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Page 1: Internship CPCL

CHAPTER - I

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INTRODUCTION

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1.1 INDUSTRY PROFILE

The petroleum industry in India is a classic example of the strides made by the

country in its march towards economic self-reliance. At the time of Independence in

1947, the industry was controlled by international companies. Today, a little over 50

years later, the industry is largely in the public domain with skills and technical know-

how comparable to the highest international standards. The testimony of its success in the

past five decades is the significant increase in crude oil production from 0.25 to 33

million tons per annum (MMTPA). The consumption of petroleum products has grown

30 times in the last 50 years from 3 million tons during 1948-49 to about 91 million tons

in 1998-99. A vast network of over 29,000 dealership and distributors has developed and

backed by over 400 storage points over the years to serve the people even in the remote

and once-inaccessible areas.

In the 50 years since independence India has witnessed a significant growth in

the refining facilities and increase in the number of refineries from one to seventeen now.

During the first decade of Independence (1947-57) three coastal refineries were

established by multinational oil companies operating in India at that time. They were

Burma shell, Esso Stanvac and Caltex; the first two at Mumbai and the third at

Visakhapatnam.

The second decade (1957-67) witnessed the setting up of Indian Refineries Ltd in

1958, a wholly-owned public sector Government company. Under its banner three

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refineries were set up at Guwahati (Assam), Bahraini (Bihar) and Koyali (Gujarat)

essentially to process the indigenous crude discovered in Assam and Gujarat. Also, one

joint sector refinery was set up with the participation of an American company at Cochin

based on imported crude.

The next ten year period (1967-77) witnessed the establishment of two refineries,

one with equity participation from American and Iranian companies at Chennai and

another in the public sector at Halide by Indian Oil.

Two more refineries in the public sector have been commenced in the period

1977-87. The refinery at Bongaigon was the first experiment in having an integrated

petroleum refinery-cum-petrochemicals unit. The other refinery was set up at Matura in

1982. Major expansions of the coastal refineries at Mumbai, Cochin, Chennai and

Visakhapatnam were also completed during this period.

During the fifth decade (1987-97), a small refinery of 0.5 MMTPA

Nagappatinam was built in TamilNadu. In 1996, at three MMTPA refineries built in the

joint sector at Mangalore HPCL and India Rayon. This decade also saw significant

expansions of the capacities of the existing refineries, thereby the refining capacity to

about 62 MMTPA.

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1.3 COMPANY PROFILE

1.3.1 HISTORY

Chennai Petroleum Corporation Limited (CPCL), formerly known as Madras

Refineries Limited (MRL) was formed as a joint venture in 1965 between the

Government of India (GOI), AMOCO and National Iranian Oil Company (NIOC) having

a share holding in the ratio 74%: 13%: 13% respectively. Originally ,CPCL Refinery was

set up with an installed capacity of 2.5 Million Tonnes Per Annum (MMTPA) in a record

time of 27 months at a cost of Rs. 43 crore without any time or cost over run.

In 1985, AMOCO disinvested in favour of GOI and the shareholding percentage

of GOI and NIOC stood revised at 84.62% and 15.38% respectively. Later GOI

disinvested 16.92% of the paid up capital in favor of Unit Trust of India, Mutual Funds,

Insurance Companies and Banks on 19 th May 1992, thereby reducing its holding to 67.7

%. The public issue of CPCL shares at a premium of Rs. 70 (Rs. 90 to FIIs) in 1994 was

over subscribed to an extent of 38 times and added a large shareholder base.

As a part of the restructuring steps taken up by the Government of India,

IndianOil acquired equity from GOI in 2000-01. In July 2003, NIOC transferred their

entire shareholding to Naftiran Intertrade Company Limited, an affiliate, in line with the

Formation Agreement, as part of their organizational restructuring. Currently IOC holds

51.89% while NICO holds 15.40%.

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CPCL has two refineries with a combined refining capacity of 10.5 Million

Tonnes Per Annum (MMTPA). The Manali Refinery has a capacity of 9.5 MMTPA and

is one of the most complex refineries in India with Fuel, Lube, Wax and Petrochemical

feedstocks production facilities. CPCL's second refinery is located at Cauvery Basin at

Nagapattinam. This unit was set up in Nagapattinam with a capacity of 0.5 MMTPA in

1993 and later enhanced to 1.0 MMTPA.

The main products of the company are LPG, Motor Spirit, Superior Kerosene,

Aviation Turbine Fuel, High Speed Diesel, Naphtha, Bitumen, Lube Base Stocks,

Paraffin Wax, Fuel Oil, Hexane and Petrochemical feed stocks. The Wax Plant at CPCL

has an installed capacity of 30,000 tonnes per annum, which is designed to produce

paraffin wax for manufacture of candle wax, waterproof formulations and match wax. A

Propylene Plant with a capacity of 17,000 tonnes per annum was commissioned in 1988

to supply petrochemical feedstock to neighbouring downstream industries. The unit was

revamped to enhance the propylene production capacity to 30,000 tonnes per annum in

2004. CPCL also supplies LABFS to a downstream unit for manufacture of Liner Alkyl

Benzene.

