This document provides background information on Madhya Gujarat Vij Company Limited (MGVCL), including that it is a power distribution company in Gujarat formed in 2005 as a subsidiary of Gujarat Electricity Board. MGVCL distributes electricity across 5 districts in central Gujarat. The document outlines MGVCL's capital structure, board of directors, key officials, and awards/recognitions received for its performance and initiatives.

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WORKING CAPITAL MANAGEMENT
BY
CHARMI S. SHAH
Submitted to
MADHYA GUJARAT VIJ COMPANY LIMITED (MGVCL)
ANAND CIRCLE
MAY – JUNE, 2013
CENTRE FOR MANAGEMENT STUDIES
DHARMSINH DESAI UNIVERSITY
NADIAD

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2. ACKNOWLEDGEMENT
I express my gratitude to my faculty guide Prof. Naresh Shah Sir for providing me guidance
and academic inputs during my training. I thank to all the faculty members. I am very
thankful to my company guide Ila Thakar Madam for helping me in my training and for
making me understand the accounting procedures of MGVCL.
I deeply express my gratitude to Mr. K. R. Rana (Dy. General manager – HRM) without
whose permission it would have not been possible to carry out my project in MGVCL.
Finally, I express my indebtedness to all who have directly or indirectly contributed to
successfully complete my project report.
Charmi S. Shah

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3. EXECUTIVE SUMMARY
This report is prepared with a view to get the knowledge of functions of Finance department
of MGVCL. This report is prepared on the basis of study done during period of 2 months
(from 1-5-2013 to 30-6-2013) at MADHYA GUJARAT VIJ COMPANY LIMITED –
Anand, as a part of education curriculum.
This study is aimed at understanding the present scenario of components of Working Capital
Management, the areas of improvement and then possible effective control that can be
applied. Both the primary and secondary sources of data has been used for collection of the
needed information for the preparation of the project.
For the preparation of report, help has also been taken from literature. There has also been
certain limitations for the study.
Due to administrative hierarchy, similar to Government organization, it is observed that there
is a lot of delay in getting Administrative approvals and ultimately results into wastage of
valuable manpower and finance. It should be minimized at respective department level. Also
there is huge blockage of funds in stores items lying unused since long. It requires to improve
the purchase policy.

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TABLE OF CONTENTS
Sr. no. Description Page no.
1 Title 1
2 Acknowledgement 2
3 Executive summary 3
4 Objectives of the study 5
5 Review of literature 6
6 Benefits/Limitations of study 8
7 Research Methodology 9
8 8.1 General information 10
8.2 About the company 13
8.3 Awards & recognition 14
8.4 Overview of the Gujarat market 15
8.5 Company profile 17
9 Company’s departments 24
10 10.1 Working capital management 28
10.2 Management of cash 30
A E - Urja 36
B E - Auction 40
10.3 Management of purchase 43
10.4 Management of inventory 58
10.5 Management of cash credit 61
11 Findings 63
12 Recommendations 64
13 Conclusion 65
14 References 66

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4. Objectives of the study
i. To analyze management of components of working capital of MGVCL
ii. To study financing of working capital of MGVCL
iii. To evaluate the inventory and cash management performance

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5. Review of literature
Every business needs funds for two purposes basically; they are for establishment and to
carry day-to-day operations. Long term funds are required for establishment of the
organization; it is required for production facility through purchase of fixed assets and it
needs fixed capital and the funds which are needed for short term purposes for the purchase
of raw materials, payment of wages, payment of day to day expenses etc, the funds required
for these are known as Working Capital.
Working capital refers to that part of the firm's capital which is required for financing short
term or current assets such as cash, marketable securities, debtors and inventories.
Funds, thus, invested in current assets keep revolving fast and are being constantly
converted into cash and this cash flow out in exchange for other current assets. Hence it is
also known as CIRCULATING CAPITAL or REVOLVING CAPITAL or SHORT TERM
CAPITAL.
According to GENESTENBERG:-
"Circulating capital means current assets of a company that are changed in the ordinary
course of business from one form to another, as for example, from cash to inventories,
inventories to receivables into cash."
According to Shodganga Mathur :
Source of Working Capital -
Conventional generalizations relating to financing of working capital suggest that an amount
equal to the basic minimum of current assets should be financed from long-term source and
that only seasonal needs of working capital should be financed from short-term sources.21 It
is obvious that such an arrangement helps to keep the cost of working capital finance to the
minimum for an enterprise and gives a rise to its rate of return on the total funds employed.
Viewed thus, the sources of working finance can be classified into permanent and the current
sources of working capital finance.

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Need for working capital cannot be over emphasized. Every business needs some amount of
working capital. The need of working capital arises due to the time gap between production
and realization of cash from sales. Thus, the working capital is needed for the following
purposes:-
a) For the purchase of raw materials, components and spares.
b) To pay wages and salaries.
c) To incur day-to-day expenses and overhead costs such as fuel, power and office expenses
etc.
d) To met the selling costs as packing, advertising etc.
e) To provide credit facility to customers.
f) To maintain the inventories of raw material, work-in-progress, stores and spares and
finished stock.
For studying the need of working capital in a business, one has to study the business
under varying circumstances such as a new concern, as a going concern and as one which has
attained maturity.
Herzfeld B (1990), studied that “Cash is king”--so say the money managers who share the
responsibility of running this country's businesses. And with banks demanding more from
their prospective borrowers, greater emphasis has been placed on those accountable for so-
called working capital management. Working capital management refers to the management
of current or short-term assets and short-term liabilities. In essence, the purpose of that
function is to make certain that the company has enough assets to operate its business.

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6. Benefits/Limitations of the study
1. The topic working capital management is itself a very vast topic yet very important
also. Due to that only some portion of working capital has been studied.
2. Many facts and data are such that they are not to be disclosed because of the
confidential nature of the same.
3. Cash credit is not been granted in MGVCL-circle office, hence study of cash credit in
corporate is being restricted only to basic.
4. MGVCL- circle office doesn’t prepare profit and loss a/c or balance sheet as part of
their final accounts. It is done by corporate office of Baroda.
5. I was not able to calculate any quantitative aspects in my project report as MGVCL
prepares only the Trial balance as part of their final accounts which they were not
allowed to share.

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7. Research Methodology
Research methodology is a systematic approach in management research to achieve pre-
defined objectives. It helps a researcher to guide during the course of research work. Rules
and techniques stated in research methodology save time and labour of the researcher as
researcher know how to proceed to conduct the study as per the objective.
SELECTION OF TOPIC
The selection of topic is a crucial factor in any research study. Working capital management
is very important for any business as it includes day to day transactions. I have studied the
procedure for managing this working capital which is followed by MGVCL.
SELECTION OF LOCATION FOR THE STUDY
The location for study was selected as the circle office of MGVCL, Anand.
SOURCES OF DATA COLLECTION
The data is collected using both primary data collection method as well as secondary sources.
Primary Data: Most of the information is gathered through primary sources. The method
which is used to collect primary data is : Personal contact at MGVCL, information given by
company guide
Secondary Data: The secondary data are those which have already collected and stored.
Secondary data are easily available. Those secondary data are from records, journals, annual
reports of the company etc.

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8.1. General Information
The Company was promoted by erstwhile Gujarat Electricity Board (GEB) as it’s wholly
owned subsidiary in the context of liberalization and as a part of efforts towards restructuring
of the Power Sector. Afterwards it changed to GUVNL.

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8.2. About the company
MGVCL Incorporation
As a part of power reform process, Gujarat Electricity Board(GEB), the promoting body, has
been un-bundled effective from 1st
April, 2005, into separate seven companies with
functional responsibilities with complete autonomous operation for
 Generation
 Transmission
 Distribution
 Trading
Accordingly, the distribution undertakings and functions of the central distribution zone of
the erstwhile GEB stand transferred to and vest in the company effective from 1st
April, 2005.
The company has become operational effective from 1st
April, 2005.
Madhya Gujarat Vij Company Limited is an ISO 9001:2008 certified leading power
distribution company in Gujarat, which distributes electricity in the central area of Gujarat.
And mission is to provide uninterrupted supply.

