Indian Railway Codes and Manuals-Stores code- Vol-II-Chapter-22 (XXII)

 

CHAPTER XXII
SURPLUS STOCKS

Prevention of stocks from becoming Surplus

2201. Important changes in the design of plant and equipment the introduction of new standards or procedure in the place of old and the scrapping of plant for which there are stocks of spares are amongst the factors contributing to accumulations of obsolete or unusable material. The procedure detailed below she rid be followed in order to keep the Controller of Stores loss informed of all such events and enable him to minimize such accumulations and consequent loss to the administration

2202. Surplus due to Change in Design and Standards.—Before any new standards introduced the consuming department should submit to the Controller of Stores an "Advice of Proposed Changes in Design/Standard of Stores/Procedure" in (manuscript) Form S. 2202 and obtain from him the particulars of the old standard materials in stock.

2203. The form is in the three parts as shown above. Three copies of the form should be prepared with portion "A" only filled in and all the copies should be sent to the Controller of Stores who should fill in the required information in the columns provided in part "A" of the form, complete part "B" and return all the copies to the department concerned.

2204. Estimate of Loss.—On receipt of the information (Form S. 2204 with part "B" filled in), from the Controller of Stores, estimates should be prepared by the department concerned showing the probable loss to the railway involved in postponing the introduction of the new standard proposed till existing stocks are exhausted and alternatively of the probable loss involved in scrapping the existing stocks. These estimates along with two out of the three copies of the Form S. 2202 originally sent to the Controller of Stores should be sent to him again. He should check the loss involved in scrapping the existing stock, seeing that other items are not incidentally involved, and also examine whether there are possibilities of reducing the loss by the disposal of the material to other railways.

2205. Where the Controller of Stores accepts the date proposed for the introduction of the new standard, he should intimate this to the department concerned to enable the latter to issue the orders for the proposed changes. The Controller of Stores should at the same time take necessary steps to regulate future purchases of the article concerned, and arrange to obtain the sanction of competent authority for any loss involved in the proposed change.

2206. Where the Controller of Stores is unable to agree with the consuming department that the dates of making the proposed changes are in the best interests of the railway as a whole, he should submit his reasons to the General Manager for final decision.

2207. Until the consuming department forwards its final orders on a proposed change, new standards in substitution for the old should not be stocked by the Stores Department nor should any further purchase of the existing article be made.

2208. Surplus Spares die to Replacements of Rolling stock, Plant or Machinery.—When budgets are under preparation involving the replacement of old rolling-stock, plant or machinery lists of the equipment to be replaced should be submitted to the Stores Department as early as possible. The Stores Department should prepare a statement of the spare parts in stock for the equipments and refer to the consuming departments to ascertain whethei these spare parts will become obsolete or can be used on other similar equipment. As soon as the details of spares to be scrapped have been fixed, the Stores Department should prepare a financial statement showing the funds to be provided in the budget for the loss involved in scrapping such material.

2209. At the time of actually replacing or scrapping such rolling stock, plant or machinery, & c. a manuscript "Advice to Write off spares" should be prepared in triplicate ia Form S. 2209, and sent to the Controller of Stores.

2210. The Controller of Stores should fill in the quantity and value of spares or fittings which are in stock and return all the copies to the departmental officer concerned. The value of such spares should be included in the estimate for replacement and on sanction of the estimate, two copies of the form with particulars of the estimate should be sent again to the Controller of Stores.

2211. When orders for new plant have been placed, the Controller of Stores should fill in the probable date of its arrival and send one copy of the form to the depot concerned with instructions for the disposal of the spares and fittings. When the old plant is scrapped and sent to the auction yard, spares and fittings should normally be sent with it; if however, the plant is transferred for use elsewhere, the spares and fittings should be kept in stock.

2212. In cases where the spares are scrapped along with the plant, the difference between the original book value and the scrap value should be debited to the estimate for the replacement of the rolling-stock, plant or machinery. When the spares are actually sold later on, no further adjustment against the estimate need be made whether the articles fetched over or below the scrap rate.

