Arl Internship Report

INTERNSHIP REPORTAttock Refinery Limited

From July 13 to August 10-2009 & July 19 to August 13-2010 (8 weeks)

Prepared By:

Ch. Muhammad Rashid Amin

BBA (Hons)

Major In Finance

Foundation University Institutes Of Engineering and Management Sciences

Page 1

Abstract

I am Ch Muhammad Rashid Amin student of BBA (Hons) Finance in Foundation University Institutes of Engineering and Management Sciences. I have done my internship in finance department From July 13 to August 10-2009 & July 19 to August 13-2010 (8 weeks) It was my first experience in any company. A.R.L is giving a suitable environment to internees. I have also improved my communication and persuasive skills. The purpose of this report is to describe my experience at Attock Refinery Limited and the knowledge that I gained at this prestigious organization. This report is primarily focused at the understanding of this company and the different tasks assigned to me by my supervisor so as to know how this company functions and to get accustomed to its day to day activities as well as its working environment.

This report also shows how this internship program helps students grow into professionals and mature them into hardworking members of the society and apply them in is practical life.

Page 2

Introduction of organization

The Attock Oil Group of Companies

ARL is a member of Attock Group of Companies, a fully integrated group covering all segments of oil and gas industry from exploration, production and refining to marketing of a wide range of petroleum products besides also engaged in manufacturing and trading of cement, information technology, etc.

Some of the leading Companies of the Group in Pakistan are as under:

PAKISTAN OILFIELDS LIMITED

NATIONAL REFINERY LIMITED

ATTOCK PETROLEUM LIMITED

ATTOCK CEMENT PAKISTAN LIMITED

ATTOCK HOSPITAL (PVT.) LIMITED

ATTOCK INFORMATION TECHNOLOGIES SERVICES (PVT.)

LIMITED

ATTOCK GEN LIMITED

Page 3

Attock Refinery Limited

Attock Refinery Limited (ARL) was incorporated as a Private Limited Company in November, 1978 to take over the business of the Attock Oil Company Limited (AOC) relating to refining of crude oil and supplying of refined petroleum products. It was subsequently converted into a Public Limited Company in June, 1979 and is listed on the three Stock Exchanges of the country. The Company is also registered with Central Depository Company of Pakistan Limited (CDC).

Original paid-up capital of the Company was Rs 80 million which was subscribed by the holding company i.e. AOC, Government of Pakistan, investment companies and general public. The present Paid-up capital of the Company is Rs. 852.93 million.

ARL is the pioneer of crude oil refining in the country with its operations dating back to 1922. Backed by a rich experience of more than 85 years of successful operations, ARL’s plants have been gradually upgraded/replaced with state-of-the-art hardware to remain competitive and meet new challenges and requirements.

Page 4

ARL profile

Vision

To be a world class and leading organization continuously providing high quality diversified environment friendly energy resources and petrochemicals.

Mission

We will utilize best blend of state-of-the-art technologies, high performing people, excellent business processes and synergetic organizational culture thus exceeding expectations of all stakeholders.

Core Values

Our success will not be a matter of chance, but of commitment to the following enduring beliefs and values that are engrained in the way we think and take actions to pursue a climate of excellence:

Integrity & Ethics Quality

Social Responsibility

Learning & Innovation

Team work

Empowerment

Page 5

DEPARTMENTS

Departments of ARL are:

Finance

Commercial & Material Management

Information Technology

Human Resources

Maintenance Department

Operations

Technical Services / Engineering

Engineering

Quality Control Laboratory

Planning and development

Page 6

Finance Department

The Finance Department is charged with the responsibility of monitoring the activities of the General Ledger. This includes the Accounts Payable and Payroll functions. In conjunction with this task the Finance Department is responsible for the compilation and administration of the City of Altus budget, the administration of the Hotel/Motel Tax, internal auditing to insure compliance with all local, state and federal laws, and financial reporting to the City Council. It also renders support services to other functional areas for enhancing organizational efficiency and effectiveness for long term value creation.

