
(SI), but nowadays entire variable overheads are shown together,
including S.I. Charges, as percentage of total variable overheads.
Hence the stores management directly refects on the cost of
production and infuences the financial management of the

industry.

9.
Planning The following planning is made along with the initial planning of
the industry. Storage space and godowns
10.1 While planning and creating storage space, the following factors
are taken into
Account:
(a) Types of items required by the industry.
(b)Quantity of each item expected to be stored.
(c) Types of items which can be stored in open.
d) Types of items which need covered accommodation
(e) Layout of godowns and storage space. Normally, the layout of
godowns and storage space is made in such a manner that it
leads to minimum transportation with respect to loading/unloading
& point consuming/issuing section.
(f) For the Items needing covered accommodation godowns and bins
are provided.
(g)Items needing special storage arrangements, like explosives,
infammable items gases, acids, textile items, paper items, rubber
items, various chemicals and perishable items Petrol, Diesel,
Oils etc.
For these items a special care is taken in the layout & design of
storage space so
as to store them safety without causing any danger to the industry.
Some of the above details are given below :Explosives

Infammable Items

Magazine based on category of explosive.

-

Away from normal items.

Away from normal
storage

Gases

Petrol

(a) Toxic

(b) Infammable Storage

Underground tanks.

Diesel - dosprit -doAcid

Rubber Items

Acid proof Tanks

-

Protection from direct light and heat ventilation

covered accommodation/coaled with chalk

power.
Paper
Humidity controlled atmosphere.
Textiles
Do will insects rodent protection.
Packages of steel Covered accommodation
protection from
moisture. Chemicals
(a) Storage of various according to the
nature of
chemical.
(b) Costly items.
(c) Affinity with other chemicals.

Creation of storage space and construction of godowns need heavy

capital investment and therefore these decisions are taken most
judiciously making all eforts for optimum utilisation of storage space
and godowns. Aim should be to effectively utilise the cubical space.
11. Layout of Railway track and construction of platforms In

the

present

days

railway

facilities are used in most of the cases for

receipt & issue of bulk of the items. For
this purpose in most of the industries the
railway track arc laid down inside the
Factory where locomotives can directly
carry the wagons to the destination.
12.

Transportations -

Transport facilities are planned for the following purposes:

a) Receipts and despatch of railway wagons from the factory.
b) Shifting of materials from unloading point to respective godown.
c) Transportation of materials from issuing section to loading point.
d) Transportation of materials from godown to consumering
sections.
e) Collection and despatch of materials from Riy. Sstn.
f) Collection and despatch of items from Road Transport
Companies.
g) Collection and despatch of Items from contractor's premises and
other sister factories. Embarkation etc.
13.

Weighing ArrangementIt is essential to weigh the incoming and outgoing materials. For
this purpose wagon weigh bridges, road weigh bridges and
weighing scales are provided.

14. Material Handling Equipments and AccessoriesObjectives - the following are the
objectives:
a) To reduce the cost of handling.

b) To economise on the storage space.

c) To reduce manpower deployed.
d) To maintain good house keeping.

15. Functional set upThe functional set up of storage management is as under.

a) Receipt of Stores and related accounting & Railway siding.
b) Issue of Stores and related accounting.
c) Stock and disposal of stores and related accounting.
16. FunctionsIn Ord. & Ord. Equipment Fys., the whole functions of store are
divided into four parts:
(A)Store (Issue)
(B)(Receipt)
(C)Store (Stock)
(D)

Store (Disposal)

---,
A. STORE (RECEIPT)
For convenience of field work and office works, it is divided into
Receipt Office a Receipt Bond and also siding. The basic
functions for Receipt Office and Receipt Bond are as under
To receive and collect materials.
To check quantity, compare with despatch documents/packing list viz-a-viz S' A/Ts,
IFDs or any other concerned authority and prepare Ml Slip.
To put material for inspection and provide facilities for inspection.
To prepare receipt voucher on clearance of MI Slip inform all concerned for further

action.
To regularise quantitative discrepancies.
Discrepancy Report for discrepancies in qty. on receipt.
Making Riy. and Transport Claims.
DD Ur and loss Statement for transit losses.
To make correspondence with the firms / fys. till their settlement.

To return rejected stores to concerned fys / firms.

To release 2&5 of the I Notes.

Redirection of stores received in economy wagons to other factories / units.
Payment of demurrage warfage & regularisation.
Linking up of consignor's issue voucher.
CRV for rental charges.
Arrange unloading of materials received in full wagons
and deal with matters connect with railway.

B. STORE (ISSUE)
For the convenience of functioning issue branch also divided into
Issue (Bond) & Issue (Office) the Issue branch deals with the issue
made to out side the Factory. Important functions are To issue materials by full wagon load, full truck load, post
parcels, part truck-load, part wagon load etc. after making
RR/Dispatch documents against P vouchers or vouchers.
To prepare issue voucher.
Linking of issue voucher with 0 voucher/1 note.
Forwarding of issue Vr. RRs to consignee immediately after
despatch.
Maintenance of loan register.
Preparation of Military Credit Notes;
Packing of stock Items for dispatch.
Return of rejected stores to consignor.
Preparation of Gate passes for items issued outside the factory.

 To obtain receipted copy of the issue voucher from the

consignee.
To obtain payment against payment issues.
To have correspondence and settle discrepancies.
To arrange wagons, trucks and other modes of dispatches.
C. STORE (STOCK)
Stocks arc maintained under following six categories.
Regular stock for which LFs exists.
Deposit stock.
Stockpile stock (they are treated as capital stock).
Nominal stock pertaining to items for which there is no ledger
folio.
Machinery Capital stock.
Stock against production work order series.