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8.3. Awards and Recognition
 Council of Power Utilities (CPU), New Delhi, recognized the contribution of
MGVCL and awarded INDIA POWER AWARD-2012 for Overall Utility
Performance-(Distribution) MIXED.
 MGVCL has been conferred POWER LINE AWARD-2012 for outstanding
performance in Power Distribution (First Prize) for the period of 2008-09,2009-
10,2010-11
 MGVCL has been conferred prestigious National Award Bronz Shield by Ministry of
power, Govt. of India, for Meritorious Performance of power Utilities for the Year
2009-10.
 MGVCL has been conferred for INDIA POWER AWARD-2010 for Overall Utility
Performance-(Distribution)-Non Urban Area.
 MGVCL has been conferred for INDIA POWER AWARD-2010 for
INNNOVATION IN DESIGN AND EXECUTION OF PROJECTS.
 National Award by Ministry of Power, Government of India has awarded BRONZ
SHIELD to the MGVCL for Power Distribution in recognition of Meritorious
Performance during 2008-09.
 FALCON STRATEGIS ADVISORS (INDIA) has conferred ENERTIA AWARD-
2009 to MGVCL considering excellent performance in the area of Reduction in
Distribution Losses, Reduction in Transformer Failure Rate as well as Continuous
and Qualitative Power supply.
 Indian Electrical and Electronics Manufacturers Association (IEEMA) have conferred
IEEMA POWER AWARD-2009 under category ‘Award for Excellence in Power
Distribution (URBAN-RURAL)’ to MGVCL.
 National Award by Ministry of Power, Govt of India has awarded GOLD SHIELD to
the MGVCL for Power Distribution in recognition of Meritorious Performance during
2006-07.
 Madhya Gujarat Vij Company Limited in the field of Power Sector Reforms and
Initiatives India Tech Excellence Award 2007 from India-Tech Foundation.
 MGVCL BAGS power line Awards 2013 in the category of “BEST PERFORMING
STATE DISCOM” in INDIA.

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8.4. Overview of the Gujarat market
Electricity companies and their service area :
Gujarat Urja Vikas Nigam Limited (GUVNL) is established as Gujarat Electricity Board
(GEB), to generate, purchase, transmit and distribute electric power in Gujarat. GUVNL is
bundled into following six subsidiaries:
o Gujarat State Electricity Corporation Ltd. (GSECL) – Electricity generation
company
o Gujarat Energy Transmission Company Ltd. (GETCO) - Electricity
transmission company
o Uttar Gujarat Vij Company Ltd. (UGVCL) – Distribution company for
Northern part of company
o Dakshin Gujarat Vij Company Ltd. (DGVCL) - Distribution company for
Southern part of Gujarat
o Paschim Gujarat Vij Company Ltd. (PGVCL) - Distribution company for
Western part of Gujarat
o Madhya Gujarat Vij Company Ltd. (MGVCL) - Distribution company for
Central part of Gujarat
GSECL is responsible for electricity generation in Gujarat while GETCO is responsible for
electricity transmission in Gujarat (GSECL 2009).
UGVCL distributes electricity in 6 districts namely Sabarkantha, Gandhinagar, Ahmedabad,
Mehsana, Patan and Banaskantha. Also, it partly covers Kheda, Anand and Surendranagar
districts. It covers 67 talukas, 61 towns and 4617 villages (UGVCL2009).
DGVCL distributes electricity in 7 districts namely Bharuch, Narmada, Surat (except part of
Surat City), Tapi, Dangs, Navsari and Valsad covering 37 talukas, 28 towns and 3512
villages (DGVCL 2009).
PGVCL distributes electricity in 8 districts namely Rajkot, Jamnagar, Junagadh,
Porbandar, Bhuj, Bhavnagar, Surendranagar and Amreli covering total 83 talukas (PGVCL
2009).

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MGVCL distributes electricity in 5 districts namely, Panchmahal, Kheda, Anand, Vadodara
and Dang covering 49 talukas and 4426 villages (MGVCL 2009).
Power Generation
Power is one of the basic infrastructures necessary for the Industries and socio- economic
development in the State. Installed capacity of the State has increased from 315 MW in 1960-
61 to 13144 MW in 2010-2011. Per capita consumption of electricity in the State of Gujarat
in 2009-10 was 1615.24 kwh (as announced by ministry of power on 12th
August, 2011)
MAJOR COMPETITORS
1. Adani power
2. Torrent power
3. Tata power
4. Reliance power

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8.5. Company Profile
Formation
As a part of efforts towards restructuring of power sector, a new Company known as Madhya
Gujarat Vij Company Limited was incorporated on 15th
September, 2003, by Gujarat
Electricity Board (GEB).
The Company obtained the Certificate of Commencement of Business on 15th
October, 2003
Registered Office
The registered office of the company is situated at:
Sardar Patel Vidyut Bhavan,
Race Course,
Vadodara
Share Capital and Share holders
The Company was incorporated with an Authorised Capital of Rs. 10 lacs divided into
100000 euity shares of Rs. 10/-each, the same has been increased to Rs.500 crores.
The present paid up capital of the Company is Rs.242,64,14,220/- divided into 24,26,41,422
equity shares of Rs.10/- each.
The entire share capital is held by Gujarat Urja Vikas Nigam Limited (GUVNL) and its
nominees.
Board of Directors
The board of directors of the company comprise of the following Directors
1) Shri Raj Gopal, IAS – Chairman
2) Shri S B Khyalia – Managing Director
3) Shri H.P Desai – Director
4) Prof. Kirankumar M Joshi – Director
5) Shri K.M.Shringarpure – Director
6) Shri C. J. Macwan – Director

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Company Executive
1) Shri S. M. Godkhindi – Chief Engineer (T&O)
2) Shri K. M. Dave – Chief Engineer (Procurement)
3) Shri K. R. Shah – General Manager (Finance)
Company Secretary
Shri K.M.Antani
Statutory Auditors
M/s. K. C. Mehta & Company, Chartered Accountants, Vadodara.
Cost Auditors
M/s R. K. Patel & Co., Cost Accountants, Vadodara
Government Company
Since the entire share capital of the company is held by GUVNL which is a government
company, the company is also a government company pursuant to the provisions of section
617 of the Companies Act, 1956.
Website: www.mgvcl.com
E-Mail: info.mgvcl@gebmail.com
Key Officials
 Managing Director
Shri S.B.Khyalia
 Chief Engineer (Tech&Operation)
Shri S.M.Godkhindi
 Chief Engineer (Projects)
Shri K.M.Dave

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 General Manager (Finance&Accounts)
Shri K.R.Shah
 Company Secretary
Shri K.M.Antani
 Additional General Manager (HR)
Shri D.R.Gupta
 Additional Chief Engineer (Procurement)
Shri R.S.Sharma
 Additional Chief Engineer (SD & P)
Shri C.D.Patel
 Additional Chief Engineer (RA&C)
Shri Y.B.Sukhadia
 Additional Chief Engineer (CC)
Shri N.V.Thakkar
 Chief Finance Manager
Shri P.N.Shah

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VISION
Customer satisfaction through service excellence
MISSION
To provide reliable and quality power at competitive cost &
To reach global standards in reducing distribution losses.
QUALITY POLICY
Madhya Gujarat Vij Company Limited is committed to distribute and maintain Reliable
Electric Power, satisfy all its customers through excellence in service by way of Safe and
Sturdy Distribution network with dedication to continual improvement in all sphere of
activities.
CORE VALUES
 Customer satisfaction
 Participative and Culture
 Pride of Belongingness
 Excellence
 Being ethically and socially responsive

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Area Profile
The company distributes electricity in
 5 districts
 48 talukas
 4404 villages
Area serviced
 23,854 sq. kmtrs.
Population serviced
 13.06 million
Number of customers
 26.74 lacs
The company is responsible for reliable and affordable power distribution to residential areas,
commercial complexes, street lights, water works, agriculture, traction as well as industries.

