NIIT TECHNOLOGIES LTD.

Purchase Policy

 

21 October 2008   Ver 03

Purchase Policy & Procedures

Intent: NIIT Technologies Ltd (NTL) Purchasing policy defines the basic Sourcing and Purchasing policy that ensures cost reduction while ensuring delivery of high quality Products, Services and activities with complete transparency and stakeholder buy-in through documented policies & procedures.

 

Scope: NTL.  - Exclusions, currently, will be limited to purchases/ Services made through HR, Finance, Marketing, Project and Legal directly.

 

Objective: The purpose of this policy to provide guidance to NTL concerning corporate purchasing authority. Reduce NTL cost with no compromise in required quality levels. Reduce risks and exposures to NTL on sourcing of I.T., Facilities and Logistics, Products, AMC and Services. Have a transparent and open purchasing process. Work within the guidelines of purchasing policy & with purchasing committee on procurements above 50 Lac. Establish prudent & reasonable policies and guidelines for sourcing and procurement at all locations ensuring that business needs are met including cost rationalization & timely procurement. Provide guidance for NTL staff, users and others about their responsibilities with respect to sourcing and procurement. Provide a foundation for the further development of related Practices and processes.

 

NTL personnel should adhere to the attached procedures concerning the approval to make or authorize the making of commitments of the order and contractual nature on behalf of NTL, to execute instruments and documents in the ordinary business of the Company, and to authorize the disbursement of corporate funds.

 

Responsibility: VP Commercial is responsible for writing and modifying the procedure. Individual CSO are responsible for implementation.

 

Reference Documents: Master vendor list (SAP), Authority Matrix for CSO, VENDOME (Vendor Pre Qualifier) document and VQR (Vendor Quality Rating) document.

 

Purchasing Policy:

 

a) This is policy of NTL that all acquisitions of goods and services for all products, materials and services, including but not limited to equipment rental and leases be processed in compliance with the NTL Purchase Requisition and Purchase order process. CSO will be responsible for the authorizing the issuance of purchase orders.

 

b) All Purchase Requisitions must be completed through CDS within the approval authority matrix of NTL.

 

c) Purchase requirements should not be processed on separate Purchase Requisitions/ Orders to reduce the total INR value and limit the required approval level as per NTL approving Authority Matrix.

 

d) Purchase Requisitions are to be used by requesting department/organization to serve as the business unit authorization for corporate purchasing to issue authorized Purchase Orders to purchase products, materials, lease the equipments and services.

 

e) Purchase Requisition involving both Capital and operating budget expenditures should be approved within originating organization per the NTL authority matrix.

 

f) All purchases more than one Lac with capital purchase will have to be routed thru corporate CSO department.

 

g) Only the CSO department (at HO and regional Level) would be authorized to raise a purchase order (Against PR) on behalf of NTL.

 

h) All goods and services ordered through a Purchase Order/ Contract require a Purchase receipt (MRC) system.  (Supply items: MRC; Installation: Installation note)

 

i) All employees involved in purchasing activities for the Company are obligated to comply with The Code of Business Conduct and Ethics and shall follow all procedure for Purchase Requisition and Purchase Order. This is applicable to all employees involved during the vendor identification & selection process.

 

j) All Purchase Orders and Service Contract exceeding total value of 50 Lac shall be approved by the corporate purchasing committee.(check in ref. To CDS)

 

k) Responsibilities – The VP Commercial is responsible for the policy interpretation and compliance.

 

Purchase Procedure:

 

1) Selection of Vendor

 

a)     Selection of a potential vendor in all cases for consideration of VENDOME process   

      shall be based upon the following criteria:

 

  • Corporate Purchase committee recommendations
  • Past experience
  • BG’s recommendation
  • Client’s recommendation in specific cases
  • Market feedback
  • Client relationship

 

b)     The selection of the vendor/supplier shall be through strategic sourcing process. This process involves the selection of the potential supplier identified for running VENDOME process. The selection of the supplier is based common platform resulting from sourcing team and SME team. The complete list of potential supplier discussed with cross-functional team and list of selected supplier formalized. However VP Commercial has power for any exceptions.

 

c)      Supplier shall be informed regarding their selection for VENDOME process. Meeting with supplier regarding the process to be followed and requirements. Any doubts or declines will be appraised to cross-functional team.

