EVALUATION OF CASH MANAGEMENT AND

BANKING SYSTEM
WITH A FINANCIAL ANALYSIS OF INDIAN
OIL CORPORATION LIMITED

CONTENTS
Chapter 1
INTRODUCTION
 Executive Summary
 Objectives of the Study
 Methodology

Chapter-2
COMPANY OVERVIEW
 Indian Oil Corporation Limited
 Indian Oil Corporation Limited Group
 Vision of Indian Oil Corporation Limited
 Mission of Indian Oil Corporation Limited
 Values of Indian Oil Corporation Limited
 Objectives of Indian Oil Corporation Limited
 Major Division of Indian Oil Corporation Limited
 Products Offered by Indian Oil Corporation Limited
 Major Products of IOCL are
 Organizational Structure
 Corporate Office New Delhi

Chapter-3
CASH MANAGEMENT
 History of Cash Management at Indian Oil
 Non Fund Based Facility
 Fund Based Facility
 Cash Budget
 Cash Management Product
 Important Terms

ATNCC, SHIVAMOGGA 1
  Letter of Authority Facility

Chapter-4
ELECTRONIC COLLECTION
 E- Collection Models
 Financial Analysis of Indian Oil Corporation Limited
 Profitability Ratios for the Year Ending 31st March 2014
 Risk Management at Indian Oil Corporation
 Other Risk Management Functions

Chapter 5
DATA ANALYSIS AND INTERPRETATION

Chapter 6
FINDINGS, SUGGESTIONS AND CONCLUSION

ANNEXURE
Questionnaire
Bibliography

ATNCC, SHIVAMOGGA 2
 Chapter 1

INTRODUCTION

 Executive Summary
 Objectives of the Study
 Methodology

ATNCC, SHIVAMOGGA 3
 Chapter 1
INTRODUCTION
INTRODUCTION
This project seeks to evaluate the cash management and banking system at
Indian Oil Corporation along with a financial statement analysis in
understanding the profitability, liquidity and efficiency of the firm.

The company uses system called cash mgt product (CMP) to get information
related to its cash information. This system performs the required function of
speeding up the cash receipts and payments as well as provides for greater
accountability which enables the management at the top to take efficient
decisions in regards of the liquidity available.
SBI is one of the main bankers of Indian oil and provides various facilities.
IOC is one of the main customers of SBI. HDFC is also among the bankers to
Indian oil and its customers. Though most of IOC’s customers cater to the
services of SBI, there are a few who prefer to carry out their transaction from
HDFC bank. Hence Indian Oil Corporation has appointed HDFC as their
second banker which also helps them during contingencies.
Indian oil has around 500 locations around India which serve as an outlet for
the finished products. Payments are made to these locations on a day to day
basis. This project provides an understanding to the facilities provided by SBI
to Indian oil at various locations.
During the year 2007, Indian oil started the concept of electronic collections
facility with a view of speeding up the payment procedure for the purchasing
party where in the delivery of the product can be taken with in 15-30 minutes

ATNCC, SHIVAMOGGA 4
whereas in the case of physical payment, the delivery would take place only
after clearing of the particular instrument.
And lastly, a financial statements analysis of the firm so as to identify its
financial strengths and weakness based on a ratio analysis model.

OBJECTIVES OF THE STUDY

 To get an exposure of the actual working environment within a multi
national.
 To thoroughly understand the cash flow management and various aspects
related to banking at Indian oil.
 To study and analyses all the details of cash management product facility
provided by SBI.
 To understand the benefits of electronic solutions in banking functions.
 To evaluate the contents of IOCL financial statements.
 To Measure IOCL’s profitability, efficiency and liquidity position.

METHODOLOGY
The study conducted is investigative in nature that is to say it profess into the
cash and banking department at Indian oil figuring out its major functions with
the help of secondary sources of data available from the department itself.
Sample Design
Considering the constraints, it was decided to conduct the study based on
sample size of 50 respondents. The selection was made through combined
approach of random sampling and convenient sampling. Scientific method was
not adopted in this study because of financial constraints and also because of

ATNCC, SHIVAMOGGA 5
lack of time, also the basic aim of doing the research was academic, hence
most convenient way was selected.

Tools Used For Data Collection

While understanding a study if their nature it is necessary that the required
information to be collected through the sampling survey.

