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Doc. Ref: QUALITY SYSTEM PROCEDURE Rev. No.

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TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS 7.4 7.4.1 PURCHASING Purchase Process Purpose To ensure that the purchased products confirm to the specified requirements / indent. 7.4.1.1 Scope This procedure is applicable to all the items purchased by SIPL for manufacturing and Factory use. Any Purchase which does not carry any significant factor affecting the final product quality & service, purchase order need not be prepared. Exclusions: This does not include purchases up to Rs.10,000/- which are treated as Sundry Purchase Order (SPO). This also does not include general purpose consumables and stationery and they are treated as SPO. However for the purpose of communication & payment the list of such suppliers is also maintained but they do not come under this procedure. 7.4.1.2 Definitions a) Vendors includes sub-contractors b) IGID means Inward Goods Inspection Department. c) End-user Departments: Departments in Syscon Instruments Pvt. Ltd. i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. Planning Department Stores Department Customer Coordination Department Transducers Department System Department Production Electronics Department Product Development Department Quality Control Department Marketing Department Syscon Calibration Centre Pvt. Ltd. Associated services Instrol Devices Associated services

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TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS d) Items procured by Purchase Department i. General Consumables for office use and stationery (excluding consumables required by Customer Coordination Department): The Department Head will send an e-mail of their requirement to Manager Purchase / Purchase Department followed with a hard copy of the email duly approved. Manager Purchase shall purchase the same under Sundry Purchase Order. Pre intimated Components including Hardware, i.e, all the items for which minimum / maximum stock to be maintained is given by the concerned department and the said stock is to be maintained by Stores Department: The indents for such material shall be raised by Deputy Manager System Stores / Sr. Executive Stores / Executive Stores and approved by Manager Commercial, Imports & Stores. However when Bill of Material is raised, such items shall be clearly marked as Pre Intimated and if the indent requirement is more than the stock available, the indents shall be raised by Deputy Manager System Stores / Sr. Executive Stores / Executive Stores and approved by Manager Commercial, Imports & Stores. iii. Other Components, i.e, the components for which no stock is maintained by Stores Department. The indents for such material shall be raised by the personnel in the respective Department and approved by Manager / Head of the said department. Raw Materials like MS sheet, MS plate, PU sheets etc. The indents for such material shall be raised by the personnel in the respective Department and approved by Manager / Head of the said department. Machined Parts: The indents for machined parts from Transducers Department / Designs Department / System Departments are received along with the drawings. Design / Product Development Job work: The selection of vendor, obtaining quotations etc. for job work / services will be done by the concerned Department Head. However the Purchase Order will be done by Purchase Department on the basis of the information provided by the concerned Department Head. Job / Labour Work and Services: The selection of vendor, obtaining quotations etc. for job / labour work and services are done by the Purchase Department / concerned department head.

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iv.

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In the case of Designs Department and System Department all the indents

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shall be routed through Planning Department.

TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS 7.4.1.3 Reference Quality Manual Section 7.4 7.4.1.4 Authority Senior Deputy General Manager Resources 7.4.1.5 Responsibility Manager - Purchase is responsible for implementation of this procedure. He is responsible for all the purchases excluding Imports, Hydraulic and Pneumatic items, Machined parts, Design / Product Development Job work, Job / Labour Work and Services. He will be also be responsible to update the records for the receipt of material, i.e., track the material till it is handed over to Stores / End user. Manager - Commercial, Imports & Stores is responsible for the purchase activities relating to Imports, Hydraulic and Pneumatic items. Deputy Manager - Purchase is responsible for Machined parts and Job / Labour Work / Services. He is also responsible for evaluation of sub-contractors. Executive - Purchase is responsible to raise Purchase Orders on the basis of the indent received and send them to the vendors, indentor and Planning Department. Asst. Executive Purchase is responsible for all cash purchases from the local market as per the advice of Manager - Purchase. Senior Deputy General Manager - Resources is responsible for review of Purchase Orders. Purchase of Capital Assets needs approval of the Board of Directors. 7.4.1.6 7.4.1.7 Procedure Selection of vendors / sub-contractors The vendor / sub-contractor registration and approval is done as per format 7.4 F01. 7.4.1.8 Selection of vendors / sub-contractors for the procurement of raw materials, components, consumables and packing materials is made from a list maintained

