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Report on Calculation of Cash Flow and IRR OF NEW HEAT EXCHANGER In RFO RUNDOWN CIRCUIT OF GUWAHATI REFINERY.
SUBMITTED BY, SHRUTI BUCHA, 3RD SEMESTER ROLL NO. :- NU/MN/14/10 SCHOOL OF MANAGEMENT & STUDIES NAGALAND UNIVERSITY, DIMAPUR CAMPUS
TABLE OF CONTENTS Declaration Preface Acknowledgement Bonafide Certificate Executive summary SL. NO. Chapter 1 1.1.1 1..1.2 1.1.3 1.2 1.2.1 1.2.2 1.2.3 1.2.4 1.2.5 1.2.6 1.2.7 1.1.8 1.1.9 Chapter 2 1.2.1 1.2.2 PARTICULARS
Overall View Of Indian Oil Corporation Limited Brief History Of Oil Industry In India Beginning Of Petroleum Refining In India Indian Oil Corporate History About IOCL Introduction Of IOCL Vision, Mission Values, Functions& Duties, Objectives & Obligations Decision Making Process Organization Set-Up Business Of The Organization Branded Products Of IOCL Indian Oil Refineries-Installed Capacities Major Petroleum Products Of The Refineries Of IOCL SWOT Analysis Of IOCL About Guwahati Refinery (NOONMATI) Introduction Of Guwahati Refinery Manufacturing Process Of Guwahati Refinery
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1.2.3 1.2.4 1..2.5 Chapter 3 Chapter 4 1.4.1 1.4.2 1.4.3 1.4.4 1.4.5 1.4.6 Chapter 5
Functions Of Each Sections Of Finance Department Section Wise Segregation ERP-SAP Aims & Objectives & Methodology & Limitation Of The Project Capital Budgeting Meaning & Type Of Budget Meaning , Need & Importance Of Capital Budgeting Capital Budgeting Process Factors influencing capital expenditure decision Investment Evaluation Techniques Limitations of capital budgeting Name Of The Proposal Brief Description Justification Of The Proposal Advantages Technical Feasibility Impact Of Proposal On Manpower Operating And Maintenance Cost Requirements Of Additional Working Capital Economics Phasing Of Expenditure Approval Completion Schedule
Findings , Conclusion & Recommendations Annexures
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References Bibliography Word Of Thanks
In today’s era of globalization and competition, coping up with technological advancement, which is undergoing evolution at a very fast rate, holds the key to
School Of Management Studies(SMS) , Nagaland University Dimapur: Nagaland Page 2
the survival and growth of any organization. Installing technology, well-equipped facilities or going for modification in the existing ones are the means to attain better performance efficiency and hence further the value addition. Indian Oil, the largest commercial enterprise of India (by sales turnover) is India’s sole representative in Fortunes prestigious listing of world’s 500 largest corporations, ranked 125th for the year 2011. To maintain strategic edge in the market place, Indian Oil has given importance to capital budgeting because capital investment decisions often represent the most important decisions taken by an organization, and they are extremely important, they sometimes also pose difficulties. A company in practice should take all care in selecting a method or methods of investment evaluation. The criterion selected should be a true measure of the investment’s profitability (in terms of cash flows), and it should lead to the net increase in the company’s wealth (that is, its benefits should exceed its cost adjusted for time value and risk). It should also be seen that the evaluation criteria do not discriminate between the investment proposals. They should be capable of ranking projects correctly in terms of profitability. The NPV method is theoretically the most desirable criterion as it is a true measure of profitability; it generally ranks projects correctly and is consistent with the wealth maximization criterion.
School Of Management Studies(SMS) , Nagaland University Dimapur: Nagaland Page 2
This training part of MBA programme taught me a lot to understand the key of success in the organization. One of them is teamwork. Teamwork is ability to work together towards a common vision. It is a fuel that allows common people to attain results. Therefore, I would like to thank all management team of Indian Oil Corporation Limited who help me to achieve this result. I would hereby like to extend my gratitude to the following people without whose cooperation and help at every stage, successful completion of the project would not have been possible. It is my privilege to express my deep gratitude to Mr. S. Gurumoorthy (CFM at IOCL) who gave me such a great opportunity & infrastructure to do this project and also for his kind cooperation & help throughout the project. I would like to express my profound gratitude & a sincere thanks to Mr. Ritesh Agarwal (ACO), Mr. Saurabh Suman (ACO) for their valuable time & educative guidance. Their constant support, innovative ideas & practical approach helped me to make the project more objective. I would like to use this opportunity to thank my lecturers Mr. Ditalak Mpanme,HOD, School Of Management Studies, and Mr. Dorendro Singh Laikangbam, Faculty, School of Management Studies, for their support and guidance. Last but not the least, I would like to thank all others who directly or indirectly helped me in this regard. Above all, thanks to the Almighty God. SHRUTI BUCHA 3RD SEMESTER
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NAGALAND UNIVERSITY. DIMAPUR is my original work prepared on individual effort based on the data provided by the Finance Department of Guwahati Refinery.I hereby declare that the project report entitled. Calculation of “Cash Flow and IRR of New Heat Exchanger in RFO (Reduced Fuel Oil)” as per requirement of the 2 YEAR FULL TIME POST GRADUATE DIPLOMA IN MANAGEMENT (MBA) AT SCHOOL OF MANAGEMENT STUDIES (SMS). SHRUTI BUCHA PGDM 3rd Semester School Of Management Studies Nagaland University School Of Management Studies(SMS) . Nagaland University Dimapur: Nagaland Page 2 .
Indian Oil Corporation Limited.U Duration of the project: 1ST June to 31ST July. Saurabh Suman Institution Guide: Mr Ditalak Mpanme Faculty SMS N. Organizational Guide: Mr Ritesh Agarwal. Nagaland University Dimapur: Nagaland Page 2 . Organization: Guwahati Refinery. 2011.EXECUTIVE SUMMARY Project Title: To provide a brief overview of the organization and working of Guwahati Refinery and determine the financial viability for installation of the New Heat Exchanger In RFO (Reduced Fuel Oil) for Heat Recovery at Delayed Coking of Guwahati Refinery. Research Methodology: School Of Management Studies(SMS) . Objective of the study: To provide a glimpse of Indian Oil Corporation Limited and of Guwahati Refinery. Mr. To describe the functioning of each sections of the Finance Department of Guwahati Refinery To determine the financial viability for installation of Heat Exchanger in RFO of Guwahati Refinery as an initiative towards CDM (Clean Development Mechanism) Projects.
83<15 NPV > 1 i.84<15 ARR > Target rate 25.The Research carried out is a Descriptive study including mostly the secondary data.e Rs 88.11 > 1 PBP < Target Period 2.47%>13% School Of Management Studies(SMS) .50<15 ARR > Target RATE 27.63<15 NPV > 1 i.e 2.1> 1 Profitability Index i. The selection rules associated with these criteria and the respective findings are as follows: Criterion With CDM Without CDM Payback Period Net Present Value(NPV) PBP < Target Period 2.e Rs 77.98%>13% DPBP < Target period 2. The data are analyzed using the various Capital Budgeting techniques. While analyzing the data with the help of various Capital Budgeting techniques we have tried to find out the worthwhileness of Heat Recovery at Delayed Coking Unit by installing a new Heat Exchanger in RFO (Reduced Fuel Oil) rundown circuit. The data has been collected from the Finance and the Projects Department of Guwahati Refinery.68%>13% DPBP < Target period 3.25 > 1 PI > 1 i.03%>13% IRR > Cost Of Capital 36.e Internal Rate of Return(IRR) Discounted payback Period Accounting Rate of Return(ARR) PI > 1 2.09 > 1 IRR > Cost Of Capital 33. Nagaland University Dimapur: Nagaland Page 2 .
one of the elephants wandered away.Chapter 1 INTRODUCTION Brief History of Oil industry in India In 1881. began laying of tracks in Assam They used elephants in place of cranes One day. Willey Leove hollered at native boys. Nagaland University Dimapur: Nagaland Page 2 . near present day Digboi A Canadian driller. Assam Railway & Trading co. “Dig boy dig” Oil was struck and the name ‘Digboi’ stuck. Digboi became the birth place of India’s School Of Management Studies(SMS) . to come back with its feet smeared by slimy oil Backtracking led to the discovery of oil in Borbhil.
AOC nationalised and its Refining and Marketing functions merged with IOC in October . Nagaland University Dimapur: Nagaland Page 2 .oil industry. 16 km away from Digboi. 1981 Digboi refinery is one of the oldest refinery in the world that is still working In 1890s Crude Oil used to be distilled in DIGBOI in Cast Iron pans – called ‘Stills’. Bottom portion of one such still of 9 feet diameter is still kept at Digboi Refinery. School Of Management Studies(SMS) . crude oil distillated at Margherita. 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. Beginning of Petroleum Refining in India. In 1890s.
This was followed by the formation of Indain Oil Co. ONGC was formed for oil exploration and drilling. with shree Feroze Gandhi as its chairman. for marketing and distribution of petroleum products. Indian Oil Refinineries were formed in1958 for refining and manufacturing of petroleum products. meaning thereby that only state would operate in this field Soon thereafter. India’s oil industry was fully controlled by international oil cartel In 1956. A country that does not produce its own oil is in a weak position. Industrial Policy Resolution was passed.IndianOil Corporate History At the time of independence. which laid the foundation of national oil industry The resolution stated – “Oil is of vast importance in the world today. Nagaland University Dimapur: Nagaland Page 2 . in 1959. School Of Management Studies(SMS) . From the point of view of defence. Exploration & production was put into Schedule – ‘A’. the absence of oil is a fatal weakness”.
INTRODUCTION OF Indian Oil Corporation Limited: Date of Incorporation: 1st September 1964. HSD & ATF over a period of 4 years on ‘rupee payment basis’.00crores ii) Subscribed. Share Capital: i)Authorised: Rs. In 1960. Indian Refineries & Indian Oil Co.(IOC) was born. 1956. Government of India. School Of Management Studies(SMS) .2500.5 MMT of SKO. Administrative Minister: Ministry of Petroleum & Natural Gas. as a step towards achieving improved efficiency. Nagaland University Dimapur: Nagaland Page 2 .1213.97 crores. issued & paid-up: Rs. Indian Oil Corporation Ltd. This initiated the end of to the monopoly of foreign oil companies. were merged. Type of Company: Government Company under Section 617 of the Companies Act. signed a historic agreement with Soviet Union for import of 1. Indian Oil Co. On 1st September 1964.
of India was holding the entire Paid. The Govt. Share Holding Pattern as on 31st March 2011: School Of Management Studies(SMS) .Details of Disinvestments: The Govt. In the year 1999. which is a Govt.up Share Capital of the Company till 1994-95. Financial Institutions and Employees of the Company during 1994-95. Company. of India further disinvested 10% of its holding in the Company in favor of ONGC Ltd. Mutual funds. of India disinvested about 9% of its holding in the company in favor of Banks. the Govt. Nagaland University Dimapur: Nagaland Page 2 .
(EST.9% MF/UT I 1.0% GoGuj 0.3% Beginning of Indian Oil Corporation Ltd.9% FIIs 0. Listing with Stock Exchange: The equity shares of the Company are presently listed with the following stock exchanges:i) Bombay Stock Exchange (BSE) . Indian Oil Company Ltd. 1958).1% Others 0. School Of Management Studies(SMS) . 1964 THROUGH THE MERGER OF INDIAN OIL COMPANY LTD. Nagaland University 1st Dimapur: NagalandSeptember 1964 Page 2 . (NSE).75% Ins Cos 3. 1959) AND INDIAN REFINERIES LTD. Mumbai ii) The National Stock Exchange of India Ltd.ONGC 8.8% LIC 2. (INDIAN OIL) WAS FORMED IN OIL Indian Oil Corporation Ltd.5% Pres ident of In dia 7 8. Merger Indian Oil Refineries Ltd. 1959 INDIAN 1958 CORPORATION LTD. (EST.7% Individuals 3.
Nagaland University Dimapur: Nagaland Page 2 . Indian Oil and its subsidiaries account for 46. The Indian Oil Group of companies owns and operates 10 of India‘s 20 refineries with a combined refining capacity of 60. 40. at 125th position. The School Of Management Studies(SMS) . Chennai Petroleum Corporation Ltd.It is currently India's largest company by sales. It is also the 20th largest petroleum company in the world. These include one of the subsidiary refinery i.2 million tons per annum. (CPCL).9% petroleum products market share in the industry.4% national refining capacity and 67% downstream sector pipelines capacity.e. Indian Oil is also the highest ranked Indian company in the prestigious Fortune 'Global 500' listing.