Primary Data
The primary data refers to data that is collected a fresh and recorded for the
first time. Primary data are those data that is collected by researcher. It thus
happens to be original in its nature. The various methods of collecting primary
data are through performing interview, through questionnaire, observation and
through direct communication with the respondents but the basic manner of
primary data collection is survey method.

Questionnaire
One of the tools to collect primary data is questionnaire. 23 questions were
prepared to collect the data. The questions were framed carefully and logically
taking into the consideration of all the factors in the interest of the
subscribers. Effectors were made through questionnaire to know the present
market mobile users. The essence of their questionnaire is explained to the
respondents and sufficient time is given to reach respondents to answer the
questionnaire.

ATNCC, SHIVAMOGGA 6
Secondary Data
Secondary data refers to those data that has been collected and analyzed by
someone else. In other words secondary data is the information that already
exists some where having been collected for another purpose. In this study
secondary data was collected for another purpose. In this study secondary data
was collected from various sources, such as
 Internet
 References from libraries
 Company brochures
 Business magazines
 Business dailies
 Company's annual report

The major parameters of the methodology includes

 Data collection and interpreting the information available in the financial
statements and drawing meaningful conclusions from them.
 Brainstorming with the personal in cash department in applying various
tools and techniques to bring out the various results.

ATNCC, SHIVAMOGGA 7
LIMITATIONS
When the consumers were contacted & requested for their opinion through
personal interview about the study, perfect answers were not obtained because
some has shown their reluctance to respond due to different regions.
But as for as possible it has been tried level best to get the correct exact level
and precise information toward the study

Since the price of petroleum products is fluctuating, it is rather difficult to get

respondents from all sections of community. The scope of study is limited to
Shimoga city & the inferences has have been drawn with the help of the
opinions of the respondents of Shimoga city only. Therefore there are chances
of influences becoming and suitable in such marketing environment which has
completely a different set up of marketing trends.

The time allotted for surveys is very limited; it has become difficult to collect
more and more information from large respondents.

ATNCC, SHIVAMOGGA 8
 Chapter 2
COMPANY OVERVIEW

 Indian Oil Corporation Limited

 Indian Oil Corporation Limited Group
 Vision of Indian Oil Corporation Limited
 Mission of Indian Oil Corporation Limited
 Values of Indian Oil Corporation Limited
 Objectives of Indian Oil Corporation Limited
 Major Division of Indian Oil Corporation Limited
 Products Offered by Indian Oil Corporation Limited
 Major Products of IOCL are
 Organizational Structure
 Corporate Office New Delhi

ATNCC, SHIVAMOGGA 9
 Chapter 2
COMPANY OVERVIEW

INDIAN OIL CORPORATION LIMITED

Indian Oil Corporation Limited was formed in 1964 as the result of merger of
Indian Oil Corporation Limited (Estd. 1959) and Indian refineries Ltd (Estd
.1958).
Indian Oil Corporation Limited IS CURRENTLY India’s largest co. by sales
with a turnover of rs. 2441329600 and profit of Rs. 25994000 for fiscal 2009.
Indian Oil Corporation Limited is the highest ranked company in the
prestigious fortune ‘Global 500’. It is ranked at 109 th position in 2010. It is also
the 20th largest petroleum company in the world.

INDIAN OIL CORPORATION LIMITED GROUP

Indian Oil Corporation Limited group consists of IOCL and the following
subsidiaries.
 Lanka IOCL
 Indian oil (Mauritius ) Ltd
 IOCL Middle east FZE
 Indian oil Technologies Ltd.
 Chennai Petroleum Corporation Ltd
 Bongaigaon refinery & Petrochemical Ltd

ATNCC, SHIVAMOGGA
10
VISION OF INDIAN OIL CORPORATION LIMITED
A major diversified, transnational, integrated energy company, with national
leadership and a strong environment conscience, playing a national role in oil
security & public distribution.

MISSION OF INDIAN OIL CORPORATION LIMITED

Indian Oil Corporation Limited has the following mission,
 To achieve international standards of excellence in all aspects of energy and
diversified business with focus on customer delight through value of
products and services and cost reduction.
 To maximize creation of wealth, value and satisfaction for the stakeholders.
 To attain leadership in developing, adopting and assimilating state of the art
technology for competitive advantage.
 To provide technology and services through sustained research and
development.
 To forester a culture of participation and innovation for employee growth
and contribution.
 To cultivate high standards of business ethics and total quality management
for a strong corporate identity and brand equity.
 To help enrich the quality of life of the community and preserve ecological
balance and heritage through a strong environment conscience.

