A Comprehensive Project On

PETROLEUM SECTOR
FOR OIL AND NATURAL GAS CORPORATION

UNDER THE GUIDANCE OF: Ms. GAYATRI MOHANTY (FACULTY- GUIDE)

PREPARED BY : PATEL JITESH M. MODI PATHIK D. MBA - SEMESTER IV ENROLLMENT NO. 107110592163 ENROLLMENT NO. : 107110592032 SUBMITTED TO : Dr. J.K.PATEL INSTITUTE OF MANAGEMENT

Dr. J. K. Patel Institute of Management

CERTIFICATE
Certified that this Comprehensive Project Report Titled The Petroleum Sector In India With Special Focus On Oil and Natural Gas Corporation Limited is the bonafide work of Mr. Jitesh Patel (Enrollment No. 107110592163) And Mr. Pathik Modi (Enrollment No. 107110592032), who carried out the research under my supervision. I also certify further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Prof. Gayatri Mohanty Faculty Guide

Dr. P.G.K. Murthy Director

Date: Place:

PREFACE
Practice makes more perfect
In the field of management every time there is a requirement of understanding or practical aspect of the organization with managerial mind. There is requirement to go for practical knowledge of any subject supplement to the theoretical knowledge and clarified concept. It is more applicable in the field of the management especially a professional course like M.B.A. Gujarat technological University has prescribed project report during the 4th Sem. as a part of M.B.A programmers at the Reliance Industries Limited is to comply with this requirements also. The project report on Petroleum sector, which provide perfect direction of invest the money. The data collections were by annual report of the different companies, magazines related to the cement association and discussion with concerned employees and experts. At the end findings and suggestions are reported. I hope this serves the Purpose.

ACKNOWLEDGEMENT

It is almost a ritual to begin the project report with an ACKNOWLEDGEMENT and our heartfelt to all those who directly or indirectly made our project a great learning experience, indicating me the values and importing the skills and hard work required for project. Many have contributed to the successful preparation of this report. We would like to place on record our grateful thanks to each one of them. We have great pleasure in submitting this report on PETROLEUM SECTOR as part of our 4 TH semester project work. I am thankful to Dr. P.G.K.Murthy the Director of our institute and my mentor Prof.Gayatri Mohanty and all the faculty members of our institute. At last but not the least, I take an opportunity to appeal my profound gratitude to my family & friends for their everlasting love, strong moral support, encouragement and personal sacrifice without which it may not have been possible to reach the present status of education. JITESH PATEL PATHIK MODI

DECLARATION
I hereby declare that Report entitled PETROLEUM SECTOR IN ONGC which is submitted by me in partial fulfillment of the requirement for the award of MBA to SGPIMS, GTU, under the guidance of Prof. Gayatri Mohanty, comprises only my original work and has not been submitted for the award of any other degree.

JITESH PATEL. PATHIK MODI

EXECUTIVE SUMMARY
Oil & Natural Gas Corporation Limited (ONGC) is the premier company in the Indian upstream of Petroleum Sector and it constantly thrives to retain this position. Born in 1956 this corporation produces more than 1 million barrels daily holding a reserve base of 6 billion tons of oil and oil-equivalent gas in India. The company undertakes various activities like drilling, discovering, producing, transporting, processing and now refining, retailing and marketing of hydrocarbons. The new budget system, in ONGC is prepared with reference to the CRC (Corporate Rejuvenation Campaign) structure. The budget exercise has to begin from June-July keeping in view stringent compliance to the various milestones in between the starting to final approval like: Submitting the physical targets and obtaining the approval of the concerned directors. Submitting the activity wise financial outlays corresponding to the physical targets. Examination of activity wise outlays submitted by the corporate budget section and communication of level of indicative financial outlays to the virtual corporates. Submission of item wise budget by virtual Corporate indicative financial outlays. Approval of financial outlays by EC, PAC and Board. The following budgets are prepared every year: Revised estimates (RE) for current year Budget Estimates (BE) for next year within the limits of

There are two types of budgets classified on basis of depth of planning required to estimate the outlays required. They are: Planned Budget Non-Planned Budget In ONGC the budget is prepared under 5 natural heads: -1. Capital 2. Stores & Spares 3. Contractual 4. Manpower 5. Other charges In ONGC Budget Monitoring is done by way of generation of Monthly Cash Expenditure report for each unit/service of a location and comparing it with the Budget to determine the level of budget utilizations. Budgetary Control is exercised in SAP System by ensuring that actual payment does not exceed the approved budget.

