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MISSION

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, and cost reduction.

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To maximize creation of wealth, value and satisfaction for the stakeholders. To attain leadership in developing, adopting and assimilating state-of-the-art technology for competitive advantage.

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To provide technology and services through sustained Research and Development. To foster a culture of participation and innovation for employee growth and contribution. To cultivate high standards of business ethics and Total Quality Management for a strong corporate identity and brand equity.

To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience.

VISION
With a dream to explore new vistas and emerge as a global entity, riding on the wave of deregulation, Indian Oil coined its first vision statement in the year 1999. Since then, the business landscape in the country has changed. During the year, a need was perceived to revisit the vision statement and chart new targets to invigorate Indian Oil. The process of revisiting the vision captured the collective aspirations of the Indian Oil People as well as other stakeholders so as to create a Shared Vision rather than Vision Shared. The resultant new vision is a matrix of six cornerstone elements and is designed to serve as the bedrock of Indian Oils future growth and transformation into a globally admired company.

(Source: www.iocl.com)

VALUES
Indian Oil nurtures the core values of Care, Innovation, Passion & Trust across the organisation in order to deliver value to its stakeholders. Care Stands for _ Concern _ Empathy _ Understanding _ Co-operation _ Empowerment Innovation Stands for _ Creativity _ Ability to learn _ Flexibility _ Change Passion Stands for _ Commitment _ Dedication _ Pride _ Inspiration _ Ownership _ Zeal & zest Trust Stands for _ Delivered promises _ Reliability _ Dependability _ Integrity _ Truthfulness _ Transparency An energized vision that transforms...backed by the aspirations of the Indian Oil People, Zealously working towards progress... and always making a timeless difference.

OBLIGATIONS

Towards customers and dealers To provide prompt, courteous and efficient service and quality products at fair and reasonable prices.

Towards suppliers To ensure prompt dealings with integrity, impartiality and courtesy and promote ancillary industries.

Towards employees Develop their capability and advancement through appropriate training and career planning.

Expeditious redressal of grievances Fair dealings with recognized representatives of employees in pursuance of healthy trade union practice and sound personnel policies.

Towards community To develop techno-economically viable and environment-friendly products for the benefit of the people. To encourage progressive indigenous manufacture of products and materials so as to substitute imports. To ensure safety in operations and highest standards of environment protection in its manufacturing plants and townships by taking suitable and effective measures.

Towards Defense Services To maintain adequate supplies to Defense Services during Norman and emergency situations as per their requirement at different locations.

CORPORATE OBJECTIVES

To serve the national interests in the Oil and related sectors in accordance and consistent with Government policies.

To ensure and maintain continuous and smooth supplies of petroleum products by way of crude refining, transportation and marketing activities and to provide appropriate assistance to the consumer to conserve and use petroleum products efficiently.

 

To earn a reasonable rate of interest on investment. To work towards the achievement of self-sufficiency in the filed of Oil refining by setting up adequate capacity and to build up expertise in laying of crude and petroleum product pipelines.

To create a strong research and development base in the field of Oil refining and stimulate the development of new product formulations with a view to minimize/eliminate their imports and to have next generation products.

To maximize utilization of the existing facilities in order to improve efficiency and increase productivity.

To optimize utilization of its refining capacity and maximize distillate yield from refining of crude to minimize foreign exchange outgo.

To minimize fuel consumption in refineries and stock losses in marketing operations to effect energy conservation.

To further enhance distribution network for providing assured service to customers throughout the country through expansion of reseller network as per Marketing Plan/Government approval.

To avail of all viable opportunities, both national and global, arising out of the liberalization policies being pursued by the Government of India.

To achieve higher growth through integration, mergers, acquisitions and diversification by harnessing new business opportunities.

FINANCIAL OBJECTIVES
To ensure adequate return on the capital employed and maintain a reasonable annual Dividend on its equity capital.

To ensure maximum economy in expenditure. To manage and operate the facilities in an efficient manner so as to generate adequate internal resources to meet revenue cost and requirements for project investment, without budgetary support. To develop long-term corporate plans to provide for adequate growth of the activities of the corporation. To endeavor to reduce the cost of production of petroleum products by means of systematic cost control measures. To endeavor to complete all planned projects within the stipulated time and cost estimates.

PRINCIPAL SUBSIDIARIES
Indo Mobil Ltd. (50%); Avi-Oil Ltd. (25%); Indian Oil tanking Ltd. (25%); Petronet India Ltd. (16%); Petronet VK Ltd. (26%); Petronet CTM Ltd. (26%); Petronet CIPL Ltd. (12.5%); IndianOil Petronas Ltd. (50%); Indian Oil Panipat Power Consortium Ltd. (26%); Indian Oil TCG Petrochem Ltd. (50%); Librizol India Pvt. Ltd. (50%).