ATNCC, SHIVAMOGGA
11
VALUES OF INDIAN OIL CORPORATION LIMITED
Values exist in all organizations and are an integral part of any it. Indian oil
nurtures a set of core values.
 CARE
 INNOVATION
 PASSION
 TRUST

OBJECTIVE S OF INDIAN OIL CORPORATION LIMITED

Indian Oil Corporation Limited defined its objectives for succeeding in its
mission. These objectives are
 To serve the national interests in oil and related sectors in accordance and
consistent with government policies.
 To ensure maintenance of continuous and smooth supplies of petroleum
products by way of crude oil refining, transportation and marketing
activities and to provide appropriate assistance to consumers to conserve
and use petroleum products efficiently.
 To enhance the country’s self sufficiency in crude oil refining and build
expertise in laying of crude oil and petroleum products pipelines.
 To further enhance marketing infrastructure and reseller network for
providing assured service to customers throughout the country.
 To optimize utilization of refining capacity and maximize distillate yield
and gross refining margin.
 To create a strong research and development base in refinery processes,
product formulations, pipeline transportation and alternative fuels with a

ATNCC, SHIVAMOGGA
12
 view to minimizing / eliminating imports and to have next generation
products.
 To minimize utilization of the existing facilities for improving efficiency
and increasing productivity
 To minimize fuel consumption and hydrocarbon loss in refineries and stock
loss in marketing operations to effect energy conservation.
 To earn a reasonable rate of return on investment.
 To avail of all viable opportunities, both national and global, arising out of
the government of India’s policy of liberalization and reforms.
 To achieve higher growth through mergers acquisitions, integration and
diversification by harnessing new business opportunities in oil exploration
and production, petrochemical, natural gas and down steam opportunities
overseas.
 To inculcate strong “ core values” among the employees and continuously
update skill sets for full exploitation of the new business opportunities.
 To develop operational synergies with subsidiaries and joint ventures and
continuously engage across the hydrocarbon value chain for the benefit of
society at large.

MAJOR DIVISION OF INDIAN OIL CORPORATION LIMITED

Indian Oil Corporation Limited owns and operates a network of crude oil and
petroleum product pipeline in India. It has two divisions: refineries division
and marketing division. The refineries is focused on managing the public sector
refineries and the marketing division is focused on distribution not only the
entire production of public sector refineries but also the deficit products

ATNCC, SHIVAMOGGA
13
imported. It is organized in two segments : Sale of petroleum products and
other business, which comprises sale of imported crude oil, sale of gas,
petrochemicals explosive and cryogenics, wind mill power generation and oil
and gas exploration activities. Jointly undertaken in the form of unincorporated
joint ventures. The Digboi refinery of Assam oil division processed 0.623
million metric tons (MMT) of crude oil during the year. The division sold
about 1,067 MMT of products, IBP division comprises the explosive and
cryogenics business.

BUSINESS MODEL OF INDIAN OIL CORPORATION LIMITED

Indian Oil Corporation Limited has its presence in all spheres of downstream
operations
 Pipeline 9273 kms (crude & product)Refining 10 refineries
 Marketing Mark share of 54%
 Refining share of 40% 55% of industry
 Infrastructure isn’t ops
 Growing presence in
 Petro chemicals operational Lab % owns ream marketing px /Pta plants
 Gas Sourcing and marketing
 E & P Forays in India and Overseas.

ATNCC, SHIVAMOGGA
14
PRODUCTS OFFERED BY INDIAN OIL CORPORATION LIMITED
Indian oil is not only the largest commercial enterprise in the country it is the
flagship corporate of the Indian Nation. Besides having a dominant market
share, Indian oil is widely recognized as India’s dominant energy brand and
customers porcive Indian oil as a reliable symbol for high quality products and
services.

MAJOR PRODUCTS OF IOCL ARE

Auto LPG Lubricants & greases
Aviation Turbine fuel Marine fuels
Bitumen MS Gas line
High speed diesel Petrochemicals
Industrial fuels Crude oil
Liquefied petroleum gas Superior kerosene oil.