Page 7

Financial Reportin

g

Corporat

e Affairs

Accounts

PayableTreasury Section

Fixed

Assets

Taxation

Budgeting and

Planning

Oil Accounti

ng

Finance

Oil Accounting

It is basic and important section of Finance .All the purchase of crude oil and sales of the products process in this section.

There are three basic functions are held by oil accounting as follows:

a. Purchase of crude oilb. Transport of crude oil( South Bound)c. Sale of refined oil products and other by-products

Purchase accounting:

The purchase of crude oil by ARL is carried out from two regions Northern and

southern. Northern crude is delivered at door step of ARL while the crude from

Southern region is delivered to the nearest refinery i.e. Parco, NRL, PRL, and

BYCO. As ARL arranges to bring in the crude by itself from the southern fields it

has to incur some charges in the transportation that is recovered by ARL through

IFEM (Inland freight equalization margin) along with the product sale invoices

dispatched to customers. The price to purchase the crude is calculated on

weekly basis according to the international market price that is communicated

through a publication called “Plates Oilogram”. Prices are applicable as per crude

sales/purchase agreement.

Price includes the following component.

A) Pricing determination on weekly basis

B) Discount (discount offered is deposited in Govt. Treasury)

C) Insurance

D) Transportation

Page 8

The crude oil supplier normally raises the invoices of crude supplied for all the

fields simultaneously at the end of each month. To pay a supplier an invoice

voucher is booked by Khan Sahib against the party that is later on processed by

account payable section.

Different crude suppliers are as under:

1. Oil and Gas Development Co. (OGDC)2. Pakistan Oilfields Limited3. Pakistan Petroleum Limited4. Government Holdings Private Limited5. MOL Pakistan Limited6. Dewan Petroleum Limited7. Oil and Gas Investment Limited8. Orient Petroleum Incorporated (OPI)9. British Petroleum Pakistan10. Zaver Petroleum Limited11. Sui Southern Gas Pipeline Co.

Transportation:

There are three departments involved in transportation freight payment system.

1) C & MM dept

2) Operation dept

3) Finance dept

Before making any payment to any party by finance a summery and detail

explanation of all the penalties are communicated to finance dept in hard copies

by operation dept. This information contained in hard copies is also maintained

by operation dept on computer system. Where as the C&MM dept maintains the

information regarding registration/deregistration, replacement of bowers etc. By

Page 9

receiving the hard copies regarding penalties, refunds etc, it is recorded in a

manual register against a “reference number” uniquely created.

To process the contractor’s bill a specialized sub-module “Cartage contractor

billing” in Oil Accounting module is used. After performing all the necessary steps

in this whole process will finally create and print a two report, one with a missing

column “Received quantity” is dispatched to the contractors for their verification

purpose, after verification contractor submit the report duly signed and stamped

along with their invoice on the covering letter while the other with the said column

is sent to treasury section after booking invoice voucher in financial. The treasury

section then process the final payment through cheque or bank transfer.

Sales Accounting:

By law the operation dept is responsible for generating “sales Tax invoice” as

soon as a delivery is dispatched and enters the record into the system. On fort

night basis a “product dispatch repot” is created and communicated by

operations department to Finance dept for verification purposes. In finance dept

a “Customer Billing Report” is processed, printed and the entries are checked

with the “Product dispatch report”, the entries here to be checked are (1) Product

quantity (2) Product Price (3) Total product price dispatched (4) Sales Tax

verification. For sales Tax verification we print another document “Sales Tax

summery” out of the system that has already been processed by operation

department. This document includes Sales Tax calculated for each product

dispatched. In this case if the sales Tax entries are verified it means that the

other data i.e. Price, quantity and levies are correct as well. I will specifically

discuss the document “Customer Billing Report” that is result of the data entered

Page 10

by operations and commercial dept and processed by finance department. Let’s

consider the following entries with in this document.

1) Refinery Price= Price/unit X Quantity dispatched

Price is always communicated by commercial dept through hard copy as

well as updated in the system,

Quantity dispatched is provided by operation dept.