PRINCIPAL COMPETITORS
Bharat Petroleum Corporation Ltd. Hindustan Petroleum Corporation Ltd. Royal Dutch/Shell Group of Companies.

MAJOR DIVISIONS
Refining Born from the vision of achieving self oil refining and marketing for the nation, Indian Oil has gathered a luminous legacy of more than 100 years of accumulated experiences in all areas of petroleum refining by taking into its fold, the Digboi Refinery commissioned in 1901. Indian Oil controls 10 of Indias 20 refineries. The group refining capacity is 60.2 Million Metric tons per

annum (MMTPA) or 1.2 million barrels per day -the largest share among refining companies in India. It accounts for Indian Oil Refineries: Installed Capacities (MMTPA)
Digboi Guwahati Barauni Koyali Haldia Mathura Panipat Bongaigaon Subtotal 0.65 1 6 13.7 6 8 12 2.35 49.7

Subsidiaries Refineries
CPCL - Chennai Narimanam Subtotal Group Total Paradip upcoming 9.5 1 10.5 60.2 15

(MMTPA Million metric tons per annum, equal to 20, 000 barrels per day) (Source: www.iocl.com) Pipelines Indian Oil Corporation network of 10540 km long crude oil and petroleum product pipelines with a capacity of 71.60 million metric tons per annum. Cross-country pipelines are globally recognized as the safest, cost energy-efficient and environment mode for transportation of petroleum products. IndianOils crude oil pipelines registered the throughput of 65 million tons. (Source: www.iocl.com)

SWOT ANALYSIS
STRENGTHS
HIGH FOREIGN EXCHANGE DEBT

IOCL has managed to significantly cut its borrowing cost due to high share of foreign exchange debt. Its share of foreign exchange borrowings is increasing with foreign exchange loans crossing 50% of its total debt compared to 42% at the end of the last financial year.

HIGHEST MARKET SHARE


As India's flagship national oil company, Indian Oil accounts for 56% petroleum products market share, 42% national refining capacity and 67% downstream pipeline throughput capacity.

EXPERTISE IN OIL & GAS INDUSTRY


Indian Oil is one of the leaders in providing engineering, construction and consultancy services to the pipeline industry. Highly qualified professionals with vast experience execute pipeline projects from concept to commissioning and provide services for construction supervision and project management.

FOREIGN SUBSIDIARIES AND JOINT VENTURES


Indian Oil is strengthening its existing overseas marketing ventures and simultaneously scouting new opportunities for marketing and export of petroleum products in foreign markets. Two wholly owned subsidiaries are already operational in Sri Lanka and Mauritius, and regional offices at Dubai and Kuala Lumpur are coordinating expansion of business activities in Middle East and South East Asia regions. The Corporation has launched eleven joint ventures (listed separately) in partnership with some of the most respected corporate from India and abroad .

WEAKNESSES
STRINGENT CORPORATE POLICIES
The decisions relating to administration are taken at the corporate level. Even minor proposals are to be referred to the top management. This leads to a delay in decision-making.

LACK OF MARKETING EFFORTS

Among the public sector oil companies, Indian Oil Corporation is the only one to follow a weak marketing strategy. It in only in the recent years that the company has started to market its products. However, still the efforts seem to be weak when compared with the competitors like BPCL and HPCL.

PROMOTION POLICY
Most of the public sector companies seem to suffer from these lacunae. The employees are promoted mainly on the basis of experience and not on the efforts and initiatives displayed by the employee in his work. This results in demotivation and lack of interest for their work on the part of the hardworking employees, who then tend to shift jobs to satisfy their need for self-esteem.

TENDER PROCESS
The policy of selection of the lowest bidder tends to affect the quality of the products/services on some occasions. A more simplistic procedure is also likely to generate some savings for the company, since tendering process leads to expenses on account of advertisement.

OPPORTUNITIES
Exploration and Production
Indian Oil is metamorphosing from a pure sectoral company with dominance in downstream in India to a vertically integrated, transnational energy behemoth. The Corporation is making investments in E&P and import/marketing ventures for oil and gas in India and abroad, and is implementing a master plan to emerge as a major player in petrochemicals by integrating its core refining business with petrochemical activities.

THREATS
Entry of Big Private players

The opening up of the oil sector for private players poses a threat even for this well-established company. With Indian players like Reliance and Essar and foreign players like Shell planning their entry into the Indian scenario, the road seems to be tough for Indian Oil.

