PROJECT REPORT ON

BUDGETING SYSTEM OF INDRAPRASTHA GAS LIMITED

PREPARED BY

VISHWAROOP SINGHAL A1802010240 Sec-E MBA-IB (2010-12)

AT

NEW DELHI

UNDER THE ABLE GUIDANCE OF

INDUSTRY GUIDE: MR. SAIBAL BISWAS Dy. GENERAL MANAGER (FINANCE)

FACULTY GUIDE: Ms. PAYAL SINGH FINANCE FACULTY

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TO WHOM IT MAY CONCERN

This is to certify that Vishwaroop Singhal, a student of Amity International Business School, Noida, undertook a project on ―Budgeting System of IGL‖ at Indraprastha Gas Ltd. From 16th May2011 to 10th July 2011.

Mr. Vishwaroop Singhal has successfully completed the project under the guidance of Mr. Saibal Biswas, Dy. General Manager (Finance). He is a sincere and hard-working student with pleasant manners.

We wish all success in him future endeavors.

Signature with date Saibal Biswas Dy. General Manager Indraprastha Gas Ltd.

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CERTIFICATE OF ORIGIN

This is to certify that Mr. Vishwaroop Singhal, a student of Post Graduate Degree in MBAIB, Amity International Business School, Noida has worked in Indraprastha Gas Ltd, under the able guidance and supervision of Mr. Saibal Biswas, Dy. General Manager.

The period for which he was on training was for 7 weeks, starting from 16th May 2011 to 10th July 2011. This Summer Internship report has the requisite standard for the partial fulfillment the Post Graduate Degree in International Business. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.

Ms. Payal Singh (Faculty Guide)

Vishwaroop Singhal (Student)

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General Manager of Indraprastha Gas Ltd. for the constant support and help in the successful completion of my project.. I am thankful to my faculty guide Ms. continuous support and cooperation throughout my project.Saibal Biswas.ACKNOWLEDGEMENT I express my sincere gratitude to my industry guide Mr. for his able guidance. Dy. Vishwaroop Singhal (Student) 4 . without which the present work would not have been possible. Payal Singh of my institute. for his/her continued guidance and invaluable encouragement. I would also like to thank the entire team of Indraprastha Gas Ltd. Also.

Present Status of IGL c.0 Executive Summary Objectives of the study Industry Profile a. Future Projections of Demand of Natural Gas d.0 2.0 10. Subject Page No.0 Conclusion Recommendations Bibliography Annexure Case Study Synopsis of the project 5 . SWOT 4.0 Company Profile a.0 12. Review of literature on the industry b.0 9. 5.TABLE OF CONTENTS Chapter No.0 Overview of budgeting system a) About budget b) Procedure of budgeting in IGL 6. Factors Consider Before Setting up Business f.0 13. Major Players c.0 Research design and methodology Reflections on what has been learned during the placement experience 8. SWOT etc. Review of literature on the company b. 1.0 3. Competitors e.0 7.0 11. Organization Structure d.

of NCT (National Capital Territory) of Delhi where the major promoters are GAIL and BPCL who together hold 45percent of the total shares of the company. altering and preparation of budget. To cater to the CNG and PNG requirements. Collection of information from employees of IGL in different departments has helped me in gaining adequate knowledge. IGL procure natural gas from different sources out of which the major supply is of APM gas of 2. prepares. approved. IGL is buying natural gas from GAIL which is extracted by ONGC at Bombay High. Indraprastha Gas ltd. marketing and distribution of CNG and marketing and distribution of CNG. projected Balance sheet and projected Cash flow. (GAIL). It shows how it plans. The study focuses on the depth understanding of the current budgeting system of IGL.7 MMSCMD in Delhi and NCR region. has imparted me a great deal of knowledge during my tenure of six weeks. Bharat Petroleum Corporation Limited (BPCL) and Govt. It is a joint venture of Gas (India) Ltd. transport. Project also contains some points related to procedure of the company‘s budgeting process. to study the different budgeting system for product and departments and to study the pattern of revising. 6 . The recommendations of the study have put emphasis on how the company can improve its current budgeting system and how its shows better financial results in future. to study the efficient utilization and management of funds. The study also includes the projected financial analysis of the company over the years and the projected P&L account. to implement the mandate issued by Supreme Court for the implementation of CNG as the non-pollution gas fuel for domestic. it was very interesting and overall a great learning experience. and commercial sectors in Delhi. implement and control its budget. The principal business activities of the company are production. GAIL purifies and processes the gas and finally it is sent through the HBJ pipeline (Hazira-Bijapur-Jagdishpur) to Delhi.EXECUTIVE SUMMARY The present report showcases about the share prices of Indraprastha Gas Limited (IGL) and comparison of its share prices with respect to one of its competitor GGCL IGL was incorporated in 23rd December 1998.

7 . To study the factors taken into consideration by IGL while preparing and revising of budget. To study the pattern of altering and controlling of budget.OBJECTIVES OF THE STUDY The study has mainly been conduct:     To study the current budgeting system of IGL To study the procedure used by IGL in preparation of budget.

2. the natural gas sector has gained importance.The share of Natural gas in total primary energy consumption in the world was 26. private parties from some of the fields are also producing gas. The demand of natural gas has sharply increased in the last two decades at the global level. is a colourless and odourless fuel that is lighter than air and burns cleaner than most traditional fossil fuels like petrol and diesel. with crude oil or free i. around 74 MMSCMD is available for sale to various consumers. AVAILABILITY & UTILISATION OF NATURAL GAS 1. particularly over the last decade. and is being termed as the Fuel of the 21st Century. cooling. Under the Production Sharing Contracts.INDUSTRY PROFILE Review of literature of Industry Natural Gas. Oil India Limited (OIL) and JVs of Tapti. The main producers of natural gas are Oil & Natural Gas Corporation Ltd. 3. It is increasingly becoming one of the popular forms of energy because of its efficiency and environmental friendly nature. electricity generation. Production of natural gas. alone from reservoirs beneath the earth‘s surface. it was approximately 9. Government have also offered blocks under New Exploration Licensing Policy (NELP) to private and public sector companies with the right to market gas at market determined prices. containing mainly methane.e. Natural Gas is recovered either as associated i. etc. Panna-Mukta and Ravva. It has found use in heating. 8 . extraction of LPG and unavoidable flaring. after internal consumption.4 % in 2009 whereas. is at present at the level of around 87 million standard cubic meters per day (MMSCMD). (ONGC). Natural gas has emerged as the most preferred fuel due to its inherent environmentally benign nature. Natural gas can be transported both in gaseous and liquid form. Out of the total production of around 87 MMSCMD. greater efficiency and cost effectiveness.4% in 2009 for India (Source BP Statistical Review. which was almost negligible at the time of independence.e. In India too. 2009).

In last ten years. The on-shore fields in Assam. Andhra Pradesh and Gujarat States are other major producers of gas. These private players. Natural Gas Production in India A large proportion of production of Natural gas in India is accounted for by ONGC and Oil India Limited. Smaller quantities of gas are also produced in Tripura.4% p. Some large Natural Gas finds have been recently reported which significantly increase India‘s proven reserves of Natural Gas. 9 . There was a major increase in the production & utilisation of natural gas in the late seventies with the development of the Bombay High fields and again in the late eighties when the South Bassein field in the Western Offshore was brought to production. India's Natural gas production reached a level of 28. accounted for approximately 13% of India‘s Natural Gas production in FY2009(Source: Ministry of Petroleum and Natural Gas).a. (GSPCL) from Hazira fields is being sold directly by them at market determined prices. In the last few years. Gas produced by Cairn Energy from Lakshmi fields and Gujarat State Petroleum Corporation Ltd. a number of private players have also been active in the exploration and production of Natural gas in India. independently or in joint ventures. OIL is operating in Assam and Rajasthan States.4 BCM in 2009. Most of the production of gas comes from the Western offshore area. The supply from these new finds are expected to be available for use in a two to three year timeframe. The gas produced by ONGC and a part of gas produced by the JV consortiums is marketed by the GAIL (India) Ltd. India‘s Natural gas production has increased at a growth rate of 6. Tamil Nadu and Rajasthan States. The gas produced by OIL is marketed by OIL itself except in Rajasthan where GAIL is marketing its gas. 5. whereas ONGC is operating in the Western offshore fields and in other states. Natural gas has been utilised in Assam and Gujarat since the sixties.4.

India Natural Gas Sector SOURCE: www.asp 10 .org/business/industry.naturalgas.

the fertilizer and the power sectors have been the principal consuming sectors. industrial factories.Demand for Natural Gas in India Natural Gas is used in a variety of applications in fertilizer and power sectors. Given the limited Natural Gas reserves in India. The gas pricing mechanism has existed in India since 1997. so far are made by an inter-ministerial Gas Linkage Committee based on inter-sect oral priorities. Natural Gas allocations for the market.asp 11 . homes.naturalgas.org/business/industry. automobiles. etc. Consumption Trends SOURCE: www.

that no person shall prospect for petroleum unless it has been granted a petroleum exploration license and no person shall mine for petroleum unless it has a petroleum mining lease granted pursuant to these rules. 1934 ("Petroleum Act"). The Oilfields Act was amended in 1999 to provide for a New Exploration Licensing Policy ("NELP") 2. that no person shall produce. 3. inter alia. The Petroleum Rules. The DGH (Directorate General of Hydrocarbons) was set up in 1993 under the administrative control of the MOPNG. inter alia. 12 .Legal Framework of the Oil and Gas Industry in India The legal framework for exploration and production of oil and gas is provided mainly in the following laws: 1. which provide. for regulation of oilfields and for the development of mineral oil resources. refine or blend petroleum unless in accordance with the rules prescribed by the Central Government and that no person shall store or transport petroleum unless permitted by the Central Government to do so. crack. 1948 ("Oilfields Act") provides. for permission of The Chief Controller of Explosives which is required if a person intends to refine. refining. which provide. etc. Other organizations in the Indian petroleum and Natural Gas sector include the Oil Industry Safety Directorate. and marketing of petroleum products and Natural Gas. inter alia. and monitoring production and optimum utilization of gas fields. distribution. with the objective of ensuring correct reservoir management practices. which provides. which develops standards and codes for safety and fire fighting. reviewing and monitoring exploratory programmes. 1959 amended by the Petroleum and Natural Gas (Amendment) Rules. reform or blend petroleum. the Oil Industry Development Board. development plans for national oil companies and private companies. The Petroleum Act. The Petroleum and Natural Gas Rules. inter alia. information dissemination. training programmes. 2002 ("Petroleum Rules"). and exports and imports of crude oil and petroleum products. The Oilfields (Regulation and Development) Act. The MOPNG oversees the entire chain of activities in the oil industry: exploration and production of crude oil and Natural Gas. 4. which provides financial and other assistance for conducive development of the oil industry.

processing.The Petroleum Regulatory Board Bill. storage. 13 . transportation. This Bill seeks the establishment of the Petroleum Regulatory Board to regulate the refining. 2002 was introduced in the Lok Sabha (Lower House of the Parliament) on May 6. distribution. marketing and sale of petroleum and petroleum products (excluding production of crude oil and Natural Gas) so as to: protect the interests of consumers and entities engaged in specified activities relating to petroleum and petroleum products. 2002.

