WELCOME TO GHCL PURCHASE TEAM 1 Procurement Soda

WELCOME TO “GHCL PURCHASE TEAM” 1

Procurement Soda Ash Division PANKAJ KUMAR Date : 20. 06. 14 2

Agenda q Have Fun alongwith Knowledge Sharing q Know each other and respective functions/responsibilities q Learn from each other q Express your challenges and share experiences q Sharing best practices 3

Spend Details q q Repair and Maintenance items (Materials) Rs 40 Crore Services Procurement (Include Bagging contract, plant related services) q HDPE Bags procurement q Project Purchases Rs 20 Crore(Approx) Rs 25 crore Rs 75 Crore (Approx) Fuel and Chemicals Procurement (Ammonia, Binder, Coke Breeze, Coke etc) Rs 160 Crore (Approx) q q Import of Coal and Limestone Rs 150 crore Other Procurements include : q Outbound Material handling of Lignite Mines and Salt fields q Raw material Procurement- Domestic. Limestone, Salt etc 4

Organisation Chart 5

Best Practices -KPIs 6

Transforming Purchase process Transaction based Purchasing – – Negotiation based buying Prime motive: avoid stock outs Skills: Commercial, follow-up Style: Individualistic Knowledge based Purchasing – Total Cost of Ownership – Consolidate and leverage volume buy – Skills: Professional, Team Building – Style: Cross-Functional 7

Strategic sourcing methodology 8

Abhilasha Initiatives – FY 14 -15 Area of Operation Strategic Sourcing Procurement Transactions Packaging Initiative Areas / Remark Study of High value purchased items / Coke & Coke Breeze services Matl Handling - Lignite mines & Salt works Casting, Fabrication and Machined items Gear Box / Valves / FRP items Engineering Spares Refractory Bricks Electrical / Instrumentation items Reviewing existing SOR & its optimization Services Study of high value service procurement Vendor consolidation / mgmt White paper to be ready by May end Waste disposal - Obsolete inventory Disposal of balance Obsolete inventory worth & Scrap disposal Rs. 94 L Increase ARC‘s 30% to 50% Increase cases of VMI Import Substitution & Alternate Vendor development Minimize advance cases & matl. del 7% to 2% overdue cases Introduction of new suppliers Add 2 vendors in 50 kg and Jumbo Weight reduction in Jumbo & 50 kg bag Other Strategic Industry interaction areas Industry meet with neighbouring industries Target Rs. 100 L 250 vendors By Aug 2014 Rs. 50 L By Mar 2015 By Nov 2014 50 kg by May ‘ 14 Jumbo bag by Nov ’ 14 Create platform for industry interaction - Nov ‘ 14 9

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PR-PO (within 15 days) – 100. 0% – 90. 0% – 80. 0% – 70. 0% – 60. 0% –PR-PO (within 15 days) – 65. 8% – 69. 6% – 75. 1% – 74. 9% – 94. 2% – 76. 8% – 79. 0% – 90. 6% – 78. 8% – 83. 8% – 80. 8% – 75. 1% Apr/13 May/13 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14 Grand Total No of PRs 635 690 571 886 2588 456 319 297 509 340 458 486 8235 Average PR-PO Conversion within 15 days: 78. 7% 11

–Material Delivery –Delay/Undelivered Cases – 30% – 25% – 20% – 15% – 10% – 5% – 0% –Apr –May –Jun –Jul –Aug –Sep –Oct –Nov –Dec –Jan –Feb –Mar –Delay/Undelivered Cases – 26% – 24% – 27% – 20% – 22% – 17% – 28% – 20% – 17% – 14% – 15% –Delay means material delivery beyond 8 days of contractual delivery Apr Delay/Undelivered Cases 193 May 228 Jun 224 Jul 158 Aug 301 Sep Oct 473 111 Nov 180 Dec 129 Jan 124 Feb 100 Mar 122 Grand Total 2343 • Average Cases of Delay/Undelivered: 20. 7% 12