Introduction OBJECTIVE OF THE STUDY:


The study is conducted with reference to IOCL. The main objective of the study is to have an idea of the practical application of the working capital management whose theoretical aspect is known. The study is conducted with the following objectives: _ To determine the managerial aspects of working capital in IOCL. _ To understand how efficiently the working capital is being managed in IOCL. _ To understand the short-term solvency as well as the effectiveness of working capital in the operation of business. _ To study the policies and the procedures adopted by IOCL for managing the various components of working capital. _ To comprehensively evaluate the inventory, receivables, creditors and cash Management performances. _ To undertake a study of the various sources of working capital financing, employed by IOCL. _ To suggest on the basis of findings, improvements in the management of working capital, at IOCL.

SCOPE OF THE STUDY:


The scope of this project work is confined to the Working Capital Management Practices at IOCL for a period of past 5 years i.e. from 2005-06 to 2009-10 and trend analysis.

LIMITATIONS:
_ Time is definitely the main constraint. Time was not sufficient enough to assess all processes and policies of an organization of the stature of IOCL. _ Inadequacy of required data is another constraint. _ Even if actual data was gathered, it is often against the company policy to disclose many such data in the project report. In that case the actual data was then slightly modified and then utilized for the project.

WORKING CAPITAL MANAGEMENT


Introduction: In a perfect world, there would be no necessity for current assets and liabilities because there would be no uncertainty, no transaction costs, information search costs, scheduling costs, or production and technology constraints. The unit cost of production would not vary with the quantity produced. Borrowing and lending rates shall be same. Capital, labour and product market shall be perfectly competitive and would reflect all available information, thus in such an environment, there would be no advantage for investing in short term assets. However the world we live is not perfect. It is characterized by considerable amount of uncertainty regarding the demand, market price, quality and availability of own products and those of suppliers. There are transaction costs for purchasing or selling goods or securities. Information is costly to obtain and is not equally distributed, there are spreads between the borrowings and lending rates for investments and financing of equal risks. Similarly each organization is faced with its own limits on the production capacity and technologies it can employ. There are fixed as well as variable costs associated with production of goods. In other words, the markets in which real firm operated are not perfectly competitive. These real world circumstances introduce problems which require the necessity of maintaining working capital. For example, an organization may be faced with an uncertainty regarding availability of sufficient quantity of crucial input in future at reasonable price. This may necessitate the holding of inventory. Similarly an organization may be faced with an uncertainty regarding the level of its future cash flows and insufficient amount of cash may incur substantial costs. This may necessitate the holding of reserve of short term marketable securities, again a short term capital asset. In the management of working capital the time factor is not a crucial decision if the size of such assets is large, the liquidity position would improve, but profitability would be adversely affected because of idle funds. Conversely, if the holdings of such assets are relatively small, the overall profitability will increase, but it adversely affected on the liquidity position and makes the firm more risky. So the working capital management should aim at striking a balance such that there is an optimum amount of short term assets. Meaning Of Working Capital: Ordinarily, the term working capital stands for that part of the capital, which is required for the financing of working or current needs of the company. Working capital is the

lifetime of every concern. Whether it is manufacturing or non-manufacturing one without adequate working capital, there can be no progress in the industry. Inadequate working capital means shortage of raw materials, labour etc., resulting in partial current assets less current liabilities-has no economic meaning in the sense of implying some type of normative behaviour. According to this line of reasoning, it is largely an accounting artifact. Working capital management, then, is a misnomer. The working capital of the firm is not managed. The term describes a category of management decisions affection specific types of current assets and current liabilities. In turn, those decisions should be rooted in the overall Valuation of the firm. 1. On the basis of Concept: There are two concepts that are currently accepted about working capital. They area) Gross working capital concept This thought says that total investment in current assets is the working capital of the company. This concept does not consider current liabilities at all. Gross working capital concept =Total of current assets Reasons given for the concept:  When we consider fixed capital as the amount invested in fixed assets. Then the amount invested in current assets should be considered as working capital.  Current asset whatever may be the sources of acquisition, are used in activities related to day to day operations and their forms keep on changing. Therefore they should be considered as working capital.

b) Net working capital concept It is narrow concept of working capital and according to this; the excess of current assets over current liabilities is called as working capital. This concept lays emphasis on qualitative aspect, which indicates the liquidity position of the concern enterprise. Net working capital concept = Excess of current assets over current liabilities Reasons for the net working capital method:  The material thing in the long run is the surplus of current assets over current liability  Financial health can easily be judged by with this concept particularly from the view point of creditors and investors.  Excess of current assets over current liabilities represents the amount which is not liable to be returned and which can be relied upon to meet any contingency.  Intercompany comparison of financial position may be correctly done particularly when both the companies have the same amount of current assets.
TYPES OF WORKI Components of Working Capital:

Current Assets Current Liabilities Cash in hand/bank Bills receivable Sundry Debtors Prepaid expenses

Short term investment Inventory Accrued Income Bank overdraft Bills Payable Sundry Creditors Outstanding Expenses Advance TakenNG
CAPITAL NET CAPITAL ON THE BASIS OF TIME PERMANENT WOR