ORGANIZATIONAL STRUCTURE
The whole of Indian Oil Corporation ( IOC) works under corporate office
located at New Delhi. It follows hierarchical structure where the decision flows
from top to bottom and the data flows from bottom to top. Under the corporate
office there are 5 divisions namely pipeline, refineries, R &D, Marketing &
Assam oil division. The marketing division located at Mumbai.Co- ordinates
with the regional offices i.e North, South, East, West region office, the other
divisional offices & SBI for decisions regarding investments. The regional
offices co- ordinates with respective state office that in turn co ordinates with
respective location offices.

ATNCC, SHIVAMOGGA
15
CORPORATE OFFICE NEW DELHI
R&D Pipeline Marketing Refineries Assam
Division Division Division Division Division
Noida Mumbai New Delhi NR ER
WRSR New Delhi Kolkata Mumbai Chennai

Respective State offices

Respective Location Offices.

ATNCC, SHIVAMOGGA
16
 Chapter-3
CASH MANAGEMENT

 History of Cash Management at Indian Oil

 Non Fund Based Facility
 Fund Based Facility
 Cash Budget
 Cash Management Product
 Important Terms
 Letter of Authority Facility

ATNCC, SHIVAMOGGA
17
 Chapter 3
CASH MANAGEMENT
Cash management involves management of the liquidity of the firm in order to
maximize case availability and interest income on idle funds. At one end, the
function starts when the customer writes a check to pay the accounts receivable
and ends when the funds are realized the funds on an account payable and
accrual, on the other hand, the payment of bills involves accounts payable and
accrual management Efficient cash management process are pre-requisites to
executive payments, collect receivables and manage liquidity. Managing the
channel of collection, payments and accounting information efficiently
becomes imperative with growth in business transaction volumes. This
includes enabling greater connectivity to internal corporate systems, expanding
the scope of cash management services. To include “full –cycle” processes
(i.e., from purchase order to reconciliation) via ecommerce, or cash
management services targeted at the needs of specific customer segments. Cost
optimization and value add services are customer demands that necessitate the
creation of a mechanism to service the various customer groups.

Banks are increasingly becoming innovative and anticipating the needs of

corporate towards standardization, ERP integration, reconciliation, real time
reporting, providing an end to end view of cash management value chain
besides offering the ability to reach and be reached by their own customers.
The mounting pressure from competitors forces the banks to look for an
information technology vendor who can offer better solutions and services in
cash management and internet banking.

ATNCC, SHIVAMOGGA
18
The goals of cash management include
 To minimize idle balances.
 To minimize borrowings & interest costs
 To maximize yields on surplus liquidity
 To reduce internal administrative cost.
 To control foreign exchange and interest rate exposure risks.

HISTORY OF CASH MANAGEMENT AT INDIAN OIL

An organizations cash operating cycle is the complete process of utilizing its
resources and converting them into income through trading activities. Prior to
the establishment of the cash management product module, the Indian oil
transactions took place through the conventional method of regional cash credit
module. In the R CC module the SBI branches of various states dispersed over
various locations would send the information of remittance of funds to the
regional office of SBI and they in turn would then forward that information to
the SBI head office.

However, in this module the lead time on an average was 4- 10 days depending
on the accessibility of the location. The delay included 2-7 days for the transfer
between the location and state office SBI branch to the regional office SBI
branch, and another 2-3 days from the regional office to the head office SBI
Branch. Therefore, through a collection may be made on the 10 th of any month
the credit of such a collection may reflect only on the 14th -20th of that month.

ATNCC, SHIVAMOGGA
19
It is clearly evident that from such a long lead time in the transfer of funds. The
cash requirements of Indian oil and the interest figure in the income statement
are affected directly by the length of the cycle.
Hence to tackle this problem, Indian oil’s primary banker, SBI, introduced the
CASH MANAGEMENT PRODUCT (CMP) module which helped the
personal to determine the fund position (receipts & applications) of all the
locations in all the 4 regions on the very same day, thus making it cashier to
project cash flow requirements or investments more accurately.

Cash Flow System at Indian Oil

Indian oil, being a huge organization, has numerous transactions taking place
through out the country. On an average at least 5000 transactions take place
within one working day with an amount equivalent to Rs 500 crores. All of
these transactions take place through banks and since SBI is the primary banker
to IOC, it has established various facilities to oversee that the transitions take
place smoothly.