Oi'ihitiiifi' f-nclwy In-miiifc of Learning. Kciiipiir

Di.'i/w.'nil

Accounting A

Functions of Store (Stock)

To collect material from receipt Bond platform etc. to respective
go down or receipt of receipt voucher from receipt ofice.
To count/weigh stock at the prescribed place and enter into the
bin curds.
Issue against authority of demand note, nominal demand note,
issue voucher etc, and post these issues in the Bin cards .
Carrying out preservation and care and custody of stores to avoid
deterioration /pilferage in storage.
To rotate materials and maintain principle of first out (FIFO).
Identification of Slow and non moving items.
Raising of Examination orders (BOs) for the items having limited
shelf life for periodical inspection.

Arranging departmental and OFBs Stock verification.

Investigation and regularization of discrepancies.
To take materials on stock charge against return Notes
Numbering of documents.

D. STORE (DISPOSAL)
Disposal is reverse of procurement. The
purpose of disposal is to timely dispose
of the unwanted materials, scraps
generated during production old and
outdated P & M (BER) etc for the purpose
of generating revenue. For disposal
guidelines is being issued by OFB time to
time & Factory follows it accordingly,

17. MATERIAL INWARD SLIPS

This is the most important stores accounting documents
preparation of MI Slip is (June in the following cases.
All receipts handled by Receipt Branch of Stores Section.
All receipt, which though not handled by the Receipt Branch but
arc to be taken on Stock/Deposit Ledger.
All receipt' which arc not initially handled by Receipt Branch like
postal parcels
But later they re to be. taken on Stock/Deposit Ledger
charge.
Exemption for preparation of Ml Slips:

The exemption is only in the following cases:

Material is not received by Receipt Branch of Stores Section.
The material which is not brought on Stock/Deposit Ledger charge.
Responsibility for preparation- of Ml Slips
This is the basic responsibility of Receipt Branch of Stores Section to
prepare MIS.
Date of MI Slip - This is the actual date of arrival of the material
in the factory. However in case of materials received by post, it is
the dale on which the Receipt Branch actually received the
material.
In no case, the dale of preparation of MI Slip is taken as date of MI
Slip.
Sl.No. of Ml Slip is maintained as per date. However, in case of
difficulties, dates over - ride the material numbers. Blank numbers
arc not permitted in the Sl.No. of MI Slips.
No. of copies. Depending upon requirement, 7 to 8 copies arc
prepared.
All the details except Inspection and pricing columns of Ml Slips arc
filled in by the Receipt Branch of Stores Section.
The MI Slips are required to be prepared within 24 hours of receipt
of the material and to be sent to Quality Control Deptt. for
sentencing after inspection of stores.
The Ml Slips are sent for inspection to Quality Control Department.

 Quality Control Dept. is required to carry out inspection and

sentence the MI Slip within 7 days of receipt. It also mentions the
quantity accepted and quantity rejected.
On receipt of the sentenced copies of the Ml Slip, Receipt Voucher
No. is allotted lo it and it is sent to the Stock Branch for posting.
The above copies are then sent to local Accounts through IBM
punching media for producing and posting in the Ledger.
18. STOCK PILE
Stock pile is nothing but (lie danger stock. Drawal from this is
permissible only after testing approval from DGOF/OFB.
Conditions Tills should satisfy the following condition.
It should be non-perishable.
Should be of imported origin not normally available in India.
Or difficult to obtain quickly in India.
Provision of Fund - Funds are provided under Major Head, 86 .
Defence Capital Outlay.
Quantum of Stock pile- Stock pile stock is kept as per the
following norms.
Indigenous items-4 months' requirement. In order to-reduce the
inventory, most of the Factories
Imported items-9 months' requirements are not maintaining
stock-pile at present.
Condition of Stock - The items are turned over from lime to lime
to avoid deterioration.
Capital Store Ledger is maintained by Accounts for Stock-Pile
items. For this purpose 'R' series of vouchers are operated by
the factory for the transaction of Stock-Pile items.
Transfer of materials between Stock-pile and working stock is
made on transfer vouchers. For use of Stock-pile items, they are
first transferred to stock and then issued to the section on

Demand Note.
The turn over of Stock-pile items is also made on Transfer
Vouchers,
The stoke-pile material is taken into use in emergency under
intimation to DOOF for regularization by ex-postfacto-saction,
Replenishment of stock-pile transferred to working stuck on
replacement basis

A register is maintained like Loan register by the Factory to give the

following details.
Stock L. F. No.
Nomenclature of store
Accounting Unit Qty. transferred from Stock-pile
Authority for transfer
No. & Date of transfer voucher
Expected date of replenishment
No. & Date of TV for replenishment of Stock-pile
Remarks
19. STOCK VERIFICATION
Generally three types of stock verification are done in
Ordnance Factories:
a) Perpetual stock verification by DGOF/SV group.
b) Internal stock verification by Factory staf & Oficers.
c) Annual stock taking of UIP, FG & Non-consumable inventory
items.
In addition. Security may also verify the stock as surprise
check.
The DGOF Stock Verification Group is administratively
controlled by DGOF but functionally under Sr. GM/GM. This
group is responsible for the following.
Drawing programme of Stock Verification.
Allocation of work to stock verifiers.
Maintaining progress details.
Intimating OFB regarding progress, discrepancies etc.
Procedure Scope - This group carries out physical verification of stock,
deposit stock item, inventory articles, machinery building,
electrical installations and medical stores borne on factory's

books.
All items arc verified at least once in a financial year.
Stocks of valuable items are verified at more frequent intervals with the
approval of 0FB. For this purpose, a list of such items is jointly prepared
by the factory and OFB Stock Verification Group.
Methods of verification - Verification is carried out by the following
methods >

Actual Counting.
Weighment.
Measurement.
Other methods like assessment etc.