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by Purchase Department. Manager - Purchase is to ensure that the approved vendors / sub-contractors with whom the Company has transaction for a period of more than One year and whose performance is established are approved by the Senior Deputy General Manager - Resources. Suppliers who are already supplying material as on the date mentioned above (QSP date) are approved suppliers. Fresh suppliers thereafter will go through the above process. TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS 7.4.1.9 All products and consumables are purchased based on the following criteria. a) Purchase is to be made only from approved vendors / sub-contractors. b) The company in specific cases, for justifiable reasons may procure items from sources, which are not approved but duly authorized by the Senior Deputy General Manager - Resources. 7.4.1.10 Selection of particular vendors / sub-contractors is to be based on the price, delivery and quality factor also. The price of the commodity and the order placement is to be determined as under: i) ii) 7.4.1.11 On the basis of offers received directly from the manufacturers / subcontractors. Detailed current price list supplied by the manufacturer for standard items.

To ensure that purchased products conform to the specified requirements, sources of procurement of items are in the following order of preference. i) ii) iii) Directly from the manufacturers From authorized distributors / Manufacturers representatives / Dealers General Order Supplier/s.

7.4.1.12

Development of new vendors / sub-contractors The development of new vendors / sub-contractors will be responsibility of Manager - Purchase / Deputy Manager - Purchase / Asst. Executive - Purchase in consultation with Senior Deputy General Manager Resources. They will also depend on following sources to upgrade their data base. a) b) c) d) e) f) Trade Directories / Journals Yellow Pages Suppliers Catalogue / Salesman Information Obtaining information from Purchase Department of Companies Request letter / introductory letters received from vendors. Internet (Google search, Justdial, etc.)

other

7.4.1.13

Periodical review, Evaluation & Rating of the approved sub-contractor is to be carried out once in a year by Manager - Purchase / Deputy Manager Purchase

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in Format No.7.4 F06, in consultation with the Head of IGID. 7.4.1.14 Verification of purchased products in the event of customer request In the event of Customer requesting to inspect the items sub-contracted by SIPL, SIPL will arrange for inspection at Vendors premises

TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS 7.4.1.15 Where specified in the contract, customer or his representative is permitted to verify the sub-contracted product whether at sub-contractors premises or at the Factory premises. Such verification is not be used by SIPL as evidence of effective control of quality by the vendor / sub-contractor. Verification by the sub-contractor will not absolve SIPL of the responsibility to provide acceptable product, nor will it preclude subsequent rejection by the customer. Time frame for procurement a) Local procurement:- 3 to 7 working days

7.4.1.16

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b) Outside Bangalore procurement:- 2 to 6 weeks c) Imported items:- 8 to 12 weeks d) Sub contracted items / machined parts:- 3 to 4 weeks However depending upon the urgency all efforts will be made to meet demand / requirement and it shall be the responsibility of Manager Purchase / Senior Deputy General Manager Resources. 7.4.2 Purchasing Information Procurement of material is effected in the following manner: The indent for material for the various departments is received by an e-mail as per Format No. 7.4.F03 directly from the concerned Department. The hard copy of the same, in duplicate, should be signed by the indentor and approver (above the designation of a Manager) and handed over to Purchase Department. Manager Purchase / Manager Commercial, Imports & Stores, Deputy Manager Purchase / Executive Purchase will acknowledge the receipt of the indent. [Responsibilities describe in Clause 7.4.1.5] However in case of requirement of Systems Department, the indent is routed through Planning Department. Planning Department to generate the hard copy of the format in triplicate. The same should be signed by the indentor and approver and handed over to Planning Department. Personnel in Planning Department to acknowledge the receipt of the indent. Planning Department should sign and hand over 2 copies of the indent to Purchase Department. Manager Purchase / Manager Commercial, Imports & Stores / Deputy Manager Purchase / Executive Purchase will acknowledge the receipt of the indent to Planning Department. 3.2.1 Manager - Purchase will take inputs from the above, verify the availability of the physical stock in the company and if the same is available in stock, he shall intimate to Stores Department in Format No. 7.4 F05 to keep the stock in a separate bin meant for the said machine order.

TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS In case of indent for multiple quantities / orders (received at the same time), then preference will be given based on the Required Date mentioned in the indent. 3.2.2 Manager - Purchase will take inputs from the above, verify the availability of the physical stock in the company and if the same is not available in stock, he will order on the appropriate vendors in the following manner: In case of repeat item, Manager Purchase will check with the vendor for the

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price / quotation and Purchase order will be released within two working day. In case of indent for new item where no quotation / Performa Invoice is obtained by the indentor, Manager Purchase / Manager Commercial, Imports & Stores / Deputy Manager Purchase / Asst. Executive Purchase shall send enquiries to the vendors / sub-contractors. On receipt of the quotation, technical clarification / approval will be taken from the Indentor / Approver of the item. Subsequently the commercial terms shall be negotiated and finalized. The same shall be approved by the Senior Deputy General Manager Resources. a. In the case where quotation / Performa Invoice is obtained by the indentor or Purchase Department, Purchase order will be released within one working day. In the case where no quotation / Performa Invoice is obtained by the indentor or Purchase Department, Purchase order will be released within three working days. In the case where the source is not known, Purchase order will be released with seven working days. However such cases will be brought to the notice of the Planning Department as well as the indentor / approver of the indent.

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3.2.3 7.4.3 4.1.1

Evidence of negotiation will be recorded for each item wherever possible. Procedure for Ordering Orders are placed by the following methods. 1) All general requirements shall be designated by G as follows. PO/G/XXX/XX-XX, Dt. PO - Purchase Order; G-General; XXX - Purchase Order No; XX-XX Financial Year

TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS 2) All capital requirements shall be designated by CAP as follows. PO/CAP/XXX/XX-XX, Dt. PO - Purchase Order; CAP Capital Equipment; XXX - Purchase Order No; XX-XX Financial Year 3) All import requirements shall be designated by IMP as follows. PO/IMP/XXX/XX-XX, Dt.

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PO - Purchase Order; IMP - Import; XXX - Purchase Order No; XX-XX Financial Year 4) All Product Development requirements shall be designated by PD as follows. PO/PD/XXX/XX-XX, Dt. PO - Purchase Order; PD Product Development; XXX - Purchase Order No; XX-XX Financial Year 5) All System requirements shall be designated by SYS as follows. PO/SYS/XXX/XX-XX, Dt. PO - Purchase Order; SYS - System; XXX - Purchase Order No; XX-XX Financial Year 6) All Transducers requirements shall be designated by TRA as follows. PO/TRA/XXX/XX-XX, Dt. PO - Purchase Order; TRA - Transducers; XXX - Purchase Order No; XX-XX Financial Year 7) All Production Electronics requirements shall be designated by ELC as follows. PO/ELC/XXX/XX-XX, Dt. PO - Purchase Order; ELC - Electronics; XXX - Purchase Order No; XX-XX Financial Year 4.1.2 The printed purchase order is checked by Manager Purchase / Manager Commercial, Imports & Stores / Deputy Manager Purchase and authorized by Senior Deputy General Manager - Resources.

TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS 4.1.3 The printed copy of the Purchase order is dispatched to the vendor as well as e-mailed to the vendor, with a copy to the indenter and Planning Department. Purchase Department will insist the vendors / sub contractors to mention the Purchase Order No. in the Deliver Challan / Invoice. Manager Purchase / Manager Commercial, Imports & Stores / Deputy

4.1.4

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Manager Purchase to obtain Order Acknowledgement / Order Confirmation from the vendor. 7.4.4 7.4.1.1 Procedure for Material Inward The material is generally received at the Security Department. However in case the material is delivered through courier by the vendor, then the material is received at the Front office and routed through Security Department. Materials received from the Marketing Office or personally collected by the employees in Purchase Department are also routed through the Security Department. In case the Purchase Order No. is not mentioned in the Delivery Challan / Invoice, then the Security Department shall immediately intimate the same to the Manager Purchase. In turn the Manager Purchase shall look into the Purchase Orders and the Purchase Order No. shall then be entered in the Delivery Challan / Invoices. Material will not be received in the stores without Purchase Order under any circumstances. All the procured items are covered with Purchase Order. However any purchases which cost less than Rs.10,000/- (excluding taxes) may be procured as Cash purchase or invoiced without Purchase Order. Such Invoice / Delivery Challan will be stamped as SPO (Sundry Purchase Order). The Security Department will maintain a register for all the Inward materials as per Format No. 7.4 F04. The Delivery Challan or copy of the Invoice (in case of non availability of Delivery Challan) will be handed over to Senior Executive Stores. The original invoice and the copies thereof will be handed over to the Executive - Front Office. The copy of the original invoice and the Excise invoice, if any, will be handed over to the Asst. Executive Accounts for accounting purpose. All the items entering into Syscon will be routed to stores for booking and there should be Receipt stamp on the Invoice / Delivery Challan. Based on this the SRIR (Format No. 7.4.2 F02 or Format No. 7.4.2 F02A) will be generated by Senior Executive - Stores. SRIR will be closed only after the material is inspected by the personnel in IGID / end-user department and approved by the IGID Head / End user Department Head and the material is returned to Stores / end-user. TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS 7.4.4.7 7.4.4.8 The Invoice / Delivery Challan is handed over to Manager Purchase / Deputy Manager - Purchase for updating the records of receipt of material. Manager Commercial, Imports & Stores will be responsible for updating the

