4.1 Suppliment to Ordering

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Specific conditions of purchase

Purchase order no.

Name and address of the supplier

Delivery address of the goods

Description of the goods

Product specifications

Quantity

Contract price

Delivery date

Delivery conditions (liability to transport, packaging, insurance cost etc.)

Terms of payment

Liquidated damage (right to recover some specified amount from supplier for delayed

delivery)

Other features (responsibility for export license, custom clearance at port of origin,

transportation and insurance cost upto port of loading, shipping document etc.)

An authorizing signature

General conditions of purchase

Prices: All prices are fixed for the duration of the contract and, unless otherwise agreed.

Quantity and description: The goods shall confirm in all respect to the specification given

by the company to the seller.

Indemnity: The seller at his own expense repairs or replaces all defects attributed to

faulty design or workmanship which may crop up in the goods within a period of 12 months.

Loss or damage: All responsibility for any loss or damage to the goods shall lie with the

seller.

Rejection: The rejected goods observed during testing/ inspection will have to be lifted

by the supplier at his own cost within a month of receipt of rejection advice from the

company.


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Force majeure clause: Neither the company nor the supplier shall be responsible if the

execution of the contract is delayed /interrupted due to the cause absolutely beyond their

control, such as acts of God, war, major civil commotion etc.

Termination: The company reserves the right to terminate the contract either in full or in

part in the event of failure/default/refusal on the part of supplier to perform as per the

contract.

Arbitration: All disputes related to the contract will be referred to the sole arbitrator

chosen by the company.

Applicable law: The law of the buyers country will be applicable.


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Order placement process

SN. Activity Description Management Project manager and

planning & budgeting

Project

Procurement

Vendor

1. Finalization of methodology

for execution (Turn key/semi

turn key/ In-house)

2. Preparation of technical

specification and indent

3 Finalization of list of vendors

4. Issue enquiry

5. Preparation and submit bids

6. Receipt of bids

7. Evaluate technical bid in

association with operating

department/vendors

8. Check suitability of technical

specification

9. Commercial

evaluation(discussion/negotiati

on/and finalization of terms

and conditions)

10. Check terms and condition

11.a Return price bid in as is

condition

11. Open price bid/negotiate with

vendors and select best

vendors

12. Obtain management solution

13. Approve sanction

14. Prepare PO, obtain vetting

from legal depart

15. Get signature of project

manager and release it

NoYes

1

2

3

4

5

6

7

Ok ?

8

9

1

1

11.a

12

3

13

14

Ok ?

10

1

5

16


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16. Acknowledgement receipt of

PO

17. Archive PO

Exhibit 11.6 Order placement process

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Transportation of equipment from origin to destination

Sn. Activity description Buyer Supplier CHA SA DP

1. Sends test certificate(TC) or inspection

report to buyer

2. Give dispatch clearance based on

TC/Inspection report3. Transport equipments to port and load it on

the ship and send bill of lading and invoice

to buyer

4. Arrange insurance of the material

5. With the information contained in the

documents(bill of lading and invoice),

Buyer arranges funds and appoints custom

house agent(CHA)6 On arrival of the ship to destination port,

CHA pays the freight to shipping agent

7. Issues delivery order to the captain to the

material to destination port

8. Destination port gets satisfied that payment

is made to the supplier through the NOC

issued by suppliers bank to this effect.

Thus, destination port issues inward Goods

manifesto(IGM) number to each item

manufactured by a separates country

9. Prepares bill of entry(which shows total

custom duty payable) based on landed value

of items and tariff rules(obtainable from

custom tariff book)

10. Pays custom duty and obtain its clearance

11. Takes necessary action for loss damage

during transit

12. Takes care of materials held at dock beyond

prescribed time

13. Ensures that import license has been

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procured before arrival of cargo.

14. Arranges trans porter and insurance from

port to project site.

15. Under takes road survey between domestic

port to project site for repair of the road and

change route to avoid obstruction

16. Hands over material to transporter for

onward movement to project sites

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2

3

4

5

6

7

9

8

1

1

10

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CHA- Custom house clearance

SA- Shipping agent

DP- Destination port

Exhibit 11.7 Transportation of equipment from origin to destination


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Process of payment through LC

I. Buyer makes an application to his local bank to open an LC in suppliers bank. Following

documents are mentioned as proof of dispatch in the application.

a. Bill of lading in case of transporting by ship or Air way bill (AWB) in case of air

freighting. Besides many things, it shows origin and destination of material.

b. Technical specification

c. Original invoice

d. Packing slip

e. .Insurance certificate

f. Guarantee/ warrantee certificate

g. Performance bank guarantee: Supplier gives a bank guarantee to buyer for meeting

desired performance. Usually, the value of guarantee is about 15-20% of the price of the

equipment. If equipment fails to give desired performance within one year of the

commissioning, buyer can encash the guarantee.

h. Commissioning period

II. Local bank asks its counterpart overseas bank to open an LC in suppliers bank for

specified amount.

III. Suppliers bank opens an LC and sends it to supplier.

IV. When equipment is dispatched, supplier submits documents (mentioned in the application

for LC) to his bank for release of payment. Also, he faxes following documents to

customer:

Bill of lading (which indicates freight amount, name of shipping company agent, etc)

Invoice

V. Bank, on receipt of documents from supplier, sends copies of all documents to buyer.

VI. Buyer sends confirmation to the suppliers bank about discrepancies, if any and advises

to negotiate LC in case no discrepancies exist in the documents.

VII. (vii) Payment is released to supplier, if everything is O.K.

Documents

4.1 Suppliment to Ordering