2213. Cancellation of orders for Material for Specific Works.—If, on account of charges in plant or specification, or the dearth of funds, materials obtained for a work, or for which a requisition has been placed will not be required, the indentor should notify the Controller of Stores at once in manuscript Form S. 2213, three copies of which should be forwarded through the divisional or district officer concerned.

2214. If the railway is not actually committed to the purchase, the Controller of Stores should at once take steps to cancel any arrangements made, returning one copy of the form to the indentor through his divisional or district officer stating that the order has been cancelled. If the supply of materials has already been received or the railway is committed to the purchase, the Controller of Stores should return one copy of the form to the indentor through his divisional or district officer stating the rate (whether full or part or scrap) at which the Controller of Stores is prepared to take the material into stock after its original purchase cost has been debited to the department which indented for the stores. The third copy of the form •should be sent by the Controller of Stores to the depot which should stock the material.

2215. In case the divisional or district officer or head of the department concerned decides in favour of the changes in design & c. proposed by him, notwithstanding the loss involved thereby, he should accept the loss as a debit to the work for which the material was obtained, the sanction of the competent authority being obtained to the additional expenditure involved.

2216. Definition of Surplus Stocks.—The procedure prescribed for the preparation of Contract Estimates of stores for purchase in Chapter VI and in paragraphs 1414 to 1437 should act as a deterrent to any accumulation of stocks beyond the ordinary requirements of the railway. Purely temporary excesses over immediate or estimated requirements are not really surpluses, so long as they can be worked out by issues over a comparatively short period of time. Stores may be considered as really surplus to the requirements of the railway only if they have not been issued for a long time. Even amongst such items there may be some which it is known could be utilized for the purpose of the railway in the near future, and these may be with advantage be distinguished from the surplus stores which cannot be so consumed.

2217. An essential prerequisite condition to declare any items of stores as "surplus" stock on railways is that such items have not been issued from stock for railway consumption, for a period of two years. Such "surplus" stock should be further classified under two heads viz.,
(a) movable surplus and
(b) dead surplus, the definitions of which have been given in paragraph 118, and are reproduced below for facility of reference.

2218. Movable Surplus.—Comprise items of stores which have not been issued for a period of 24 months but which it is anticipated will be utilized in the near future. Such items should be marked in the Price Lists.

2219. Dead Surplus.—Comprise items of stores which have not been issued for the post 24 months and which it is considered are not likely to be utilized on any railway within the next two years. No article, may, however, be classified as "dead surplus" unless it has been duly inspected by a Survey Committee, vide paragraph 2222 and declared as such. Such items should be marked in the Price Lists.

2220. Emergency Stores not Surplus.—There are items which do not ordinarily wear out, or require renewal and stocks of which are not readily obtainable in India, but which it is essential to maintain to meet occasional emergencies. Amongst such items may be mentioned spare parts and duplicates of electrical machinery to be maintained for emergent use in case of failure. Such stores are emergency stores and though not issued for period of two years or more, should not be classed as surplus stores.
Survey Committees

2221. Functions of Sumy Committees.—A Survey Committee should be formed on each railway for the purpose of inspecting critically the condition of all the stores.—
(1) that have deteriorated in value, for any reason.
(2) broken or damaged in transit, or while in stock.
(3) lying in the custody of the Stores Department for a long time and considered by
the Controller of Stores as having become unserviceable owing to obsolescence of other causes, and
(4) received as scrap from the line.

2222. The Committee should determine after such inspection—
(a) what stores held in the depots should be treated as Dead Surplus Stores or as scrap,
(b) what stores should be classified and rate second-hand
(c) at what rates and values such stocks should be held in the accounts books, and
{d) how such stores shcul4 be disposed of i.e. by sale or by issue to particular uses of particular departments, & c.