Nagaland University Dimapur: Nagaland Page 2 . agricultural and marine sectors. Indian Oil also enjoys a dominant share of the bulk consumer business. Indian Oil joined the league of global technology providers in 2006-07 with its in-house developed Indmax technology selected for the 4 MMTPA Fluidized Catalytic Cracking (FCC) unit at the Corporation‘s upcoming 15 MMTPA refinery-cumpetrochemicals complex at Para dip in Orissa. 43.4 million households in 2. Indian Oil's world class R&D Centre is perhaps Asia's finest. Besides pioneering work in lubricants formulation. the Centre is also the nodal agency of the Indian hydrocarbon sector for ushering in Hydrogen fuel in the country. industrial. and state transport undertakings.300 km meets the vital energy needs of the country. pipeline transportation and alternative fuels such as bio-diesel. LOCATION OF IOCL IN INDIA School Of Management Studies(SMS) . refinery processes. Indian Oil operates the largest and the widest network of petrol & diesel stations in the country.996 Indane distributors Indian Oil's ISO-9002 certified Aviation Service commands a 63% market share in aviation fuel business. besides refining and pipeline capacity augmentation. numbering around 16.455. railways. operates pipelines and refines imported as well as indigenous crude oil and markets petroleum products. Indian Oil has invested Rs. To maintain its competitive edge and leadership status.Company‘s cross-country crude oil and product pipelines network spanning over 9.709 markets through a network of 4. private airlines and the Indian Defense Services. The Indian Oil Corporation Ltd. 65 billion) during the XI Plan period (2007-12) in integration and diversification projects. meeting the fuel needs of domestic and international flag carriers. product quality upgradation and expansion of marketing infrastructure. It reaches Indane cooking gas to the doorsteps to over 46.250 crore (US $10. as well as for the FCC unit coming up at BRPL.
Nagaland University Dimapur: Nagaland Page 2 .School Of Management Studies(SMS) .
4) To provide technology and services through sustained Research and Development. and cost reduction. playing a national role in oil security & public distribution Mission: 1) To achieve international standards of excellence in all aspects of energy and diversified business with focus on customer delight through value of products and services.the-art technology for competitive advantage. integrated energy company. transnational. 2) To maximize creation of wealth. Objectives & obligations : Vision A major diversified.Vision. Nagaland University Dimapur: Nagaland Page 2 . 3) To attain leadership in developing. School Of Management Studies(SMS) . Values. with national leadership and a strong environment conscience. value and satisfaction for the stakeholders. adopting and assimilating state-of. Functions & Duties . Mission.
Objectives: 1) To serve the national interests in oil and related sectors in accordance and consistent with Government policies. Nagaland University Dimapur: Nagaland Page 2 . School Of Management Studies(SMS) .stands Delivered Promise Reliability Dependability Integrity Truthfulness Transparency Functions & duties Indian Oil Corporation Ltd. has been established to carry out the objectives specified in the Memorandum & Articles of Association of the Company.stands for Creativity Ability to learn Flexibility Change Concern Empathy Understanding Cooperation Empowerment Passion . transporting and marketing of petroleum products. VALUES.stands for • • • • • Innovation . The main activities of Indian Oil are refining.Values we nurture Care .stands for for • • • • • • Commitment Dedication Inspiration Pride Ownership Zeal & Zest Trust .5) To foster a culture of participation and innovation for employee growth and contribution.
5) To maximize utilisation of the existing facilities for improving efficiency and increasing productivity. Towards community To maintain the highest standards in respect of safety. impartiality and courtesy and help promote ancillary industries. Towards Defence Services To maintain adequate supplies to Defence and other para-military services during normal as well as emergency situations. Nagaland University Dimapur: Nagaland Page 2 . product formulations.2) To enhance the country‘s self-sufficiency in crude oil refining and build expertise in laying of crude oil and petroleum product pipelines. courteous and efficient service and quality products at competitive prices: 1. 4. 4) To optimize utilisation of refining capacity and maximize distillate yield and gross refining margin. 2. 3) To create a strong research & development base in refinery processes. School Of Management Studies(SMS) . 3. Towards employees To develop their capabilities and facilitate their advancement through appropriate training and career planning. 6) To avail of all viable opportunities. both national and global. pipeline transportation and alternative fuels with a view to minimizing/eliminating imports and to have next generation products. arising out of the Government of India‘s policy of liberalization and reforms. Towards suppliers To ensure prompt dealings with integrity. environment protection and occupational health at all production units. Obligations: To provide prompt.
Decision Making Process: The decisions making process of IOCL follows the following Channel BOARD OF DIRECTORS CHAIRMAN FUNCTIONAL DIRECTORS EXECUTIVES School Of Management Studies(SMS) . Nagaland University Dimapur: Nagaland Page 2 .
1956 certain matters require the approval of the shareholders of the Company in General Meeting. The Chairman. Functional Directors and other Executives are accountable to Board of Directors for proper discharge of their duties & responsibilities. Functional Directors. Indian Oil being a Public Sector Enterprise (PSE). The Board of Directors has delegated powers to the Chairman.Overall management of the Company is vested with the Board of Directors of the Company. The powers. As per the provisions of the Companies Act. The Chairman. which are not delegated. The Board of Directors is accountable to the shareholders of the Company. Nagaland University Dimapur: Nagaland Page 2 .the Board of Directors of the Company is also accountable to Government of India. 1956. Functional Directors and other officers exercise their decision-making powers as per this delegation of powers. ORGANISATION SET-UP: School Of Management Studies(SMS) . who have in turn delegated powers to the Executives of the Company through Delegation of Powers. are exercised by the Board of Directors subject to the restrictions and provisions of the Companies Act. which is the ultimate authority of a Company. The day-to-day management of the Company is entrusted on the Chairman and the Functional Directors and other Officers of the Company. The Board of Directors is the highest decision making body within the Company.
Planning & Business Development Divisional Set-up 1. Pipelines 3.BOARD OF DIRECTORS BOARD OF DIRECTORS Corporate Set-up 1. Human Resource 3. Nagaland University Dimapur: Nagaland Page 2 . R&D Business of the Organization: School Of Management Studies(SMS) . Refineries(including AOD’s Digboi Refinery) 2. Finance 2. Marketing (including AOD’s Marketing) 4.
to heavy ends. from which it produces more than 60 types of petroleum products. Refineries Division Refineries HQ. 2. such as furnace oil and low sulphur heavy stock. The flexibility of processing capability allows IndianOil to vary both its crude oil inputs and petroleum product outputs to achieve the company’s desired production mix. New Delhi HR Refineries Materials *0 *1 *2 *3 *4 *5 *6 *7 *8 *9 Digboi (AOD) Guwahati Barauni Gujarat Haldia Mathura Panipat Bongaigaon CPCL Nariman Technical Projects FINANC E S & EP M&I IndianOil group of companies owns and operates 10 out of India’s 20 refineries with a combined refining capacity of 60. naphtha and motor spirit. Nagaland University Pipelines HO.2 million tonnes per annum. Pipelines Division: NOIDA Page 2 School Of Management Studies(SMS) . IndianOil refineries are fully equipped to meet the current environmental norms in relation to product specifications in the country and are being constantly modernized and upgraded to be able to meet all future environment regulatory requirements. Dimapur: Nagaland . ranging from light distillates.1. such as LPG. IndianOil refineries process all major indigenous crude oil plus over 36 types of imported crude oil.
Operations MATERIALS MAINTENANCE TECHNICAL SERVICES Projects Northern Region MJPL (P) PBPL (P) MTPL (P) PRPL (P) PJPL (LPG) Eastern Region GSPL (P) BKPL (P) HBPL(P) HMRPL(P) PHBPL (C) Western Region KAPL(P) SMPL(C) KSPL(P) MPPL(C) KNPL(P) Southern Region CTMPL (P) School Of Management Studies(SMS) . Nagaland University Dimapur: Nagaland Page 2 .
61 million metric tonnes per annum as on March 2009.1. 71.2009) Bangaluru Crude: 4366 KM Sankar (38.608 MMTPA.483 MMTPA) Dahej Tinsuki a Siliguri Bongaigaon Guwahati Digbo i IOC’s Pipelines (Existing) Product Crude Oil LPG Pipeline p Indian Oil Corporation owns and operates the largest network of crude oil and product pipelines in India.000 km with a capacity of 71.2009) Crude: 4366 KM Sangru a Panipa r Jalandhar Ambal a Roorkee Najibabad Meerut Delhi Mathur Luckno w Barauni Rajbandh Maurigram Budge Budge Haldia Paradi IOC Pipelines (As on21. School Of Management Studies(SMS) .408 MMTPA.2 MMTPA) Jodhpu r a Chaks r Tundla r Kanpu u Product: 9866 KM Chittaurgar Kot r Sidhpur h Ahmedabad (59.28 MMTPA) Kandla Mundr Ratlam Navagam Vadina Koyali Total: 14232 KM a r (97. 100%) Product: 5698 KM (31. The total network of pipelines is more than 10. Nagaland University Dimapur: Nagaland Page 2 .4%) i Trichy Madura i Chennai Asanur IOC’s Pipelines (Ongoing) Product Crude Oil LNG RPipeline t Rewari Dadri Sangane Ajme (38. The company’s pipelines are well positioned to supply petroleum products from its refineries and India’s ports to high demand states in northwestern India. 53%) Total: 10064 KM (69.1.Pipeline s Downstream Industry Pipelines Bhatind (As on 21. IndianOil’s pipelines include 4366 kilometers of crude oil pipelines and 5964 kilometers of product pipelines.2 MMTPA.
distributors etc. Nagaland University Dimapur: Nagaland Page 2 . the substantial majority of which are governed by dealership agreements. rail tankers and road tanker trucks. consumer pumps. School Of Management Studies(SMS) . The company’s overall distribution network encompasses over 35. The company distributes its products directly to bulk customers and to retail customers via a network of retail outlets and dealers/distributors. Marketing Division Marketing HO.3. Products are transported to the distribution points by pipeline. Mumbai 4 Regional Services North/East/West/South AOD International Marketing & Overseas Subsidiaries State Offices AFSs Div.000 sales points incorporating its own franchise as well as independent outlets./Area Offices Depots/terminals/BPs/ SCFPs Field Force IndianOil and its subsidiaries account for 47% petroleum products market share. ship tanker.
Faridabad Refining Technol ogy Lube Technol ogy Fuels & Emissi on Petroch em & Biote ch Othe rs Process Development Product Development Transportation Studies Projects Established in 1972 for the development of lube as well as refining process technologies. the IndianOil R&D Centre at Faridabad has completed over 35 years of glorious service to the nation. refining and pipeline areas making it a unique technology centre. Nagaland University Dimapur: Nagaland Page 2 . it has successfully perfected the state-of-the-art lube formulation technology meeting latest national and international specifications with approvals from major original equipment manufacturers. Research and Development R&D Centre. The Centre has also taken the lead in the development and commercialisation of biodiesel.4. Its rich reservoir of highly qualified/ specialized scientific and technical manpower has elevated this centre to global status. School Of Management Studies(SMS) . Developing more than 2500 formulations over the years. IndianOil markets around 800 grades of lubricants under the brand name "SERVO" based on its own R&D technology and is one among the six worldwide technology holders of marine oil technology. It has extensive laboratory and pilot plant facilities to successfully pursue projects in lube.
BRANDED PRODUCTS OF IOCL INDIAN OIL DETAILS OF PRODUCTS School Of Management Studies(SMS) . Nagaland University Dimapur: Nagaland Page 2 .
9. Nagaland University Dimapur: Nagaland Page 2 . there is a SERVO lubricant for virtually every single application.100 Indian Oil petrol/diesel stations. The SERVO range of lubricants is used in almost every application covering automotive. Indian Oil AVIATION SERVICE School Of Management Studies(SMS) . etc. 87 Indane Bottling Plants are spread across the country with a combined bottling capacity of 3. hotels & restaurants.300 SERVO Shops and a countrywide network of bazaar traders. medical labs. With over 42% market share and 450 grades. SERVO ranges of lubricants enjoy approvals from major Original Equipment Manufacturers (OEMs) including new generation cars. SERVO has been designated as a SUPERBRAND. Indian Oil's auto LPG brand Auto gas is the leader in the segment. 3.000 Retail Outlets and a countrywide network of SERVO SSls and SSAs Bazaar traders offer SERVO range of lubricants to customers.1. industrial and marine sectors. New and convenient 5 kg Indane LPG gas cylinders introduced in rural and hilly regions for wider use by economically weaker sections. SERVO SERVO is India's largest selling lubricant brand.77 MMTPA. Marketed through a network 48 stations out of an industry total of 103 Auto LPG Dispensing Stations. 2. Indane LPG as is marketed through a network of 4350 Indane distributors. INDANE LPG Indian Oil Indane LPG gas is used in 40 Million homes as cooking fuel and commands over 48% market share in India. Widely used in commercial sectors like industries. the country's leading SERVO brand lubricants from Indian Oil are sold through over 8. Developed exclusively at Indian Oil's world-class R&D Centre at Faridabad. over 1.
