MUGHALS PAKISTAN (PRIVATE) LIMITED

Standard Operating Procedures - Procurement Dated: March 02, 2016

OBJECTIVE

The purchase department will work to ensure that purchase system is effective enough to detect
and replenish purchase needs in a cost effective manner.

SCOPE

This Standard Operating Procedure (SOP) manual covers Cash Purchases and purchases made
through Purchase Order (PO).

PROCEDURAL MANUAL

The procedural manual for material purchase mechanism is as under:

1 Responsibilities & Duties

Requestor
1.1 Requisition shall be prepared by a Requestor at site/Lahore Office or any other
authorized person.
1.2 Requestor will then submit the Requisition to stores department.
1.3 Requestor shall mention complete specification of goods required.
1.4 Stores department will check whether the goods are available in stores or not
within 2 days of receiving the requisition.
1.5 If requested goods are available in stores, then stores department will make
delivery at requested site in accordance with Material Movement SOP.
1.6 If requested material is not available in stores then stores department will
inform the Requestor that goods are not available in stores.
1.7 Requestor shall forward the Purchase requisition to Purchase Department for
pricing. Purchase department shall provide pricing to requestor within 5 days
of receiving the Purchase Requisition.
1.8 Requestor shall provide the time period in which goods are required to be
received at site (or to be installed at site where applicable).
1.9 After pricing from purchase department Requestor will generate PR in HR
system.
1.10 HR system will send automated email to requestor, Accounts department and
reporting manager of Requestor.
1.11 Requestor & purchase department will decide whether to purchase the item
through Purchase Order or through Cash Purchase.

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

1.12 Requestor shall provide the specifications of required goods and technical
terms and conditions to be communicated with supplier in PO/CP.

Purchase Department
1.13 Purchase department will call quotations from different suppliers (at least
three quotations shall be called). However if value of an item to be purchased
is less than Rs. 25,000/- then it may be purchased against single quotation
whether written or verbal.
1.14 Multiple quotations shall not be called if we are bound by any agreement with
Client/Consultant to buy the goods from designated supplier; however the
purchaser shall try to negotiate the most favourable rate and terms and
conditions with client’s specified supplier.
1.15 On the basis of quotations from suppliers, Purchase department shall prepare
the comparative statement to analyse and recommend the best rate available
from suppliers.
1.16 Purchaser shall present the Comparative statement for approval before
management.
1.17 Comparative statement shall be approved by GMC/GME, If amount involved is
Rs.500,000 or more than Comparative Statement should also be approved by
Director.
1.18 Purchase department shall forward the approved Comparative Statement to
Requestor who will enter the required goods with pricing in HR system for
computerized PR as described in 1.7 above.
1.19 Purchase department and Requestor shall agree the financial terms with
supplier and inform the accounts department for Financial Terms of PO via
email & shall CC to GMC & GME .

Management
1.20 PR is approved by GMC or GME in system.
1.21 HR system will send automatic email on approval or rejection of Requisition to
Requestor, Accounts and reporting manager of Requestor.
1.22 If PR is approved then purchase department shall prepare Purchase Order
(PO) or Cash Purchase (CP) as per requisition. If PR amount is less than Rs.
100K, then CP is prepared otherwise PO is prepared for processing.

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

1.22.1 For Purchase of goods through PO:

Purchase Department’s responsibilities for PO
1.22.1.1 Purchase department will present the PO draft along with
PR & comparative statements before GME, GMC &
Director for approval. PO will be presented to Director
only if amount involved is more than Rs. 500,000/-.
1.22.1.2 After approval from relevant persons purchase
department will post the PO in HR system.
1.22.1.3 Purchase department will forward the purchase order
along with covering letter to supplier and will get
receiving from supplier on copy of PO for his own record.
1.22.1.4 Copies of PO will be submitted to accounts, engineering
and stores.
1.22.1.5 Purchase department will pursue timely delivery of all
items as per PO delivery conditions.
1.22.1.6 Purchaser shall ask the supplier to provide a delivery
challan along with goods delivered.
1.22.1.7 Purchaser shall be responsible to get invoice of goods
from supplier on time.
1.22.1.8 On receipt of goods, purchase department will prepare
PO closure report on the basis of manual & computerized
Goods Receipt Note (GRN) & Inward Gate Pass (IGP)
received from stores department.
1.22.1.9 Purchase department will submit the PO Closure report
along with GRNs, IGP and supplier’s invoice to Accounts
Department for PO closure.
1.22.1.10 PO closure report shall be submitted by purchaser within
15 days after GRN date.

1.22.2 For Cash Purchase :

Purchase Department’s responsibilities for CP
1.22.2.1 After PR approval by GMC/GME Purchase department
will print the CP.

