AKNOWLEDGEMENT

A formal line of appreciation would hardly meet the end of justice expressing my sincere thanks to Mr.S.N. Pandey (Manager Training) & Mr. R.B Singh (Administrative Officer Training) & Mr. U.C Sharma,Mr. V.S Singh ,for providing me every possible help to complete my work within given time period of 4 weeks. As the task of completion was gigantic and stupendous, but I tried to give all efforts related to my training at my level best. I as a vocational trainee with the place on record my gratitude and appreciation of continued support, guidance and co-operation extended by the different employees of each level of Finance, Human Resource and development, GAD,

Welfare/Safety, Time office, Production, Purchase, Quality control, Store and Marketing. I specially thank to GM & DGM (Personnel) who contributed full support and valuable guidance during my project work and training period in the organization. At the end I am thankful to all the employees of the BPCL, Naini, who gave their full support and co-operation during my training by giving me sufficient knowledge related to the organizational environment. The completion of this training report is the result of valuable guidance, constructive suggestion, keen interest and eminent supervision of all the Training officials and every experienced employee of BPCL.

Thanking you. Ajit Kumar

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INTRODUCTION

Bharat Pumps and Compressors Limited, (the public sector enterprise) was incorporate in 1970. The factory is situated in the Trans Yamuna area of Naini Allahabad. The company has started its Business from 1973. Later on during year 1986, the company was brought out under the holding Company Bharat Yantra Nigam Limited. With the objective to design research and development and manufacture and supply of capital goods in the fluid handing field including Provision of service connected there with. BPCL had entered into technical collaborations with World famous manufactures of Pimps, Compressors and Gas cylinders and high technology Oil Equipments. In a very short period the company absorbed the technology and establishes itself as a World renewed manufacturing of a wide range of high-tech products in the fluid handing areas. In spite of being an import substitution oriented unit. BPCL competes with renowned international manufacturing and secure Prestigious orders from the counts core sector industrials. Almost all the national project in the areas of oil exploration and exploration. Refineries petrochemicals and Fertilizers process industries; thermal hydro and nuclear power plant have BPCs products which are functioning to the total satisfaction of the total satisfaction of the customers. The confidences reposed on BPCL by customer select in terms of steady and continuous ion order position as well as receipt of high value order to manufacturing and supply the high tech product like cementing units. Sucker Rod Pumping units and Nuclear Pumps besides Mud pimps for deep deleing oil rigs and compressors etc. Through quality of BPCL product in good as compared to any other competitors but the company did not perform well due to various reasons. The concept of holding company was this adopted by the government to recognize BPCL along with other five companies in a manner which was most conductive to their effective performance. In 1986, BPCL was made a subsidiary of Bharat Yantra Nigam limited. Who formed as holding for six companies which come under the Department of Heavy Industry? BPCL is the only company in Asia to manufacturing a wide range of hi-tech products, heavy duty pumps and compressors and high pressure seamless and welded gas cylinders, under one roof.

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VISION To become an Indian MNC in the field of Fluid handling, Gas Compression, Gas storage equipment, services & project management. MISSION To provide quality products and services to core sector industries with special thrust on Oil and Natural Gas, Petrochemicals, Refineries, Nuclear and Thermal Power Plants, Fertilizers and Public Transport Services, complying with health and safety requirements OBJECTIVES To increase market shares of our products and services. To maximize customers satisfaction by providing quality products and services with stipulated delivery. To increase the business of spares and rendering prompt after sale and services including refurbishment. Achieve export turnover of 15% by 2009-10.

CAPABILITIES BPCL A subsidiary of Bharat Yantra Nigam Ltd. A subsidiary of enterprise are engaged in the manufacturing of reciprocating pumps, reciprocating compressors, centrifugal pumps, and gas cylinders catering to the needs of a wide range of industries such as fertilizers, refineries. Petrochemical, oil and gas exploration, nuclear and thermal power, or processing and metal extraction, air separation refrigeration plants, etc. ENGINEERING CAPABILITIES- BPCL have a complete team of design and development engineers specialized in the field of reciprocating compressors, reciprocating pumps, electrical drives and measurement and control instrumentation. The constituents of this team are thoroughly knowledgeable and experienced design and development of more than 15 years. Most of engineers have been trained at collaborators works and have through experience of a wide variety of applications handled by BPCL. Pumps and compressors are designed in conformity of American Petroleum Institute Standards (e.g. API 628 for Reciprocating Compressors, API 610 for centrifugal pumps), PN-EUROPE or any other national/international codes specified by client consultants. In case of reciprocating machines, analogue digital pulsation study is carried out to evaluate and optimize performance during design stage itself. In case of centrifugal machines, seismic analysis is carried out wherever required. MANUFACTURING CAPABILITIES- BPCL has excellent in-house facilities for reciprocating as well as centrifugal machines. The modernization machines, shop containing CNC machines, etc. Is well equipped to achieve the required manufacturing tolerance had finish on the pumps and compressors components.

