SUMMER TRAI NI NG REPORT

ON

A Study on the OIL EXCHANGE ANALYSIS.

AT
HINDUSTAN PETROLEUM CORPORATION LTD.
8, Shoorji Vallabhdas Marg, Ballard Estate,
MUMBAI, MAHARASHTRA.

PREPARED BY
SONAM BALIRAM KANGULE
BATCH 2011-2013.




AKNOWLEDGEMENT

I owe my sincere gratitude to Hindustan Petroleum Corporation Limited, for providing
me the opportunity to undergo summer training on the project titled A brief study on
OIL EXCHANGE ANALYSIS. It was a great learning experience in the corporation
environment.
I am thankful to Mr. P.R.Lokrey Chief Finance Manager PVA and Oil Exchange
for his support, co-operation provided to me during the training.
I am highly indebted to my project guide, Mr. K.Y.PATIL (Oil Exchange Manager),
who gave an insight in to the various aspect data release and their guidance throughout
the project.
The successful completion of this training wouldnt have been possible without the
cooperation and coordination of many people who not only help me whenever I got
hindered in between but also guide me. Such kind of cooperation extended by all has led
to fruitful completion of training period.


SONAM B. KANGULE




ABSTRACT
TITLE OF THE PROJECT: A brief study on OIL EXCHANGE ANALYSIS

NAME OF THE COMPANY: Hindustan Petroleum Corporation Limited, Mumbai

NAME OF THE INSTITUTE: Indira Institute Of Business Management, Vashi

NAME OF THE GUIDE: Mr. K.Y.PATIL
Manager, Finance (Oil Exchange Dept.)

PROJECT PERIOD: 3/5/2012 to 2/7/2012

DATA SOURCE: Secondary data

MAJOR OBJECTIVES OF THE STUDY:
Analyzed the purchase & sales data for the past three years.
Studied the Analyzing & Validation procedure in detail.









EXECUTIVE SUMMERY

The Oil Exchange is a process of purchase and selling of petroleum products between oil
companies where an Oil Marketing company (OMC) supplies petroleum products in
regions where it does not have its own presence.
Oil exchange transactions have huge financial implications and a correct understanding
of process and practices is critical to ensure cash flow management and correct
accounting.
Complexity of Oil Exchange transaction has increased the manifold with deregulation
and entry of private players. Besides the introduction of ERP and B2B processes have led
to significant changes in practices and time schedule, thereby placing greater onus on all
the functionaries to correctly understand and operate various modules.
Oil exchanges are a regular feature of the operations of oil marketing companies. The
cost of this manual process of settlement / reconciliation of a large volume of petroleum
products runs into Crores of Rupees and requires a settlement time of several months.
At the end of every month, a settlement is carried out based on paper based joint
certificates with each participating company which involves reconciliation of total
products sold / purchased from each other and consequently financial settlement for
arriving at the amount payable/receivable.



INDEX
SR NO. CONTENT
1 Introduction of Petroleum Industry
2 Major Oil & Gas Companies in India
3 HPCL
3.1 Introduction
3.2 HPCL Roots
3.3 Vision, Mission statement
3.4 Joint Venture & % holding
3.5 HPCL Products
3.6 HPCL Business
3.7 HPCL Refinery
3.8 Other Infrastructure Of HPCL
3.9 Corporate Social Responsibility
4 Oil Exchange
4.1 Introduction
4.2 Document Flow in oil Exchange
4.3 Oil Exchange Procedure
4.4 Price Elements Considered In Oil Exchange Transaction
4.5 Oil Exchange Transactions
i. 2009-2010
ii. 2010-2011
iii. 2011-2012
4.6 Purchase & Sales Statements
4.7 Validation
i. Introduction & Objective
ii. Steps
iii. Validation- year 2011-2012
5 Learning & Outcome
6 Bibliography




Introduction of Petroleum Industry in India
The petroleum industry includes the global processes of exploration, extraction, refining,
transporting (often by oil tankers and pipeline), and marketing petroleum products.
The oil Industry is a very important industry, it has been observed that whenever the oil
prices increase the price of all products also increases. The fluctuation in the oil pricing is
directly and indirectly affected on the all other products.
Indian Petroleum Industry started its journey during the fiscal year 1890 in the north-
eastern provinces of India especially in the place called Digboi. The production of
petroleum along with the exploration of new sites was primarily restricted to north-
eastern India up to the 1970s.
After the inception of the Liberalization-Privation-Globalization (L-P-G) policy in the
month of July, 1991, the Government had started allowing the Indian Petroleum Industry
to go into private as well as government-private joint venture.
The consumption of petroleum products during 2010-11 was 141.785 million metric
tonnes (including sales through private imports) which is 3.60% higher than that of
138.196 million metric tonnes during 2009-10.
The refining capacity in the India increased to 187.386 million metric tonnes per annum
(MMTPA) as on 1.4.2011 from 183.386 MMTPA as on 1.4.2010. Crude oil production
during 2010-11at 37.71 million metric tonnes is 11.91% higher than 33.69 million metric
tonnes produced during 2009-10.
Gross Production of Natural Gas in the country at 52.22 billion cubic metres during
2010-11 is 9.95% higher than the production of 47.50 billion cubic metres during
2009-10.