There are two arms to the business: Cairn IndiaIndia is an autonomous business listed on the Bombay Stock Exchange and the National Stock Exchange of India and has interests in a total of 14 blocks in India and Sri Lanka. engaged in the business of exploration. Oil India Limited Oil India Limited (OIL) is a premier National oil company. Reliance Industries Limited.NATURAL GAS COMPANIES (MAJOR PLAYERS) Reliance The Reliance Group was founded by Dhirubhai H. Ambani (1932-2002). Government of India. 14 . is a Fortune Global 500 company and is the largest private sector company in India. The group's annual revenues are in excess of US$ 34 billion. production and transportation of crude oil and natural gas. The Company's operations can be classified into four segments namely:     Petroleum Refining and Marketing business Petrochemicals business Oil and Gas Exploration & Production business Others Cairn Energy Cairn is an Edinburgh-based oil and gas exploration and production company listed on the London Stock Exchange since 1988. Oil India Limited is a "Schedule A" company under the Ministry of Petroleum and Natural Gas. The flagship company.

15 .03. HPCL HPCL is a Fortune 500 company. marginal field development. (East Coast) with a capacity of 7. Corresponding figures for FY 2006-07 are: Rs 91. 16% Refining & Marketing share in India and a strong market infrastructure.67 billion) for fiscal 2007. deepwater exploration and drilling. 1. 247.e.837 Crores ($ 25.e.2 million barrels per day).5 MMTPA capacity and the other in Vishakapatnam.142 Millions) during FY 2007-08.479 crore (US $59.892 Million). and profit of Rs. The Corporation is now venturing out to new areas i. exploration in frontier basins.5 MMTPA. optimization of field development plan field recovery and other allied areas of service sector.448 crores ($20.Indian Oil Corporation Limited Indian Oil Corporation Ltd. These include two refineries of subsidiary Chennai Petroleum Corporation Ltd.2 million metric tonnes per annum (MMTPA. one in Mumbai5. ONGC Oil and Natural Gas Corporation Ltd.22 billion). 6963 crore (US $ 1. (CPCL) and one of Bongaigaon Refinery and Petrochemical limited (BRPL). . with an annual turnover of over Rs 1. 18th largest petroleum company in the world and has a current turnover of Rs.i. The IndianOil Group of companies owns and operates 10 of India's 19 refineries with a combined refining capacity of 60. The Corporation operates 2 major refineries producing a wide variety of petroleum fuels & specialties. (ONGC) is engaged in E&P activities both in Onshore and Offshore.

special boiling point spirit/hexane. naphtha. It also offers LPG and other liquid hydrocarbons. with which EIL started initially.Engineers India Limited Engineers India Limited was established in 1965 to provide engineering and related technical services for petroleum refineries and other industrial projects. including liquefied petroleum gas (LPG). and distributing petroleum products in India. toluene. GAIL (India) Limited GAIL (India) Limited operates as a natural gas company in India and internationally. distribution. polypropylene feedstock and more. The company offers various products. marketing. benzene. BPCL Bharat Petroleum Corporation Limited engages in refining. oil and gas processing. offshore structures and platforms. 16 . The company involves in the exploration. In addition to petroleum refineries. petrochemicals. The company owns approximately 5. fertilizers.800 kilometers of natural gas high pressure trunk pipeline. It also involves in the exploration and production of hydrocarbons. and petrochemicals. processing. metallurgy and power. it has diversified into and excelled in other fields such as pipelines. transmission. production. and marketing of natural gas. motor spirit. EIL now provides a range of project services in these fields and has emerged as Asia's leading design and engineering Company. storing.

kms. has set up the country's s first LNG receiving and degasification terminal at Dahej . Middle East and Pakistan. Kerala. the North Sea. One Block with an area of 75 sq. A key part of many of these projects is the provision of pipeline and tanks where in conjunction with Punj Lloyd they have considerable expertise in the design and construction of these facilities in often very difficult environments. In gas processing they have carried out projects in Singapore. kms is situated in Cambay. and is in the process of building another terminal at Kochi. Gujarat. development. and production of oil and gas properties. Simon Carves In Simon Carves as a part of its offshore development.Premier Oil Premier Oil plc engages in the exploration. and west Africa. projects have been carried out in India and Indonesia in providing oil and natural gas development facilities. the company had proved plus probable reserves of 722 billion cubic feet of gas and 152. Petronet LNG Limited Petronet LNG Ltd. Is situated in Assam. under the recently concluded NELP VI and also plans to participate in the upcoming NELP VII bids and is actively looking at oil and gas blocks overseas. It has oil and gas producing interests principally in Asia.1 million barrels of oil equivalents of oil. 2006. The Dahej terminal has a nominal 17 . Adani Group Adani Group has forayed into the Oil & Gas sector and has been awarded two oil & gas blocks in Gujarat and Assam Gujarat and another block with an area of 95 sq. one of the fast growing companies in the Indian energy sector. As of December 31. Indonesia and India in providing natural gas processing facilities and gas field developments.

capacity of 5 million metric tones per annum (MMTPA) [equivalent to 20 million standard cubic meters per day (MMSCMD) of natural gas]. the Kochi terminal will have a capacity of 2.5 MMTPA (equivalent to 10 MMSCMD of natural gas) 18 .

Fertilizer sector will fuel this demand further as major players switch from naphtha to gas as feedstock. According to India Hydrocarbon Vision 2025 report. fertilizers and city gas distribution has forced us to increase the production of natural gas as it will surely change the energy requirements scene of the whole nation. Recent gas finds and increased use of gas for power generation. The last thirty years have seen a shift in the global energy fuel mix towards an increased role for natural gas. Moreover. gas has assumed a significant role in power generation.000 MW in the Eleventh Plan. Government is planning to add power generation capacity of 41. Attractive for its cleaner and more efficient combustion relative to other fossil fuels. petrochemicals. 120 MMSCMD of additional demand for Natural Gas is expected in the next five years. The major force behind this demand growth will be investments in power sector. we can see rapidly growing vehicle population which will demand better road infrastructure & thus will drive more consumption of petroleum products.a. refining and marketing of petroleum products and gas. Because of this. Production of petroleum products has grown at 6. Natural gas demand was about 150 MMSCMD (2004) with only 54% being met through domestic sources. There was $90 billion revenue generated in FY ‗05. The report also expects that the share of natural gas in total energy mix to go up to 20 percent. residential heating and in some cases as a transport fuel as well. Petroleum & Natural Gas constitutes over 16% of GDP and includes transportation. The demand for natural gas is expected to grow at a CAGR of more than 7 percent by 200708.110 MW under the Tenth Plan and over 60. Over 190 MMT of refining capacity is projected by 2010. during the last 3 years. demand for natural gas is expected to show a sharp rise in the future with the demand reaching to 391 MMSCMD by 2024-25.FUTURE PROJECTIONS OF DEMAND India is witnessing a high GDP growth rate. The industry is expected to grow at a CAGR of about 8% to 10%. India has a crude oil refining capacity of about 127 MMT. 19 .5% p. industrial applications.

20 . liberalized fertilizer imports.  The Low Gas scenario assumes vigorous coal sector reforms.SHARE OF GAS LIKELY TO RISE TO 18% BY FY2015  The High Gas scenario assumes stringent sulphur constraints in the power sector. and low economic growth slowing industrial gas demand. and high economic growth driving industrial gas use. protectionist constraints on fertilizer imports.

 Natural gas: has an enviable safety record  High Gas prices make it inefficient to compete directly with coal. 21 .  Slow role out of pipe line infrastructure OPPORTUNITIES THREATS  Failure to reform crude oil could expand the window of opportunity for natural gas.SWOT ANALYSIS OF NATURAL GAS INDUSTRY STRENGTHS WEAKNESS  Natural gas is: environmentally clean  Natural gas is: economical and efficient. Thus firms are finding it cost effective.  Delay in gas production can help sustain the demand at higher prices.  Absence of Exclusive on city gas projects can negatively affect the incumbent.  Delay in gas production in domestic field can slow the growth.  For industrial users it competes with liquid (oil based) and solid (coal based) fuels.  Major players in fertilizers sector can switch from naphtha to gas as feedstock.

Initial Objectives The two main business objectives of the company are:  To provide safe. The transport sector uses natural gas as Compressed Natural Gas (CNG). With the backing of strong promoters – GAIL (India) Ltd. convenient and reliable natural gas supply to its customers in the domestic and commercial sectors. This will considerably bring down the alarmingly high levels of pollution. and  To provide a cleaner. IGL took over Delhi City Gas Distribution Project in 1999 from GAIL (India) Limited (Formerly Gas Authority of India Limited). (BPCL) – IGL plans to provide natural gas in the entire capital region. transport. and Bharat Petroleum Corporation Ltd. while the domestic and commercial sectors use it as Piped Natural Gas (PNG). environment-friendly alternative as auto fuel to Delhi‘s residents. and commercial sectors. The project was started to lay the network for the distribution of natural gas in the National Capital Territory of Delhi to consumers in the domestic.COMPANY PROFILE Review of literature Incorporated in 1998. 22 .

Growth and Development of The Organization Milestones Achieved  Incorporated in 1998  Started with 9 CNG stations & 1000 PNG consumers  Crossed 100 stations in 2003  Maiden dividend in FY 2002-03  Completed 12‖ steel pipeline in December 2002  IPO listing on 26th December 2003  Two stations commissioned in Noida in December 2004 23 .

Use of personnel protective equipments is compulsory while at work. To adopt such system and methods so as to ensure continual improvement.    Health checks of each employee are done annually. Engineer-in-charge for contacts ensures compliance of safety order/rules and statutory requirements by contactor. Standards and Safety practices in design. transporters. Safety and environment. It is compulsory for all the employees to take active part on safety and health related activities on and off the job.  All planning.     To ensure compliance of Work-Permit System. Safety and environment management of company. Quality maintenance in all areas of activities.  Each employee is fully informed strict compliance of safety order/rules issued by the Management. To train all employees in their respective areas of training. decisions and action confirm our commitment towards Health. The policy of company is as follows:   To give top most priority to health and safety of all the personnel and property. Compliance of safety observations is done in most effective manner.PRESENT STATUS OF THE ORGANISATION The management accepts the responsibility for the health. every employee has been responsible and accountable for the protection of health. To follow all applicable codes. maintenance and modifications. visitors and other agencies related to contracts.  Safety audit is carried out yearly and the findings are documented for follow up actions so as to restore safe condition. 24 . The subject being a line responsibility.    Emergency drills are conducted every six months. Each employee is to abstain from unsafe acts and prevent unsafe conditions. Safety and Environment protection aspects. operation.

FUNCTIONAL DEPARTMENTS OF THE ORGANISATION  Finance department  Human resource department  Corporate secretary and legal department  Electrical department  Instrumentation department  Fire and safety department  Contract and procedure department  Planning department  PNG project department  CNG project department  CNG O & M – Operations  PNG O & M – city gas  CNG marketing department  PNG marketing department  Civil department  Mechanical department  Company secretary department  DC cell  Information technology  MD cell  Optical fiber cable department  Stores department  Business promotion department 25 .