The crude throughput for the year 2008-09 was 10.12 million metric tonnes

(MMT). The company’s turnover for the year 2008-09 was Rs 36489.67 crores and the

Profit after Tax was (Rs.397.28 crores).

The Company has not declared any dividend for the year 2008-09 in view of the

net loss incurred during the financial year.

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1.3.2 PRODUCTS AND SERVICES

The main products & services of the company are:

LPG

Motor Spirit

Superior Kerosene

Aviation Turbine Fuel

High Speed Diesel

Naphtha

Bitumen

Lube Base Stocks

Paraffin Wax

Fuel Oil

Hexane

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1.3.3 COMPETITORS

The key competitors for CPCL are as follows:

Mumbai Refinery (MAHARASHTRA) - Bharat Petroleum Corporation Ltd. (BPCL)

The Refinery at Mumbai came into stream in January, 1955 under the ownership

of Burmah-Shell Refineries Ltd. Following the Government's acquisition of the Burmah-

Shell, name of the Refinery was changed to Bharat Refineries Limited on 11.2.1976. In

August, 1977, the Company was given its permanent name, viz. Bharat Petroleum

Corporation Ltd. The installed capacity of 5.25 MMTPA was increased to 6 MMTPA in

1985. With the successful commissioning of “Refinery Modernization Project” (RMP) in

2005, the current refining capacity stands at 12.00 MMTPA. The Refinery uses latest

microprocessor based Digital Distributed Control System (DDCS) and has been

accredited with ISO 9002 (Quality Management System), the refinery has also been

accredited with the unique distinction of a quality certification from NABL for “Quality

Assurance Laboratory. BPCL Mumbai refinery is the first Indian work site to achieve a

Level 8 rating on the International Safety Rating System (ISRS), ISRS is a tool owned by

Det Norske Veritas, UK for comparison benchmarking and development of safety

management systems worldwide. ISO 14001 (Environmental Management System)

certifications has also been conferred to the refinery for effective deployment of

environmental care measures.

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Mumbai Refinery (Maharashtra) – Hindustan Petroleum Corporation Limited

(HPCL)

Mumbai Refinery was commissioned in 1954 under the ownership of ESSO and

was acquired by Govt. of India in March, 1974. Hindustan Petroleum Corporation

Limited (HPCL) was formed on 15th July 1974 after the merger of these companies. The

capacity of Mumbai Refinery was 3.5 MMTPA which was increased to 5.5 MMTPA

during 1985 after implementation of expansion programme.

Mumbai Refinery is also having Lube complex, which was commissioned in

1969 as a joint venture between Esso and Government of India with a capacity of 165

TMT per annum of LOBS. In the year 1974, Lube India Ltd was fully taken over by

Government of India and it was merged with HPCL. In the year 1983 Lube refinery units

were debottlenecked and capacity increased to 225 TMT per annum. In the year 1995,

Lube Refinery was further expanded by adding a new units and capacity increased to 335

TMT per annum of LOBS which is the largest in India even today.

In order to meet the Euro II/III specification of diesel, new project ‘Diesel Hydro

Desulphurization’ (DHDS) project was commissioned in the year 2000. To upgrade MS

quality from Euro-II to Euro-III & Euro-IV, Green Fuels & Emission Control Project

(GFEC) has been commissioned in the year 2009.

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Reliance Petroleum Limited (RPL) (Private Sector), JAMNAGAR (GUJARAT)

Reliance Industries Limited (RIL) has two refineries. The present capacity of the

first refinery is 33 MMTPA / day. Post amalgamation of Reliance Petroleum Limited

with RIL, RPL refinery (a unit in Jamnagar SEZ) has become the second refinery of RIL.

The Scheme of amalgamation is effective from 11 th September, 2009 with an appointed

date being 1st April, 2008. The capacity of the second refinery (SEZ) is 29 MMTPA /

Day.

Essar Oil Limited (EOL) (Private Sector), VADINAR (GUJARAT)

The private sector refinery was commissioned in November 2006 with an

installed capacity of 10.50 MMTPA at Vadinar, Gujarat.

1.3.6 BANKERS

Chennai Petroleum Corporation Limited Bankers are

STATE BANK OF INDIA HDFC ICICI

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CHAPTER - II

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METHODOLOGY

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2.1 Objective of the study:

To study the organization and to know about the policies, functions of finance

department at Chennai Petroleum Corporation Limited.

