A REPORT ON

BUDGETARY CONTROL and PRACTICES AT IOCL

Name of the organization: Indian oil Corporation Sec 19 A, Madhya Marg, Chandigarh Submitted To:
Gurjeetpal Singh

Submitted By: Kashish Khanna (211 1!"# M$A, Glo%al

Faculty, Finance Institues

A REPORT ON

BUDGETARY CONTROL and PRACTICES AT IOCL

UNDER THE GU DAN!E O"

#R$ SANDEEP DH NGRA

AO% " NAN!E DEPTT$ & O!'( )

Prof$ Gur*eet+a, Singh

"A!U'T-% " NAN!E SUB# TTED B-: .a/hi/h .hanna &0112134( #BA% G #ET ASR

ORGAN 5AT ON

ND AN O ' !ORPORAT ON ' # TED% !HAND GARH G'OBA' NST TUTE O" #ANAGE#ENT AND TE!HNO'OG-% A#R TSAR

TABLE OF CONTENTS

1$ A67no8,edgement 0$ Pur+o/e of the Pro*e6t 3$ O9er9ie8 of Oi, indu/try :$ !om+any Profi,e :$1 :$0 :$3 :$: :$= :$4 :$? :$@ :$A Origin ntrodu6tion ;oint <enture/ and Sub/idiarie/ of O!' <i/ion and #i//ion S>OT ana,y/i/ of O!' Ob*e6ti9e/ of O!' Ob,igation of O!' Produ6t range and Brand/ "inan6ia, Performan6e

:$12 Bu/ine// O+eration/ of O!' :$11 Stru6ture of O!' :$10 Different 'o6ation/ :$13 A6ti9itie/ at PSO 4$ Pro*e6t &6on6e+tua, frame8or7(

4$1 #eaning of Budget 4$0 Ty+e/ of Budget 4$:!,a//ifi6ation of Budget 4$: Budgeting ) Budgetary !ontro, 4$= Budgeting at O!' 4$4 A++ro9a, of Budget 4$? #ethod of e/timating Budget 4$@ Broad methodo,ogy for Budgeting eB+en/e/ under ma*or head/ 4$A #aintenan6e of Budget 4$12 Budgeting in SAP 4$11 Budgeting a9ai,abi,ity 6he67 ?$ Tran/fer of Budget ?$1Rea++ro+riation of budget ?$0 E//entia,/ of rea++ro+riation @$ >hat i/ ERP CC @$1ERP /y/tem u/ed by O!' @$0 >hat i/ SAP @$ m+ortant term/ u/ed in SAP A$ Bib,iogra+hy

ACKNOWLEDGEMENT
As a part o& curriculu' at G'OBA' NST TUTE O" #ANAGE#ENT AND TE!HNO'OG- , the (Su''er Internship )rogra'* ai's at o+erall de+elop'ent o& the students %y pro+iding the' an opportunity to gain corporate e,posure and space to apply their theoretical -no.ledge practically in a 'utually %ene&icial 'anner/ 0o su''er internship can %e success&ul .ithout the support o& the people .ho -eep the'sel+es closely in+ol+ed .ith the student undergoing the progra'/ 1he .ealth o& -no.ledge and guidance shared and pro+ided %y these pro&essionals is in+alua%le/ First o& all, I .ould li-e to than- 'y co'pany guide at Indian 2il Corporation 3i'ited , Chandigarh, #r$ Sandee+ Dhingra% A66ount/ Offi6er% O!' &or his sel&less support and encourage'ent during 'y entire training progra'/ My sincere regard to #r$ B$. .u,/hre/htha% !hief "inan6e #anager% ndian Oi, !or+$ 'imited% !handigarh &or allo.ing 'e to undergo this training/

I e,press 'y gratitude to 'y project &aculty guide #r$ Gur*eet+a, Singh% G #ET% Amrit/ar &or his a%le guidance and un&linching support throughout 'y project and &or pro+iding 'e right direction and opportunity .hene+er I &aced pro%le's during the .hole project/

#r$ B$.$ .u,/hre/htha !"#% ndian Oi,

#r .a/hi/h .hanna #BA% G #ET ASR

PURPOSE OF THE PROJECT

1o study the preparation o& the %udget &or the &inancial year and &or the ne,t year o& I2C3/ An o+er+ie. o& ad+antages, disad+antages and types o& %udget/ Analy4e the +arious accounting procedures that are &ollo.ed &or $udget 'a-ing transactions as per the agree'ent / 1o -no. ho. Cost report is 'ade/ Co'parison %et.een +arious other co'panies .ith I2C3 1o -no. the &inancial position o& the co'pany/ 1o %e con+ersant .ith the &inance 'anage'ent o& a large si4e %usiness organi4ation/ 1o de+elop the understanding a%out responsi%ility as to .hy and %y .ho' it is to %e done/ 1o -no. the +arious reasons o& +ariances in the %udgeted &igures/

 1o -no. the +arious heads o& e,penditure/ 1o -no. the .or-ing o& the co'pany/ 1o get &a'iliar .ith SA)/

Overview of Oil indu !r"

Oil Industry in India

An Introduction to 2il Industry in India A&ter the Indian Independence, the 2il Industry in India .as a +ery s'all one in si4e and 2il .as produced 'ainly &ro' Assa' and the total a'ount o& 2il production .as not 'ore than 25 , tonnes per year /

1his s'all a'ount o& production 'ade the oil e,perts &ro' di&&erent countries predict the &uture o& the oil industry as a dull one and also dou%ted India6s a%ility to search &or ne. oil reser+es/ $ut the Go+ern'ent o& India declared the 2il industry in India as the core sector industry under the Industrial )olicy 7esolution %ill in the year 1958, .hich helped the 2il Industry in India +astly/

2il e,ploration and production in India is done %y co'panies li-e 02C or 0ational 2il Corporation, 20GC or 2il and 0atural Gas Corporation and 2I3 .ho are actually the oil co'panies in India that are o.ned %y the go+ern'ent under the Industrial )olicy 7ule/ 1he 0ational 2il Corporation during the 199 s used to produce and supply 'ore than 9 percent o& the do'estic need &or the petroleu' %ut %y the end o& this a'ount dropped to near a%out !5 percent/ 1his .as %ecause the de'and on the one hand .as increasing at a good rate and the production .as declining at a steady rate/

2il Industry in India during the year 2

8:2

5 &ul&illed 'ost o& de'and

through i'porting oil &ro' 'ultiple oil producing countries/ 1he 2il Industry in India itsel& produced nearly !5 'illion 'etric tons o& 2il &ro' the year 2 2 1 to

5/ 1he I'port that is done %y the 2il Industry in India co'es 'ostly &ro'

the Middle ;ast Asia/

1he 2il that is produced %y the 2il Industry in India pro+ides 'ore than !5 percent o& the energy that is pri'arily consu'ed %y the people o& India/ 1his a'ount is e,pected to gro. &urther .ith %oth econo'ic and o+erall gro.th in ter's o& production as .ell as percentage/ 1he de'and &or oil is predicted to go higher and higher .ith e+ery passing decade and is e,pected to reach an a'ount o& nearly 25 'illion 'etric ton %y the year 2 28/

So'e o& the 'ajor co'panies in the 2il Industry in India are<

2il India 3td/ Indian 2il Corporation 3i'ited $harat )etroleu' Corporation 3i'ited =industan )etroleu'/

Various

Production

Segments:
?: 9/

7e&inery production< 7e&inery production in conte,t o& crude oil escalated &ro' 15"/11 M1 in F> 2 9: ? to 1" /"9 M1 in F> 2

Indian 2il Corporation 3td is loo-ing &or.ard to ele+ate the capacity o& its =aldia re&inery and )anipat re&inery plants to 9/5 'illion tones and 15 'illion tones respecti+ely in 2 1 / 0atural Gas )roduction< 1he natural gas production in 2 ?: 9 increased

&ro' the pre+ious year6s !2/8 %illion cu%ic 'etres tonnes ($CM# to !2/?8 $CM/ In 2 9 alone the 0atural gas production .as registered at

!!,?8" 'illion cu%ic 'etres/

 Crude 2il )roduction< 1he projected production o& crude oil during the 11th Fi+e:>ear )lan (2 9:2 12# is 2 "/9" MM1, .hile that o& natural

gas is 255/29 $CM/ Cu'ulati+e production o& crude oil %et.een April: @ece'%er 2 9 .as 25,152 M1, .hile cu'ulati+e production o& re&inery

production during the sa'e period .as 119,2?! M1/

India as an International Industry Destination:

India is steadily emerging as an international destination for oil refining with investment requirements lesser by 25% - 50% as compared to its Asian counterparts. As per the analysis carried out by eutsche !an"#

India is e$pected to enhance its refining competence by %5% in the ne$t 5 years. !eing the fifth biggest worldwide nation in conte,t o& distillation capacity, India enjoys !A o& the international capacity share/ 1o 'o+e ahead in 'a-ing its presence &elt strongly in the glo%al 'ar-et, Indian petroleu' &ir's are planning to raise their distillation capacity &ro' the e,isting 189 'tpa to 28! 'tpa %y F> 2 11:12/

Indian

Petroleum

Retail

Market:

;,pansion o& Indian petroleu' retail 'ar-et is triggered %y the gro.th in auto'o%ile sales that resulted in 'ajor &oreign in+est'ents/ 1he gro.th is esti'ated to sustain and the 'ar-et is li-ely to e,pand &urther %y 2 'illion e+ery year till 2 ! , placing India at the .orld 'ap in ter's o& %eing the %iggest auto'o%ile 'ar-et/