ORGANIZATION STRUCTURE The organizational hierarchy of the IGL is as depicted below: DIRECTOR MD/DC CGM (FINANCE) CGM (MKTG) CGM (PROJECT) DGM MANAGER CHIEF MGR ADDITIONAL MANAGER DEPUTY MANAGER SUPRITENT SENIOR OFFICE ASSITANT OFFICE ASSITANT OFFICE ATTANDANT 26 .

Jet Dyeing Machine.COMPETITORS I. GUJARAT GAS COMPANY LIMITED (GGCL) In 1988.Compressed Natural Gas (as fuel for vehicles) Gas is supplied to various categories of customers for multi-purpose usage such as o Residential – for cooking and water heating o Commercial – for cooking. assures the 27 .C. The same is subjected to the process of filtration. Distribution operation is grouped into two lines of business o PNG . Reliance and BG Group). through the establishment of an independent network of pipelines in South Gujarat. The potential for growth derives from the ever-increasing energy demand-supply gap in this economically vibrant area.I.. Some of the major suppliers include GAIL A Central Government Organization. In the past. Bharuch. the three cities of Surat. boilers etc. GGCL pipeline network spans more than 2700 kilometers. commercial and Industrial customers for heating and other purpose) o CNG .the Golden Corridor of Gujarat. BG EPIL (from its PMT source . Gujarat Gas Company Limited (GGCL) pioneered the private distribution of Natural Gas in India. o CNG – for running vehicles GGCL is committed to bringing the benefits of Natural Gas to people in various forms. Gas driven engine coupled to Air Compressor. GGCL has also extended the network to Jhagadia. it has introduced multiple specialized gas based applications like Air-conditioning Unit. o Industrial – customer for heating. addition of odorant as well as change of pressure before being supplied into the network for distribution. Yarn heating etc. GGCL has established its base in one of the most industrialized belts of the country . and Ankleshwar form the nucleus of its current operations. GGCL is sourcing gas from multiple suppliers. Today. Jet dying.D. Cairn Energy.Piped Natural Gas (for residential. The gas is received at various receiving stations of GGCL. area. Specifically. COGEN etc. At present.a JV organization of ONGC. GGCL is establishing pipeline network in Vapi G. GSPC – Gujarat State owned organization. water heating..

Besides monitoring our system on a daily basis they also have a Customer Service Cell with a 24 X 7 customer care number 1917. thereby providing greater convenience and better services to Mumbaikars. Fulfilling the promise of a Clean Mumbai. Mahanagar Gas Limited (MGL). In this endeavor they have in place systems and processes that match up with the best in the world. NGV movement is started by GAIL in the year 1992 as pilot project.88 lakh households in and around Mumbai. 1161 BEST buses.users of energy supplies using natural gas. MGL has already started work in South Mumbai areas like Prabhadevi. economic viability etc. From a modest background of supply gas to the suburbs of Mumbai. safe efficient and affordable Piped Natural Gas. MGL has always emphasized on Health. Colaba etc. a pioneering initiative to bring clean. Worli. to give access to customers at all times to answer all your queries. direct to over 6. Security and Environment (HSS&E). Besides the natural advantages of NG like proenvironment. has covered major parts of Mumbai through its distribution network i. Presently MGL has connected more than 3. 293 Private Buses and 46 Mini Buses across the city through it's network of 136 CNG stations having 683 dispensing points. company has ensured consistent supply of gas to its customers. this versatile gas has today become the preferred choice for the residents of Mumbai. the operations where transferred to newly formed organization.000 homes in Mumbai.30 lakh auto rickshaws. MGL's Compressed Natural Gas (CNG) powers over 56. from South Mumbai to Mira road and from Sion to Mulund. 28 . II. MGL has today become a leading gas friendly company with a customer tally of 3. Safety. After successful commissioning. thus contributing to more than 800 tonnes reduction of pollutants every day. MAHANAGAR GAS LIMITED (MGL) MUMBAI.000 taxis/cars. Mumbai is a city of seven islands having approximate 450 sq per meter area. which started in 1995 from Chembur. more than 1. which is a financial capital of India houses more than 16 million people. From cooking stoves to geysers and air-conditioners.00. The MGL project.50 TMT Buses.Mahanagar Gas Limited.88 lakhs connected PNG users.e.

east. small and large commercial consumer in his/ her zone.MARKET PROFILE OF THE ORGANISATION The GM (marketing) spearheads the sales and marketing efforts for CNG as well as PNG. And for the purpose of marketing of PNG and acquiring new connections we have divided NCT of Delhi into four zones. Each zone is headed by marketing officer. CNG. For the purpose of marketing of CNG. west and central. south. Market structure of IGL consist of three major segments i. PNG. each zone looked after by marketing officer who is responsible for marketing to domestic. R-LNG. Flow Chart Depicting Market Segment of IGL: MARKET SEGMENT CNG PNG DOMESTIC CUST SMALL CUST R-LNG INDUSTRIAL CUST BUSES TAXIES AUTO RIKSHAWS LCV’S LARGE CUST INDUSTRIAL CUST CARS 29 . NCT of Delhi has been divided into five zones.e.north.

 Taking permission from various legal authority like MCD.  No of compressors required according to traffic size. % OF QUANTITY SOLD 8% CNG PNG 92% COMPRESSED NATURAL GAS (CNG)  Identify the area where no CNG station is located.  Research team analyzes various parameters (like requirement of stations is small and large). 30 .  Establishment of the stations.  Deciding about station size according to the required location. CPWD etc.FACTORS CONSIDERED BEFORE SETTING UP A BUSINESS Diagram representing percentage of quantity sold in CNG and PNG.  To facilitate the various services such as water and electricity etc  Getting available the various services such as fire protection services.  Vehicular population of CNG around that area.  Analysis of demand.

it is said the initial cause of friendship is from its advantages. this friendship is certain to leap from being strong to stronger. CNG reduces harmful emissions. And while every friendship in itself is to be desired. The advantages of using CNG are varied and distinct. Presented below is an outline of the benefits that CNG offers –  Green fuel: Commonly referred to as the green fuel because of its lead and sulphur free character. Safety: CNG is less likely to auto-ignite on hot surfaces. Furthermore.  Increased life of oils: Another practical advantage observed is the increased life of lubricating oils. as CNG does not contaminate and dilute the crankcase oil. it enhances the longevity of spark plugs. Being non-corrosive. since it has a high autoignition temperature (540 degrees centigrade) and a narrow range (5%-15%) of 31 .Diagram representing percentage of quantity sold in CNG % QUANTITY CONSUMED 4% 21% 0% BUSES 39% CARS TAXIES MINI BUSES LGV'S RAILWAYS 5% 31% IGL envisages a long lasting friendship between CNG and its consumers. when one is apprised of the advantages of using CNG. the lead fouling of spark plugs.   Mixes evenly in air: Being a gaseous fuel CNG mixes in the air easily and evenly. and lead or benzene pollution are eliminated. Due to the absence of any lead or benzene content in CNG. The first and most important benefit of using CNG is that it‘s a ‗green fuel‘.

2-9. 32 .inflammability.5 1.64 Degree C % in Air Degree C - 360 1-8 2.  Preparing map of pipe line where they exactly goes out.  To facilitate the various services such as water and electricity etc  Getting available the various services such as fire protection services.  Analysis of demand of pipe lines in particular area.030 87 280 0.74 - Diesel 0.  Average consumption according to various categories of PNG business.  Taking permission from various legal authorities like MCD.  Establishment of the stations. it will not burn.0 1. CPWD etc. Properties Relative density Relative density Auto-ignition Temperature Flammability Range Flame Temperature Octane Number Unit Water = 1 Air =1 Petrol 0.285 CNG 0.900 127 PIPED NATURAL GAS (PNG)  Founding area where no PNG lines are located.6-5.  Identify area where the need to establish the pipe line.55 1.84 - LPG 0.983 93 540 5-15 1. It means that if CNG concentration in the air is below 5% or above 15%.  Research team analyzes various parameters (like requirement of pipe line in small and large area). This high ignition temperature and limited flammability range makes accidental ignition or combustion very unlikely.780 - 374 2.

Diagram representing percentage of quantity sold in PNG

% OF TOTAL PNG SALES

8% 38%

DOMESTIC CUSTOMERS SMALL CUSTOMERS LARGE CUSTOMERS

47% 7% INDUSTRIAL CUSTOMERS

Knowing full well that Piped Natural Gas is the obvious choice for one to make, it would be just if one called PNG Positively Natural Gas!! PNG has several distinctions to its credit- of being a pollution-free fuel, easily accessible minus storage troubles, and being available at very competitive rates, are just a few of them. When one chooses PNG, one is making a wise decision. Why not enhance your comfort and improve your lifestyle for the years to come? Experience the versatility and performance of this reliable energy source. With PNG you don't need to make any choices, for its characteristics make it the best option for domestic and commercial purposes.  Uninterrupted supply: The source of PNG supply in Delhi is the famous HaziraBijaipur-Jagdishpur (HBJ) pipeline of GAIL (India) Limited. PNG offers the convenience of ensuring continuous and adequate supply of PNG at all times, without any problems of storing gas in cylinders.  Unmatched convenience: The domestic consumers have to take upon themselves the trying task of booking an LPG cylinder refill, time and again. And then starts the wait for the deliveryman to deliver the cylinder. Switching over to PNG renders this entire exercise unnecessary. PNG also eliminates the tedious routine of checking LPG refill

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cylinder for any suspected leakage, or it being underweight, at the time of delivery. Moreover, the user is spared the inconvenience of connecting and disconnecting the LPG cylinder when out of gas. Precious space, occupied by LPG cylinders is also saved.  Safety: The combustible mixture of natural gas and air does not ignite if the mixture is leaner than 5% and richer than 15% of the air-fuel ratio required for ignition. This narrow inflammability range makes PNG one of the safest fuels in the world. Safety Tips Natural gas is lighter than air. Therefore, in case of a leak, it just rises and disperses into thin air given adequate ventilation. But LPG being heavier will settle at the bottom near the floor surface. A large quantity of LPG is stored in liquefied form in a cylinder. With PNG, it is safer since PNG installation inside your premises contains only a limited quantity of natural gas at low pressure i.e. 21 milibar (mbar). On leakage, LPG expands 250 times, which is not the case with PNG. Supply in PNG can be switched off through appliance valve (inside the kitchen) and isolation valve (outside kitchen premises), which fully cuts off the gas supply. Economy with PNG PNG has been positioned to be cheaper than alternative fuels being used via domestic LPG in case of House Hold, commercial LPG in case of Small Commercial and LPG Bulk & LDO in case of Large Commercial. This is besides the amount you save by avoiding underweight cylinders delivered to you. 

Billing: The user is charged only for the amount of PNG used, and no pilferage is possible with PNG as the billing is done according to the meter. A unique feature is that the user gets to pay only after consumption of gas. The domestic consumer pays the PNG bill only once in two months. The user pays the gas consumption charges based on the exact consumption reading provided by the meter installed at his premises. The bill is delivered at the user‘s doorstep. List of collection centers/drop boxes.

Customer support: Round-the-clock customer support is assured through 24 hrs toll free number 1800112535 and 64543592 backed by control rooms, which are manned by engineers and trained technicians. Thus complaints, if any, are promptly redressed.