2) Sales Tax

Sales Tax charge to a company is 17% off the refinery bill for a product dispatched

3) Total Govt. Levies Adding up the sales Tax calculated (17%) to PDL amount (if any), Excise

duty (if any), special Excise duty (if any) IFEM if any will result in Total

Govt. Levies.

After verifying all the entries, the billing report along with a covering letter is sent

to all the customers as invoice for requesting the receivable amount. After this an

account receivable is booked in the oracle interface. A request is also made to

I.T for transferring of the data over to oracle financial from oracle interface. A

final check is then made by printing out a document “Invoice GL distribution” to

see if the entries have been gone to the right Ledgers by comparing them with

“Customer Billing Report”.

Page 11

Corporate Affairs

This department is responsible for the dealing of share capital of the company in the stock market. The activities covered in the monthly charge for shares registrar services.

1) Maintenance of company’s members’ register. Issue of share transfer receipts against share certificates lodged for transfer.

2) Manual/ Computer audit of share certificates and transfer deeds lodged for transfer.

3) Maintaining specimen signature cards up to date. Verification of transferor’s signatures on transfer deeds lodged for transfer.

4) Posting of transfer to members’ register. Interfacing with central depositary system.

5) Daily balancing and reconciliation of shareholdings in central depository register and company’s members’ register.

6) Reporting to Central Depository Committee the reconciliation of members’ register shareholding with Central Depository Register shareholding.

7) Issuing notices to CDC in respect of Corporate Actions.8) Endorsing the physical transferred shares9) After endorsement, the certificates are sent for Directors’ approval.10)Custody of undelivered shares and dividend warrants returned undelivered.11)Delivery /Dispatch of transferred shares to the shareholders, after

discharge of transfer receipts.12)Serializing and filing of discharged transfer receipts.13)Issue of duplicate share certificates and dividend warrants, against

appropriate indemnities and completion of formalities, in place of share certificates and dividend warrants reported lost

14)Maintaining records for income tax deductions/exemptions.15)Maintaining records of change of address16)Assistance to company’s auditors in their audit of share related affairs.17)Daily dealing and correspondence with shareholders, solving their queries

and giving guidance.18)Other standard share department works.

Page 12

Financial ReportingThey compile all financial information from all sections, and organized it for

annual report. They also make financial statement as follows:

Balance sheet Profit and loss account Cash flow statement Statement of changes in equity

This section also prepares and compiles the following

Tax Depreciation Schedule

Schedule of tax on P/loss on retirement of fixed assets

Telephone fax and postage charges statement

Training expenses report

Working of impairment loss

Statement of comprehensive income

Statement of changes in income

Letter to/from different companies for reconciliation and consolidation of unrealized profit

Comparative statement of own fuel consumed

Delayed payment changes schedule

Details of customer wise sales

Status of tax affairs

Foreign exchange saving schedule

Credit quality of different creditors

Period wise breakup of overdue debtors

Comparison of interest income schedule

Page 13

Accounts PayableIt is a section of Finance department that is responsible for almost all types of

payments that are payable by ARL to suppliers, contractors and for services of

course.

First of all a need for an item is initiated by a department, a requisition is

generated in the store for the availability, if the item is there then its ok but if the

item is out of stock, the procurement department is informed about the item

needed, here a few quotation are called in from different suppliers, one of them is

selected and a purchase order is raised for the selected company by

procurement department. After receiving the delivery of the stuff is checked by

procurement department using the software “Maximo” if the stuff has already

been received it should have been updated (debited) in Maximo. The Finance

department must have already got a copy of purchase order from the

procurement department, so will also get the invoice generated by the supplier

with in 1 or2 days of the delivery. After matching both the documents the account

payable section process the payment with application of with holding TAX and

other surcharges of 4.25 % from the supplier that is not included in Large Tax

payer Unit. Some of the companies are exempted from the said tax, in order to

avoid the Tax application they check certificate of exemption for the company.