Accordingly, the petroleu' dealers $harat )etroleu' Corporation, =industan

)etroleu' Corporation and Indian 2il Corporation in colla%oration .ith each other are loo-ing &or.ard to add 2,2"2 petrol pu'ps in India %y 2 1 /

Investments in Indian Petroleum Industry:

In 2 1 the state:o.ned oil &ir's are e,pected to splurge BSC 11/!8 %illion on de+eloping supplies and constructing ne. shipping net.or-s &or petroleu' and natural gas/

Indian 2il Corporation is loo-ing &or.ard to esta%lish a petroleu' plant in the state o& Dest $engal %y %ringing in in+est'ents .orth BSC 59"/"! 'illion

20GC .ill %ring in BSC "98 'illion &or raising ser+ices at its oil &ields in Assa' and adjoining states to enhance the petroleu' output/ In addition it .ill also splurge BSC 5/"5 %illion on capital e,penses in the ne,t t.o years/

GAI3 (India# 3i'ited and 2E3, the international associate o& leading oil and gas player 20GC, are e,pected to %ring in in+est'ents .orth BSC 25 'illion/

As per the latest CII:K)MG analysis, the energy industry o& India .ill help tin the e,pansion o& the petroleu' sector %y %ringing in in+est'ents .orth BSC 12 %illion:BSC 15 %illion in the ne,t !:5 years/ $y 2 12, the prospects in India )etroleu' Industry are esti'ated to acco'plish BSC !5 %illion to BSC 8 /

T#e

i$nifi%&n%e of !#e lo$o'

The ndian Oi, ,ogo e//entia,,y ha/ the fo,,o8ing e,ement/:

A sa&&ron coloured circleFglo%e ;nclosed %y a dar- %lue coloured outer ring and a dar- %lue coloured %and across on .hich is .ritten the na'e Indian 2il in @e+anagri script 1he sa&&ron circle represents energy as a deri+ati+e o& the Sun, connoting li&e and the &uture/ 1he dar- %lue outer ring and the hori4ontal %and sy'%oli4e technology &or harnessing this energy/

D(SCR(PT(ON OF O(L (NDUSTR)

OR(G(N OF (OCL
ndian Oi, !or+oration 'imited, or ndianOi, is an Indian state:o.ned oil and gas co'pany headGuartered at Mu'%ai, India/ It is India*s largest co''ercial enterprise, ran-ing 125th on the Fortune Glo%al 5 list in 2 1 /

Indian2il and its su%sidiaries account &or a 89A share in the petroleu' products 'ar-et, !8/?A share in re&ining capacity and "9A do.nstrea' sector pipelines capacity in India/ 1he Indian 2il Group o& Co'panies o.ns and operates 1 o& India6s 19 re&ineries .ith a co'%ined re&ining capacity o& "5/9 'illion 'etric tons per year/ Indian2il operates the largest and the .idest net.or- o& &uel stations in the country, nu'%ering a%out 19" " (15559 regular 72s H 2 89 Kissan Se.a Kendra#/ It has also started Auto 3)G @ispensing Stations (A3@S#/ It supplies Indane coo-ing gas to o+er 89/5 'illion households through a net.oro& 8,99 Indian distri%utors/ In addition, Indian2il6s 7esearch and @e+elop'ent Center (7H@# at Farida%ad supports, de+elops and pro+ides the necessary technology solutions to the operating di+isions o& the corporation and its custo'ers .ithin the country and a%road/ Su%seGuently, Indian2il 1echnologies 3i'ited : a .holly o.ned su%sidiary, .as set up in 2 !, .ith a +ision to 'ar-et the technologies de+eloped at Indian2il6s 7esearch and @e+elop'ent Center/ It has %een 'odeled on the 7H@ 'ar-eting ar's o& 7oyal @utch Shell and $ritish )etroleu'/

The Indian Oil Corporation Ltd. operates as the largest company in India in ter's o& turno+er and is the only Indian co'pany to ran- in the Fortune IGlo%al 5 I listing/ India*s &lagship national oil co'pany and do.nstrea' petroleu' 'ajor, Indian 2il Corporation 3td/ (Indian2il# is cele%rating its Golden Ju%ilee during ! th June : 1st Septe'%er 2 9/ ;sta%lished as an oil 'ar-eting entity on ! th June 1959, Indian 2il Co'pany 3td/ .as rena'ed Indian 2il Corporation 3td/ on 1st Septe'%er 19"8 &ollo.ing the 'erger o& Indian 7e&ineries 3td/ (esta%lished in August 195?# .ith it/

ndian Refinerie/ 'td$ 1A=@

ndian Oi, !or+oration 'imited #ERGER 1A4:

ndian Oi, !om+any 1A=A

(n!rodu%!ion

(ndi&n Oil Tod&"

 Indian 2il*s gross turno+er (inclusi+e o& e,cise duty# &or the year 2 1 :11 touched 7s/ !,2?,988/29 crore .hich is the highest e+er/ For the year 2 1 :11, the co'pany*s ;arnings )er Share (;)S# stands at 7s/ ! /"9 as co'pared to 7s/ 82/1 &or 2 9:1 /

Indian 2il is the highest ran-ed Indian co'pany in the latest Fortune (Glo%al 5 * listings, ran-ed at the 125th position/

State:run Indian 2il Corporation (I2C# is ai'ing to in+est around 7s 5, crore in 2 11 to e,pand its Koyali re&inery in Gujarat &ro' 1!/9 'illion 'etric tonnes per annu' ('tpa# to an 1? 'tpa re&inery and also planning to acGuire additional land/

JO(NT *ENTURES AND SU+S(D(AR(ES OF (OCL

Name of JV

Date of Promoters Area(s) of Incorporation & Equity Operation

A+i:2il India 8/11/199! 0>C2 SA, France and 1o %lend, 'anu&acture and sell )+t/ 3td/ $al'er 3a.rie H Co/ synthetic, se'i synthetic and 3td/ 'ineral %ased lu%ricating oils, greases and hydraulic &luids, related products and specialties &or @e&ence and Ci+il A+iation uses/ I21 2?/ ?/199" 2iltan-ing 1o %uild and operate In&rastructure G'%=, Ger'any/ ter'inalling ser+ices &or H ;nergy petroleu' products/ Ser+ices 3td/ )etronet 2"/ 5/1999 $harat )etroleu' India 3i'ited Corporation 3td/, =industan )etroleu' Corporation 3td/, 7eliance Industries 3i'ited, In&rastructure 3easing H Financial Ser+ices 3td/ 1rust Co'pany 3i'ited, ICICI $an- 3td/, State $an- o& India/, ;ssar 2il 3i'ited/ )etronet 2/ 8/199? $harat )etroleu' 30G 3i'ited Corporation 3td/, 2il H 0atural gas Corporation 3td/, GAI3 (India# 3td, Ga4 de France, A@$ )etronet EK 21/ 5/199? )etronet India 3i'ited 3i'ited , 7eliance Industries 3i'ited H ;ssar 2il 3i'ited/, State $an- o& India, 1o i'ple'ent petroleu' products, pipeline projects through Special )urpose Eehicles/

@e+elop'ent o& &acilities &or i'port and regasi&ication o& 30G at @ahej and Kochi/

1o construct and operate a pipeline &or transportation o& petroleu' products &ro' Eadinar to Kandla/

Gujarat Industry In+est'ent Corporation, Financial Ser+ices 3i'ited/K Indian2il )etronas )ri+ate 3td/ !/12/199? )etronas, Malaysia 1o construct and i'port &acilities &or 3)G i'port at =aldia and to engage in parallel 'ar-eting o& 3)G/ 1o 'anu&acture and 'ar-et che'icals &or use as additi+es in &uels, lu%ricants and greases/ City Gas @istri%ution 3uc-no. and Agra/ in

3u%ri4ol 1/ 8/2 India )ri+ate 3i'ited Green 3td/ Gas 9/1 /2

3u%ri4ol Inc/, BSA

5 GAI3 (India# 3td/

Suntera 9/ 5/2 0igeria 2 5 3i'ited Indo Cat )+t/ 1/ "/2 3i'ited Indian2il S-ytan-ing 3i'ited 21/ ?/2

" Indian2il Corporation 3td/ H 2il India/, Suntera 7esources 3td/ " Intercat, BSA

In+est'ents in oil and gas industry especially in the upstrea' sector Manu&acturing H 'ar-eting o& FCC catalysts and additi+es/ @esign, &inance, construct, operate H 'aintain a+iation &uel &acility projects/

" Indian2il, I21 In&rastructure H ;nergy Ser+ices 3td/ (For'erly I213: Indian2il Corporation 3td/ 1an-ing 3td

SU+S(D(AR(ES OF (OCL

Indo Mo%il 3td/ (5 A#K A+i:2il 3td/ (25A#K Indian 2il tan-ing 3td/ (25A#K

)etronet India 3td/ (1"A#K )etronet EK 3td/ (2"A#K )etronet C1M 3td/ (2"A#K )etronet CI)3 3td/ (12/5A#K Indian2il )etronas 3td/ (5 A#K Indian 2il )anipat )o.er Consortiu' 3td/ (2"A#K Indian 2il 1CG )etroche' 3td/ (5 A#K 3i%ri4ol India )+t/ 3td/ (5 A#/

OPERAT(ONS, AREAS OF (OCL

Indian2il is India*s &lagship national oil co'pany .ith %usiness interests straddling the entire hydrocar%on +alue chain L &ro' re&ining, pipeline transportation and 'ar-eting o& petroleu' products to e,ploration H production o& crude oil H gas, 'ar-eting o& natural gas, and petroche'icals/ It is the leading Indian corporate in the Fortune 6Glo%al 5 6 listing, ran-ed at the 125th position in the year 2 1 / At Indian2il, the operations are strategically structured along %usiness +erticals : 7e&ineries, )ipelines, Mar-eting, 7H@ Centre and $usiness @e+elop'ent L ;H), )etroche'icals and 0atural Gas/