TABLE OF CONTENTS
SR. NO CONTENTS PAGE NO.

1 2

Industry information Corporate Profile 2.1 Company History 2.2 Basic Information 2.3 Vision and Mission 2.4 Milestone since Inception 2.5 Broad Functions

9 12 15 18 21 22 24 29

RESEARCH METHODOLOGY &ORGANISATION REARCH

4 5 6 7 8 9 10

SWOT analysis of ONGC Financial overview Problem Identification Impact on Indian Economy Conclusion Recommendation Bibliography

33 35 38 39 41 43 45

[1] INDUSTRY INFORMATION

Pe tro

leum is the single largest source of energy used in the United States. The nation uses two times more petroleum than either coal or natural gas and four times more than nuclear power or renewable energy sources. Before petroleum can be used it is sent to a refinery where it is physically, thermally, and chemically separated into fractions and then converted into finished products. About 90 percent of these products are fuels such as gasoline, aviation fuels, distillate and residual oil, liquefied petroleum gas (LPG), coke, and kerosene. Refineries also produce nonfuel products, including petrochemicals, asphalt, road oil, lubricants, solvents, and wax. Petrochemicals (ethylene, propylene, benzene, and others) are shipped to chemical plants, where they are used to manufacture chemicals and plastics. [DOE 1998]

The United States is the largest producer of refined petroleum products in the world, with 25 percent of global production and 163 operating refineries. In 1997 refineries supplied more than 6 billion barrels of finished products and employed about 65,000 people [DOE 1998, DOC 1997]. U.S. refineries are also the largest energy consumers in manufacturing and spend $5-$6 billion annually in pollution abatement costs [MECS 1994, DOE 1998]. The broad Standard Industrial Classification (SIC) for refining is SIC 29; oil and gas exploration falls under SIC 13.

TOP 5 OIL & GAS COMPANIES

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Symbol

NAME OF COMPANIES

INDIAN OIL CORPORATION LIMITED (IOC)

OIL AND NATURAL GAS CORPORATION(ONGC)

BHARAT PETROLEUM CORPORATION LIMITED(BPCL)

RELIANCE PETROLEUM LIMITED (RPL)

ESSAR OIL LIMITED (EOL)

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[2] CORPORATE PROFILE

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PROFILE
Oil and Natural Gas Corporation Limited

Type PSU Founded 1956 Headquarters Dehradun, India Key people R S Sharma, Chairman and MD Industry Petroleum and Gas Website http://www.ongcindia.com

COMPANY PROFILE

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During the pre-independence period, the Assam Oil Company in the northeastern and attock Oil company in northwestern part of the undivided India were the only oil companies producing oil in the country, with minimal exploration input. After independence, the national Government realized the importance oil and gas for rapid industrial development and its strategic role in defense. Consequently, while framing the Industrial Policy Statement of 1948, the development of petroleum industry in the country was considered to be of utmost necessity. Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of India. In Assam, the Assam Oil Company was producing oil at Digboi (discovered in 1889) and the Oil India Ltd. (a 50% joint venture between Government of India and Burmah Oil Company) was engaged in developing two newly discovered large fields Naharkatiya and Moran in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a joint venture between Government of India and Standard Vacuum Oil Company of USA) was engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining offshore remained largely unexplored.In 1955, Government of India decided to develop the oil and natural gas resources in the various regions of the country as part of the Public Sector development. With this objective, an Oil and Natural Gas Directorate was set up towards the end of 1955, as a subordinate office under the then Ministry of Natural Resources and Scientific Research.