Loose and bulk items - Loose bulk items like coal, coke, rubber
etc. are required to be stored in bins or stock of suficient size to
facilitate measurement by cubical content.
Normally stock verification of an item is carried on when it is at
the minimum level.

Internal stock Verification

In addition to the above minimum 10% of the items are verified
by the concerned ASK of the go down.
Stock taking sheets are prepared and discrepancies are required
to be settled as per procedure.
Annual progress report is sent to OFB on the above stock
verification.
20. DISCREPANCIES IN STOCK
There are four types of balances:
a) Stock ledger balance - This is the balance shown in the ledger.
b) Ground balance - This is the balance found on physical
verification.
c) Bin card balance - This is the balance shown on the bin card.

d) Unorthodox balance.
It is necessary that
These balances on stock ledger, physical and bin card are in
agreement.
There is no unorthodox balance i.e. there should not be any balance
physically available other than the ledger balance.
Any discrepancy in the above balances should normally be corrected
within a period of three days of detection.
Detection of Discrepancies:
The discrepancies come to notice as a result of the following.
Departmental stock verification group.
Internal stock verification by factory staf.
Posting of full invoiced qty. as per procedure in vogue though
there is a short receipt.
Finding of an unorthodox balance in the stock ledger.
The discrepancies are dealt with by making out the discrepancy
voucher portion of IAF (Fac) 144 or IAF (Fac) 145.
IFA (Fac) 498 is prepared in the following cases of
discrepancies:
i.

due to change of condition posting in stock ledger is not required

to make the balance show the facts.

ii.

The documents are numbered as a regular Stock Receipt Voucher

or a Regular Stock Issue Voucher as the case may be.
The documents are signed by the officer for authentication.
The documents are sent to Accounts for pricing and posting in the
priced ledger in the normal way after the original receipt voucher
to show the discrepant quantity being passed on to them.
These documents arc treated as "Suspense transaction" till
settlement.
Above vouchers will be kept in a register till it is cleared by LAO.
Clearance of vouchers- The voucher will be cleared in the
following manners: By the sanction of loss/ surplus statement by
competent authority.
OR

iii.
iv.
v.
vi.
vii.

No loss/surplus statement is involved.

a) Settlement of Discrepancies -The discrepancies arc settled in the
following Submission of sanctioned loss statement. manners.
b) Submission of sanctioned surplus statement.
c) Finding of old document of transaction to regularise the
discrepancy.
d) Payment by supplier for discrepancies in transit for which supplier
is responsible. Supply of short/discrepant material by the supplier.

e) At the time of final posting there is posting of identical amount

simultaneously on receipt and issue sides of the lodger by
Accounts so that there is no efect on balance facility.
f) Discrepancies noticed in stock should be finalized with in the
same year,

21. CARE AND PRESERVATION OF STORES

The main objectives are following:

a) To maintain the serviceability of the items during storage so that
there is no hold up in production at the time of actual
requirement.
b) To avoid loss to the state due to deterioration in condition of the
item.
c) To enhance the shelf life by proper storage.
d) To avoid corrosion, deterioration, evaporation etc. due to
environmental conditions.
e) To ensure the principle of "First in First our" and rotation of
stores.
f) Inter service stores preservation organization now converted to
defence material & Stores Research and development
Establishment with Hqrs at Kanpur formed by the Govt. is
responsible for safeguarding defence stores form damage of
biological and non biological agents.
g) The above Establishment issues recommendation regarding
methods of

preservation of stores to avoid any deterioration to stores or in

transit. Standard recommendations are published through ISSP
(Indian Standard Stores Preservation) Technical Bulletins and
literature is circulated to all factories.
Any type of losses in the material
held in stock viz tosses due to the Fy. &
fraud or negligence deterioration due to
corrosion/erosion, Ageing or by any over
causes, shall be regularized by making a
loss statement on form no-IAFZ-2071 by
taking

sanction

of

the

appropriate

authority.
Storage accommodation Storage accommodation should be
closely related to drainage and dunnage.
This should consist of well ventilated
permanent

sheds

with

pucca

level

fooring, free from cracks, pervious foor.

Dunnagei.

Dunnage should be made to provide a firm and stable base for

the stores.

ii.

Prevent moisture from the ground/foor reaching the stores.

iii.

Allow proper ventilation beneath the stock and facilitate

ventilation also in the stock.

iv.

Provide proper cleaning and thereby clearing Potential or actual

centers of infestation.

v.

Infectional cases, (prevent white ants from attacking stores).

vi.

Periodical inspection.
Stores Hygiene-

i.

Cleanliness.

ii.

Segregation of infested Stores.

iii.

Disinfection of godowns.

PRESERVATION OF COMMON ITEMS IN STORAGE

Sl.

Items

Method of Preservation

No.
Sled sheet

2.

3.

4.

5.

6.

7.
8.

Rubber goods

Fuels

Paint

Petroleum

Drugs

Wooden shelves and

handles of timber
items
Plywood and plywood

Application of mineral oil grease on

the surface.