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A versatile fuel: Natural gas is being used predominantly as a versatile fuel in many major cities catering to domestic and commercial applications, as a cooking fuel, for water heating, space heating, air conditioning, etc.

Environment friendly: Natural gas is one of the cleanest burning fossil fuels, and helps improve the quality of air, especially when used in place of other more polluting energy sources. Its combustion results in virtually no atmospheric emissions of sulphurdioxide (SO2), and far lower emissions of carbon monoxide (CO), reactive hydrocarbons and carbon dioxide, than combustion of other fossil fuels. In fact, when natural gas burns completely, it gives out carbon dioxide and water vapor. These are the very components that we give out while breathing!

Additional Benefits of PNG that the commercial consumers can avail  No storage problems and stock accounting: PNG does not require any storage tank or storage space since it is supplied to you through pipelines. Also, the manpower and time that was earlier being used for ensuring minimum stock levels of LPG, HSD and LDO, can be used elsewhere. The other functions that accompany storing these fuels – monitoring stock levels, checking the quality and quantity of fuels received – have also been rendered unnecessary.  Economy with PNG: PNG has been presently positioned to be cheaper than alternative fuels. For small commercials the pricing is indexed to 19 Kg LPG cylinders after adjusting for heat values. For Large Commercials, pricing is indexed to 90% LDO and 10% Bulk LPG again after adjusting for heat values. These savings are in addition to the amount you save by avoiding spillage & pilferage of alternative fuels.  No daily liaisoning: The consumer is spared the task of liasioning with oil companies and coordinating with them for ensuring the daily supply of fuel, because PNG is supplied directly through pipes. The daily bills, settlements and reconciliation are also avoided as the consumer is billed once a month, and that too as per the meter reading.  No spillage and pilferage: In case of spillage of fuels like HSD and LDO, there are liable to be immense product losses. Also, there are considerable chances of pilferage

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of these fuels. In case of PNG these losses are invariably done away with, for PNG is supplied through pipes.  Billing - No up-front payment: The user is charged only for the amount of PNG used, and no pilferage is possible with PNG as the billing is done according to the meter. The commercial consumer pays on a monthly basis. Moreover, there are no minimum consumption charges, i.e., if there hasn‘t been any consumption, there shall not be any bill. The user pays the gas consumption charges based on the exact consumption reading provided by the meter installed at his premises. The bill is delivered at the user‘s doorstep.  Lower maintenance cost: With PNG, soot or ash accumulation and greasy spillages are absent from your appliance. Maintenance costs are, thus, driven down.

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SWOT ANALYSIS OF IGL

Strengths:        The Company has been given marketing exclusivity in NCT of Delhi for three years w.e.f. January 1, 2009. Dominant market position and first moves advantage in NCT of Delhi. Experienced sector leader as promoters. As per the Petroleum and Natural Gas Regulatory Board (PNGRB) regulations, IGL has network exclusivity up to December 2025 in the NCT area. IGL has continuously adopted the latest technology as a result of which the quality of its products has also improved.

Lower debt in the books along with healthy return ratios gives confidence in the company‘s ability to raise debt for future expansion Another major strength of company can be that it helps in controlling pollution and hence supported by government.

Opportunities:   CNG is replacing traditional fuels like petrol & diesel. CNG is about 33 Rs cheaper than Petrol and about 11 Rs cheaper than diesel. Introduction of Radio Taxis and high capacity buses running on CNG in Delhi along with increase in number of CNG variant models by car manufacturers presents a significant opportunity for the company  Shift towards usage of PNG by industrial and commercial segment.

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Dependence on single or few supplier/ customer Threats:    Competition from other players is possible after December 2011 as the company‘s marketing exclusivity is valid till December 2011 only.  Due to the recent growth in CNG vehicles. foresee any risk 38 . IGL doesn‘t arising from dispute with them over supply of natural gas.Weaknesses:  Future expansion activities would be dependent on ability to secure additional gas supplies    Competition from alternative fuel. especially private cars. Alternative modes of transport like metro rail pose a threat. there is a need to add more CNG stations for which the timely availability of land from land owning agencies is a matter of concern. Regulatory and economic changes. GAIL being one of the promoters of the company.

typically. market movements and the business cycle are more easily predictable in the short term.  Minimize salary adjournment.  Optimize product portfolio. 39 .OVERVIEW OF BUDGETING SYSYTM OF IGL Budget Definition Budget a detailed plan. that specifies how resources will be acquired and used during a specified period of time.  Increase the operational level. one's plan must be flexible to account for the uncertainty inherent to it. Types of Budgets Long-Range Budgets – Capital budgets dealing with the acquisition of building and equipment normally cover several years. A budget with a term usually longer than one year.  Precisely determine the real financing needs. Thus. expressed in quantitative terms. while planning for the long term is necessary.  Stabilize debts level. On the other hand. Purposes of budgeting systems:  Planning  Facilitating Communication and Coordination  Allocating Resources  Controlling Profit and Operations  Evaluating Performance and Providing Incentives Using a budgeting system companies can:  Improve cash flow. A long-range budget involves more uncertainty than a short-term budget because. planning for the long-term is necessary in order to ensure sustainable profitability.  Eliminate breaks in production process.

which is prepared first. In this case a full year will be added to replace the year that has just ended. It contains estimates of the total value of resources required for the performance of the operation including reimbursable work or services for others. functional/sub functional categories and cost accounts. 40 .Continuous or Rolling Budget – This budget is usually a twelve-month budget that rolls forward one month as the current month is completed. To achieve this. a company might have a 5-year rolling budget for capital expenditures. An operating budget is the annual budget of an activity stated in terms of Budget Classification Code. It also includes estimates of workload in terms of total work units identified by cost accounts. A detailed projection of all estimated income and expenses based on forecasted sales revenue during a given period(usually one year). the most important one being the sales budget. as they require forecasting for much shorter time periods. Budgeting system used in IGL From the above type of budget system IGL follows the operating budget system because it revised its budget after every six month and follows its budget after each quarter. capital outlays are excluded because they are longterm costs. This 5-year rolling budget means that management will always have a 5-year planning horizon. It‘s very useful for companies experiencing rapid change. the budget is constantly being added to at the same rate as time is passing. Since an operating budget is a short budget. Also. Rolling budget is a budget prepared with a fixed planning horizon. Operating Budget – the annual operating budget may be divided into quarterly or monthly budgets. It generally consists of several sub-budgets. A rolling budget could use 3-month periods or quarters instead of months.

41 . the production budget is prepared after the sales budget. Production needs can be determined as follows. depend on it in some way. The production budget in turn is used to determine the budgets for manufacturing costs including the direct materials budget. These budgets are then combined with data from the sales budget and the selling and administrative expenses budget to determine the cash budget. . typically. This reciprocal relationship arises because sales will in part be determined by the funds committed for advertising and sales promotion. The sales budget will help determine how many units will have to be produced. and the manufacturing overhead budget. If the sales budget is sloppily done then the rest of the budgeting process is largely a waste of time. it is expressed in both dollars and units of production. All other items in the master budget including production. inventories.IGL Budgeting comprises 2 components:  Operational Component . The production budget lists the number of units that must be produced during each budget period to meet sales needs and to provide for the desired ending inventory. An accurate sales budget is the key to the entire budgeting in some way. purchase. and expenses. Thus. thedirect labor budget. In essence. The selling and administrative expenses budget is both dependent on and a determinant of the sales budget.Sales Budget: A sales budget is a detailed schedule showing the expected sales for the budget period. The sales budget is the starting point in preparing the master budget. The sales budget is constructed by multiplying the budgeted sales in units by the selling price. the sales budget triggers a chain reaction that leads to the development of the other budgets.Production Budget The production budget is prepared after the sales budget.

XXXX XXXX -------XXXX XXXX -------XXXX ===== Add desired ending inventory-----------Total need--------------------------------------- less beginning inventory-------------------Required production-------------------------- Production requirements for a period are influenced by the desired level of ending inventory.Inventory Budget-Inventory and purchase budget represents what a business plans to buy and how much inventory it intends to hold over a given timeframe. Inventories should be carefully planned. direct labor-hours per unit of 5. While the Purchases Budget. assume budgeted production of 790 units. this is an accrual-based accounting figure. Excessive inventories tie up funds and create storage problems. Insufficient inventories can lead to lost sales or crash production efforts in the following period.Budgeted sales in units------------------.Labor Budget. represents an estimate of future purchases. by time period. A larger desired ending inventory will typically lead to a larger Purchases Budget and vice-versa. A business's desired ending inventory will drive that business' budgeted purchases over a given period of time. . . Labor requirements are based on production volume multiplied by direct labor-hours per unit. and is typically presented in either a monthly or quarterly format. and beginning inventory. Direct labor-hours needed for production are then multiplied by direct labor cost per hour to derive budgeted direct labor costs. and it is the Disbursements for Purchases Budget (another component of the Inventory and Purchases Budget) that drives a company's cash flows. in order to fulfill the requirements of the production budget. . is based on three factors: a business' desired ending inventory. and direct labor cost per hour of $5 42 . For example.Materials Budget -The direct materials budget calculates the materials that must be purchased. cost of goods sold. a component of the Inventory and Purchases Budget.Expected labor cost is dependent upon expected production volume (production budget).

.Overheads Budget. Budgeted fixed overhead costs remain unchanged as the activity level changes within the relevant range.  Financial Component . .It shows the expected cost of all production costs other than direct materials and direct labor.Balance Sheet 43 .Investment Budget-An investment budget consists of planned investments and disinvestments over a period of time (the planning period). Depending on the type of asset there are various depreciation schedules that can be used to depreciate the asset. Budgeted variable overhead costs are based on a budgeted variable overhead rate multiplied by budgeted activity.

. 44 . This phase is auditing and evaluating the entire process and system. The third phase is policy execution which follows budget adoption is budget execution—the implementation and revision of budgeted policy. quarterly for the second year and annually for the rest of the years. The fourth phase encompasses the entire budget process. Typically. The first requires policy planning and resource analysis and includes revenue estimation. The second phase is referred to as policy formulation and includes the negotiation and planning of the budget formation. but is considered its fourth phase.Cash Flow Statement Principles to be taken into consideration by IGL when developing a Budget      There are realistic objectives There is a profitable business There is a financial diagnosis as base for determining trends There is integrity with Management Informational System You can use what-if analysis Normally it is figured monthly for the first year of activity. the budget cycles occurs in four phases.

Factors Considered by IGL before making Budget:The budget estimates include:              Projected Capital Expenditure Demand projections Sales quantity projections Revenue Cost of natural gas purchase Operating expenses Funding Projected profit Proposed dividend Resource mobilization of capital expenditure Projected Profit & Loss Statement Projected Cash Flow Projected Balance Sheet 45 . with an aim to meet an individual‘s financial goals. The primary aim of IGL‘s budget planner is to ensure savings after the allocation for spending.PROCEDURE OF IGL BUDGETING SYSTEM STEP 1: Planning of Budget IGL entails identifying the sources of income and taking into account all current and future expenses.