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The machine shop is staffed by expert operators working under the supervisors and engineers who bring in the state of the art and technology in all products. BPCL have a fully equipped test bed for pumps and compressors including clean room facilities. A well known team of quality control and assurance engineers ensures high quality throughout all phases of manufacturing. Their party inspection by reputed inspection agencies, such as, bureau EIL, PIDL, UHDE, H&G are offered on all our products at clients discretion. STRATEGIES, ACTION, PLAN BPCL have already initiated action for attainment of ISO 9000 certification. BPCL is already registered with process consultants. Various export houses. We are receiving from EEPC, Mohan export, PEC etc. BPCL has initiated action to become of international trade council. Export possibility will also be dealt through our holding company i.e. BYNL. As agents are the main contact with the ultimate customers, we are also looking for appointing some agents of repute in foreign countries. To participate in international trade fairs which are held in India & Abroad.

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PRODUCT PROFILE Centrifugal Pumps Pumps for Application in Power Plants. Reciprocating Piston and Plunger Pumps. Cementing Units. Sucker Rod Pumping Unit. Reciprocating Compressors.

Pumps and Compressors

Gas Cylinders

High Pressure Seamless Industrial Gas Cylinders. Welded Cylinders. Cylinders in Cascade for Storage of Compressed Natural Gas (CNG)

Range of Products Centrifugal Pumps Maximum Power Maximum Pressure Maximum Capacity Fluids Handled 2500 KW 140 kg/cm2 12,000 M3/Hr Demineralised water, Sea water, Hydrocarbons, Naphtha, LPG, Carbonate Solution, Boiler Feed Water, Benfield solution, Alkaline and Acidic Solution, Ammonia liquor and slurry 1700 KW 675 kg/cm2 315 M3/Hr

Reciprocating Pumps

Maximum Power Maximum Pressure Maximum Capacity

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Fluids Handled

Drilling Mud, Cementing Slurry, Crude Oil steam, Condensate, Heavy Water, Fatty Acids, Ammonia Carbonate, Liquid Ammonia, Water Injection

Reciprocating Compressors Maximum Power 25,000 KW Maximum 450 kg/cm2 Pressure Maximum 70,000 NM3/Hr Capacity Fluids Handled Air, Nitrogen, Oxygen, Carbon Di-Oxide, Hydrocarbons, Ammonia, Synthesis Gas, Hydrogen Sulphate, Coal Gas etc. GAS CYLINDERS Maximum Pressure 400 kg/cm2 Maximum Capacity 110 Litres. Fluids Handled Oxygen, Nitrogen, Hydrogen, Argon, Air, Helium, Carbon Di-Oxide, Nitrous Oxide, Acetylene, Ammonia, Chlorine, Freon, LPG, Compressed Natural CUSTOMER OF BPCL

Oil & Natural Gas Commission. Indian Oil Corporation. Hindustan Petroleum Corporation. Fertilizer Corporation of India Ltd. Indian Farmers Fertilizer Corporation. Gas Authority of India Ltd. Indian Petro-Chemicals Ltd. Madras Refineries Ltd. Oil India Ltd. Bharat Petroleum Corporation. Engineers India Ltd. National Fertilizer Corporation. Indo Gulf Fertilizers Corporation. Indraprastha Gas Limited. Bongaigaon Refineries & Petro-Chemicals Ltd. Cochin Refineries Ltd Tamil Nadu Petro-Chemicals Ltd.

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BRANCHES OF BPCL Its manufacturing unit is at Allahabad only. But it has 6 more branches at Delhi Mumbai Kolkata Chennai Dibrugarh (Assam) Baroda (Gujrat) TURN AROUND HISTORY OF BPCL THE TURN AROUND STORY LEARNINGS & WAY FORWARD ABOUT BPCL Bharat Pumps & Compressors Ltd., (A Public Sector Undertaking under the control of Ministry of Heavy Industries & Public Enterprises, Govt. of India), was incorporated in 1970 with manufacturing facility at Naini, Allahabad. The company is engaged in manufacture and supply of heavy duty pumps & compressors and high pressure seamless and CNG gas cylinders / cascades to cater the needs of oil exploration & exploitation, refineries, petro-chemicals, chemicals and fertilizer, power [including nuclear power] sectors and other process downstream industries. Such high valued hi-tech products are functioning to the total satisfaction of the customers with least maintenance cost and optimum energy conservation. BPCLs products pumps & compressors meet the specifications of International codes, such as, API and are fully guaranteed for performance on the basis of proven and updated designs. Gas

Cylinders are manufactured as per specifications of international standards, such as, DOT, BS, BIS, ISO, etc. and usage approval from recognized national/international agencies.

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SCENARIO TILL 2004-05 BPCL was a sick company having suffered losses consistently since inception aggregating to Rs.175.29 crores. The net worth of the company as on 31.03.2005 was negative at Rs.121.61 crores. As on March 2005, the company had manpower of 1244 employees. The employees also lost all zeal to work required for productive results as the Company could not generate enough production & obtain orders to maintain even a working business cycle. Bharat Pumps & Compressors Ltd., as such was on verge of almost being closed with minimal production and failure in securing orders in competitive biddings. Table -1, below gives past performance and also performance in the turnaround year 2005-06:

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PAST PERFORMANCE Table-I [Rs. In lakhs] Sl. Parameter No. 1. Value of Production 2. Value Added 3. Net Profit/(Loss) After Tax 4. Net Worth 5. No. of Employees