[2.1] Company History

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1947 - 1960 During the pre-independence period, the Assam Oil Company in the north eastern and Attock Oil company in northwestern part of the undivided India were the only oil companies producing oil in the country, with minimal exploration input. The major part of Indian sedimentary basins was deemed to be unfit for development of oil and gas resources. After independence, the national Government realized the importance oil and gas for rapid industrial development and its strategic role in defense. Consequently, while framing the Industrial Policy Statement of 1948, the development of petroleum industry in the country was considered to be of utmost necessity. Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of India. In Assam, the Assam Oil Company was producing oil at Digboi (discovered in 1889) and the Oil India Ltd. (a 50% joint venture between Government of India and Burmah Oil Company) was engaged in developing two newly discovered large fields Naharkatiya and Moran in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a joint venture between Government of India and Standard Vacuum Oil Company of USA) was engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining offshore remained largely unexplored. In 1955, Government of India decided to develop the oil and natural gas resources in the various regions of the country as part of the Public Sector development. With this objective, an Oil and Natural Gas Directorate was set up towards the end of 1955, as a subordinate office under the then Ministry of Natural Resources and Scientific Research. The department was constituted with a nucleus of geoscientists from the Geological survey of India. A delegation under the leadership of Mr. K D Malviya, the then Minister of Natural Resources, visited several European countries to study the status of oil industry in those countries and to facilitate the training of Indian professionals for exploring potential oil and gas reserves. Foreign experts from USA, West Germany, Romania and erstwhile U.S.S.R visited India and helped the government with their expertise. Finally, the visiting Soviet experts drew up a detailed plan for geological and geophysical surveys and drilling operations to be carried out in the 2nd Five Year Plan (1956-57 to 1960-61).

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In April 1956, the Government of India adopted the Industrial Policy Resolution, which placed mineral oil industry among the schedule 'A' industries, the future development of which was to be the sole and exclusive responsibility of the state. Soon, after the formation of the Oil and Natural Gas Directorate, it became apparent that it would not be possible for the Directorate with its limited financial and administrative powers as subordinate office of the Government, to function efficiently. So in August, 1956, the Directorate was raised to the status of a commission with enhanced powers, although it continued to be under the government. In October 1959, the Commission was converted into a statutory body by an act of the Indian Parliament, which enhanced powers of the commission further. The main functions of the Oil and Natural Gas Commission subject to the provisions of the Act, were "to plan, promote, organize and implement programmes for development of Petroleum Resources and the production and sale of petroleum and petroleum products produced by it, and to perform such other functions as the Central Government may, from time to time, assign to it ". The act further outlined the activities and steps to be taken by ONGC in fulfilling its mandate 1961 1960 Since its inception, ONGC has been instrumental in transforming the country's limited upstream sector into a large viable playing field, with its activities spread throughout India and significantly in overseas territories. In the inland areas, ONGC not only found new resources in Assam but also established new oil province in Cambay basin (Gujarat), while adding new petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both inland and offshore). ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay High, now known as Mumbai High. This discovery, along with subsequent discoveries of huge oil and gas fields in Western offshore changed the oil scenario of the country. Subsequently, over 5 billion tonnes of hydrocarbons, which were present in the country, were discovered. The most important contribution of ONGC, however, is its self-reliance and development of core competence in E&P activities at a globally competitive level.

After 1990

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The liberalized economic policy, adopted by the Government of India in July 1991, sought to deregulate and de-license the core sectors (including petroleum sector) with partial disinvestments of government equity in Public Sector Undertakings and other measures. As a consequence thereof, ONGC was re-organized as a limited Company under the Company's Act, 1956 in February 1994. After the conversion of business of the erstwhile Oil & Natural Gas Commission to that of Oil & Natural Gas Corporation Limited in 1993, the Government disinvested 2 per cent of its shares through competitive bidding. Subsequently, ONGC expanded its equity by another 2 per cent by offering shares to its employees. During March 1999, ONGC, Indian Oil Corporation (IOC) - a downstream giant and Gas Authority of India Limited (GAIL) - the only gas marketing company, agreed to have cross holding in each other's stock. This paved the way for long-term strategic alliances both for the domestic and overseas business opportunities in the energy value chain, amongst themselves. Consequent to this the Government sold off 10 per cent of its share holding in ONGC to IOC and 2.5 per cent to GAIL. With this, the Government holding in ONGC came down to 84.11 per cent. In the year 2002-03, after taking over MRPL from the A V Birla Group, ONGC diversified into the downstream sector. ONGC will soon be entering into the retailing business. ONGC has also entered the global field through its subsidiary, ONGC Videsh Ltd. (OVL). ONGC has made major investments in Vietnam, Sakhalin and Sudan and earned its first hydrocarbon revenue from its investment in Vietnam.