S-e%i&l!ie
7e&ineries )ipelines Mar-eting 7H@ Centre and $usiness @e+elop'ent L ;H)

 )etroche'icals 0atural Gas

REF(N(NG
$orn &ro' the +ision o& achie+ing sel&:reliance in oil re&ining and 'ar-eting &or the nation, Indian2il has gathered a lu'inous legacy o& 'ore than 1 years o& accu'ulated e,periences in all areas o& petroleu'

re&ining %y ta-ing into its &old, the @ig%oi 7e&inery co''issioned in 19 1/ Indian2il controls 1 o& India*s 2

re&ineries/

1he

group

re&ining

capacity is "5/9 'illion 'etric tonnes per annu' (MM1)A, /i/e/ 1/! 'illion %arrels per day appro,/# the largest share a'ong re&ining co'panies in India/ It accounts &or !8/?A share o& national re&ining capacity/ 1he strength o& Indian2il springs &ro' its e,perience o& operating the largest nu'%er o& re&ineries in India and adapting to a +ariety o& re&ining processes along the .ay/ 1he %as-et o& technologies, .hich are in operation in Indian2il re&ineries include< At'osphericFEacuu' @istillationK @istillate FCCF7esid FCCK =ydrocrac-ingK Catalytic 7e&or'ing, =ydrogen GenerationK @elayed Co-ingK 3u%e )rocessing BnitsK Eis%rea-ingK Mero, 1reat'entK =ydro:@esulphirisation o& KeroseneHGasoil strea'sK Sulphur reco+eryK @e.a,ing, Da, =ydro &inishingK Co-e Calcining, etc/

1he Corporation has co''issioned se+eral grassroot re&ineries and 'odern process units/ )rocedures &or co''issioning and start:up o& indi+idual units and the re&inery ha+e %een .ell laid out and enshrined in +arious custo'i4ed operating 'anuals, .hich are continually updated/ Indian2il re&ineries ha+e an a'%itious gro.th plan .ith an outlay o& a%out 7s/ 55, crore &or capacity aug'entation, de:%ottlenec-ing, %otto' upgradation and Guality upgradation/ Major projects under i'ple'entation include a 15 MM1)A grassroots re&inery at )aradip, 2rissa, 0aphtha Crac-er and )oly'er Co'ple, at )anipat, )anipat 7e&inery e,pansion &ro' 12 MM1)A to 15 MM1)A, a'ong others/ In addition, petrol Guality upgradation projects are under i'ple'entation at )anipat, Mathura, $arauni, Gu.ahati and @ig%oi re&ineries proposed to %e co'pleted %y the end o& 2 9/

2n the en+iron'ent &ront, all Indian2il re&ineries &ully co'ply .ith the statutory reGuire'ents/ Se+eral Clean @e+elop'ent Mechanis' projects ha+e also %een initiated/ 1o address concerns on sa&ety at the .or- place, a nu'%er o& steps .ere ta-en during the year, resulting in reduction o& the &reGuency o& accidents/

Inno+ati+e strategies and -no.ledge:sharing are the tools a+aila%le &or con+erting challenges into opportunities &or sustained organisational gro.th/ Dith strategies and plans &or se+eral +alue:added projects in place, Indian2il re&ineries .ill continue to play a leading role in the do.nstrea' hydrocar%on sector &or 'eeting the rising energy needs o& our P PE' NES Indian 2il Corporation 3td/ operates a net.or- o& 1 ,?99 -' long crude oil, petroleu' product and gas pipelines .ith a capacity o& 95/2" 'illion 'etric tonnes per annu' o& oil and 1 'illion 'etric standard cu%ic 'eter per day o& gas/ Cross:country pipelines are glo%ally recognised as the sa&est, cost:e&&ecti+e, energy:e&&icient and en+iron'ent:&riendly 'ode &or transportation o& crude oil and petroleu' products/ country/

1he operational throughput o& pipelines .as recorded at "5/ 1 'illion 'etric tonnes during 2 E3CCs 9:1 / 1he o&&shore ter'inals o& Indian2il at during the year/ Eadinar, Mundra and )aradip ha+e handled 21? tan-ers including 12?

1he 'ulti:product pipelines success&ully prepared to transport ;uro IE grade &uels &ro' re&ineries to 'ar-eting centres 'aintaining the high Guality standards o& products during transportation/ $eginning .ith the &irst %atch o& ;uro:IE MS grade Guality &uel to 0ational Capital 7egion in January, 2 1 , ;uro IE grade Guality &uels ha+e %een transported through the pipelines &ro' re&inery locations to the 'ajor 'etros &or supply o& these en+iron'ent &riendly products to the consu'ers as per the ne. e'ission nor's/

Indian2il co'pleted and co''issioned the 29 :-' long Chennai: $angalore )ipeline to position the petroleu' products &ro' Chennai )etroleu' Corporation*s Manali re&inery to $angalore and surrounding areas in a cost:e&&ecti+e 'anner/ Crude oil &eed &or the e,pansion o& )anipat re&inery to 15 'illion tonnes .as arranged through the aug'ented Mundra:)anipat )ipeline/ 1he aug'entation project .as

co''issioned during the year at a cost o& 7s/ 1"5 crore against appro+ed cost o& 7s/ 2 5 crore/

Integrated crude oil handling &acilities %eing pro+ided at )aradip in+ol+es setting up o& a second and third Single )oint Mooring (S)M# and conco'itant su%:sea pipelines/ Crude oil %lending application installed at Mundra has %een an attracti+e solution &or re&ineries .ith the a%ility to %lend di&&erent crude types to pro+ide a consistent and opti'al &eedstocto re&inery operations/ 1he online integrated crude oil %lender &acility is no. %eing i'ple'ented at Eadinar crude oil ter'inal to ena%le the 'a,i'i4ation o& yields o& higher +alue products/

I'ple'entation o& )aradip:Sa'%alpur:7aipur:7anchi )ipeline, %ranch pipeline &ro' Koyali:Sanganer )ipeline at Eira'ga' to Kandla .ill &urther strengthen the petroleu' product deli+ery in central and .estern India in the co'ing years/ crore

0e. pipeline projects o& 2

-' .orth appro,i'ately 7s/ 2

are planned &or e,panding the in&rastructure &or transportation o& crude oil and petroleu' products/ 1hese include the 9 -' )aradip:=aldia:$udge

$udge:Kalyani:@urgapur 3)G )ipeline, 295 -' Sanganer:$ij.asan 0aphtha )ipeline, Aug'entation o& )=$)3 and &i+e additional tan-s at )aradip, 29 -' %ranch pipeline &ro' )atna to Motihari and $aitalpur, 12 -' Cau+ery $asin 7e&inery to 1richy )ipeline and 8 1richy:)ondicherry 3)G -' ;nnore: )ipeline/

MARKET(NG
Indian2il has one o& the largest petroleu' 'ar-eting and distri%ution net.or-s in Asia, .ith o+er !5, 'ar-eting touch points/ Its u%iGuitous petrolFdiesel stations are located across di&&erent terrains and regions o& the Indian su%:continent/ Fro' the icy heights o& the =i'alayas to the sun:soa-ed shores o& Kerala, &ro' Kutch on India6s .estern tip to Kohi'a in the +erdant 0orth ;ast, Indian2il is truly 6in e+ery heart, in e+ery part6/ Indian2il6s +ast 'ar-eting in&rastructure o& petrolFdiesel stations,Indane (3)G# distri%utorships, SERVO lu%ricants H greases outlets and large +olu'e consu'er pu'ps are %ac-ed %y %ul- storage ter'inals and installations, inland depots, a+iation &uel stations, 3)G %ottling plants and lu%e %lending plants a'ongst others/ 1he country.ide 'ar-eting operations are coordinated %y 1" State 2&&ices and o+er 1 decentralised ad'inistrati+e o&&ices/

Se+eral land'ar- sur+eys continue to rate Indian2il as the do'inant energy %rand in the country and an

enduring sy'%ol &or high Guality petroleu' products and ser+ices/ 1he heritage and iconic association that the %rand in+o-es has %een %uilt o+er &our decades o& co''it'ent to uninterrupted supply line o& petroleu' products to e+ery part o& the country, and uniGue products that cater not only to the &unctional reGuire'ents %ut also the inspirational needs o& 'illions o& custo'ers/

Indian2il has %een adjudged India6s 0o/ 1 %rand %y BK:%ased $rand Finance, an independent consultancy that deals .ith +aluation o& %rands/ It .as also listed as India6s 6Most 1rusted $rand6 in the 6Gasoline6 category in a 7eaders6 @igest : AC 0ielsen sur+ey/ In addition, Indian2il topped 1he =indu $usinessline6s IIndia6s Most Ealua%le $randsI list/ =o.e+er, the +alue o& the Indian2il %rand is not just li'ited to its co''ercial role as an energy pro+ider %ut straddles the entire +alue chain o& ga'ut o& e,ploration H production, re&ining, transportation H 'ar-eting, petroche'icals H natural gas and do.nstrea' 'ar-eting operations a%road/ Indian2il is a national %rand o.ned %y o+er a %illion Indians and that is a priceless +alue/

RESEARCH . DE*ELOPMENT
In today6s dyna'ic %usiness en+iron'ent, inno+ation through a sustained process o& 7esearch H @e+elop'ent (7H@# is the only cutting edge tool &or organisations to thri+e/ Dith e'phasis on de+elop'ent and speedy co''ercialisation o& glo%ally co'petiti+e products, processes and technologies, the &ocus has no. shi&ted &ro' 7H@ to 7@H@ (7esearch, @e+elop'ent H @eploy'ent#/