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Consumer Details
As on November, 2012
Total consumers 2673845
LTMD & NRGP 260458
HT Industrial consumers 1532
RGP 2296868
GLP 19243
Street lights 5993
Water works 11193
Agricultural total 78552
Traction railway 6
Licencees (TPAEC) 0
Agricultural metered 52508
Agricultural unmetered (A1) 26044
RGP – Residential General Purpose
NRGP – Non-Residential General Purpose
GLP – General Lighting Purpose

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Statistical Details
As on November, 2012
M.U.S Sent (incl. EHT) upto Nov-12 6236.80
M.U.S Sold (incl. EHT) upto Nov-12 5453.78
% T & D Lossess (in EHT) 12.55
Numbers of Transformers 70664
HT Line (KMs) 40199
LT Line (KMs) 57978
LT / HT Ratio 1.44

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9. Company’s Departments
MGVCL is the electricity distribution company so there is no production department nor
marketing department. Mainly there are 3 departments in MGVCL
1. Human Resource Department
2. Finance Department
3. IT Department
Human Resource Department
MGVCL Anand Circle has 2200 employees in all. All employees are connected with
Human resources department. As like welfare activities, and services related activities.
Human resources department’s role is very vital starting from employee’s recruitment to
retirement. The Human Resource department deals with all the issues relating to the key
resources or the lungs of the organization i.e.; the human resource of the organization.
The vital organ of any of the enterprise is the manpower. The MGVCL also believes in
the same. Like any other organization, there is a separate department in MGVCL which
deals with all the issues related to the manpower.
The Human resource Department of MGVCL is very enthusiastic which keeps the entity
going and lively. While discussing from the viewpoint of Accounts, the Basic salary of
the recruited persons on various level i.e.; from the helper level to the Chief Engineer is
fixed. Also the percentage of the increment every year is also fixed. So, the HR
Department is responsible for the payment of remuneration/salary and various
emoluments to various employees of the organization.
The salary to the Class I & II officers is done through ECS, while the employees at the
other levels get their wages/salary through cheque or Cash. The Salary sheet is prepared
by the HRD department with the help of which the Salary exp of the various departments
& the entity as a whole is accounted in the books of Accounts by the Accounts
Department. The Accounts Department also advises the HR Department from time to
time in relation to the deduction of TDS i.e. Tax deducted at source. The provisions of
TDS normally changes with the change in the financial year & hence the
Finance/Accounts department also plays its role by intimating to the HR department for
deducting the TDS accordingly.

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Training is essential for job success. It can lead to higher production, fewer mistakes,
greater job satisfaction and lower turnover. These benefits accrue to both the trainee and
the organization, if managers understand the principles behind the training process.
Every employee is given training in GUVNL’s specialized training center GETRI –
Vadodara. GETRI (Gujarat Energy Training & Research Institute) is the training center
where employees of all subsidiary companies of GUVNL receives their training. The
training center is fully equipped with all facilities.
Gujarat Energy Training & Research Institute (GETRI) is an autonomous training and
research facility promoted by Gujarat Urja Vikas Nigam Limited. It was established with a
view to offer a platform for providing state-of-the-art facilities for training, skills
upgradation, research and documentation of best practices in the power industry.
GETRI is equipped with full-time faculty members with expertise in power sector -
Generation, Transmission, Distribution, Regulatory, IT, Finance, Commerce and HRD. The
Institute also calls upon eminent external faculty with rich and vast experience in their
respective fields both in India and abroad.
The employees of MGVCL has been given special training regarding the distribution of
electricity like:
Energy management
Attitudinal Change
G.I.S./G.P.S. for power utilities
Pilferage of Electricity issues & challenges.
Skill Building
Best Practices in Distribution System O&M
Distribution Loss Reduction
Electrical Safety Procedure, Accident Prevention & Disaster Management
Performance Benchmarking & Quality of Supply & service
Customer Satisfaction, Communication & Outreach Change Management
GIS-Supported Network Planning, Analysis and Asset Management
Communications skills, employee motivation and morale development

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Finance Department
This department carries out various activities like:
(1) Preparation of Monthly Budget
(2) Issues related to grant & utilisation of required fund & distribution of the same among
various departments
(3) Procedural aspect related to the issuance of Tenders & allotment of various works
contract among different contractors as well as allotment of order in relation to the
purchase of required materials
(4) Procedural aspect related to the invoicing for the services provided as well as the
receipt against the same
(5) Monthly Reconciliation of the transactions carried out through various Banks to match
with the books of accounts
(6) Preparation of IBA
(7) Preparation of Cash Flow Statement
(8) Issues & procedural aspect in relation to incurring of various Expenditures
(9) Accounting in relation to Human resource management
(10) At last but not the least, the passing out of various Journal entries in various typical
situations.
IT Department
This department deals with new inventions, the research work and management of all
procedures which are done through computer and internet.
E-Urja where in all accounting procedures is carried out is maintained by IT department and
the website of the company is also maintained.
Patent for inventing improved single phase power supply system granted to MGVCL
First time in the history of power distribution sector of India, Madhya Gujarat Vij Company
Ltd. a state owned power distribution company operating in central part of Gujarat, has
achieved a revolutionary technology breakthrough by inventing “Improved Single Phase
Power Supply System” known as Special Designed Transformer. The patent office of
government of India has granted a patent for this invention to MGVCL on 25/02/2010.

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A team of Engineers of MGVCL and UGVCL had achieved a technology breakthrough and
invented this “Special Design Transformer” in the year 2005. MGVCL had filed an
application for getting the patent for this invention with the patent office of Government of
India in 2005.
This invention “Improved Single Phase Power Supply System” known as Special Design
Transformer (SDT) is a great technological breakthrough for extending single phase power
supply for the residential use of farmers after the schedule hours of 3 phase supply for
Agricultural Pump sets. Such 3500 Improved Single Phase Power Supply System or Special
Design Transformers are in use by state owned Distribution Companies of Gujarat giving
uninterrupted power supply to the farmers residing far away from the main villages.

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10.1. WORKING CAPITAL MANAGEMENT
Whatever may be the organization, working capital plays an important role, as the company
needs capital for its day to day expenditure. Thousands of companies fail each year due to
poor working capital management practices. Entrepreneurs often don't account for short term
disruptions to cash flow and are forced to close their operations.
In simple term, working capital is an excess of current assets over the current liabilities.
Good working capital management reveals higher returns of current assets than the current
liabilities to maintain a steady liquidity position of a company. Otherwise, working capital is
a requirement of funds to meet the day to day working expenses. So a proper way of
management of working capital is highly essential to ensure a dynamic stability of the
financial position of an organization.
MGVCL is the power distribution company in central Gujarat which plays the role of
distribution of electricity in the central state of Gujarat. Seeing the good opportunity to study
financial systems and practices of MGVCL, it is relatively important to take up internship
assignment on ‘WORKING CAPITAL MANAGEMENT IN MGVCL’. During the project
work, it is being analyzed the working capital position of this company. Decisions relating to
working capital and short term financing are referred to as working capital management.
These involve managing the relationship between a firm's short-term assets and its short-term
liabilities. The goal of Working capital management is to ensure that the firm is able to
continue its operations and that it has sufficient money flow to satisfy both maturing short-
term debt and upcoming operational expenses.
Working capital management deals with maintaining the levels of working capital to
optimum, because if a concern has inadequate opportunities and if the working capital is
more than required then the concern will lose money in the form of interest on the blocked
funds. Therefore working capital management plays a very important role in the profitability
of a company. And also due to heavy competitions among different organization’s it is now
compulsory to look after working capital.
During the project, I have studied the management of various components of working capital
of MGVCL.

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The books of accounts and records maintained by MGVCL are as under :
(A) Main books of account –
i. Main cash book / Subsidiary cash book
ii. Journal
iii. Ledger
(B) Subsidiary books of account –
i. Stock ledger
ii. Consumers general ledger
iii. Suspense registers
iv. Subsidiary registers
v. Store inventory, Capital inventory and Assets register
(C) Record of original entry –
i. Duplicate copy of bill as per that billing
ii. Stores debit/credit requisition
iii. Measurement book, S.R. note and Bin card
iv. Duplicate / Triplicate / Quadruplicate receipts
v. Payment vouchers for purchases / work
vi. Petty payment vouchers

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10.2. MANAGEMENT OF CASH
Cash management refers to a broad area of finance involving the collection, handling, and
usage of cash. It involves assessing market liquidity, cash flow, and investments. Cash
Management System is an integral part of corporate baking today. Cash is the lifeline of any
business. Thus, successful business is ultimately about managing cash better. But the
difficulty for any commercial enterprise is that its core competency is not managing cash but
running business. Generally Cash Management comprises integrated collection, payments,
liquidity management, and receivables functions.
Cash Management comprises of a series of activities aimed at efficiently handling the inflow
and outflow of cash. This mainly involves diverting cash from where it is to where it is
needed. In other words, cash management is the optimization of cash flows, balances and
short term investments.
Companies heavily rely on knowing their cash position to manage working capital
requirements such as ordering inventory, raw material, or acquisitions/expansion program,
for which they need a clear idea of how much cash is required, and when. This is enabled by
efficient cash management.
MGVCL records its cash transactions by two ways:
1. Manually in books
2. Program of E-Urja in computer
Legacy – manually
In MGVCL, the finance department has to deal with mainly 2 types of accounts for managing
the cash transactions.
1. Operative A/c
2. Non – operative A/c
Funds come from the HO(Head Office) – Vadodara in Operative A/c and Anand circle office
has to utilize funds for its operations from this operative account.
MGVCL has to follow a specific procedure for cash related aspects.
• Circle office needs to give an indented fund copy showing the requirement of fund for
the next 10 days.
• Hence, circle has to send indented fund copy thrice in the month.