Storage in covered accommodation to

protect against rain and water.

Protect against heat

and light.

Apply French
chalk
Use proper bunks with washers to avoid
leakage and evaporation.

Avoid rough handling to avoid leakage of

containers.

Stack properly (vertically)

Use rust-free and dry containers.

Fire protection devices to be kept nearby.

Follow principle First in first out'.

Same as for fuel.

Roll drums to avoid sedimentation on

periodical basis.

Utilise within the shelf life.

Use proper underground storage lank.

While storing on ground store over sand.

Do not allow smoking or lighting of fire.

No infamable material to be stored

nearby.

Other precautions-same as for fuel.

Use cool places as per directives.

Protect from sun light, rains.

Follow principle of first in first out.

Use within shelf life otherwise destroy.

If poisonous - keep under lock and key.

Treat within 20% mixture of raw linseed

oil on half yearly basis.

Spray 10% solution of copper napthenatic

in while spirit/kerosene oil of superior
quality
nilmixture
sides. of creosote oil and
Soak
in on
50%

items.
9.

Wooden blocks
structural limber
ballies/sleepers etc.

used engine oil at about 20c for 1 5 to 20

minutes.

10.

11.
1
13.

Wool
Soak in a solution of 1 gm of martins
i
yellow in 3 Ltrs of water.
Soak in 5% solution of DDT in petrol or
white spirit.
B To be packed with naphthalene powder.
with
animal
Co Expose to heat of sun for 8 to I 0 hours at
it
least.
jute
Silk Expose to heal of sun for 8 to 1 0 hours
Ny
et

after monsoon or Use hot air disinfector

for 45 to 60 minutes,

14.

L Use protective coating of

items Dubbin/preserval S.-bilamil.

15.

So Use protective coating of soap yellow.

sho Do not use dubbin for this purpose.
Boots
22. STOCK LEDGERS

These are maintained by Accounts office.

The purpose of stock register is of show up to date position of all

items held on regular stock. The factory opens the ledger sheets
whenever there is introduction of a new item.

Similarly dead ledger folios are removed by the fy.

Store transaction documents are posted in the ledger by the

representative of Accounts immediately when the transaction takes
place.

Stock ledger stock should always be in agreement with bin card

balance and ground balance.

These colour codes are followed by painting the ends of the rod
strips with the paint of pecified colour.

23. Stores Accounting Documents.

All the transactions of stores are required to take place through
stores Accounting Documents only to monitor control of them.
Categorization -They are categorization as under
Regular.
Nominal

Primary Store Accounting

Documents.
The following arc called primary Store Accounting Documents.
Documents :

Form No.

Demand Note
Return Note.

IAFO 1926
IAFO 1927

Examination order
IAF (OG) 1-7
Material inward receipt, Inspection report
and ledger posting voucher (MI slip)
IAF (Fac) 151
Bin card Receipt issue and expense voucher. OFK.1
Discrepancy report.
IAFZ 2096
Discrepancy (Deficiency Voucher and loss
statement Store ledger cum provision sheet. IAF (Fac) 144
24. Utilization of store Accounting Documents-

SL.
No

Particulars

1.

Receipt from
outside the Fy.

2.

Receipt within the

Fy.

3.

Issue within the Fy.

4.

Issue outside the

Fy.

Documents used
Material Inward Slip (MI)
a) Receipt voucher
b) Return note.
Demand Note
a) Issue voucher fro stock item.
b) P/O issue voucher for production
item:
c) Sale release order.

5.

Regularization

i.

Receipt issue & expense

voucher

ii.

Discrepancy (deficiency)
voucher followed by loss
statement.

iii.

Surplus work order.

For the regular transactions regular voucher are used. In case of

transactions which arc not routed through the ledger nominal
VOL113hers are used.
Average Kate -For the purpose of pricing average ledger rate
-which is diferent from actual rate quoted in receipt or issue voucher

value are struck in the ledger at the end of every month and averaged
rate is arrived at dividing the total value by every entry with total
quantity. The issue vouchers, demand note etc. during the subsequent
month arc priced at the above rate. This rate is called weighted
average rate.

25. Colour Co-dification of Primary Stores Accounting

Documents.

In Ord. Fys. ABC and XYZ technique have been introduced for
inventory control: In order to give importance to the primary
documents pertaining to AIX category items separate colour code
has been introduced for them as given below;

Sl.No
.

Documents

Cat. B &
C'
Item
White

1.

Receipt Voucher

Cat. A
Items
Green

2.

Issue Voucher

Blue

White

3.

Demand Note

Blue

White

4.

Return Note

Green

Red.

5.

Material Inward Slip

Green

White

6.

Discrepancy (Deficiency Voucher) &

Loss Statement.

White

White

The above system ensures speedy clearance of stores transaction

documents and their posting in ledgers, it also helps in maintaining the
ground condition close to the ledger conditions.
26. Linking of documents -Important areas arc given below
(A) OUTSTANDING ASSETS

From the point of view of Finance, these stores for which the
payment has been already made but they have not been
brought on stock charge as per store ledger cum provision
sheet are the assets yet to be received by the factory. Hence
they arc known as" outstanding assets."

Issue vouchers of Sister fys. (Feeder fty) are linked with the
corresponding receipt vouchers. Unlinked cases are termed as
"Outstanding assets.

The following cases also tall under these categories.