2223. (a) No stores in stock should be reclassified and rated second-hand or scrap without the sanction of the General Manager obtained on the recommendations of the Survey Committee. However, Controller of Stores may, on the recommendation of the Survey Committee, reclassify stores in stock and rate them second-hand or scrap up to a limit of Rs. 25,000 per item, this limit being applied with reference to the book value of the item before reclassification. The power delegated to the COS may by redelegated to the Dy. COS & Depot Officers up to a limit of Rs. 10,000 per item and Rs. 1,000 per item respectively.
(b) Depot Officer may also reclassify stores in stock & rate them 'Second hand' or 'scrap' without processing the same through Survey Committee upto a limit of Rs. 1,000 per item. However, before classifying an item costing upto Rs. 1 000 as dead surplus, the Depot Officer should where considered necessary ascertain from the user departments and other depots that the item is not likely to be utilised by them in the next two years.

2224. No sale by auction of any article of whatever category in the depot, and no sale of scrap by private treaty (subject to the exception stated in paragraph 2408) should be made unless the article has been recommended for sale by the Survey Committee.

2225. Composition of Survey Committees.—The Committee which should be appointed by the General Manager, will consist of the heads or the Senior Officers of the consuming departments of branches with a Secretary nominated by the General Manager who will be an officer of a department other than the Stores Department.

2226. Meetings of Survey Committees.—The Committees should meet not less frequently than once in a half year, at the request of the Controller of Stores or the Depot Officer who should arrange to collect and list the articles to be surveyed.

2227. Survey Sheets.—Separate lists of the articles should be made out in quadruplicate, group by group, in the form shown below 

ere state briefly haw stores become obsolete, surplus, & c.
The Committee should, after the most careful investigation, have their recommendations recorded by the Secretary against each of the items on all the copies of the list, both as regards prices and the manner of disposal. The Secretary of the Committee should initial each such recommendation and the members of the Committee including the Secretary, should sign all the copies of the list.

2228. General Manager's sanction.—The Survey Committee's report should be submitted by the Depot Officer to the Controller of Stores. The Controller of Stores will deal with the items falling within his powers and obtain orders of the General Manager for the others. The orders of the General Manager/Controller of Stores should be communicated to the stores Accounts Officer, the Statutoiy Audit Officer and the Depot Ofiflcer and prompt Faction should be taken to implement them.

2229. Revaluation of Undisposed of Items.—Such surplus stores as are not disposed of by sale, transfer of issue within twelve months of the recommendation of the Survey Committee should be classified as scrap and the book value adjusted in accordance with the rules.

OVER-STOCKS OF "ORDINARY STORES'

2230. The maximum stock that may be held, at any time, of ordinary stores in stock (other than surplus stores and emergency or special stores) should not ordinarily exceed 50 per cent of the issues of each item during the year. This limit is applied only to 'ordinary stores'. It should be the objective of every Controller of Stores to see that the stocks on hand of all items of 'ordinary stores' are maintained well within this limit. But inspite of the best of plans, overstocks of 'ordinary stores' develop which have also to be reduced in the best manner possible.

2231. Factors responsible for Overstocks of Ordinary Stores.—Amongst the factors that tend to increase balances may be mentioned :
(1) An unanticipated falls in consumption which it has been impossible to off-set by smaller purchases, owing to contractual obligations on the basis of annual contracts, and 

(2) Stores returned by consuming departments in larger quantities than anticipated.

2232. These factors should be particularly taken into account in preparing the Annual Contract Estimates (S. 603).

DISPOSAL OF OVER-STOCK AND SURPLUS STOCKS OF STORES

2233. Surplus stock Section.—The Stores Department of every railway should be organized to deal effectively with the disposal of surplus stock either by sale or issue, or transfer to other railways. The section of the office dealing with this work corresponds to the sales organization of a commercial concern. It should be in active touch, not only with the stocks of the different items of surplus stores, but also with markets and market prices (if any such exist) for the articles in question.