2000-01 5950 3044 (559) (5413) 1583

01-02 6643 2589 (1246) (6759) 1522

02-03 6441 2793 (1292) (8470) 1376

03-04 4750 2421 (2494) (11340) 1257

04-05 7000 3483 (1086) (12161) 1244

The moment of Pride and Recognition for BPCL had arrived in 2005-06. The special efforts and corporate strategies put in place during the last quarter, after joining of present incumbent on 31.12.2005 have yielded the much awaited turnaround of the Company which was on the verge of being closed on account of losses since its inception in 1970 for about 35 years as the Company had an accumulated loss of Rs. 175.29 Crores, till 2004-05. The turnaround in less than a year from a near closure/winding up situation has been made possible through dedicated and sustained pursuits of revival strategies and following the fundamental concepts of excellence and with emphasis on participative management. BPCL achieved a net profit of Rs.1.82 crores during Financial Year 2005-06 after accounting for Govt. interest amounting to Rs.13.50 crores as against a loss of Rs.10.86 crores during previous year 2004-05. This remarkable feat of turnaround is more of significance since it has been achieved without considering the benefits of financial restructuring or any Govt. assistance. Table-II, below gives details of achievements in 2005-06.

SALIENT ACHIEVEMENT IN 2005-06 Table-II [Rs. In lakhs] Parameters 1. 2. 3. 4. 5. Value of Production Value Added Net Profit/(Loss) Net worth No. of employees 2003-04 4750 2421 (2494) (11340) 1257 2004-05 7000 3483 (1086) (12161) 1244 2005-06 10318 4959 182 (11715) 1233 % change over last year 47.4% 42.37% Turnaround 4% Improvement Reduction of 11 employees

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BPCL, now known as MY BPC to employees and this was made visible to all through suitable Boards at entrance of the Plant A quarterly meeting/address to all employees together to share urgent issues/achievements Vision document prepared for 10 years Rejection & rework reduction by 7% Initiative on MAATI SE SONA Improvement in communication Overall improvement through 5S initiative and cost savings to the tune of Rs.40.00 lakhs Capacity utilization improved to 43% from 29%

Further, energized by the performance and achievement of 2005-06, the Company targeted to achieve turnover of Rs.135 Crores in 2006-07 and net profit of Rs.16.3 crores, however, with dedicated and missionary efforts, the performance has been historical and turnover achieved is Rs.144 crores and net profit is at Rs.18.34 crores a growth of 53% in turnover and 913% in net profit. The Table-III, below gives performance highlights of 2006-07 and significant achievements.

SALIENT ACHIEVEMENTS 2006-07 Table-III [Rs. In lakhs] 2004-05 Parameters 1. 2. 3. 4. 5. Value of Production Value Added Net Profit/(Loss) Net worth No. of employees 7000 3483 (1086) (12161) 1244

2005-06 10318 4959 182 (11715)* 1233

2006-07 14500 6234 1834 +5512 1214

% growth over last year 40.53% 25.7% 913% +147% Reduction of 19 employees

* After revival package net worth will be positive Rs.3438 lakhs

BPCL Certified for Integrated Management Systems in Dec. 2006, by M/s QS Services Zurich (Switzerland) i.e., ISO 9000/14001 & OHSAS 18001.

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Proposal for Strengthening & Financial Restructuring of BPCL approved by Cabinet in December, 2006. Deregistered from BIFR in February, 2007. Measure such as:(i) Smart Card Punching System (ii) Uniform to all Employees (iii) Canteen Up gradation (iv) Jatropha Plantation taken at Plant Model of Excellence introduced ABHAY MODEL of EXCELLENCE a copy right of MD, BPCL Vendor base widened Capacity utilization improved to 53% from 43%

EXPECTED RESULTS DURING 2007-08 The expected sales/production during current year shall be to the tune of Rs.185 crores. BPCLs present order book stands at Rs.160 crores. The order booking is expected to be Rs.200 crores and estimated net profit after tax shall be Rs.24.27 crores i.e., a quantum jump in all the key performance areas is expected. PERFORMANCE AS COMPARED TO PROJECTIONS MADE BY CONSULTANT M/s S.B. BILLIMORIA & CO., AS PRESENTED TO BRPSE FOR APPROVAL OF REVIVAL PLAN IN APRIL 2005 Table-IV [Rs. In lakhs] Parameters A. As per Consultant 1. Value of Production 2. PAT B. As Achieved/ Planned by BPCL 1. Value of Production 2. PAT Years 2005-06 9429 (148) 2006-07 10200 176 2007-08 11232 795 2008-09 11801 396 2009-10 12524 741

10318 182

14500 1834

18500 22427

23500 2347

29500 2762

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MEASURES INITIATED FOR TURNAROUND

The corporate philosophy to implement the approach of Total Quality Management (TQM) and Integrated Management System (IMS) in order to achieve and sustain a reputation for Quality at a Competitive Cost in National & International Markets for BPCL products and services through collective involvement of all was initiated.

The short term & long term initiatives with respect to turnover, delivery commitment, market planning, measurement of productivity & gross margin through cost reduction, technology, etc. were undertaken and key personnel were made accountable for their implementation within the target date.

Besides, the concept of daily 11.30 Communication Meeting was implemented which helped the organization in improving Inter Departmental Communication and immediate resolution of internal problems.

BPCL, is now IMS (INTEGRATED MANAGEMENT SYSTEM) certified Company, covering ISO 9000, ISO 14001 AND OHSAS 18001 and manufactures technically sophisticated and environmentally friendly products, equaling International Standards of quality and performance with the support of a modern and sophisticated machine(though old) having assembly, testing, heat treatment and fabrication workshops. A plan for modernization of machine tools and new capital equipment has already been made. The rippling effect of companys tremendous progress is evident in the 1233 strong work force of the company, which for the first time ever feels motivated enough regarding future growth of the company. The progress and zeal to strike excellence is employee centric and growth oriented.

