Working Capital Project in Ioc Barauni Refinery

FINANCIAL MANAGEMENT
AT INDIAN OIL CORPORATION LIMITED, BARAUNI
PROJECT REPORT ON-
),1$1&,$/0$1$*(0(17
AT
INDIAN OIL CORPORATION LIMITED, BARAUNI
SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION
SUBMITTED BYDeep Shree (Finance)
SESSION: 2010-2012
CERTIFICATE FROM THE GUIDE
This is to certify that the project work done on FINANCIAL MANAGEMENT AT IOCL, BARAUNI, submitted to Motilal Nehru Institute of Research and Business Administration by Deep Shree in partial fulfilment of the requirement for the award of degree of PG Diploma in Management, is a bonafide work carried out by herunder my supervision and guidance.
Date:
Vikash C. Jaiswal Accou ts office IOCL, Barau i Bihar
DECLARATION
I , DEEP SHREE ,student of MOTILAL NEHRU INSTITUTE OF RESEARCH AND BUSINESS ADMINISTRATION here by solemnly declare that the project titled FINANCIAL MANAGEMENT AT IOCL ,BARAUNI is my original work and all the information, facts and figures in thisreport are based on my own experience and study during my summer training procedures.
Date: Place:
Dee Shree (MONIRBA)
A K
D
rm cann t be adeq ately c nveyed in rts in making
My indebtedness and gratit de t the individ als wh have helped t shape this rep rt in its present j st a ew sentences Yet I m st rec rd my immense gratit de t the brains and hands that w rked vertime t supp rt my e a near c mprehensive rep rt MANAGEMENT AT IOCL BARAUNI . I am highly bliged t Mr Vikash C. Jaiswal r giving me this n a t pic as br ad as FINANCIAL
pp rtunity t w rk n this challenging pr ject and lending me their learning ver the m nths and his c ntinuous guidance in his capacity as my project guide. Iam also grate ul to Mr Himanshu Shekhar (Accounts O icer), IOCL or his extraordinary support and guidance. Next in line I thank all the faculty members of MONIRBA or apprising me of their specific requirements and the nuances of the system and helping me immensely with their phenomenal and participative responses during the interviews I had with them. Last but not the least I am thankful to Almighty God, myParents, mySisters and Brother for their immense support and cooperation throughout.