46 . Uttar Pradesh and Rajasthan in respect of free movement of public transport vehicles across the interstate borders  Augmentation of fleet of CNG buses by neighboring states  Growth in CNG demand in satellite towns of Delhi Therefore. it is necessary for IGL to go for aggressive expansion and augmentation of CGD infrastructure in NCT and NCR Region. Accordingly. Haryana. As per the authorization letter issued by the PNGRB to IGL for CGD operations in NCT of Delhi. IGL is required to lay infrastructure in all the charge areas covering entire Delhi. only three years marketing exclusivity has been given to IGL and during this period.  NCT In addition to above reasons. Factors Considered by IGL before making budget of year 2010-11: Capital Expenditure Budget IGL foresees rapid growth in CNG business in the next years primarily due to factors like:  Approaching Commonwealth Games in Year 2010  Increase in CNG conversion in private car segment  Introduction of CNG Variants by automobile manufacturers  Addition/replacement of CNG Buses planned by DTC  Recent agreement between the Governments of Delhi.For instance. an aggressive capex plan has been prepared to meet this objective for the financial year 2009-10. Hence. there is one more reason for IGL to aggressively build infrastructure in NCT of Delhi. IGL need to have such a robust infrastructure by that time which should not only meet the requirements laid by PNGRB but also act as an entry barrier for new players after the exclusivity period is over after three years.

47 . It is proposed to add 20 CNG stations during the year 2010-11 increasing the total number of CNG stations to 237 by the end of March 2011.7233 lakhs on CNG project during the financial year 2010-11 which will create an additional compression capacity of 4. More than 63 kms of steel pipeline will be added to the existing network in the budget period. 5653 lakhs on steel pipeline network. the total compression capacity is estimated to be 41.05 lakhs kg per day by the end of FY 2010-11. At this compression capacity. average sale of 15. 2. it is planned to invest Rs. This is required to connect new stations and conversion of some of the existing daughter stations to online stations. PROJECTED PIPELINE Steel Pipeline During the FY 2009-10.75 lakhs kg per day in 2009-10. 19445 lakhs on MDPE/HDPE Pipeline and other related activity during FY 2010-11.78 lakhs kgs per day is expected to be achieved during 2010-11 against the expected average sale of 13.1. MDPE/HDPE Pipeline It is planned to incur a capital expenditure of Rs. CNG Project The company plans to incur a total Capital Expenditure of Rs. The above capex includes the cost of 15 new compressors of 1200 SCMH and 29 new compressors of 600 SCMH which will be used in the new stations and also for up gradation of the existing stations. With this addition.90 lakhs kgs per day.

Other Capex During the financial year 2010-11. 3 stations in Greater Noida and 2 stations in Ghaziabad by the end of 2009-10. 5 stations in Gurgaon and 5 stations in Faridabad during the year 2010-11. The company plans to incur a total capital expenditure of Rs. DFR. The company plans to add 4 stations in Noida. 11 stations in Ghaziabad. it is planned to incur a capital expenditure of Rs. Another 16933 lakhs is estimated to be invested in MDPE/HDPE pipeline during the year. The compression capacity to be added through this capex shall be approximately 7.06 lakhs kg/day.  NCR Region Budget for the year 2010-11 has been prepared for Noida. 13301 lakhs in the financial year 2010-11 . 48 . 5 stations in Greater Noida. Noida and Ghaziabad. Gurgaon and Faridabad cities in NCR Region. 2) Pipeline Network During the financial year 2010-11.7825 lakhs on steel pipeline. Greater Noida Ghaziabad. 1) CNG Project The Company has already started the expansion project in Greater Noida. 2658 lakhs on other capex like construction of new stores/control rooms. With the above additions the total number of CNG stations in these cities will be 45 by the end of 2010-11. IT infrastructure etc. The company is expected to have 5 stations in Noida. it is planned to incur an expenditure of Rs.

Consolidated Capital Expenditure Budget: Total Project 2009-10 NCT CNG Pipeline Other TOTAL NCT NCR CNG Pipeline Others TOTAL NCR TOTAL 5308 14416 600 20324 54610 14587 18496 1203 34286 49 .

 Augmentation of fleet of CNG buses in these cities. average annual sale of PNG is expected to be 1. During FY 2010-11. PNG During FY 2010-11. Demand projections  NCT 1.75 lakhs kgs in 2009-10 showing a growth of 15% over last year. CNG During 2010-11. Haryana.  NCR Region a) CNG IGL foresees substantial growth of CNG business in the satellite cities of Delhi due to factors like:   Increase in CNG conversion in private car segment .68 lakhs SCM in 2009-10 showing a growth of 54% over 2009-10. average annual sale of CNG is expected to be 15. Recent agreement between the Governments of Delhi. 2. 80000 new PNG-Domestic customers are expected to be enrolled increasing the total number of PNG-Domestic customers to 255000 by the end of March‘2011. Uttar Pradesh and Rajasthan in respect of free movement of public transport vehicles across the interstate borders. Growth during 2009-10 is expected to be 20%. 50 .78 lakhs kgs per day against the expected average per day sale of 13.05 lakhs SCM per day against the expected average per day sale of 0.

Gurgaon and Faridabad is estimated at 2. Greater Noida and Ghaziabad is estimated at 0. Gurgaon and Faridabad.During the FY 2010-11 the projected sale of CNG in Noida. During the FY 2010-11 the projected sale of PNG in Noida.) PNG (lakhs SCM) NCR CNG (lakhs Kgs. Ghaziabad. Greater Noida. IGL also foresees substantial demand for PNG from commercial and industrial sector and expects to add approximately 50 Commercials and industrial customers in 2010-11.) PNG (lakhs SCM) 365 169 5561 625 51 . b) PNG During the FY 2010-11. IGL projects around 36000 domestic households will convert to PNG in Noida.  Projected Sales Quantity The sales volumes of both NCT and NCR Region are expected to be as under during 2010-11: Particulars Total 2010-11 NCT CNG (lakhs Kgs.5 lakh kgs per day. Greater Noida Ghaziabad.46 lakh scm per day.

growth in CNG and PNG is expected to be 28% and 47% respectively during 2010-11.00 per SCM The revenue of the Company on account of CNG and PNG is expected to be Rs. The combined growth in sales volumes taking CNG. PNG together is expected to be 29%.   NCT Revenue A. CNG The existing selling price of CNG is Rs.90 per KG and the same rate has been considered for the first quarter and Rs.6. The need for increase in CNG price has arisen due to the fact that IGL will have to purchase KG Basin gas to feed the additional demand of CNG over and above the allotted quota of 2 mmscmd of APM gas. 27. 23.80 per kg has been considered thereafter. 18. B.50 per SCM Rs. The price difference between APM and KG basin gas is more than Rs.On an overall basis. 52 . PNG The consumer prices considered in the financial year 2010-11 are as under:    Domestic Commercial Industrial Rs. 124927 lakhs during the financial year 2010-11 showing a growth of about 29% over projected sales income of 2008-09. 14.00 per SCM Rs.25 per scm.20.

The consolidated sales income of both NCT and NCR Region is summarized as follows: Rs. NCR – Sales Income The revenue of the company on account of CNG and PNG is expected to be Rs. in Lakhs Total 2010-11 NCT CNG PNG Total – NCT NCR CNG PNG Total – NCR Grand Total 7583 3400 10983 135910 112272 12655 124927 53 .10983 lakhs.

While IGL has allocation of 0.6. IGL need to buy RLNG gas through GAIL/BPC. 5825 lakhs -------------------Rs. 39317 lakhs Rs.6424 lakhs. The price difference between APM and KG basin gas is more than Rs. requirement of gas for CNG and PNG 54 . The breakup of gas cost considered based on above is as follows: APM Gas from GAIL: KG Basin Gas R-LNG : : Rs.2 mmscmd of APM gas for CNG and PNG-Domestic demand for the cities of Noida & Greater Noida. For supply to Industrial customers. In case of Ghaziabad. Cost of Natural Gas Purchase  NCT Total purchase cost of natural gas for the financial year 2009-2010 is expected to be Rs. 54824 lakhs. the gas required for Commercial & Industrial customers has to be met from RLNG gas. As mentioned earlier.25 per scm. IGL will have to purchase KG Basin gas to feed the additional demand of CNG and PNG-Domestic over and above the allotted quota of 2 mmscmd of APM gas. 9682 lakhs Rs. 54824 lakhs ----------------------  NCR Total purchase cost of natural gas for the FY 2010-11 is expected to be Rs.

1554 lakhs : Rs. 2453 lakhs : Rs.1356 lakhs) – Mainly due to.Domestic has to be met by purchasing KG Basin gas and PNG-Commercial & Industrial demand has to be met by purchasing RLNG.5% and the reconciliation difference at 2. The increase in operating expenses during the year is attributed mainly to the following reasons –  Repair & Maintenance expenses (Rs. increase in number of manpower at PNG control rooms due to expanded area/number of PNG connections and increase in AMC cost of new compressors/Dispensers. It may be mentioned that earlier IGL used to take AMC of new compressors/Dispensers for one year. The breakup of gas cost considered based on above is as follows: APM Gas from GAIL KG Basin Gas R-LNG : Rs. and thereafter these units 55 .5% has been considered in the above gas cost. 19100 lakhs (excluding discount to DTC) during the financial year 2010-11. 2417 lakhs -------------------Rs. 6424 lakhs ---------------------- The effect of cost of natural gas being used for running compressors at 5.  Operating expenses  NCT The total operating expenses are expected to be Rs.

Due to revision in LCV charges and increase in sales.2009. more manpower is required at stations to service this segment of customers as the quantity of CNG taken by them at a time is much smaller.01. However.f. However.  Employees cost (Rs. 01.475 lakhs) .e.  Hire Charges (Rs. now AMC is taken for two years in view of manpower constraints and to save associated cost of spares required for maintenance.715 lakhs) . The other reason is increase in manpower at stations as a result of increase in sales and increase in number of stations.  Operator’s expenses (Rs.941 lakhs) .  Power & Fuel (Rs. there is a corresponding savings in Gas cost which otherwise would have been used in running Gas driven compressors. 56 . annual increase in salaries and increase in manpower.555 lakhs) .On account of provision for increase in salaries.Due to increase in wages of DSMs/Technicians and increase in remuneration of Operators w.Due to increase in sales/number of stations and load enhancement for running motor driven compressors.used to be maintained in house. It may be mentioned that due to increase in number of cars converted on CNG.

 Projected Profit  NCT Based on above. Rs. 57 . The income from such investment is expected to be Rs. During the year the Profit after Tax is expected to be Rs.377 lakhs in Greater Noida and Rs. 421 lakhs in Noida. 260 crores and the internal accruals of 201011 will be sufficient to meet the fund requirement during 2010-11 to finance the projected capital expenditure.  NCR During the year the consolidated profit after tax for Noida.  Funding Present surplus funds of approximately Rs. Any surplus fund during the year after meeting the revenue and capital expenses shall be invested during the year as per the Treasury Policy of the company. the projected Profit & Loss Account with quarterly breakup for the financial year 2010-11 has been prepared.1298 lakhs. 1077 lakhs during the financial year 2010-11. NCR The total operating expenses are expected to be Rs.306 lakhs in Ghaziabad during the financial year 2010-11. Greater Noida and Ghaziabad is expected to be Rs. 19833 lakhs.

