01-01-2013, 03:34 PM
Report on Budgeting Process in ONGC
Budgeting Process.docx (Size: 39.99 KB / Downloads: 30)
ABSTRACT
My internship was carried out at ONGC, Head Quarter Finance, Tel Bhavan, Dehradun,Uttarakhand. I was placed in the budget section in Finance department. I was thoroughlymotivated to learn as much as possible during these crucial eight weeks of my internship. I wasmade to pursue a project of my choice from a number of choices given by my corporatesupervisor. I chose to undergo a project of budgeting process in ONGC.I was regular in attending all the sessions conducted by my corporate supervisor. I did everythingas directed by my corporate supervisor. I learnt many invaluable things about how things aredone in the corporate environment. The working environment of ONGC as an employer is justtremendous. All the people work together as if they are a family at ONGC. Everyone is ready tohelp at anytime. I was greeted very auspiciously with every person whom I tried tocommunicate. The most important thing which I observed is the teamwork. Even at manageriallevel, team work with the seniors, subordinates as well as juniors is of utmost importance.Another important lesson which I learnt through this industry interface is how to deal withdifferent things diplomatically. I was told not to behave in an aggressive manner especially whensitting at a managerial position in an organization.Through my project, I learnt that ONGC is an organization with very strong fundamentals. Thecompany has been performing outstandingly in the oil and gas industry and is contributing a lotto the Government of India. The company is very strong in its financials as compared to its peersin the industry. The budgeting process at ONGC is without any kind of errors. Each and everyexpense is cross checked many times at different levels before actually executing it. The projectgave me an exhaustive insight on the working of Public Sector Undertakings.
COMPANY PROFILE
Background
Oil and Natural Gas Corporation Limited (hereinafter referred to as “ONGC” or “the Company”)is the leading Oil and Gas Company in Hydrocarbon sector in India. It is engaged in theexploration and production of Oil, Gas and other related petroleum products. The Company wasinitially established as a commission in 1959 by an act of parliament with the objective of exploration, development, production and distribution of hydrocarbons in the country. ONGCcame into existence in 1994 and all the assets and liabilities of the commission were transferredto the Company.ONGC is the flagship company of India, and making this possible is a dedicated team of nearly40,000 professionals who toil round the clock. It is this toil which amply reflects in the performance figures and aspirations of ONGC. Over 18,000 experienced and technicallycompetent executives mostly scientists and engineers from distinguished Universities /Institutions of India and abroad form the core of manpower. They include geologists,geophysicists, geochemists, drilling engineers, reservoir engineers, petroleum engineers, production engineers, engineering & technical service providers, financial and human resourceexperts, IT professionals and so on.The liberalized economic policy, adopted by the Government of India in July 1991, sought toderegulate and de-license the core sectors (including petroleum sector) with partialdisinvestments of government equity in Public Sector Undertakings and other measures. As aconsequence thereof, ONGC was re-organized as a limited Company under the Company's Act,1956 in February 1994.
Overview of the Company’s business
At present, ONGC is a Public Sector Company with Central Government holding 74.14 percentof total equity shares. ONGC is a major producer of Oil & Gas in India and the biggest wealthcreator in the recent years. ONGC has its registered Office and Corporate Office at New Delhi.Oil and Natural Gas Corporation Limited is the largest Exploration and Production Company inIndia. The principal activities of ONGC include acquisition of mineral interests in properties,exploration (including prospecting), development, production, transportation and marketingcrude oil and natural gas. It also produces several value added products (VAPs) like LiquefiedPetroleum Gas (LPG), Naphtha, Superior Kerosene Oil (SKO), Ethane-Propane (C2-C3), HighSpeed Diesel (HSD), Sulphur, Low Sulphur Heavy Stock (LSHS), ATF at their crude & gas processing facilities
PROFITABILITY RATIOS
Profitability ratios are calculated to measure the operating efficiency of the company. Besidesmanagement of the company, creditors and owners are also interested in the profitability of thefirm. Creditors want to get interest and repayment of principal regularly. Owners want to get arequired rate of return on their investment. This is possible only when company earns enough profit.
GROSS PROFIT MARGIN:
The gross profit margin reflects the efficiency with which management produces each unit of product. Ahigh gross profit margin relative to the industry average implies that the firm is able to produce atrelatively lower cost. It is a sign of good management. A gross margin ratio may increase due to; i)higher sales prices, ii)lower cost of goods sold, iii)a combination of variations in sales prices and costs, iv)anincrease in the proportionate volume of higher margin items.A low gross profit margin may reflect higher cost of goods sold due to the firm’s inability to purchase rawmaterials at favorable terms, inefficient utilization of plant and machinery, or over investment in plant andmachinery resulting in higher cost of production.