FA
5
Summer Internship plays a vital role in the development of future managers. Notonly does it provide insights about the organisation concerned, it also bridges thegap between theory and practical knowledge. I was fortunate that I wasprovided with an opportunity of undergoing summer internship at INDIAN OILCORPORATION Ltd., Barauni, one of the leading refineries in India. Theexperience gained during this short period was fascinating to say the least. Itwas a tremendous feeling to observe the working of Finance Department. It was overwhelming for us to notice how such a big refinery isbeing managed with proper co-ordination to obtain desiredresults. During my training I realized that in order to be a successful manager one needs to possess a sound theoretical base alongwith the acumen for effective practical application of the theory. Thus, I hopethat this summer internship will serve as a stepping-stone for me and will help mein being successful in future.
CONTENTS
S. No. 1. 2. 3. TOPIC INTRODUCTION INTRODUCTION OF THE ORGANISATION PROFILE OF BARAUN REFINERY RESEARCH METHODOLOGY AND DATA SOURCE INTRODUCTION TO THE TOPIC DATA ANALYSIS AND INTERPRETATION CONCLUSION BIBLIOGRAPHY PAGE NO. 8 9-31
32-39
4.
40-43
5.
44-56
6. 7. 8.
57-105 106-107 107-108
INTRODUCTION
PROJECTTITLE:Financial Management at Indian Oil Corporation Limited, Barauni DURATION:6 Weeks (from 20/06/2011 to 29/07/2011) ORGANISATION AND PLACE: IndianOil Corporation Limited, Barauni Refinery, Barauni, Bihar ORGANISATIONAL GUIDE:MrVikash C. Jaiswal,AO
INTRODUCTION OF THE ORGANISATION
Milestones
1948: Indian government passed the industrial policy resolution, which states that its oil industry should be state owned and operated 1958: The government forms its own oil refining company, Indi n fin ri s Li it d 1959: IndianOil Company is founded as a statutory body to supply oil products to government enterprises 1964: IndianRefineries andIndianOil Company merge to form the Indi n Oil Corpor tion 1965: Indane' brand LPG launched for the first time in the country at Kolkata 1967: Haldia Barauni product pipeline commissioned Bitumen and marine bunkering businesses commenced Maiden e port of petroleum products, to the Far East. 1975:The world s highest altitude retail outlet commissioned at Leh in Ladakh 1995:Listing of e uity shares on Bombay Stock Exchange 1998:Indian Oil is the largest commercial organization in India, the only Indian company to feature in the Fortune Global 500 list, it is ranked 30th in term of sales and profits among the world's petroleum companies 2000:1999-2000 turnover crossed Rs. l,00,000 crore first corporate in India to do so 2001:IOCL also has the largest marketing network in the country
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2002:The Indian Oil Corporation launched the country's first high-octane petrol and superior quality diesel 'IOC Premium' and 'Superior Diesel' IBP Co. Ltd. acquired with management control. 2005:Mathura Refinery becomes first Indian refinery to produce Euro-III compliant diesel 2008:IndianOil Chairman elected as President of World LP Gas Association. First LPG pipeline commissioned from Panipat to Jalandhar 2011: Indian Oil breaks into Top 100 of Fortune Global listing, ranked 98th
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HISTORIC MOMENTS
30th Jun 1959 The commencement o the gol en journey
1st Septem er 1964 In i n Oil Company Limited renamed as Indian Oil Corporation
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HISTORY
Beginning of Petroleum Refining in India In 1881, Assam Railway & Trading co. began laying of tracks in Assam. They used elephants in place of cranes. One day, one of the elephants wandered away, to come back with its feet smeared by slimy oil. Backtracking led to the discovery of oil in Borbil near present day Digboi.A Canadian driller, Willey Leove hollered at native boys, Dig boy dig . Oil was struck and the name Digboi stuck. Digboi became the birth place of India s oil industry In 1890s, crude oil distillate at Margherita, 16 Km away from Digboi, in cast iron pans, called Stills Digboi Refinery of Assam Oil Company (AOC) commissioned at its present location in 1901 with 500 bbl./day capacity AOC nationalised and its Refining and Marketing functions merged with IOC in October, 1981.Digboi refinery is one of the oldest refineries in the world that is still working. Fig. "Betch-still" used in Margherita Refinery nit
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COMPANY HISTORY
Beginning in 1959 as IndianOil Company Limited, IndianOil Corporation Limited was formed in 1964 with the merger of Indian Refineries Limited (Estd. 1958)
Wartime rationing lasted until 1950, and a shortage of oil products continued until well after independence. The government s 1948 industrial policy resolution declared the oil industry to be an area of the economy that should be reserved for state ownership and control, stipulating that all new units should be government owned unless specifically authorized. In 1959, theIndianOil Company was founded as a statutory body.Indian oil owes its origin to the Indian government s conflict with foreign oil companies in the period immediately following India s independence in 1947. The leaders of the newly independent state found that much of the country s oil industry was effectively in the hands of a private monopoly
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led by a combination of British owned oil companies Burmah and Shell and U.S. At first, itsobjective was to supply oil products to Indian state enterprises. Then it was made responsible for the sale of the products of state refineries. After a 1961 price war with the foreign companies, it emerged as the nation s major marketing body for the export and import of oil and gas. In September 1964, Indian Refineries Limited and the Indian Oil Company were merged to form the Indian Oil Corporation .The government announced that all future refinery partnership would be required to sell their products through Indian Oil. It was widely expected that Indian Oil and India sOil and Natural Gas Commission(ONGC) would eventually be merged into a single state monopoly company. Bothcompanies grew vastly in size and sales volume but despite close links, they remained separate. A policy of state control was reinforced due toIndia s closer economic and political links with the Soviet Union and its isolation from the mainstream of the western multinational capitalism. India and the USSR entered into a number of trade deals.one of the most important of these trade pacts allowed Indian Oil to import oil from the USSR and Romania at price lower than those prevailing in world markets did didand to pay in local currency, rather than dollars or other convertible currencies. By the end of the 1980s, India soil consumption continued to grow at 8% per year, andIndian Oil expanded its capacity to about 150 million barrels of crude per annum.In1989, Indian Oil announced plans to build a new refinery Paradeep and modernize the Digboi refinery, India s oldest. By the early 1990s, IndianOil refined, produced, and transported petroleum products throughout India. Indian Oil produced crude oil, base oil, formula products, lubricants, greases, and other petroleum products.
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It was organized into three divisions. The refineries and the pipelines division had six refineries located at Guwahati,Barauni,Gujarat, Haldia, Mathura and Digboi. Together, thesix represented 45% of the country s refining capacity. The division also laid and managed oil pipelines. The marketing division was responsible for storage and distribution and controlled about 60% of the total oil industry sales .The Assam oil division controlled the marketing and distribution of the formally British - owned company. In early 2002, Indian Oil acquired IBP, a state owned petroleum marketing company. The firm also purchased a 26 per cent stake in financially troubled Haldia Petrochemicals Ltd. InApril of that year,Indian Oil s monopoly over crude imports ended as deregulation of the petroleum industry came into effect .As a result; the company faced increased competition from large international firms as well as new domestic entrants to the market .During the first 45 days of deregulation, Indian Oil lost Rs. 7.25 billion, a signal that the India s largest oil refinery would indeed face challenges as a result of the changes. Nevertheless, Indian Oil management believed that the deregulation would bring lucrative opportunities to the company and would eventually allow it to become one of the top 100 companies on the Fortune 500- and in 2001, the company was ranked 209. Since then Indian Oil has maintained its position in the list with ever improving performance. Indian Oil, India s flagship energy corporate, continued to lead the set of Indian companies in the prestigious Fortune Global 500 listing of the world s largest companies by sales for the year 2011 with an overall ranking of 98.
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COMPANY PROFILE
Indian Oil Corporation Ltd. is India s largest company by sales with a turnover of Rs. 3, 28,744 crore and profit of Rs. 7445.48 crore for the year 2010-11. IndianOil is the highest ranked Indian company in the latest Fortune Global 500 listings, ranked at the 98th position. IndianOil s vision is driven by a group of dynamic leaders who have made it a name to reckon with.
IndianOil is India s flagship national oil company, withbusiness interests straddling the entire hydrocarbonvalue chain and the highest ranked Indian corporate in theprestigious Fortune Global 500 listing. With over a 34,000-strong workforce, IndianOil has been meeting India s energydemands for over five decades. The company s operations arestrategically structured along business verticals - Refineries, Pipelines, Marketing, R&D and Business Development.
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To achieve the next level of growth, IndianOil is currently forgingahead on a well laid-out road map through vertical integration upstream into oil exploration & production (E&P) anddownstream into petrochemicals and diversification intonatural gas marketing and alternative energy, besidesglobalisation of its downstream operations. Having set upsubsidiaries in Sri Lanka, Mauritius and the United Arab Emirates (UAE), IndianOil is simultaneously scouting for newbusiness opportunities in the energy markets of Asia and Africa. IndianOil and its subsidiaries have a dominant share of thepetroleum products market share, national refining capacityand the downstream sector pipelines capacity in India. With asteady aim of maintaining its position as a market leader andproviding best quality products and services, IndianOil iscurrently investing Rs. 47,000 crore in a host of projects foraugmentation of refining and pipelines capacities, expansionof marketing infrastructure and product quality upgradation. The IndianOil Group of companies owns and operates 10 ofIndia s 20 refineries and the largest network of crude oil andprofile product pipelinesin the country,meeting the vitalenergy needs ofthe consumers inan efficient,economical andenvironmentfriendlymanner. It has a portfolio ofpowerful and much-loved energy brands that includes Indane, LPGas, SERVO lubricants, XTRAPREMIUM petrol, XTRAMILEdiesel, etc. IndianOil has a keen customer focus and a formidable networkof customer touch-points dotting the landscape across urbanand rural India, backed for supplies by bulk storage terminalsand depots, aviation fuel stations and LPGas bottling plants.IndianOil s ISO-9002 certified Aviation Service commands adominant market share in aviation fuel business, successfullyservicing the needs of domestic and international
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flag carriers,private airlines and the Indian Defence Services. IndianOil has a sprawling world-class R&D Centre that isperhaps Asia s finest. It conducts pioneering work in lubricantsformulation, refinery processes, pipeline transportation andalternative fuels, and is also the nodal agency of the Indianhydrocarbon sector for ushering in a Hydrogen fuel economyin the country. In Exploration & Production, IndianOil s domestic portfolioincludes nine oil & gas blocks and two Coal Bed Methaneblocks while the overseas portfolio consist of nine blocksspread across Libya, Iran, Gabon, Nigeria, Timor-Leste andYemen. In addition, as part of a consortium, IndianOil has beenawarded Project -1 in the Carabobo heavy oil region ofVenezuela. IndianOil has entered into franchise agreements with severalCity Gas Distribution (CGD) players to market CompressedNatural Gas through its retail outlets. IndianOil has forayedinto alternative energy options such as wind, solar, bio-fuelsand nuclear power. A wind power project is currently operationalin the Kutch district of Gujarat while a solar power initiative isbeing spearheaded on a pilot basis in Orissa, Karnataka andthe Northeast. IndianOil has one of the largest captiveplantations underway for bio-fuel production in Chhattisgarh andMadhya Pradesh. As a leading public sector enterprise of India, IndianOil hassuccessfully combined its corporate social responsibilityagenda with its businessofferings, meeting the energy needsof millions of people every day across the length and breadthof the country, traversing a diversity of cultures, difficult terrainsand harsh climatic conditions. The Corporation takes pride inits continuous investments in innovative technologies andsolutions for a sustainable energy flow and economic growthand in developing techno-economically viable and environmentfriendlyproducts & services for the benefit of its consumers
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GROUP COMPANIE
IndianOil is currently metamorphosing from a pure sectoral company with dominance in downstream in India to a vertically integrated, transnational energy behemoth. The Corporation is already on the way to becoming a major player in petrochemicals by integrating its core refining business with petrochemical activities, besides making large investments in E&P and import/marketing ventures for oil and gas in India and abroad
NAME
BU INE
Chennai Petroleum Corporation Limited IndianOil (Mauritius) Ltd.
Refining of petroleum products
Terminalling, Retailing & Aviation refuelling
Lanka IOC PLC.
Retailing, Terminalling & Bunkering
IOC Middle East FZE
Lube blending & marketing of petroleum products Plantation of Jatropha and extraction of oil for Bio-diesel
IndianOil - CREDA Biofuels Limited
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VI ION AN VALUE
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VALUE
Indianoil nurtures the core values of Care, Initiative, Passion & Trust across the organization in order to deliver value to its stakeholders. C r Stands for Concern Empathy Understanding Co-operation Empowerment Innov tion Stands for Creativity Ability to learn Flexibility Change Passion Stands for Commitment Dedication Pride Inspiration Ownership Zeal & Zest Trust Stands for Delivered promises Reliability Dependability Integrity Truthfulness Transparency
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OBJECTIVE
To serve the national interests in oil and related sectors in accordance and consistent with Government policies. To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil refining, transportation and marketing activities and to provide appropriate assistance to consumers to conserve and use petroleum products efficiently. To enhance the country's self-sufficiency in crude oil refining and build expertise in lying of crude oil and petroleum product pipelines. To further enhance marketing infrastructure and reseller network for providing assured service to customers throughout the country. To create a strong research & development base in refinery processes, product formulations, pipeline transportation and alternative fuels with a view to minimizing/eliminating imports and to have next generation products. To optimise utilisation of refining capacity and maximize distillate yield and gross refining margin. To maximise utilisation of the existing facilities for improving efficiency and increasing productivity. To minimise fuel consumption and hydrocarbon loss in refineries and stock loss in marketing operations to effect energy conservation.
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To earn a reasonable rate of return on investment. To avail of all viable opportunities, both national and global, arising out of the Government of India s policy of liberalisation and reforms. To achieve higher growth through mergers, acquisitions, integration and diversification by harnessing new business opportunities in oil exploration & production, petrochemicals, natural gas and downstream opportunities overseas. To inculcate strong core values among the employees and continuously update skill sets for full exploitation of the new business opportunities. To develop operational synergies with subsidiaries and joint ventures and continuously engage across the hydrocarbon value chain for the benefit of society at large.
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OBLIGATIONS
Towards customers and dealers: - To provide prompt, courteous and efficient service and quality products at competitive prices. Towards suppliers: - To ensure prompt dealings with integrity, impartiality and courtesy and help promote ancillary industries. Towards employees: - To develop their capabilities and facilitate their advancement through appropriate training and career planning. To have fair dealings with recognised representatives of employees in pursuance of healthy industrial relations practices and sound personnel policies. Towards community: - To develop techno-economically viable and environment-friendly products. To maintain the highest standards in respect of safety, environment protection and occupational health at all production units. Towards Defence Services:- To maintain adequate supplies to Defence and other Para-military services during normal as well as emergency situations
FINANCIAL OBJECTIVES
To ensure adequate return on the capital employed and maintain a reasonable annual dividend on equity capital. To ensure maximum economy in expenditure. To manage and operate all facilities in an efficient manner to generate adequate internal resources to meet revenue cost and requirements for project investment, without budgetary support.
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To develop long-term corporate plans to provide for adequate growth of the Corporation s business. To reduce the cost of production of petroleum products by means of systematic cost control measures and thereby sustain market leadership through cost competitiveness. To complete all planned projects within the scheduled time and approved cost
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Indi nOil Major Uni

Regi ered Office
Registered Office
IndianOil Bhavan, G-9, Ali Yavar Jung Marg, Bandra (East), Mumbai -400 051
Corporate Office
Pipelines Division
Head Office Northern Region Western Region A-1 Udyog Marg, Sector-1, Noida-201301(Uttar Pradesh) P.O. Panipat Refinery Panipat -132 140 (Haryana) P.O. Box 1007,Bedipara, Morvi Road,Gauridad, Rajkot-360 003 (Gujarat) 139, Nungambakkam High Road Chennai - 600034 14, Lee Road,
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Southern Region Eastern Region
Kolkata-700020
Refineries Di ision
Head Office SCOPE Complex, Core-2 7, Institutional Area, Lodhi Road New Delhi -110003 P.O. Barauni Refinery, Dist. Begusarai -861 114 (Bihar) P.O. Jawahar Nagar, Dist. Vadodara -391 320(Gujarat) P.O. Noonmati, Guwahati-781020 (Assam) P.O. Haldia Refinery Dist. Midnapur-721 606 (West Bengal) P.O. Mathura Refinery, Mathura -281 005 (Uttar Pradesh) P.O. Panipat Refinery, Panipat-132140(Haryana) P.O. Dhaligaon, Dist. Chirang, Assam - 783 385
Barauni Refinery
Gujarat Refinery
Guwahati Refinery
Haldia Refinery
Mathura Refinery
Panipat Refinery
Bongaigaon Refinery
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Marketing Di ision
Head Office IndianOil Bhavan, G-9, Ali Yavar Jung Marg, Bandra (East), Mumbai -400 051 IndianOil Bhavan, 1, Aurobindo Marg, Yusuf Sarai New Delhi -110016 IndianOil Bhavan, 2, Gariahat Road, South (Dhakuria) Kolkata -700 068 254-C, Dr. Annie Besant Road, Worli Colony, Mumbai -400 030 IndianOil Bhavan 139, Nungambakkam High Road Chennai -600034
Northern Region
Eastern Region
Western Region
Southern Region
R&D Centre
R&D Centre Sector 13 Faridabad -121 007 (Haryana)
Assam Oil Di ision

