KERALA STATE ELECTRONICS DEVELOPMENT COPRN.
July 24, 2002
Tendering Procedures Amendment
MDs Office Order No. MD/66 dated 12.1.1987
MDs Office Order no. MD/66 dated 12.1.1987 is hereby amended as under:
Tenders over Rs. 100 lakhs in case of Controls Division and Rs. 50 lakhs in the case
of other Divisions must be referred to Corporate Office for clearance is hereby
amended as Tenders over Rs. 200 lakhs in the case of all Divisions/SBUs must
be referred to Corporate Office for clearance.
All other terms and conditions as stipulated in the above
referred Order remain unchanged.
ALL BR. MANAGERS
KERALA STATE ELECTRONICS DEVELOPMENT CORPN. LTD.,
January 12, 1987
Sub: Tendering Procedures
The following procedurs should be followed for submission of a tender or quotation
Marketing Departments for Systems/Products/Contract:
- Obtain tender documents/details of customer requirements
- Study of technical details and drawings
- bill of materials
- details of value addition by the Division,
identify value of items and identify supply soiurces and ascertain
quotations both for imported and indigenous materials
- Prepare cost statement taking into consideration customs duty, exchange rates, other
statutory levies etc., statutory restrictionslike licensing etc., must be borne in
Prepare cost of:
- Engineering design/R&D efforts
- Erection and commissioning
- Other terms of ternders must be looked into like supply of spares, performance
guarantee, servicing etc. and provode for the same in the costs
- Contingencies must be provided for
The tender/quotation must stipulate:
- Terms of payment. Advance payment should be lasked for wherever possible taking to
the fund flow (a lfund flow statement must be prepared) problems and
- Provision for retention against our bills must be avoided and 100% payment must be
need be a bank guarantee may be agreed to, to the extent of retention.
- Provision must be made for variation in statutory levies eg: customs duty, excise,
sales tax etc.,
increases due to exchange fluctuations in case of imports, escalation in cost
of imported items,
being borne by customer.
- Validity period of the tender must be stipulated clearly and corresponding price
must be reached with the suppliers. Where a contract runs over a period of
two to five years, an
escalation clause for cost increases must be provided for or alternatively
higher costs must be
considered in the calculations, taking into account the impact of
inflation on prices unless
understanding with the suppliers or collaborators takes care of this aspect.
- Finance charges based on fund flow statement should be provided for in the uotation.
- A profit margin of 30 to 35% must be provided for initially. During negotiation,
depending on the
contract and future prospects, the profit margin may be reduced to 20%. Any
reduction below this
level needs MDs specific approval.
- Tenders over Rs. 100 lakhs in case of Controls Division and Rs. 50 lakhs in the case of
Division must be referred to Corporate Office for clearance
- A review of cost s and profits must be made after completionof each
contract/system job and
reasons of variations from original tender ascertained. A report must be
submitted to Corporate
Office on completion of jobs over Rs. 100 lakhs/Rs.50 lakhs for Controls
respectively. This will be forming part of our learning curve; and lessons
learnt will be summarised
and advised to the Divisions.
Financial concurrence must be obtained for all quotations
Progress reports must be submitted to Corporate Office on major contracts on
a regular monthly
Heads of Divisions
Heads of Finance Dept. of Divisions
ED(F), SM(MIS & BC)