2.2 Time Period of the Study:

Time period of the study taken was about thirty working days.

2.3 Sources of Data:

Information are gathered through discussion with higher officials and also by self

observation.

2.4 Significance of Study:

Importance of the study is to learn the organization and its environment and how

one could able to complete the allotted work in perfect time schedules. To experience the

working environment and to gain benefits from that for the future career.

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CHAPTER - III

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FUNTIONS OF THE DEPARTMENT

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Description of the Functions of the Department:

PRODUCTION AND SALES SECTION

The production and sales section consists of the following sub-sections.

Sales section.

Crude purchase and insurance section.

Pool accounts, pricing and costing section.

The production and sales section, as a whole, is headed by a senior manager.

The sales section is looked after by a manager, who is assisted by a senior officer,

three accountants and a trainee.

The crude purchase and insurance section is looked after by a deputy manager, who

is assisted by an accountant.

The cost cell and product pricing section is looked after by a manager, who is

assisted by an accountant and an industrial trainee.

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PERSONNEL ENTITLEMENT SECTION:

This section is responsible for disbursement of payments like pay and

allowances, Medical (domiciliary & hospitalisation), medical fund, provident fund,

gratuity, superannuation, advance for housing, two/four wheeler purchase, etc.

This section includes

Pay roll & PF

Medical and housing

The pay roll and PF section is headed by a senior manager, who is assisted by five

Accountants and one industrial trainee.

The medical and housing section is headed by a deputy manager, who is assisted by

three accountants and one industrial trainee.

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MATERIALS AND WORKS SECTION

The materials and works section is primarily intended to look the work connected

with receipt, verification and passing of bills in respect of purchases, contracts and

miscellaneous services for the operating refinery.

This section includes functions such as

inland purchase bills

Work bills

Finance concurrence for work orders

Miscellaneous bills

Finance function in material management dept.,

Stores accounting

Foreign purchase bills

The materials and works section is headed by senior manager, who is assisted by

two managers, deputy manager, one senior officer, one officer, five accountants and four

industrial trainees.

CASH AND BANK SECTION

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The cash and bank section takes care of receipt of cash/ cheques, preparation and

dispatch of cheques, disbursement of salary, medical and other cash payments,

investment of surplus funds, borrowable of funds for working capital requirements and

for capital projects, preparation of cash flow forecasts etc.,

This section is headed by a senior manager, who is assisted by one officer and

two assistants and one industrial trainee.

PROJECT FINANCE SECTION

The project finance section looks after all capital jobs covered under plan and

Non-plan schemes.

For effective discharge of its responsibility, the section is divided into two

subsections namely,

Plan Projects section

Non-Plan Projects section.

The main function of each sub-section, namely, plan projects section and non

plan projects section are as follow

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Vetting of capital budget proposals as to its financial viability before placing

it to the board for approval.

According finance concurrence to capital budget proposals.

Processing of purchase bills.

Processing of works bills.

Monitoring of project expenditure of various projects both under plan and

non plan projects and monthly expenditure reporting.

Maintenance of projects stores ledger.

Capitalisation of completed projects.

The section, at present, is headed by a senior manager, who is assisted by a

manager, a deputy manager, three accountants and two industrial Trainees.

CORPORATE ACCONUTS, MIS AND TAXATION SECTION

The following functions are handled

The preparation of final accounts

Maintenance of fixed asset Register

Co-ordination with statutory /government auditors for audit of final accounts

Direct and indirect Taxation

Generation of MIS reports and

Filing returns

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The section comprises two sub-sections

Corporate accounts

Direct taxation & MIS

The corporate accounts, direct taxation and MIS section is under the direct of the

senior Manager, who is assisted by a senior officer, two accountants and one industrial

trainee.

CENTRAL EXCISE & CEVAT

The central excise section is headed by a manager who is assisted by an officer

and two accountants and one industrial trainee.

CPCL CAUVERY BASIN REFINERY

CBR-finance section is located at Cauvery basin refinery, Nagappatinam and

takes care of all finance activities at CBR. The areas of finance are almost the same as in

CPCL, Manali.

Senior manager is in-charge of finance activities of CBR. He is assisted by one

officer, two accountants, three assistant accountants and two commercial apprentices.

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The following finance work is handled at CBR.

Personnel entitlement

Production & sales

Materials & works

Project finance

Cash and bank activates

Head office account reconciliation

Accounting of transfers from Manali to CBR & vice versa

Preparation of final accounts of CBR.

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CHAPTER - IV

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CONCLUSION

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CONCLUSION:

It was a great experience working in finance department at Chennai petroleum

Corporation. During the internship process not only I gained knowledge about the

functions of the department but also working in the bill processing section gave me some

understanding of how to be with co-workers, within department and within the

organization. This period of study gave some confident for my future career

development.

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