This alternative fuel is a good business proposition in the long term. 5. which are the best your vehicle can get. • Enhances cleaning of engines. Indian Oil Aviation Services serves over 71 International airlines besides the domestic airlines in India. XtraMile. • Minimizes exhaust emissions. Available at nearly 4400 Retail Outlets nationwide.PREMIUM FUELS Indian Oil offers Xtra Pemium Petrol and XtraMile Diesel. and Indian Oil intends to further expand its marketing in a big way. Nagaland University Dimapur: Nagaland Page 2 . Available at nearly 2000 Retail Outlets nationwide. India's first 91 Octane petrol. Between one sunrise and the next. 4. Indian Oil refuels over 900 aircrafts. XtraMile offers: • • Extra mileage -Greater Acceleration. Indian Oil's new generation High Speed Diesel with world-class additives has taken a leadership position in the market. Indian Oil Aviation Services is ISO 9002 certified and entrusted with WIP refueling for national and overseas dignitaries. XtraPremium is reinforced with multifunctional additives including 'Friction Buster'. School Of Management Studies(SMS) . Indian Oil's prompt. Bangalore and Mumbai markets. courteous and 'No-Delay' Indian Oil Aviation Services has a market share of 65% with a network of 95 Aviation Fuel Stations (AFS). AUTO GAS Auto gas (LPG) has been introduced in Hyderabad. .Meets complete Aviation Fuel requirements of the Defence Services and for over 75 Domestic and International airlines besides private aircraft operators. Longer engine life -Enhanced overall performance. XtraPremium offers: • Super Mileage and Super Pick-up.
SWAGAT HIGHWAY OUTLET To cater the high growth areas of National Highways forming a part of Golden Quadrilateral and N-S. Incentives available on fuel purchases in the form of loyalty points redeemable against fuel/lubes and other rewards. loyalty programme. capability training. The non-fuel services are being given a major fillip in the Indian Oil Xtra Care plan with a wide range of loyalty programme with –Xtra Rewards. Indian Oil has moved several steps ahead by introducing fortnightly random sampling with specific importance given to RON (Research Octane Number) sampling which is truly the definitive test for quality and quantity. Nagaland University Dimapur: Nagaland Page 2 . which facilitates cashless purchase of fuel & lubes from designated retail outlets of Indian Oil through flexible prepaid and credit facilities. Xtra Power is a Smart Card based Fleet Card Program. 8. which have been branded as “Swagat” Retail Outlets. XTRA CARE The launch of Xtra Care was the culmination of a series of plans in retail design.• Eliminates engine knockings 6. product and service upgradation. 7. Indian Oil Refineries: Installed Capacities School Of Management Studies(SMS) . While the industry standard is to take samples on a quarterly basis. retail site management techniques all benchmarked to global standards. XTRA POWER Indian Oil's Xtra Power Fleet Card Program is a complete fleet management solution for Fleet Owners / Operators and Corporates. automation. E-W corridors. Xtra Power and cobranded cards like Indian Oil-Citibank credit cards. Indian Oil has launched Flagship Outlets.
3.S.2 1. 6.50 1. 4. 5. Nagaland University Dimapur: Nagaland Page 2 .00 8.00 2.65 12. 8.70 6. 2. 9.00 13. 10 TOTAL School Of Management Studies(SMS) .35 09.0 6O. 7.NO.00 0.00 6. NAME OF COMPANY IOCL IOCL IOCL IOCL IOCL IOCL IOCL IOCL IOCL IOCL THE LOCATION REFINERY GUWAHATI BARAUNI KOYALI HALDIA MATHURA DIGBOI PANIPAT BRPL *CPCL *NARIMAN OF CAPACITY (MMTPA) 1.
MMTPA – Million Metric Tonne Per Annum.NOTE: 1. Another refinery is being set up on the East Coast at Paradip(Orissa) with a capacity of 15. 2. Indian Oil group of companies owns and operates 10 out of India’s 20 refineries with a combined refining capacity of 60.2(49. * Subsidiary of IOCL.70-own capacity and 10. Nagaland University Heaviest Raw Petroleum Coke (RPC) Dimapur: Nagaland Petroleum Wax Bitumen/ Asphalt Page 2 .00 million metric tonnes per annum.50-capacity of the subsidiary refineries) million metric tonnes per annum. 3. Major Petroleum Products Lightest Liquified Petroleum Gas (LPG) Naphtha Motor Spirit (MS)/ Petrol/ Gasoline Aviation Turbine Fuel (ATF) Superior Kerosene Oil (SKO) High Speed Diesel (HSD) Light Diesel Oil (LDO) Furnace oil (FO) Heavy Petroleum Stock (HPS) Lube oils School Of Management Studies(SMS) .
Nagaland University Dimapur: Nagaland Gujarat Mathura Panipat Barauni Haldia GuwahatiDigboi CPCL BRPL √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Page 2 .Products of the Refineries of IOCL: LPG Naphtha MS-BS-II MS-BS-III SK ATF HSD-BS-II HSD-BS-III FO LSHS/HPS Wax LOBS Bitumen RPC LABFS LAB pX PTA School Of Management Studies(SMS) .
SWOT ANALYSIS: S INTERNAL ORIGIN W weaknesses Strengths EXTERNAL ORIGIN O Opportunities STRENGTH: 1) Dominant Foothold in Indian Market T Threats 2) IOCL has 10 Refineries under its Group having a combined.Throughput of 60 MMTPA which is the highest in India. Nagaland University Dimapur: Nagaland Page 2 . 3) Vast Network of Petrol Pumps spread across all parts of India and IOC occupies more than 60% of Market Share in Petroleum Products in India. 2) Most of IOCL Refineries are Inland Refineries which increases the cost of Production. Large Network of Pipeline gives IOCL a competitive edge.4% of Total Downstream Pipeline Network in India. 4) IOCL has downstream pipeline network of 10064 Km spread across India which is 71. WEAKNESS: 1) Non Autonomy. School Of Management Studies(SMS) .
THREATS: 1. School Of Management Studies(SMS) . Prices regulated by Govt. i. 4) Since IOCL is a Public Sector Undertaking there is high Government Regulation. Increasing International Crude Prices and Depleting Crude Oil Reserves. Highly Competitive Market 2. Volatile Oil and Gas Prices. 4) Developing its own technology with emphasis on R & D units. MS. 3) Strengthening Petrochemical Operation. 7. 3. Rising Capital Costs in the Refining Sector 5. 5) Company can integrate its core Business of Petroleum Products with Exploration Activities. 4. Emergence of Private Player like Reliance/ESSAR with latest refining technology having High Crude Throughput Installed Capacity and locational advantages. OPPORTUNITY: 1) Diversification into Renewable Energy. They can only process Low Sulphur Crude and efficiency is also low. 2) Positive Outlook for Natural Gas Business.e HSD. for Four Major Products. 6) Diversification oppurtunities are there in Gas Sector & Alternate Energy Sectors such as Bio-Fuels and also in Power Sector. SKO & LPG 6. Environmental Regulations.3) Some of the Refineries Technology is old. Nagaland University Dimapur: Nagaland Page 2 .
The above task has to be accomplished – a) In the most cost effective way. e) Through a set of refining processes & operations Guwahati Refinery. the first public sector refinery of the country. on 1st January 1962. Nagaland University Dimapur: Nagaland Page 2 . School Of Management Studies(SMS) . d) Without any interruptions.e.75 million metric tones per annum. b) Safely and without damaging the environment. c) Complying all statutory stipulations. was built with Romanian collaboration at the cost of Rs 17.29 crores with a design capacity of 0. as needed by the market. crude oil and transforms it into various useful products meeting stringent quality norms and dispatches it by various modes. Pandit Jawaharlal Nehru.2 INTRODUCTION GUWAHATI REFINERY (NOONMATI) What is a refinery? A refinery is a factory which takes a single raw material i. The Guwahati Refinery was inaugurated by the first Prime Minister of India.CHAPTER.
85 MMTPA and now to 1. the total refining capacity was subsequently enhanced in first stage to 0.The present capacity of Guwahati Refinery is 1.0 MMTPA. Wide Range of Products: With capacity of 1. Guwahati Refinery is amongst those Indian Refineries who have been rewarded with ISO-9001 certification of International Quality Standards as well as ISO-14001. Its product slate includes LPG. Safety and Environmental Management System. Keeping pace with changes in Industrial Environment. Kerosene.0 million metric tones per annum. Guwahati Refinery is diversifying to produce specialty products like Premium MS & Needle coke etc. Guwahati Refinery processes crude oil received from the upper Assam oil fields and caters to the requirement of the petroleum products of northeastern region. Guwahati Refinery came into operation in the year 1962 with an installed capacity to process 0. The refinery process a mix of Oil (Oil India Limited) and ONGC (Oil & Natural Gasses Corporation Limited) crude received from Assam Oil fields through a 430 km long and 16-trunk pipeline. and a special cut naphtha (RN) which is used as a feed stock for CRU of Digboi Refinery of Assam Oil Division. for Environment Management System and Occupational Health and Safety Management System (OSHMS) which is also a stringent International Standard which very few Indian Companies have achieved till date.75 MTPA of Assam Crude. Guwahati Refinery has been certified with International Safety Rating System (ISRS) level-6 certification by M/s DNV. Nagaland University Dimapur: Nagaland Page 2 . More than 50 % of the treated effluent water is now reused in the refinery. After debottling the operating process units. The Refinery has an elaborate pollution control system to ensure that water generated are adequately treated prior to discharge into the river Brahmaputra. Straight Run Naphtha (SRN).0 MMTPA. Raw Petroleum Coke (RPC). Light Diesel Oil (LDO). for gearing up the cleaner fuel requirements of the country in coming years. These achievements show the deep commitment of Guwahati Refinery to Quality. School Of Management Studies(SMS) . The Guwahati Refinery is one of the largest production based organization in the Entire Northeast having 900 employees in total. High Speed Diesel (HSD). Motor Spirit (MS).
Medium weight materials. including gasoline. In Guwahati Refinery crude oil is distilled in one crude unit that operates at near atmospheric pressure (CDU).75 million metric tones per annum. like propane and butane.50. Heavy materials. & now has been upgraded to process 1. jet. CRACKING and TREATING. This 435-Km pipeline connecting Guwahati Refinery to different installations was designed to carry about 0.A hydrotreater unit for improving the quality of diesel has been installed and was commissioned in 2002.a. the lightest materials. Nagaland University Dimapur: Nagaland Page 2 . In refineries.00 MMTA (million metric tones of crude per annum).Siliguri pipeline. vaporize and rise to the top of the atmospheric column. in 1965. Indian Oil commissioned India's first product pipeline. As on 1st April 2003 Indian Oil operates the country's largest network of 7170 km of crude and product pipeline with a total capacity of 52. distillation involves pumping oil through pipes in hot furnaces and separating light hydrocarbon molecules from heavy ones. condense in the middle. a novel technology developed by its R&D Centre for upgrading heavy ends LPG. kerosene and diesel fuels. Guwahati Refinery is the first refinery in India to produce Needle Coke. The process involved in production of these products can be described under three basic steps: DISTILLATION. called reduced crude oil condense in the lower portion of the atmospheric column. The refinery has also installed in 2003 Indmax Unit. motor spirit and diesel oil. The refinery process a mix of oil (Oil India Limited) and ONGC(Oil & Natural Gasses Corporation Limited) crude recived from Assam Oil fields through a 430 km long and 16. 1. the Guwahati . From the Romanian Government was initially designed to process 7. A Brief on Manufacturing Process at Guwahati Refinery At Guwahati Refinery various petroleum products are produced by refining crude oil.818 MMT of oil per year. School Of Management Studies(SMS) . Distillation The process of separating the components of a mixture by differences in boiling point.trunk pipeline. Guwahati refinery set up with the expertise and technical assistance.000 metric tones of crude oil p. Guwahati refinery got TPM certificate from Japan Institute of Plant Management. During this process. a vapor is formed from the liquid by heating the liquid in a vessel and successively collecting and condensing the vapors into liquids.
The large residuum molecules are cracked into smaller molecules when the residuum is held in a coke drum at a high temperature for a period of time. LDO/HSD in presence of high temperature and catalyst. Cracking The process of breaking down the larger. Gasoline. At Guwahati Refinery. Only solid coke remains and has to be drilled from the coke drums. Treating (Removing sulfur) In order to meet the environmental norms (BS-II /BS-III). At Guwahati Refinery. Process Flow Diagram of Guwahati Refinery: School Of Management Studies(SMS) . Cracking is done by application of heat and pressure called as thermal cracking or pyrolysis and use of heat and catalytic agent called as catalytic cracking. the Gasoil produced in Crude Units/DCU is treated in (Hydrotreater Unit) HDT unit where sulfur is reduced with the help of hydrogen. Nagaland University Dimapur: Nagaland Page 2 .2. For this purpose. thermal cracking is carried out in Delayed Coking Unit (DCU) wherein reduced crude oil (RCO) from CDU bottom is converted (using the coking. heavier and more complex hydrocarbon molecules into simpler and lighter molecules of higher value. the sulfur content of Gasoil has to reduce to acceptable norms. 3. or thermal-cracking process) to high-value light products. producing petroleum coke in the process. catalytic cracking is carried out in INDMAX unit. which is a form of fluidized catalytic cracking wherein reduced crude oil (RCO) from CDU bottom & Coker Fuel oil (CFO) from DCU bottom is converted into value added products like LPG.
PRO CES S FLO W D IA G RA M LPG LN HGU H2 I S O S IV A T E IS O S IV NO RMAL N et G as S R -I K MS RN C ru d e HN RN CDU SRK -I SRK -II SRGO LPG CK G A S O L IN E TCO CGO HDT AT U SRU AT F SKO HSD SULPHUR LD O C LO RCO D C U CFO RFO RCO IF O RPC School Of Management Studies(SMS) . Nagaland University Dimapur: Nagaland Page 2 .