Assam Oil Division P.O. Digboi -768 171 (Assam)
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IBP Di ision
IBP Division 34-A, Nirmal Chandra Street, Kolkata - 700 013
Group Companies
Chennai Petroleum Corporation Ltd. 536, Anna Salai, Teynampet, Chennai - 600 018 IndianOil (Mauritius) Ltd. Mer Rouge Port Louis Mauritius Lanka IOC Head Office Level 20, West Tower, World Trade Centre, Echelon Square, Colombo - 01, Sri Lanka. LOB- 12 114, Jebel Ali Free Zone, P.O.Box: 261338
Lanka IOC PLC
IOC Middle East FZE
IndianOil - CREDA Biofuels Limited
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MAJOR PRODUCTS
Indian Oil Corporation Limited is responsible for manufacturing many products,some major products are as follows
1. 2.
Indane Gas Auto Gas Natural Gas Petrol/Gasoline Diesel/Gas oil ATF/Jet Fuel SERVO lubricants & greases Marine Fuels & Lubricants Kerosene Bulk/Industrial Fuels Bitumen Petrochemicals Special Products such as carbon black feedstock sulphur,etc. Crude Oil
3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
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PROFIL OF BARAU I REFI ERY
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IOCL BARAUNI REFINERY THE JE EL OF BIHAR

FOUN ATION The sixth Refinery and the second state owned oil refinery,Barauni Refinery was establiushed in the midway of its feeding zone,Assam and its catering zone- North and North Central India.this second jewel of indian oil corporation limited was born in 1964,on the nortern banks of holy ganga,at barauni.on the periphery of the district town Begusarai,Bihar.the country had just come out from a traumatic war with its mercurial neighbour and against that backdrop was the birth of this strategically located refinery at barauni located at the crossroads of two very important national highways-NH-30 and NH -31- connecting the east end of our country to its west end. Built in collaboration with limited participation from romania, at a cost of Rs. 49.4 crores,this vision of the first chief minister of Bihar,Dr. Shri Krishna Singh , Barauni Refinery went on stream in july 1964. Prof. Humayun Kabir the then union minister for petroleum and chemicals, government of india dedicated Baraunu Refinery to the Nation on January 15, 1965. MAJOR FEATURES. Starting from a humble crude processing capacity of 1 Million Metric Tonne per annum of sweet crude from Assam oil fields , it has steadily added and expanded its capacity to the current 6 MMTPA capacity with caapbility of processing partial sour crude also.the 3.3 MMTPA capacities since 1969 were augmented to 4.2 MMTPA capacity in 2000 and then subsequently to 6 MMTPA capacities in 2002. To enhance productivity and thereby profitability in the competitive scenario , a Resid Fluidised
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Catalytic Cracking Unit was commissioned in the year 2002 to upgrade the heavy ends from Distillation unit.The expansion project , fondly referred as the BXP , consists of primarily Residue Fluidised Catalytic Cracker Unit (RFCCU), Diesel Hydro Treating Unit (DHDT),Sulphur Recovery Unit (SRU) ,Amine Regeneration Unit (ARU), Sour Water Stripper Unit (SWSU) and Hydrogen Generation Unit apart from associated utilities and offsite facilities to take care of additional storage of feed and generation and distribution of utilities. The main objective of this unit is to produce market oriented pattern of environment friendly high value products like LPG ,diesel and motor spirit. Moving through the years , Barauni Refinery has made concerted efforts to add to the country s coffers in terms of products and earn valuable foreign exchange.this is while ensuring safety of plant and person and in keeping with the commitment to environmental and energy conservation. In its continuous endeavour to supply eco-friendly fuel, barauni refinery is implementing the MS Quality Upgradation Project at an estimated cost of Rs. 1492 crore. MAJOR PRODUCTS THE VARIOUS PRODUCTS PRODUCED BY BARAUNI REFINERY ARE: LPG LOW SULPHUR HEAVY STOCK NAPHTHA SUPERIOR KEROSENE OIL CARBON BLACK FEED STOCK MOTOR SPIRIT HIGH SPEED DIESEL RAW PETROLEUM COKE MOTOR SPIRIT LIGHT DIESEL OIL BITUMEN (PREMIUM GRADE)
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ATF
MAJOR CUSTOMERS

NEPAL OIL COMPANY IFFCO PHULPUR CCIL GHAZIABAD BARAUNI THERMAL POWER STATION NALCO BALCO HINDALCO INDIAN RAILWAYS
Major objecti es and goals

Financial mission
to provide high quality financial satff support for decision making and control to all levels of management: corporate,divisional ,unit and location to enable the achievement of overall corporate objectives and goals. to play alead role in scanning the domestic and international financial environment , the formulation and implementation of all financial policies and plans for different time spans consistent with and conducive to the business plans for expansion, diversification,productivity,etc.
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FINANCE DEPARTMENT ORGANOGRAM

2011-2012
S. C. B ANSALI CFM
A.BASU (SFM)
A.K. LAL (SFM)
B. SETHI (FM)
R.AGARWAL (SACO)
A.SONI( FM)
R.P.SINGH(DF M)
S. KUMAR(DFM)
L.P.SHARMA(SA CO)
M.KUMAR(SAC O)
G.SHARMA(S ACO)
V.D JHA (SACO)
V.C.JAISWAL(AC O) S.LACHHIRAMK A (ACO)
R.K.SINGH(SAC O)
A.K.SINHA(SA CO)
R.N.PRASAD(SA CO)
A.KUMAR(SACO )
U.K.PRASAD( ACO)
A.K.RAKSHIT(A CO)
SANTOSH KUMAR(SACO)
U.S.SARAWAT (ACO)
H.SEKHAR(ACO )
SUMIT AGARWAL(ACO 36
A ARDS AND ACCREDITIONS

1999-2000
NPMP Award for excellence in Project management for CRU Runner s Up trophy of Golden Peacock Environment Management Award Accredition for OHSMS (Occupational Health and Safety Management System ) under BS-8800 by DNV National Safety Award from British Safety Council,UK ,1999 for demonstrating the commitment to best practice in workplace Health and Safety
2000-2001
Audit of the Safety System of the Refinery by British Safety Council -awarded 4 Star Rating Joint winner of ShriAV OGALE SHIELD ,1999-2000 for the lowest fire incident in refinery Awarded ShreeANIL RAJ TROPHY ,1999-2000 for energy conservation The INDO German GreenTech Environmental Excellence Award 1999-2000 Won the National Safety Award 1999 from the British Safety Council UK
2001-2002
Received INDO German Greentech Environmental Excellence Award, 2000-2001
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Received Jawaharlal Nehru Memorial National Award for environmental excellence from International Green Land Society, Hyderabad Won the National Safety Award for the second consecutive year,from British Safety Council,UK,2000 Received OISD Award, 1999-2000 for Best Safety Performance
2002-2003
Sword of Honour 2002 conferred by the British Safety Council ,UK Won the Occupational Health And Safety Award for 2002 from RSPA (Royal Society For Prevention Of Accident), UK-becoming the only Indian company in the oil sector to achieve this recognition Received Jawahar Lal Nehru Memorial National Award , 1999-2000 for achieving the best improvement in Energy Conservation Quality control laboratory received NABL accredition certificate effective august 1,2002 as per standard ISO/IEC 17025 1999
2003-2004
Recertified ISO -9001-2000 and ISO -14001 certifications Won Greentech Safety Award from Greentech Foundation
2004-2005
Receved TERI Corporate Environmental Award adjudged the winner of Shri AV OGALE Trophy for safety in operations Won OSID Award ,2002-2003 for refineries in Group 1
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Won Greentech Safety Award ,2002-2003 for best performance in safety Won INDOGerman Greentech Environmental Excellence Award for the year 2003-2004
2005-2006
First prize winner in Safety (Refinery Category ) by OISD for the year 2003-2004 and 2004-2005
2006-2007
Accorded the Highest Security Index in the division for 20052006 by Corporate Security
2008-2009
First prize for the year 2007-08for best safety performance in Group-1 refineries by OISd Declared joint winner of Shri AV Ogale Shield , 2008 for zero fire and no fatality in 2007 2008 TPM Excellence Award in category A (under 8 pillars categorythe most stringent category)
2009-2010
Barauni Refinery added another feather to its cap by winning the "Best Kaizen Award" at the 15th TPM National Conference held in Pune. The conference was organised by the Confederation of Indian Industry (CII), TPM Club of India and JIPM-Solutions Company Limited,.
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RESEARCH METHODO OGY AND DATA SOURCE
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RESEARCH METHODOLOGY
AN INTRODUCTION
Research is a systematic activity to achiev the truth .Research includes the procedure of collecting data, analysing the data and finding the conclusion or truth.Research in common parlance refers to a search for knowledge. One can also define research asa scientific and systematic search for pertinent information on a specific topic. In fact, research is anart of scientific investigation. The Advanced Learner s Dictionary of Current English lays down themeaning of research as a careful investigation or inquiry specially through search for new facts inany branch of knowledge. It is actually a voyage of discovery. We all possess the vital instinct of inquisitivenessfor, when the unknown confronts us, we wonder and our inquisitiveness makes us probe and attainfull and fuller understanding of the unknown. This inquisitiveness is the mother of all knowledge andthe method, which man employs for obtaining the knowledge of whatever the unknown, can betermed as research.
Research is a systematic inquiry Research is an investigation into a subject or specific field of knowledge Research is undertaken to establishfacts or principles Research is an original contribution to the existing stock of knowledge, thus furthering its advancement
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TYPE OF RESEARCH
The type of research used while carrying out this research process is analytical research and empirical research.In analytical research,the researcher has to use facts or information already available, and analyze these to make a critical evaluation of the material or process.Empirical research relies on experience orobservation alone, often without due regard for system and theory. It is data-based research,coming up with conclusions which are capable of being verified by observation or experiment.
RESEARCH APPROACH
There are two basic approaches to research, viz., quantitative approachand the qualitative approach. The formerinvolves the generation of data in quantitative form, which can be subjected to rigorous quantitative analysis in a formal and rigid fashion. Qualitative approach to research is concerned with subjective assessment of attitudes, opinions and behaviour. Research in such a situation is a function of researcher s insights and impressions. Such an approach to research generates results either in non-quantitative form or in the form, which are not subjected to rigorous quantitative analysis. Quantitative approach to research is used in this case to generate data in quantitative form.
DATA SOURCE
The data source refes to the sources from which the data are collected for conducting the study.Data may be of two types1. Primary Data 2. Secondary Data
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PRIMARY DATA The data which are collected from the field under the control and supervision of an investigator is known as Primary Data.This type of data are generally afresh and collected for the first time.In this case primary data was mainly collected through 1. unstru tur d p sonal int rvi s which involved personal discussions without any premoulded question set 2. cont nt anal sis using documentary materials such as news paper,statistical reports,etc. SECONDARY DATA Secondary data are collected from the sources which have been already collected for purpose other than the problem at hand.Secondary data were collected from 1. Company files and reports, 2. Annual reports and brochures of the company, 3. Business journals and magazines, 4. Records of the company, 5. Internet websites, 6. Books on Financial Management
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INTRODUCTION TO THE TOPIC
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Finance is the study of money management, the acquisition of funds (cash) and the directing of these funds to meet particular objectives. Good financial management helps businesses to maximize returns while simultaneously minimizing risks
MEANING OF FINANCIAL MANAGEMENT

Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.
SCOPE/ELEMENTS
1. Inv st nt d cisions- Includes investment in fixed assets (called as capital budgeting).Investment in current assets are also a part of investment decisions called as working capital decisions. 2. Financial d cisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby. 3. Divid nd d cision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two: a. Dividend for shareholders b. Retained profits
Objecti es of Financial Management

The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be45
1. To ensure regular and adequate supply of funds to the concern 2. To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders 3. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost 4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved 5. To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital
Functions of Financial Management

1. 2. 3. 4. 5. 6. 7. Estimation of capital requirements Determination of capital composition Choice of sources of funds Investment of funds Disposal of surplus Management of cash Financial controls
Financial Management: Le els

Broadly speaking, the process of financial management takes place at two levels. At the individual l v l, financial management involves tailoring expenses according to the financial resources of an individual. Individuals with surplus cash or access to funding invest their money to
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make up for the impact of taxation and inflation. Else, they spend it on discretionary items. They need to be able to take the financial decisions
that are intended to benefit them in the long run and help them achieve their financial goals. From an or anizational point of vi , the process of financial management is associated with financial planning and financial control. Financial planning seeks to quantify various financial resources available and plan the size and timing of expenditures. Financial control refers to monitoring cash flow. Inflow is the amount of money coming into a particular company, while outflow is a record of the expenditure being made by the company. Managing this movement of funds in relation to the budget is essential for a business. At the corporat l v l, the main aim of the process of managing finances is to achieve the various goals a company sets at a given point of time. Businesses also seek to generate substantial amounts of profits, following a particular set of financial processes.
FINANCIAL DECISION MAKING

Financial management basically involves decision making in two major areas: Investment decisions or capital budgeting decisions Working capital decisions 1.INVESTMENT DECISIONS The following are the features of investment decision: The exchange of current funds for the future benefits. The funds are invested in long term assets. The future benefits will occur to the firm over a series of years Management must allocate limited resources between competing opportunities(projects) in a process known as capital budgeting.Making
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this investment, or capital allocation, decisionrequires estimating the value of each opportunity or project, which is a function of the size, timing and predictability of future cash flows. Importance of investment decision: They influence firms growth in long run. They effect the risk of the firm. They involve commitment of large amountof funds. They are among the most difficultdecisions to make. Types of investment:
Expansion of existing business. Expansion of new business. Replacement and modernization

CAPITAL BUDGETING TOOLS Payback Period Accounting Rate of Return Net Present Value Internal Rate of Return Profitability Index
Payback Period
Payback period is the time duration required to recoup the investment committed to a project. Business enterprises following payback period use "stipulated payback period", which acts as a standard for screening the project. Computation of Payback Period

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Acceptance Rule A project would be accepted if its payback period is less than the maximum payback period set by the management.
Accounting Rate Of Return

Accounting rate of return is the ratio of the average after tax profit divided by the average investment. Computation Of Accountin Rate Of Return

Where,

Acceptance Rule The projects whose rates of return are higher than the cut-off rate set by the management are accepted
Net Present Value (Np )

Net present value of an investment/project is the difference between present value of cash inflows and cash outflows. The present values of cash flows are obtained at a discount rate equivalent to the cost of capital.
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Computation Of Net Present Value (Npv)
Where, , , represent net cash inflows in year 1,2, .,k is the opportunity cost of capital, is initial cost of investment and n is the expected life of investment. Acceptance Rules Projects whose NPV is positive are accepted and projects whose NPV is equivalent to zero may be accepted.
Internal Rate Of Return (Irr)

The internal rate of return method is also known as the yield method. The IRRof a project/investment is defined as the rate of discount at which the present value of cash inflows and present value of cash outflows are equal. IRR can be restated as the rate of discount at which the present value of cash flow (inflows and outflows) associated with a project equals zero. Computation Of Internal Rate Of Return (Irr) IRR can be determined by solving this equation for r
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AcceptanceRules A project is accepted if its IRR is higher than the opportunity cost of capital.
Profitability Index (
Profitability index (PI) is the ratio of present value of cash inflows to the initial cash outflow. The present values of cash flows are obtained at a discount rate equivalent tothe cost of capital. Computation of Profitability Index ( )
Acceptance Rule Select all projects whose profitability index is greater than or equivalent to one.
SENSITIVITY ANALYSIS
Sensitivity analysis is a technique for investigating the impact of changes in project variables on the base-case (most probable outcome scenario). Typically, onlyadverse changes are considered in sensitivity analysis.
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The purpose of sensitivity analysis is: (i) to help identify the key variables which influence the project cost and benefit streams. (ii) to investigate the consequences of likely adverse changes in these key variables; (iii) to assess whether project decisions are likely to be affected by such changes; and, (iv) to identify actions that could mitigate possible adverse effects on the project.
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ORKING CAPITAL MANAGEMENT

Business also needs funds for short-term purposes to finance current operations. Investment in short term assets like cash, inventories, debtors etc., is called Short-term Funds or Working Capital . The Working Capital can be categorised, as funds needed for carrying out day-to-day operations of the business smoothly. The business will not be able to carry on day-to-day activities without the availability of adequate working capital. While managing the working capital, two characteristics of current assetsshould be kept in mind viz. (i) short life span, and (ii) swift transformation into other form of current asset. These characteristics have certain implications: i. Decision regarding management of the working capital has to be taken frequently and on a repeat basis. ii. The various components of the working capital are closely related and mismanagement of any one component adversely affects theother components too. The working capital needs of a business are influenced by numerous factors. The important ones are discussed in brief as given below: i. Nature of Enterprise ii. Manufacturing/Production Policy iii. Operations iv. Market Condition v. Availability of Raw Material vi. Growth and Expansion vii. Price Level Changes viii. Manufacturing Cycle CONSEQUENCES OF UNDER ASSESSMENT OFWORKING CAPITAL Growth may be stunted. It may become difficult for the enterpriseto undertake profitable projects due to non-availability of working capital.
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Implementation of operating plans may become difficult and consequentlythe profit goals may not be achieved. Cash crisis may emerge due to paucity of working funds. Optimum capacity utilisation of fixed assets may not be achieved dueto non-availability of the working capital. The business may fail to honour its commitment in time, therebyadversely affecting its credibility. This situation may lead to businessclosure. The business may be compelled to buy raw materials on credit and sellfinished goods on cash. In the process it may end up with increasingcost of purchases and reducing selling prices by offering discounts. Both these situations would affect profitability adversely. Non-availability of stocks due to non-availability of funds may resultin production stoppage.
While underassessment of working capital has disastrous implications on business, over assessment of working capital also has its own dangers. CONSEQUENCES OF OVER ASSESSMENT OF ORKING CAPITAL Excess of working capital may result in unnecessary accumulation ofinventories. It may lead to offer too liberal credit terms to buyers and very poorrecovery system and cash management. It may make management complacent leading to its inefficiency. Over-investment in working capital makes capital less productive andmay reduce return on investment. Working capital is very essential for success of a business and, therefore, needs efficient management and control. Each of the components of the working capital needs proper management to optimise profit.
In entory Management
Inventory includes all types of stocks. For effective working capital management, inventory needs to be managed effectively. The level of inventory should be such that the total cost of ordering and holding
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inventory is the least. Simultaneously, stock out costs should also be minimised. Business, therefore,should fix the minimum safety stock level, re-order level and ordering quantity so that the inventory cost is reduced and its management becomes efficient.
Recei ables Management

Given a choice, every business would prefer selling its produce on cash basis. However, due to factors like trade policies, prevailing marketing conditions, etc., businesses are compelled to sell their goods on credit. In certain circumstances, a business may deliberately extend credit as a strategy of increasing sales. Extending credit means creating a current asset in the form of Debtors or Accounts Receivable . Investment in this type of current assets needs proper and effective management as it gives rise to costs such as: i. Cost of carrying receivable (payment of interest etc.) ii. Cost of bad debt losses Thus the objective of any management policy pertaining to accounts receivables would be to ensure that the benefits arising due to the receivables aremore than the cost incurred for receivables and the gap between benefit and cost increases resulting in increased profits. An effective control of receivables helps a great deal in properly managing it. Each business should, therefore, try to find out average credit extended to its client using the below given formula:

Each business should project expected sales and expected investment inreceivables based on various factors, which influence the working capitalrequirement. From this it would be possible to find out the average credit daysusing the above given formula. A business should continuously try to monitorthe credit days and see that the average
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credit offered to clients is notcrossing the budgeted period. Otherwise, the requirement of investment in theworking capital would increase and, as a result, activities may get squeezed. This may lead to cash crisis.
Cash Management
Cash is the most liquid current asset. It is of vital importance to the daily operationsof business. While the proportion of assets held in the form of cash isvery small, its efficient management is crucial to the solvency of the business. Therefore, planning cash and controlling its use are very important tasks.
Components of working capital are calculated as follows:

1)Raw Materials Storage Period=Average stock of materials/Average cost of raw material consumption per day. raw
2.) W-I-P Holding period=Average w-i-p in inventory/Average cost of production per day. 3.) Stores and spares conversion period= Average stock of Stores and spares/Average consumption per day. 4.) Finished goods conversion period= Average stock of finished goods/Average cost of goods sold per day. 5.) Debtors collection period=Average book debts/Average credit sales per day. 6.) Credit period availed=Average trade creditors/Average credit purchase per day.
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DATA ANA YSIS AND INTERPRETATION
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CAPITAL BUDGETING AND ANALYSIS AT IOCL BARAUNI
SENSITIVITY
To meet future needs, IndianOil is buildingadequate refining capacity through capacityexpansions of existing refineries .Various technologies are being implemented to meet the demandfor middle distillates and improve the quality ofIndia s petroleum products. As a part of the continued efforts towards energy conservation, a number of Energy Conversation projects have been implemented during 2009-10 in Refineries, resulting in savings of around 82,000 SRFT in 2009-10 Flare gas recovery system at Barauni Refinery is also one of them. As a part of modernisation of Oil Movement & Storage (OM&S) facilities, Automation of Tank Wagon loadingand Blending Automation at Barauni refinery has been implemented. Thus, various projects have been implemented and are being implemented at Barauni refinery. For evaluation of these projects and calculation of cash inflows and outflows during the lifetime of project under various circumstances, capital budgeting techniques and sensitivity analysis is used.Capitalbudgeting is more or less a continuous process and it is carried out by different functional areas of management such a production, marketing, engineering, financial management etc. All the relevant functional departments play a crucial role in the capital budgeting decision process. Capital Budgeting Process followed at IOCL, Barauni Refinery:1. Identification of investment proposal. 2. Screening the proposal. 3. Evaluation of various proposals. 4. Fixing priorities. 5. Final approval & preparation of capital expenditurebudget. 6. Implementing proposal. 7. Performance review.
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Identification of investment proposal:The capital budgeting process begins with the identification ofinvestment proposal. The proposal or idea about potential investmentopportunities may originate from the top of management or may come from the rank and file workers of any department or from any officers of theorganization. The departmental head analyses the various proposals in thelight of the corporate strategies and submits the suitable proposals to thecapital expenditures planning committee. Screening the proposal:The expenditures planning committee screens the various proposals receivedfrom different departments. The committee view these proposals from variousangles to ensure that these are in accordance with the corporate strategies and do not lead to the departmentimbalances. Evaluation of various proposals:The next step in the capital budgeting process is to evaluate the profitability ofvarious proposals. Methods, which used for this purposeat IOCL, are payback period method, internal rate of return method and net present valuemethod. Fixing priorities:After evaluating various proposals, the unprofitable proposals may be rejectedstraight away. Various proposals are ranked and priorities are assigned afterconsidering urgency, risk and profitability involved there in. Final approval & preparation of capital expenditure budget:Proposals meeting the evaluation and other criteria are finally approved after sensitivity analysis to beincluded in the capital expenditure budget. The capital expenditures budget lays down the amount of the
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estimationexpenditures to be incurred on fixed assets during the budget period.
Implementing proposals:Translating an investment proposal into a concrete project is a complex,time consuming, and risk- fraught task. Specific responsibility to project managers for completing the project within the defined period and cost limits is assigned. Performance Review:Performance review, or post completion audit, is done for comparing actual performance with projected performance. It throws light on how realistic were the assumptions underlying theproject. Types of investment decisions:1. Expansion of existing business. 2. Expansion of new business.
3. Replacement and modernization. Sensitivity analysis

Sensitivity analysis is a technique for investigating the impact of changesin project variables on the base-case (most probable outcome scenario). Sensitivity analysis needs to be carried out in a systematic manner. Tomeet the above purposes, the following steps are suggested: (i) key variables to which the project decision may be sensitive are identified (ii) the effect of likely changes in these variables on the base-case IRRor NPV, and calculate a sensitivity indicator and/or switching value is calculated
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(iii) possible combinations of variables that may change simultaneouslyin an adverse direction are considered
(iv) analyze the direction and scale of likely changes for the key variables identified, involving identification of the sources of change are identified This can be better understood by the example on the next page
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WORKING CAPITAL MANAGEMENT IOCL BARAUNI REFINERY
AT
Barauni Refinery Unit (IOCL) follows a restrictive policy. It maintains minimum level of current assets. But this unit does not maintain the working capital fund separately; it shows this account in their annual budget. Barauni Refinery Unit does not deal directly. But in spite of this, Refinery Unit maintains the working capital at some extent to meet out the following requirements:
To maintain inventories (Raw materials, work-in-process, finished goods, chemical, stores and spares) To pay wages and salary To incur day-to-day expenses and overheads cost such as fuel, power and office expenses.
Note: To provide credit facilities to the customers is not applicable to Barauni Refinery. It is because the finished pr oducts are directly sent to the Marketing Division. Yet creditors may arise due to the lengthy process of book payment system.
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PARTICULARS
AMOUNT(Rs.) 2010-2011
AMOUNT(Rs.) 2009-2010
CURRENT ASSETS Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Total Current Assets 14,544,054,710 0 3,091 2,840,179 1,245,796,841 15,792,694,821 12,280,694,768 0 640 5,101,115 1,206,606,047 13,492,402,570
CURRENT LIABILITIES Sundry Creditors: Security Deposits Other Liabilities Total Current Liabilities 2345605699 158556580 987246089 3,491,408,368 2006366562 221059660 906634169 3134060391
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PARTICULARS
AMOUNT(Rs.) 2008-2009
AMOUNT(Rs.) 2007-2008
CURRENT ASSETS INVENTORIES BOOK DEBTS CASH & BANK BALANCE 9,60,90,41,410 2,03,852 14,84,51,62,456 3,45,909
LOANS AND ADVANCES Total Current Assets
1,08,18,14,151 10,69,10,59,413
75,72,05,502 15,60,27,13,867
CURRENT LIABILITIES: Sundry Creditors Security Deposit 8,792,412,906 177,492,379 6,319,690,270 99,144,371
Total Current Liabilities
8,969,905,285
6,418,834,641
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Calculation of Working Capital

Net Working Capital = Total Current Assets Total Current Liability
For the year 2010-11 Net Working Capital=15,792,694,821 - 3,491,408,368 =12301286453 For the year 2009-10 Net Working Capital =13,492,402,570 - 3134060391 =10358542179 For the year 2008-09 Net Working Capital =10,69,10,59,413 - 8,969,905,285 =1721154128 For the year 2007-08 Net Working Capital =15,60,27,13,867 - 6,418,834,641 =9183879226
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in the context of Barauni Refinery Unit (IOCL), the working capital requirement is mainly determined by factors like nature of the business, manufacturing process, sales volume and turnover, production policy and operating efficiency. Credit policy, seasonal fluctuation and are not applicable in Barauni Refinery. This is a manufacturing concern and its working depends on the manufacturing cycle and the time tag between production and sale. The sales volume and turnover also has an impact on the holding period of raw materials, work-in-progress and finished goods and ultimately affects the working capital requirement for the concerned department. The cyclical and seasonal fluctuations as do not affect the business as the final product are utilized throughout the year.
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Indian Oil Corporation Ltd. (Refinery Division) Barauni Refinery Cost Sheet Particular Amount (Rs) 2008-09
Opening stock of Raw material + Purchases + Pipe line freight Less: Closing stock of Raw material Raw material consumed Add: Manufacturing Expenses: Chemicals, Stores and spares Power and Fuels Repairs and Maintenance Freight and Transportation charge Other manufacturing expenses: (Salary and wages to employees, overtime, etc) Add: Opening stock of work -in-process Less: Closing stock of work-in-process Wor s Cost: Add: Office and Administrative expenses Cost of Production: Add: opening stock of finished goods
Amount (Rs) 2009-10