 

d)     There shall plan for the cross-functional team visiting supplier office, their client’s destinations and physical check the ESH compliance, wherever deemed essential.

 

e)     The following aspects shall be considered during the discussions and final                               

 

f)         selection:

 

  • Quality of the goods / service offered
  • Pricing
  • Delivery
  • Payment terms
  • Availability of the goods
  • Warranties inclusion
  • Customer service available
  • After Sales Technical support

 

f)  VENDOME rating shall be given by cross-functional team and forward the same to   

     purchasing committee members for approval. The Qualified supplier’s list is listed at            

     Vendome site. However VP Commercial should approve exception to above  

     process.

    

g) BG should provide the complete scope of work, annual proposed requirements and

    service level expectations to purchasing team. This document should be       

    comprehensive  and detailed. The required budget approval as per the NTL

    approving authority shall be submitted along with purchase requisitions. Except the

    Annual contracts & AMC all purchase requisitions should be through SAP.

 

2) Purchasing Process

 

a)     The corporate purchase department will be handling all the requirements as per   

      Following schedule: -

 

1.)   All Capital Purchases

2.)   All non Capital Purchase

3.)   All bought out purchases

4.)   Telecom

5.)   AMC/ Contract

6.)   Regular items

7.)   Consumables/Non consumables - All items covered under this heading will have to have a Service PO if the amount exceeds Rs 15,000/-(Rs Fifteen thousand only) however exception of items not cover under this clause are i.e. Diesel, Corporate Lunch/dinner's, Events, Hotel Bookings, Security, Office rents, Taxi booking, Rental of Desktops/Laptops and Tea & Coffee Expense ,Stamp's /Stamp Paper and Visiting cards.

 

 

     b) The user department shall give a CDS duly authorized by the appropriate authority as per NTL prevailing Authority Matrix. This CDS is through online purchasing system.

 

In case of emergencies, e-mail authorization by CEO can be considered for initiating purchasing action. Such cases must be formalized officially subsequently by processing on a CDS with requisite approval to CDS.

 

All details asked for in the CDS like detailed specifications, quantity, approximate price, project code, required date, and budget, specific warranty terms required and any other specific requirement / instructions must be filled up. It may be necessary to mandate that the user must specify whether or not the item requisitioned is a capital item.

 

Wherever the user department desires to have estimated prices only, the same shall be provided without seeking a CDS. Such communications could be informal like through e-mail.

 

c) Buyer need to find out the type of purchases involved as per purchasing process. These shall be 3-pronged approach-purchasing process as followings: -

 

1) RFQ process

 

This process involved sending RFQ to the qualified suppliers along with complete scope of work. The RFQ can be reverted back within defined period to purchasing team. The purchasing team should generate the comparison sheet. This shall be followed by round of negotiation.

 

a) There shall be four broad Categories for item/services to be purchased as follows:-

 

1.)   Infrastructure/Build out Purchase

2.)   Technology Purchase

3.)    Contracts and services

4.)    Non Technology Purchase

 

 

 

 

b) For all purchases below 50 Lac as per NTL Authorization Matrix:-

 

CSO shall try and obtain three quotations (transaction/product more than INR 50,000/-) or as many numbers of quotations as the item in Requisition merit to obtain the best price and terms in an objective and transparent manner. However, Head Procurement can process purchases less than Rs 50,000/-, through approved single quote. Purchase Order releasing authority shall approve exceptions to this. This shall not be a binding factor in the following circumstances. CSO is authorized for variation of + 8 to 10 % of CDS value upto 5 lacs and +5% for CDS more than 5 lacs

 

  • When the user department specifies a particular make based on justified business/Client need (Should be documented)
  • When the item has monopoly in market.
  • When there is an unforeseen emergency

 

 

 c) For all purchases exceeding 50 Lac or a value as specified by the NTL Authority Matrix, guidelines of corporate purchasing committee shall be followed.

 

d.) The approved PO total should be inline to approve CDS only. The total amount of approved CDS will be the reference value, not the line item value. However for certain exception CSO is authorized for variation of + 8 to 10 % of CDS value upto 5 lacs and +5% for CDS more than 5 lacs. The approved CDS amount is without taxes.

 

In case of major infra Purchase committee approves projects, the budgets separately (not thru system). Then Asset controller creates the PRs to enable purchase deptt to release POs.