LPG – LIQUID PETROLEUM GAS MS – MOTOR SPIRIT HSD – HIGH SPEED DIESEL SRN – STRAIGHT RUN NAPTHA RPC – RAW PETROLEUM COKE LDO – LIGHT DIESEL OIL SKO – SUPER KEROSENE OIL ATF – AVIATION TERVINE FUEL CDU. Nagaland University Dimapur: Nagaland Page 2 .STRAIGHT RUN GAS OIL HN – HIGH NAPTHA School Of Management Studies(SMS) .CRUDE DISTILLATION UNIT HGU – HYDRO TREATER UNIT ATU – AMINE TREATING UNIT DCU – DELAYED COKING UNIT SRU – SULPHUR UNIT CLO – CLARIFIED OIL IFO – INTERNAL FUEL OIL LN – LIGHT NAPHTA SRK – STRAIGHT RUN KEROSENE RCO – REDUCED CRUDE OIL RFO – REDUCED FURNACE OIL TCO – TOTAL CYCLE OIL CK – COKER KERO CGO – COKER GAS OIL CFO – COKER FURNACE OIL SRGO .
School Of Management Studies(SMS) . for mobilization and provision of funds for uninterrupted operations and project execution at optimal costs. 2. 4. the formulation and implementation of all financial policies and plans for different time spans consistent with and conducive to the business plans for expansion. with sensitivity and promptness. systems and procedures for discharging the fiduciary responsibilities and enabling compliance with statutory obligations. diversification. depositors and creditors. 5. To interact pro-actively with the relevant Government agencies on pricing and investment and with financial institutions. 3. To play a lead role in scanning the domestic and international financial environment. To develop the human resources. systems and techniques of finance for continuing innovation and contribution towards IOC corporate excellence. review and update of all relevant accounting records. productivity etc. cost benefit attitudes and system orientation in the entire organization.FUNCTIONS OF EACH SECTIONS OF FINANCE DEPERTMENT FINANCE DEPERTMENT OF GUWAHATI REFINERY FINANCIAL MISSIONS 1. divisional. Nagaland University Dimapur: Nagaland Page 2 . To maintain. unit and location to enable the achievement of overall corporate objectives and goals. To inculcate financial awareness. 6. To provide high quality financial staff support for decision-making and control to all levels of management—corporate.
5. Optimize utilization of working capital. To ensure adequate return on capital employed and maintain a reasonable annual dividend on its equity capital. THE FUNCTIONS OF THE FINANCE DEPARTMENT INCLUDES: School Of Management Studies(SMS) . Proper implementation of budgetary control and submission of MIS in time. 3. To develop long term corporate plans to provide adequate growth of the activities of the Corporation.FINANCIAL OBJECTIVES 1. 4. The endeavour to complete all planned projects within stipulated time and within stipulated cost estimates. 3. To generate sufficient internal resources for financing partly/wholly expenditure on new capital projects. 6. 6. To ensure maximum economy in expenditure. Nagaland University Dimapur: Nagaland Page 2 . Ensure payment on due date to various agencies. 2. To inculcate cost consciousness in user departments. 5. 4. To continue to make an effort in bringing reduction in the cost of production of petroleum products by means of systematic cost control measures. Development of Standard Refining costs at each unit level. Efficient management of Funds. FINANCIAL GOALS 1. 2.
CAG. Preparation of Balance sheet b.e. Physical Asset verification. if any. c. Head Office Account Reconciliation. Ensuring that the Corporation acts in all financial and accounting matters as per approved policies of the Corporation within the framework of Government policy for public enterprises. Establishment and maintain an appropriate system of Budgetary Control and Management Information System for different levels of the Management. MAIN ACCOUNTS: The main accounts section is entrusted with the responsibility of the following: a. Establish and maintain a system of financial scrutiny and internal checks and render advice on financial matters including examination of feasibility studies and detailed project reports. Statutory. cost accounts and other relevant books and records in accordance with the various statutory and other requirements. Insurance of Assets and stocks. Ensuring uniform financial and accounting policies and procedures. Co-ordinator for all Audits i. etc. in the Division. e. to the extent possible. 4. 3. d. Nagaland University Dimapur: Nagaland Page 2 . THE FUNCTIONING OF DIFFERENT SECTIONS OF THE FINANCE DEPARTMENT OF GUWAHATI REFINERY: 1. Government.1. 6. Maintain the financial accounts. Internal Audit. 2. School Of Management Studies(SMS) . credit policy and pricing policies of the Corporation. 5. Advise on corporate cash planning. Management of financial resources for meeting the Corporations programmes of operations and capital expenditure including investment of surplus fund.
Accounting of cash purchases made by the materials department. • (a) Assets (b) Stores and spares showing original cost. Scrutiny of purchase proposals.Cash budget is prepared in this section and the same is to be produced before HO. List “B” details include 20 items approximately. Deposit and advance payments to suppliers. The Stores Department makes Goods Receipt Note (GRN) and sends it to the purchase section. Asset management is also controlled by this section. which includes name. • • duties. Excise duty. 2. Nagaland University Dimapur: Nagaland Page 2 . f. c. credit notes and reconciliation of the is also a part of this section. All other section of finance department provides the information to the Main Accounts for preparing list “B”. Payment of sales tax. Passing of bill for supplies received. book value and reason for disposal of each item under various categories. After purchase. receiving debit. Maintenance of books of accounts. Here the GRN is checked with the purchase order (PO) and payment is made through e-banking. Some of them are mentioned below. b. e. the material is delivered to the stores department. they prepare the master of assets. For assets management. Arrangement for insurance of goods in transit. PURCHASE ACCOUNT: Generally this section deals with the payment of purchase items only. cost centre and other details for capitalization of assets. PAYROLL: Loss on disposal/write-off of – Employment and Housing accommodation statistics. Entry tax and other tax and School Of Management Studies(SMS) . d. 3. Further. The purchases section is responsible for: a.
a manufacturer can take credit of excise duty paid on raw materials and components used by them. which is now known as CENVAT i.e. It is a scheme. Deductions from pay bills. b. return and transfer of materials. The section dealing with accounting of stores have the following functions: a. Function dealing with this section can be broadly classified as: a. However it depends upon the Tariff class under which the product is classified. Central Value Added Tax. The eligibility for special type of allowance such as special allowances. d. b. shift allowance etc. Advances payment to employees. d. Rules for pay and allowance are prescribed by head office from time to time. e. Personal claims and other payments. 4. Nagaland University Dimapur: Nagaland Page 2 . If a person is transferred to another unit. Accounting of receipts. School Of Management Studies(SMS) . Stock verification. e. STORES AND CENVAT: MODVAT stands for Modified Value Added Tax. c. Then the Pay Roll section functions accordingly. Accounting for sale of surplus/scrap materials. The normal excise duty rate is 16%. Passing and accounting of transportation bills. Accounting of imported materials for capital works and operations/ maintenance. is determined by personnel department and intimations are sent to the finance department giving the details of employees those who are eligible for such allowance. Payment of salaries and allowances.This section mainly deals with the payment to employees for their work. Under this scheme. which provides relief to final manufacturers on the excise duty borne by the suppliers in respect of goods manufactured by them. issues. the LPC (last pay certificate) is required to be added into master information. Scrutiny & concurrence of proposals from personnel department. This section also maintains the data of transfer and new recruitment of employees and adds it to master information. c.
Finished Goods c. b. Preparation of BRS (Bank Reconciliation Statement) d.5. Raw Material. Salary to the employees is paid through cheques. Valuation of closing stocks i. Receipts of cheques and bank drafts b. All the employees irrespective of their position in the organization are entitled to 9. 7. The balance at the end of the day. including crude accounting. Preparation of Cost Sheet and Cost Audit Performa d. becomes nil by transferring the amount to the head office. The organization has special current accounts with State Bank of India. custom duty payments. product bill accounts. The basic functions of the production accounts are: a. PROVIDENT FUND & ADVANCES: The scheme of the provident fund is the same as in case of any government undertaking i. Safe custody of valuables and documents. Payment of cheques and bank drafts. Production Accounts Section keeps records of input in terms of crude oil and output in terms of the company’s final products. No fixed limit is established by the organization for making payments. ISD. Cash section shall be responsible for: a. The employees of the organization are paid through cash up to Rs. 20000. Accounting of Crude oil quantity and value for the receipts. 6. Preparation of Revenue Budget.5% interest on provident fund. This School Of Management Studies(SMS) . Monitoring of Revenue Budget. bitumen drum accounts and stock valuation accounts. c.e. These accounts are the sources of payments. CASH / BANK: This section mainly deals with making payments.20000 and by cheque for over and above Rs. PRODUCTION ACCOUNTING: This section maintains production accounts.e. consumption and stock. Nagaland University Dimapur: Nagaland Page 2 . 12% of the dearness allowance is kept aside for this purpose and the company contributes the same amount.
Accounting of cash imp rest and advances for company expenses for specific reasons such as gift items for functions. Material balance & Production statistics. f. Passing of bills of miscellaneous nature such as expenses of Auditor. b. OIL ACCOUNT Here are some basic functions of the oil accounting: a. Miscellaneous recoveries from outsiders d. urgent purchase etc. 9. Payment for expenditure of Canteen and Training. Payment of Electricity Duty.rule is applied uniformly to all the units and branches of the refineries division of Indian Oil Corporation limited. e. Dispatch of products. School Of Management Studies(SMS) . Accounting of finished product receipts d. c. e. Nagaland University Dimapur: Nagaland Page 2 . 8. Accounting of crude oil receipts b. The function of the Miscellaneous Section includes the following: a. MISCELLANEOUS SECTION The expense which cannot be accounted and beard by any other section is done by this section. Excise procedure and accounting f. Inter-sectional coordination. c. Accounting of customs duty on crude oil.
e) Improved productivity and effectiveness. c) Reduced cost. MM. PS implemented and all transactions are done in SAP. GENERAL ADVANTAGES a) Reduced working capital requirements. and JR in the year 2002. All modules viz FICO. School Of Management Studies(SMS) . from customer requirement to fulfillment. structure and technology. PM. MR. FEATURES OF ERP-SAP a) Covers the entire value chain/ supply chain. b) Covers all business dimensions of the organization. d) Covers all management levels of the organization. This was the fourth refinery to IOCL to go live in SAP after PRP. MISCONCEPTIONS ABOUT SAP a) ERP facilitates the decision-making and does not decide. process. d) Having accountability through out the organization. c) Oriented towards business process and not around function. b) Improved customer service and quality. HR. Nagaland University Dimapur: Nagaland Page 2 . e) Fully integrated with all functionality of the organization.IMPLEMENTATION OF ERP-SAP IN GUWAHATI REFINERY: ERP-SAP has been implemented in Guwahati Refinery in 2002. people.
Nagaland University Dimapur: Nagaland Page 2 . c) It automates and integrates transactions but does not target the cycle time Since the system security is of utmost importance under SAP. The objectives of the project are as follows:a) To provide a glimpse of Indian Oil Corporation Limited and of Guwahati Refinery. Under SAP a complete Audit trial is maintained in the System. School Of Management Studies(SMS) . Therefore.b) ERP provides comprehensive information to optimize but does not optimize dynamically. user ID and Password is strictly enforced. the responsibility for any misshappening is established as per the user ID to perform the relevant transactions. METHODOLOGY AND LIMITATION OF THE PROJECT Any project work exposes the research scholar to the ground realities prevailing in the particular industry and thereby enables to carry out a meaningful realistic analysis. c) To determine the financial viability for installation of Heat Exchanger in RFO (reduced fuel oil) rundown circuit of Guwahati Refinery leading to reduce the energy consumption. Chapter 3 AIMS &OBJECTIVES. RESEARCH METHODOLOGY The data collection is carried out mainly through personal interviews as well as through the literature review from the relevant policy manuals as well as from the various daily reports made by the Finance Department. b) To understand and describe the functioning of each sections of the Finance Department of Guwahati Refinery.
They are primary data & secondary data.e. Also through Company websites i. The data are analyzed using the various Capital Budgeting techniques. Nagaland University Dimapur: Nagaland Page 2 . The selection rules associated with these criteria are as follows: School Of Management Studies(SMS) .com The Research carried out is a Descriptive study including DATA ANALYSIS: mostly the secondary data. Training Department personnel. Journals and magazines published by I. Data provided from the finance dept. a) PRIMARY DATA: Face to face discussion with the Finance Manager. 2. 4. • www. Ltd. Finance Department Personnel and the employees of Guwahati Refinery (a unit of IOCL). Cost of Capital and other related information.iocl.O. Library: records and manuals. 3. regarding Cost of Investment.SOURCES OF DATA: For collecting necessary data two sources have been used. b) SECONDARY DATA: 1.C.