1,052,398,617 156,580,858,532 5,642,945,764 163,276,202,913 3,244,599,731 160,031,603,182 1,147,217,840 49,902,519 912,475,932 540,696,053 1,486,366,329 164,168,261,855 2,115,521,609 166,283,783,464 3,081,839,768 163,201,943,696 345,294,023 163,547,237,719 4,363,813,291 167,911,051,010 4,252,292,110 163,658,758,900 189,512,622 163,848,271,522
7,264,607,814 184,882,113,070 3,549,326,897 195,696,047,781 1,088,830,365 194,607,217,416 643,947,098 50,467,626 671,090,249 816,995,132 1,886,908,800 198,676,626,321 1,971,777,039 200,648,403,360 2,115,521,609 198,532,881,751 3,775,958,673 202,308,840,424 4,094,970,406 206,403,810,830 4,363,813,291 202,039,997,539 88,350,568
Less: closing stock of finished goods Cost of Goods Sold: Add: profit Transfer to Mar eting Division:
202,128,348,107
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Indian Oil Corporation Ltd. (Refinery Division) Barauni Refinery Cost Sheet Particular Amount (Rs) 2007-08 Opening stock of Raw material + Purchases + Pipe line freight Less: Closing stock of Raw material Raw material consumed Add: Manufacturing Expenses: Chemicals Stores and spares Power and Fuels Repairs and Maintenance Freight and Transportation charge Other manufacturing expenses: (Salary and wages to employees, overtime, etc) 7,866,033,711 143,272,803,666 1,031,874,186 152,170,711,563 7,264,607,814 144,906,103,749 759,020,855 46,480,030 49,576,516 955,066,394 634,409,180
Amount (Rs) 2006-07 7,421,419,792 132,976,533,414 1,012,811,000 141,410,764,206 7,866,033,711 133,544,730,495 639,199,259 45,149,240 38,008,324 882,564,438 856,638,760
1,115,911,307 148,466,568,031 1,766,187,119 150,232,755,150 1,971,777,039 148,260,978,111 789,691,553 149,050,669,664 4,167,577,708 153,218,247,372 4,094,970,406 149,123,276,966 7,448,693,896 156,571,970,862
1,028,129,248 137,034,419,764 2,126,733,280 139,161,153,044 1,766,187,119 137,394,965,925 795,284,058 138,190,249,983 3,140,400,210 141,330,650,193 4,167,577,708 137,163,072,485 773,326,289 137,936,398,774
Add: Opening stock of work -in-process Less: Closing stock of work-in-process Wor s Cost: Add Office and Administrative expenses: Cost of Production: Add opening .stock of finished goods:
Less closing stock of finished goods Cost of Goods Sold: Add: profit Transfer to Mar eting Division:
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For the year 2009-10
Raw Materials Conversion period: Average stock of R.M = Opening stock of R.M + Closing stock of R.M 2 = 1,052,398,617 + 3,244,599,731 2 Rs 2,148,499,174 Raw Materialconsumed Average Stock of R.M 160,031,603,182 2,148,499,174 74 times = Average stock of R.M x 365 R.M Consumed
= Raw Material Turnover =
= R.M Holding Period
2,148,499,174 x 365 160,031,603,182 5 days R.M Consumed x R.M Holding Period 365 160,031,603,182 x 5 365
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= R.M Inventories =
Rs 2,192,213,742
Wor -in-process Conversion period: Average stock of W.I.P = Op. stock of W.I.P + Cl. stock of W.I.P 2 2,115,521,609 + 3,081,839,768 2 Rs 2,598,680,689
= W.I.P Turnover
= Cost of Production Average stock of W.I.P = 163,547,237,719 2,598,680,689 = 63 times
W.I.P Holding Period
= Average stock of W.I.P x 365 Cost of Production = 2,598,680,689x 365 163,547,237,719 = 6 days
W.I.P Inventories
= Cost of Production x W.I.P Holding Period 365
Cost of Production x W.I.P Holding Perio

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163,547,237,719 x 5 365 = Rs 2,240,373,119
Finished Good Conversion period: Average stock of F.G = Op. stock of F.G + Cl. Stock of F.G 2 4,363,813,291 + 4,252,292,110 2 Rs 4,308,052,701 Cost of goods sold Average stock of F.G
= F.G Turnover =
= 163,658,758,900 4,308,052,701 = F.G Holding Period = 38 times Average stock of F.G x 365 Cost of goods sold 4,308,052,701 x 365 163,658,758,900
10 days
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F.G Inventories
Cost of good sold x F.G Holding Period 365
163,658,758,900 x 8 365 = Rs 3,587,041,291
Operating Cycle Diagram for the year 2009-10
Rs 2,192,213,742 For 5 days Raw Material (Crude Oil)
Cash
Transferred to Mktg. Division
Rs 2,240,373,119 For 6 days
Finished Goods (Petrol, Diesel, etc) Rs 3,587,041,291 For 10 days
Work-in-process (Naphtha, etc)
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Holding Period and Wor ing Capital Required for 2009-10 Stock Raw Material Work-In-Process Holding Period 5 days 6 days W.C. Requirement Rs 2,192,213,742 Rs 2,240,373,119 Rs 3,587,041,291 Rs 8,019,628,152
Finished Goods 10 days Total W.C. Requirement
For the year 2008-09 Raw Materials Conversion period: Average stock of R.M = Opening stock of R.M + Closing stock of R.M 2 = 7,264,607,814 + 1,088,830,365 2 Rs 4,176,719,090 Raw Materialconsumed Average Stock of R.M 194,607,217,416 4,176,719,090 47 times
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R.M Holding Period
= Average stock of R.M x 365 R.M Consumed = 4,176,719,090 x 365 194,607,217,416 8 days R.M Consumed x R.M Holding Period 365 194,607,217,416 x 8 365 Rs 4,265,363,669
= R.M Inventories =
Work-in-process Conversion period: Average stock of W.I.P = Op. stock of W.I.P + Cl. stock of W.I.P 2 1,971,777,039 +2,115,521,609 2 Rs 2,043,649,324 Cost of Production Average stock of W.I.P
= W.I.P Turnover =
= 202,308,840,424 2,043,649,324 = 99 times

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Average stock of W.I.P x 365 Cost of Production
= 2,043,649,324 x 365 202,308,840,424 = 4 days W.I.P Inventories = Cost of Production x W.I.P Holding Period 365 = 202,308,840,424 x 5 365 Rs 2,771,353,978
Finished Good Conversion period: Average stock of F.G = Op. stock of F.G + Cl. Stock of F.G 2 4,094,970,406 + 4,363,813,291 2 Rs 4,229,391,849 Cost of good sold Average stock of F.G 202,039,997,539 4,229,391,849 = 48 times
= F.G Turnover =
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F.G Holding Period
Average stock of F.G x 365 Cost of good sold 4,229,391,849 x 365 202,039,997,539
= F.G Inventories =
8 days Cost of goods sold x F.G Holding Period 365
202,039,997,539 x 8 365 = Rs 4,428,273,919

Cash
Transferred to Mktg. Division
Rs 2,771,353,978 For 4 days
Finished Goods (Petrol, Diesel, etc)
Rs 4,428,273,919 For 8 days
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Holding Period and Working Capital Required for 2008-09 Stock Raw Material Work-In-Process Holding Period 8 days 4 days W.C. Requirement Rs 4,265,363,669 Rs 2,771,353,978 Rs 4,428,273,919 R 11,464,991,566
Finished Goods 8 days Total W.C. Requirement
For the year 2007-08 Raw Materials Conversion period: Average stock of R.M = Opening stock of R.M + Closing of R.M 2 7,866,033,711 + 7,264,607,814 2 Rs 7,565,320,763 Raw Materialconsumed Average Stock of R.M 144,906,103,749 7,565,320,763 19 times
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R.M Holding Period
= R.M Inventories =
Work-in-process Conversion period: Average stock of W.I.P = Op. stock of W.I.P + Cl. stock of W.I.P 2 1,766,187,119 + 1,971,777,039 2 Rs 1,868,982,079 Cost of Production Average stock of W.I.P 149,050,669,664 1,868,982,079 80 times
= W.I.P Turnover =
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Average stock of W.I.P x 365 Cost of Production 1,868,982,079 x 365 149,050,669,664 5 days
= W.I.P Inventories
= Cost of Production x W.I.P Holding Period 365 = 149,050,669,664 x 5 365 Rs 2,041,789,995
Finished Good Conversion period: Average stock of F.G = Op. stock of F.G + Cl. Stock of F.G 2 4,167,577,708 + 4,094,970,406 2 Rs 4,131,274,057 Cost of good sold Average stock of F.G 149,123,276,966 4,131,274,057 36 times
= F.G Turnover =
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F.G Holding Period
Average stock of F.G x 365 Cost of good sold 4,131,274,057 x 365 149,123,276,966 10 days Cost of good sold x F.G Holding Period 365 149,123,276,966 x 10 365 Rs 4,085,569,232
= F.G Inventories =
Rs 7,543,057,455
Cash
For 19 days
Raw Material (Crude Oil)
Rs 2,041,789,995 Transferred to Mktg. Division For 5 days
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Holding Period and Working Capital Required for 2007-08 Stock Raw Material Work-In-Process Finished Goods Total W.C. Requirement Holding Period 19 days 5 days 10 days W.C. Requirement Rs 7,543,057,455 Rs 2,041,789,995 Rs 4,085,569,232 Rs 13,670,416,682
For the year 2006-07 Raw Materials Conversion period: Average stock of R.M = Opening stock of R.M + Closing of R.M 2 7,421,419,792 + 7,866,033,711 2 Rs 7,643,726,752 Raw Materialconsumed Average Stock of R.M 133,544,730,495 7,643,726,752 17 times
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R.M Holding Period
= R.M Inventories =
Work-in-process Conversion period: Average stock of W.I.P = Op. stock of W.I.P + Cl. stock of W.I.P 2 2,126,733,280 + 1,766,187,119 2 Rs 1,946,460,100 Cost of Production Average stock of W.I.P 138,190,249,983 1,946,460,100 71 times
= W.I.P Turnover =
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Average stock of W.I.P x 365 Cost of Production 1,946,460,100 x 365 138,190,249,983 5 days
= W.I.P Inventories
= Cost of Production x W.I.P Holding Period 365 = 138,190,249,983 x 5 365 Rs 1,893,017,123
Finished Good Conversion period: Average stock of F.G = Op. stock of F.G + Cl. Stock of F.G 2 3,140,400,210 + 4,167,577,708 2 Rs 3,653,988,959 Cost of good sold Average stock of F.G 137,163,072,485 3,653,988,959
= F.G Turnover =
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= F.G Holding Period =
37 times Average stock of F.G x 365 Cost of good sold 3,653,988,959 x 365 137,163,072,485 10 days Cost of good sold x F.G Holding Period 365 137,163,072,485 x 10 365 Rs 3,757,892,397
= F.G Inventories =

Cash
Rs 1,893,017,123 Transferred to Mktg. Division For 5 days
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Holding Period and Working Capital Required for 2006-07 Stock Raw Material Work-In-Process Finished Goods Total W.C. Requirement Holding Period 21 days 5 days 10 days W.C. Requirement Rs 7,683,395,453 Rs 1,893,017,123 Rs 3,757,892,397 Rs 13,334,304,973
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INVENTORY MANAGEMENT AT IOCL