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• As per the requirement, HO transfers the fund to the operative a/c of Anand circle and
they utilizes this fund.
• All payment is done by cheque only, the withdrawal of cash can only be done for
petty cash requirements and travel allowance. The limit of holding cash in hand is Rs.
5000
HO will make the arrangement to open current a/c termed as disbursement a/c at
division/circle level for payment of salaries and wages to staff and for incurring expenditure
within the permissible limit. The amount to disbursement a/c will be transferred by HO from
time to time as per requirement of fund data’s received from field officer. The amount will be
withdrawn by way of cheque from current a/c. this a/c is operated by the competent authority
as per provision of the GUVNL board.
Imprest a/c
An imprest either temporary or permanent is an advance of money granted to an officer to
meet the normal day to day expenditure and is recouped from time to time to the extent of
expenditure incurred within his competence as per delegation of power
 Permanent Imprest a/c
A Permanent Imprest is an advance granted to meet normal day to day expenditure
within his competence as per delegation and is recouped from time to time to the
extent of expenditure incurred.
 Temporary Imprest a/c
Temporary Imprest is an advance granted to an officer for specific expenditure and
no expenditure is to be incurred from that advance for any other item of expenditure.
It is to be closed as soon as the purpose for which it is granted is over or within
specified time limit. Special check should be exercised by the controlling officer in
granting temporary imprests so that earlier imprest are duly cleared and fresh imprest
are granted to avoid large amount of imprests being unnecessary blocked up with the
imprest holder.
The imprest holder is personally responsible for its safe custody and for its proper and prompt
accounting. If any balance is left in the temporary imprest after meeting the expenditure, the
same should be deposited into the board’s working fund a/c. the imprest a/c should be written
on prescribed forms in ink supported by vouchers and pages acknowledged giving proper
account classification. The imprest a/c submitted by officer should be thoroughly checked

32. 32
and see that all vouchers are stamped as paid from imprest. The division office will adjust the
same temporary imprest a/c or recoup the same in case of permanent imprest account. The
imprest a/c shall be accounted for in main cash book.
The HO of MGVCL brings funds from the non- operative account of MGVCL – Anand and
all like divisions and circle.
The funds which are there in non – operative a/c cannot be utilized by MGVCL circle office
and there is no issuance of cheque book by bank for the non – operative a/c.
Non – operative a/c includes all items by which the funds comes into the business
1. Electric bill collection
2. New connections
3. Tender fees {Non – refundable}
4. EMD(Earnest Money Deposit) {Refundable}
5. E – Auction
 Electricity bill
All bill collection centers collects bill amount from its consumers and has to deposit the cash
collected from consumers in the non – operative account the next day morning.
The big HT consumers like Railways and Big industries whose monthly bill crosses 2 crore
Rs., they pay their bill amount directly to HO – Vadodara.
The reason is that funds do not block and directly utilization can be done by HO as it is a very
big amount.
If there is delay in depositing the bill amount with the bank, consolidation form has to be
prepared and the cashier needs to give proper reasons – justification for the non – payment of
the amount.
There is also misuse of cash by cashier. The cashier has to deposit the fund the next day
morning in bank. Hence meanwhile in the night, the cashier utilizes that fund for the personal
purpose and also earns interest for 1 night. This type usage of MGVCL’s funds can prove
dangerous for the company at times.

33. 33
On verification of physical cash with cashier, if found short, the shortage should be recovered
from cashier by preparing receipt in the personal name. The specific journal entries should be
passed. If the mistake could not be located the order of competent authority should be
obtained either to write of the short amount or to recover the same from cashier depending
upon the circumstances.
 New connections
Funds come into business when the company gets new customers. They demand new
connection for electricity and for that the customer has to pay certain deposit for getting a
connection to new area. This amount is non – refundable.
 Tender fees and earnest money deposit
The income from tender is when the company purchases materials by way of tender. Tender
fees is non-refundable and it is paid by the supplier who wants to supply goods to MGVCL
and to participate in tender.
EMD (Earnest Money Deposit) of Rs. ____ as indicated on the first page of tender form
should be paid by the tenderer along with the tender in cash or by D.D. on any schedule bank
in favor of MGVCL in which cash receipts shall be attached with the tender invariably.
Tender without EMD is not considered for acceptance.
EMD is forfeited in case the successful tenderer after his tender has been accepted fails to pay
the prescribed security deposit.
E – auction is included separately in detail.
The main authority of funds lies in the hands of GUVNL. The funds of non – operative a/c is
transferred to HO and again it is transferred to GUVNL. The GUVNL then transfers to all
subsidiaries as per the requirement.
If the funds are not there in operative a/c of MGVCL-circle and still they are in need of the
funds then they cannot utilize the funds of non – operative a/c neither they can go for BOD.
They have to arranged the needed funds from other divisions and circle offices.

34. 34
Cash book
Two cash books are prepared in MGVCL. The main cash book is maintaine at HO for
recording all the transactions of receipts and payments day to day. The cash book shows the
columns for cash, remittance in bank and bank disbursement a/c.
The subsidiary cash book is maintained at circle and division level for each sub-division and
bank collection for accounting all the receipts pertaining to sub-division concerned. The form
of main cash book differs from the form of subsidiary cash book which is maintained in
columnar form.
The main cash book is to be written day to day and to be closed every day, while the
subsidiary cash book is to be closed at the month ending.
 Main cash book
Three columnar cash book showing the details of column for cash book, bank for adjustment
a/c and bank forwarding fund a/c should be maintained at HO / circle / division level
depending upon the banks operated by the concern office.
Circle / division should record all the receipts and payment transactions day to day in the cash
book and balance daily. Every entry on receipt and payment side should be supported with
authenticated vouchers duly approach by the competent authority.
The cash book should be printed with machine numbered and should be maintained with
great care and no page is turn out of the cash book. The cash book should be written with
legible handwriting and close day to day and balances should be worked out which should be
written in words and figures. The same should be signed by cashier, divisional accountant
and head of the unit. All the corrections in the cash book should be attested by the cashier in
absence of head of unit, the next immediate technical officer D.E. should sign the same.
The actual balance at the end of each month should be physically verified by the disbursing
officer and should record the certificate having been verified physically and found correct.
The cash book should be written with ink and once the entry is made should not be
overwritten for any correction. The correction should be made by drawing the para through
incorrect entry.
The cash should be verified by all the vouchers before the payments are made and no
payment should be made on behalf of sub divisions staff without the approach of head of the
unit.

35. 35
 Subsidiary cash book
The subsidiary cash book should be maintained in columnar for recording transactions of sub
division. All the receipts including energy collection through imprest should be written in
difference column head wise. The balance in the subsidiary cash book will reflect at the end
of month for the collection of revenue not remitted into working fund a/c. the subsidiary cash
book should be signed by D.A. & E.E. at the end of every month.
Accounting for operative a/c
• Receipts
Bank a/c Dr.
To Corporate a/c
• Utilization
Expenses a/c Dr.
To Bank a/c
Accounting for non operative a/c
• Remittance in transit a/c has to be created.
• Corporate will give entry for its receipt
• HO of MGVCL gives advice after receiving the funds
Bank reconciliation statement
• Previously when it was GEB there were too many problems in BRS. No employee
was taking care about the reconciliation of bank statement.
• Many of the consumers were making fraud by personal contacts with bank and they
stop transfer of money from their a/c to MGVCL a/c
• It came into the notice of the auditors and few employees and hence presently its
management is proper.
• The top authority now also forces all employees for properly doing BRS.
• It includes all CFs of non – operative a/c

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10.2. A. E – Urja
The e-Urja project is an integrated solution and aims to share a centralised database with all
the users. Most of the functions such as procurement, accounting, budget, human resources,
payrolls and other departments will be served by the same database through a single entry
point.
The software will help GUVNL in reducing errors while saving on time and labour.
This has become an integral part of the state being power surplus by 2012. The system has
been put into practice from 2010.
Deputy General Manager (IT) GUVNL Rajesh Shah had said the 23 modules in the e-Urja
project are at different stages of implementation. All the relevant modules have been taken up
by the subsidiary companies of GUVNL, and from February 2010 all the services have
become online.
One of the major benefits of the e-Urja project being envisaged is improvement in consumer
grievances mechanism. Since every complaint will be uploaded at the time of filing and will
be centrally monitored, the authorities will be able to check delays in rectification.
In 2008 GUVNL (Gujarat Urja Vikas Nigam Limited) and its subsidiary companies started
using ERP solution, named “e-Urja” project, which is being implemented with all integrated
modules first time in power utility sector in India across wide spread area of Gujarat.
The e-Urja, is the name given to Oracle (Oracle’s E-Business Suite 11i )based Enterprise
Resource Planning (ERP) suite, which is implemented in all the seven companies for
delivering efficient and effective services to the END consumers.