Brief introduction of consumption of petroleum products in India.
Consumption of Petroleum Products (Million Tonnes)
2010-2011 2009-2010 % Y-o-Y growth
LPG 14.4 13.1 9.6%
Motor Spirit (Petrol) 14.4 12.8 12.1%
Naphtha 11.5 10.1 13.9%
Aviation Turbine Fuel 5.1 4.6 9.1%
Superior Kerosene 8.9 9.3 -3.8%
High Speed Diesel 60.4 56.2 7.3%
Light Diesel Oil 0.4 0.5 -6.0%
Lubes 2.6 2.5 0.8%
Furnace Oil / LSHS 11.4 11.6 -1.7%
Bitumen 4.7 4.9 -6.0%
Others 10.7 11.9 -11.1%
Total 144.4 137.8 4.8%


Industry Structure
The Petroleum industry divides into five sectors.
Upstream (exploration, development and production of crude oil or natural gas)
Downstream (oil tankers, refiners, retailers and consumers)
Pipeline
Marine
Service and supply




Major Oil and Gas companies in India
1. RIL (Reliance Industries Limited):- The Flagship Company of the Ambanis and Indias
largest Private Company Reliance Industries is also Oil and Gas Giant .The Company has seen
very sharp growth in the last decade and is diversifying into Retail .With a market cap
exceeding $30 billion it is Indias most valued company.

2. ONGC (oil and Natural gas Corporation):- ONGC ranks 3rd in Oil & Gas Exploration
& Production (E&P) Industry globally with a market cap of Rs. 235,000 Crores. It cumulatively
produced 803 Million Metric Tonnes of crude and 485 Billion Cubic Meters of Natural Gas
from 111 fields.

3. GAIL India:- GAIL (India) Limited, is Indias flagship Natural Gas company, integrating
all aspects of the Natural Gas value chain right from exploration to marketing. It is a well-
managed fast growing company in one of the best sectors in India with high competitive
barriers.

4. BPCL (Bharat Petroleum Corporation Limited):- BPCL is major distributor of petroleum,
cooking gas and diesel in the Indian market The Company has a market capitalization of Rs.
21,000 crores. Bharat Petroleum produces a diverse range of products, from petrochemicals and
solvents to aircraft fuel and specialty lubricants and markets them to hundreds of industries and
several international and domestic airlines.

5. IOCL (Indian Oil Corporation Limited):- The Company covers the entire hydrocarbon
value chain from refining, pipeline transportation and marketing of petroleum products to
exploration & production of crude oil & gas, marketing of natural Gas and petrochemicals. With
a market capitalization of Rs. 75,000 crores, it is in the Fortune Global 500 listing, ranked at
the 125th position in the year 2010.

6. HPCL (Hindustan Petroleum Corporation limited):- One of the major Oil and Gas
PSUs with a market capitalization of Rs. 11,000 crores. The company owns and operates the
largest Lube Refinery in the country producing Lube Base Oils of international standards, with a
capacity of 335 TMT





HPCL
(HINDUSTAN PETROLEUM CORPORATION LIMITED)
Hindustan Petroleum Corporation Limited (HPCL) is an Indian state-
owned oil company headquartered at Mumbai, India. HPCL is ranked #336 globally
in Fortune Global 500 list in 2011. It is Mega Public Sector Undertaking Company.
HPCLs vast marketing network consists of its zonal & regional offices facilitated by a
supply & distribution infrastructure comprising terminals, pipeline networks, aviation
service stations, LPG bottling plants, inland relay depots & retail outlets, lube and LPG
distributorships. HPCL accounts for about 20% of the market share and about 10% of the
nations refining capacity.
HPCL (Navratna)
Navratnas, mean nine precious jewels. A pride of place accorded by the Government of
india to nine public sector companies in recognition for their excellence services, HPCL
is a navratna, because of its infrastructure and large network. Added to which are the
mergers and takeovers as well as the large amount of capital,which has seen the company
evolve into Indias second largest oil company. Above all this lays the fact that HPCL
believes itself to be more than just about oil. In its commitment to people and the natural
environment.
Company emerge through following takeovers, (HPCL Roots)