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[2.2] BASIC INFORMATION

Oil & Natural Gas Corporation Limited.
Incorporation year : Ownership Main Activity Subsidiaries : : : 1959 Central Govt. Commercial Enterprises. exploration & production of Oil and Gas Mangalore Refinery & Petrochemical Ltd. ONGC Videsh Ltd.

BOARD OF DIRECTORS
R S Sharma : Chairman & managing Director

Dr. A K Balyan : Director ( Human resource) A K Hazarika D K Pande U N Bose D K Sarraf S Vasudeva R S Butola : Director ( Onshore) : Director ( Exploration) : Director (Technology & Field services : Director ( Finance) : Director ( Offshore) : Manging Director ( ONGC VIDESH LTD)

Non Functional Directors: L M Vas S S Rajsekar S Balachanran Santosh Nautiyal Anita Das

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Motto
Provide quality services with efficiency and transparency.

Quality Objective
ONGC is committed to provide quality service at optimum cost with efficiency and Transparency within time frame.

ONGC strategies to
Understands Customers needs expectation and continuously improve the services to enhance the level of satisfaction of customers with as minimum cause or complaints. Ensure that when complaints are received, they are well attended to in a timely manner within the framework of applicable department rules and regulations with a view to eliminate root Cause and prevent recurrence. Maintain a healthy constructive work environment by promoting the employees competency through training and motivation that enables to give optimal output. Comply with the requirements of applicable statutory and corporate office requirement.

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ORGANISATIONAL CHART:

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[2.3] VISION AND MISSION

To be a world-class Oil and Gas Company integrated in energy business with dominant Indian leadership and global presence.

1) World Class
Dedicated to excellence by leveraging competitive advantages in R&D and technology with involved people. Imbibe high standards of business ethics and organizational values. Abiding commitment to safety, health and environment to enrich quality of community life. Foster a culture of trust, openness and mutual concern to make working a stimulating and challenging experience for our people. Strive for customer delight through quality products and services.

2) Integrated In Energy Business

Focus on domestic and international oil and gas exploration and production business opportunities. Provide value linkages in other sectors of energy business. Create growth opportunities and maximize shareholder value

3) Dominant Indian Lead

Retain dominant position in Indian ership petroleum sector and enhance India's energy availability.

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[2.4] MILESTONE SINCE INCEPTION

August 1956 April 1957 September 1958 May 1960 1962 1965 March 1970 Formation of Oil and Natural Gas Commission First well drilled in Jawalamukhi Discovery of oil in Lunej at Cambay Discovery of major oilfield in Ankleshwar Started Offshore exploration Formation of Hydrocarbons India Ltd.-OVL precursor First foray into offshore drilling at Aliabet and first offshore drilling rig Sagar Samrat ordered November 1973 February 1974 March 1984 1988 ONGC got a contract to work in Iraq Bombay High discovered Giant onshore field Gandhar discovered HIL rechristened as ONGC Videsh Limited

1992 5 producing fields of ONGC handed over to multinational combines June 1993 ONGC incorporated as a company

1998 Phased dismantling of Administered Price Mechanism (APM) starts August 2001 January 2003 March 2003 Corporate Rejuvenation Campaign (CRC) rolls First commercial production in Vietnam OVL acquired 25% participating Interest in Greater Nile Oil Project ONGC acquired stake in MRPL August 2003 Launching Samriddhi March 2004 minutes. 10% equity of ONGC disinvested; offer oversubscribed in 11 of Deepwater Exploration Campaign Sagar