37. 37
ERP Modules:
i. HR Modules
• Employee Self Service
• Manager Self Service
• HRMS Manager
• Payroll
ii. Finance Modules
• Accounts Payable
• Accounts Receivable
• Fixed Asset
• Fund / Cash Management (Loans, bill discounting, cash flow analysis)
• General Ledger
• Fuel Accounting
iii. Technical Modules
• Projects Tracking & Costing
• Customer Relationship Management
• Enterprise Asset Management (Equipment Maintenance)
• Procurement
• Inventory
• Order Management (Scrap and Ash Disposal)
• OPM (Operations)
• Network Analysis solution
iv. Others
• Energy billing
• Quality-Lab/Environment
• Legal
• Oracle Collaboration Suite
• Trading Solution

38. 38
Components of e-Urja Project
1. Oracle Applications E-Biz Suite 11.5.10 (ERP)
• Finance, Materials, Process manufacturing, Projects, HR, Business
Intelligence, Customer relationship management, Maintenance
2. Oracle Collaboration Suite
• E-mail, Files, i-meeting, Calendar
3. Oracle Database 10g
4. Billing solution (Broadline Systems Pvt. Ltd.)
5. Triple point Trading solution (Triple Point Technologies)
6. Payroll solution (TCS)
7. ETAP Network Analysis (KLG System)
8. Interfaces with external applications like SCADA, GIS
Benefits to Business by e-urja
• Increased asset productivity and reduced operating costs associated with
maintenance, procurement, transmission, distribution, and customer service.
• Proactive management of available resources such as inventory, equipment, and
skilled personnel and mapping with asset maintenance demand, leading to optimized
availability, reliability, and productivity of assets.
• Streamlined procurement functions; reduced lead time for procurement, informed
decision making inputs for effective and optimal procurements thereby enabling
companies to save significant costs of procurement.
• Fact-based decisions leading to decreased operating costs, improved regulatory
compliance, enhanced safety, and maximized return on investment.
• Streamlined field service operations, improve citizen responsiveness and issue
resolution.
•Better materials planning & control; material stock availability across locations
(main stores/departmental stores) made visible; there by reducing inventory carrying
cost.
• Proper material management with implementation of various management
techniques like ABC Analysis, Fast Slow Non-moving (FSN) Analysis, XYZ
Analysis etc.
• Project Management

39. 39
• Proper cash management
• Proper budgeting
• More prompt payments to vendors
• Effective Inventory Management
• Improved Revenue Management Supplier Satisfaction
• HR Management
• Finance Management
In MGVCL – Anand circle, presently cash management is fully managed up by e-urja. E-urja
and manual goes together. The employees has been legally allocated powers from HO as per
his work. Every employee has its own login in e-urja.
For preparing BRS in e-urja, the cash book must tally in e-urja. BRS is generated automatic
by uploading the bank statement and all entries in cash book. Manual BRS can also be
generated through e-urja.
The work of all the employees has become very easy with the help of e-urja. The software
automatically generates the output, employees just have to make entries of cash book and
upload a bank statement.
MGVCL has implemented e-urja and is successful in Finance Management
• Better Monitoring of Loans and Advances
• Accurate Calculation of Depreciation of Assets
• Improved Monitoring of Supplier Performance

40. 40
10.2. B. E – Auction
Previously when it was GEB, there used to be public auction for the scrap materials. It
was very costly as there was expenses like advertisement, tent, ground rent, extra
facilities, etc. After the conversion of GEB into GUVNL and its subsidiary companies like
MGVCL, the contract for selling the scrap is given to a separate company. Currently the
contract has been given to MSTC (Material Scrap Trading Corporation).
MSTC Limited is a Mini Ratna Category-I PSU under the administrative control of the
Ministry of Steel, Government of India. The company was set up in 9th
September 1964 to
act as a regulating authority for export of ferrous scrap with an investment of Rs 6 lakh.
Government of India, Members of Steel Arc Furnace Association and members of ISSAI
had made with the investment.
MSTC became a subsidiary of SAIL in 1974. In 1982, it got delinked from SAIL and
became an independent company under Ministry of Steel. It was a canalizing agency for
import of ferrous scrap till 1992. In an effort to Recycle Waste, Protect Environment and
Promote Growth, MSTC has developed a series of initiatives.
It has presented with e-Auction portal namely, www.mstcecommerce.com which has
become an immensely popular tool for transacting business over the internet in a most
transparent and fair manner. The portal provides a virtual marketplace for domestic sellers
and buyers to do business in metal scrap (ferrous/non-ferrous), surplus stores,
machineries, obsolete spares, vehicles, minerals and agriculture & forest produce etc. The
methodology adopted includes open tender, public auction and e-auction.
Some of the unique features of MSTC’s system are :-
a) Permanent registration of coal buyers - thereby ensuring that information about
forthcoming sale events is made known. Customers get information only about items of
their choice.

41. 41
b) Before the auction starts, either floor price or reserve price is fed into the system
by the stock-holder(Principal).
c) If the highest price exceeds floor price or the reserve price as the case may be,
then automatic sale intimation letter is issued by the system without any manual
intervention making the system transparent.
d) The auction continues even beyond the stipulated closing hours until no bid is
received for a specified period of time (5 to 8 minutes depending upon the item)
Procedure
o One committee is being formed of employees of MGVCL
o The material can be declared as scrap only after committee certifies it as non
usable
Limits of declaring scrap are -
Upto 25000 Division
500000 Circle
Above 500000 Corporate
o All stores give the scrap report, all statements are clubbed together and is given to
MSTC
o MGVCL has to do registration on MSTC site
o For this online auction, bidders also have to register and pay fee for participating in
auction
Everything is done by MSTC only, MGVCL has just to give list of scrap items with quantity
and VAT.
MGVCL accepts the bid if it is more than or equal to its stated value. If bid is upto 25% less
then stated value then it is acceptable with subject to HO approval. The software of MSTC is
such which auto rejects the bid if it is less then 25%.
Successful bidders have to pay 25% of deposit immediately. The bidders which are
acceptable with subject to HO approval, has to pay 10% of deposit.

42. 42
o Capital items are put up for bidding in lots. Lot has a single value – no rate. It is the
way to sell all items together, even if buyer doesnot want it. For purchasing 1 item,
buyer has to compulsorily purchase another material.
All payment is to be made within 15 days. If the bidder cannot pay timely, 1% penalty per
week is charged. After payment, the bidder is given 21 days for collecting the material from
MGVCL store. If the bidder is late then ground rent of 18% is charged by MGVCL. But if
proper reasons are given then no ground rent.
o MGVCL also has to give commission to MSTC for their services. Commission of
2.48% is given to MSTC for providing these services of selling scrap.
Thus, E – Auction is the income of MGVCL from its scrap materials. The commission paid is
very nominal hence e – auction has been proved as a profit for MGVCL.