I0@MAM, a hall'ar- technology de+eloped %y the Centre &or 'a,i'isation o& 3)G and light distillates &ro' re&inery residue, has %een selected %y Indian2il &or setting up a 8 'illion 'etric tonnes per annu' (MM1)A# I0@MAM unit as a part o& the 15 MM1)A integrated re&inery:cu':petroche'icals co'ple, at )aradip, as .ell as at $ongaigaon 7e&inery H )etroche'icals 3td/ ($7)3#/ 1he Centre has also licensed its @iesel =ydrotreating technology to these t.o re&ineries/ 1hese successes ha+e catapulted Indian2il 7H@ into the elite league o& 'ultinational technology licensors/ Standing in the co'pany o& si, .orld.ide technology holders &or Marine 2ils, .ith the second glo%al 2;M (original eGuip'ent 'anu&acturer# appro+al %y Dartsila, S.it4erland, Indian2il6s SERVO Marine 2ils are no. technically Guali&ied to cater to the lu%rication reGuire'ents o& 'ore than 9 A o& the .orld6s 'arine engine population/ In the po.er: generation seg'ent, the ne.ly de+eloped SERVO Marine K:Series .as appro+ed %y >an'ar Co/ 3td/ o& Japan &or use in their engines operating on distillate &uels/

1he 7H@ Centre continues to pro+ide signi&icant support to the Indian2il Group re&ineries in product Guality i'pro+e'ent, e+aluation o& catalysts and additi+es, health assess'ent o& catalysts, 'aterial &ailure analysis,

trou%leshooting and in i'pro+ing o+erall e&&iciency o& operations/ In: house de+eloped FCC 'odels are not only %eing used in Indian2il re&ineries &or process opti'isation %ut a si'ilar 'odel has also %een sold to a 'ultinational co'pany/ Indian2il has &or'ed a joint +enture co'pany, Indo Cat )+t/ 3td/, .ith Intercat, BSA, &or 'anu&acturing 15, tonnes per annu' o& FCC (&luidised catalytic crac-ing# catalysts H additi+es in India, &or catering to rising glo%al de'and/

As a step to.ards ensuring energy security &or the nation, Indian2il has launched se+eral initiati+es to e,ploit alternati+e sources o& energy such as =ydrogen and $io:&uels/ Su%seGuent to co''issioning India6s &irst e,peri'ental =:C0G (=ydrogen:Co'pressed 0atural Gas# dispensing unit at the 7H@ Centre ca'pus at Farida%ad, de'onstration projects are under.ay on use o& =: C0G %lends in hea+y and light +ehicles/ Indian2il is also setting up India6s &irst co''ercial =:C0G dispensing station at one o& its retail outlets in @elhi in the year 2 ? &or &uelling e,peri'ental +ehicles running on =:C0G %lends as .ell as on pure =ydrogen/ Indian2il 7H@ is also .or-ing on production, storage, transportation, distri%ution and co''ercialisation o& =ydrogen as an alternati+e &uel/

In $io:&uels, %esides spearheading co''ercialisation o& ;thanol:$lended )etrol in the country, Indian2il has %een in the &ore&ront o& technology de+elop'ent &or $io:diesel production &ro' +arious edi%le and non: edi%le oils and its application in +ehicles/ )ioneering studies %y India2il6s 7H@ Centre esta%lished that $io:diesel produced &ro' Jatropha seeds .ere at par .ith that produced &ro' +egeta%le oils/ In the past &e. years, the 7H@ Centre has studied the entire +alue chain o& $io:diesel, starting &ro' Jatropha plantation to &ield trials on passenger cars, light co''ercial +ehicles and rail.ay locos in colla%oration .ith se+eral +ehicle 'anu&acturers, rail.ays and state transport underta-ings.

NATURAL GAS
2+er the years, 0atural Gas has e'erged as the 6&uel o& choice6 across the Dorld/ 0atural gas %usiness presents i''ense opportunities &or Indian 2il and has already started generating signi&icant re+enues &or the Corporation/ 1he Corporation is in the process o& sourcing 'ore 30G and e,panding its custo'er %ase/ Dithin the gas %usiness, city gas distri%ution is seen as a &ocus area &or rapid gro.th/ Green Gas 3td/, Indian 2il6s joint +enture .ith GAI3 (India# 3td/, is operational in Agra and 3uc-no. and plans to e,pand &or city gas distri%ution in other parts o& the country/

*i ion/ Mi *i ion 0

ion And *&lue

A 'ajor di+ersi&ied, trans:national, integrated energy co'pany, .ith national leadership and a strong en+iron'ent conscience, playing a national role in oil security H pu%lic distri%ution/

Mi

ion 1

1o achie+e international standards o& e,cellence in all aspects o& energy and di+ersi&ied %usiness .ith &ocus on custo'er delight through +alue o& products and ser+ices, and cost reduction/ 1o 'a,i'i4e creation o& .ealth, +alue and satis&action &or the sta-eholders/ 1o attain leadership in de+eloping, adopting and assi'ilating state:o&:the:art technology &or co'petiti+e ad+antage/ 1o pro+ide technology and ser+ices through sustained 7esearch and

@e+elop'ent/ 1o &oster a culture o& participation and inno+ation &or e'ployee gro.th and

contri%ution/ 1o culti+ate high standards o& %usiness ethics and 1otal Nuality

Manage'ent &or a strong corporate identity and %rand eGuity/ 1o help enrich the Guality o& li&e o& the co''unity and preser+e ecological %alance and heritage through a strong en+iron'ent conscience.

O+JECT(*ES (OCL

O+L(GAT(ONS

OF

O23e%!ive '
O 1o ser+e the national interests in oil and related sectors in accordance and consistent .ith Go+ern'ent policies/ O 1o ensure 'aintenance o& continuous and s'ooth supplies o& petroleu' products %y .ay o& crude oil re&ining, transportation 'ar-eting acti+ities and to pro+ide appropriate assistance to consu'ers to conser+e and use petroleu' products e&&iciently/ O 1o enhance the country6s sel&:su&&iciency in crude oil re&ining and %uild e,pertise in laying o& crude oil and petroleu' product pipelines/ O 1o &urther enhance 'ar-eting in&rastructure and reseller net.or- &or pro+iding assured ser+ice to custo'ers throughout the country/ O 1o create a strong researchHde+elop'ent %ase in re&inery processes, product &or'ulations, pipeline transportation and alternati+e &uels .ith a +ie. to 'ini'i4ingFeli'inating i'ports and to ha+e ne,t generation products/ O 1o opti'i4e utili4ation o& re&ining capacity and 'a,i'i4e distillate yield and gross re&ining 'argin/ O 1o 'a,i'i4e utili4ation o& the e,isting &acilities &or i'pro+ing e&&iciency and increasing producti+ity/ O 1o 'ini'i4e &uel consu'ption and hydrocar%on loss in re&ineries and stocloss in 'ar-eting operations to e&&ect energy conser+ation/ O 1o earn a reasona%le rate o& return on in+est'ent / O 1o a+ail o& all +ia%le opportunities, %oth national and glo%al, arising out o& the Go+ern'ent o& India*s policy o& li%erali4ation and re&or's/ O 1o achie+e higher gro.th through 'ergers, acGuisitions, integration and di+ersi&ication %y harnessing ne. %usiness opportunities in oil e,ploration production, petroche'icals, natural gas and do.nstrea' opportunities o+erseas $ O 1o inculcate strong (core +alues* a'ong the e'ployees and continuously update s-ill sets &or &ull e,ploitation o& the ne. %usiness opportunities/

O 1o de+elop operational synergies .ith su%sidiaries and joint +entures and continuously engaged across the hydrocar%on +alue chain &or the %ene&it o& society at large/

Financial 2%jecti+es< O1o ensure adeGuate return on the capital e'ployed and 'aintain a reasona%le annual di+idend on eGuity capital/ O1o ensure 'a,i'u' econo'y in e,penditure/ O1o 'anage and operate all &acilities in an e&&icient 'anner so as to generate adeGuate internal resources to 'eet re+enue cost and reGuire'ents &or project in+est'ent, .ithout t%udgetary support/ O1o de+elop long:ter' corporate plans to pro+ide &or adeGuate gro.th o& the Corporation*s %usiness/ O1o reduce the cost o& production o& petroleu' products %y 'eans o& syste'atic cost control 'easures and there%y sustain 'ar-et leadership through cost co'petiti+eness/ O1o co'plete all planned projects .ithin the scheduled ti'e and appro+ed cost

O2li$&!ion '
1o.ards custo'ers and dealers<: 1o pro+ide pro'pt, courteous and e&&icient ser+ice and Guality products at co'petiti+e prices/ 1o.ards suppliers<: 1o ensure pro'pt dealings .ith integrity, i'partiality and courtesy and help pro'ote ancillary industries/ 1o.ards e'ployees<: 1o de+elop their capa%ilities and &acilitate their ad+ance'ent through appropriate training and career planning/ 1o ha+e &air dealings .ith recognised representati+es o& e'ployees in pursuance o& healthy industrial relations practices and sound personnel policies/

 1o.ards co''unity<: 1o de+elop techno:econo'ically +ia%le and en+iron'ent:&riendly products/ 1o 'aintain the highest standards in respect o& sa&ety, en+iron'ent protection and occupational health at all production units/ 1o.ards @e&ence Ser+ices<: 1o 'aintain adeGuate supplies to @e&ence and other para:'ilitary ser+ices during nor'al as .ell as e'ergency situations/