Since Indian oil is the biggest customer of SBI, they enjoy value added services
provided by the bank. Corporate accounts group (CAG) central Office of SBI
at Andheri, Mumbai is the controlling office of SBI, having sanctioning
authority for the various credit facilities and the other banking needs of the
corporation. CAG of SBI operates with network of branches called “ CAG
Branches” in all the Metro cities. The co- ordination between SBI and IOC is
done from the Ho Marketing Mumbai.

ATNCC, SHIVAMOGGA
20
The credit facilities provided by SBI to Indian oil can be summarized as
follows.
FUND BASED FACILITY
It is the amount of overdraft obtained from the bank. At present the total
overdraft limit of the corporations is controlled through the main cash credit
facility. Other accounts opened at various branches and other places are just the
extension of this limit. The gets renewed from time to time.

NON FUND BASED FACILITY

These facilities are for pure banking convenience provided by the bank, so that
the corporation can carry out the business transactions. Various non fund based
facilities available include.
Performance / financial bank guarantee facility
Letter of credit facility – Inland
Letter of credit facility – Import

How Transactions Take Effect

Undertaking the transactions at more than 500 places and giving effect in a
single account of Mumbai branch is a very complicated process which involves
a lot of supervision and most importantly to administrator the various kind of
accounts IOC has with SBI to run its operations .Each and every account has
its own advantages towards. Company.

CASH BUDGET
Preparation and management

ATNCC, SHIVAMOGGA
21
Compilation of monthly dollar / rupee cash flow statements from inputs
received from all the divisions.
Cash flow is monitored on a daily basis.
Debt availment / repayment decided based on cash flow projections –daily /
monthly/ yearly.
Variance analysis of actual v/s budgeted cash flow on an ongoing basis.
Cash flow forecasting Overview
A key element of treasury management involves projections of inflows and
outflows of cash the corporation. It also requires its constant updation on day to
day basis for ensuring effective fund management.

Projection is done in two stages

 Monthly - by 7th every month
 Rolling - by 22th every month for 15 days of next month.
 For effective forecasting, managers at Indian oil require credible
information from multiple sources. The sources of information for daily
updation of accruals and refinement of projections can be given as follows.
 Cash management product – Through downloading data from CMS service
providers.
 Web – banking / emails from banks regional collection centers – through
emails/ telephone from

All 4 regions of marketing division

 Refining division
 Pipeline division

ATNCC, SHIVAMOGGA
22
  Assam oil Division
 Information is received from networks spread all over India.

SBI
570 collection centers with SBI in 250 location most of the centers have CMP(
cash management product) facility.

460 total withdrawal account with SBI about 150 special withdrawal account
with the facility of transferring the balance at the end of the day to the
centralized cash credit a/c with SBI, Mumbai.

HDFC (Initiative for alternate banking arrangement) 30 collection centers in

North India. All the centers have CMP ( cash management product) facility . 1
withdrawal account in Delhi.

The following is a cash flow reconciliation statement for the month of march
2010, depicting the total of collections among all the four regions (North, East,
West and South) across India, also including the Assam oil Division and the
head office here in Mumbai. The statement is divided into 3 main aspects
namely, the budgeted collections, the actual receivables and the variance
among the two.
Date Total
Budget Actual Variance
1 March 302.04 377.78 75.74
2 March 951.23 798.38 (152.85)

ATNCC, SHIVAMOGGA
23
 3 March 733.91 718.19 (15.72)
4 March 722.39 816.05 93.66
5 March 727.41 763.00 35.59
6 March 584.33 637.79 53.46
8 March 875.78 935.16 59.39
9 March 746.36 815.26 68.90
10 March 791.92 820.02 28.10
11 March 718.04 712.66 (5.38)
12 March 897.36 914.94 17.58
13 March 661.52 665.96 4.44

The major problem or bottleneck faced by the cash management department is

the huge variance between the budgeted receivables and the actual accruals the
prime reasons why variances occur are.
 Debtors failing to make a payment on time
 Delay in clearance of payment from banks
 Over estimation of receivables
 Extra ordinary state of affairs.