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Standard Operating Procedures - Procurement Dated: March 02, 2016

1.22.2.2 CP is signed by Sr. Purchase Officer and submitted to

accounts department for disbursement of cash/cheque to
purchaser.
1.22.2.3 Purchaser will make efforts to buy maximum no. of items
from a single supplier so that payment to the supplier can
be made through cross cheque.
1.22.2.4 Accounts department prepares the cheque/cross cheque
of CP amount and then delivers to purchaser.
1.22.2.5 Purchaser purchases the goods from market and in case
of partial purchasing or purchasing at lower rate than
expected, balance cash will be submitted to accounts
along with bills.
1.22.2.6 In case if purchase is not made or delayed by some
reasons, purchaser will submit the cash to accounts
department before close of business hours or if purchaser
is in market then cash will be submitted to accounts
department before 10.00 A.M of very next working day.
1.22.2.7 Purchaser shall not hold excess cash with him in any case
except as stated above.
1.22.2.8 If amount of actual purchase exceeds 5% of approved
amount, then purchaser will be responsible to get
approval of the excess amount from the same authorities
who approved the Requisition.
1.22.2.9 When goods are received at gate at respective site/Head
Office GRN & IGP is prepared in same manner as for PO.
1.22.2.10 CP closure report is prepared by purchaser and
submitted to accounts department for closure along with
GRN, IGP & supplier’s invoice.
1.22.2.11 CP closure report shall be submitted by purchaser within
15 days after GRN date.

Stores Department

1.23 Stores staff receiving the goods will prepare Goods Receipt Note (Manual &
Computerized) on receipt of goods as & when goods are received and will
forward a copy of GRN to stores department at Head Office.

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 MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

1.24 GRN of Capital Assets shall always be created at Head Office provided that name
of receiving site and IGP shall be mentioned in GRN. Whereas IGP shall always be
created where it is actually received.

Security Staff / Gate Clerk

1.25 At gate, Security Staff / Gate Clerk will check the goods received and will prepare
Inward Gate Pass (IGP) after physical verification of all the items loaded on the
vehicle. If items are large in number then IGP may be prepared at the time of
unloading at stores in presence of Security Staff/Gate Clerk.
1.26 IGP shall be signed by the Security Staff / Gate Clerk, Stores Incharge, & Delivery
Supervisor/Driver who is shifting the material.
1.27 Security Staff shall also mark their Security Stamp on IGP.
1.28 Inward Gate pass will be in triplicate, one copy will be sent to stores receiving
the goods, 2nd to purchase department at Head Office which will forward it to
accounts department for CP/PO closure and 3rd book copy will be retained by
the Gate Clerk/Security Staff for their own record.

Accounts & Finance Department

1.29 Accounts & Finance department shall confirm receipt of Financial Terms of PO
and shall provide their recommendations within Eight (8) hours of receiving the
term. If they do not respond in 8 hours it shall be deemed that they have no
objection of Financial Terms of PO.
1.30 Accounts department will receive the account closure report from purchase
department along with copy of all documents including IGP, GRN manual &
computerized.
1.31 After verifying the supporting documents accounts department shall make
Journal entry in accounting system and shall proceed for payment in accordance
with Financial Terms of PO.
1.32 If advance payment is mentioned in PO Financial Terms then it shall be
processed soon after PO is approved by the relevant persons.
1.33 Accounts department shall intimate to supplier, purchaser and requestor that
cheque has been prepared and ready for payment.

2 Emergency and Exceptions to General Rule

In case of situations where goods are required to be purchased on emergency basis and the
above stated procedures are not possible to follow, then management discretion will

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 MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

prevail. However the requestor shall obtain written approval from management to process
the purchase through emergency route bypassing the SOP.
3 Contents of PO:
PO shall be in such format as attached herewith (Annexure – A).
4 Record Keeping Responsibilities
4.1 Purchaser shall keep the date wise detail of all POs & CPs generated showing their
amount, supplier name & current status whether closed or running. This detail shall
be updated on daily basis and will be available to review by management or any
other person authorized by management at any time.
4.2 Purchaser shall keep record of PO/CP & suppliers’ invoices.
4.3 Accounts department shall keep record of following documents:
i) Copies of PO/CP
ii) Original Invoice of Supplier
iii) IGP (Duplicate)
iv) GRN (Duplicate)
v) PO Closure Report
vi) Copy of Cheque/ Payment Voucher.
5 Documentation:
5.1 For Purchase of goods through PO following documents shall be prepared by
following persons:

Sr. Document Document Owner

i) Requisition Requestor

ii) Comparative Statement of Purchase Department

quotations

iii) Purchase requisition computerized Co-ordination Engineer

iv) Purchase Order computerized Purchase Department

v) Purchase Order Cover Letter Co-ordination Engineer /

Purchase

vi) Inward Gate Pass (IGP) Security Staff

vii) Goods Receipt Note (GRN Manual) Stores Incharge

viii) Goods Receipt Note (Computerized) Stores

ix) PO Closure Report Purchase Department

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 MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

5.2 For Cash Purchases following documents shall be prepared by following persons:

Sr. Document Document Owner

i) Material Requisition Requestor

ii) Comparative Statement of Purchase Department

quotations

iii) Purchase requisition computerized Co-ordination Engineer

iv) Cash Purchase (CP) Purchase Department

v) Inward Gate Pass (IGP) Security Staff

vi) Goods Receipt Note (GRN Manual) Stores Incharge

vii) Goods Receipt Note (Computerized) Stores

viii) CP Closure Report Purchase / Stores

Department

6 Persons Involved in Purchase Cycle

6.1 For purchase through PO
i) Co-ordination Engineer
ii) Stores Manager
iii) Purchase Officer
iv) GMC / GME
v) Director
vi) Security Staff
vii) Stores Staff
viii) Accounts Department

6.2 For purchase through CP

i) Co-ordination Engineer
ii) Stores Manager
iii) Purchase Officer
iv) GMC / GME
v) Security Staff
vi) Stores Staff
vii) Accounts Department

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 MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016
Annexure - A
Computer Generated PO
Purchase Order - MIL-023
NO: XX Date: XX-XX-XX

Mughals Imperial (Pvt) Limited Name of Supplier

57-Main Ghazi Road,Opp.Allama Iqbal Airport, Lahore. Address

Ph #: 042-35701290-7 Fax:04235701298 Phone #
E-mail: admin@mughalspak.com Email: Supplier@mail.com

Subject of PO
Scope of Work & Rate Agreed:

SR # Req. No Intrnal No. Description of Item BOQ CC Desc Unit Qty Rate Amount (Rs)
1
-
2
-
Sales
Tax
Closure By:
Total -

Terms & Conditions:

a) Technical

These are to be provided by requestor to purchaser and will vary item to item.

b) Delivery

This shall include the date on which goods are to be delivered/installed by the supplier.Initial delivery date shall be
proposed by requestor as per the requirements of project and then finalized by purchaser after discussing with supplier.

c) Fiancial

These shall be finalized by Requestor / Purchaser after obtaining clearance from Finance and Accounts department.

Financial Terms shall include at least the following:

→ Pattern of Payment to supplier whether advance or in installments

→ Taxes to be paid or withheld from payment etc.

→ Freight charges to be paid

→ Method of Payment i.e Cash or Cross Cheque and name of Payee.

This purchase order is being sent to you in duplicate and you are required to return the copy of this
purchase order duly signed as a token of your acceptance.

d) Any Other Term

This may include any other term such as warranty etc required from supplier or any other term required as per
circumstances

Agree & Accepted Director

Nmae of Supplier Mughals Imperial (pvt) limited

Copy: Accounts Lahore

Engineering
Stores

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 MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

PROCUREMENT FLOW CHART

START

Requestor Forwards Requisition To

Stores

Stores Department Checks the

availability of Material

Refer to
Is material Material
available in Yes Movement SOP
stores

NO

Requestor Forwards
Requisition To Purchase
Deptt for pricing

Purchaser calls quotations

& prepares Comparative
statements

Comparative Statement is
approved by
management

PO Requestor will enter PR in CP

HR System

Clearance on Purchaser prepares CP

Financial Terms & submit to accoutns

PO Approval by Mgt
Accounts pay cash to
purchaser

PO placed with
Supplier

Receipt of goods at GRN, IGP Purchase of goods by

store/site purchaser

CP/PO Closure
Report

Entry in Accounts

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of Purchase Requisition (System generated)

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of Purchase Order Cover Letter

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 MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of PO Covering letter (Draft for Management approval/ PO Office Copy)

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of Inward Gate Pass

NO:_________________

INWARD GATE PASS

DATE:_______________ OFFICE / PROJECT:_______________

TIME:_______________ VEH NO:_______________

SR #. DESCRIPTION UNIT QTY. REMARKS

10

11

12

_______________ ____________ _____________

DELIVERED BY GATE CLERK RECEIVED BY

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of Goods Receipt Note (GRN – Manual)

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of Goods Receipt Note (GRN – Computerized)

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of PO Closure Report

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of Cash Purchase (CP)

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MUGHALS PAKISTAN (PRIVATE) LIMITED
Standard Operating Procedures - Procurement Dated: March 02, 2016

Sample of CP Closure Report

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