Spot payment.
Advance payment - (90%, 95% & 98%) against proof of inspection
and dispatch.
Provisional payment.
This is monitored by clearance and posting of MI slips /receipt
vouchers.
For an eficient stores Management outstanding assests should be
minimum. This helps in speedy clearance of MI, slips, reducing
time lag in bringing materials on stock charge and posting in
ledgers, speedy clearance of contractors bills for payment,
minimum discrepancies in ground condition and ledger position
and minimum audit objections.

(B) OUTSTANDING LIABILITIES

From the point of view of Finance those stores which have been
brought on stock charge but they cannot be priced and their cost
cannot be debited due to nonavailability of Issue vouchers of the
consigner fy. are called outstanding liabilities.' In short these are
the cases where liability of the fy. is not known against stores
already received.

All the receipt Vouchers arc linked with the corresponding issue
vouchers of consignor fy. Unlinked eases, Le. where issue voucher
of consignor fy. is not available pertaining to a particular receipt
voucher is called outstanding liability.

Receipts from other sources without the adequate authy. of

contract linking vouchers etc: also fall under this category.

Minimum outstanding liabilities is an indication of efficient and

timely fow of document from sister Fys. and other suppliers. This
helps in maintaining ground conditions close to the ledger
positions.

This is monitored by clearance and posting of MI slips/vouchers.

(C) OUTSTANDING ISSUES

Issue Vouchers arc linked with the receipted copy of the Issue
Vouchers. Unlinked cases are called out standing issue. This is

watched by .Finance due to the following reasons:

It shows that the consignee has received the goods.

There is no discrepancy.

The consignee has accepted the liability of payment.

The transaction is treated as closed only after linking of the

receipted copy of the Issue Voucher.

Unorthodox Balances -In store ledger cum provision sheet some

limes following peculiar situation arises; timer:

Bin Card stock Nil & Total value exists, or

Bin Card stock exists & Total value is Nil, or

Bin Card stock is negative, or

Total value in ledger is negative

The above cases are called unorthodox balances. They may arise
due to the following reasons:-

(a)

Non posting of vouchers / primary document.

(b)
(e)

Incorrect pricing of vouchers.

No arriving at the weighted average rate after each entry. By this,
the receipts arc priced at the rate an issues are priced at the old
rate, therebt cost of production is under priced unorthodox
balances are considered symptoms of poor accounting.
These balances are regularised at the end of each financial year.
(D) NOMINAL TRANSACI IONS

All the transactions of receipt and issue which are not made
through regular "Store Accounting Documents' are called nominal
Transactions Documents.
The Transactions of above nature are not routed through the store
ledger cum provision sheet and priced ledger maintained by
accounts. Hence this leads to distortion in the ground condition visa-vis the position shown on ledgers.

 The nominal transactions are settled by preparing regular vouchers

and cancelling the nominal vouchers,
(E) LOAN TRANSACTIONS

Issue Office maintains an account of stores issued on loan in a

register called Loan Issue Register".

Security Ofice also carries out counter check on the above

transaction with the help of "outstanding gale passes pending
regularisation".

The concerned parties are periodically approached from them.

In case of issue to Sister Fys., the transaction is also settled by

obtaining IFD and preparing corresponding regular issue voucher.
(F) TRANSIT DISCREPANCIES

Settlement of Railway claims:

This falls under transit discrepancies. When there is a discrepancy in
quantity or quality of materials despatched against clear RR open
delivery is taken and the claim is preferred on the Railways for the loss
occurred in transit.

Normally Railway Authorities disallow certain portion of the claim

like taxes, packing charges, etc. These are regularised by

preparing a loss statement.

Similar procedures are followed when the goods are received by

road transport.
Timely action in this area saves losses to the Govt. and helps in
speedy clearance of Ml Slips, posting of documents and
settlement of outstanding assets.
27.

REGULARISATION OF LOSSES

The loss of the stores may take place in the following manners.
(a)

Transit Loss.
The loss may be of two types.
(a) Partial.
(b) Full.

(b)

Loss in Storage.

This may be due to following reasons Loss Statement is required.

Mishandling, improper storage etc.

Deterioration within shelf life. No loss treatment is required.

In case of Deterioration after expiry of shelf life:

Accidents, fires, food etc.

(c) Loss due to theft, fraud or neglect.

(d) Regularisaiion of Losses -In all the above cases the procedure
followed for regularisation
recovery of tosses is shown in the table giver below.

REGULARISATION OF LOSSES
SL.N
o.
1.

2.

Category of loss

Method of Regulation

Forms used

Transit loss (a) partial

(b) Full

1. Prepare discrepancy report

in form No.
2. Recover from Rlys/
Transport agency by
preferring claims.
3. Recover from Contractor is
Claims disallowed by
transport agency.
4. Send discrepancy report to
consigner factory to accept
responsibility of loss.
5. Write of the loss not
accepted by transport
agency/consigner by
preparing D(D) Vr. Loss
statement and CVR.
1. Prepare CVR if loss is
within specified limits
Prepare D(D) Vr. Loss
statements and CRV loss is
beyond laid down limits
Prepare DC (D) Vr. Loss
statement and CVR to write
of the loss.

No. -30
FAFZ-30
D(D) Vr. F.
No. IAF-144
CVR from
IAFZ 2096
(large)

Loss in Storage. Not

due to theft fraud or
neglect
(a) Leakage,
evaporation etc.
(b)Mis-handling, inproper storage
etc.

IAF- 14
IAFZ 2096
(large)

-do(c) Deterioration
within shelf life
(d)Deterioration
after expiry of
shelf life.

3.