PRODUCTS PROF(LE 4(OCL5

The Produ6t/ +rodu6ed by O!' are broad,y 6,a//ified into the fo,,o8ing 6a/e/: !,a// A: 1/3iGuid )etroleu' Gas (3/)/G# !,a// B: 2/Motor Spirit (M/S/#FGasoline !/Super Kerosene 2il (S/K/2# 8/=igh Speed @iesel 2il (=/S/@# !,a// ! : 5/=igh Speed @iesel 2il (=/S/@# "/Furnace 2il (F/2/# 9/ $itu'en ?/ 0aphtha 9/A+iation 1ur%ine Fuel (A/1/F# !,a// D :

1 /Mineral 1urpentine 2il (M/1/2# 11/ Jute $atching 2il (J/$/2# 12/ 3ight @iesel 2il (3/@/2# 1!/ Bnleaded petroleu' 18/ 3u%es H Greases 15/ Fuel H Feedstoc1"/ Super Kerosene2il

1/

PETROL 0

Auto'oti+e gasoline and gasoline:o,ygenate %lends are used in internal co'%ustion spar-:ign o&&:high.ay utility +ans, &ar' 'achinery and in other spar- ignition engines e'ployed in a +a

Gasoline is a co'ple, 'i,ture o& relati+ely +olatile hydro crude petroleu' .ith a &urther treat'ent 'ainly in ter's o& i'pro+e'ent o& its octane rating/

An o,ygenate is an o,ygen:containing, ashless organic co'pound (such as an alcohol or ethe deli+ered into the auto'o%ile tan-/ 1he Indian Standard go+erning the properties o& 'otor gas In +ie. o& the auto &uel policy issued %y Go+t o& India, 'ore H 'ore stringent speci&ications India/ 1his has led to reduction o& en+iron'entally polluting &actors in gasolines/

M17A)7;MIBM

M17A)7;MIBM petrol is a 'uch sought:a&ter &uel a'ong discerning 'otorists .ho are in '

1he PClean and Keep CleanQ &unction o& the super cleanser additi+e in M17A)7;MIBM red Ili-e ne.I per&or'ance o& the +ehicle/ 7egular use o& M17A)7;MIBM gi+es the +ehicle a s to opti'ise per&or'ance o& ne. generation +ehicles %ut also reju+enate old +ehicles to per&or' 0$ D(ESEL

)etroleu' deri+ed diesel (called as petrodiesel# is a 'i,ture o& straight run product (15 RC a (pri'arily para&&ins including n , iso , and cyclopara&&ins#, and aro'atic hydrocar%ons (includ

@iesel is used in diesel engines, a type o& internal co'%u 'ore e&&ecti+e/ @iesel engines are used in cars, 'otorcycles, %oats and loco'oti+es/ Auto'ot and other o&&:road eGuip'ent and to %e the pri'e 'o+er in a .ide range o& po.er generation heat o& high co'pression a 1he Indian Standard go+erning the properties o& diesel &uels is IS 18" <2

5 (5th 7e+#/ I'por

@iesel &uel o&ten contains higher Guantities o& sulphur/ In India , e'ission standards (eGui+ale diesel in +ie. o& the auto &uel policy %rought in &orce %y Go+t o& India/

$IS has %rought out speci&ication &or I@iesel .ith 5A $iodieselI that 'ay %e 'ar-eted in nea M17AMI3;

Indian2il*s M17AMI3; Super @iesel, the leader in the %randed diesel seg'ent, is %lended they see a clear +alue %ene&it in ter's o& superior 'ileage, lo.er 'aintenance costs and i'pr and (passenger* category, pre&er M17AMI3; as a &uel &or its added and enhanced per&or'an &leets that operate a large nu'%er o& truc-s crisscrossing the country are using M17AMI3; to

67

(NDANE 1

Indane is today one o& the largest pac-ed:3)G %rands in the .orld and has %een con&erred th

=a+ing launched 3)G 'ar-eting in the 'id:" s, Indian2il has %een credited .ith %ringing a% the clean and e&&icient coo-ing &uel/ It has led to a su%stantial i'pro+e'ent in the health o& . 'odern -itchens, synony'ous .ith sa&ety, relia%ility and con+enience/

Dith the status o& an e,clusi+e %usiness +ertical .ithin the Corporation, the Indane net.or- d second largest 'ar-eter o& 3)G glo%ally, a&ter S=E Gas o& 1he 0etherlands/ Indane is a+aila 19 -g and 89/5 -g &or co''ercial and industrial use/

3)G is a %lend o& $utane a settles do.n in lo.:lying places/ Since 3)G has only a &aint scent, a 'ercaptan odorant is add condenses the .ater +apour contained in it to &or' a .hitish &og, .hich is easy to o%ser+e/ 3)

87

A*(AT(ON FUEL 1

Indian2il A+iation Ser+ice is a leading a+iation &uel solution pro+ider in India and the 'ost:p Indian2il A+iation Ser+ice re&uels o+er 15 &lights L &ro' the %ustling 'etros to the re'ote 1 ,"?2 &t# to the distant islands o& Anda'an H 0ico%ar/

Jet &uel is a colorless, co'%usti%le, straight:run petroleu' distillate liGuid/ Its principal uses a 1/1he go+erning speci&ications in India are IS 1591< 2 1 (9th 7e+#/

Indian2il is India6s &irst IS2:9 2 certi&ied oil co'pany con&or'ing to stringent glo%al Gualit o& the Indian @e&ence Ser+ices, %esides re&ueling EEI) &lights at all the airports and re'ote h Indian2il A+iation group regularly organises International A+iation con&erences that act as a

industries, statutory a+iation authorities and go+ern'ent agencies &ro' o+er !5 countries/

Indian2il is the only oil co'pany in India to 'ar-et the .idest possi%le range o& &uels used %y lu%ricants, etc/

A+iation 1ur%ine Fuel (A1F# is dispensed &ro' specially re&uelling syste's that pu'p the &uel right up to the &illing outlets on the tar'ac through unde 2+er.ing and Bnder.ing/ 2+er.ing &uelling is used on s'aller planes, helicopters, and pisto pu'ped in .ith a con+entional pu'p/ Bnder.ing &uelling, also called single:point is used on

1o ensure that you recei+e the %est ser+ice, e+ery one o& our 1 1 AFSs &ollo.s speci&ic Gualit Certi&ication 3a%oratories pro+ide co'plete speci&ication tests round:the:cloc-/ ;nsuring that o&&icers and re&ueling cre./ Indian2il has a strategic partnership .ith Air $), the .orld leade interact .ith its partners, .hich apart &ro' %eing a t.o:.ay channel o& co''unication, helps

97

KEROSENE 1

Kerosenes are distillate &ractions o& crude oil in the %oiling range o& 15 :25 RC/ 1hey are trea hydro&ining to reduce sulphur content and to i'pro+e odour, colour H %urning Gualities (char

Kerosene is used as a do'estic &uel &or heating F lighting and also &or 'anu&acture o& insectici increase in its e+aporation rate in do'estic %urners is achie+ed %y increasing sur&ace area o& th t.o categories na'ely +aporisers H ato'isers/

6.

+(TUMEN 1

$itu'en is a co''on %inder used in road construction/ It is principally o%tained as a residual Indian Standard Institution de&ines $itu'en as a %lac- or dar- %ro.n non:crystalline soil or + processes/

Indian2il produces %itu'en &ro' its re&ineries at )anipat, Mathura, Koyali, =aldia and Chenn and ;'ulsion/ C7M$ is produced at )anipat, Mathura, Koyali, =aldia and C)C3 re&ineries/ I located in =aldia and )anipat re&ineries/ C7M$ and ;'ulsion are a+aila%le %oth in %ul- as .

Gener&l u e

of +i!u:en'

For ci+il engineering .or-s Constructions o& roads, run.ays and plat&or's/ Dater proo&ing to pre+ent .ater seepage/ Mastic &loorings &or &actories and godo.ns/ Canal lining to pre+ent erosion/ @u'p:proo& courses &or 'asonry/ 1an- &oundation/ Joint &illing 'aterial &or 'ason

SWOT An&l" i for (OCL

EBterna, en9ironment

O--or!uni!" < : 1he I2C3 has 'uch opportunity in the present 'ar-et conditions/

%ecause the petroleu' products are %eco'e a need &or e+eryone and still contains a lot o& scope &or custo'i4ation/ 1he +arious opportunities are listed %elo./ O Since the co'pany has the 'a,i'u' no/ 2& out lets and also the 'a,i'u' no/ 2&re&ineries .ill get support &ro' its huge 'ar-et net.or-/ O 1he co'pany can 'a-e the %uying process 'ore easy &or the custo'ers, %y i'plying 'any 'ore sche'es in the range o& M17A)2D;7 A0@ M17A7;DA7@/ O 1he co'pany can thin- o+er the issue to %uild its o.n pipelines, so that it .ill %e a independent player and it .ill also support its a+iation &uel supply/ O Co'pany ha+e a great scope in ;H)/ It is already in+ol+es in ;H) %ut only in a +ery li'ited scale/

T#re&! ' : since the co'pany is the 'ar-et leader in the &ield , so ha+e 'a,i'u' thr
&ro' the other players and 'any other issues/ 1he lists o& threats are gi+en %elo./

O 1he &oreign players .ith 'ore ad+anced technology are the %iggest treat &or the co'pany/ O 1he crude oil supply is also a %ig issue in &ront o& the co'pany, %ecause the co'pany cannot &i, its price and so, so'e ti'e had operate in loss also/ it is the %iggest pro%le' %ecause the 'a,i'u' part o& their crude is %een i'ported/ O In &uture the 'ar-et .ill .elco'e 'ore pri+ate players, .hich .ill eat up its 'ar-et share/ O I& the Go+t/ )olicies allo. the pri+ate players to set their o.n price, the the pri+ate player can seriously har' the 'ar-et share o& I2C3/ Internal en+iron'ent