In Lakhs Income (A) Expenditure (B) Cost of Gas Excise Duty Gross Margin (C= A-B) Other Income (D) Operating Expenses (E) PBDIT F = (C+D-E) Depreciation (G) Profit Before Tax [ H= F-G ] Tax (I) Profit After Tax ( J = H-I ) 61248 15239 59423 1077 20204 40296 8639 31657 10526 21131 135910 58 .Consolidated Profit and Loss Account for NCR and NCT region taken together and details are summarized as follows:  Projected Profit & Loss Account for the year 2010-11 Amount Rs.

59 .  Projected Balance Sheet and cash flow (for the Financial Year 2009-10) The projected balance sheet and cash flow for the year 2009-10 is shown in annexure below. Proposed dividend Subject to the approval of the Board and members of the Company in ensuing Annual General Meeting.6234 lakhs (including dividend tax) has been considered in the cash flow. 54610 lakhs (consolidated CAPEX for NCT and NCR) during the financial year 2010-11 and finance the same from internal accruals. This is equivalent to around 31% payout. the company plans to incur total capital expenditure of Rs.  Resource mobilization of capital expenditure As explained above. proposed dividend @ 40% amounting to Rs.

60 . The sales budget is the starting point in preparing the master budget. In large organizations this budget would be a compilation of many smaller. These budgets are then combined with data from the sales budget and the selling and administrative expenses budget to determine the cash budget. purchase. individual budgets submitted by department heads and other persons responsible for selling and administrative expenses. and the manufacturing overhead budget. inventories.Selling and administrative expense budget lists the budgeted expenses for areas other than manufacturing. The sales budget will help determine how many units will have to be produced.STEP 2: Budget Preparation Preparation of Sales Budget: .A sales budget is a detailed schedule showing the expected sales for the budget period. the production budget is prepared after the sales budget. the direct labor budget. The sales budget is constructed by multiplying the budgeted sales in units by the selling price. In essence. An accurate sales budget is the key to the entire budgeting in some way. If the sales budget is sloppily done then the rest of the budgeting process is largely a waste of time. it is expressed in both dollars and units of production. typically. the marketing manager in a large organization would submit a budget detailing the advertising expenses for each budget period. This reciprocal relationship arises because sales will in part be determined by the funds committed for advertising and sales promotion. The production budget in turn is used to determine the budgets for manufacturing costs including the direct materials budget. The selling and administrative expenses budget is both dependent on and a determinant of the sales budget. the sales budget triggers a chain reaction that leads to the development of the other budgets. Preparation of expense Budget: . depend on it in some way. For example. Thus. All other items in the master budget including production. and expenses.

after the preparation of budget for each department. 14587 Lakhs for CNG Rs. in case the actual amount exceeds). 18496 Lakhs on Pipeline Rs. The Budget Committee is requested to consider and approve the following: NCT a) Capital Budget for financial year 2010-11 :    Rs. They review the budget in all aspects and then if they find it up to the mark.  Add ending inventory units and projected sales units to determine total units needed per quarter.  Enter the unit cost for each quarter. any deviation in any department is noticed then also the approval of this budget committee is required to make any changes(increase in budget amount.Preparing a Purchases Budget  Calculate the ending inventory for each quarter. 61 .Approval of Budget In IGL. Step 3:.  Enter beginning inventory. 1203 Lakhs for Corporate and others b) Revenue Budget for the financial year 2010-11.  Subtract beginning inventory from total units needed to determine total unit purchases for the quarter.  Enter projected unit sales for the quarter from the sales budget schedule. which is the same as ending inventory for the preceding quarter. If in between of the budgeting year. it need to be approved by the budgeting committee which consists of four directors from each department. then they show their consent for the same and budget gets approved.

approved and implemented. Under the controlling process the expected budget is being matched with the actual figures after every 3 months. 600 Lakhs for Corporate and others b) Revenue Budget for the financial year 2010-11. it is then analyzed to review that whether the budgeted amount is exceeding the amount limited by the company for each department or not.control and evaluation:After the budget has been prepared. Data analysis: once the budgeted data has been entered in the SAP. 14416 Lakhs on Pipeline Rs. company used to update the budgeted information in the software SAP under each department head.e if the actual 62 .NCR a) Capital Budget for financial year 2010-11 :    Rs. If any deviations are recorded i. Step 4:. 5308 Lakhs for CNG Rs. then the software will automatically reject the data and it will then send for correction. If yes. The SAP ERP application supports the essential functions of the business processes and operations efficiently and is tailored to specific needs of company. A sound foundation is necessary to compete and win in the global marketplace. IGL while using SAP perform two functions: Data storage: after the preparation and approval of budget for each department. Step 5:.Implementation of Budget:This includes the dissemination of approved budget to different departments as well as updates the same approved budget in the software SAP used by company. the process of control is been taken place.

the company has sold 2425 lakhs kgs.21 lakhs kgs per day. 63 .figure exceeds the expected figure then there is a need to change the expected budget figure in accordance with the actual. the sale for the second half-year ended 31st March 2010 has been revised to 2641 lakhs kgs . This change in expected budget which is prepared in every 6th month is known as revised budget. Considering the actual sale of CNG during first half year ended 30th September 2009. at an average of 14.51 lakhs kgs per day against the original budget of 2960 lakhs kgs. This process of make changes in expected budget is done in every 6th month. CNG During the period April-September 2009.26 lakhs kgs per day.23 lakhs kgs per day. at an average of 13. at an average of 16. at an average of 14.25 lakhs kgs per day.88 lakhs kgs per day during the current year 2009-10 against the budgeted quantity of 5561 lakhs kgs at an average of 15. The company thus expects to achieve sale of 5066 lakhs kgs of CNG at an average of 13. A Revised Estimate for the FY 2009-10 has been prepared considering the provisional unaudited results upto September 2009 and actual performance during October & November 2009 Revised Revenue Estimate for Financial Year 2009-10  Sales Quantity  NCT I. of CNG as against budget of 2600 lakhs kgs.

it is expected that the conversion process may pick up some pace in Jan 2010 onwards II. Delay in the addition of new buses in the DTC fleet. 2. Extension in the deadline to make around 10000 diesel operated LGVs CNG powered from June 30. Delay in availability of municipal permissions.The major reasons for projected sales being less than what was envisaged in Budget are: 1. the company expects to achieve sale of 656 lakhs SCM of piped natural gas as against the budgeted quantity of 625 lakhs SCM.However. Reduction in the number of blue line buses as a part of Delhi Govt‘s plan to phase out these buses before Commonwealth Games (More than 1000 blue line buses had been taken off the road ) 3. 2009 to Sep 2009 and then further extending it to end of March 2010. As per the latest understanding given. PNG The company achieved sale of 314 lakhs SCM of piped natural gas against the budgeted quantity of 295 lakhs SCM during the period April-September 2009. it is expected that since the Govt has fixed the last date for booking of CNG vehicles as 31st December 2009. this additional R-LNG quantity is now likely to start by Jan‘2010 64 .( replacing blue line buses) 4. 2. During the current financial year. The major reasons for projected sales being less than what was envisaged in Budget are: 1. Earlier it was expected that around 1050 new buses would be added by the end if Oct 2009 against which only 110 buses were added. Earlier both GAIL & BPCL had indicated that the additional R-LNG quantity (on long term basis) may be available from Oct‘09 onwards. Deferring of Delhi Govt‘s plan for corporatizsation of private buses.

Total sales excludes sale of natural gas.62 (494. PNG includes sale to industrial customers 2. CNG The expected CNG sales in Noida and Greater Noida are being revised to 245 Lakhs Kgs against the Budgeted volume of 365 Lakhs kgs. Noida DTC Depot was non operational from April end to Oct 09 and additional buses have also not arrived as per the expected schedule 65 .51) 31.25 (616.3.53 624. The details of sales quantities of NCT are summarized below Sales Quantity Product Unit Budgeted 2008-09 Revised Estimates 2008-08 5066. Necessary infrastructure (including laying of pipelines) to supply gas to targeted industrial customers in NCR towns is still in progress.13 7292.88 7909. Reason for downward revision of sales target are : 1.55) Volume Variance Increase/ (Decrease) CNG PNG Total Lakhs kg Lakhs scm Lakhs scm 5560.02 656. CNG sales in Ghaziabad could commence from August ‗2009.17 Note: 1. 2.  NCR 1.

Noida region. approximately. However. the expected number of connection is now being revised to 4627 Domestic connections. 66 . Its Depot in Greater Noida is yet not ready for operations 2. In case of UPSRTC as well. additional buses have not been added to the existing fleet in Noida & Greater Noida. Greater Noida & Ghaziabad) and accordingly PNG sale of 169 lakhs SCM was budgeted. 4.e. 30 Commercial customers and 17 Industrial customers would be added by the end of FY 09-10 in NCR (Noida.f Dec 2009. projected sales during the year will be 53 lakhs SCM. PNG It was anticipated in the original budget that around 20000 Domestic connections.3. due to the reasons as mentioned above.Also. 30 Commercial customers and 17 Industrial customers in Noida and Greater Noida. The transport department has started to phase out around 250 Blue line buses plying across Noida region w. which shall be affecting CNG sales in Noida and G. Accordingly.

93 647. Total sales excludes sale of natural gas  SALES VALUE During the period April to September 2009.60518 lakhs (sale value is net of discount to DTC).83 373.The details of sales quantities of NCR are summarized below: Sales Quantity Product Unit Budgeted 2008-09 Revised Estimates 2008-09 Volume Variance Increase/(Decrease) CNG PNG Total Lakhs kg Lakhs scm Lakhs scm 365.53) Note: 1. 56878 lakhs against the budgeted figure of Rs.08 244.83 52. PNG includes sale to industrial customers 2. (Sales value is net of discount to DTC).17) (116. Further. 67 .55 (120.00 168.135909 lakhs. the company achieved sales income of Rs.10) (273. during the financial year 2009-10. the company is expected to achieve a sale income of Rs.124076 lakhs against budgeted figure of Rs.

09.2009 30.96 (11832.39 16053.09.93) 60517.33 124076.50379 lakhs against the budgeted figure of Rs.34) 1772.87 6105.2009 CNG PNG NG Total 53508. 68 .96 (11204.41 Details in respect of NCT and NCR are given in Annexure-I (B) & I (C) respectively.The consolidated details are summarized below: Sales Income Product Budget till Actual till Budget 2009-10 Rs.18 7009.08 119855. Lakhs Revised Estimate 2009-10 Variance Increase/ (Decrease) 30.56) (2401.01 135909.61248 lakhs. Also the projected average cost of natural gas is lower than the estimates made in Budget.94 108650.71 50019.  Cost of Gas The cost of gas has been revised downward to Rs. This decrease is due to primarily due to decrease in sales volume by 890 lacs SCM .61 1772.89 56878.07 753.84 13652.

