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The Lucknow Divisional Office successfully navigated a competitive tender for LDO supply to the 220MW Thermal Power Station at Panki, Kanpur. Facing strong competition from HPC, the office leveraged market intelligence and strong customer relationships to clarify the handling of Entry Tax in cost calculations. This strategic engagement led to an additional Rs. 1000/KL discount, allowing IOC to secure the tender despite previous concerns of losing it. This case highlights the importance of market awareness, relationship management, and the potential for success in challenging situations.
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LUCKNOW DIVISIONAL OFFICE BACKGROUND : • Thermal Power Station (TPS) Panki Kanpur is a 220MW thermal power station at Panki, Kanpur • The monthly LDO requirement of the customer is 300KL • The customer floated tender for 3500KL of LDO in Sept’11, for meeting its LDO requirement for the next 12 months, on delivered basis. • The last tender for 3000KL of LDO in 2010 was won by IOC, wherein a discount of Rs 4100/KL was offered by IOC. HPC was L2 in this tender with its landed cost higher by around 300/KL. • During the last tender, the transportation rate quoted by HPC was lower by Rs 700/KL, as compared to IOC delivered transportation rate. • HO restricted maximum outgo on LDO to Rs 1000/KL wef 01.05.2011
LUCKNOW DIVISIONAL OFFICE BACKGROUND : • Based on the transportation rate quoted by HPC in the last tender, mandate for offer of a discount of Rs 1800/KL on LDO was obtained by us • We quoted in the tender with LDO supplies on inter-state basis @2% CST & Rs 1800/KL discount on LDO. HPC also supplies LDO on inter-state basis from Shakurbasti. • During the same time, a tender for LDO supply by rake was floated by NTPC Tanda, under Allahabad Divisional Office. • The bids for NTPC Tanda were opened one week before the due date for opening of the bids for TPS Panki, Kanpur • We were in touch with Allahabad DO & they informed that apart from a discount of Rs 1000/KL, HPC has absorbed Rs 1000/KL in the rake transportation & hence IOC lost the NTPC tender.
LUCKNOW DIVISIONAL OFFICE PROBLEM : • We now expected to lose the TPS Panki tender, as HPC was expected to absorb Rs 1000/KL in the transportation rate in this tender also. • We had already submitted the tender & it was due to open in the next week. • We started searching for options to WIN the tender.
LUCKNOW DIVISIONAL OFFICE ACTION TAKEN : • Entry Tax @ 5% is charged on LDO, for supplies on inter-state basis • The tender floated by TPS Panki was silent on the Entry tax element & we decided to use the same to IOC benefit. • We met the TPS management & persuaded them to clarify whether the Entry tax portion is part of the landed cost calculations. We requested them to seek clarification on the Entry tax element from the bidders. • Our logic & excellent relations with the customer clicked. • Accordingly, TPS Panki issued a letter to the bidders, seeking to clarify, whether the Entry Tax would be borne by the buyer or supplier. They simultaneously extended the Bid opening date by further one week. • On receipt of this letter, we sought mandate for additional discount of Rs 1000/KL, for partly absorbing the Entry tax & submitted our position on the Entry tax, accordingly.
LUCKNOW DIVISIONAL OFFICE OUTCOME : • When the bids were opened, it was found that HPC was L1, based on quoted LDO rate by Rs 700/KL • However, when the status on Entry tax was included in the Landed cost calculation, IOC stood L1. • TPS Panki placed Supply Order on IOC for supply of 3500KL on LDO on delivered basis.
LUCKNOW DIVISIONAL OFFICE LEARNINGS : • Market Intelligence is very important in winning business. • The motivation should be “ Playing to WIN “ . There may be a possible WIN, even in seemingly LOST situation. • Maintaining excellent Customer relationship is very important. It provides the winning edge.
LUCKNOW DIVISIONAL OFFICE THANKS