1952
1962
1974
1976
1979


1952: The Company was incorporated in the name of Standard Vacuum Refining
Company of India Limited on July 5, 1952.
1962: On 31st March, 1962 the name was changed to ESSO Standard Refining
Company of India Limited.
1974: Hindustan Petroleum Corporation Limited comes into being after the takeover
and merger of while Esso and Lube India Undertaking
1976: Caltex Oil Refining Ltd. is taken over by the Government of India and
subsequently merged with HPCL in 1978.
1979: Kosan Gas Company, the concessionaries of HPCL in the domestic LPG
market, are taken over and merged with HPCL.
HPCL thus comes into being after merging four different organizations at different
points of time.





COMPANYs VISION
To be a world class Energy Company known for caring and delighting the customers
with high quality products and innovative services across domestic and international
markets with aggressive growth and delivering superior financial performance. The
company will be a model of excellence in meeting social commitment, environment,
health and safety norms and in employee welfare and relations.
COMPANYs MISSION
HPCL, along with its joint ventures, will be a fully integrated company in the
Hydrocarbons sector of exploration and production, refining and marketing; focusing on
enhancement of productivity, quality and profitability; caring for customers and
employees; caring for environment protection and cultural heritage.
Joint Venture % Holding
Company % Holding
HPCL-Mittal Energy Limited 49
Hindustan Colas Limited (HINCOL) 50
South Asia LPG Company Pvt. Limited (SALPG) 50
Prize Petroleum Company Limited 50
Mangalore Refinery and Petrochemicals Limited (MRPL) 16.95
Bhagyanagar Gas Limited 25
Petronet MHB Limited 28.77
Avantika Gas Limited 25





Subsidiary:-
1. HPCL Biofuels Limited 100% holding
2. Creda HPCL Biofuel Limited 74% holding


Joint Ventures
1. HPCL-Mittal Energy Limited: - HPCL-Mittal Energy Limited between Hindustan between
Hindustan petroleum Corporation limited and Mittal Energy investments Petroleum limited
(MEI), Singapore, an L N Mittal group of companies, for implementation of a grassroot refinery
project of 9MMTPA capacity at Bhatinda in the state of Punjab. Both partners hold 49% equity
stake in HMEL and balance 2% is held by financial institutions i.e. IFCI Limited and state bank
of India.

2. Hindustan Colas Limited (HINCOL):- Hindustan Colas Limited (HINCOL) is a joint
venture company promoted by HPCL and Colas S.A. of France and was incorporated on July
17, 1995. HINCOL presently has seven manufacturing plants across India and the eight Plants
are in final stages of construction in the state of West Bengal. HINCOL products find extensive
use in the construction industry. HINCOL recorded a production of 159.39TMT with turnover
of Rs. 357.97 crores and earned net profit (PAT) of Rs.28.38 crores.

3. South Asia LPG Co Pvt Ltd.:- South Asia LPG Co Pvt Ltd.(SALPG), is a Joint Venture
Company with M/s. Total Gas and Power India (a wholly owned subsidiary of Total, France)
has commissioned an underground cavern Storage of 60 TMT capacity and associated receiving
& dispatch facilities at Vishakhapatnam in Dec, 2007. SALPG maintained 50% dividend for
second consecutive year (2010-11).

4. Prize Petroleum Company Limited (PPCL):- HPCL, in partnership with ICICI and HDFC,
has formed this Joint Venture E & P Company for Participating in exploration and production of
hydrocarbons on October 28, 1998. Over the years, Prize Petroleum Company Limited (PPCL)
has built up a portfolio of 2 producing fields and one exploration block.







5. Mangalore Refinery and Petrochemicals Limited (MRPL):- HPCL holds equity of
16.95% in the 9 MMTPA Mangalore Refinery and Petrochemicals Limited (MRPL). HPCL &
MRPL have been exchanging intermediate process streams between their refineries to
supplement efforts to meet new environmental norms in respect of products like MS and HSD
on mutually agreed terms. MRPL maintained dividend of 12% for 2010-11.


6. Bhagyanagar Gas Limited: - Bhagyanagar Gas Limited (BGL) was incorporated on August
22, 2003 as a Joint Venture Company by GAIL (India) limited& HPCL for distribution and
marketing of environmental friendly fuels (green fuels). BGL now operates 15 CNG stations- 5
at Hyderabad, 8 at Vijayawada and 1 each at Kakinada and Rajahmundry.