On account of increase in number of 69 . Employees cost (Rs.Due to increase in direct and indirect manpower and increase in sales Volume. Increase in certain heads of operating expenses is attributed mainly to the following reasons –     Operator‘s expenses (Rs. the total operating expenses were Rs. Accordingly.357 laksh) – On account of Consultancy charges to A T Kearney which was not forseen at the time of budget. Operating Expenses During the period April-September 2009.281 lakhs) – Due to increase in operators manpower as a result of increase in number of stations. REASONS FOR VARIANCE Overall Projected operating expenses for the year will be less than the estimates made in Budget.189 lakhs) – employees inducted.20204 lakhs.9248 lakhs against the budget of Rs.20050 lakhs against the budget of Rs. the projected operating expenses have been revised downward to Rs. Legal & Professional Charges (Rs. Other Operating expenses (Rs 73 lacs).10803 lakhs against a budget of Rs 10833 lakhs for the period.9371 lakhs for the corresponding period. The operating expenses for half year ended Mar‘10 have been reviewed and is projected to be Rs.

insurance claims received.1549 lakhs during the year 2009-10 against the budget of Rs.  Profit for the Year Based on the above. against the budget of Rs.504 lakhs. The increase is mainly due to increase in income from mutual fund investments/Fixed deposits with banks being made out of surplus funds available with the company.1077 lakhs. sale of tenders. It is expected that the company will earn other income of Rs. Other Income During the period April-September‘ 2009.21131 lakhs.21881 lakhs against the budget of Rs. excess liabilities written back etc. The details of profitability have been prepared and the same is summarized as under: 70 . the company earned other income of Rs. the projected Net Profit for the financial year 2009-10 is now estimated to be Rs.1136 lakhs mainly on account of the short-term investment of surplus funds in mutual fund/fixed deposit with banks.

40372 ( Rs.02 27740.17 3794.48 1549.48 11208.EstFY09 ITEMS Sales Quantity CNG (lacs Kgs) PNG (lacs SCM) NG (lacs SCM) BGT-H1 ACT-H1 BGT-H2 RE-H2 FY09 2709.84 345.51 413.48 31758.46 Total Quantity (lacs SCM) 3895.18 32850.69 9922. In lacs) BudgetRev.34 13697.95 27549.16 5325.33 PROFIT BEFORE TAX 14857.96 208.60 17016.43 59422.37 124.08 21870.43 314.89 71 .51 8648.69 448.25 7874.93 3939.40 573.81 5310.77 10802.86 10507.41 9370.91 1077.59 35198.54 Excise Duty (CNG) Total Gross Margin Total OperatingExpenses Other Income PBDIT Depreciation 6804.41 22829.46 16798.44 67198.20 20203.37 INCOME TOTAL SALES EXPENDITURE Total Material Consumed 26049.08 60517.58 15833.33 124076.05 40295.48 3215.85 708.63 56878.73 5590.20 9247.80 6308.54 31656.74 61247.89 4660.58 11373.03 21498.39 135909.Details of Profit and Loss 5.59 83.92 5925.97 1135.01 75391.51 504.94 19628.15 8556.47 5643.03 18796.54 3685.86 (PBT) Taxation Profit After Tax (PAT) 4935.53 793.18 21130.94 27663.41 4699.81 50379.42 394.34 4853.08 32259.88 4189.10 59999.79 10833.18 8434.63 10969.44 21880.02 41498.33 2801.54 7389.71 15239.47 2509.97 20050.15 10526.35 8638.

Estimates also include the cost of augmentation of the facilities at existing stations .19905 lakhs to Rs. 8 DTC Stations and 12 OMC stations) during the FY 2009-10 thereby increasing the number from 181 to 234. the capital expenditure estimates have been revised from Rs. 72 . In spite of abnormal delays in allotment of land by DDA & L&DO .22152 lakhs. which is an ongoing effort to reduce the long queue at CNG Stations./DTC OMC Booster/ Daughter OMC NCT Noida Greater Noida Ghaziabad Gurgaon Faridabad 2 2 24 26 1 3 1 14 7 10 28 27 35 Accordingly. it is being proposed to add 96 new CNG stations by the end of FY 2009-10 Detailed break-up of 90 stations which are to be added during Oct‘09 to Mar‘10 are as follows: D' Mother/ Online IGL. it was planned to add 53 new CNG stations (33 IGL stations.Revised Capital Budget for Financial Year 2009-10  CNG Project At the time of formulation of budget.

78 lacs kgs/ day.1803 lakhs to Rs. of PNG are expected to surpass the Budgeted numbers.20521. The budget estimates for the financial year 2009-10 have been revised from Rs. 1500 lakhs. PNG Project As per the budget Rs. This included amounts to be spent on the IT related activities. Although the capital expenditure have been reduced.  Steel pipeline As per the budget Rs 8637 lacs were to be spent on steel pipeline and related capex during the FY 2009-10 against which the revised estimate is Rs 6840 lacs.  Corporate The budget for the financial year 2009-10 included Rs.24275 lakhs were to be spent on the Piped Natural Gas project during the financial year 2009-10 against which the revised estimates have been kept at Rs.62 lacs kgs/day by the end of this financial year which is marginally less the budgeted estimate of 41.1803 lakhs on account of corporate related expenditure. the CNG compression capacity is expected to be 40. connections the projected no.  Capacity Expansion With the projected number of stations to be added. 73 . furniture / fixtures/stores building etc.

021 1.247 33.027 3.185 9.966 11.492 4.389 19.317 11.013 74 .587 13.248 5.734 1.396 4. Capex-C Total Capex (A+B+C) 5.440 18.The details of capital expenditure are summarized below:- Budget PARTICULARS NCT CNG PNG STEEL P/L Total NCT-A NCR CNG PNG STEEL P/L Total NCR-B Corp.803 54.083 FY 09-10 RE FY 09-10 17.620 14.126 2.500 51.400 31.

92 405.20 19.66 545.98 1135.76 150.22 1288.53 1364.82 295.30 253.31 589.47 6.75 93.63 57.39 4865.79 786.29 26.45 98.84 640.66 197.80 722.73 8.88 4504.10 544.00 518.81 58.25 712.20 624.91 247.37 617.98 705.37 46.05 316.27 9370.88 134.60 107.47 10.51 761.Operating and other revenue expenses for the year 2009-10 S.08 662.96 60.07 51.76 60.19 75 .97 712.N O PARTICULARS Operating 1 Stations Dealers' Commission Stores and Spares Consumed 2 3 Power & Fuel Rent Hire Charges Rates & taxes Repair & Maintenance Employee cost 6 Insurance Legal and Professional charges Advertisement Security Expenses Other Operating Expenses Financial Charges TOTAL Expenses at CNG BGTQ1 BGTQ2 BGTH1 ACTQ1 651.85 671.09 271.22 64.68 374.23 1417.59 215.99 185.33 189.48 231.59 1509.64 284.76 4359.38 117.02 177.76 17.55 24.03 123.58 512.03 345.57 22.84 51.

66 1770.69 903.03 28.62 1256.98 719.78 614.60 725.56 42.79 698.77 56.20 278.90 1509.30 12.14 220.43 508.45 184.13 605.02 65.66 740.88 14.79 4938.51 712.52 778.77 BGT-Q4 819.96 313.25 769.97 BGT-Q3 786.63 ACT-H1 1551.ACT-Q2 789.67 1289.74 1106.24 140.35 1314.97 10833.16 593.74 74.36 375.47 61.39 116.31 5309.97 866.98 71.29 4888.04 9247.34 57.09 233.94 259.86 381.85 22.77 31.40 76 .06 225.62 BGT-H2 1606.58 40.66 5523.91 128.83 648.31 309.80 59.25 118.27 79.23 454.46 263.36 479.88 668.98 1322.36 189.50 181.63 169.47 646.42 490.89 62.97 244.17 27.32 28.82 300.99 223.00 19.66 396.13 351.72 145.58 1444.

10 27.48 % incr/(decr.21 1607.66 357.83 9.) 9% -6% -5% -2% -1% -9% -1% -13% 7% -14% 145% -36% -21% 8% -3% -1% 77 .60 233.88 579.10 823.32 2450.12 2318.38 1211.75 139.47 253.35 913.06 851.96 60.64 987.08 2737.70 216.49 617.13 2797.39 146.30 1070.78 280.51 10802.56 25.82 253.60 1440.76 5471.31 3051.64 111.10 1304.91 RE-FY10 3251.33 1728.22 95.20 209.28 507.23 20203.70 18.58 734.56 20050.39 133.97 698.51 FY10 2970.91 828.30 245.77 636.76 5330.66 53.83 713.96 60.10 784.51 324.17 261.87 RE-H2 1699.50 138.94 279.80 442.27 877.Budget RE-Q3 849.25 3279.77 503.87 9.83 2864.41 1447.71 602.94 299.58 40.64 RE-Q4 849.02 46.58 40.78 1133.75 269.31 340.93 121.89 593.38 47.75 184.15 818.80 2862.16 80.

information & data in connection with Profit & Loss A/c. (D) I have collected the data. For this purpose I became in close contact with sources of data collection by personally & through Internet. (C) I have collected the information from the website of Ministry of Petroleum and Natural Gas. (B) With the help of Internet I have got the information. (A) I have taken the figures. from the annual report of the company through website of the company. (E) I have also get the figures. objective. So. 78 . global & Indian scenario of Natural Gas industry. EPS etc. beginning of Natural Gas industry in India. For this purpose I did my best efforts to get proper & correct information. eligibility etc. I have gone very deeply in preparing the project & I devoted my full attention to get the accurate & real data collection. regarding norms. history of Natural Gas Industry. Net Profit. Hence my research design is experience based and method of data collection is basically secondary. information & data from the chief manager (Finance) & other staff of the company with the discussion personally.Sources of collection of data for a project report has a very important role. It has also an important aspect as regards to IGL (Indraprastha Gas limited) concerning with regulation of Ministry of Petroleum and Natural Gas. data & figures about Natural Gas industry. Balance Sheet. information & figures from the printed annual report of Indraprastha Gas Limited (IGL) for the purpose preparing of charts of Gross Sales. The Methodology contains the following things: Sources of Data:. the sources must be very reliable.RESEARCH DESIGN AND METHEDOLOGY Methodology is the bone of a project. Recent Developments of Natural Gas Industry.

data & figures from annual report of Indraprastha Gas Limited (IGL). I adopted both the methods primary as well as secondary method of data collection.Throughout the preparation of project report I was in the contact of Chief Manager (Finance) & staff of finance department to get the information. (A) Primary Data:. 79 .I collected the information figures & data in connection the preparation of project report from Balance-sheet & Profit and loss a/c of Indraprastha Gas Limited (IGL). I have also collected the information. So. (B) Secondary Data:. Methods of Data Collection:.For a project report methods of data collection has also an important role in connection with accuracy & exact information. I have collected the information from the Internet in connection with the where about Natural Gas Industry.

where I was taught the basic training consisted of two phase.  Collecting information and data relating to the various important aspects of share market and keep an close eye in changes occurred in the share prices of IGL 80 . hence validity and authenticity of data also needed to be taken into consideration. The Responsibility assign to me to collect all information regarding project and prepare project using updated data available from finance department of IGL.  Understanding the transactions passed in accounts record in respect of the entry forward by C & P department to Finance department. It was a project of ―Trend analysis of share prices of IGL with respect to its competitor (GGCL)‖. during my training period for 7 weeks. according to latest changes made by MOPNG. It includes the practical and theoretical knowledge. management activity.  Learning about how they feed and maintaining general business transactions in SAP (Systematic Analysis Process) while preparing budget. The main sources of theoretical knowledge were insights of my project guide respected Mr. Saibal Biswas. The basic source of data was the information provided by the firm itself. etc.REFLECTION OF LEARNING DURING THE PLACEMENT I was working in Finance department.  Understanding the procedure of rectifying the entry that was wrongly passed in operating system. The basic work to be done was the analysis of firm on various parameters like financial parameters.  The project provided me platform to use my analytical and management skills to calculate various ratios and needed information. practical knowledge induced me in live working project. business performance.  Getting an insight into the various criteria describe by MOPNG.