The Indian Oil Corporation (Barauni Refinery unit) needs to hold inventories for transactions motive and precautionary motive. In this unit production is a continuous process and for smooth production, the company needs to maintain or keep an adequate level of raw material inventory to avoid any shut down position. The company also maintains an adequate level of inventories for work-in-process as per the requirements. Till the completion of the production cycle, the work-inprocess inventories are maintained and some part of it is also used as fuel in the unit. Stock of finished goods also has to be maintained by the Barauni Refinery unit. This unit does not have authority to sell the finished product in the market directly. It has to be sent to the Marketing division for further sale. As per the instruction of the Head Office they have to keep an adequate level of finished goods for compensating any loss of production during the period of election (governmental hazards), production break down and other contingencies. It also sells finished goods like LPG, Petrol, Diesel, etc. on behalf of the Marketing division. That s why a stock of finished goods also needs to be maintained. System of identification of needs There are mainly three types of inventories maintained by Barauni Refinery Unit (IOCL) such as:
Crude Oil Inventories Inventories for chemicals Inventories for stores and spares
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Identification the need for Crude Oil Inventories and system of placing the order The Barauni Refinery Unit (IOCL) identifies the need for inventories for crude oil through Revenue Budget that is prepared on yearly basis.In the Revenue Budget, the estimate for the consumption of Crude Oil inventories for the next year is estimated on the past experience basis. The Barauni Refinery Unit (IOCL) prepares Revenue Budget every year in mid-September. In the month of September, the Budgeted Estimates (BE) for the next year and Revised Estimates (RE) for the current year are prepared, for which the Budgeted Estimates (BE) is prepared in the previous year. For example:- In the financial year 2007-08 in the month of September, the Budgeted Estimates (BE) for the financial year 2008-09 the Revised Estimates (RE) for the next six months 2007-08 were prepared. Revised Estimates (RE): Revised Estimates is prepared after six months of applications of budget estimates. The purpose of preparing Revised Estimates is to know that during the present six months what are the actual expenses or income exits and on what basis they have been prepared. They collect this information, about expenses or incomes from the concerned officers or employees. They also provider information regarding what will be the expenses and incomes for the basis they next six months. On this basis, they prepare estimate for the next six months. Identify of the need for chemicals and spares: Identification of need for chemicals depends on the quantity and types of crude oil processed. The quantity for chemicals is decided in the ratio of quantity and types of crude oil processed. Orders regarding the purchase of chemicals and spares are made on past experiences. Inventory is maintained on approximation. The user department sends the need for the item to the Material department along with the consumption pattern. The reorder point is fixed in certain cases and then the order goes to the Purchase department.
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Two kinds of indent are raised:
Inventory control items, which are fixed where the reorder point or indent, is raised and the consumption pattern is studied. Where consumption pattern is not known, preventive maintenance processes are undertaken on cash basis.
When an indent is raised and if it is universally available, quotations or order is placed and the best is selected amongst all. In case of wholesale items, order is placed to the authorized dealer who manufactures the items as per the requirement. Issue system of inventory for Barauni Refinery Unit
Barauni Refinery Unit (IOCL): issues inventories for the production process and for the sale to the Marketing Division on First in First Out (FIFO) basis. Here there is a continuous flow of crude oil. Every day crude oil is supplied to Refinery and there is a continuous supply of finished product to the Marketing Division. Every day crude oil is processed or converted in to finished product and everyday it is sent to the stores and thereafter it is sent to the Marketing Division. Crude oil enters in the tank, it is sent for the process, and after processing, it is sent to the stores. All this happens automatically. This means that the crude oil, which enters the tank, first, is sent for the processing first and after processing; it is sent to the sores. From the stores it is sent to the Marketing Division and then the crude oil is sent for the process and so on. This is a continuous process and it works on FIFO basis. Stores Management: There is a separate department in Barauni Refinery Unit (IOCL) Oil Storage and Movement Department, which manages and maintains the movement of crude oil, intermediate products and finished goods.
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Actual job of this department is to receive the raw material, intermediate products and finished goods and dispatch all this, such as raw material for processing, intermediate products for further processing and some of the intermediate products to the Marketing Division for sale and finished products to the marketing department for the same purpose. This department receives raw material as crude oil and issues for the further processing at First in First Out basis. After processing finished products are issued and dispatched to the Marketing Division for Sale. They receive more than one type of finished products for which there is different maintenance cost. The maintenance cost for LPG is more than the other products. There should be certain temperature, which has to be maintained. Moreover, for other products like Petrol, Diesel, Etc., which is stored in tanks, should not be filled up to the brim. A certain portion of the tank is kept empty. Valuation of Inventory: Generally the valuation of closing stock is done on the basis of market price or cost price whichever is less. However, here we will see how Indian Oil Corporation (Barauni Refinery Unit) evaluates its stock, what rules and regulations are followed by them etc. At first, we will see how many types of closing stock they maintain: Types of Closing Stock in Indian Oil Corporation Ltd.:
Crude Oil
Crude Oil Stock in Transit. Crude Oil Stock in Pipeline Crude Oil Stock in Refinery Tanks.
Intermediate Stock or Work-in-Process Finished Goods
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Valuation of Crude Oil Stock Crude Oil Stock to be valued at Cost or Replacement Cost For valuation at replacement cost following conditions should be satisfied: There should be fall in the price of Crude Oil after the date of closing (31st March). The expected realization from products to be produced out of crude oil inventory results in realization lower than cost of crude oil. For the purpose of valuation of crude oil following three elements are required: 1) Cost of Crude Oil. 2) Expected realization from products produced from crude oil. 3) Replacement of cost of crude oil. Cost of Imported Crude Oil (High Sulphur& Low Sulphur) 1. All elements which are a part of imported crude oil are to be considered in the cost of stock at Refinery such as FOB, marine freight, marine insurance, and other landing charges, custom duty, pipeline cost, entry tax (if applicable). 2. All the above elements to be considered are booked in the purchase cost of crude oil 3. For crude oil in transit, FOB and other elements are booked in purchase cost. 4. The above elements are to be considered for the purpose of valuation of crude oil stock at cost.
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5. All elements as considered for Refinery stock to be taken on notional basis for crude oil stock in transit and in pipeline e.g. Custom duty, entry tax etc. 6. Operating cost as per budget estimated of the next year should be included for comparison with realization. Valuation of Crude Oil Stock: Expected realization value: 1. If the crude oil quantity is processed during April, the realization of the products is at the price applicable for the month of April. 2. For balance crude oil quantity (if any), the expected product realization for the month of May will be considered based on Inventory Logistic Plan (ILP) 3. Specific customer price and excise duty benefit to be considered for above Replacement cost of crude oil stock: The elements for replacement cost will be same as considered for cost of crude oil, however, following are to be taken additionally: 1. FOB as intimated by HO based on actual price during April 2. Other element to be considered by the unit based on the estimated actual cost. 3. Customs duty as based on percentage; the same should be revised taking revised FOB value.
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Valuation of Intermediate Stock The valuation will be lower than the cost of intermediate products or realization of the products, to be produced out of the intermediate stock, whichever is lower. Cost (Including conversion cost) The cost of intermediate stock will be based on cost of crude oil as for Refinery stock and 50% of operating cost as considered for product valuation and 50% of fuel and loss for the month. Expected realizable value The realizable value will be similar to crude oil stock valuation, however, the balance operating cost & fuel & loss (50%) adjustment has to be done while comparing with the cost of intermediate products. Valuation of crude Oil Pipeline Cost, crude oil valuation
For pipeline cost, the operating cost to be considered as fixed & variable Fixed cost to be allocated based in installed capacity if the capacity utilization is below installed capacity. Variable cost will be allocated based on the pumped quantity by pipeline during the year.
Valuation of finished products Finished stock to be valued at cost or realization value whichever is lower.
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Finished products to be divided into two categories.
Straight run products speciality products for which there is a separate production plant such as benzene, toluene, FGH, propylene, lubes etc.
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CASH MANAGEMENT
IN CONTEXT TO BARAUNI REFINERY (IOCL) The first and the foremost step in managing cash are identifying its requirements. The Indian Oil Corporation Ltd. (Barauni Refinery Unit) identifies the need for cash for meeting its working capital requirement and for day-to-day operations of business through the preparation of the cash budget. The Indian Oil Corporation Ltd. (Barauni Refinery Unit) prepares the cash budget on the value dating system. As per this system the Barauni Refinery (IOCL) maintains a special current account with the SBI. Barauni Refinery Unit maintains this account with the campus branch as well as the Kolkata branch. Every payment is made through cheque by this branch; cash payment is made in rare cases. Only the payment to the employees, up to Rs. 20,000 is made by cash ,above this the payment made by cheques. The arrangement of this cash payment is made through the State Bank of India on behalf of the Head Office. Barauni Refinery Unit issues cheques for the payment to the party every day as and when required. Out of those cheques how many cheques are present for payment does not matter. Every day payment is made for the Barauni payment Refinery Unit and every day they are sent to the bank for payment for which the Head officer makes payment ultimately to the Bank. It is a continuous or a cyclical process. It prepares the Estimated Budget and the Revised Budget every month and every year. The estimated budget is prepared every 10th of a month and the revised budget is prepared every 25th of the same month as per the approval of the Head Office The SBI Branch at Kolkata maintains an account for the Barauni division in order to make payment to the parties who are interested in getting the payments conveniently form the Kolkata Branch. For example payments have to be made to auditors, suppliers for chemicals and stores and spares, entry tax, excise duty, etc. An amount of Rs. 10 crores is kept and maintained for payments to the concerned parties and is authorized to spend Rs. 9 cores at a stretch.
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The branch has to keep Rs 1 crore as a reserve. The amount of Rs. 9crores can be spent may be, within an hour or a day or a week. As and when it is spent, the amount is again reimbursed by the Indian Oil Head Office. The Kolkata Head Office provides all details regarding the payment made to various parties, after adjusting the amount received and paid, to the Head Office as a proof of its payment
Estimated Cash Budget: This Estimated cash budget is prepared in every month till the date of 10th for the next month. In this it is estimated how much cash is required for the next month. In this all the expected expenses are included and forecasted. Revised Cash Budget: Revised cash budget is also prepared in the same month of the estimated cash budget till 25th of the month. It is also prepared for the next year for which estimated cash budget is required. It is nothing but the system of finalizing the cash budget. The only difference is that during the period of 15 days from 10th to 25th there may be some expenses, which are included, further. Items included in the Cash Budget: These are some items, which are included in the Cash Budget: Projected Expenditure: This expenditure is capital in nature. As it is not finalized, it is considered to be revenue in nature. When the project gets over then all the expenses relating to this are capitalized. Custom & Excise Duty and Entry Tax: These expenses are paid based on occurrence. When these transactions occur then it is shown in the cash budget. These expenses are on payment basis.
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Employee Payments: This expense mainly depends on the existing number of employees in the Refinery and their pay scale. The estimation is done based on how many new employees are appointed, how many of them get retired, how many of them get promoted, how many of them require advance payment of salary, etc. Other Expenses: Other expenses are related to payment to suppliers, contractors, etc.. System of managing cash: The Barauni Refinery basically does not deal with raw cash, at this division, As the cash management is thoroughly dealt at Delhi and Mumbai Head Office. The daily requirement of cash is met by direct transitions with the SBI where a special current account is maintained. The income earned by the Barauni Division is maintained and kept only on books.
It mainly deals with payments to various parties, which are:
The internal customers who are the employees The external customers who are the contractors. For statutory deposits i.e. payment as the Bihar Entry Tax.
The requirements of cash are met as per time and fulfilled by the Finance department, which deals with the State Bank of India. Cash for petty uses are paid to the concerned departments and maintained for further uses. Salary to the staff is directly debited to the concerned accounts. This is how cash is managed in the Barauni Division.
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Petty Cash Management: For the daily requirements of the Corporation, petty cash is required in each department. Every department gets and maintains around Rs. 5000 as impressed balance, even though there is no direct cash dealt by the Barauni Refinery unit. The State Bank of India, Campus Branch, provides this cash. Thisamount is provided to the required department. It is not necessary to maintain or provide cash to each department. When the department makes cash expenses up to Rs. 4500, they have to give the information to the cash department, to the cashier for updating the account for Rs. 5000. The departments have to give information to the cashier when they make cash expenses up to Rs. 4500. They have to keep a balance of cash of Rs. 500 for special cases. However, they are authorized for making cash expenses more than Rs. 5000 in times of need. On the next day or time, they are paid Rs. 5000 and the extra payment they had made. Nevertheless, till the 31st of March of every year, each department is required to deposit the balance amount, which they have at the end of the Year. It is necessary that on the March 31st of March every department closes its petty cash account and sends a report to the cashier. Again on the 1st of April the cash department distributes the amount of Rs. 5000 to each department for the Petty cash requirement. Petty requirements of each department are maintained with this balance and are updated at the end of every year that is the 31st of March. This amount of cash is utilized only in case of contingencies. They are not authorized to use that amount of money for their personal requirements such as tea or coffee.
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RECEIVABLES MANAGEMENT
In today s competitive business scenario any company wants to maximize sales rather than the profit. For maximizing the sales it is essentially required that the company should sale its product more and more on credit rather than on cash sales. Trade credit arises when a firm sells its products or services on credit and doesn t receive cash immediately. A firm grants trade credit to protect its sales from the competitors and to attract the potential customers to buy its products at favorable terms. The receivables out of the credit sales crunch the availability of the resources to meet the day today requirements. The acute competition requires the firm to sustain among the other competitors through more volume of credit sales and in the intention of retaining the existing customers. OBJECTIVES: 1) Achieving the growth in the volume of sales 2) Increasing the volume of profits 3) Meeting the acute competition
COST OF MAINTAINING THE ACCOUNTS RECEIVABLES:
Capital cost: Due to in sufficient amount of working capital with reference to more volume of credit sales which drastically affects the existing of the working capital of the firm. The firm may be required to borrow which may lead to pay certain amount of interest on the borrowings. The interest, which is paid by the firm due to the borrowings in order to meet the shortage of working capital, is known as capital cost of receivables.
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Administrative cost:
Cost of maintaining the receivables.
Collection cost:
Whatever the cost incurred for the collection of the receivables are known as collection cost.
Defaulting cost :
This may arise due to defaulter and the cost is in other words as cost of bad debts and so on. FACTORS AFFECTING THE ACCOUNTS RECEIVABLE
Level of sales:
The volume of sales is the best indicator of accounts receivables. It differs from one firm to another.
Credit Policies:
The credit policies are another major force of determinant in deciding the size of the accounts receivables. There are two types of credit policies. 1. Lenient credit policies: Enhances the volume of the accounts receivable due to liberal terms of the trade, which normally encourage the buyers to buy more and more.
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2.
Stringent credit Policies : It curtails the motive buying the goods on credit due stiff terms of the trade put forth by the supplier unlike the earlier
Terms of Trade :
The terms of the trade are normally bifurcated into two categories viz credit period and cash discount. Credit period : Higher the credit period will lead to more volume of receivables, on the other side that will lead to greater volume of debts from the side of buyers. Cash discount: It the discount on sales is more, that will enhance the volume of sales on the other hand that will affect the income of the enterprise. The full-fledged Receivable management is not done in the Barauni Unit
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PAYABLE MANAGEMENT
IN CONTEXT OF BARAUNI REFINERY UNIT (IOCL) Through bank payment mode is followed in Barauni Refinery unit (IOCL). The vendor sends two intimation copies to the bank and one copy to the Finance Department. The two intimation copies include Lorry Receipt (LR) and the invoice. The units begin operation only when it gets the intimation letter from the bank. Cheques is drawn by the Finance Department first in the name of Yourself account and then transferred to the bank. The bank then receive the cheques, first credits to the party account with the amount of payment and then releases the original endorsement consignee copy to the Finance Department. It is then sent to the stores department, which takes it to the transporters and gets the possession of the materials. There are as such no creditors of this unit but the time it takes the payment to the parties (For Chemicals and stores and spares) creates such creditors for that period. PERIOD OF CREDIT ALLOWED: he period of credit depicts the period for which any firm is allowed to have possession of the materials without prior payment. The Barauni unit basically dos not deal with any sort of credit as per the main goods for the unit is concerned. Thus there isn t any such credit payment except the accessories, which are used for the comfort of the staff members here.
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CONC USION
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CONCLUSION
After studying the components of working capital management system Of IOCL, Barauni Refinery. It is found that the company has a sound and effectivepolicy and its performance is very goodCompany iscompeting well at the domestic as well as the international levelonly because ofits proper management of financeThe company is a matured one and it has contributed well in thecountries growth and development and will also continue to perform andcontribute to the whole nation. In conclusion ,we can say that the companies management is an effectiveone .Its Financial Management system is very good because of which only the companyhas got the status of MAHARATNA company.
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BIBLIOGRAPHY
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BIBLIOGRAPHY
1. 2. 3. 4. 5. 6. 7. 8. Research Methodology By V.v.khanzode Research Methodology By R. Panneerselvam Research Methodology By Rajendar Kumar Financial Management By I M Pandey Financial Management By Khan and Jain www.google.com www.investopedia.com www.iocl.com
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Working Capital Project in Ioc Barauni Refinery