Nagaland University Dimapur: Nagaland Page 2 .R) ARR<TARGET PERIOD Based on the above mentioned selection rules. LIMITATIONS: The limitations of this study are as follows:- School Of Management Studies(SMS) .R. after analyzing the data collected from various sources we can conclude that the project is worthwhile for the organization and can be implemented.CRITERION NET PRESENT (NPV) INTERNAL ACCEPT VALUE NPV>1 OF IRR> COST OF CAPITAL REJECT NPV<1 IRR< COST OF CAPITAL PBP>TARGET PERIOD DPBP>TARGETPERIOD RATE RETURN (IRR) PAYBACK PERIOD (PBP) PBP< TARGET PERIOD DISCOUNTED PAYBACK DPBP<TARGETPERIOD PERIOD (DPBP) ACCOUNTING RATE OF ARR>TARGET PERIOD RETURN (A.
the benefits related to coalescer assembly. d) The scope of the study is limited to the vicinity of Guwahati Refinery e) Time taken to complete the project work is very limited. b) Due to limited knowledge on the technical ground. CHAPTER -4 INTRODUCTION TO BUDGET & CAPITAL BUDGET BUDGET School Of Management Studies(SMS) . viz. some technical things and terms are taken for granted. Nagaland University Dimapur: Nagaland Page 2 . c) In this project we are mainly concerned with the Financial Analysis part for installation of heat exchanger.a) The primary data collected through direct interaction with Officers of different departments are assumed to be correct as there is no provision to cross-check and verify the data.
of the policy to be pursued during that period for the purpose of attaining a given objective”. According to CIMA. The target/ goals set in the long range plan is reviewed periodically at Units/HO with reference to actual. Official terminology. LONG RANGE PLAN: Long range plan is aimed to achieve the broad objective envisaged in the perspective plan by fixing specific targets and action plans for various functions. Perspective plan covering a duration of 10-15 years 2. SHORT TERM BUDGETS: In the short term. 2. Long range plan covering a duration of 5 years. A budget is the monetary or / and quantitative expression of business plans & policies to be pursued in the future period of time.These budgets are more detailed and indicate the expected School Of Management Studies(SMS) . perspective for a period of 10 –15 years is available. TYPES OF PLAN/BUDGET The corporate objective forms the basis for long term and short term budget as to attain the desired objectives: The long term plan comprises of: 1. “A budget is a financial and/or quantitative statement prepared prior to a defined period of time. the corporation prepares REVENUE and CAPITAL BUDGET indicating the revised estimates for the current year and the Budget Estimates for the next year.Budget is a pre determined statement of management policy during a given period which provides a standard for comparison with the result actually achieved. 1. In other words. The perspective plan is updated once in two years so that at any point of time. The perspective plan is prepared by corporate planning department based on inputs received from the divisions. PERSPECTIVE PLAN: The Perspective plan sets the long term goals to be attained by the corporation in line with the corporate objectives. The corporate goals are further divided into Divisional goals and Units’ goals. Nagaland University Dimapur: Nagaland Page 2 . The long range plan is co ordinate by the long range planning department at all Units and HO and the same is updated every year so as to have detail plans for five years at any point of time. performance.
Research and development project cost. goodwill. plant and machinery. In other words. capital expenditure is an expenditure incurred for acquiring or improving the fixed assets. The following are some of the examples of capital expenditure: Cost of acquisition of permanent assets as land and building.C. Cost of replacement of permanent assets. G.” Capital budgeting is concerned with the allocation of the firm’s scarce financial resources among the available market opportunities. CAPITAL BUDGET: Capital budgeting is the process of making investment decisions in capital expenditures. the benefits of which are expected to be received over a number of years in future. SHORT TERM BUDGET REVENUE BUDGET CAPITAL BUDGET REVENUE BUDGET: The revenue budget is basically a budget of income and expenditure. School Of Management Studies(SMS) . improvement or alteration in the fixed assets. The main characteristic of a capital expenditure is that the expenditure is incurred at one point of time whereas benefits of the expenditure are realized at different points of time in future.physical/financial performance of operations and projects for close monitoring and control. etc. Nagaland University Dimapur: Nagaland Page 2 . expansion. Cost of addition. etc. A capital expenditure may be defined as an expenditure the benefits of which are expected to be received over period of time exceeding one year. Philippatos has defined capital budgeting as.
i. concern is of national importance because it determines employment. expansion and alteration of assets is essential. b. vi. greater is the need for careful planning of capital expenditure. replacement. But the funds available with the firm are always limited and the demand for funds far exceeds the resources. and c. involve large investment of funds. Hence. Capital Budgeting. III. Higher degree of risk. LARGE INVESTMENTS: capital budgeting decisions. significance oor importance of capital budgeting arises mainly due to the following: I. Nagaland University Dimapur: Nagaland Page 2 . Thus. NATIONAL IMPORTANCE: investment decision though taken by individual II. it is very important for a firm to plan and control its capital expenditure. it becomes very difficult to dispose of these assets without incurring heavy losses. economic activities and economic growth.e. LONG-TERM INVESTMENTS COMMITMENT OF FUNDS: capital expenditure involves not only large amount of funds for long term or more or less on permanent basis.NEED AND IMPORTANCE OF CAPITAL BUDGETING: The importance of capital budgeting can be well understood from the fact that an unsound investment decision may prove to be fatal to the very existence of the concern. generally. Proper timing of purchase. The need. without using capital budgeting techniques a firm involve itself in a losing project. Decision extends to a series of years beyond the current accounting period. CAPITAL BUDGETING PROCESS: Capital budgeting is a complex process as it involves decision relating to the investment of current funds for the benefit to the achieved in future and the future School Of Management Studies(SMS) . The long term commitment of funds increases the financial risk involved in the investment decision. Uncertainties of future. IRREVERSIBLE NATURE: the capital expenditure decisions are of irreversible nature. Greater the risk involved. IV. DIFFICULTIES OF INVESTMENT PROPOSAL: the long term investment decisions are difficult to be taken because: a. Once the decision for acquiring a permanent asset is taken.
The capital expenditure budget lays down the amount of estimated expenditure to be incurred on fixed assets during the budget period. the following procedure may be adopted in the process of capital budgeting: i. proposals involving smaller investment may be decided at the lower levels for expenditure action. But it may not be possible for the firm to invest immediately in all the acceptable proposals and to establish due to limitation of funds. ii. internal rate of rate return method. School Of Management Studies(SMS) . FINAL APPROVAL AND PREPARATION OF CAPITAL EXPENDITURE BUDGET: proposals meeting the evaluation and other criteria are finally approved to be included in the Capital Expenditure Budget. etc. SCREENING THE PROPOSALS: The Expenditure Planning Committee screens the various proposals received from different departments. There are many methods which may be used for this purpose such as payback period method. However. net present value method. INDENTIFICATION OF INVESTMENT PROPOSALS: The capital budgeting process begins with the identification of investment proposals. v.is always uncertain. Nagaland University Dimapur: Nagaland Page 2 . iii. the unprofitable or uneconomic proposals may be rejected straight away. Evaluation of various proposals: the next step in the capital budgeting process is to evaluate the profitability of various proposals. rate of return of return method. risk and profitability involved therein. The proposal or the idea about potential investment opportunities may originate from the top management or may come from the rank and file worker of any department or from any officer of the organization. The committee views these proposals from various angles to ensure that these are in accordance with the corporate strategies or selection criterion of the firm and also do not lead to departmental imbalances. iv. The departmental head analyses the various proposals in the light of the corporate strategies and submits the suitable proposals in the light of the corporate strategies and submits the suitable proposals to the Capital Expenditure Planning Committee in case of large organization or to the officers concerned with the process of long term investment decision. However. it is very essential to rank the various proposals and to establish priorities after considering urgency. Hence. Fixing priorities: after evaluating various proposals.
The evaluation is made through comparison of actual expenditure on the project with the budgeted one. PERFORMANCE REVIEW: the last stage in the process of capital budgeting is the evaluation of the performance of the project.vi. if any should be looked into and the causes of the same are identified so that corrective action may be taken in future. Nagaland University Dimapur: Nagaland Page 2 . A request for the authority to spend the amount should further be made to the Capital Expenditure committee which may like to review the profitability of the project in the changed circumstances. IDENTIFY INVESTMENT PROPOSAL SCREEN PROPOSAL vii. EVALUATE VARIOUS PROPOSAL FIX PRIORITIES FINAL APPROVAL IMPLEMENT THE PROPOSALS REVIEW PERFORMANCE FIG: CAPITAL BUDGETING PROCESS Investment Evaluation Techniques Used In This Project: School Of Management Studies(SMS) . and also by comparing the actual return from the investment with the anticipated return. IMPLEMENTING PROPOSAL: preparation of a capital expenditure budgeting & incorporation of a particular proposal in the budget does not itself authorize to go ahead with the implementation of the project. The unfavorable variances.
At each point of time a business firm has a number of proposals regarding various projects in which it can invest funds. PAYBACK PERIOD METHOD: School Of Management Studies(SMS) . DISCOUNTED PAYBACK PERIOD METHOD. There are many methods of evaluating profitability of capital investment proposals. which influence the capital budgeting decisions. PAYBACK PERIOD METHOD. Hence. i. NET PRESENT VALUE METHOD. III. II.e. (B) TIME –ADJUSTED METHOD OR DISCOUNTED METHODS: I. I. it is very essential to select from amongst the various competing proposals. ACCOUNTING RATE RETURN METHOD. II. INTERNAL RATE OF RETURN METHOD. But the funds available with the firm are always limited and it is not possible to invest funds in all the proposals at a time. Yet. Nagaland University Dimapur: Nagaland Page 2 . PROFITABILITY INDEX METHOD. III. The crucial factor that influences the capital budgeting decision is the profitability of the prospective investment. those which give the highest benefits. There are many considerations. economics well as non-economic. The various commonly used methods are as follows: (A) TRADITIONAL METHODS/ NON DISCOUNTED CASH FLOW: I. higher the profitability. the greater the risk and vice versa. the risk involved in the proposal cannot be ignored because profitability and risk are directly related.
School Of Management Studies(SMS) . Nagaland University Dimapur: Nagaland Page 2 . The resultant figure is the payback period. (2) Where annual cash inflow is uniform. the payback period can be found by adding up the cash inflows until the total is equal to the initial cash outlay of the project. these are called annual cash inflows. the initial outlay of the project is divided by the annual cash inflow. it is adopted if it pays back for itself within a period specified by the management and if the project does not payback itself within the period specified by the management then it is rejected. PROS: a) It is simple to understand and easy to calculate. Accept / Reject criterion: In case of evaluation of a single project. This method is based on the principle that every capital expenditure pays itself back within a certain period out of the additional earnings generated from the capital assets. Calculation of payback period: (1) Calculate annual net earnings (profits) before depreciation and after taxes.Pay Back period is the exact amount of time required for a firm to recover its initial investment in a project as calculated from cash inflows. CONS: a) It does not take into account cash inflows earned after the pay back period & hence the true profitability of the projects cannot be correctly assessed. b) This method is particularly suited to a firm which has shortage of cash or whose liquidity position is not particularly good. c) It is suitable in conditions of uncertainty. PBP = Initial Cash outlays Annual Cash inflow (3) Where the annual cash inflow are unequal.
In this modified method the present values of all cash outflows and inflows are computed at an appropriate discount rate.b) It ignores the time value of money and does not consider the magnitude and timing of cash in flows. II. DISCOUNTED PAYBACK PERIOD METHOD: A major shortcoming of the conventional payback period method is that it does not take into account the time value of money. Under this method. because it does not explicitly consider the time value of money. The time period at which the cumulated present value of cash inflows equals the present value of cash outflows is known as discounted pay-back period. According to this method. The expected return is determined and the project which has a higher rate of return than the minimum rate specified by the firm. is accepted School Of Management Studies(SMS) . Although popular the payback period is generally viewed as unsophisticated capital budgeting technique. Nagaland University Dimapur: Nagaland Page 2 . ARR = Average Annual Income After Tax & Depreciation x 100 Initial Investment Decision Criterion: The project with the higher rate of return is selected as compared to the one with lower rate of return. To overcome this limitation. The present values of all inflows are cumulated in order of time. various projects are ranked in order of the rate of earnings or rate of return. ACCOUNTING RATE OF RETURN METHOD / RATE OF RETURN METHOD: This method takes into account the earnings expected from the investment over their whole life. Decision criterion: The project which gives a shorter discounted pay-back period is accepted. c) It does not take into consideration the cost of capital which is a very important factor in making sound investment decisions. the discounted payback period is used. the Accounting concept of profit (net profit after tax and depreciation) is used rather than cash inflows. III.
the real value of money fluctuates over a period of time. Therefore. PROS: a) It is very simple to understand and use. c) It ignores the fact that the profits earned can be reinvested. c) This method through the concept of "net earnings" ensures a compensation of expected profitability of the projects. An investment is essentially out flow of funds aiming at fair percentage of return in future. The presence of time as a factor in investment is fundamental for the purpose of evaluating investment. Time is a crucial factor. In evaluating investment projects it is important to consider the timing of returns on investment. it provides a better means of comparison of project than the pay back period. TIME –ADJUSTED METHOD OR DISCOUNTED METHODS: Time adjusted technique is an improvement over pay back method and ARR. NET PRESENT VALUE METHOD: School Of Management Studies(SMS) . Discounted cash flow technique takes into account both the interest factor and the return after the payback 'period.and the one which gives a lower expected rate of return than the minimum rate is rejected. B. Calculation of cash inflow and out flows over the entire life of the asset. b) This method takes into account saving over the entire economic life of the project. Nagaland University Dimapur: Nagaland Page 2 . CONS: a) It ignores time value of money. because. Discounting the cash flows by a discount factor Aggregating the discounted cash inflows and comparing the total so obtained with the discounted out flows. A rupee received today has more value than a rupee received tomorrow. Discounted cash flow technique involves the following steps: I. b) It does not consider the length of life of the projects.
the proposal should be rejected.V 1) Determine an appropriate rate of interest that should be selected as the minimum required rate of return called “cut – off rate or discount rate”. 4) Calculate the net present value of each project by subtracting the present value of cash outflows for each project. = 1 (1+r) n Where. of cash inflows either exceeds or is equal to the P. It is considered as the best method of evaluating the capital investment proposal.P. the proposal may be accepted. when P. The net present values of all inflows and outflows of cash occurring during the entire life of the project is determined separately for each year by discounting these flows by the firm’s cost of capital or a predetermined rate. The discount rate should be either the actual rate of interest in the market on long-term loans or it should reflect the opportunity cost of capital of the investor. 1 due in any number of years can be found with the use of the following mathematical formula: P. of cash outflows.V.V of Re. P.V. Nagaland University Dimapur: Nagaland Page 2 . 2) Present value of the total investment outlays is to be computed. The P. Method of calculation of N.P. = Present Value r = rate of interest/ discount rate School Of Management Studies(SMS) . 3) Present value of cash inflows during the entire life of the project at the discounted rate is to be calculated. But in case the present value of inflows is less than of cash outflows. It recognizes the fact that a rupee earned today is worth more than the same rupee earned tomorrow. i.This method recognizes the impact of time value of money.V.V is positive or zero.e.V. 5) If the N.