43. 43
10.3. MANAGEMENT OF PURCHASE
Purchasing management is one of the most critical areas in the entire organization and needs
intensive management. Purchasing management directs the flow of goods and services in a
company and handles all data relating to contact with suppliers. Effective purchasing
management requires knowledge of the supply chain, business and tax laws, invoice
and inventory procedures, and transportation and logistics issues. Although a strong
knowledge of the products and services to be purchased is essential, purchasing management
professionals must also be able to plan, execute, and oversee purchasing strategies that are
conducive to company profitability.
Sourcing reliable suppliers is a crucial part of purchasing management. Purchasing managers,
buyers, and materials managers control budgets, manage staff, and may analyze procurement
methods as well as negotiate supplier contracts. Purchasing management professionals must
understand tax laws, purchasing trends, ethics, and global outsourcing issues. Buyers and
purchasing agents usually deal specifically with purchasing tasks, while purchasing managers
usually supervise others, including purchasing agents. However, titles and duties vary greatly
between industries and employers. Buyers often have assistants to place orders and keep track
of delivery details.
In MGVCL, purchasing is done by two ways:
• Purchase by local
• Purchase by HO
The system of centralized store purchase agency working at HO – Baroda ensures the
purchase of stores on behalf of the field unit in most economical manner. All the major items
of stores required for construction, operation and maintenance & for project work should be
purchased by centralized store purchase section.

44. 44
The field unit will first assess their requirement for construction of new lines and for O & M
work and will prepare the indent for their requirement giving full justification for the same.
The indent should be prepared for each groupwise items such as transformers, wires, oils,
spare parts, etc. circle office will scrutinize the indent with technical particulars and will
ensure that the present stock at regional stores level cover the part any of the indent
requirement in order to minimize the reserve stock and blocking of fund unnecessarily. The
consolidation of indents at circle level for requirement of various materials should be made at
most economical manner in order to purchase by HO.
Indent should cover :-
a) Indent should be group wise. Item wise ref of technical sanction if any budget
provision.
b) Probable date of requirement of material at various places as per plan.
c) Dispatch instruction should be given in order to get materials at site.

45. 45
HO purchase section will issue tender inquiry for bulk purchase so that to get competitive
price. The materials purchase in bulk used in various unit of the board will be of the same
type and therefore the same can be transferred from 1 store to other for use without any
difficulty.
Similarly field officers are also empowered to purchase certain items locally as per powers
delegated in purchase code.
Circle – 500000
Division - 100000
They should purchase such items which are manufactured locally in order to save
transportation storing charges, etc.
Tender inquiry can be classified as under :
1. Advertisement
2. Limited in charge
3. Casual inquiry
4. Single tender inquiry
Division Circle
Advertised Up to 100000 Up to 300000
Limited Up to 50000 Up to 150000
Single tender Up to 100000 Up to 300000
 Issue of office note from technical dept. is necessary for the finance dept. to issue the
order of purchase by way of tender.
 Approval by circle if division is not capable or tender is above the limit of division.
After following the procedure of inviting the tenders to the placing of order as per delegation
of power in purchase code, materials will be received at various places as per dispatch
instruction.

46. 46
As soon as the materials are received and inspected as per specification, the measurement is
recorded by engineer who has 20% power to check the materials received and then as per
board’s procedure, Store Receipt Note is prepared which contains complete details.
I. All incoming materials shall be subject to careful inspection, involving dimensional aspect,
materials analysis, performance test etc.
II. Inspection shall be carried out with reference to specifications contained in purchase order
and ensure that damaged, incorrect or defective materials are properly identified and
segregated.
III. Confirm that the details of discrepancies, if any and quantities accepted are recorded in
the Inspection Task in e‐Urja system.
The original copy of S.R. note, suppliers copy with M.B and copy of bill should be forwarded
to HO – Baroda through division office. Division office will exercise check and forward
suppliers copy & M.B. with copy of bill to HO accounts, copy to regional stores of respective
circle and copy to suppliers directly.
If any recovery is to be made from suppliers such as breakage, loss freight charge, insurance
charge, demerage charges, etc. should be shown in remark column in S.R. note so that
recovery can be effected at the time of payment at HO level on receipt of suppliers copy and
M.B. the bill will be audited and passed for payment at HO baroda. If any payment is
allowed/disallowed will be either debited/credited to the concern division and necessary
advice will be sent for the same.
Procedure for Receipt of material from suppliers against Purchase Order (PO)

47. 47

48. 48
Verify the “Store Receipts Note” (SRN) with the Dispatch Instruction & Supplier’s Bill to
ensure the quantity accepted on the basis dispatch instruction (DI) and correct materials have
been received.
I. Discrepancy in quantity received against Dispatch Instruction
II. Ensure that quantity in excess of Dispatch instruction is not accepted and in case of short
receipt, confirm that the balance quantity have also been received within the stipulated time
or not. And if not, proper correspondence is made for the same.
III. Confirm that purchase order value, invoice value and SRN value should equal. If any
change in value of P.O. with invoice, ensure the P.O. is amended by the competent authority
before preparation of SRN.
IV. Review the time lag between the various stages of preparation of documents relating to
receipt of materials i.e.
a. Receipt of material
b. Preparation of TRC (Truck Receipt)
c. Inspection of material
d. Preparation of Store Receipt Note (SRN) to confirm that there is no avoidable delay.
V. Obtain “Expected PO Receipts (Pending Receipt Deliveries) Report” and verify the
material received for which SRN has not been prepared due to non amendment of PO or any
other reason. Such abnormalities should be reviewed scrupulously and obtain justification for
such delay.
Issue of material
At division level, material is being issued to subdivision or other division or to outside
agencies. A brief overview of material issue process in e‐Urja System is explained in the
following diagram:
At division level, material is issued to outside agencies for repairing (to transformer repairing
agency), for fabrication (to fabricator) or for capital works (to contractors).

49. 49
Inter organization transfer
---------------------------------------------------------------------------------------

50. 50
 Certain Books and Notes are prepared in the process of purchasing for properly
managing the purchase process. The forms used in stores accounting are:
1. Store Receipt Note (ST-1)
2. Work Completion Certificate (ST-2)
3. Bin Card (ST-3)
4. Store Receipt Book (ST-4)
5. Stock Ledger Value (ST-5 A)
6. Stock Ledger Quantity (ST-5 B)
7. Material Requisition (ST-6) (white)
8. Credit Requisition (ST-6) (pink)
9. Daily/Weekly issue per Bin (ST-7)
10. Material Allocation Statement (ST-8) For debit/credit.
11. Abstract of Stock Ledger for Receipt and Issue for operated Bin (ST-9)
12. Monthly Return of Receipt (ST-10)
(A)S.R. NOTE
The form used for material receipt either for HO purchase or local purchase against order
placed by HO or local purchase.
S. R. Note contains reference of HO order no. & date, name of suppliers, name of store
centre, bin code no. & description of materials, unit, quantity, rate, amount, etc. If the rate is
not known it should be priced at ledger rate prevailing at the time of receipt of materials.
First of all on receipt of material & inspection measurement should be recorded and on the
strength of MB, SR note should be prepared by store keeper after due verification of
reference. S. R. Note must be certified by the field officer in charge and exercise percentage
check wherever necessary as per delegation of power in purchase code.
The difference in value can be adjusted by preparing supplementary SR note for either
credit/debit amount for recovery of amount from suppliers for demurrage charge, freight
charge, etc. as per remark shown in SR note.
The SR note (suppliers copy) MB and bill should be forwarded to division/circle/HO for
payment. The account copy of SR note will be sent to respective store centre for posting in
monthly store receipt book, stock ledger, monthly store receipt return, etc.

51. 51
SRN A/C
Material inward a/c Dr.
To Liability a/c
Purchase order is being entered in e-urja. Variance is being adjusted in maintenance account.
(B) Material Requisition
The purchased material is kept in store and transferred to various departments as per their
requirement. Whenever material required for departmental work and through other agency
the material should be drawn by way of preparing material requisition book in prescribed
form. The indentor should prepare MR for HO, qty required as per schedule ’A’, prepared for
works or estimated requirement of qty, for maintenance work. The details such as name of
work scheme, T/s no., name of contractor, order no., date, qty required should be written and
if any correction, it should be attested by competent authority.
(C)Credit Requisition
Credit Requisition is one of the forms used for crediting the material return from contractors,
debt work or from fabrication contractor either in receivable condition or scrap condition.
Whenever material is physically return to stores, storekeeper will verify the qty and condition
of materials either serviceable or unserviceable and will prepare credit note as per separate
bin card. The credit note should cover details such as name of work, scheme T/S no.,
contractor’s name, order no., quantity, unit in length or weight, account head to which it is
creditable.
The store keeper will post the same in bin card on receipt side like SR note posting indicating
CR no. & date and will prepare daily/weekly return for receipt and forward to division/RSO
for posting in stock ledger.
As per board’s accounting procedure whenever small qty of materials are lying with the
contractors for particular are transferred from one work to other work by way of preparing
credit requisition and material requisition without physical movement of materials in stores.
In such case reference of MR/CR should be given in both the copies and to be sent to
storekeeper for posting in bincard and then to division office for pricing at original value of
issue of material. Credit note will be priced at the rate at which the original issue by
division/RSO stores. However materials return from fabrication contractor or dept workshop,
the same should be priced at costing.