2234. Selection of items for Sale.—The 'Grouping Forms' (S. 610) prepared, as explained in paragraphs 611 to 616 for the purpose of estimating the items and quantities for which annual contracts should be let contain particulars of all those items of ordinary stores (Stock items) for which there have been no demands for purchase either during the current contract or the new contract periods or both. As stated in paragraph 623, the Grouping Forms (S. 610) for such items will be sent to the Surplus stock Section for disposal. The average time lag between the date of the preparation of the estimates of the annual requirements of each class of stock and the end of the new contract period being about 18 months, the stocks of such stores for which no demands for purchase have been made for one or more contract periods are really in excess of the requirements of the railway, and the surplus Stock Section should take all steps necessary to reduce such stocks, if possible, by sale to other railways who may be requiring them, during the new contract period. As the estimates for annual purchases for each item of stores will be made, by all railways, on or about the same date, the time would be opportune for the section to collect and offer such items for sale to other railways.

2235. "Over-stocks" Disposal Register.—A register in the form shown below should be maintained for recording the quantities of over-stocks of "ordinary stores" which it has been considered desirable to sell or dispose of during the next 12 months. This register should be posted from the "Grouping Form" (S. 610) for the items of "ordinary stores" concerned.

2236. Register of Non-stock Items.—The Surplus Stock Section should not only try, in this manner, to dispose of the over-stocks of "ordinary stores", but should make use of the same opportunity to dispose of the stock of "movable" and "dead surplus" stores, detailed information about which would be available in the Statement of Non-stock items (S. 609) submitted by the depots from which a register (S. 2236) similar to Form S. 2235 should be posted. The items classified as "movable surplus" will be generally "stock items" for other railways and the best time for offering them for sale is that at which railways make up estimates of their requirements of the class of articles to which the item belongs.

2237. Disposal to Other Railways and Government Departments.—The Surplus Stock Section should scrutinize every public call for tender, stores, bulletins and Home indents issued by other railways, the Directorate General of Supplies and Disposals or any other Government Department or public body, and in addition examine advertisements in papers such as the Indian Trade Journal in order to discover suitable opportunities of effecting the sales of surplus stores and over-stocks. When such occasion arises suitable offer may be made for sale.

2238. Deleted.

2239. The sales will be affected by means of sales orders (S. 2334) duly sanctioned by competent authority. The sanction should be communicated by the sanctioning authority direct to the Accounts Officer, copy being furnished to the Audit Officer also.
2240. Invitation to Tender for purchase of Surplus Stores &c.—The disposal of overstocks and surplus stores may also be made by advertising invitations to submit tenders to the Railway for the purchase of such stores, in the most open manner possible.
The detailed procedure for such a method of disposal is laid down in paragraphs 2320 to 2324.

Multiple choice questions:

Question 1

Which of the following factors contributes to the accumulation of obsolete or unusable material in a railway's stores?

a) Important changes in the design of plant and equipment
b) The introduction of new standards or procedures
c) The scrapping of plant for which there are stocks of spares
d) All of the above

Answer: d) All of the above

Question 2

Before introducing any new standards, what form should the consuming department submit to the Controller of Stores?

a) Form S. 2201
b) Form S. 2202
c) Form S. 2203
d) Form S. 2204

Answer: b) Form S. 2202

Question 3

How many copies of Form S. 2202 should be prepared and sent to the Controller of Stores?

a) One
b) Two
c) Three
d) Four

Answer: c) Three

Question 4

Who is responsible for estimating the probable loss to the railway involved in postponing the introduction of a new standard until existing stocks are exhausted?

a) The Controller of Stores
b) The General Manager
c) The department concerned
d) The Survey Committee

Answer: c) The department concerned

Question 5

If the Controller of Stores is unable to agree with the consuming department about the dates for making proposed changes, to whom should he submit his reasons?

a) The divisional officer
b) The district officer
c) The General Manager
d) The head of the department

Answer: c) The General Manager

Question 6

What should the Stores Department do when budgets involving the replacement of old rolling-stock, plant, or machinery are under preparation?

a) Submit lists of the equipment to be replaced
b) Prepare a statement of the spare parts in stock
c) Ascertain whether the spare parts will become obsolete or can be used on other equipment
d) All of the above

Answer: d) All of the above

Question 7

What form should be prepared in triplicate and sent to the Controller of Stores at the time of actually replacing or scrapping rolling stock, plant, or machinery?