(e) Accidents, Fire

Flood etc.
Loss in storage due to
theft fraud or neglect

(i)
(ii)

Prepare D(D) Vr. And

regularize through
CVR.
No loss statement is
required.

-do-

(i)

Appoint Board of
enquiry.
(ii)
Recover from the
-doindividual found
responsible.
(iii) Prepare D(D) Vr.
Loss statement and
CRV if loss is not
recovered.
(c) No loss statement is prepared in case of loss in storage mentioned
in para No. (d) 2 (b) and (d) 2 (e) and the discrepancy is regularised
by preparation of expense voucher.
(f) In case of loss due to theft fraud and neglect an enquiry is ordered
and the loss is recovered from the defaulter. However if
responsibility is not fixed D(D) Vr. and loss statement are prepared

to write of the loss and the quantity is charged of through CRV.

(g) In all the above cases the loss is priced by LAO and sanctioned by
CFA as per their financial powers.
28. MATERIAL HANDLING EQUIPMENT
The material handling equipments are generally divided into the
following main classes:
(a) Horizontal fixed path type.
(b) Vertical Movement type.
(c) Fixed area type.
(d) Overhead movement type.
(c) Flexible path (or non fixed path.) type.
a)

Horizontal Fixed path type Equipments

Belt Conveyors.

Wire Gauge conveyors.

Gravity roller conveyors.

Slant conveyors.

Apron Conveyors.

Powered Roller Conveyors.

Drag Chain Conveyors.

Trolley conveyors moving on channel track or Rail track.

Vibrating conveyors.

Closed channel Conveyors.

i) Screw Conveyors.
ii) Pneumatic tube
conveyors.

b)

Vertical Movement type equipments

Package lift elevator.

Bucket elevator.
Derricks and Booms.
Hoists.
Revolving crimes.
Mobile cranes.
Fork lifts.
Spiral chutes.

c) Fixed Area Type Equipments.

Revolving cranes.

Derricks.

Travelling Bridge Cranes.

Gantry Cranes.

(d)

Overhead Movements type

equipments.

(e)

Mono rail conveyors.

Cable ways.
Overhead Chain Conveyors.
Overhead Cranes.
Flexible Path Type equipments.

Two Wheelhand trucks.

Three Wheelhand trucks.
Powered fixed Platform trucks.
Industrial tractors.
Fork lift trucks.
Side Leading trucks.
Straddle trucks.
Dumper trucks.

Equipment of Handling Equipment & Manpower

When calculating requirement for equipment and man Power one
has to be aware of the fact that the materials handling plan will have to
operate under a number of diferent conditions. While equipments, we
must make adequate provision for maximum, worst condition and
severe conditions or peak hour conditions.

DISPOSAL
1. Disposal is an efective function of material management which
mainly serves the following purposes To clear the blocked up capital and obtain as much revenue as
possible for more useful purposes.
To vacate the storage space occupied by these items, so that the
same can be utilised for storage at other items.
To bring them in the area of utilisation from the area of nonutilisation by making them available to other
organisation/contractors who need them.
2. CATEGORISATION OF ITEMS FOR DISPOSAL The items for disposal arc normally categorised under the following
heads:

Surplus serviceable items not required by the organisation or in

excess over the permissible stock limit.

Unrepairable stores.
Unserviceable items.
Scrap-generated as by product or production like brass scrap,

copper scrap, aluminium scrap, saw dust etc.

Unserviceable plant & Machinery.
Waste products like coal ash, cinder ash, saw dust etc.
Obsolete- store is declared obsolete due to technical ineficiency

or superserion due to improved/equipment stores.

Obsolescent-No further provision of such items is made due to
development of superior equipment.

3. FINANCIAL POWERS OF GM FOR DISPOSAL

of Power

1.

Disposal
of surplus
stores

Ex
te
nt
to
w
hi
ch
de
le
ga
te
d

scrap and
plant &
Machiner
y
Stores
i.

Serviceab
le

ADeclaration
of Surplus
GM

Fu
ll
po
w
er
in
re
sp
ec
t
of
dr
u
m
s/
Co
nt
ai
ne
rs/
pa
ck
ag
e
an
d
for
ot
he
r
ca
se
s
Rs
.
50
,0
00
in
ea
ch
ca
se
su
bj
ec
t
to
cl
ea

ii.

Unservice
able

GM

-do-

JT.GM/DGM

iii.

Scrap.
Swart &
waste.
Product

GM DGM/JT.DM

iv.

Plant
Machiner
y
(Unservic
eable ie

GM

ra
nc
e
by
th
e
te
ch
ni
ca
l
te
a
m.
Rs
.5
La
kh
s/
ca
se
Rs
.2
La
kh
s/
ca
se
Fu
ll
su
bj
ec
t
to
te
ch
ni
ca
l
cl
ea
ra
nc
e.
Rs
.5
La
kh
/c
as
e
Fu
ll
Po
w
er

beyond
economic
al repair)

(B
ef
or
e
de
cl
ari
ng
an
y
ite
m
of
P
&
M
as
un
se
rvi
ce
ab
le
&
su
rpl
us
.
All
av
en
ue
for
its
co
st
ef
ec
tiv
en
es
s,
re
co
nd
iti
on
in
g
et
c.
m
us
t
be
ex
pl

or
ed
.)
i.

Stores
Serviceab
le

B-Disposal
GM

Fu
ll
po
w
er
s
in
re
sp
ec
t
of
dr
u
m
s/
co
nt
ai
ne
rs
pa
ck
ag
es
an
d
for
ot
he
r
ca
se
s
Rs
.
50
,0
00
/in
ea
ch
ca
se
,
su
bj
ec
t
to
cl
ea

ii.