52. 52
(D)Work Completion Certificate
Work Completion Certificate is prepared for all incidental expenses paid through cash book
such as transportation charges, rly freight payment, insurance charges, octroi charges,
demurrage charges, etc. One copy will be attached with bill sent for payment and account
copy will be sent for posting in stock ledger after giving reference of CV/JV no. & date.
While preparing monthly return of receipt the amount so paid is not to be included, as the
same is reflected through cash /JV abstract debit to stock suspense.
The details of reference of SR note against which WCC is prepared should be given with RR
no. & date, bill no. & date, name of contractors, description of material, etc. so that the same
can be posted in stock ledger against particular items. Whenever WCC is prepared for giving
certificate of satisfactory completion of work for petty items for labour work and paid from
imprest a/c, should not be posted in stock ledger and a remark to that effect should be given
on WCC “Not to be posted” in stock ledger.
The WCC is a form of receipt of recording the incidental expense for each item wise meant
for stock in store.
(E) Bin Card
Bin card is also maintained in all stores along with SR note and MR note. Bin card are to be
maintained for each item of material at all store centers’ under a card board. The Bin card is
maintained for transaction of each item such issued and receipt and should be posted day to
day in order to ensure the actual stock on hand every day.
The Bin card will only record SR note and MR for receipt/issue of material. The store keeper
should initial bin card for each transaction of receipt issue day to day.
The storekeeper will prepare daily/weekly issue per bin and forward to division/RSO stores.
They will account of MR for posting in stock ledger.
(F) Stock Ledger Form
Stock ledgers are to be maintained at division/RSO level for all independent stores. The same
are utilized for posting of receipt/issue of materials as per daily/weekly issue per bin card
returns from independent store centers.
The stock ledger forms are maintained in loose leaf for each item wise and group wise.
 The account copy of SR note, MR note, CR note WCC received from store centre will
be reconciled first with the qty shown in daily/weekly issue receipt per bin.

53. 53
 They should contain correct description of materials, size, length, bin card no., qty,
value, rate, amount, etc.
 At the end of each month the balance of each item will be drawn for issue/receipt
credit for qty and amount and will reconcile with the bin balance maintained at store
centre. The average rate will work out every month.
 A monthly return of receipt will be prepared and reconcile with store receipt book for
HO purchase, local purchase receipt.
 The monthly allocation register debit/credit will be prepared after reconciliation with
daily/weekly issue/receipt per bin and will forward to circle office for accounting
purpose.
 If at the end of the year there is any balance of amount without qty either plus or
minus may be adjusted debiting/crediting towards against which generally issued.
(G)Material Allocation Statement Register
Material Allocation Statement is maintained in form showing the details of requisition no.,
total amount and account head chargeable. The MR/CR statement will be prepared separately
as debit allocation and credit allocation. The amount of requisition will be posted in each
separate column for each account head wise and will reconcile with the total amount of
requisition.
This material allocation either debit or credit should be prepared for each scheme wise,
village wise, line wise, so that it will facilitate for passing in work registers maintained for the
scheme operated by the respective division.
The total of the amount of issue per bin during the month will reconcile with the total amount
of debit allocation statement. Similarly, total amount of credit as per bin during the month
will reconcile with the total amount of credit allocation statement.
(H)Monthly Return of Receipt
Monthly Return of Receipt should be classified as under:
1) Monthly Return of Receipt for local purchase order placed by division office/circle
office
2) Monthly Return of Receipt for material received against order placed by CE ( HO
purchase )
3) Monthly Return of Receipt for D.G.S.D. rate contract
4) Monthly Return of Receipt for material from other store centers’

54. 54
This statement should be prepared by posting from stock ledger in respect of each items of
receipt against each SR note and should reconcile with the total amount of store receipt book
for each classification as shown above.
The amount separately paid by preparing WCC for incidental charges should not be included
in Monthly Return of Receipt.
(I) Monthly Abstract of Receipt and Issue
The main object for preparing the Monthly Abstract of Receipt and Issue is to reconcile the
value of store stock balance as per stock ledger maintain at divisional/RSO level and stock
suspense a/c in financial ledger maintained at circle level every month.
Sometimes it may happen that there is a wide variation between the balance amount shown as
per stock ledger and amount shown in financial ledger due to some misposting/wrong posting
of returns.
The monthly store returns such as Material Allocation Statement, Monthly Return of Receipt,
cash abstract are submitted to circle office by division and posting in stock suspense is
carried out as per returns. This will operate stock suspense account in ledger with the balance
shown every month which should reconcile the balance of stock ledger.
In order to avoid mistake, Monthly Abstract of Receipt and Issue is prepared for all operated
items during the month which will reflect opening balance, receipt through SR note, credit
note, incidental charges through WCC, total issue made during the month and closing
balance.
 The total amount shown as receipt through SR note will reconcile with the total
amount of Monthly Return of Receipt
 The total amount shown as receipt through credit note will reconcile with the amount
of Material Allocation Statement – credit allocation statement
 The total amount of incidental charges will reconcile with the amount shown in cash
abstract/JV abstract
 The total amount shown as issue through MR will reconcile with the amount of
Material Allocation Statement – debit allocation statement
Thus the amount reflected through the all monthly returns will reconcile with the amount of
financial ledger maintained at circle level.

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(J) Daily/Weekly Issue per Bin
This statement will reflect the daily/weekly issue of materials Bin wise. This should be
prepared from bin card group wise by the store keeper and submitted to division office for
pricing and posting alongwith account copy of material requisition.
Division office will valued at the rate arrived at the end of each month brought down from
the stock ledger.
The total amount of Daily/Weekly Issue per Bin will reconcile with the total amount of
Material Allocation Statement – debit allocation statement.
(K)Monthly Store Receipt Book
This book is to be maintained separately for each store centre at divisional/RSO level for
local purchase, HO purchase, purchase DGSD and transfer of stock from other stores.
All the SR notes prepared against above referred purchases/receipt of materials will be posted
in separate book giving the reference no., SR note no., date, description of material, unit, rate,
qty, amount, order no., and date.
The total amount of Monthly Store Receipt Book will reconcile with total amount of Monthly
Return of Receipt.
Within divisions there is always a credit note
At end of month, everything is given to a/c dept
All payment is done by HO only at the end of the month
Advice note is being sent to the circle
Capital items
• Purchase of capital items like computer, fax machine is done by way of buyback
• Old ones are replaced with the same company and hence some reduction in the costs
of new ones

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Certain conditions
 The supplier who is selected has to put a security deposit or bank guarantee before
executing the order
 After 100% acquiring of materials, mgvcl issues NOC and then payment is done
 If supplier doesn't supplies material as per promised date, then MGVCL charges
penalty of 0.5% per week for the late supply
 The delicate materials must be insured by the supplier while transporting it to store so
that if any damage occurs, no party has to suffer
 After receiving of material, if quality of the material is not as per sample then the
supplier is asked for replacement
 Even if 2nd
time its material is rejected then whole lot is cancelled. Its security deposit
is taken and again tender is issued and order being given to other supplier

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List of materials purchased
ALL ALUMINIUM CONDUCTOR
ACSR CONDUCTOR
G I STAY WIRE
HIGH TENSILE STEEL WIRE
ALUMINIUM ALLOY CONDUCTOR
CEMENT BAGS
CYCLE STAND
UNARMOURED CABLE
PVC CABLE
INDOOR SWITCH BOARD WITH ACCESSARIES
CAST IRON EARTHING PLATE
TABLES STEEL
CHAIRS, CUPBOARDS, CABINETS
WATER COOLER , FILTER
AIR CONDITIONER
FUSE
BOLTS AND NUTS
METER
COIL , INSULATOR
CHOKE , STARTER
TRANSFORMER
LIGHTNING ARRESTOR
DANGER BOARD ENAMEL
VEHICLES
CAPACITORS
CLOTH MATERIALS
REGULATOR
SILICA GEL
TUBES , FLAPS
FIRE EXTINGUISHER
TESTER
WIRE CUTTING PLIER