This change in expected budget which is prepared in every 6th month is known as revised budget.CONCLUSION From the above analysis over the budgeting system of the IGL.  Procedure of IGL budgeting system includes the following: Planning of Budget. implementation and control & evaluation. If any deviations are recorded i. preparation of budget.The budget estimates include:  Projected Capital Expenditure  Demand projections  Sales quantity projections  Revenue  Cost of natural gas purchase  Operating expenses  Funding  Projected profit  Proposed dividend  Resource mobilization of capital expenditure  Projected Profit & Loss Statement  Projected Cash Flow  Projected Balance Sheet  Under the controlling process the expected budget is being matched with the actual figures after every 3 months. approval of budget. I conclude the following:  IGL follows the operating budget system because it revised its budget after every six month and follows its budget after each quarter.  Factors Considered by IGL before making Budget:.e if the actual figure exceeds the expected figure then there is a need to change the expected budget figure in accordance with the actual. This process of make changes in expected budget is done in every 6th month. 81 .

 If there is any deviation recorded in the actual figure while making comparison with its budgeted figure then they used to exceed it with the required amount in their revising budget and the next year‘s budget is then adjusted with that same amount. This makes their budgeted system more consistent and reliable for all the departments. This is because of their well and good budgeting system as they used to revised their budget after every 6 months and they can make required changes within time.  They are good at controlling their budget as compared to other organizations in a way that: Generally other companies used to prepare their budget by taking the figures either 5% more or 5% less than the actual. While on the other hand IGL used to take the exact figures into account while preparing the budget and make changes in it as and when required. 82 . Company is a debt free company.

 Provide the investors and other interested outsiders with better information so that they can take their decision efficiently.  The departments are more aware of the concerned problem so they can solve it in better way than any other authority.  An inspection committee should be made to check the estimated budget proposal come from different department before making the approval of that budget.  Company should delegate authority to each department of making changes in the budgetary figures as and when required so as to: Save time.  Every department should have power to prepare their own budget according to their need and then take approval from higher authority.RECOMMENDATIONS  Company should involve employee‘s ideas while preparing the budget.  For efficient decision making regarding budget. This will help in improving accountability in different department for their budget.  A budgeting suggestion box should be made in order take opinion of employees on budget so that every member of organization can show their involvement in budgeting process. 83 .

wekipedia. Gupta R.google.org/business/industry.com  http://www.igl. Pandey S.gujaratgas.com  http://moneycontrol.in/ng.com NEWSPAPERS & MAGAZINES     Economic Times Business standard ―Outlook Money‖ ―Business Today‖ 84 .P.com  http://www.petroleum.com  http://www.bseindia.naturalgas.htm  http://www.asp  http://equitymaster. Rastogi WEBSITES REFRENCES:  http://www. M.com  http://www.com  http://www.BIBLIOGRAPHY BOOK REFERRED    I.nic. P.

37 793.41 21870.34 41076.17 21498.48 14193.39 2801.63 6573.48 7389.45 BGT-H1 ACT-H1 BGT-H2 RE-H2 14.94 6308.47 314.66 Material 26049.54 22829.71 2509.38 Duty 6804.53 Rev.03 1135.71 50379.37 3685.94 573.48 4660.20 59999.44 67198.46 7.81 Actual FY08-09 (lacs SCM) INCOME TOTAL INCOME EXPENDITURE Total Consumed Excise (CNG) Total Margin Total OperatingExpenses Other Income PBDIT 504.68 SALES 60517.25 7874.91 20050.77 59422.51 2622.33 394.79 32259.10 10936.43 17.12 (lacs 345.96 535.40 10802.04 32629.Est FY09-10 14.67 3215.69 15.15 8556.81 2709.05 Gross 27663.81 708.39 135909.54 61247.02 41498.43 13697.42 FY09-10 16.84 13.05 1549.54 124.33 124076.97 44200.51 9247.20 31758.85 4603.08 15239.23 5925.55 5310.18 27549.38 9370.92 208.73 18796.01 75391.97 10833.ANNEXURE REVISED ESTIMATES OF PROFIT AND LOSS ACCOUNT FOR THE YEAR (2009-10) (In lacs) Budget ITEMS Sales Quantity CNG (lacs Kgs) PNG SCM) Natural Gas (lacs SCM) Total Quantity 3895.89 56878.34 40295.80 35198.88 4189.51 20203.03 413.41 27740.59 448.08 1077.93 19628.35 85 .57 83.41 96213.02 8434.

24810 11144 11144 86 .85 33003.46 4700. 2009 TO MARCH 31.36 21130.54 8494.55 21982.28 8638.59 16798.65 6743.47 11474.08 3794.86 5590.73 11208.43 Profit After Tax 9922.95 17170. 2010 (Rs In Lacs) PARTICULARS SOURCES OF FUNDS Profit After Tax (PAT) Add: Depreciation security deposit .48 5695.86 15833.69 5325.18 11021.58 4699.81 4935.36 25886.16 (PAT) 10507.06 31656.70 10526.Depreciation PROFIT BEFORE (PBT) Taxation TAX 3939.59 17247.63 PROJECTED CASH FLOW STATEMENT FOR THE YEAR OCTOBER 1.10 8638.02 14857.PNG customers Total Sources of Funds APPLICATION OF FUNDS Payment for Purchase of Fixed Assets Dividend Payment Investments/Redemption of investments Defered Tax Increase/(decrease) in working capital Total Application of Funds 1000 325 (1215) 9500 (13666) 368 (5864) 9150 9391 28312 37703 0 (12666) 693 -7080 18650 5719 2205 1576 9501 5755 2495 900 9150 11474 4700 2476 18651 Q3 Q4 Total Opening Cash and Bank Balance Opening Balance in Mutual Funds 17143 6666 18000 6810 17143 6666 Closing Cash and Cash Eq.

Less: Proposed Dividend Net Current Assets Application of Funds 12555 6564 -4774 93048 18221 84674 98135 9619 10500 6552 2844 4718 2543 200 4039 14345 2509 4041 17143 209 3937 27840 2800 4009 17143 219 4022 28194 131143 46364 84778 13044 0 88647 41557 47090 12697 6666 -6000 139250 46258 92993 14000 69944 0 6822 2283 93049 14000 64849 0 3909 1915 84674 14000 69772 0 6385 7978 98135 2009 Audited 2010 Unaudited 87 . Particulars 2010 Budgeted Sources of Funds Share Capital General Reserve Loan Funds Deposit from customers Deferred Tax Liability Sources of Funds Application Funds Fixed Assets Gross Block Depreciation Net Block CWIP Investment Current Assets Inventories Sundry Debtors Cash & Cash Equivalent Other Current Assets Loans & Advances Total Current Assets Less: Current Liab. As on Sept 30. As on March 31. and Provn.PROJECTED BALANCE SHEET (FOR THE FINANCIAL YEAR( 2009-10) As on March 31.

but we must admit that the pollution levels were dangerously high enough for it to be listed amongst the world‘s most polluted cities. It‘s funny to note that the court actually slapped a fine of about $450 on the Union government. it earned the recognition of drafting one amongst the top 12 best policies in the world. once the government set about preparing a comprehensive action plan by passing the desired legislation and setting up the infrastructure necessary for such a transition. when the visitors lost a match. which upon combustion mainly emits CO2 and H2O and being lighter disperses very quickly. CNG is mainly comprised of methane. With the economy shifting gears around the same time amidst increasing middle class aspirations. the government of New Delhi reluctantly as is typical of a developing nation. Delhi has won the US Department of Energy‘s first ‗Clean Cities International Partner of the Year‘ award in 2003 for ‗‗bold efforts to curb air pollution and support alternative fuel initiatives‘‘ [7]. the Carbon emissions plummeted by 72%. Between 2000 and 2008. during the English cricket tour of India.CASE STUDY New Delhi – A Case Study of the CNG revolution Not very long ago in 1993. Ever since then. To its credit. whereas gasoline and diesel being more complex. Perhaps they were bad losers. a turnaround seemed highly improbable. Vehicular emissions. Buoyed by the public pressure. for repeatedly seeking a modification in the order [4]. with children and senior citizens being the worst affected. emit more harmful emissions such as NOX and SOX. 12000 taxis. In a unique display of judicial activism. would morph into deadly smog during the foggy winters resulting in an increase in respiratory illnesses. they attributed part of their loss to the air pollution in Delhi – the capital city of India [8]. Owing to the recent volatility in the oil prices and continued patronage of CNG by 88 . complied and enforced regulations to convert its entire fleet of diesel and gasoline dependent public transport system to Compressed Natural Gas (CNG) by 2002. while the SO2 emissions decreased by 57% on account of 3500 CNG buses. with about 500 new vehicles being added every day. which accounted for 70% of the air pollution. as per a study conducted by the World Wide Fund for Nature (WWF) and E3G [1]. 65000 auto rickshaws (tuktuks) and 5000 mini buses plying on CNG [1]. the Supreme Court of India ordered the responsible government to switch its public-transit system to a cleaner-burning fuel in response to citizens concerns about air pollution.

the recent indigenous gas discoveries in the K. the general public has begun to increasingly incorporate CNG kits in their private vehicles.the government by way of subsidies. enabling us to save valuable foreign exchange. 89 .G Basin and elsewhere have only brightened our outlook for lesser dependence on foreign oil. Encouraged by the public response. For a country which depends on 70% of oil imports. In view of growing awareness for cleaner air and climate change. there‘s many a lesson to be learnt from Delhi‘s resurgence. which facilitates them to run on dual fuel mode. the Ministry of Petroleum and Natural Gas has set about an ambition plan of bringing 200 cities under the supply network of CNG and Piped Natural Gas (PNG) by 2015 [5].

To provide a cleaner. and Bharat Petroleum Corporation Ltd.  The transport sector uses natural gas as Compressed Natural Gas (CNG). environment-friendly alternative as auto fuel to Delhi‘s residents. IGL took over Delhi City Gas Distribution Project in 1999 from GAIL (India) Limited (Formerly Gas Authority of India Limited). To study the factors taken into consideration by IGL while preparing and revising of budget. 90 .SYNOPSIS OF THE PROJECT ABOUT THE COMPANY Incorporated in 1998. OBJECTIVES OF THE PROJECT     To study the current budgeting system of IGL To study the procedure used by IGL in preparation of budget. and commercial sectors. To study the pattern of altering and controlling of budget. the domestic and commercial sectors use it as Piped Natural Gas (PNG) and R-LNG is being supplied to industrial establishments. convenient and reliable natural gas supply to it‘s customers in the domestic and commercial sectors. This will considerably bring down the alarmingly high levels of pollution. The two main business objectives of the company are  To provide safe. transport. The project was started to lay the network for the distribution of natural gas in the National Capital Territory of Delhi to consumers in the domestic. (BPCL) – IGL plans to provide natural gas in the entire capital region. With the backing of strong promoters – GAIL (India) Ltd.

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