S!ren$!#

O I2C controls 1 re&ineries, %y +irtue o& .hich it has a total share o& around 8 A o&India*s o+ re&ineries %eca'e su%sidiaries o& I2C/ O 5?A o& I2C*s re&ining capacity is located in the 0orthern and Destern regions, .hich are high de'and and high gro.th areas/ O Although its re&ineries are located the interior o& the country, and not near the 'ajorports I2 pipelines/ 1he total capacity o& these product pipelines is 89/99MM1/ O I2C also acGuired 'anage'ent control o& the 'ar-eting co'pany I$), there%ystrengthening in&rastructure/ Its net.or- includes 19?! retail outlets,? 3)G distri%utors, and "892 -ero O $y +irtue o& entering into e,tensi+e joint +enture agree'ents, and o& its o.n initiati+eas .el additi+es, e,ploration, petroche'icals, gas, trainingand consultancy, etc/ O 1he co'pany has already entered o+erseas 'ar-ets such as Sri 3an-a, Maldi+es, and2'an a set up a 1 'illion 1)A grassroot re&inery .ith anin+est'ent o& C2 %illion and esta%lish retail I2C has also started e,ploring the o+erseas 'ar-ets &or increasing its scope o& operations/ Itsi %usiness in Maldi+es, @u%ai, $angladesh, Sri 3an-a, etcK a'ong others/

We&;ne

' :the co'pany is the 'ar-et leader in the industry, %ut still it had 'any .

1he list is gi+en %elo./ O 1he 'ajor .ea-ness &or the co'pany is the 7H@/ 1he co'pany starts .or-ing on it/ O 1he petroche'ical product de+elop'ent technology is another .ea-ness &or the co'pany/ O 1he technological dra.%ac-, as co'pared to so'e 'ajor &oreign player is another .ea-ness &or the co'pany

S17B
ND AN O ' !O#PAN- D < S ONS

RE" N NG D < S ON

P PE' NE D < S ON

#AR.ET NG D < S ON

R)D D < S ON

ASSA# O' D < S ON

HEAD O"" !E &#U#BA (

REG ON O"" ! ES

NORTHERN REG ON

SOUTHERN REG ON

>ESTERN REG ON

EASTERN REG ON

STATE O"" ! ES

STATE O"" ! ES

STATE O"" ! ES

STATE O"" ! ES

PUN;AB STATE O"" !E &PSO(

RA;ASTHAN STATE O"" !E &RSO(

DE'H STATE O"" !E &DSO(

'U.HNO> STATE O"" !E &UPSO (

NO DA STATE O"" !E &UPSO (

MEAN(NG OF +UDGET

A Budget i/ an esti'ation o& the re+enue and e,penses o+er a speci&ied &uture period o& ti'e/ A %udget can %e 'ade &or a person, &a'ily, group o& people, %usiness, go+ern'ent, country, 'ultinational organi4ation or just a%out anything else that 'a-es and spends 'oney/

A Budget is a plan that outlines an organi4ation6s &inancial and operational goals/ So a %udget 'ay %e thought o& as an action planK planning a %udget helps a %usiness allocate resources, e+aluate per&or'ance, and &or'ulate plans/

Dhile planning a %udget can occur at any ti'e, &or 'any %usinesses, planning a %udget is an annual tas-, .here the past year6s %udget is re+ie.ed and %udget projections are 'ade &or the ne,t three or e+en &i+e years/

A budget is a &inancial docu'ent used to project &uture inco'e and e,penses/ 1he %udgeting process 'ay %e carried out %y indi+iduals or %y co'panies to esti'ate .hether the personFco'pany can continue to operate .ith its projected inco'e and e,penses/

FEATURES OF +UDGET

It is prepared &or a de&inite &uture period/ It is a special &or' o& state'ent e,pressed in Guantitati+e ter's .hich 'ay %e in the &or' o& 'onetary +alue or physical units/ It is prepared .ith a +ie. to attain a de&inite o%jecti+e or target/ It e,presses the plans and policies o& the 'anage'ent to %e pursued in &uture/ It pro+ides a %ase &or 'easuring the success o& actual results/ It is appro+ed %y 'anage'ent &or i'ple'entation/

It usually sho.s the planned inco'e to %e generated and e,penditure to %e incurred/

O+JECT(*ES OF +UDGETS

1o pro+ide a realistic esti'ate o& inco'e and e,penses &or a period and o& the &inancial position at the close o& the period/ 1o pro+ide a coordinated plan o& action .hich is design to achie+e the esti'ates re&lected in the %udget/ 1o pro+ide a co'parison o& actual results .ith those %udgeted and an analysis and interpretation o& de+iations %y areas o& responsi%ility to indicate courses o& correcti+e actions and to lead to i'pro+e'ent in &uture plans/ 1o pro+ide a guide &or 'anage'ent decisions in adjusting plans and o%jecti+es i& there is an uncontrolla%le change in conditions/ 1o pro+ide a ready %asis &or 'a-ing &orecasts during the %udget period to guide 'anage'ent in 'a-ing day to day decisions/

AD*ANTAGES OF +UDGETS
A %udget helps us in the &ollo.ing .ays<

1he 'ajor strength o& %udgeting is that it coordinates acti+ities across depart'ents/ $udgets translate /trategi6 +,an/ into action/ 1hey speci&y the resources, revenues, and acti+ities reGuired to carry out the strategic plan &or the co'ing year/ $udgets pro+ide an e,cellent record o& organi4ational a6ti9itie// $udgets i'pro+e 6ommuni6ation .ith e'ployees/ $udgets i'pro+e re/our6e/ a,,o6ation, %ecause all reGuests are clari&ied and justi&ied/ $udgets pro+ide a tool &or correcti+e action throughrea,,o6ation//

T)PES OF +UDGET
Sales $udget )roduction $udget )urchase $udget ;,penditure $udgets Master $udget Sero $ase $udget Cash $udget

Fle,i%le $udge/

S&le

+ud$e!

Sales %udget is a &unctional %udget/ 1he product .ise as .ell as regional %reaup o& sales esti'ates are incorporated in the sales %udget/ 1he sales %udget %egins .ith the pre+ious year actual and incorporates the li-ely changes Produ6tion Budget 1he production %udget is prepared %ased on the sales esti'ate incorporated inthe sales %udget/ 1he adjust'ents .ith respect to the opening and closing stoc-positions that are policy decisions o& the %usiness are then 'ade to prepare theproduction %udget/ Manage'ent Science:II )ro&/ 7/Madu'athi Indian Institute o& 1echnology Madras

Pur%#& e +ud$e!
1he purchase %udget is another &unctional %udget that esti'ates the purchase reGuire'ent o& 'aterials utili4ed in the production process/ 1he

purchase %udget is %ased on the production %udget and the standard 'aterial consu'ption reGuire'ent &or the production esti'ates/ Manage'ent Science:II )ro&/ 7/Madu'athi

E<-endi!ure +ud$e!
;,penditure %udgets 'ay %e dra&ted as &i,ed F &le,i%le %udgets/ A &i,ed %udget is one .hich is prepared -eeping in 'ind one le+el o& acti+ity/ It is de&ined as one .hich is designed to re'ain unchanged irrespecti+e o& the le+el o& acti+ity attained/ In contrast, &le,i%le %udget is one .hich is designed to change in relation Manage'ent Science:II )ro&/ 7/Madu'athi Indian Institute o& 1echnology Madras to the le+el o& acti+ity attained/ Fle,i%le %udgets are prepared .here the nature o& %usiness is such that it is di&&icult to predict the de'andFsale o& goods/

C& # +ud$e!
A cash %udget consolidates all the cash in&lo.s and out&lo.s &or the %usiness/ 1he cash %udget is also a &unctional %udget/ 1he cash %udget helps the %usiness to plan the project purchases as .ell as to pro+ide &or the loan reGuire'ents/ 1he cash %udgets also help in de&ining the repay'ent plans &or short and long ter' loans o& the %usiness/ Manage'ent Science:II )ro&/ 7/Madu'athi Indian Institute o& 1echnology Madras 1he cash %udget is %ased upon the %usiness policy o& holding a certain a'ountas cash/ 1his is the desired opening cash %alance &or the %usiness/ Accordingly,the cash %udget &orecasts the loan reGuire'ents or short ter' in+est'ents thatare to %e 'ade .ith e,cess cash at any speci&ic ti'e/ #a/ter Budget 1he o+erall or 'aster %udget su''ari4es the other &unctional %udgets/ Consolidating the &unctional %udgets, an inco'e and e,penditure %udget and %udgeted %alance sheet are prepared/ 1he

'aster %udget is usually a one:year %udget e,pressing the e,pected asset position and capital and lia%ility positions &or the projected year/

RE*ENUE +UDGET
A re+enue %udget identi&ies each o& the indi+idual re+enue sources &or .hich the organi4ation is to %e responsi%le, esti'ates the a'ount o& re+enue each is to IearnI in the %udget year, docu'ents the %asis &or the esti'ate and other i'portant in&or'ation a%out each source and assigns responsi%ility &or re+enue 'anage'ent (including esti'ate updating# to a speci&ic organi4ation unitF'anager/ A 'anage'ent responsi%ility to %e associated .ith re+enue %udgeting is the de+elop'ent o& 'onthly plans &or re+enue recognition and collection/

+UDGET(NG
$udgeting is a part o& 'anage'ent process .hich includes preparation o& %udget, L %udget control, %udget co:ordination and all those acti+ities that are related .ith %udget/ It is a co'plete process o& controlling all the related acti+ities o& %udget