= A1 (1+r) N + A2 (1+r)2 + A3 (1+r)3 +. c) It estimates the present value of their cash inflows by using a discount rate equal to the cost of capital. and in a dynamic situation where the desired rate can vary frequently due to inflation and risk factors‘. The P.. Thus. deciding on a desired rate for the duration of the project life poses problems.… + An (1+ r)n A1. A = Future net cash flows (profit after tax but before depreciation) r = rate of interest 2. Nagaland University Dimapur: Nagaland Page 2 . b) It considers the cash inflow of the entire project. NPV = PV of cash inflows – cash outlay THE DECISION CRITERIA: If NPV is greater than 1.. II. accept the project If NPV is less than 1. indifferent PROS: a) It recognizes the time value of money.. A2. CONS: a) It is more involved and complicated as compared to the Average Rate of Return or Payback methods.……….V. INTERNAL RATE OF RETURN METHOD: School Of Management Studies(SMS) . A3. and n = number of years.n = number of years. reject the project If NPV is equal to 1. 3. of years is thus found as follows: P. b) The decision on the desired rate of return is crucial for evaluation by this method. c) It may not give reliable answers when dealing with alternative projects under the conditions of unequal lives of project.V for all the cash inflows for a no.
In this case. IRR = Lower Discount Rate + – Lower Discount Rate) (Higher Discount Rate The Decision Criteria When IRR is used to make accept-reject decisions. If the IRR is equal to the cost of capital. Nagaland University Dimapur: Nagaland Page 2 . PROS: a) It consider the time value of money b) Calculation of cost of capital is not a prerequisite for adopting IRR c) IRR attempts to find the maximum rate of interest at which funds invested in the project could be repaid out of the cash inflows arising from the project. If the IRR is greater than the cost of capital. the decision criteria are as follows: • • • If the IRR is less than the cost of capital. It is the rate at which the net present value of the investment is zero. which equates the net present value so calculated to the amount of investment. School Of Management Studies(SMS) .It is that rate at which the sum of discounted cash inflows equals the sum of discounted cash outflows. It is the rate of discount which reduces the NPV of an investment to zero. accept the project. It is called internal rate because it depends mainly on the outlay and proceeds associated with the project and not on any rate determined outside the investment. cash flows are discounted at a suitable rate by hit and trial method. d) It considers cash inflows throughout the life of the project. reject the project. CONS: a) Computation of IRR is tedious and difficult to understand. indifferent.
life and timings of cash flows. This situation arises in case of non conventional projects. accept the project. c) It assumes that all proceeds are reinvested at the particular internal rate of return for the remaining life of the project. and thus looks at the profitability rather than the absolute quantum of profit. PROFITABILITY INDEX METHOD. It focuses attention on the ratio of benefits expected of the project to its costs of investment and operations. III. reject the project. Profitability Index (PI) is the ratio of the present value of cash inflows. to the initial cash outflow of the investment. the decision criteria are as follows: • • • If the PI is greater than 1.b) It produces multiple rates which can be confusing. at the required rate of return. Nagaland University Dimapur: Nagaland Page 2 . indifferent PRONS: School Of Management Studies(SMS) . d) The results of NPV & IRR method may differ when the projects under evaluation differ in their size. Profitability Index = Present Value of Cash Inflows Present Value of Cash Outflows Net Profitability Index = Net Present Value Initial Cash Outlay THE DECISION CRITERIA: When PI is used to make accept-reject decisions. If the PI is equal to 1. It is an extension of the net present value approach to compare the profitability of investment alternatives before deciding on investment. If the PI is less than 1. But this assumption is not correct if the average rate of return earned by the firm is not close to the internal rate of return.
Uncertainty & risk pose the biggest limitation to the techniques of capital budgeting. All the techniques of capital budgeting presume that various investment proposals under consideration are mutually exclusive which may not practically be true in some particular circumstances. CONS: • • When a package of smaller projects is to be considered in relation to a larger project. Nagaland University Dimapur: Nagaland Page 2 . the Profitability Index approach is of no help. LIMITATIONS OF CAPITAL BUDGETING: Capital budgeting techniques suffer from the following limitations: I. The future is always uncertain & the data collected for future may not be exact. Obviously the results based upon wrong data may not be good. Since the benefit-cost ratio indicates relative and not absolute measure of profits. School Of Management Studies(SMS) . The techniques of capital budgeting require estimation of future cash inflows & outflows. III. it is considered superior to the Net Present Value method.• • It can be correctly used for ranking of the projects when the project involve different amount of investments. IV. Urgency is another limitation in the evaluation of capital investment decisions. It is more involved and complicated as compared to the Average Rate of Return or Payback methods. II.
Step 1:Calculation of cash outflow Cost of project/asset Transportation/installation charges Working capital Cash outflow xxxx xxxx xxxx xxxx Step 2: Calculation of cash inflow Sales Less: Cash expenses PBDT Less: Depreciation PBT less: Tax PAT Add: Depreciation xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx School Of Management Studies(SMS) . Nagaland University Dimapur: Nagaland Page 2 .
DCU is operating with higher Energy Index. This recoverable heat energy. heat integration of Reduced Fuel Oil (RFO) was not addressed during the said revamp.Cash inflow p. Heat integration of the unit was done by M/s Kinetic Technology of India (KTI) with installation of New Charge Heater (03F101) and feed preheat exchanger trains. Opportunity exists in RFO circuit to recover heat by integrating with generation of MPS in the existing system. 1. Delayed Coking Unit of Guwahati Refinery has been identified in Benchmarking Study conducted among all PSU refineries by M/s Shell Global Solutions at the request of MoP&NG. equivalent to 175 SRFT. Further. which signifies that the unit consumes more energy than theoretical/ benchmark energy figure of DCU of similar capacity and has recommended to explore possibility of heat integration to improve energy Index.33 MMTPA.a xxxx Chapter 5 INTRODUCTION OF PROJECT: NAME OF THE PROPOSAL: Heat Recovery at Delayed Coking Unit by installing a new Heat Exchanger in RFO (Reduced Fuel Oil) rundown circuit. is presently being rejected in Cooling Water System and thus being wasted. But. BRIEF DESCRIPTION: Delayed Coking Unit (DCU) of Guwahati Refinery was installed with Rumanian Technology with a capacity of 0. In light of above. As per Benchmarking report 2008. The proposed exchanger is Reduced Fuel Oil (RFO) Vs Boiler Feed Water School Of Management Studies(SMS) . Nagaland University Dimapur: Nagaland Page 2 . this is a proposal to install a new exchanger in DCU to recover additional heat from rundown stream.
energy efficiency.% of custom duty : Rs. COST ESTIMATE . which is to prevent dangerous climate change.7 Lakhs : 2010-11 : N/A : N/A School Of Management Studies(SMS) . "Annex I" parties are those countries that are listed in Annex I of the treaty. Boost transfers of clean. It is defined in Article 12 of the Protocol. and is intended to meet two objectives: (1) to assist parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC). An industrialised country that wishes to get credits from a CDM project must obtain the consent of the developing country hosting the project that the project will contribute to sustainable development.(BFW) leading to increase in MP steam generation in Steam Generator section due to increased BFW inlet temperature. The CDM allows industrialized countries to invest in emission reductions wherever it is cheapest globally through renewable energy. and (2) to assist parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments (greenhouse gas (GHG) emission caps).Price used are based on which year . Help to reduce "leakage" (carbon leakage) of emissions from developed to developing countries. 2007). What is Clean Development Mechanism ? The Clean Development Mechanism (CDM) is one of the "flexibility" mechanisms defined in the Kyoto Protocol (IPCC. Nagaland University Dimapur: Nagaland Page 2 . 70.% of escalation amount . and are the industrialized countries. less polluting technologies to developing countries. and fuel switching. 2. Crediting mechanisms like the CDM could play three important roles in reducing the amount of (mitigating) future climate change: • • • Improve the cost-effectiveness of GHG mitigation policies in developed countries.
With total investment cost of Rs.10 Lakhs/Annum.83 years (without CDM) and 2. The investment cost would be recovered in only 2.63. The party conducted the detailed thermal design of the heat exchanger and has submitted their budgetary offer for basic price of Rs. Datasheet of the proposed exchanger was sent to a Heat Exchanger vendor M/s Ozone Engineers. ADVANTAGES : The increased heat recovery in the unit. simple payback for the proposed AF project would be mere 2.58Lakhs for design. 9. 3. 70. 4. 2. testing . Kolkata. School Of Management Studies(SMS) . instruments and cost of execution works out to Rs. The total cost estimate including the additional expenses for piping. Nagaland University Dimapur: Nagaland Page 2 . fittings. would result in increased Medium Pressure generation from steam generator. Reduction of 175 SRFT of fuel in boilers will lead to reduction of 567 MT of CO2 emission to the atmosphere translating to equivalent Carbon Emission Reduction (CER) of 567MT. This would provide an additional benefit of Rs. JUSTIFICATION OF THE PROPOSAL: The envisaged energy saving potential of this process scheme is equivalent to 175 SRFT.83 years and the installed heat exchanger would continue to yield recurring benefit. 18354/MT.32.7 Lakhs .63 years (with CDM). similar to that of LSHS price of MoU 10-11.Budgetary cost estimate of exchanger contingency @ 10%.7 lakhs. This would reduce the energy consumption and hence the Energy Index of DCU.commissioning and supply of the exchangers. fabrication. Based on cost estimation of Engineering Services the total cost estimation of Heat Exchanger installation has worked out to be Rs 70. Considering SRF price of Rs. this translates in additional Gross Refinery Margin (GRM) of Rs. due to installation of the new exchanger.55lakhs under CDM as it qualifies under technological barrier.1Lakhs.
IMPACT OF PROPOSAL OF MAN POWER : a) WHETHER ADDITIONAL MANPOWER IS REQUIRED FOR RUNNING THE FACILITY. Nagaland University Dimapur: Nagaland Page 2 . IF ANY : None b) TECHNICAL CONSTRAINTS. IF ANY : None 6.. Fuel & Utility cost Salary & allowance Repair & Maintenance cost : Nil : Nil : Rs. OPERATIONING AND MAINTENANCE COST : Power.ALTERNATIVE OPTION CONSIDERED. : No : Yes : Yes : Opportunity to maximize MPS 5.9 Lakhs (Considering 1. TECHNICAL FEASIBILITY : a) EFFECT OF ENVIRONMENT. IF ANY: No.25% of Investment Cost) School Of Management Studies(SMS) . PLEASE FURNISH THE DETAILS IN THE FORM OF AN ANNEXURE: No b) IF ADDITIONAL MANPOWER IS REQUIRED.) IN CASE THE PROPOSAL IS NOT ACCEPTED : i) ii) iii) iv) LOSS OF PRODUCTION LOSS OF PROFIT LOSS OF EFFICIENCY OTHERS (PLEASE SPECIFY) production ex DCU. CONSEQUENCE (ON PRODUCTION/ PROFIT/ EFFICIENCY ETC. HOW THE SCHEME WILL BE MANNED : No c) WILL THE PROPOSAL RESULT IN SAVING MANPOWER FOR DEVELOPMENT IN OTHER JOBS : No 7. IF YES. 0.
