Indenting Procedure for
Stock and Non-stock items

Indenting Procedure

• Indenting is the formal process by which user departments (indentors) communicate their material requirements to the Stores Department.
• A correct and well-prepared indent is the foundation of the entire procurement cycle.
• Errors at the indenting stage cascade into wrong purchases, delays, excess inventory, and financial irregularities.
• Para 701 of Stores code volume-1: The Agency of the Stores Department will be used in ordering the supply of ALL stores required for the use of the railway, whether for stock purposes or for immediate consumption on works.

Fundamentals of stock & Non-stock

Indenting Procedure for stock items

Three methods are used on Indian Railways  

• (i) Maxima- Minima System (EOQ / ROL System)
• (ii) Annual Estimate System
• (iii) Base stock/ Fixed Qty system

Maxima- Minima System

• Also called Re-Order Level (ROL) is fixed for each item.
• When Physical Stock + Dues falls to or below the ROL, recoupment is initiated immediately.
• Maximum – most economical order quantity:    • High value items: 3 to 6 months’ requirement    • Low value items: 12 months’ requirement
• Minimum – quantity (Physical Stock + Dues) sufficient to last through the lead time.
• Formula for Recoupment Quantity: Q = Maximum + Minimum + Pending Demand − (Stock + Dues)
• Used for: Emergency/Safety spares where stock-out is critical
• In the maximum minimum system, a perpetual record is required to be kept.  As soon as the stocks plus dues touch the minimum level, Recoupment is made for the quantity equal to one maximum.
• In the Railways shop manufactured items and a few typical depot stock items are recouped on this system.
• In this system inventory carrying cost & ordering cost are minimum

Annual Estimate system (AES)

• Also called periodic review/ fixed interval system
• Recoupment is done at FIXED review dates as per a pre-decided timetable.
• Different groups of items recouped in different months (Jan, Feb, etc.) to spread the workload.
• The period for which items are recouped is fixed and is called “Contract Period”. This contract period is generally 12 months.
• The interval between the dates fixed for sending the recoupment to the beginning of the contract period is known as the “Interim Period”.
• This system is advantageous in that it is possible to combine the demands of different depots and make one purchase and getting competitive price.
• In this system Net Procurement Qty will be calculated with the following formula
• NPQ= IP Qty +CP Qty+ Buffer stock –(Stock on Hand + Dues  

                                              (Covered & uncovered) + UDM Stocks)

Base Stock Method:

• Used for Emergency Stores (slow-moving, uncertain demand).
• A Base Stock level is sanctioned. Rule: Physical Stock + Dues = Base Stock at all times.
• As soon as one unit is issued, an equivalent quantity is immediately recouped.
• Theoretically: Number of Recoupments = Number of Issues.

PACE- Procurement and Consumption Efficiency

• If the consumption is there Demand will be initiated, otherwise demand will not be initiated

Important terms in stock indenting

IMMS based stock Indenting – Estimation of AAC

AAC- Anticipated Annual Consumption- fixation

• 3 HOD/JAG Committee finalized requirements- AAC fixation as it is the requirements.
• Departments wise submission- zonal level/ Divn Level- AAC fixation as it is the requirements.
• Individual requirements submission by consignee duly approved by SAG officer and Finance concurrence- in this case Depots are fixing the AAC based on past 3 years consumption duly considering the out of stock period.
• Based on: Past 3 years’ consumption (Simple Average or Weighted Average).
• Adjusted for: Stock-out periods (consumption artificially low due to non-availability).
• Plus: Forecast of activities (increase/decrease), condemnation of rolling stock, new rolling stock acquisition.
• Trend analysis of past consumption patterns

IMMS based stock indenting

• Stocking Depots raise Estimate Sheets / Recoupment Sheets through iMMS (Integrated Material Management  System) online.
• Fixed interval procurement: Indents sent at periodic intervals covering 12-month demand.
• Reorder point procurement: Indents generated automatically when inventory falls to minimum level.
• PCMM scrutinises, modifies, consolidates all depot indents for the same item across the Railway.
• PCMM adjusts surplus at one depot against shortage at another before raising purchase orders.
• IREPS (Indian Railways Electronic Procurement System at), GeM, Cash purchase, Spot  purchase are used for procurement

Indenting Procedure for Non- Stock items

• Non-stock items are procured ONLY when specifically demanded by user departments.
• Planning is the indentor’s responsibility, not the Stores Department’s. The indentor must plan in advance as procurement takes time
• Before indenting a non-stock item, the indentor MUST first check whether a standard stock item from the Stores Depot can meet the requirement. Non-stock items are resorted to only when no suitable stock item exists.
• A non-stock indent can be placed for the SAME item at most TWICE in a year, with an interval of at least 6 months between the two indents but the value not to cross Rs.50000/-.

Work Out the Requirement

• User department estimates requirement based on: Work estimates, Repair & maintenance programmes, Annual maintenance plan.
• Quantity should be assessed realistically; over-indenting leads to excess stock with no use (against Canons of Financial Propriety).

Obtain Non-Stock Certificate

• Before raising an indent, obtain a Non-Stock Certificate from the feeding Stores Depot confirming the item is not available in stock.
• This prevents duplication of procurement effort.
• Prepare form S-1302 in UDM. Provide SPN/PL No if available.

Mandatory information on the Non-stock Indent

Urgency Certificate for Non- Stock items

If urgency provided stores department will initiate the procurement on top priority.

• Urgency certificate to be certified by JAG officer- Below 10 Lakhs
• Urgency certificate to be certified by SAG officer- above 10 Lakhs

Signing of the NS indent must be countersigned by the officer of the user department as per delegated powers. Present delegations

Non-Stock Indents- PAC Certificate

For non-stock items that can be sourced from ONLY ONE firm or where only one firm’s product is acceptable due to compatibility/safety reasons, a Proprietary Article Certificate (PAC) must be issued by the user department

Types of PAC

• Brand PAC (Absolute PAC): Only one firm manufactures/stocks this item. No alternative exists – PAC(a)
• Qualified PAC: Alternative products may exist in the market, but only this specific brand/firm’s product is acceptable due to: Interchangeability, Safety certification, Performance compatibility, Warranty requirements, or Previous validated performance – PAC(c)

PAC Delegation of Powers

• PAC Certificate
• Description of Articles : ………………………………
• Quantity                        : ………………………………
• Approximate Cost, if known : ………………………………
• Maker’s name and address : ………………………………
• Name of local Agent : ………………………………
• I approve the above purchase and I certify that:-

    (a) no other make/brand will be suitable

    (b) This is the only firm who is manufacturing/stocking this item.

    (c)  A similar article is not manufacture/sold by any other firm which

           could be used in lieu.

  Note: Delete (a) or (c) whichever is not necessary.

Forwarding of the NS Indents

After countersignature by the user department, the indent is submitted to the appropriate Stores officer. Present SOP for Stores Officer processing