A Road Map and strategy for existing product portfolios based on SWOT analysis and market projections have been prepared. Strategic Business Plan has also been prepared for next 10 years. The year-wise plan for milestones is given at Table-IV.

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YEARWISE MAJOR MILESTONES Table-V Year Milestones 2006 Approval of Revival Plan Turnover 135 Crores All reviewed Systems in place Turnaround 2007 Turnover 185 Crores Private Sector Business Plan for listing of BPCL Start Exports Turnover 235 Crores Listing of BPCL Plant Modernization/Investment Build a Brand Image Turnover 295 Crores Obtain Mini Ratna status Turnover 385 Crores Apply for CII-EXIM Award A case study on Turnaround Turnover 500 Crores 600 Crores 800 Crores 1000 Crores 1200 Crores Add Foreign Base LSTK Projects Project Management & Consultancy

2008

2009

2010

2011 2012 2013 2014 2015

THE WAY FORWARD Short term and long term goals established as part of strategic business plan (Road Map) for next 10 years clearly reflects current visionary leadership. Large investments of nearly Rs.90,000 crores have been planned in refinery, pipelines, Oil & Gas and Nuclear Power sector in next 5-10 years and as such there will be substantial requirement of BPCL products. BPCL expects its share to the tune of Rs.1500 crores in next 4-5 years. CNG network is being expanded to major cities and huge demand of CNG cylinders and cascades is expected. The company has targeted 15% export turnover by 2009-10, increase in market share of the company from 20% to 45% and becoming Mini Ratna by 2009 as well as Indian multinational company by 2011, expand business to the tune of 1200 crores by 2015. The future growth plan is as per Table-V.

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FUTURE GROWTH PLAN Table-VI Parameter 1. 2. 3. 4. 5. Value of Production Value Added Net Profit After Tax Net worth No. of employees Year 2007-08 18500 7496 2427 7111 1099 2008-09 23500 9398 2347 8503 1059 2009-10 29500 11795 2762 10450 998 2010-11 38500 15395 2807 12314 920 2011-12 50000 19533 7473 18577 876

The major enablers for the turn-around have been the employees of My BPC, customers who re-posed their confidence in our equipment and the Government which provided positive support for initiatives taken in hand to achieve this performance. The salient achievements and learnings of The Turnaround Process are: A. 1. 2. 3. 4. 5. 6. Achievements. Pride to individuals & Image of organization Improvement in customer commitment resulting in customer confidence Strengthening & restructuring package approved by Competent Authority De-listing from BIFR Unparallel growth in Turnover & Profitability Parameters Change of mind set towards productivity, Product Mix, Business Portfolio and urgency for the initiatives Emotional connect & passion for performance and result orientation Production Mind Set to service Mind Set Employee became part of solution as compared to part of problem Learnings Power of Expectations, makes us to become what we want to be. To get help from others from outside first, we have to help ourselves.

7. 8. 9.

B. 1. 2.

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3.

Every employee responds to positive transparent & genuine urgencies expressed by the Leadership. Turnaround needs passion, patience, commitment, role model & sharing of vision/plans leading to benefits of organization & society at large. The extra-ordinary results can be achieved from ordinary people. All employees of BPC are same as earlier and results achieved without any outside help, except for self joining from BHEL in Dec. 2005. 11.30 meetings with HODs have helped in stopping Tug of War between HODs/Section Heads. The identified change agents of processes are capable of helping in change management. We need to guide & provide assistance at all levels, to enable the Process Owners to achieve desired results. The process part needs to be left to them. Participative Management helps in Good Governance & Good Governance ensure employees at all levels, to change their role from one of pulling each other to a role of partnership & trusteeship in the growth of organization. The customer has reposed confidence and the customer centric approach has resulted in meeting commitments and better order book

4.

5.

6.

7.

8.

9.

10.

DEPARTMENTS OF BPCL FINANCE MARKETING PURCHASE HUMAN DEVELOPMENT STORE QUALITY CONTROL

SECTIONS OF FINANCE DEPARTMENT STORE BILL SECTION & FOREIGN PAYMENT MR.C.N MISHRA SALES- MR. G.P SINGH PROVIDEND FUND MS. GAURI SALARY MR. M.N TRIPATHI MISCELLANEOUS MR. B.V SINGH INCOME TAX- MR. RANJEET SINGH COSTING-MR. WAHIDI JI

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 BOOK SECTION- MR. S.B GUPTA BANK SECTION-MR SANJAY GUPTA MEDICAL SECTION -MR. R.C PANDEY

STORE BILL SECTION Base of placing the Purchase Order (PO)- Design Department raised indent for procurement of material for various products the main product of BPCL are: 1. 2. 3. 4. Reciprocating Compressor Reciprocating Pumps Centrifugal Pumps Gas Cylinder (excluding LPG)