7. Petronet MHB Limited:- HPCL, along with Petronet India Limited (PIL) promoted Petronet
MHB Limited (PMHBL) for construction of Mangalore-Hassan-Bangalore Pipeline at a cost of
Rs.667 crores with debt equity ratio of 3:1. The Joint venture Company was incorporated on
July 31, 1998. HPCL & ONGC holds the 28.77% equity stake and PILs equity holding is
7.90%.

8. Avantika Gas Limited: - Avantika Gas Limited (AGL) was incorporated on June 07, 2006
as a Joint Venture Company by GAIL and HPCL distribution and marketing of environmental
friendly fuels (green fuels). AGL now operates 9 CNG stations 7 daughter stations (5 in
Indore and 2 in Ujjain) and 1 mother station at Indore and 1 on line station at Indore.
















HPCL PRODUCTS:-
Products End uses
Liquefied Petroleum Gas Domestic / industrial fuel
Motor Spirit/ Gasoline / Petrol Automobiles Fuel
Propylene Petrochemicals feed stock
Hexane Edible Oil extraction
Solvent For paint industry
Naphtha Petrochemicals / fertilizers
Motor Turpentine Oil Solvent for paints
Superior Kerosene Oil Cooking Fuel / Illumination
Aviation Turbo Fuel Aviation fuel
High Speed Diesel Transport vehicles / Locomotive Engines
Light Diesel Oil Agricultural pumps
Jute Batching Oil Solvent in jute industry
Railex Railway Axils Oil
Rubber Processing Oil Solvent in rubber/ Tyres industry
Industrial Fuel Oil Industrial furnaces / Bunker fuel
Low Sulphur Heavy Oil Industrial furnaces
Bitumen Road Paving / Insulator / Paints
Neutral Oils Crank Case Lubrication of IC engines
Industrial Oils Lubrication of Hydraulic pumps







HPCL BUSINESS:
HPCL Operates in four major sectors:-

Retail
Direct Sales
LPG
Aviation









HPCL
Business
Operations
Retail
Direct Sale
LPG
Aviation


HPCL Refineries:-
Mumbai Refinery

Mumbai Refinery is a Lube based refinery with the highest lube production capacity in
India. It is one of the most complex refineries in the country, is constructed on an area of
321 acres.
During 2010-11, Mumbai refinery achieved crude throughput of 6.55 MMT as against
installed capacity of 6.50 MMT.
The fuel and loss of 7.6 wt% for the year was lower than Annual plan of 8.8% for the
year.
The Adjusted Distillate yield at 72.4% was higher than MoU Excellence target of 70%.
Mumbai Refinery achieved Specific Energy Consumption (MBTU/BBL/NRGF) 0f 91.1
against MoU Excellence target of 97.0% for the year 2010-11.

Visakh Refinery

During the year 2010-11, Mumbai refinery achieved crude throughput of 8.20 MMT as
against installed capacity of 8.3 MMT.
The fuel and loss of 7.3 wt% for the year was lower than Annual plan of 7.7% for the
year.
The Adjusted Distillate yield at 71.5% was higher than MoU Excellence target of 70%.
Mumbai Refinery achieved Specific Energy Consumption (MBTU/BBL/NRGF) 0f 86.3
against MoU Excellence target of 90.0% for the year 2010-11.


Other Infrastructure of HPCL:-

Regional offices 85
Terminals / Installations / TOPs 37
Depots 92
ASFs 13
Retail outlets 7313
SKO/ LDO Dealers 1648
LPG Bottling Plants 43
LPG Distributors

2202













CORPORATE SOCIAL RESPONSIBILITY
HPCLs CSR model based on Creating Shared Value. The Shared Value model is based on
the concept that corporate success and social welfare are independent. HPCLs approach has
been based on triple bottom line approach (people, planet and profit).
Major Projects:-
Swavalamban: - This project is for vocational training to unemployed youth including school
drop-outs by imparting various skills like Refrigeration, AC, Fabrication, Plumbing, Basic IT,
Computer, and Beauty Culture & skin care.

Unnati: - The objective of this project is to Promoting Computer Education and literacy to the
underprivileged children in semi urban and rural areas.

Nanhi kali: - This program focuses on education of girl children in remote tribal villages.

Muskan:- The objective of this program is to taken care of street/run away children by placing
them in shelter homes for bringing back their lost childhood. Providing them foods, clothing,
shelter, healthcare, counseling, non-formal education, and vocational training and giving them
an opportunity to live dignified lives as future citizens.