Variance Analysis
Sources (inflows) Reasons

Budget T Actual L Variance E

Collections 21746 23635 1889 Annexure A
OMC Product exchange 94 88 (6)

ATNCC, SHIVAMOGGA
24
receipts
OMC Imports receipts 207 210 3
receipt on P-I
Receipt on crude import 1727 2085 358 Shifting of
CPCL
Total 1934 2296 352
Exports & others 957 939 (18)
Subsidy 192 238 46
Interest on bonds 238 238 0
Sales of bonds 1064 1064 0
BD Receipts 28 281 0
Maturity of FD 850 1100 250 Premature
receipt
Receipt of compensation 7100 7100 0
Discount from UC 605 605 0
Total inflows 35060 37583 2523

CASH MANAGEMENT PRODUCT

All the conventional methods and controls outlined by Indian oil in today’s
world have become obsolete. With the growing availability of relatively
inexpensive computer systems, it has encouraged the firm to introduce a
greater level of control and forward planning. The justifications for introducing
a computer system are:-
 High volume data processing that would otherwise be prohibitively
expensive, difficult to manage, and too slow.

ATNCC, SHIVAMOGGA
25
 Complex task that would otherwise be either impossible or unjustifiably
expensive.
 Keeping the above considerations in mind, SBI, Indian oil’s primary
banker, introduced a module known as CMP. CMP is a facility provided by
SBI, whereby the collections and withdrawals from the branches all over
India are transferred via electronic mode to the cash credit account in
Mumbai.

The CMP facility can be divided into two main modules

 The credit module of CMP
 This module deals with the collection proceeds.
 The debit module of CMP
 This module deals with the withdrawals.

Under CMP, no new a/c is opened on receipt of the request for a new account
for a particular location, the Ho finance gets a separate client code allotted to
the location through CMP cell Mumbai. Such code is unique for each location.
The CMP charges are divided into 3 broad categories
 0.01/100 for all the motors i.e A class city.
 0.05 /100 for all the B class cities (that includes mainly capital cities)
 0.12/100 for all the C class cities ( this includes all the other locations not
included in the above 2 categories).
The CMP module provide convenience to the company in the sense that all the
decentralized information flows to the company in a centralized manner

ATNCC, SHIVAMOGGA
26
through very fast modes and accordingly the company can have precise
information of where the funds are and how to utilized them more efficiently.

Accounts and facilities Provided by CMP Module

In designing the CMP module, SBI established various accounts that would
operate under it and also set up various amenities for the ease of transactions.
These facilities include
 Collection account
 Special current account
 Current imprest account
 Letter of authority facility
 Railway credit note facility
 Regional cash credit account
 Cash credit account

Collection account
This account is opened at all the branches / locations/ depots etc.. or at any
place from where IOC collects its money from customers or other parties.

IMPORTANT TERMS
DCR (Daily collection report)
IOC has a completely different system of depositing their cheques into bank.
Instead of filling in bank slip book they make their own DCR and deposit it
into bank where respective SBI person will check all entries and then credit the
amount in the accounts of IOC at his/ her respective branch.

ATNCC, SHIVAMOGGA
27
DDP Limit( DD purchase)
A facility provided by SBI from all the branches (where IOC has their
collection account) in which they purchase all outstation cheques and gives
immediate credit, IOC against these. It has to be fixed for every location
depending upon the outstation cheques collection requirement of the company.
Once the DDP limit is granted to a location, the overall cash credit limit is
reduced to that extent by the SBI it is necessary for the location to ensure that
the DDP limit is not fixed too high so as to remain unutilized, at the same
time it should be sufficient to meet the outstation cheque requirements for 15
days.
Day Zero/ One/ two centers
Depending upon the clearing house arrangement for local banking instrument
these of funds is given to IOC in same day in day. Zero center, on next day in
day one center and on second day of deposit in day two center provided by
instruments are deposited with CMP into all the branch before cutoff time.
If an instrument is not cleared within 15 days of depositing follow up action is
taken against party or customer.
If it has been 60 days to deposit an instrument and then it got dishonored , SBI
cannot debit the amount without prior intimation; even in case of less in transit
same is applicable.

The overdue interest for delayed realization of outstation instruments

recovered from the corporation should not be more than 47 days. Such overdue
interest should be at SBI’s prime lending rate at that period. Overdue interest

ATNCC, SHIVAMOGGA
28
is applicable only in respect of outstation instruments drawn by the corporation
drawn on a bank other than SBI and the branch on which it is drawn is situated
at a place where the SBI does not have a branch.