After receipt of indent Purchase Department offer quotation from different suppliers through tenders. There are 4 types of tenders1. Single tender (for only one reputed supplier). 2. Limited tender (Some regular suppliers are said to be providing quotation after receipt of quotation comparative statement is prepared in which price quality, past performances of the supplier are maintained. The comparative statement send to finance department for concurrence and final decision are given by finance department. 3. Global tender (These are given in newspaper and international supplier submits their quotations through this tender). 4. Open-tender (quotation calls for international). Purchase order (PO)- This is an arrangement between buyers and suppliers & suppliers and suppliers is bound to deliver the materials as mentioned in PO Items name Quantity Unit rate Packing & forwarding [0.5% to 5% of material value (mv)] excise duty Up to 29-02-2008-16.48% Up to march 2008-14.42% Up to o7-12-2008-10.03% Up to 24-02-2009-8.24% Up to 27-02-2010-10.03%

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VAT [MV+P&F+Excise duty] 5 %(19-02-2010) or [13.5% applicable in 5% cases]. Service tax (10.3%is applicable on machinery work or labour job). Central Sales Tax (CST)- Presently 2% on [MV+P&F+ED]. Government taxes like VAT, CST, Service Tax %age is not given in PO.

Payment to the supplier When supplier supplies the material, he provide bills invoice/ bill, taxable invoice [for moderate credit- credit taken which excise duty are paid by BPC to suppliers. BPC takes excise credit on the basis of taxable invoice.] According to PO supplier invoice/ bill the same or past as per PO rate terms & conditions. Late delivery inventory- 0.5% per week subject to maximum of 5% of delayed supply is deducted from the bill. If supply is delayed beyond delivery period (as per PO delivery period is 4 weeks from the date of PO), all payments are released through cheques / RTGS. Note-; ED, VAT, ST or refunded/credited by sales tax department & excise department. Contractor transport payment- Annual contract is awarded for transportation of materials from BPCL to any place within India & all over India to BPCL. Presently there are 3 transporters. e.g.- ETO (Economic Transport Organisation), ARC (Associated Road Organisation), Indo Aryan Organisation. For different jobs, construction of roads, building, foundation of machinery tanks the contract is awarded on the basis of tender. Income tax - @ 2.06% of labour job amount. Machinery is deducted from the suppliers bill. Finally store department provide Store Receipt Voucher (SRV) to finance for valuation. Purchase of imported materials- On the basis of PO, materials are imported by 2 ways-; (1) through letter of credit (LC) - 90% (2) On collection basis-10% Establishment of LC1. Banker- SBI Naini 2. Consignee- overseas supplier, foreign vendors (supplier) beneficiaries. 3. Consignee- SBI Naini a/c, BPCL Naini (receiver) Foreign payment-: After placement of the PO purchase department sent request letter to finance department.

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Foreign payment section along with 2 copies of PO and suppliers consent letter for establishing LC. Finance department on the basis of PO prepare the following documents: 1. Letter addressed to SBI Naini (chief manager) in which PO no., date, value in foreign currency, freight forwarders, name and address are mentioned. 2. Shipping documents. In this document the following points are indicated: i. ii. iii. iv. v. vi. vii. viii. ix. Airway bill / Bill of lading Invoice/Bill Packing list Country or origin Test Inspection Certificate Certificate of utilities Specification of Goals Certificate of completion of supply Warranty/ Guarantee Total LC value in FC suppliers name, name of freight forwarders, late delivery penalty if applicable, PBC (Performance Bank Guarantee) if applicable, requirement of advance set of documents for shipping of materials. 3. Guarantee LC form (2) suppliers name, FC value, price term [free on boat] All charges from suppliers workshops to sea/ airport like handling charges, documentation charges, warehousing charges, paid by suppliers and finally charges in his invoice. 4. Foreign exchange control. Name of supplier Material cost

The LC is established by the buyer through his banker (SBI, Naini) with a prime bank located in the country of supplier. Confirmation of LC is confirmed by the buyers banker only. Terms of dispatch/ shipment (fob)- in this case supplier is responsible for transportation of material upto port, documentation charge, warehouse charge will be paid by the supplier and finally charged in this bill. Ex-works: The supplier is only responsible on his work place. The freight forwarder of buyer is responsible for material handling upto port and all expenses at port.

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Cost insurance and freight of air/ship- will be born by the supplier. Port of Loading- The supplier shipped the material with the consultant of freight forwarder in his country. Port of Discharge- Material discharge of Mumbai port and the clearing agent of buyer shall provide all expense of the port along with freight bill. Releasing of material from port- after payment freight port trust expenses custom duty and receipt of original documents like bill/invoice, packing list, country of origin and AWB/ BL. Invoice/bill and AWB/ BL must be signed by chief manager SBI Naini. In some cases original documents are not received in SBI Naini and material reached and Mumbai port then in case of air release order duly addressed to freight forwarder and signed by chief manager SBI Naini. In case of sea indemnity bond is issued and also signed by SBI is sent to freight forwarder for increasing the material from the port. After releasing the materials through our transporters, materials are send ton BPCL Naini.