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ONGC DISCOVERED IN INDIA

1967: Rajasthan Basin

1889: Assam Shelf *

1973: Assam & Assam Arakand Basin 1958: Cambay Basin 1980: Krishna Godavari Basin

1974: Mumbai Offshore

1985: Cauvery Basin

[2.5] BROAD FUNCTIONS

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Following are the broad functions of Cambay Forward Base under CRC Structure:

1. Stacking of released locations and Handing over Drilling & Oil Mining. 2. Land acquisition. 3. preparation of approach roads and drill sites. 4. preparation of GTO (Geological Technical Order) and other related technical data. 5. collection of subsurface geological data during drilling. 6. monitoring of day to day drilling operations for health/ timely well completion. 7. Planning ,provisioning and inventory control of casing, well heads, floating equipments, centralizers etc. 8. Co-ordination with other services such as Logging, WSS, Cementing, Logistics. 9. Planning and monitoring production testing 10. Planning and execution of work over jobs. 11. documentation of data for each jobs 12. Budget preparation 13. Well Completion reports 14. Cost reduction planning 15. Other miscellaneous jobs related to exploratory and development drilling and work over jobs in Cambay Forward Base.

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PRODUCT DETAILS
ONGC Ltd. has following product profile a. Crude oil b. Gas c. LPG d. Naphtha e. Electricity-Wheeling & Sale f. Crude Oil Processing & Transporting g. Gas Compression

ONGC Ltd., Cambay involves in production of Crude Oil, Natural Gas and Crude Oil Processing & Transportation. Their customers are. 1. IOCL (Crude Oil) 2. GAIL (Natural Gas) 3. GSPC/NIKO (Processing of Crude Oil) 4. Heramec Ltd. (Processing Of Crude Oil)

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In 2009, India was the 6th largest net importer of oil in the world, importing nearly 2.1 million barrels per day, or about 70 %, of its oil needs as compared with 44 % in 1995 . Nearly 70 % of Indias crude oil imports come from the Middle East, primarily from Saudi Arabia, followed by Iran.

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[3] RESEARCH METHODOLOGY

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OBJECTIVE OF THE STUDY

The study is oriented with the following objectives. To know the financial passion of Oil &natural gas corporation ltd. To know the liquidity position of Oil &natural gas corporation ltd. To understand the cash management system of Oil &natural gas corporation ltd. To understand the sales accounting and debtors management system of Oil &natural gas corporation ltd. To understand the budgeting system of Oil &natural gas corporation ltd. To know the position of current assets and current liabilities of Oil &natural gas corporation ltd.

Methodology is a systematic procedure of collecting information in order to analyze and verify a phenomenon. The collection of information is done two principle sources, viz 1. Secondary data

Secondary data:The secondary data was collected from already published sources such as, pamphlets of annual reports, returns and internal records.

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The data collection includes:(a) Collection of required data from annual records of Oil &natural gas corporation ltd. (b) Reference from textbooks and journals relating to financial management. (c) Electronics based data such as internet downloaded data.

INSIDE THE COMPANY SECONDARY SECONDARY SOURCES SOURCES

ANNUAL REORT /

RECORDS
TEST BOOK/ JOURNALS/ WEBSITE

DATA

OUTSIDE THE COMPANY

SOURCES

PRIMARY SOURCES

MANAGEMENT RESPONDENTS

PERSONAL PERSONAL OBSERVANCE OBSERVANCE

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Research design
This project is basically on descriptive type of research design. Descriptive study: In descriptive research design the main focus is on

describing the project. Here in this project I take detail study of the ratio analysis & budgeting system of Oil &natural gas corporation ltd. I gathered comprehensive data collected about the ratio & budgeting.

Limitations
The response of the employees in giving information was lukewarm. Organizations resistance to share the internal information. Company uses account without in tally so that I dont collect sufficient data. Companys employee cannot provide those data which is compulsory to keep secret.