Special current (Withdrawal ) Account

This account is opened at all regions and state offices for the purpose of
withdrawal. The locations having monthly payments of more than Rs. 1 crore
have the facility of this account, for this purpose locations are to assess their
fund requirements and put up the proposal for opening it as this will result in
avoidance of blockage of funds.

Features
 No pre funding of this account is done.
 All payments made are centrally funded from the corporation’s main cash
credit account at Mumbai.
 Daily balances are transferred through regional cash credit account to main
cash credit account at Mumbai.
 Monthly expenditures should be at least Rs 1crore , not less.

Important
 There is fixed monthly limit for his account and it should not exceed, if so,
duly approval from regional head should be taken.
 No deposit of any instrument is permitted in this account.

ATNCC, SHIVAMOGGA
29
 Only computerized cheque books printed by IOC should be used with
“account payee only” printed on.
 On 5th of every month a bank reconciliation statement is taken and a report
on same is submitted to region on a fixed interval basis.

Current ( Imprest ) Account.

This account is generally opened at all locations of IOC. Main purpose of the
account is to meet day to day expenses of respective locations. Its . transactions
are not transferred to the main account of Mumbai via CMP

Feature
 This account has to be pre funded by state/ region office
 It’s safe because locations cannot make payments more than the credit
available in the account.
 It is an independent account and therefore its transactions are not transferred
to state/ region offices.
 On 5th of every month a bank recondiliation statement is taken and a report
on same is submitted to region ion a fixed interval basis.
 No deposit of instrument is permitted in this account except instruments
received from state / region office towards salary and other payments.
 Only computerized cheque books printed by IOC should be used with
“Account payee only” printed on.

LETTER OF AUTHORITY FACILITY

ATNCC, SHIVAMOGGA
30
At every location of IOC some special type of payments are made, e.g customs
and excise authorities or payment to port trust authorities or payment to other
refineries for cost of product etc. With the help of this facility payments can be
made to these authorities from respective locations.

Features
Various payments to only one authority can be made via this facility
 For payments to different authorities from one branch only there should be
approval for this from IOC as well as SBI and then a new authority payment
is made.
 Finance In charge of the region has the power to increase or decrease the
limit of facility.

Important
 For the payment of excise duty, only three LA’s in a month can be issued
not more than that
 For the payment of others e.g. customs port trust etc. No such retraction is
imposed.

Railway credit Note facility (RCN)

This is a special facility provided by SBI in which IOC’s all locations can
make payments for railway freight. All locations, under this facility are
authorized to make payment of railway freight, shunting charges etc.
There ways of making payment under this facility.
By having a special current (Withdrawal) account of the location.

ATNCC, SHIVAMOGGA
31
By issuing cheques of special current (Withdrawal) account maintained at the
RSC branch.
By issuing railway credit Note (RCN)

Important
 Any other payment accept from RCN is not permitted under this facility by
the bank.
 Locations need to have pre- printed cheque books with the name of railway.
 Authority to which payment is made.
 SBI cannot charge any charges for accepting IOC’s cheques presented by
the railway’s banker.
 If it is paid by account of RCC, separate cheque book should be given to
each location.

Regional cash credit Account (RCC)

Each regional office of the marketing and other divisions of the corporation
individually operates a regional cash credit (RCC ) account.

Features
 In this account, pooling of debits and credits from various accounts other
than the current ( imprest) account operated by the locations is effected.
 Debit entries to the RCC account is from the following 3 a/c s
 Special account a/c
 Letter of authority payments made.
 Railway credit notes issued .

ATNCC, SHIVAMOGGA
32
 Credit entry to the RCC account is from the collection a/c
 Separate code numbers are allotted to identify each type of transactions in
the RCC.
 For collection
 For withdrawal
 For LA debits
 For RCN debits.

Cash credit Account

CCA is the principle account operated by the Ho marketing division.

Features
 Transfer of funds from all other accounts like the collection account, special
current a/c. etc..except the current imprest a/c are to the cash credit account.
 Part from transfer entries all payments handled by Ho like purchase of
foreign currencies , repayment of loan availed, and etc is directly debited to
the cash credit account.
 Loans availed for working capital purpose & other major receipts handled
by Ho are mostly credited to cash credit a/c directly.
 Interest payable to the bank are based on daily “value dated” balances in the
CC a/c and is calculated every quarter by applying the prevalent prime –
lending rate and interest amount is debited to cash credit account.