7.4.1.2

7.4.1.3

7.4.1.4

7.4.1.5 7.4.4.6

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Purchase Entry in the Electronic Media. 7.4.4.9 If the material is accepted by the personnel in IGID / end-user department and approved by the IGID Head / End user Department Head, the white and yellow copy of the SRIR is given to Manager- Purchase for information by the Senior Executive - Stores. In case SRIR is not received within the reasonable time (as specified in the IGID procedure), Manager Purchase / Deputy Manager Purchase shall follow up with IGID Department for closure of the SRIR. Manager Purchase to hand over the Original Invoice along with the yellow copy of the SRIR and copy of the Purchase Order to Manager Accounts for payment to the vendor. In case of a Bill for Labor charges / service charges, the Manager Purchase / Deputy Manager Purchase will get the vendor / sub contractor bill endorsed by the concerned Department Head and forward the bill and copy of the Purchase Order to Manager Accounts for payment to the vendor / sub contractor. If any of the material is rejected by the personnel in IGID / IGID Head / end-user department / End user Department Head, the white and yellow copy of the SRIR is given to Manager- Purchase / Deputy Manager Purchase for necessary action. The bill / Invoice will not be handed over to Accounts Department for payment. Non conformances are dealt with as described below 1. Identification with a tag in Format No. 7.5.3 F06 B (yellow colour) for rework and 7.5.3 F06 C (Red colour) for rejected items mentioning items, description, quantity, Purchase Order No., Date of supply and name of vendor / sub contractor signed by IGID personnel. Items may be classified as outright rejected or recommended for rework in case of subcontracted items. Rejected items should be returned to the vendor / sub contractor within 2 working days along with the copy of the rejection report signed by IGID personnel and accompanied by Gate Pass in Format No. 7.4.2 F03

7.4.4.10

7.4.4.11

7.4.4.12

7.4.4.13

7.4.4.14

2. 3.

TITLE: 7.0 PRODUCT REALISATION SECTION TITLE: 7.4 PURCHASING PROCESS 7.4.4.15 On receipt of the replacement for the rejected material / reworked material,

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Clause 7.4.4 onwards will be repeated. The earlier SRIR No. will be given for the new SRIR but will be suffixed with R. 7.4.4.16 In case the material cannot be replaced by the vendor, then Manager Purchase shall get the same adjusted with a Debit / Credit Note from / to the vendor / sub contractor.

7.4.5

Formats & Records: Purchase Department Records Vendor / Sub contractor Registration cum approval form Vendor /Sub- contractor approval list Indent Form Material Inward Register maintained at Security Department Outward Gate Pass (for sending the material to vendor / sub contractor) Intimation for Stores to allocate the item for a particular Order Periodical Evaluation & Vendor rating form Stores Department Records Stores Receipt & Inspection Report Stores Receipt & Inspection Report IGID Records Identification Tag for rework Identification Tag for rejection : : : : : : : : Format / Retention Period Format No. 7.4 F01 Format No. 7.4 F02 Format No. 7.4 F03 Format No. 7.4 F04 / 3 years / 1 year / 1 year / 3 years

Format No. 7.4.2 F03 / 1 year Format No. 7.4 F05 Format No. 7.4 F06 / 1 year / 1 year

: : : : : :

Format Format No. 7.4.2 F02 Format No. 7.4.2 F02A Format Format No. 7.5.3 F06 B Format No. 7.5.3.F06 C

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