Unservice
able

GM
JTGM/Dy
GM

iii.

Scrap
swart
waste
products

GM DGM/JTGM

iv.

Plant &
Machiner
y
(Unservic
eable ie

GM

ra
nc
e
by
th
e
te
ch
ni
ca
l
te
a
m.
Rs
.5
La
kh
s
pe
r
ca
se
Rs
.2
La
kh
s
pe
r
ca
se
Fu
ll
po
w
er
Rs
.5
La
kh
s
pe
r
ca
se
(B
oo
k
va
lu
e)
Rs
.
40
,0
00

beyond
economic
al
repairs)

v.

Walval of
ground
rent

vi.

Sanction
of
demurrag
e&
warfage

i.

Losses of
store due
to Theft,
fraud of
neglect

/(b
oo
k
va
lu
e)
GM
Rs
.
10
,0
00
/in
ea
ch
ca
se
GM
Rs
.
5,
00
0/in
ea
ch
ca
se
(C) Regularization of losses
Rs
.
10
,0
00
/pe
r
ca
se
su
bj
ec
t
to
co
nv
en
in
g
Bo
ar
d
of
En
qu
iry
to

ii.

Loss of
store not
due to
theft,
fraud or
neglect

in
ve
sti
ga
te
th
e
lo
ss
&
co
m
pli
an
ce
of
ot
he
r
pr
ov
isi
on
lai
d
do
w
n
In
F.R
.
Pt.
-1.
Rs
.
50
,0
00
/in
ea
ch
ca
se
su
bj
ec
t
to
ha
lf
ye
arl
y
re
po
rt

be
in
g
se
nt
to
OF
B
an
d
Co
nv
en
in
g
Bo
ar
d
of
En
qu
iry
to
in
ve
sti
ga
te
th
e
lo
ss
an
d
co
m
pli
an
ce
of
ot
he
r
pr
ov
isi
on
lai
d
do
w
n
in
E.
R.
Pt.
I

Rs
.
50
00
/pe
r
ca
se
Agency for Disposal of the Items

Issue to other ord. Fys./OMD/PSU through MAS (OMD - Other than

Military Department).

Through Auction (Departmentally) or through MSTC).

Through Tender.

Issue to private contractor for the conversion into raw

material/finish products required by the Fy.

Notes:(i) The disposal shall be efected by public auction/open lender. Limited

tender may be resorted to with proper justification with the prior
approval of Board/ concerned Member.
(ii) Rate/Running contracts may also be concluded with the prior
approval of Board/ concerned Member.
4. REVIEW OF SURPLUS ITEMS FOR DISPOSAL
Review of surplus items for disposal involves scrutiny to ascertain
prospects of alternative utilisation on re-ulilisalion after carrying
out certain modification/ processing etc. This review is carried out

in the following manner.

Within the factory-A committee is formed in the factory which
carries out review of surplus items once in every six months. This
committee is assisted by stores Branch as well as Material
Control Office This committee tries to ascertain the area of
alternative/ rcutilisalion of these items and declares the surplus

for disposal only when no alternative utilisation could be found.

Technical Team- Technical team is formed under the Directives
of Director General of ordnance stores (D.GOS). This team
consists of the Reps of diferent depots/departments of Defence
organisation Ordnance Factory Board and factory concerned.

They jointly review the items declared as surplus by the factory

and try to explore possibility of utilisation by any other sister
factory/Military Department Whenever no such scope exists, the
team declares them as surplus for disposal.
5 AGENCIES FOR DISPOSAL OF THE ITEM
Disposal is arranged through the
following agencies:
6 DISPOSAL BY THE FACTORY
General Guide Lines
As per instructions, priority should be given for disposal to sister
factories. When item are not required by sister factories, then

only other modes of disposal are followed.

Disposal cannot be arranged by single tender/limited tender
enquiries or negotlatings by the factory w/o the specific approval
of the 0. F. Board. In case of disposal by advertised Tender
Enquiry, it is essential to accept the highest ofer only. In case of

taking any other decision sanction of the O.F. Board is required.

As per the latest instruction issued by OFB for disposal of N911
Ferrous scraps/waste etc. within the financial year only one mode

to be adopted I.e. cither through OTE or through Auction.

Normally all the store/scrap valued Rs. 50,000/" in each case
should be disposed by public Auction. In case of waste product
the limit for Auction sale will be Rs. 1 lakh in case/lot. Tender sale
should be resorted for items/lots in excess of above financial

ceiling.
Under M/D let No. PC No. 6(z)/76 D prod. Dt. 9.5.78 it has been
laid down that 30% of all copper & copper based Non ferrous
scrap & alloy shall be reserved for disposal in lots of 1 to 5 M/tons
each to S.S.I, units & further 30% of the available scrap shall be
marked for bonafide export units. It should be kept in view that a
price preference of 10% over the highest tendered rate is
admissible to the registered small scale limit. The same price
preference may be allowed to small scale, Invent of any qty. out
of the above allocation not being disposed of to the entitled
categories. The same will be added to the quantity for disposal to
the firms in general.
7

i.

DISPOSAL BY PUBLIC AUCTION -

While carrying out disposal by public

Auction, the following steps are taken:
Fixing of Reserve guiding price; A committee is appointed by GM

for fixing the reserve guide price. Two Fy. Oficers & one AO. The
team fixes the price of a lot by taking into consideration of the
following factors:
a) Book value of the item
b) b) Highest bid received in the last Auction if the hem was
put up for disposal in the past c) Present condition of the
item d) Present market price of the item
ii.