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10.4. MANAGEMENT OF INVENTORY
Effective inventory management is all about knowing what is on hand, where it is in use, and
how much finished product results. Inventory management is the process of efficiently
overseeing the constant flow of units into and out of an existing inventory. This process
usually involves controlling the transfer in of units in order to prevent the inventory from
becoming too high, or dwindling to levels that could put the operation of the company into
jeopardy. Competent inventory management also seeks to control the costs associated with
the inventory, both from the perspective of the total value of the goods included and the tax
burden generated by the cumulative value of the inventory.
Calculating what is known as buffer stock is also key to effective inventory management.
Essentially, buffer stock is additional units above and beyond the minimum number required
to maintain production levels. For example, the manager may determine that it would be a
good idea to keep one or two extra units of a given machine part on hand, just in case an
emergency situation arises or one of the units proves to be defective once installed. Creating
this cushion or buffer helps to minimize the chance for production to be interrupted due to a
lack of essential parts in the operation supply inventory.
Stores Section has a very vital role in making available required stores and spares items for
efficient and economical operation and maintenance. Stores in fact are considered as back
bone of capital & maintenance activities to be undertaken. Efficient and effective services to
the user sections shall be the principal objective of Stores Section and this shall be the most
important parameter to judge its performance. It is, however, equally desirable to provide
these services as economically as possible i.e. to keep the stock level at optimum, conserve
and preserve them properly so that both financial and operative objectives are attained.
The key objectives of Stores Section audit are summarized as under:
 To determine the existence of adequate system of internal controls over inventory to
prevent and detect errors and irregularities.
 To account for all the materials received and issued timely along with its appropriate
valuation.
 Proper storage to avoid deterioration and loss of materials, economical material
handling, physical stock verification and its reconciliation and proper and authenticate
accounting of discrepancies.

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 To determine that inventory is monitored and controlled for obsolete or low usage
items (i.e. slow‐moving and non‐moving items).
 To receive scrap and other discarded materials and arrange prompt and most
economical disposal.
Issue of materials from the stores of MGVCL is done as per technical sanction no.
If material is over issued, it becomes the responsibility of supt. Supt. has to give proper
reasons for over issue.
Sometimes materials are issued because of augmentation (change for enhancement) Eg.:
Transformers. It is not replacement because it is not in bad condition but it is changed for
good as load is increased.
 Inventory management is the weakest point of MGVCL.
 Inventory increases when the contractor returns the material back. Inventory sheet is
given by the contractor. The remaining material is to be returned by the credit note.
 For proper inventory, CR = Bin Card = Physical stock
 Maximum 20 parts of the particular material should be maintained in store as
inventory but there are always about 450 to 1400 numbers lying in the store
Management is not at all sincere in proper checking of the inventory. There are 4 types of
material available in store.

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1. Active – Fast Moving (goods which are used regularly)
2. Slow moving material (which has not been used up to 3 months)
3. Non – moving (which has not been used up to 6 months)
4. Scrap
Programmed software is available in MGVCL where every month MICR is being generated
to know the inventory. MICR is the Monthly Inventory Control Report.
Even though MICR is being prepared, employees did not notice the stock and keeps on
ordering new materials. The drawback of this software is that the material which is purchased
for first time is shown in slow moving goods. It is default of the program.
In short, not a single point of effective inventory management is seen in stores of MGVCL. It
is the weakest point and most of the funds are engaged which is poor for the profitability of
the company.
Key areas of Stores Section which must be managed properly for inventory management:
Movement (i.e. Receipts and issue of Store Items)
Valuation of Inventory
Valuation of Inter‐organization transfers
Transformer/Meter/Fabricator cycle
Issue of material on loan basis
Material Rejection
Scrap sale
Review of system of levels of inventory
Periodic physical Verification of Inventory

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10.5. MANAGEMENT OF CASH CREDIT
CASH CREDIT is not allowed for MGVCL – circle/division level. It is permissible only to
corporate level.
Borrowings
Corporate Office has to manage fund/finance to meet long term requirements (for execution
of certain projects/schemes) and working capital (for its day to day operations). At the
Corporate level, such requirements are met through “Borrowings” from different sources like
banks, financial institutions, Government.
Borrowings has certain conditions as under:
I. The loan is to be taken under proper authorization of competent authority after passing the
resolution in the board meeting.
II. Ensure that company has carried out comparative analysis about rate of interest,
prepayment penalty, processing fees, repayment schedule, etc from different banks/financial
institution and also for different sources of finance like loan, cash credit,bill discounting, etc.
III. Ascertain that the economical source of finance has been opted and if not, obtain
justification for the same.
IV. In case of borrowings from banks or any other financial institutions, following must be
there:
Documentation like sanction letter, creation of charge papers, etc
Hypothecation / pledging of assets /security (i.e. creation of charge)
Rate of interest (simple or compounding)
Tenure of the loan
Documentation charges & commitment charges
Pre‐payment charges
Interest on overdue installments
Penal interest for failure to adhere to certain conditions
Payment terms for interest and principal amount
Other conditions attached thereto
V. The disbursement against borrowings are to be utilized timely for the same
purpose for which it was availed and also there should be no remaining idle funds out of the
borrowed amount for a long.

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VI. The borrowings raised for long term purpose should not be utilized for short term purpose
in accordance with the provisions of “Companies Auditors Report Order”.
VII. New borrowings should be raised only in case of insufficient
VIII. The actual borrowings should not exceed the planned credit limit decided
and approved by the Board or borrowing committee.
IX. the repayment of loans/ borrowings must be made within due dates to
avoid penal interest.
X. Verification of the Cash Credit should be done by:
Documentation
Rate of interest
Creation of charges (i.e. hypothecation or pledge)
Drawing limit
Verify whether the Cash credit facility has been availed under proper authorization of
competent authority.

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11. FINDINGS
 It was found that the way of working is to follow the perfect standards which are
already set. The fix procedures are being followed in each work.
 The decision of adopting Enterprise Resources Planning (ERP) popularly known as
“e-Urja” in MGVCL, in Data Processing was the one of the good decisions as it has
helped MGVCL reduced its stationary costs as well as it has fastened the working
system. It has also helped in reducing mistakes as were done earlier.
 The cash available is being properly managed and the purchasing procedure i.e., from
where to purchase and how to purchase is perfect. It is being properly managed.
 Inventory is the weakest point of MGVCL. No techniques like LIFO / FIFO is being
applied in stores for inventory management.

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12. RECOMMENDATIONS
 For the requirement of fund, indented fund copy is being send for next 10 days, this
could be increased to 15 days. This can save the time of fund to arrive from HO to
circle.
 The misuse of cash by cashiers which is an on-going problem for MGVCL, could be
stopped by way of surprise checking of cashier’s locker at midnight.
 For the proper inventory management, MGVCL must start using inventory module of
e-urja as soon as possible. With the help of e-urja, they can
• Implement Global Best Practices for Inventory Valuation
• Better Tracking and Monitoring of Stock at all times
 According to my study, the inventory module of e-urja will say to prepare budget of
material for whole year and also for maintenance material. The e-urja will not allow
to sanction new purchase order until there is stock available.
 If the company doesn’t want to go for e-urja for inventory management, then survey
must be done about how much material is required monthly for maintenance and
emergency. As per that only stock should be there.
 Although stock is there, purchase is done and no care is taken. No proper utilization
of material is done, hence material gets deteriorate.
• LIFO or FIFO must be implemented so that material doesn’t deteriorate.
• Stock in stores must not be proved as a blockage of money.

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13. CONCLUSION
 It was great experience for me to have training at the company like MGVCL. I
learned whole procedure of how working capital is managed
 Management of MGVCL is good as everything is perfectly managed as per pre
decided standards
 I have not face any difficulty in obtaining the data. All employees of MGVCL are
very cooperative and helpful
 I am now having a clear view of the activities that are being carried out in finance
department
 I have got clear picture of Working Capital and also got my concepts clear
 Company is constantly adapting the new changes with changing circumstances

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14. REFERENCES
www.mgvcl.com
www.gseb.com
www.indianexpress.com/news/guvnl-to-introduce-eurja
www.mstcindia.co.in
www.sldcguj.com
www.getri.org
www.wikipedia.org