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FINANCIAL MANAGEMENT

AT INDIAN OIL CORPORATION LIMITED, BARAUNI

PROJECT REPORT ON-

SUBMITTED BYDeep Shree (Finance)

CERTIFICATE FROM THE GUIDE

Vikash C. Jaiswal Accou ts office IOCL, Barau i Bihar

Dee Shree (MONIRBA)

57-105 106-107 107-108

INTRODUCTION OF THE ORGANISATION

30th Jun 1959 The commencement o the gol en journey

Chennai Petroleum Corporation Limited IndianOil (Mauritius) Ltd.

Refining of petroleum products

Terminalling, Retailing & Aviation refuelling

Lanka IOC PLC.

Retailing, Terminalling & Bunkering

IOC Middle East FZE

IndianOil - CREDA Biofuels Limited

Indi nOil Major Uni

Southern Region Eastern Region

Assam Oil Di ision

Lanka IOC PLC

IOC Middle East FZE

IndianOil - CREDA Biofuels Limited

3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

PROFIL OF BARAU I REFI ERY

IOCL BARAUNI REFINERY THE JE EL OF BIHAR

Major objecti es and goals

FINANCE DEPARTMENT ORGANOGRAM

A.K. LAL (SFM)

V.D JHA (SACO)

V.C.JAISWAL(AC O) S.LACHHIRAMK A (ACO)

A ARDS AND ACCREDITIONS

RESEARCH METHODO OGY AND DATA SOURCE

INTRODUCTION TO THE TOPIC

MEANING OF FINANCIAL MANAGEMENT

Objecti es of Financial Management

Functions of Financial Management

Financial Management: Le els

FINANCIAL DECISION MAKING

 Expansion of existing business.  Expansion of new business.  Replacement and modernization

Accounting Rate Of Return

Net Present Value (Np )

Computation Of Net Present Value (Npv)

Internal Rate Of Return (Irr)

ORKING CAPITAL MANAGEMENT

Recei ables Management

Components of working capital are calculated as follows:

DATA ANA YSIS AND INTERPRETATION

CAPITAL BUDGETING AND ANALYSIS AT IOCL BARAUNI

estimationexpenditures to be incurred on fixed assets during the budget period.

3. Replacement and modernization. Sensitivity analysis

WORKING CAPITAL MANAGEMENT IOCL BARAUNI REFINERY

LOANS AND ADVANCES Total Current Assets

Total Current Liabilities

Calculation of Working Capital

Amount (Rs) 2009-10

For the year 2009-10

= Raw Material Turnover =

= R.M Holding Period

= Cost of Production Average stock of W.I.P = 163,547,237,719 2,598,680,689 = 63 times

W.I.P Holding Period

= Cost of Production x W.I.P Holding Period 365

Expansion of existing business. Expansion of new business. Replacement and modernization

Intermediate Stock or Work-in-Process Finished Goods