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[4] SWOT Analysis of ONGC

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Strengths
Market leader in oil and gas sector in India Strong and visionary leadership Strong financial position of the company with huge oil and gas reserves Existing product of value added products like kerosene ,Neptha , Diesel ,etc Owns equity of oil and gas abroad. ONGC has ISO-9001 and ISO 14001 registration.

Weakness
State owned No major exploration except Bombay High. It needs to find out more sources like Bombay High. Average age of regular employees is 50+. Young manpower is needed. Manpower is more than required. No experience in retail marketing of petroleum products.

Opportunities
Possible mergers with smaller companies. Finding alternative fuels before fuels before competitors. Expanding into more areas. Increase in Oil and Gas equity abroad through its overseas subsidiary, OVL. Entry into Energy sector through power generation.

Threats
Increase competitor activity in the oil and gas business in India and emergence of other integrated like RIL. Backward integration by Oil refining companies like IOCL, Gas and power generating companies like Gail and NTPC. Limited availability of fossil reserves. Continued subsidy to be provided by ONGC. Government policy affect long term planning

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[5] FINANCIAL OVERVIEW OF ONGC

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NET SALES TURNOVER OF ONGC FROM THE YEAR 2006-11

FINANCIAL PERFORMANCE
Particulars Turnover Profit After Tax (PAT) Dividend 2010-11 661,516 2009 10 602, 061 2008 09 639,493

MILLIONS

2007 08 601,373

2006-07 569037

189,240 136888.3

167,676 70583.3

161,263 68,444

167,016 68,444

156429 60108

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NET PROFIT OF ONGC FROM THE YEAR 2006-11

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[6] Problem Indentification

a)

RISE IN COST OF IMPORTS: The first victim of rise in crude oil prices is the state exchequer. Every increase of $1 per barrel in Indian crude basket prices pushes up the annual oil import bill by $1.2 billion. It also leads to a faster depletion of Indias Foreign Exchange (FOREX) Reserves.

b) INFLATION: Rise in fuel prices has a direct impact on the prevailing inflation
rate in the economy. Higher fuel prices (in particular Diesel) lead to increase in transportation costs across the country. As a result of which the price of essential commodities (such as food items, cement, coal etc) shoots up. Inflationary expectations among traders lead to hoarding which pushes the spiraling inflation rate further up.

c)

HIKE IN INTEREST RATES: The Reserve Bank of India (RBI) is entrusted with the responsibility of containing inflation in the Indian economy through periodic Monetary Policy review. In case of inflation zooming beyond the comfort zone, the RBI steps in to bring it down to an acceptable level. It does so by increasing the Cash Reserve Ratio (a portion of deposits which banks have to keep with the RBI), Repo Rate (the rate at which banks borrow funds from the RBI) & Reverse Repo Rate (the rate at which RBI borrows money from the banks)

d) SLOWDOWN IN ECONOMIC GROWTH: A sustained rise in interest rates in

the economy begins to hurt the economic growth. Reduced investment, lower spending on infrastructure & fall in domestic consumption of goods & services puts a break on the growth of the economy.

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[7] Impact on Indian economy

a) Indias crude oil import bill may cross USD100 billion if the global price stays
firm at USD 100-USD 120 a barrel. If that happens, it will upset the delicate fiscal balance, expand deficit, increase the subsidy bill that continues to bloat year after year and fuel inflationary expectations. Rising crude oil prices will impact inflation whether the government absorbs the burden or passes it to the consumer by increasing prices of petroleum products. If the government acts as a buffer, the oil subsidy bill will rise and affect fiscal deficit. This will indirectly fan inflation. India's oil import bill in the first 11 months of 2010-11 was USD 85 billion. For the whole year, it is reported to have reached USD 90 billion. India, which imports nearly 80 percent of its crude oil requirement, spent USD 79.55 billion in 2009-10.

b) The recent strengthening of crude oil prices could impact economic growth
momentum in the country for the current fiscal. The main factors that would be responsible for economic growth moderation in 2011-12 would be crude oil prices and RBI's tightening of monetary policy in response to oil prices. Rising crude price will lead higher inflation and higher inflation attracts monetary tightening. Monetary tightening would lead to a squeeze on aggregate demand, impacting economic growth.