Navjot: - Supports Child Health and Welfare at Resettlement colony at Bawana in Delhi. The
residents are provided health care facilities, Referral services through regular health check-up
camps, Rehabilitation for slum families and training program.

Suraksha: - This program is for preventing and spreading awareness of HIV/AIDS. This
program executed through HPCL Retail outlets. HPCL Opened up khushi clinic, there is STI
diagnosis and treatment along with bringing awareness on safe sex practices.

Sushrut hospital: - Sushrut hospital is a Multispecialty Hospital and charitable institution at
chembur, supported by HPCL. The objective is to make health care affordable to the public at
large.

Chale chalo: - It is a community based program in villages and slums. The objective of this
program is to make permanent irreversible change in the lives of underprivileged Indian
children and address the root cause that I pact childrens lives- gender, caste, displacement,
livelihood etc.

OIL EXCHANGE





















HPCL



OMC 1
OMC 2
Tank Truck
Pipeline
Rail Wagons





Introduction
Oil exchange is a business activity, were purchase & sale of oil or petroleum products
made between the Oil Marketing Companies (OMC). Oil Exchange is a mutual
agreement between the Oil Marketing Companies (OMC).
The need for oil exchange arose mainly because of following reasons
To bridge the gap between supply and demand
To save on logistic cost
To share infrastructure facilities






Need for Oil
exchange arose
because of.......
To bridge the
gap between
supply and
demand
To share
infrastructure
facilities
To save on
logistics cost


Document Flow in Oil Exchange












The above diagram shows the document flow in Oil exchange transactions. There are two
transactions made, that are purchase and sale of Oil or petroleum products.
When company makes an oil exchange sale, product delivered report (PDR) is prepared
and in the cases of purchase, product received report (PRR) is prepared in the JDE.
In the PDR, the credit transactions transferred to P & L A/c and debit transactions are
transferred to Daily A/c. In the PRR, the debit transactions transferred to P & L A/c and
credit transactions are transferred to Daily A/c.
After making Daily A/c and P & L A/c transactions, Monthly A/c is made on the basis
Joint Certificate (JC) in purchase and sale transaction.
After Monthly A/c, settlement is made on the basis of Debit Note (for sale transaction)
and Credit Note (for purchase transaction).
PDR
Monthly
A/c.
Daily A/c.

Daily A/c.

Monthly A/c.

PRR
Settlement
A/c.
Sale
Purchase
Dr.
JC
Cr.
JC
Debit
Note
Credit
Note
Cr.
Dr.
P & L. A/c.

P & L. A/c.



Oil exchange process
Agreements / MOUs with oil exchange companies:
Agreements/MOUs signed with oil marketing companies / standalone refineries forms
the basis of all activities involved in oil exchange transactions between companies such
as IOC/BPC/RIL/ONGC/EOL defining the scope of sale and purchase of products,
hospitality/safekeeping assistance and LPG bottling assistance. These agreement/MOUs
are finalized at HQO level.
Monthly distribution plan (MDP)/Industry Logistic plan (ILP) finalization:
1. As envisaged in the Agreements, a monthly MDP/ILP is prepared by oil companies at
HQO level as per the demand and supply position and copies of the MDP/ILP figures are
forwarded to zones and locations operations department about a week prior to the
starting of the month.
2. MDP/ILP gives product wise, mode wise and source wise quantities to be supplied to
the locations. It is the base document for daily planning.
Placing of indents for product exchange:
Basis the MDP/ILP allocations, oil companies place the indents at various locations for
the product requirements. Indents should clearly specify inter-alia product name, end use
(e.g. unbranded MS, MS intended for branding, domestic LPG, and ND LPG), quantity,
mode of delivery (e.g. Tank truck, Tank wagon) and destination.
Preparation of PDRs / PRRs:
Basis the indent, oil companies makes the product deliveries through indented modes of
delivery. Thus, HPC when makes an oil exchange sale, product delivered report (PDR) is
prepared and in the cases of purchase, product received report (PRR) is prepared in the
JDE.




Preparation and finalization of joint certificates (JC):
1. Joint certificate is a document which gives summary of sales (PDRs) / purchase
(PRRs) for a specific period. JC is normally prepared on fortnightly basis unless there are
price revisions or duty changes falling within a fortnight.
2. JCs are jointly signed by the location representatives of the selling and buying
company indicating acceptance of both parties to the transactions and are sent to zonal oil
exchange office for the purpose of financial settlement.

Compilation of debit/credit notes:

Settlement zone on receipt of joint certificates/receipts and issues statements from the
locations complies the same and arrive at the settlement amount to be realized from the
companies. Some procedure is followed by other oil companies also. This forms the basis
for settlement between OMCs.