+UDGETAR) CONTROL
$udgetary Control is the esta%lish'ent o& $udgets relating to the responsi%ilities o& $udgets relating to the responsi%ilities o& e,ecuti+es o& a policy and the continuous o& e,ecuti+es o& a policy and the continuous co'parison o& the actual .ith the %udgeted co'parison o& the actual .ith the %udgeted results, either to secure %y indi+idual action results, either to secure %y indi+idual action the o%jecti+e o& the policy or to pro+ide the o%jecti+e o& the policy or to pro+ide %asis &or its re+ision %asis &or its re+isio

(:-or!&n%e of +ud$e!&r" Con!rol

1$ To U/e the "ore6a/ting Te6hniDue/

It is the i'portance o& %udgetary control that .ith this, .e can use the &orecasting techniGues/ 1hree depart'ents .or- hard &or calculating %est esti'ation o& &uture/ Accounting depart'ent pro+ides old data/ Statistical depart'ent pro+ides the tools and techniGues o& &orecasting li-e pro%a%ility,

ti'e series other sa'pling 'ethods/ Manage'ent depart'ent uses %oth depart'ent ser+ices to esti'ate the e,penditures and re+enue o& %usiness under the nor'al conditions o& %usiness/ So, no depart'ent say anything .rong in 'a-ing o& %udget/ So, it is necessary &or %usiness to use %udgetary control techniGues/

0$ "iB the Re/+on/ibi,ity of De+artment/

@epart'ent6s scienti&ic na'e is cost center/ Manager 'a-es %udget and sho. the target o& co'pany and e'ployees are gi+en the po.ers to per&or' these targets/ A&ter chec-ing the +ariance in %udget through %udgetary control process, 'anager can &i, the responsi%ility o& each depart'ent and its e'ployees in a particular cost center/

3$ Effe6ti9e Uti,ization of !om+anyE/ re/our6e/

Co'pany can only e&&ecti+e use its resources, i& so'eone stops 'isuse o& 'oney and &und o& co'pany/ I& %udgetary control is used in co'pany, at that ti'e, no action .ill %e ta-en %e&ore 'a-ing %udget/ 7esponsi%le personal o& co'pany .ill %e accounta%le &or his action/ Suppose, co'pany has &i,ed the target o& co'pany6s annual Sale is C 8 , , a&ter participating sales

'anager in the setting o& this sale %udget/ 0o., a&ter one year, i& sale is just C 1, , / 1his sale 'anager 'ust say .hat is the reason &or not selling the

product up to standard le+el o& sale/

:$ EB6e, your/e,f

A&ter using %udgetary control techniGues in your %usiness, you .ill de&initely learn the s-ills o& e,cel yoursel& %ecause .e all -no. that a %udget is %ased on esti'ates, it 'ay or 'ay not %e true/ $ut continually practise o& 'a-ing good %udget and apply in organisation, 'anager can learn s-ills and e,perience &or increasing the e&&iciency in e+ery .or- o& co'pany/ Meaning o& this, 'anager .ill get positi+e approach through %udgetary control/

Li:i!&!ion of +ud$e!&r" Con!rol'

$udgetary control is a sound techniGue o& control/ $ut it is not a per&ect tool/ @espite the appreciation, it has its o.n li'itations .hich are as &ollo.s< 1/ $udgets deal .ith &uture/ Forecasting is necessary &or %udgeting/ Forecasts and esti'ates are rarely cent per cent accurate/ 1he success largely depends upon the degree o& accuracy o& the esti'ates/ 2/ $udgeting is ti'e:consu'ing process/ @uring the preparation period, the %usiness conditions 'ay change and esti'ates 'ay go .rogn %y that ti'e/ !/ 1he Success&ul operation and e,ecution o& %udgets depends upon the e&&iciency o& the e,ecuti+e personnel/ 8/ $udgetary control is essentially a tool o& decision:'a-ing and it helps the 'anage'ent in ta-ing sound decisions/ $ut it cannot replace the 'anage'ent/ 5/ $udgeting necessitates the e'ploy'ent o& speciali4ed sta&& and this in+ol+es e,penditure .hich s'all concerns 'ay not a&&ord/ "/ A %udget progra''e should %e dyna'ic, capa%le o& %eing adapted to changing conditions/ $ut .hen %udgets are prepared .ith pre:deter'ined targets, there is a &eeling rigid/ 9/ the success o& the %udgetary control largely depends upon .illing co: operation or tea' .or- o& all concerned/ I& there is no co:operation, the .hole syste' collapses/

T#e E

en!i&l

for & ound " !e: of

2ud$e!&r" %on!rol'
1/ !hart: 1here 'ust %e an organi4ational chart to sho. the authority and responsi%ility o& each e,ecuti+e o& the &ir'/ 1his .ill ena%le hi' to -no. his relationship .ith other e,ecuti+es/ 1he %udget director deri+es po.er &ro' the chie& e,ecuti+e, helps in co:ordination and dra.ing up o& all %udgets and suggests changes, i& necessary/ 1he sales 'anager, production 'anager, purchasing 'anager, personnel 'anager and accountant .ill prepare their %udgets/ 0$ Budget !entre: For the purpose o& e&&ecti+e %udgetary control, %udget centres are de&ined/ A %udget centre 'ay %e a depart'ent o& a section o& the underta-ing/ Separate %udgets are prepared &or each depart'ent and the depart'ental head is responsi%le &or carrying out %udgets/ @epart'ental heads should ha+e e&&ecti+e control o+er the e,ecution o& the %udget, to pre+ent un&a+ora%le +ariation/ !/ Budget: In s'all &ir's, the chie& accountant prepares the %udgets and co:ordinates +arious acti+ities/ In %ig concerns, a Co''ittee is appointed &or this tas-/ 1he Co''ittee consists o& +arious section heads, the chie& e,ecuti+e and the %udget controller/ 1he %udgets are prepared %y section heads and su%'itted to the Co''ittee &or appro+alK changes are 'ade, i& necessary, and appro+ed/ :$ Budget #anua,: It is a docu'ent .hich sets out the responsi%ilities o& persons engaged in the routine .or-/ $udget 'anual lays do.n the o%jecti+es o& the organi4ation, responsi%ilities o& all e,ecuti+es and the procedure to %e &ollo.ed &or %udgetary

control/ @uties, authorities, po.ers o& each o&&icial o& the di&&erent depart'ents are clearly de&ined, so as to a+oid con&licts a'ount the personnel/ It also speci&ies di&&erent &or's and records to %e used &or the purpose o& %udgetary control/ =$ .eyF"a6tor: Key &actor is also -no.n as P3i'iting &actorQ o& PGo+erning FactorQ .hich 'eans this is the &actor, the e,tent o& .hose in&luence 'ust &irst %e assessed, in order to ensure that the &unctional %udgets are reasona%ly capa%le o& &ul&ill'ent/ 1he -ey &actor 'ay %e , shortage o& ra. 'aterials, non:a+aila%ility o& la%our, li'ited sales, go+ern'ent restrictions etc/ the -ey:&actor is a li'itation o& production or sales/ First locate the -ey:&actor, %e&ore preparing the %udget, as it in&luences all other %udgets/ For e,a'ple, shortage o& po.er supply leads to under:utili4ation o& plant capacity/

+UDGET(NG AT (OCL
1op 'anage'ent as-s &or %udget proposal &ro' its regional o&&ices/ 1he guidelines .hich are to %e &ollo.ed in order to 'a-e this %udget proposal are gi+en %y the head o&&ice to the regional o&&ices and the regional o&&ices pass these guidelines to the di&&erent locations under their control/ $ased on the inputs &ro' the locations, the state o&&ices 'a-e a %udget proposal and &or.ard it to their respecti+e regional o&&ice .here all the proposals &ro' the state o&&ices are co'%ined and &ro' the regional o&&ice, this proposal is

%eing sent to the head o&&ice/ 1he head o&&ice, a&ter recei+ing the %udget proposals conducts region .ise 'eetings a&ter .hich the %udget is &inali4ed %y the head o&&ice and then it is &or.arded to the corporate o&&ice/

APPRO*AL OF +UDGET

$udget is appro+ed %y $oard o& @irectors as they are ha+ing authority to e,ercise it/ 1he &lo. o& 'a-ing o& %udget .or-sheet is do.n.ard then it goes up.ard &or re+ie.ing and appro+ing purpose/ I/ =ead o&&ice prepares the %udget .or-sheet .here cost, e,traneous e,penditure, additional acti+ities o& pre+ious year is plotted/ Dith it A o& cut rate (as directed %y $2@# and in&lation rate (according to co'pany policy and econo'ic conditions# is also plotted/ 1hen =ead o&&ice sends this .or-sheet to all state o&&ices/ II/ State o&&ice adds e,traneous e,penditure and additional acti+ities in that .or-sheet/ State o&&ice the'sel+es not plot the &igures o& e,traordinary e,penses and ne. acti+ities/ For this purpose, they ha+e to discuss the cost o& di&&erent location .ith their respecti+e heads so that they .ill tell the &igures .hich is reGuired %y the'/ Further 3ocation heads they contact to other cost centre*s to -no. their esti'ation/ A&ter 'eeting and discussing, State o&&ice plots all the &igures in .or-sheet/

III/

State o&&ice sends this report to regional o&&ice/ 7egional o&&ice is a +enue .here actually co''ittee o& 5 persons is 'ade in .hich persons &ro' =ead o&&ice (&inance dept# and State o&&ice (Finance dept# discusses a%out the %udget .or-sheet/ Sa'e procedure happens in all the other regional o&&ices/ No8 thi/ report is send %ac- to =ead 2&&ice/