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Impact on world economy

It is estimated that over a year, USD 100 oil would reduce U.S. economic growth by 0.2 or 0.3 of a percentage point. So rather than grow an estimated 3.7 percent this year, the economy would expand 3.4 percent or 3.5 percent. That would likely mean less hiring and higher unemployment. The global economy wouldn't be affected as much. In part, that's because emerging economies consume less oil, per person, than industrialized countries do. In addition, many developing countries regulate or subsidize the cost of gas. Global growth would slip about 0.1 percentage points, economists estimate. But rising oil prices could threaten European economies, many of which are net importers of oil and gas, haven't fully recovered from the financial crisis and face heavy debt loads. Spain and Italy, where gas at the pump already goes for about USD 8 a gallon, face years of a slow, grinding recovery. A spike in oil would deal their economies another setback. Rising oil price would also push up inflation in Europe, where it already exceeds official targets, and in countries with surging food prices, like China, Brazil and India. Those countries might then have to raise interest rates to cool inflation. Doing so, in turn, would slow growth in Latin America and Asia.

How Crude Oil Prices Affects People:

For this reason, higher oil prices increase the cost of everything people buy, especially food. That's because a lot of food costs depends on transportation. High oil prices will ultimately increase inflation. Crude oil prices most directly affect you in higher gasoline prices and higher home heating oil prices (primarily for those of you who live in the Northeast U.S.) Crude oil accounts for 55% of the price of gasoline, while distribution and taxes influence the remaining 45%.

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[8]

CONCLUSION

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 Participation: The budget system in ONGC involves as many people as

possible. In drawing up a budget, budget coordinators are appointed at every work centers. Comprehensiveness: Since budget is prepared at cost center level to reap the benefit of accuracy. In this way ONGC embrace the whole organization in budget preparation. Flexibility: Though the corporate budget section passes the budget for the total requirement of fund centre, internal adjustments can be made if one or the other cost centers need for funds exceeds the estimated expenditure so it allow enough flexibility to deal with changing circumstances or new requirements. First BE is prepared for any year and thereafter RE is prepared. As BE is prepared in advance by a year there may be some limiting internal and external factors in an effective manner RE is prepared for that BE during the month of June. Feedback: Monthly utilization report facilitates constant monitoring of performance.

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[9]
RECOMMENDATION

It was a great experience during my summer training that I have got an opportunity to work with a company like ONGC which is the only Indian company having crossed first time the profit of Rs. Ten thousand Crore. I have discussed about the modules 43

of budgeting briefly so that anyone can get the idea about the budgetary control of ONGC.

Actual figures. These figures serve as the basis for preparing budget for current year. On the contrary it is advisable to consider past few years data, this enables one to get an idea as to what are the requirements every year, thus a standard can be made. This standard can thus be used as tool for accurately estimating budgetary requirements. Funds that are allocated, as budgetary requirements to the funds centers remain unutilized either for the need of placing an order or for want of fulfillment of the placed order on time. These are accounted as throw forward items in the succeeding budget. Allocated funds should be utilized in respective year itself so that the budget is consumed in the respective year. Here the Revised Budget (RE) is prepared for current year and Budgeted Estimate (BE) is prepared for following year. In addition to this a consolidated /comprehensive budget for five years should be prepared to know long-term budget requirements. The costing records are maintained under the SAP (system application programming). The actual cost have to be downloaded from SAP and uploaded in Budget Software, this is time consuming Instead a provision wherein budget can also be prepared under SAP itself should be introduced.

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[10]
BIBLOGRAPHY

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REFERENCES
Prasanna Chandra, Financial Management, Tata McGraw Hill, New Delhi Budget Circular Annual Reports for the Year 08-09 COMPANY MAGAZINES: Corporate Finance, ONGC, ONGC Reports, May & June, 2010 Internet: www.ongcindia.com http://jade-1.ongcl.com/DirectoryServices/index.jsp www.ongcvidesh.com O.N.G.C LTD. Annual Report (20010-11) Intranet: http://10.205.55.5

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