a) Form S. 2201
b) Form S. 2204
c) Form S. 2209
d) Form S. 2213

Answer: c) Form S. 2209

Question 8

Who should fill in the quantity and value of spares or fittings in stock when Form S. 2209 is received?

a) The department concerned
b) The General Manager
c) The Controller of Stores
d) The Survey Committee

Answer: c) The Controller of Stores

Question 9

If materials obtained for a work will not be required due to changes in plant or specifications, who should be notified at once?

a) The General Manager
b) The divisional or district officer
c) The Controller of Stores
d) The Survey Committee

Answer: c) The Controller of Stores

Question 10

What are the classifications for surplus stock on railways?

a) Active surplus and inactive surplus
b) Movable surplus and dead surplus
c) Temporary surplus and permanent surplus
d) Issued surplus and unissued surplus

Answer: b) Movable surplus and dead surplus

Question 11

What is the primary purpose of forming a Survey Committee on each railway?

a) To manage financial statements
b) To inspect the condition of all stores
c) To prepare budgets
d) To sell surplus stores

Answer: b) To inspect the condition of all stores

Question 12

Which of the following is NOT a function of the Survey Committee?

a) Inspect stores that have deteriorated in value
b) Inspect stores broken or damaged in transit
c) Inspect stores that are in high demand
d) Inspect stores received as scrap from the line

Answer: c) Inspect stores that are in high demand

Question 13

What should the Survey Committee determine after inspecting the stores?

a) Which stores should be treated as Dead Surplus or scrap
b) Which stores should be classified and rated as second-hand
c) The rates and values at which stocks should be held in the accounts books
d) All of the above

Answer: d) All of the above

Question 14

Who can reclassify stores in stock and rate them second-hand or scrap up to a limit of Rs. 25,000 per item?

a) General Manager
b) Controller of Stores
c) Depot Officer
d) Survey Committee

Answer: b) Controller of Stores

Question 15

Up to what limit can a Depot Officer reclassify stores in stock and rate them as 'Second hand' or 'scrap' without processing through the Survey Committee?

a) Rs. 1,000 per item
b) Rs. 10,000 per item
c) Rs. 25,000 per item
d) Rs. 50,000 per item

Answer: a) Rs. 1,000 per item

Question 16

Who should recommend the sale of any article in the depot before it is sold by auction?

a) General Manager
b) Survey Committee
c) Controller of Stores
d) Depot Officer

Answer: b) Survey Committee

Question 17

How frequently should the Survey Committees meet?

a) Once a month
b) Once in a quarter
c) Once in a half year
d) Once a year

Answer: c) Once in a half year

Question 18

What should be done with surplus stores not disposed of within twelve months of the recommendation of the Survey Committee?

a) They should be kept in stock
b) They should be reclassified as scrap
c) They should be donated
d) They should be given away

Answer: b) They should be reclassified as scrap

Question 19

What is the maximum stock that may be held of ordinary stores in stock at any time?

a) 25% of the issues during the year
b) 50% of the issues during the year
c) 75% of the issues during the year
d) 100% of the issues during the year

Answer: b) 50% of the issues during the year

Question 20

What is one of the factors responsible for overstocks of ordinary stores?

a) Increased demand for the stores
b) Unanticipated fall in consumption
c) Regular purchases
d) Efficient stock management

Answer: b) Unanticipated fall in consumption

Question 21

What should the Surplus Stock Section be in active touch with?

a) Markets and market prices
b) Local businesses
c) Railway employees
d) Government departments

Answer: a) Markets and market prices

Question 22

How should surplus stock and over-stocks be disposed of to other railways or government departments?

a) By selling in local markets
b) By advertising in newspapers
c) By scrutinizing public calls for tender
d) By direct negotiations with suppliers

Answer: c) By scrutinizing public calls for tender

Question 23

Who should approve the sales orders for surplus stocks?

a) Depot Officer
b) Survey Committee
c) Competent authority
d) General Manager

Answer: c) Competent authority

Question 24

How can the disposal of overstocks and surplus stores be advertised?

a) By issuing press releases
b) By inviting tenders
c) By hosting public auctions
d) By using social media

Answer: b) By inviting tenders

 

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