MICSCELLANEOUS PAYMENT SECTION. Function of miscellaneous payment section 1. Payment of transport bills 2. Payment of mobiles and telephones 3. Miscellaneous advance and adjustment 4. AMC (annual maintenance contracts) 5. Publication and advertisement 6. Payment of leased houses 7. Security/earnest money deposits and payment 8. Reduction of income tax &payment 9. Training and seminar 10. Power payment 11. Miscellaneous payments DEDUCTION AND PENALTY IN CASE OF PENALTY Deduction on late arrival (for all types of vehicles) =Contract amount +diesel hike/25 2*1% Extra mileage rate rs.5.60 per km Penalty case Contract amount +diesel hike Days in a month or 25 days/ 25 hrs *hrs indicated in the bill 4 or 3 LANDLINES 36 landlines connection DGM (60000/-)

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90 Mobiles are issued to the officer diff.department IMPEREST Imperest is an advance being paid to each and every department to meet out the expenses of emergent and petty nature. MISCELLANEOUS ADVANCE AND ADJUSTMENTit includes material handling ,local cash purchase ,repair handling ,welfare /press and publication expenses etc.

AMC-annual maintenance contracts AMC for computers AMC for crane services AMC for weighing machines AMC for electronic punching machines AMC for electronic data processing(EDP) PUBLICATION AND ADVERTISEMENT Advertisement for tender notice Advertisement for recruitment Advertisement for goodwill and sales promotion SECURITY/EARNEST MONEY DEPOSITS AND PAYMENT Earnest money it is being deposited at the time of issuing tender form .it is refundable just after the party is failure to obtain contract. Security money-it is being deposited after finalization of contract and security deposits is refundable after termination of contracts. REDUCTION OF INCOME TAX &PAYMENT TDS is being deducted from the parties payment under two section 1st-sec 194(c) 2nd-sec 194 (j) Sec194(c)-ths sec. covers the payments of parties who are rendering their services with their own means and cost .e.g. transporters bill. (A) rate of TDS-2.06% (B) Rate of TDS-1.03% is being deducted from the bill of the parties who do the work of mediator or broker.\ e.g satya advertising agencies sec 194(j) TDS at the rate of-10.30% This rate is applicable on the payment of professional, retainers and service consultants. Tax will be deposited on before the 7th of the coming month. SALARY SECTION As per the government rules and regulations the salary section calculates the salary of employees by involving-:

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DA (IDA)-industrial dearness allowance DA is changed according to the survey made by consumer forum in several cities to know the prices of various products. Presently DA is 127.5% of basic HRA( house rent allowance ) Classification of cities A-1(population>50 lac) A,B-1,B-2(population between 20-50 lac) C (population between 10-20 lac) Unclassified (below 10 lac) CCA(city compensatory allowance)

HRA 30% of basic pay 15% of basic pay 7.5% of basic pay 5% of basic pay

Washing allowance Rs 60/- per month Canteen allowance Rs 400/-per month Children education allowance Attendance award Rs55 for 100% attendence

PROVIDEND FUND SECTION UP/4882/2612 code given by PF Commissioner to BPCL. P.F no up/4882/2612 12% is cut down from individual salary same amount is added to a/c which is provided by company. Contribution involved in the separate a/c of employee: (1) Employee contribution (2) Employer contribution (3) Voluntary provident fund VPF is a/c to the will of employee which is provided by company Randomly .maximum limit that can be cut down 6000/- or 72000 per year. In last two month Feb. &mar individual can exceed the amount 6000/- to maintain 72000/- in that year 8.33% or Rs 541/- whichever is lower one is cut from the 12% of the salary then we get the amount. Types of loan Non refundable Condition 1- 90% of the amount is provided Condition2-(basic+DA)*36 Refundable

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Condition 1- 90% of the amount is provided after 10 year of service if taken 75%provided only refundable Condition 2-(basic + DA)*6 Deduction Provident fund -12% of basic +DA 8.5% interest on PF Voluntary provident fund Max 6000/- can be deducted as VPF Income tax deduction Bus charge GLIC/LIC Deduction

MEDICAL SECTION Medical section of finance department provides financial help for medical facilities to the employee and their dependents. In the month of April 95% of the basic payment is provided to the employee for normal disease. For each month=95%of the basic 12 Following are the hospital in which financial help is provided: (1)Srijan vatsalya hospital pvt.ltd (2) Akshay vat and trama hospital. (3) saraswati heart care (4)Nazareth hospital. (5) government hospitals

FUNCTIONING OF MARKETING PURCHASE DEPARTMENT OF BPCL MARKETING (1)REQUIREMENT OF CUSTOMER (a) directly from customers (b) Through internet. (c) Print media. (d) Consultants. (e) Lump sum turn key vendor. (2)ACTION BY MARKETING (a) We get registered. (b) On submission of enquiry from customer we analyze the specification Technical details and commercial details. (c) techno-commercial offer is made and tender/bid/offer.

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(d) The technical scruting is done by the customer and technically qualified parties short listed for price bid openings. (e) The price bid is open and purchase order is placed to the lowest bidder.

PURCHASE Material required for direct production or non production is purchased by purchase department of BPCL. There are two categories of material: (1) metallic (2) nonmetallic Two group in purchase: (1) linked to direct production (2) linked to non production FUNCTION OF PURCHASE D.P.I (departmental purchase indent) Checking availability of material in store house. Accurate information in purchase Enquiry letter (to the vendors) Competitive statement Final order

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OBJECTIVE OF THE STUDY

1) To evaluate the financial status of the company. 2) To interpret and analyse the financial ratios of the company. 3) To study the working capital management of the company.

LIMITATION OF THE PRO JECT

The topic was new to me and so broad to cover all the fields in just four weeks. One of the constraints in the completion of the project was the busy environment of the organization. Although Allahabad is not new for me yet the company is establish far away from the city. All the necessary data were not available to me dew to companys confidential matter. RESEARCH METHODOLOGY Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various step that are generally adopted by researcher.