 

For hiring of machines, the approval of Business head is required to go ahead for ordering.

 

e.) Purchase Orders shall be authorized in SAP as described in the NTL CSO authority matrix. Currently the limits are as below –

 

Up to      Rs. 1.0 lac    --- Regional Controller

Up to      Rs. 8.0 lac    --- Head Procurement

Beyond   Rs 8.0 lac    --- Head CSO

 

f.) For all the contracts and services, Legal department will vet the standard format of NTL.

 

The Purchase group member will sign PO. The Purchase Orders shall be disposed off as under:

 

  • Copy/ mail to be sent to the Vendor through Vendome
  • Return mail by vendor shall be taken as a token of having accepted terms and conditions of the contract. If no communication, however, is received from the vendor by e-mail within three working days of Vendome mail, it shall be assumed that all terms and conditions are acceptable.

 

h) For Technology purchases related to branded items, Service Providers shall be chosen and agreed jointly by Technology, Stakeholders and Purchasing based on commercial, service network and technical considerations. A List of Approved Service Providers shall be maintained by CSO.

 

i) Wherever the payments terms are against Letters of Credit and advance, CSO officer shall simultaneously request the vendor to send Performa Invoice. The CSO Officer with respect to the Purchase Order shall check the Performa Invoice for appropriateness and forwarded to Finance for further action.

 

j) After the copy of Letter of Credit is received from Finance, it will be checked for all terms and conditions by the CSO Officer and if everything is in order, it will be faxed to the vendor, if the vendor through its bank does not receive it by that time.

 

k) In case, any change or amendment is desired in the Letter of Credit, a written communication will be sent by the CSO Officer to Finance.

 

Inclusion/ Removal of Vendors

 

Head Procurement may include/ remove vendors of products and services from the respective Approved Master Vendor List on basis of VQR process.

 

Infrastructure/Build out Purchase (Project Procurement – Owner Furnished items)

 

a) The complete Technical Specification, Design Documents along with volumes should be directed from Project team. This sheet should also include the possible vendor’s recommendation along with requirements.

 

b) Purchase team will cross check potential vendor list formulized by project team than should shortlist the supplier eligible thru VENDOME process.

 

c) Selection of potential vendors for consideration of VENDOME process shall be based      upon the following criteria:

 

1.      Corporate Sourcing recommendations

2.      Past experience

3.      BG’s recommendation

4.      Client’s recommendation in specific cases

5.      Market feedback

6.      Client relationship

 

d) The selection of the vendor/supplier shall be through vendor selection process. The selection of the supplier is based on common platform resulting from sourcing team and Purchase Committee. However VP Commercial has power for any exceptions.

 

 

e) Supplier shall be informed regarding their selection for VENDOME process. Meeting with supplier to info them regarding the process to be followed and requirements would be conducted and any doubts or declines will be appraised to cross-functional team.

 

g)     The following aspects shall be considered during the discussions and final selection:

 

  • Quality of the goods / service offered
  • Pricing
  • Delivery
  • Payment terms
  • Availability of the goods
  • Warranties inclusion
  • Customer service available
  • After Sales Technical support

 

h)      All short listed suppliers will be given RFP/RFQ documents package. Pre Bid meeting (If required) organized with cross-functional team for better understanding of the RFQ documents. This RFP/ RFQ is associated with closing timelines. Any proposal received after closing will not be considered. However VP Commercial/ Head NIIT will approve any exception to this.

 

i)        All short-listed supplier should submit the minimum earnest payment with NTL, if this is the part of agreement / tender.

 

j)        The bid package should be opened in presence of cross-functional team (minimum 3 persons).  All the required information should be formulated in comparison sheet. A final comparative statement is made & sent with its financial and technical comments to Purchase Committee for approval. The cross-functional team reviews the functional expert comments and short listed vendors for final negotiations.

 

k)      The cross functional team should follow round of negotiations to get the best price for bench marking. The complete analysis along with recommendations should be forwarded for approval (as per NTL Authority Matrix).

 

l)        The Deposit for the non-short listed supplier should be released after selection of vendor against that tender.

 

m)   The acceptance of recommendation should permit purchasing to issue LOI for Project. The approved Purchase Order will follow this LOI incase of new vendor.