Page 272 - MANUAL OF SOP

Determination of Non Injurious Price

(c) The total value of actual consumption of raw material and utilities for PUC
during POI and injury period as shown here should reconcile with the total
raw material/ utility consumption in Format-C for PUC;

(d) Purchase rates of related party procurements should be confirmed based
on arm’s length pricing. These rates may be compared with rates of same
products procured from non-related parties. The comments of the Statutory
Auditors and requirements of Indian Accounting Standard-18 should be
seen from the Audited Annual Accounts regarding the arm’s length pricing;
(e) Records of relevant related companies/parties should also be seen to confirm
that the purchase price of items purchased from such related parties during
POI is comparable to the corresponding sale price charged by the said
Related Parties from the non-related customers during the said period. In
the case of utilities, the sale price is generally published and is reflected on
the web site also. The comments of the Statutory Auditors are to be seen
from the Audited Annual Accounts regarding the arm’s length pricing of the
related party transactions, which are furnished by the applicant in Format-J.

(f) If the similar item is purchased from a related party as well as non-related
party, the corresponding rates must be compared to understand the
variations, if any in the rates. Similarly, if the inputs are captively consumed
as well as purchased from non-related parties, the rates must be compared
to arrive at the reasonability of the prices charged for captive consumption.

(g) The per unit rates of captive consumption of inputs, closing stock and
consumption for PUC during the injury period including POI should be
compared for the basis of pricing, and in case wide variations are seen, an
explanation should be sought.

(h) Format-A is also required to be verified from Stores/Material Ledger and
Utility Ledger/Register maintained by the company/unit. Some of the
purchase invoices of various raw materials/utilities are also required to be
collected and compared with the annual weighted average price reflected
in Format A to ensure that the weighted average price does not vary widely
from the purchase price as per sample invoice. If it varies widely, reasons of
such variations may be ascertained.

(i) Sometimes, the procurement rates vary widely from day to day or month
to month. The monthly consumption rate may need to be worked out in

249