10. IF ANY : NIL (DETAILS TO BE ATTACHED) 9. for additional heat recovery in DCU. REQUIREMENT OF ADDITIONAL WORKING CAPITAL.4 % of Investment Cost) Total Net Operating cost : Rs 1.29 Lakhs (Considering 0. ECONOMICS: a) PAY BACK PERIOD : 2. Discounted payback (refer to below) period. PI.in Lakhs 70.98% (Without CDM) ARR. Nagaland University Dimapur: Nagaland Page 2 .63 Years (With CDM) 2.68% (With CDM) 33. PHASING OF EXPENDITURE : YEAR 2012 Rs.83 Years (Without CDM) b) INTERNAL RATE OF RETURN : c) ANY OTHER CRITERIA USED: 36.19 Lakhs 8. information and install the same in the unit as per attached process scheme School Of Management Studies(SMS) .7 Lakh (100 % of total investment) 11. APPROVAL: In view of the foregoing condition.Overheads & Insurance : Rs. NPV. 0. it is proposed to procure a new heat exchanger as per attached process datasheet.
LAKHS 1 PROJECT COST (PCWOFC) FINANCIAL COST LAND 0.00 0. COMPLETION SCHEDULE: By May 2012 A detail of completion schedule is enclosed as Annexure-III IRR CALCULATION OF RFO EXCHANGER SYSTEM AT GR (WITH CDM) RS.19 RS.00 2 PHASING (PCWFC) 0TH YEAR 70.7 P&M 68.7 CIVIL 2.29 1. LAKHS 1ST YEAR 0.7 0.7 School Of Management Studies(SMS) .00 0.25% -INSURANCE @ 0.00 0.00 68.7 3 OPERATING COST -REPAIR &MAINTENANCE @1.4% 0.7 0. Nagaland University Dimapur: Nagaland Page 2 .00 TOTAL 70.9 0.00 2.12.00 2ND YEAR 0.00 TOTAL 70.00 70.
06 2.52 10.89 8.05 19.46 LAKHS Calculations with CDM Yea r 1 2 3 4 5 6 7 8 9 10 11 Gros s Profi t 33.29 24.71 12.29 16.09 21.23 3.19) LAKHS = 33.64 Depreciati on 24.6 3.46 33.71 26.74 18.49 10.65 – 1.295 0.480 0.55 GROSS PROFIT = (34.00 0.75 23.87 21.46 33.6 28.86 31.73 7.17 9.25 10.543 0.61 20. Nagaland University Dimapur: Nagaland Page 2 .46 9.38 10.44 0.06 33.46 33.98 4.90 11.58 Incom e Tax PAT Cash Flow 30.4 REALISATION Delta products Rs/MT Product prices Rs/MT Freight under recovery Rs/MT Rs/MT ED benefits MT / CER Products RS LAKHS FUEL OIL CDM TOTAL 34.33 14.75 6.96 39.783 0.46 33.00 175 567 32.92 10.00 0.43 19.86 2.10 2.261 PV Of Cash Flows 27.376 0.88 1.46 33.46 33.58 31.71 9.89 5.54 23.693 0.6 Profit Before Tax 8.94 20.48 29.6 2.21 1.39 17.425 0.83 14.885 0.65 18354 449.57 24.63 24.46 33.21 23.93 8.23 29.86 30.7 45.83 9.69 6.02 19.22 23.2 28.57 27.31 20.78 5.4 30.97 5.86 4.99 20.613 0.46 33.00 0.52 19.88 Disc Factor @13% 0.97 22.46 33.333 0. 23.46 33.37 23.73 12.82 17.09 10.30 9.46 Writte n Down Value 70.28 School Of Management Studies(SMS) .25 31.08 22.
27 4.25 36.56 1.T) = P.73 10.81 NOTES: CO. Nagaland University Dimapur: Nagaland 2.10 3.62 158.64 4.204 0.T CASH FLOW = GROSSPROFIT – INCOME TAX PRESENT VALUE OF CASH FLOW= CASH FLOW *DISCOUNTFACTOR CALCULATION S Pay Back Period Net Present Value Profitability Index Internal Rate Of Return Discounted Pay Back Period Average Rate Of Return School Of Management Studies(SMS) .68% 3 .8 22. PROFIT BEFORE TAX (PBT) = GROSS PROFIT (G.5% OF 30 %( SURCHARGE) + 3% OF 32.231 0.48 32.25 %( EDUCATION –CESS &) PROFIT AFTER TAX (P.12 13 14 15 TOT AL 33.44 21.73 22.46 9.DEPRECIATION INCOME TAX (I.36 1.T) = IT IS CHARGED @ 33.P) .B.1 3 0.22%.69 21.54 5.83 32.A.45% Page 2 .T – I.67 22.15 0.79 22. HAS ADOPTED WRITTEN DOWN VALUE METHOD DEPRECIATION & THE RATE OF DEPRECIATION IS 15%.31 32.46 33.63 10. WHICH IS CALCULATED AS 30% TAX + 7.98 0.69 6.51 years 27.84 21.1 32.46 33. FOR CHARGING FOR THE FIRST YEAR THE CO.63 years Rs.05 7.11 lakhs 2.66 10.88.79 10.181 0.46 33.160 5. CAN CHARGE 20% MORE THAN THE ADDITIONAL DEPRECIATION RATE.62 291.58 21.
7 0.00 TOTAL 70.00 2 PHASING (PCWFC) 70.7 0.7 3 OPERATING COST RS.25% -INSURANCE @ 0.00 0.19 4 REALISATION Delta products Product prices Rs/MT Freight under recovery Rs/MT ED benefits Rs/MT Products MT/ CER RsLAKHS P&M 68.00 2.7 CIVIL 2.00 70.00 68.IRR CALCULATION OF RFO EXCHANGER SYSTEM AT GR (WITHOUT CDM) RS.29 1.4% 0. Nagaland University Dimapur: Nagaland Page 2 .7 TOTAL School Of Management Studies(SMS) .00 0.7 0TH YEAR 0.00 2ND YEAR 70.00 1ST YEAR 0. LAKHS -REPAIR &MAINTENANCE @1. LAKHS 1 PROJECT COST (PCWOFC) FINANCIAL COST LAND 0.00 0.9 0.
68 27.53 4.91 30.6 2.54 17.92 Disc Factor @ 13% 0.31 27.99 20.2 28.93 30.783 0.11 16.83 years Rs.99 PAT 4.52 10.15 0.333 0.83 Profit Before Tax 6.295 0.40 9.53 5.261 0.91 Written Down Value 70.91 30.05 21.02 25.93 26.91 30.82 18.02 20.74 9.87 19.91 30.376 0.36 1.93 22.00 175 32.76 29.75 6.73 19.86 4.7 29.35 CALCULATIONS Pay Back Period Net Present Value Profitability Index 2 .94 9.04 16.08 School Of Management Studies(SMS) .17 19.61 8.39 19.86 22.543 0.57 19.693 0.05 25.181 0.00 0.24 18.6 18.91 30.91 30.89 9.55 Depre ciatio n 24.97 10.91 30.FUEL OIL 18354 0.91 30.23 3.73 17.10 Calculations without CDM Yea r 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Gross Profit 30.68 6.613 0.55 29.48 9.32 17.17 21.91 30.88 21.885 0.91 30.10 TOTAL GROSS PROFIT = (32.19) LAKHS = 30.98 0.425 0.91 19.84 21.85 28.82 9.67 11.89 5.97 20.03 29.10 – 1.21 1.08 Inco me Tax 2.91 30.27 5.53 9.160 PV Of Cash Flows 25.88 1.05 7.31 28.12 6.96 39.91 30.06 33.51 21.06 2.65 13.31 29.1 2.29 3.39 17.6 3.73 12.27 21.25 9.66 21.09 7.86 9.231 0.80 3.09 21.16 24.09 Cash Flow s 28.7 45. Nagaland University Dimapur: Nagaland Page 2 .204 0.98 4.59 22.91 30.07 9.32 8.04 7.91 30.64 9.99 20.64 9.6 1.98 8.22 23.33 14.21 8.91 LAKHS 32.77.96 15.480 0.87 4.3 22.
Internal Rate Of Return Discounted Pay Back Period
3 .84 years
Average Rate Return 25.03% ITEMWISE DETAILS OF COST ESTIMATE FOR RFO EXCHANGER
EQUIPMENT COST HEAT EXCHANGER
47.1 9.6 56.7
PIPE TAXES &FREIGHT
4.4 1.2 62.3
ADD: CONTINGENCY @10%
School Of Management Studies(SMS) , Nagaland University Dimapur: Nagaland Page 2
CHAPTER 6 FINDINGS ,CONCLUSION& RECOMMENDATION
1. PAYBACK PERIOD METHOD: Initial Investment 70.70 lakhs Inflow in 1st year 30.5 7 lakhs Inflow in 2nd year 24.63lakhs Inflow in 3rd year 24.29 lakhs
Since the cash inflows are uneven pay back period can be calculated as: In first two years we recover Rs 55.2 lakhs. To recover Rs 70.70 we need Rs 15.5 lakhs more This amount (Rs.15.77 Lakhs) can be recovered in third year. In third year cash inflow is Rs 24.47 lakhs Therefore the Pay Back Period = 2 + 15.5 24.29 = 2.63 years School Of Management Studies(SMS) , Nagaland University Dimapur: Nagaland Page 2
ThemaximumacceptablepaybackperiodofIOCL,GuwahatiRefinery is15years. Here we have found that the payback period of the project which is with CDM is 2.63 years which is much less than the maximum acceptable payback period. Thus we should accept the project.
2. Accounting Rate Of Return (ARR)
Average income after tax &depreciation = 291.13/15 = Rs 19.41 lakhs Initial investment = Rs 70.70 lakhs ARR = 19.41 x 100 70.70 = 27.45% As the ARR of this project is 27.45% which is higher than the minimum rate established by the management of the organization which is 13%, thus we accept the project.
3. Net Present Value (NPV)
PV of cash inflows = Rs 158.94 lakhs Cash outflow = Rs 70.70 lakhs NPV = 158.81 – 70.70 = Rs 88.11 lakhs Here we see that NPV of the project is Rs 88.11 lakhs which is greater than 1 thus we accept the project.
School Of Management Studies(SMS) , Nagaland University Dimapur: Nagaland Page 2
29 lakhs Inflow in 3rd year Inflow in 4th year 16. In fourth year cash inflow is Rs 14.71 lakhs In the first three years we recover Rs 63. Here we have found that the payback period of the project which is with CDM is 3.81 lakhs Cash outflow = Rs 70.70 lakhs Initial Investment Inflow in 1st year 27.25 Here PI is 2.81 70.71 = 3.7.70 Lakhs we need Rs 7.53 14. School Of Management Studies(SMS) .17 Lakhs To recover Rs 70.53 Lakhs more This amount (Rs.51 years which is much less than the maximum acceptable payback period.83 lakhs 14.05 lakhs Inflow in 2nd year 19. Profitability Index (PI) PV of cash inflows = Rs 158.GuwahatiRefinery is15years.70 = 2.25 which is greater than 1.53 Lakhs) can be recovered in fourth year. Discounted Pay Back Period: 70. so we accept the project 5.4.51 years ThemaximumacceptablepaybackperiodofIOCL. Nagaland University Dimapur: Nagaland Page 2 .70 lakhs PI = 158.71 Lakhs Therefore the Discounted Pay Back Period = 3 + 7.
18.59 = 2. To recover Rs 70. Nagaland University Dimapur: Nagaland Page 2 .34 – 70. Pay Back Period Initial Investment 70. Internal Rate Of Return: IRR = 30% + 83.34 – 64.Thus we should accept the project.91 lakhs more This amount (Rs.GuwahatiRefinery School Of Management Studies(SMS) .70 (40% – 30%) 83. 6.68% As the IRR is higher than the opportunity cost of capital of the organization i.41 = 36.e. so we Accept the project.79 lakhs.70 lakhs Inflow in 1st year 28.91 lakhs) can be recovered in third year.83 years ThemaximumacceptablepaybackperiodofIOCL. WITHOUT CDM 1.59 lakhs Therefore the Pay Back Period = 2 + 18.91 22. 13%.93 lakhs Inflow in 3rd year 22.70 we need Rs 18. In third year cash inflow is Rs 22.59 lakhs Since the cash inflows are uneven pay back period can be calculated as: In first two years we recover Rs 51.86 lakhs Inflow in 2nd year 22.
8 – 70.8 lakhs Cash outflow = Rs 70.70 = 25.1 lakhs which is greater than 1 thus we accept the project. thus we accept the project.03% which is higher than the minimum rate established by the management of the organization which is 13%. Here we have found that the payback period of the project which is with CDM is 2.70 = Rs 77. Net Present Value (NPV) PV of cash inflows = Rs 147. Nagaland University Dimapur: Nagaland Page 2 .1 lakhs Here we see that NPV of the project is Rs 77.03% As the ARR of this project is 25.70 lakhs Initial investment = Rs 70. 2. Thus we should accept the project.58/15 = Rs 17.is15years. 4. Accounting Rate Of Return (ARR) Average income after tax &depreciation = 265. 3.83 years which is much less than the maximum acceptable payback period.70 lakhs NPV = 147.70 lakhs ARR = 17. Profitability Index (PI) School Of Management Studies(SMS) .70 x 100 70.