Settlement:
A system of exchange of deposits exist between oil marketing companies whereby HQO
of OMC exchange deposits for the net realizable amount basis actual transactions booked
in ERP on the prescribed due dates. Once the final debit/credit notes are sent by zonal
offices, HQO of oil companies proceed with the final settlement for the month.
Payment to stand alone refineries:
In the case of purchases from standalone refineries, settlement takes place on a
daily/weekly/fortnightly basis in line with individual agreement/MOUs based on certified
invoices / joint certificates received from locations. It should be ensured that purchases
from standalone refineries are updated in JDE before releasing of payments.




Price elements considered in the Oil Exchange Transactions:-
Oil exchanges are on actual cost basis.
Basic price - nearest port IPP/TPP. That is calculated as per the terms and
Conditions.

IPP freight Pipe line, Railway & Road
- Pipe line - MS/HSD - 75% of freight for Railway distance ;
- SKO 90% of freight for Pipe line distance
- Railway & Road on actual basis.
Terminalling charges - basically charges for storage & distribution facilities.
Rates varies with mode of delivery & product

Terminalling Charges
Product Mode Rate/Kl @ Natural
MS TT/TW 68.31
MS Local P/L 10.63
HSD TT/TW 79.66
HSD Local P/L 12.40
SKO TT/TW 75.02
SKO Local P/L 11.67
LPG varies depending on supply point
Nil TC on Coastal Shipment

Inventory Carrying Cost
Charged for supplies ex TOPs towards working capital
o Eight days quantities.
o Applying SBI PLR rate applicable on 1
st
of the month
o Computed on IPP+ED




Excise duty - as per rates applicable to product.

MS/HSD specific rates

MS Unbranded MS Branded HSD
Unbranded
HSD Branded
14780.50/Kl 15965.00/KL 2060.00/KL 5922.50/Kl

SKO (PDS) & LPG (DOM.)- NIL
CST/VAT/LST
CST/VAT/LST settlement is to be made at applicable rates
CST should be absorbed by the Seller for MS, HSD, SKO (PDS) and LPG
(Dom.).
For other products, CST settlement is based on specific understanding on this
matter.

Coastal Settlements
Coastal Settlements are made on destination port coastal price declared by Pricing
Dept., which is arrived at by deducting following elements from destination port
RTP
Wharfage, Insurance & Ocean loss included in destination RTP
Notional Coastal Freight (NCF) to destination port.

Service tax applicable on

LPG filling charges
Hospitality and safekeeping charges
Pipeline charges
Terminalling charges



CALCULATION OF PRICING FOR 1
st
FORTNIGHT OF MAY 2012

PRODUCT MS HSD SKO LPG ATF
LOCATION Udaipur Karur shimoga Palghat Panipat
CONNECTED PORT Kandala Kochi Mangalore kochi Kandala
LOCATION CODE 21583 11956 11858 12649 13560
port RTP 42538.03 44959.39 43927.66 56459.58 43210.48
IPP Freight 1312.03 479.12 908.3 0 0
TAIPP 43850.06 45438.51 44835.96 56459.58 43210.48
Add: Exercise duty 15713.65 2060 0 1258.11 3560.54
Sub Total 59563.71 47498.51 44835.96 57717.69 46771.02
ICC 0 155.69 0 0 0
TC/PL 0 12.55 0 0 0
TC 69.48 0 76.05 0 0
Octroi 0 0 0 0 0
TOTAL 59633.19 47666.75 44912.01 57717.69 46771.02





The above table shows the calculation of pricing for the 1
st
fortnight of May 2012.
The location, location code and port connected to the location of the products is
mentioned in the table.
Port RTP:
Port linkage RTP is the price calculated from the RTP BCSP table.
IPP Freight
IPP Freight charges calculated from the IPP Freight table.
For road it is calculated on actual basic price.
Exercise Duty calculated as follows:
1) MS:
14731.70+2%+1%
14731+ 294.634+17.317 = 15173.65

2) HSD: Exercise duty for HSD branded is fixed i.e 2060
2000+2%+1%
2000+40+20 = 2060

3) ATF:

8%+2%+1%
8% on port linkage RTP
3456.8384+69.136768+34.568384 = 3560.543552

4) There is no Exercise duty on SKO and LPG.




Terminalling Charges for PL/RD
The Terminalling Charges are always fixed. They are added to the price depends on the
mode of transaction.
MS product exchange transaction done through the Road so Road charges are added, i.e
69.48.
For HSD: Pipe line charges: 12.55
For SKO: Road charges: 76.05

ICC (inventory Carrying Cost) is calculated when the mode of oil exchange is Pipe line

The formula for calculating ICC is:
ICC =
Step 1: TAIPP+ED = Sub Total
Step 2: Sub-total * 8/360days
Step 3: Step 2 amt * 14.75 %( PLR Rate)

The amount which we got from step 3 i.e. ICC (Inventory Carrying Cost).