In account payable section the services payoff is dealt by Chaudhry

Muhammad Amin who books invoice vouchers with the tax code of 6% is

forward to Tanveer for processing and creating the payment voucher.

Page 14

Treasury SectionTreasury section actually does the cash management, bank reconciliation and

defines actual mode of payment performed by ARL. A “cash register” is

maintained shows opening balance, expenditure of the period and closing cash

balance. Actually the section hold a safe which they call “bank” maintain some

cash for the payment of daily small expenses for which they cannot write a

chaque to pay for.

They use three modes of payment on purchases;

Letter of credit (LC): It is used when there is new supplier. Both the

companies use their banks and banks provide grantees; if customer’s bank

received document of product (that they want to import), than it will pay for

it. Both companies are secured in this mode.

Cash against Document (CAD): In this mode purchaser paid first and there

is no grantee from bank. This mode is used when the company have

permanent supplier.

Wire Transfer: It is an advance payment mode. When purchases are under

10,000 dollar, they use wire transfer.

They also match sales and purchases book of company with the bank record at

the end of month. This process is called Bank Reconciliation.

Page 15

Fixed Assets

There are six categories of fixed assets:

1. Land

2. Building(5%depreciation)

3. Plant and machinery(10%depreciation)

4. Computers(20%depreciation)

5. Furniture, fixture and equipments(10%depreciation)

6. Vehicles(20%depreciation)

They charge depreciation on building, Plant and machinery, Computers,

Furniture, Fixture, and Equipments Vehicles. They complete their work on

monthly bases. They inter daily information about depreciation of assets in

excel worksheet and every end of the month they upload data through

“Automatic Data Interface” (ADI) in Oracle Application Software. This

software generates a depreciation report, through this report they make a

summary of fixed assets and transfer it to final accounts section for general

ledger information.

When a new asset purchase for use then capital cost account would be

debited and capital clearing account would be credited.

Page 16

Taxation

This department deals in all tax related to this company such as income tax, sales tax, import/export, direct/indirect all types of tax are seen to be this department. It uses income from different sources to calculate the various taxes bound to be levied.

Budgeting and PlanningIt is also an important section of finance. Planning of future projects and process of their budgeting is done here.

They record the estimated amount that shall be invested on new projects next year. Budgeting is the financial term of planning. Its has two types.

1. Capital Budgeting: That gives benefit more than one year.

2. Revenue Budgeting: That gives benefit with in one year

3. Extra ordinary Revenue Budget:

The Extra Ordinary Revenue Budget is a Budget which lies somewhere between the capital and revenue budget, it shows the expenditure which are of around five years of life.

Page 17

Internship experience at ArlLearning as internee

I have learn lot of things in that organization, some basic things which help me are given below

Personal experience in organization:

It was a tremendous experience that I have availed with devotion and commitment. I have an interest in oil and gas industry that’s because OGRA is the back bone of the economy of the country. But one thing I want to share its not easy that looks it has a great toughness and complications in its process but the overall it was nice and great. Here I am sharing some of my learning regarding my internship in different sections of finance department.

Work experience in finance department:

· First I met Mr. Atif saleem the HR representative of ARL. Who explain the periodic schedule of internship in different sections.

then I have sended to the finance department, I go to the oil accounting where I discussed about the marketing practices going on in the international Oil market and how oil prices have to maintain by the refinery through the instructions of government .

· In the oil accounting I have learnt about how they maintain crude oil and oil products supply record.

· I learnt that how payments have been made to their customers and mode of transaction and involvement of banking activities in these transactions.

· I also performed some task in the corporate affairs section like how to calculate the no of share holder’s contribution in the company, making of annual report call for annual general meeting and how dividend divided.

· I learnt about the marketing procedure and required of the documents and dealing with customers. All the record is saved.

· During my internship I learnt about the value that customer is the only who come first. There is no need of making advertising for sales and development because of regular base customer.

Page 18

· The quality control as well inception in the finance department should be parallel.

· I learnt about the HR policies that how many types of hiring ARL is using. And what are the procedures of the Attock about HR matters.

Page 19