Price Variance –Note: Cases depict price rise more than 5 % CASES OF PRICE INCREASE Type of Vendors No of Material Impact (Rs in Lakhs) Regular Vendors 1205 28. 40 208. 37 15 17. 55 118. 76 563 79. 57 495. 43 Single Party 24 1. 55 5. 36 Grand Total 1807 127. 07 827. 91 33. 31% 77. 65% 74. 83% IMPORT OEM %age of OEM, SP, Import Cases Purchase Order Value (Rs in Lakhs) 13

Price Impact PURCHASE ORDER VALUE (Rs in Cr. ) CHANGE STATUS APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB Grand Total Increase 1. 6 1. 4 0. 9 0. 5 1. 1 0. 9 0. 6 1. 7 0. 9 1. 1 1. 6 12. 2 Decrease 1. 0 1. 9 0. 6 0. 5 1. 0 0. 6 0. 2 0. 5 0. 8 0. 7 0. 4 8. 2 No Rise 0. 5 0. 9 0. 8 0. 5 0. 6 0. 4 0. 2 0. 3 0. 4 0. 2 5. 1 Nil History 0. 5 1. 1 0. 8 0. 5 0. 6 0. 5 0. 3 0. 2 0. 5 1. 0 0. 6 6. 6 Total Order Value 3. 6 5. 3 3. 0 2. 0 3. 3 2. 3 1. 3 2. 8 2. 4 3. 2 2. 8 32. 1 14

GRN Status –GRN STATUS – 105 – 95 – 85 – 75 – 65 –APR –MAY –JUN –JUL –AUG –SEP –OCT –NOV –DEC –JAN –FEB – – 1 RR-GRN (within 5 days) – 91 – 90 – 95 – 96 – 95 – 94 – 97 – 89 – 2 RR-User Approval (within 5 days) – 74 – 73 – 77 – 85 – 67 – 77 – 75 – 79 – 84 – 68 APR Total Materials Received 963 MAY 1269 JUN 1017 JUL 1011 AUG 1737 SEP 2559 OCT 835 NOV 602 DEC 872 JAN 754 FEB 1013 MAR 964 –* Average RR-GRN Converted within 5 days: 93. 9% 15

Payment Terms: Advance Cases – Cases of Advance Payment – 10% – 8% – 6% – 4% – 2% – 0% –Cases of Advances –Apr – 8% –May – 8% –Jun – 9% –Jul – 6% –Aug – 5% –Sep – 5% –Oct – 6% –Nov – 4% –Dec – 7% –Jan – 6% –Feb – 7% –Mar – 5% • Average Cases of Advance Payment: 6. 37% • 61% of Total Advance Cases due to OEM & Single Party Vendors Pay Terms ADO ADV API ATT BBB CAD LC 1 P 1 C P 2 P P 3 C P 3 P PYT 2 Description 100% AGNST EXCHANGE OF DISP. DOCUMENTS 100% ADVANCE ALONG WITH PURCHASE ORDER 100% AGAINST SUBMISSION OF PROFORMA INVOICE 100% ADVANCE TT 100%AGNST DISPATCH DOCS THRU DENA BANK, VRL CASH AGAINST DOCUMENTS 100% AGNST IRREVOCABLE L/C PAYABLE AT SIGHT 10% ADV BAL WITHIN 15 FROM THE DATE OF DES/REC 20% ADVANCE BALANCE AGAINST PROFORMA INVOICE 30% ADV BAL WITHIN 15 FROM THE DATE OF DES/REC 30% ADVANCE BALANCE AGAINST PROFORMA INVOICE 20% AGNST PROF. INV, 80% AGNST DEL. AFTER 30 DAYS Grand Total No of Cases 3 11 198 1 9 6 2 2 1 238 %age 1. 3% 4. 6% 83. 2% 0. 4% 3. 8% 2. 5% 0. 8% 0. 4% 16

Thank You 17