OBJECTIVE OF RESEARCH To gain familiarty with a phenomenon or to achieve new insights into it. To portray accurately the characteristics of a particular individual, situation or a group.

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To test hypothesis of the casuak relationship between a variable.

SOURCES OF DATA The data I have collected are primary data in which I personally collected the

information from the retailers. PRIMARY DATA:The primary data are those which are collected through experiment or survey. SECONDARY DATA:The secondary data on the other hand are those which have already been collected by someone else and which have already been passed through the statistical process. In this study basically primary data are used. The primary data are collected from the following ways : By observation

Through personal interview

DATA COLLECTION The next step to determine the sources of data to be used. The researcher has to decide whether to primary data or depend exclusively on secondary data. When a study is to be based on secondary data, whether partially or fully, it is necessary to satisfy onceself that the data are quite suitable for the spelt out by the study. The various sources of collection of data in the project are : Interview with officers and employees. Record files.

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Company sites. Annual report 2010.

ANALYSIS OF DATA After the data have been collected the researcher turns the task of analysing them. For the analusis of data I used two types of tools : Financial tools 1. Ratio analysis. 2. Comparative analysis. 3. Working capital analysis. Statistical tool.

SWOT ANALYSIS

STRENGTHS * * * * . Good engineering capabilities. Good design backed by reputed foreign manufacture. Good manufacturing & testing facilities. .

Good performance of equipment already supplied. * Good quality & high degree of reliability * Stable industrial relations.

WEAKNESSES

* *

High material and manufacturing cost. Delays in delivery.

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* * *

Lack

of

planning

and

scientific

monitoring

of

jobs.

Lack of reliable vendors for casting and other bought outs. Inadequate after sales services & delay in resolving customers problems higher fixed costs & administrative expenses. * * Poor liquidity position & market credibility. Reference to BIFR.

OPPORTUNITIES * Large investment planned in oil and gas, petrochemicals, chemical industries , etc during 8th plan period. * Growing demand for pumps in all the core sectors. THREATS * Entry of foreign suppliers due to recession in the world market increased competition from private sector companies and entry of more and more foreign companies into Indian market resulting in cut throat competition. Dependence on world bank , other agencies for funds results in large scale import equipment. Project consultants/process licensers imposing preferences on Indian customers leading to imports. Foreign companies quoting dumping prices. Reduction in customs duties has made offer from overseas companies more competitive in comparison to Indian counterparts. Due to financial constraints customers going in for turnkey packages with credit package thus altogether eliminating domestic equipment manufacturers/suppliers. Companys own ex-collaborators are now competing with it. Ability of foreign companies to quote very competitive price. Recession in steel industry is hitting the gas cylinders refineries , power &

* * * *

* * *

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WORKING CAPITAL Working capital, also known as "WC", is a financial metric which represents operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. Net working capital is working capital minus cash (which is a current asset) and minus interest bearing liabilities (i.e. short term debt). It is a derivation of working capital, that is commonly used in valuation techniques such as DCFs (Discounted cash flows). Working Capital = Current Assets Current Liabilities

A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash.

CALCULATION OF WORKING CAPITAL Current assets and current liabilities include three accounts which are of special importance. These accounts represent the areas of the business where managers have the most direct impact:

accounts receivable (current asset) inventory (current assets), and accounts payable (current liability)

The current portion of debt (payable within 12 months) is critical, because it represents a shortterm claim to current assets and is often secured by long term assets. Common types of shortterm debt are bank loans and lines of credit. An increase in working capital indicates that the business has either increased current assets (that is has increased its receivables, or other current assets) or has decreased current liabilities, for example has paid off some short-term creditors. Implications on M&A: The common commercial definition of working capital for the purpose of a working capital adjustment in an M&A transaction (i.e. for a working capital adjustment mechanism in a sale and purchase agreement) is equal to:Current Assets - Current Liabilities

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excluding deferred tax assets/liabilities, excess cash, surplus assets and/or deposit balances.Cash balance items often attract a one-for-one purchase price adjustment WORKING CAPITAL MANAGEMENT Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.

By definition, working capital management entails short term decisions - generally, relating to the next one year period - which are "reversible". These decisions are therefore not taken on the same basis as Capital Investment Decisions (NPV or related, as above) rather they will be based on cash flows and / or profitability One measure of cash flow is provided by the cash conversion cycle - the net number of days from the outlay of cash for raw material to receiving payment from the customer. As a management tool, this metric makes explicit the inter-relatedness of decisions relating to inventories, accounts receivable and payable, and cash. Because this number effectively corresponds to the time that the firm's cash is tied up in operations and unavailable for other activities, management generally aims at a low net count

In this context, the most useful measure of profitability is Return on capital (ROC). The result is shown as a percentage, determined by dividing relevant income for the 12 months by capital employed; Return on equity (ROE) shows this result for the firm's shareholders. Firm value is enhanced when, and if, the return on capital, which results from working capital management, exceeds the cost of capital, which results from capital investment decisions as above. ROC measures are therefore useful as a management tool, in that they link short-term policy with long-term decision making. See Economic value added (EVA).Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the current assets (generally cash and cash equivalents, inventories and debtors) and the short term financing, such that cash flows and returns are acceptable. Cash management. Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs.