IE/

=ead o&&ice re+ie.s the .or-sheet and sends this report to corporate o&&ice/ Corporate o&&ice recei+es the %udget .or-sheet &ro' all the di+isions/ 1hey re+ie.s H analyses the report and curtail or add the cost %y discussing it .ith the respecti+e heads o& di+isions/ Corporate o&&ice consolidates the .or-sheet o& all the di+isions/ 7eport is send to $oard o& @irectors/

E/

$oard o& @irectors (.ho are ha+ing authority &or appro+ing $udget# re+ie.s the consolidated .or-sheet/ 0o. &inal decisions is in their hands i& they thin- .or-sheet need alterations, they alter it other.ise Dor-sheet is appro+ed &or $udget/

1he process o& appro+ing %udget .or-sheet ends till the 'onth o& March then ho. e,penditure .ill incur in current year/ For this purpose co'pany proposed 2$; (.hich is yearly %udget prepared in ad+ance# so that transactions can %e done in SA)/ The ba/e for OBE i/ ta7en a/ the +eriod +rior to +re9iou/ year$ EGF f 8e ha9e to ma7e OBE for "$-$ 0212F11 then 8e ta7e a6tua, eB+enditure/ of "$-$ 022@F2A a/ ba/e$

METHOD OF EST(MAT(NG +UDGET

)re+ious year*s !o/t Re+ort is ta-en as a %ase &or esti'ating the original %udget/ Dhile re+ising the e,penses under controlla%le heads o& accounts, nor's laid do.n %y the $oard should %e adhered to/ 1he nor' laid do.n %y the $oard o& directors is to ha+e a reduction o& cut a'ount (1he Aage o& that a'ount set %y $2@# in controlla%le e,pense heads o+er pre+ious year actual e,cluding e,traneous &actors o&T pre+ious year and include the a'ount o& ne. acti+ities F e,traneous &actors &or current year along .ith in&lation/ "o,,o8ing formu,a i/ u/ed to e/timate budget need/:F A6tua, eB+enditure of ,a/t year &F( EBtraneou/ amount &,a/t yearH/ additiona, eB+enditure( &F( !ut amount &redu6tion for the +ur+o/e of e6onomy( &I( nf,ation amount &I( Amount of ne8 additiona, a6ti9itie/ &I( EBtraneou/ a6ti9ity &6urrent year( &J( Origina, budget e/timate

1;7MS BS;@ I0 $B@G;1 OBEF 2riginal $udget ;sti'ate< It is the yearly proposed %udget .hich is i'ple'ented %e&ore starting o& yearly e,penditure/ RBEF 7e+ised $udget ;sti'ate< It is the re+ised %udget, .hich is %eing proposed, .hen %udget is re+ised as per reGuire'ents/ !UT RATEF Cut rate is a prede&ined rate to control the cost o& a particular ite'/

N"'AT ON RATEF 1he o+erall general up.ard price 'o+e'ent o& goods and ser+ices in an econo'y/ 1he rate o& in&lation is ta-en as %ench'ar- &or e+ery year in I2C3/ ADD T ONA' A!T < T ESF 1he acti+ities .hich is ne.ly added EGTRANEOUS EGPEND TUREF 1hese are e,traordinary e,penditures .hich are &or the particular year/ The 8or7 /heet of !o/t Re+ort and of budget +ro+o/a, i/ /ho8n in the neBt +age: 1his %udget is allocated %ased on the pre+ious year*s %udget/ For e,a'ple i& .e see the sheet it could %e seen that the %udget &or 2 1 :11 is allocated %ased on the actual o& 2 ?: 9 &ro' .hich the e,traneous e,penses and cut o& 2 A o& 2 ?: 9 are su%tracted and the in&lation, additional acti+ities and e,traneous e,penses are added %ac- to it/

CA3CB3A1I20 2F 2$; (2 1 :11# EBam+,e: $udget &or the year 2 1 :11 is to %e esti'ated then &ollo.ing in&or'ation .ill %e considered<

A6tua, eB+enditure of 022@F2A : 7s 1 , 'e// EBtraneou/ amount of 022@F2A : 7s 5 Ba,an6e J 7s 95 !ut amount &02K( L 7s 19 Ba,an6e J 7s 9" Add nf,ation amount &=K( U !? (9" V5A# Amount of ne8 additiona, a6ti9itie/ of 022AF12F 7s 2 EBtraneou/ amount of 022AF12F 7s 1 Re9i/ed Budget E/timate &022AF12( F R/ @0@2 Then RBE &022AF12( L R/ @0@2 'e// EBtraneou/ amount of 022AF12 : 7s 1 Ba,an6e J 7s ?1? !ut amount &02K( L 7s 1"!" Ba,an6e J 7s "588 Add nf,ation amount &=K( U !29 ("588V5A# Amount of ne8 additiona, a6ti9itie/ of 0212F11F 7s ! EBtraneou/ amount of 0212F11F 7s 2 Origina, Budget E/timate &0212F11( F R/ ?3?1

MA(NTENANCE OF +UDGET

In order to 'aintain the %udget in a proper .ay, Indian 2il has di&&erent co''it'ent heads and also di&&erent locations, to .hich the %udget is allocated %ased on the di&&erent &unctions/ 1hese locations are allocated a code and all the e,penses are .ritten under this code/ 1he di&&erent locations under )S2 C=@ are gi+en in the chart %elo. along .ith their cost centre code along .ith the di&&erent &unctions/

+UDGET(NG (N SAP
1he %udget is 'aintained in SA) .ith the co'%ination o& cost centre and the co''it'ent ite'/ 1he controlla%le e,penses are denoted %y !Mhead and the non:controlla%le e,penses are denoted %y NMhead/

REAPPROPR(AT(ON OF +UDGET
7e:appropriation represents the allot'ent o& a particular su' o& 'oney to 'eet e,penditure on a speci&ied jo% as enunciated in the @etailed @e'ands &or Grants/ It is operati+e only &or the &inancial year &or .hich it is 'ade/

WHAT (S ERP =
Definition

1he ;7) 'ar-et is a glo%al e,change in .hich so&t.are pro+iders and support technicians sell enterprise resource 'anage'ent so&t.are to %usinesses/ 1he 'ar-et is glo%al in nature and includes %usinesses o& all si4es, according to ;7)D.ire/co', an online ;7) resources pro+ider/

;7) is a %usiness 'anage'ent syste' that integrates all &acets o& the %usiness, including planning, 'anu&acturing, sales, and 'ar-eting/ As the ;7) 'ethodology has %eco'e 'ore popular, so&t.are ha+e e'erged to help %usiness 'anagers i'ple'ent ;7) in %usiness acti+ities such as in+entory control, order trac-ing, custo'er ser+ice, &inance and hu'an resources/ ;nterprise resource planning (;7)# 'ar-ets help %usinesses, as .ell as

nonpro&its and go+ern'ent agencies, increase producti+ity/ ;7) applications are in&or'ation syste's that %ind closely +arious corporate &unctions, including hu'an resources, &inance and in+entory 'anage'ent, .hile ena%ling a co'pany to e&&iciently 'anage its custo'ers and suppliers/

;7) S2F1DA7; BS;@ $> I2C3 1here are 'any ;7) so&t.are pac-ages a+aila%le in the 'ar-et today %ut Indian 2il has selected SAP RN3 so&t.are pac-age &or ;7) i'ple'entation/ SA) is a state:o&:the:art %usiness in&or'ation syste' de+eloped %y MFs SA) AG o& Ger'any/

It is particularly .ell suited &or large co'panies in+ol+ed in high:+olu'e and co'ple, %usiness acti+ities spread across 'any locations/ It has earned .orld.ide recognition &or its &unctionality and its integration o& the %est %usiness practices/

WHAT (S SAP
SA) is a Ger'an glo%al so&t.are corporation that pro+ides enterprise so&t.are applications and support to %usinesses o& all si4es glo%ally/ It is also the largest so&t.are co'pany in ;urope and the &ourth largest glo%ally/ 1he co'pany6s %est -no.n products are its SA) ;nterprise 7esource )lanning and SA) $usiness 2%jects so&t.are/ 1he original SA) idea .as to pro+ide custo'ers .ith the a%ility to interact .ith a co''on corporate data%ase &or a co'prehensi+e range o& applications/ Gradually, the applications ha+e %een asse'%led and today 'any corporations, including I$M and Microso&t/

(MPORTANT TERMS USED (N SAP

17A0SAC1I20 C2@; (1:C2@;# It is a 'ean to per&or' a speci&ic tas- &or achie+ing so'e desired result/ 1hese 1:Codes are used to gi+e co''and to the SA) &or per&or'ing desired operation/ An indi+idual can access only those 1:Codes &or .hich authori4ation is granted to hi'/ "or eBam+,e: an indi+idual is responsi%le &or 'a-ing re+enue pay'ents so authori4ations related to %udgets .ill not %e granted to hi', thus creating an internal control syste'/

GENERA' 'EDGER &G' !ODE( Since I2C is a %ig organi4ation, it has de&ined its accounts %roadly into +arious categories/ For e/g/ sales pro'otion/ 0o., sales pro'otion can %e done in di&&erent .ays li-e 'edia, gi&ts, ca'paigns etc, these can %e identi&ied %y di&&erent G3 codes/ In a nutshell, G3 Codes is used &or codi&ication o& di&&erent types o& accounts/ C2S1 C;01;7 1he %usiness o& I2C3 is spread all o+er India and also a%road so it .ill di&&icult to learn all o& its location or .ritten %y that na'e/ So that co'pany .ill assign a code &or .or-ing e&&iciently and Guic-ly/ 1hat .ill sa+e ti'e o& e'ployees/ C2MMI1M;01 I1;M 1hat .ill represent the nature o& the e,penditure/ "or eBam+,e: CW2E;71IM; (controlla%le e,penditure#, 0WSA3A7> (0on controlla%le e,penditures#/