22-09-2012, 04:22 PM
Steel Authority of India Limited
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Introduction
Steel Authority of India Limited (SAIL), India’s largest public sector steel manufacturing
company, caters to the core sectors of the Indian economy like the Railways, Defence,
and Power besides Automobile, Agriculture, Construction, etc. It produces 13 million
tonne of steel per annum through its five integrated steel plants.
Central Marketing Organisation (CMO), the sales and distribution network of SAIL,
comprises four regional offices, 34 branch sales offices (BSO) with stockyards, four
branch transport & shipping offices, eight consignment agency yards, authorised
distributors and conversion agents. SAIL’s entire home (domestic) sale is conducted
through CMO, with customers placing their orders at the different BSOs and the
materials being delivered from the Plants to the BSO stockyard. CMO’s Head Quarters
located at Kolkata is headed by Executive Directors (ED) such as ED (Flat Products), ED
(Long Products), ED (Transport and Shipping), etc., who supervise the entire domestic
sale operations and report to the Director (Commercial) at SAIL Corporate office, New
Delhi. The International Trade Division of CMO located at New Delhi looks after the
overseas trading activities, mainly exports.
Input controls
(i) Existence of duplicate all India party codes and party names
The all India party code (AIPC), a unique alpha numeric id which identifies SAIL’s
customers on a national basis, was allotted by CMO Headquarters, Kolkata. As all
transactions were done on the basis of AIPC, every AIPC had to be unique. However, it
was found during audit that 591 parties had been allotted more than one AIPC. Lack of
input controls led to presence of duplicate AIPC. In absence of a unique AIPC it was not
possible to track all the transactions of a party on a national basis.
(ii) Abnormal credit limit
Steel is sold in metric tonne (MT) and the approximate market value of lowest grade of
steel was Rs.27,000 per MT. According to the Company’s policy, credit limit assigned to
parties was always in round figures in lakh. However during test check, it was also found
that 11 parties had been assigned abnormal credit limits viz. Re. one only in the case of
Advance Steel Tubes Limited and Assam Roofing Limited and Rs.26 only in the case of
BHEL, among others.
Validation checks
(iii) Cheque & credit facility extended to blacklisted parties
Test check revealed that four blacklisted parties had been given cheque facility and in one
case the blacklisted party had even been extended credit facility due to lack of validation
controls.
(iv) Movement plan
The Movement plan for production dispatch was prepared in the system on the basis of
the purchase order booking.
Discrepancies in data
While despatching the material from the plant to the stock yard, a Consignment Advice
(CA) with details of the material with weight, description, destination, etc. is prepared
and the material is loaded into the wagons and despatched. After the wagon is received at
the Branch stockyard, a Wagon Arrival Report (WAR) is generated in the system. On
receipt of CA at the BSO from the plant, the CA is linked with WAR and the material
carried in the wagon is then entered into the system.
The ‘Consignment Advice Date’, thus, as per logical sequence of work flow and
document creation must be a date preceding the ‘Wagon Arrival Date’.
However, it was seen in audit that in 893 cases in respect of various branches ‘Wagon
Arrival Dates’ were found to be before their ‘Consignment Advice Date’. The delays
ranged between 1 day to 362 days.
The test check revealed that wagons were being loaded and despatched and the CA were
being prepared subsequently.