After adding all the above vales or figures we got the total amount.


Findings:
RTP price is fixed for each product and port.
If the location place is different, but the connected port and product are same then the
port RTP price remain same for those locations.
If the mode of oil exchange is pipe line then only the ICC calculated on that product
Calculation of fortnight is the primary calculation which is essential for validation
procedure











ANALYSIS

OIL EXCHANGE TRANSACTIONS

YEAR 2009-2010
Purchases - Product Wise

Product MT Rs in Crore
ATF 729905.14 2256.98
HSD 9321853.21 31513.23
LPG 3918623.20 6228.82
MS 2550833.14 12787.29
SKO 1597179.98 4598.92
Total 18118394.67 57385.24



4%
51%
22%
14%
9%
Purchase percentage
ATF
HSD
LPG
MS
SKO

Product wise Sales 2009-10


Product MT Rs in Crore
ATF 630764.60 1938.89
HSD 3514916.63 11962.72
LPG 468986.40 793.55
MS 966351.22 4838.39
SKO 653031.15 1880.39
Total 6234050.00 21413.94





10%
56%
8%
16%
10%
Sales Percentage
ATF
HSD
LPG
MS
SKO
















0.00
500000.00
1000000.00
1500000.00
2000000.00
2500000.00
3000000.00
3500000.00
4000000.00
4500000.00
BPCL ESSAR GAIL IOCL MRPL ONGC RIL
Purchase
sales
Company Wise Oil exchange transactions 2009-10


MT
Company Purchase sales
BPCL 1964723.76 1888451.93
ESSAR 3352558.83 185367.65
GAIL 322359.17 -
IOCL 3386390.62 4056086.62
MRPL 2774312.63 -
ONGC 495592.73 -
RIL 3212906.54 56.87
Total 15508844.28 6129963.06

YEAR 2010-2011

Purchase - product wise


Product MT Rs in Crore
ATF 687681.97 2591.08
HSD 10623007.06 45288.15
MS 2142465.01 12474.82
SKO 1076342.38 3686.75
LPG 3490350.13 5871.17
Total 18019846.55 69911.96




4%
59%
12%
6%
19%
Purchase Percentage
ATF
HSD
MS
SKO
LPG

Product wise Sales 2010-11


Product MT Rs in Crore
ATF 570881.82 2152.28
HSD 3566252.37 15437.81
MS 1095968.55 6414.41
SKO 631863.07 2208.52
LPG 411949.05 881.72
Total 6276914.86 27094.75






9%
57%
17%
10%
7%
Sales Percentage
ATF
HSD
MS
SKO
LPG




MT
Company Purchases Sales
BPCL 1995381.06 2003471.459
ESSAR 3281231.67 106469.136
GAIL 327094.38

IOCL 3428740.51 4081757.168
MRPL 2430543.53

ONGC 482166.67

RIL 3599633.27 25518.31
Total 15544791.09 6217216.07



0.00
500000.00
1000000.00
1500000.00
2000000.00
2500000.00
3000000.00
3500000.00
4000000.00
4500000.00
BPCL ESSAR GAIL IOCL MRPL ONGC RIL
Purchases
Sales
Company Wise Oil exchange transactions 2010-11


YEAR 2011-2012

Purchase - Product wise


Product MT RS in Crore
ATF 738376.01 3857.85
HSD 12000485.51 63200.10
MS 2177099.66 15667.87
SKO 947704.12 4657.50
LPG 3143511.28 6049.36
Total 19007176.58 93432.69



4%
63%
11%
5%
17%
Purchase Percentage
ATF
HSD
MS
SKO
LPG


Product wise Sales 2011-12


Product MT Rs. in Crore
ATF 610091.11 3194.47
HSD 3665443.24 19420.18
MS 1138262.66 8095.87
SKO 539503.96 2640.74
LPG 506338.10 1301.86
Total 6459639.09 34653.12




9%
57%
18%
8%
8%
Sales Percentage
ATF
HSD
MS
SKO
LPG


Company Wise Oil exchange transactions 2011-12


MT

Company Purchases Sales
BPCL 2106388.59 2083151.34

ESSAR 2877083.55 30104.99
GAIL 326041.04 -

IOCL 3533219.06 4158812.08
MRPL 2242915.55 -

ONGC 469112.89 -
RIL 5080136.75 13047.06

Total 16634897.43 6285115.47


0.00
1000000.00
2000000.00
3000000.00
4000000.00
5000000.00
6000000.00
BPCL ESSAR GAIL IOCL MRPL ONGC RIL
Purchases
Sales