Inventory management. Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials - and minimizes reordering costs and hence increases cash flow; see Supply chain management; Just In Time (JIT); Economic order quantity (EOQ); Economic production quantity

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Debtors management. Identify the appropriate credit policy, i.e. credit terms which will attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence Return on Capital (or vice versa); see Discounts and allowances. Short term financing. Identify the appropriate source of financing, given the cash conversion cycle: the inventory is ideally financed by credit granted by the supplier; however, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors to cash" through "factoring".

Growth and performance of BPC Ltd.

Yearly competitive position or working capital PARTICULAR 1. Inventories a) Stores spares 2006-07 2007-08 2008-09 2009-10

and 481.77

219.71

334.36

346.56

b) Raw material c) Stores transit

1039.59

1664.63 122.58

1064.08 238.77

2422.99 1433.38

in 594.12

d) Material with 17.72 fabricator e) Loose tools f) Scrap 47.64 10.51

3.69

2.44

48.91

53.18 78.23 81.99

80.75 60.56 128.66

104.21 27.70 145.44

g) Pattern and 99.62 dies with fabricator h) Finish goods Pumps and 20.56 compressor 55.14 Gas cylinder

10.46 389.33 -76.60

1197 32.33 -76.60

11.33 311.42 -76.60

Less : provision for -1040.48 estimate loss in

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inventory Total inventory

1781.98

4125.79

3530.26

6511.29

Particulars Sundry debtors Cash at bank Loans and Advances Current assets Less: Current Liabilities& Provision Total

2005-06 4236.76 585.55 1031.66 7635.82

2006-07 4676.50 1778.49 937.19 9983.43

2007-08 5407.62 2130.04 1559.25 13222.7

2008-09 6451.00 18933.04 1667.16 30581.46

2009-10 8158.47 16765.62 3159.75 34595.13

2914.35 3442.02 13909.12

3646.20 2007.78 6789.55

3776.99 1729.26 5506.25

4781.77 1470.46 5116.59

10467.10 1239.22 4154.07

WC=(c.a-c.l)

20686.01

23791.91

7716.92

4866.92

3481.75

RATIO RELATED TO WORKING CAPITAL

Particulars C.A C.L Current ratio 009 34595.1 13909.1 .4:1 008 50581.4 6789.55 4.5:1 007 13 5506.5 .4:1 006 9983.43 3116.59 1.8:1 005 7635.8 4154.07 1.8:1

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Quick ratio

2:1

3.9:1

1.6:1

1.4:1

1.4:1

WORKING CAPITAL RATIO (UNIT BPCL, NAINI)

PARTICULARS SALES CURRENT ASSETS

2008 23636.43 34595.13

2009 19459.459 30581.46 0.63

2010 14391.60 13222.7 1.08

CURRENT ASSET 0.68 TURNOVER

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MAJOR FINDING The major findings are revealed by the above statement showing the difference of values from the previous year are as follows: Current asset as well as current liabilities of the company are increasing year after year. The total current assets of the company have increased by 13% in the year 2009 and 31% in the year 2010. The total current liabilities of the company have increased by 25% in 2009 and by 28% in 2010. The total net inventory of the company have increased by 27% in 2009 and 31% in 2010. Creditors shows an increasing trend which hinders the goodwill of the company. The working capital of the company also follows an increasing trend which is not a good sign for the growth of the company, it hinders the growth of the organization .

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CONCLUSION

The report on working capital management and analysis enables to find out the condition of working capital in BPCL, Naini Allahabad.

Conclusion can be easily drawn from the analysis presented in this report. Although there are some aspects on which I have concentrated but I have tried to put over heart and soul to it for being a successful report.

I have worked on various techniques of financial analysis and assessed the financial state of the company.

Few of the conclusion that have been found are as follows :

The organization shows an increasing trend of profitability. There is variability in the price of raw material of product, hence there is no standard policy for the cost of the product. There is a continuous increase in the sales of the company, hence it has bright future prospects. The company shows a healthy balance sheet.

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OBSERVATION & SUGGESTION

OBSERVATIONS These were certain things which were being observed during the tenure of the project. Being a PSU( Public Sector Unit ) BPCL has its traditional problem Of overstaffing. There is a huge Time Lag in procurement of raw materials so the delivery schedule is compliance is a problem. Problem of Red Tapism is there i.e. BPCL has to prove to the government that the bid quoted is the least one. Very few Export - Orders are there . Lack of Aggressive marketing is there. Delivery performance of BPCL is very poor among its competitors except in the Gas Cylinder section. Quality and Technology of Products of BPCL are considered to be superior than its competitors. Sales Promotion activities done by BPCL are very few as compared to its competitors. After sales service and Spare parts back up is not up to the mark. Less Turn Key projects are taken up. Diversification plans are implemented now days. Customer feed back is very rarely taken. Delivery status of the order is only told if asked for. SUGGESTIONS: BPCL- should have export division. Better IT networking and communication Training and development should be considered. Research and development programmes should be initiated. BPCL should make list of fast moving equipments. Better medical facilities should be provided inside the campus. Proper maintenance of sanitary environment within BPCL.

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BIBLIOGRAPHY

BOOKS :

Financial Management I.M. Pandey. Financial Management Jain and Khan.

INTERNAL SOURCES :

Annual report : Bharat Pumps and Compressor Ltd.

WEBSITES :

www.bpcl.com

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