70 = 2.84 years which is much less than the maximum acceptable payback period.15 lakhs To recover Rs 70.55 lakhs more This amount (Rs11. Discounted Pay Back Period Initial Investment 70.67 = 3.PV of cash inflows = Rs 147.70 lakhs we need Rs 11.70 lakhs PI = 147.96 lakhs Inflow in 3rd year Inflow in 4th year 15.8 lakhs Cash outflow = Rs 70.GuwahatiRefinery is15years.54 lakhs Inflow in 2nd year 17.70 lakhs Inflow in 1st year 25.84 years ThemaximumacceptablepaybackperiodofIOCL.67 lakhs Therefore the Discounted Pay Back Period = 3 + 11. In fourth year cash inflow is Rs 13.67 lakhs In the first three years we recover Rs 59.55 13. so we accept the project 5. Nagaland University Dimapur: Nagaland Page 2 .55 lakhs) can be recovered in fourth year.8 70.65 lakhs 13. Here we have found that the payback period of the project which is with CDM is 3.09 Here PI is 2. School Of Management Studies(SMS) .09 which is greater than 1.
47%>13% Thus we should accept the project.84<15 ARR > Target rate 25.12 = 33.e. so we accept the project.63<15 NPV > 1 i.98% As the IRR is higher than the opportunity cost of capital of the organization i.The various outcome by using the different capital budgeting techniques to find out the feasibility of the project are mentioned below:School Of Management Studies(SMS) . Internal Rate Of Return IRR = 30% + 77.50<15 ARR > Target RATE 27.1> 1 PI > 1 i. CONCLUSION To judge the worthiness of the project several aspects have been analyzed. 6.7 – 60.e. 2.e.e.e.68%>13% DPBP < Target period 3.11 > 1 PI > 1 i. Rs 77. 2.70 (40% – 30%) 77.83<15 NPV > 1 i. Rs 88. B.98%>13% DPBP < Target period 2.09 > 1 IRR > Cost Of Capital 33.25 > 1 IRR > Cost Of Capital 36. 13%.03%>13% 2.Criterion Payback Period Net Present Value(NPV) Profitability Index Internal Rate of Return(IRR) Discounted payback Period Accounting Rate of Return(ARR) With CDM PBP < Target Period Without CDM PBP < Target Period 2. Nagaland University Dimapur: Nagaland Page 2 .7– 70. considering CDM and without CDM whereby taking into consideration the financial viability and profitability of the project which also results in low CO2 emission as well as generate profit(by savings) in the long run .
one of its responsibility is to safeguard the environment. School Of Management Studies(SMS) . This would reduce the energy consumption and hence the Energy Index of DCU. would result in increased Medium Pressure generation from steam generator. b) Since IOCL is a Public Sector Undertaking. d) The investment cost would be recovered in only 2. Since the project is viable from the financial point of view it’s recommended to accept the proposal since it will absorb the additional heat.83 years and the installed heat exchanger would continue to yield recurring benefit. due to installation of the new exchanger. RECOMMENDATIONS It is recommended that the old heat exchanger in DCU which was to recover additional heat in rundown circuit of Guwahati Refinery should be replaced with the new one so as to gain good amount of carbon credit and increase efficiency in production energy index at the same time generate revenue in the form of savings . Nagaland University Dimapur: Nagaland Page 2 . c) The increased heat recovery in the unit. a) There is no need of additional man power to run the facility & no operating & maintenance cost so it is advisable to install the new heat exchanger in the unit.Based on the above findings we can conclude that the project is very much feasible from financial as well as from economic point of view.
31 265.39 19.6 18. 10.32 17.69 21. 2. 4. Nagaland University Dimapur: Nagaland 291.04 16.58 Page 2 . M & Without C.28 21. 6. 13. 14.D.79 P.09 21.31 20.44 21. 7.T (with CDM) 5. 12.94 20. 11. 3.02 19. 5.73 17.87 21.D.52 19.82 18.T (without CDM) 4.61 19.M Year 1.87 19.91 19.99 20.73 19.74 18.11 16.61 20.Annexure .A.82 17. 15. 9.A. 8.17 19. Total P.58 21.24 18.57 19.09 School Of Management Studies(SMS) .I Calculation of Accounting Rate of Return with C.
D. Nagaland University Dimapur: Nagaland Page 2 .Calculation Of Net Present Value (With C.M) School Of Management Studies(SMS) .
75 23.204 0.80 22.73 7. Nagaland University Dimapur: Nagaland Page 2 .00 23.97 22.Year Cash Flows Discounting Factors@ 13 % 0.783 0.54 23.71 12.10 3.27 4.543 0.05 19.62 Present Values Rs (in lakhs) 27.693 0.333 0.63 24.11 Total Present Values of Cash Less Initial investment Net Present Value Calculation of Net Present Value (without CDM) Year Cash Flows Discounting Factors@ 13% Present Value Rs (in lakhs) School Of Management Studies(SMS) .62 158.29 16.885 0.181 0.48 0.425 0.93 8.73 22.81 70.37 23.90 11.231 0.295 0.30 9.376 0.08 22.261 0.70 88.69 6.67 22.57 24.29 24.88 22.21 23.16 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 inflows 30.613 0.64 4.78 5.97 5.83 14.
543 0.8 70. Nagaland University Dimapur: Nagaland Page 2 .97 20.16 25.96 15.376 0.333 0.87 4.261 0.1 Total Present Values of Cash Less Initial investment Net Present Value Calculation of Profitability Index (with CDM) YEAR CASH FLOWS DISCOUNTING FACTORS @ 13 % PRESENT VALUE Rs (in lakhs) School Of Management Studies(SMS) .231 0.204 0.21 8.66 21.48 0.12 6.885 0.67 11.30 22.51 21.7 77.54 17.295 0.05 21.65 13.09 7.29 3.425 0.59 22.181 0.35 147.84 21.27 21.86 22.27 5.Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Inflows 28.02 20.693 0.613 0.48 9.53 4.80 3.38 21.93 22.17 21.92 0.97 10.09 21.783 0.
71 12.21 23. Nagaland University Dimapur: Nagaland Page 2 .64 4.75 23.543 0.62 0.295 0.97 5.57 24.16 27.73 7.69 6.08 22.88 22.231 0.05 19.261 0.93 8.62 158.10 3.73 22.78 5.00 23.67 22.204 0.29 24.63 24.425 0.83 14.37 23.27 4.Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Inflows 30.885 0.783 0.97 22.693 0.30 9.333 0.29 16.48 0.81 Total Present Values of Cash Calculation of Profitability Index (without CDM) School Of Management Studies(SMS) .181 0.54 23.376 0.613 0.80 22.90 11.
87 4.543 0.885 0.27 5.613 0.27 21.16 PRESENT VALUES Rs (in lakhs) 25.05 21.693 0.86 22.67 11.Year CASH FlOWS Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 28.425 0.09 21.48 0.92 DISCOUNTING FACTOR@ 13% 0.17 21.30 22.66 21.09 7.59 22.295 0.53 4.231 0.80 3.97 10.93 22.8 Total Present Values of Cash Inflows Calculation of Internal Rate of Return (with CDM) School Of Management Studies(SMS) .65 13. Nagaland University Dimapur: Nagaland Page 2 .333 0.12 6.261 0.84 21.48 9.02 20.96 15.38 21.54 17.204 0.376 0.35 147.181 0.29 3.783 0.51 21.97 20.21 8.
02 .44 83.57 1.59 0.75 0.08 22.54 23.09 0.06 0.80 22.57 24. Nagaland University Dimapur: Nagaland Page 2 .02 0.37 23.V.77 0.13 0.79 0.12 0.40 4.07 0.71 0.72 2.92 6.04 0.46 0.36 0.01 .75 23.34 40% discount factor P.73 22.21 23.21 0.35 0.67 22.84 12.57 11.03 0.02 .V.03 .13 2.05 0.01 .41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total 30.57 0.52 14.19 0.40 6.98 0.57 8.29 24.13 8.28 0.63 24.97 22.07 0. of cash inflow Rs(in lakhs) 21.09 0.62 0.24 4.20 .51 0.11 0.29 0.03 0.00 23.85 2.21 1.67 1.56 0.26 0.16 0.88 3.01 Calculation of Internal Rate of Return (without CDM) School Of Management Studies(SMS) .88 22.27 0.14 64.18 1.Year cash inflows 30% discount factor P. of Cash inflow Rs(in lakhs) 23.40 0.42 3.
71 0.57 10.02 20. Nagaland University Dimapur: Nagaland Page 2 .02 0.46 1.81 5.02 .66 21.13 60.21 0.51 21.86 22.V.09 0.04 0.35 0.19 0.II School Of Management Studies(SMS) .64 2.27 21.12 0.91 0.09 21.94 4.36 0.92 0.05 1.05 21.54 1.03 0.52 3.59 22.03 .26 0.03 0.19 0.41 77. of Cash inflow Rs(in lakhs) 22.07 0.77 0.37 0.18 0.07 0.16 0.03 0. of cash inflow Rs(in lakhs) 20.2 13.09 0.90 2.26 0.Year cash inflows 30% discount factor P.06 0.02 .01 .05 0.93 22.13 0.97 20.7 40% discount factor P.30 22.17 21.V.01 Annexure .52 0.74 0.70 8.84 21.46 0.28 7.12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total 28.23 5.45 2.51 0.69 0.53 0.38 21.80 4.01 .61 11.02 1.59 0.27 0.10 2.
Chart for various activities envisaged for completion and commissioning is attached below: School Of Management Studies(SMS) .6 : 1 Ratio 2) Steam to fuel ratio of refinery fuel oil 3) Calculated C:H 7.Benefit calculation for installation of RFO Exchanger at Delayed Coking Unit Calculation for CO2 Emission Reduction & CDM Benefit Value Unit Remar Parameter Parameters Value Units ks 1) Fuel Saving from 175 MT/pa 2369687.63:1 Metric 3) Fuel Ratio of Ton RFO(carbon:hydro gen) =175 MT 4) Carbon content of 4) Cost fuel oil 18354 Per saved Metric = 154.55 Lakhs As per AOR 2006-07 Very Attractive ANNEXURE -III COMPLETION SCHEDULE: The project is estimated to be complete within 12 months from the date of financial approval of the proposal.7 Kg/Year 1) Saving in High pressure steam due to RFO Exchanger installation of heat exchanger 2) Average Density 0.18 conversion 8) CDM Benefit 567 ×8 ×56.62 Ton MT 5) CO2 Emission due 5) Monetary Benefit for installation of RFO 175 × Lakhs/per to saved fuel oil exchanger(Saving) 18354 =32.18 = 2.96 MT/M3 12.10 year (considering 12 MT of carbon = 567 generates 44 Mt of CO2) 6) Rate of carbon 8 Euro credit 7) Rs to Euro 56. Nagaland University Dimapur: Nagaland Page 2 .
Nagaland University Dimapur: Nagaland Page 2 .F 1e 2b . RITESH AGARWAL.ABHISHEK MAURYA.D 1e 2c.Mr.M 1 a r.A 1u1g. Financial Manager – Mr. Accounts Officer .Mr.S 1e 1p .BHALERAO. A N MEHTAJI.M.N.M a y an 2 1P l a c e m e n t O f A F A p p r o v a l 2A F A p p r o v a l B y M a n a g e m e n t 3P l a c e m e n t N o t i c e I n v i t i n g T e n d e r 4P l a c e m e n t o f P u r c h a s e O r d e r 5D e l i v e r y F r e e o n B o a r d 6D e l i v e r y a t G u w a h a t i 7I n s t a l l a t i o n 8C o m m i s s i o n a n d S t a b i l i s a t i o n REFERENCES • • • • • • Senior Financial Manager – Mr.S.N 1o1 v. Financial Manager .GURUMOORTY. • Annual Report of IOCL School Of Management Studies(SMS) . ACCOUNTS OFFICER – MR.J 1 2 .S l.A 1p2 r.Mr. N o A c tiv ity T im e S c h e d u le 1 1 . SAURABH SUMAN Accounts Officer.O1 c1 t.
Nagaland University Dimapur: Nagaland Page 2 . IOCL for the invaluable opportunity and experience. I cherish the enriching learning experience in IOCL.com www.google. I express my deep sense of gratitude to all those who patiently explained and clarified me several doubts in the intricate subject. and above all guiding me throughout the internship period. I once again thank Guwahati Refinery.com www.com WEBSITES OF THE ORGANISATIONS • www.BIBLOGRAPHY MAGAZINES • Various Reports published by IOCL SEARCH ENGINES • • • • • www.iocl. I would like to thank all those readers who will go through this project in future.com www.com WORD OF THANKS Towards the end I take the opportunity to pay hearty regards to the HOD and Management Faculty of SCHOOL OF MANAGEMENT STUDIES for providing me the opportunity to work with such a big company.economictimes.com www. School Of Management Studies(SMS) .hpcl.iocl.bpcl. though for a brief period. I welcome any suggestion or comments from the reader.
Nagaland University Dimapur: Nagaland Page 2 .SHRUTI BUCHA NU/MN/14/10 School of Management Studies NAGALAND UNIVERSITY School Of Management Studies(SMS) .
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