Validation
One of the most important activities of oil Exchange dept. is validation exercise.
Objective:- The main objective of this exercise is to ensure that 100% sale, purchase and
other physical transactions with oil companies are accounted, valuation of these
transactions are done correctly, compare the same with the values generated in JDE
debit/credit Notes and take necessary corrective action for the differences.
Following are the steps which consider while doing the Validation:-
1) Oil Exchange purchase/sale Report: - This report is taken from the Oil Exchange
Portal based on the actual ERP data, which is prepared via PDR, PRR, and each zonal
transaction. Oil Exchange purchase/sale Report consists of the purchase and sales
transactions done by the company in the different zones or locations. Oil Exchange
purchase/sale Report is essential for preparing the data which is needed for analyzing
the oil Exchange transactions.

2) Data: - Data from Oil Exchange portal is converted into various formats with the help
of VLOOK-UP. Data is prepared and used for various MIS reports.

3) Pivot Table: - Pivot table is an excel function, which is used for summarized the data.
This is a very important tool for analyzing purchase and sale in various ways such as
company wise/product wise in Quantity/amount as well as individual location
comparison and analysis. With the help of Pivot Table, comparative prices also can be
ascertained for validation.

4) RTP BCSP Table: - RTP BCSP table contains the fortnightly price of the product, I e
from - 1 to 15 date of the month and second period- 16 to 30/31 last date of the month.

5) Oil Exchange Price: - RTP price calculate from the RTP BCSP Table. RTP + IPP
(Import parity Price) Freight = TAIPP. Excise Duty, ICC (Inventory Carrying Cost)
and Terminalling charges added in the TAIPP. Total value is arrived after adding the
all values after adding the applicable local taxes.
Year 2011-2012 - Validation Statement

Purchase

PRODUCT RTP IPP FREIGHT TAIPP
Exercise
Duty
ICC TC Total Average price Difference
MS 36779.79 411.37 37191.16 15173.65

69.48 52434.29 53426.37 992.08
HSD 40438.14 477.49 40915.63 2060

80.64 43056.27 43638.68 582.41
SKO 38396.5 494.81 38891.31 -

76.05 38967.36 39203.99 236.63
LPG 43933.76 - 43933.76 -

208 44141.76 43497.28 644.48
ATF 36009.25 - 36009.25 2967.1622

75.88 39052.29 39620.01 567.72

Sales

PRODUCT RTP IPP FREIGHT TAIPP Exercise Duty ICC TC Total Average price Difference
MS 36779.79 411.37 37191.16 15173.65

69.48 52434.29 53180.23 745.94
HSD 40438.14 477.49 40915.63 2060

80.64 43056.27 43924.54 868.27
SKO 38396.5 494.81 38891.31 -

76.05 38967.36 39109.74 142.38
LPG 43933.76 - 43933.76 -

208 44141.76 44472.92 331.16
ATF 36009.25 - 36009.25 2967.1622

75.88 39052.29 39810.05 757.76



Findings:(Validation)
The purchase and sale validation for the year 2011-12 shows a difference. This is
mainly due to the products sale \ purchases are scattered in various parts of India.
The coastal and IPP freight are having a major impact on validating the yearly
transactions. Hence such validation is only useful only for directionally difference.
Simultaneously this is very useful for finding the mistakes at same location of
different company. If the mode of transport is considered separate the price can be
compared and matched with port locations.





LEARNI NG AND OUTCOME

It was good experience to work with HPCL. Oil exchange is very important
activity for minimizing the cost. It is a mutual agreement between the oil
marketing companies (OMC).
HPCL using the JD Edward software for their business transactions. Also they are
using the pivot table (Excel function) as a supportive but very much important
function for summarized the data.
Purchase and sale accounted through the Pivot-Table and the Validation procedure
is accounted through JD Edward software. The validation procedure is very
difficult and but it is very important to make a settlement between the OMCs
Online business process has fastened the work, but still lot of paperwork is done in
the HPCL. In the whole Oil Exchange procedure lot of paper work is done, the
documents like Debit-Credit Note, Joint Certificate, P & L A/c and Daily A/c
statements etc. are needed in the procedure.








BI BI LOGRAPHY
References:-
Annual Reports of HPCL
Manual of oil exchange
HPCL Portal

www.hindustanpetroleum.com
www.google.com
www.petronet.com