Government Auctioneers: Auctions are arranged through govt.

Auctioneer For this purpose a list of Govt. Auctioneers is
maintained by the factory, and each auctioneer is given a chance
by rotation in his turn.

iii.

Supervision of Auction: For this purpose, supervising oficer is

nominated by GM. Who supervises the auction on behalf of the
GM and gives decision regarding acceptance/ rejection of the bid
on the spot and signs all documents on behalf of the GM. /Govt.
of India.

iv.

Supervising oficer may be authorized by the GM in writing to

accept, the bid upto 10% below GM can accept 20% below the
reserve guiding price.

v.

Representatives of Excise Deptt., Sates Tax Authorities, Security,

Inspection Deptt. Accounts etc. also attend auction to give
suitable guidance/ instructions in the matter falling under their
purview.

vi.

Successful bidders are required to deposit 25% of the total value

immediately to Govt. auctioneers on acceptance of the bid. Govt.
Auctioneer will deposit this amount in nearest RBI or SBI through
MRO- MRO is made in four copies original + Duplicate - Returned
to Factory Triplicate copy - Kept by RBI Quadruplicate copy - Kept
by Auctioneers.

vii.

Balance payment of the bid is required to be made by the bidder

against MRO within six working days of the auction.

viii.

Bidder is required to lift the material within 21 working days of

the auction. This lime limit can be extended before the auction

with the approval of supervising oficer.

ix.

Entry of Bidders is controlled by the security. Bidders may enter

the factory against the gate passes to be issued by stores
section, on payment of Rs. 10/-.

x.

Ground Rent: In case of failure of the bidders to lift the material

within the stipulated period, he has to pay the ground rent at the
rate of 2% per week of the cost of unlifted material.

xi.

Belated payment in case of failure of the bidders to make the

payment within the stipulated period he has to pay penalty at the
rate of 10% of 1% of value per day (i.e. 0.11% of value).
DISPOSAL BY ADVERTISED TENDER
ENQUIRIES The following special instruction are
followed

in

ease

of

disposal

by

advertised tender enquiries :

i.

Tender enquiries are issued in the prescribed proforma only.

Normally 14 days arc allowed for DAVP to publish the
advertisement in leading Newspapers.

ii.

Last date of issue of* Tender forms to the interested parties is

fixed as the 44lh day from the dale of Issue of advertisement to
DAVP.

iii.

The lenders are received upto 2.30 pm of the 45th day of the
date of issue of advertisement to DAVP and the tenders are
opened on the same day at 3.00 pm.

iv.

Only those contractors are allowed to witness the tender opening

etc who have participated in the disposal offender enquiry.

v.

Existing Instructions arc that in case of disposal the tender

should be complete in all respect and it should be on the
prescribed proforma.

vi.

The tenderers are required to submit 5% of the total cost of their

bid as earnest.

vii.

Money along with the quotation, in the form of call deposit or

treasury receipt.

viii.

Late quotations in these cases are discouraged.

ix.

Comparative statements of Tender are prepared based on the

quotations received and decision for placement of disposal
contract is taken as per various rules in vogue within a period of
30 days from the date offender opening.

x.

The highest acceptable ofer can be accepted by the GM. In case

of taking any other decision the matter has to be referred to OFB.

xi.

The successful tender has to des posit security deposit at 10% of

the total value of the contract before release of disposal of
contract.
Note: Complete instructions in disposal
procedure are contained in OFB letter
No.212/2/MM dt. 15-6-81.
10.

DISPOSAL COMMITTEE -

In case of disposal, the value of the item is very large. In order

to exercise
monetary control and also to safeguard the interest of Govt.,
disposal committee is
formed which is composed as under:
i. Chairman - GM/AGM
ii. Rep- of LAO - member
iii. Rep. of Store Sec. member
iv. Rep. of Provision Office member
v. Rep. of Work Inspection Ofice member
vi. Any oilier member as considered necessary.
DISPOSAL OF FERROUS SCRAP As per Ql''3's directive issued in June
1985, disposal of ferrous scrap is
arranged through MSTC. The following
procedure is followed in the above case.

Steel Scrap Class 'A' and 'B' are disposed of by the factory only.
In case of other ferrous scrap, the value should be above Rs.

50,000/.
The type of scrap with details of quantity and specification is
intimated to MSTC. Tender Enquiries are issued by MSTC and CST

is sent to the factory for recommendation.

Disposal contract are concluded by MSTC based on the

recommendation of the CST.

Payment towards the sale value is accepted by MSTC and they
issue sale release order to the contractors for the Issue of the

scrap.
Sales tax and other taxes are collected by the factory from the
contractor before issue of the scrap. Issue of scrap is made as
per disposal instructions of MSTC.

Discrepancy if any arising out of the contract is settled by MSTC.

Disposal committee carries out the

following functions:
I. Scrutiny of the tender enquiry before sending to DAVP regarding
terms and conditions etc. to avoid disputes at a later date,
II. Scrutiny of quotations received and recommending the contractor
on whom disposal contract should be placed.
III.

Supervising progress of disposal contract and giving suitable

advice to the disposal Group of provision ofice and Stores
Section from time to time.
In certain cases. Disposal implementation Committee is formed.
The functions of Disposal Implementation committee is to
ensure that the materials arc lifted by the Contractors as per
terms of contract. This committee also settles disputes which
may arise during the execution of the contract.

* ***