ATNCC, SHIVAMOGGA
33
Important
Only on board of directions can open a cash credit account upon passing a
resolutions to that effect.
The fund made based and non fund based limits sanctioned by SBI for the cash
credit account are required to be renewed every year by submitting yearly
credit monitoring arrangement data inn the form prescribed by the bank.
Since the fund based limit us against hypothecation of stock – in – trade,
debtors, etc.. a quarterly report of debtors outstanding , stock of raw material,
finished goods held ect a/c to be submitted to the bank by Ho marketing
division.

SUGGESTIONS
Indian oil needs to make sure that they have a clear of the true cash position at
any point of time. Since they deal with multiple banks it may get difficult to
know the true cash standings. For this need to have better internal controls so
that the flow of information among all the departments is smooth.
 The other areas in which cash has to be efficiently managed include.
 Explore centralizing cash and treasury management
 Review market counterparties.
 Protectively plan to reduce debt levels.
 Ensure treasury and cash management systems are up to date ., etc.

ATNCC, SHIVAMOGGA
34
 Chapter-4
ELECTRONIC COLLECTION

 E- Collection Models
 Financial Analysis of Indian Oil Corporation Limited
 Profitability Ratios for the Year Ending 31st March 2014
 Risk Management at Indian Oil Corporation
 Other Risk Management Functions

ATNCC, SHIVAMOGGA
35
 Chapter 4
ELECTRONIC COLLECTION
Internet banking or banking via the internet can be considered a marketable
development in the banking sector. The ability to carry out banking
transactions through the internet has empowered customers to execute their
financial transactions within the comfort of their homes. Besides this, the
benefits of internet banking are not limited to a particular group of people, as it
benefits both bankers and customers alike.
Thanks to the information technology and the upgrades in our banking sector
and thanks to reserve bank of India (RBI) for introducing the paperless work
called electronic funds transfer (EFT) mechanism.
Conventional banking has always been slow and time consuming, so much so
that sometimes you need to wait several hours to process a simple transaction
like clearing a check. But, internet banking has tremendously reduced the time
required to process banking transactions, thereby making banking faster and
convenient. For both the banker (SBI) and the corporate (IOCL), this system is
cost effective, as it has considerably reduced the administrative costs and
paperwork related to the transactions. Besides, banks can also cater to the
needs of thousands of customers at the same time. With the internet banking
facility, multinationals like IOCL, can bank on the opportunities like,
 Immediate arrangement of funds
 Reduced float period
 Centralized control
 Almost nil cost.

ATNCC, SHIVAMOGGA
36
E- COLLECTION MODELS
E- collection uses the internet banking facility by adopting to the latest
technology in use. Some of the important concepts coming under it are
 Electronic Funds transfer
 Real Time Gross settlement
 National electronic Funds Transfer

Electronic Fund Transfer ( EFT)

EFT is a method in which the money is transferred from one bank account to
other bank account in without the paper cheque and paper money. The
transaction is done at bank ATM or using credit card or debit card. In RBI EFT
system you authorize the bank to transfer money from your bank account to
other bank a/c that is called as beneficiary account.
However, this facility is restricted only to the 15 RBI defined cities such as
Mumbai, New Delhi, Chennai, etc Funds transfer using this service can be
made from any branch of a bank at these centers to any other branch of any
bank at these cities, both inter city and Intra city.

National Electronic Funds Transfer (NEFT)

This is a better version of RBI EFT system. In RBI –EFT there is a limit in
location, whereas in NEFT there is no geographical location problem and only
requires both the bank to be NEFT enabled system. Under NEFT, the transfer
takes place either on the same day or on the next day, depending on the time of
instructions given. NEFT is on net settlement basis that is to say that it
processes transaction in batches. NEFT involves four settlement cycles a day

ATNCC, SHIVAMOGGA
37
9.30 am, 10.30 am, 12 pm and 4pm. Thus if a customer has given instruction to
its bank to transfer money through NEFT to another bank in the morning hours.
Money would be transferred the same day, but if the instruction be transferred
next day.
NEFT transactions are mostly avoided at Indian oil. They have their preference
more towards Internet banking and real time gross settlement.

Real Time gross settlement (RTGS)

RTGS is an instantaneous funds transfer system, within the money is
transferred on a ‘real time’ basis and hence, happens in a real time mode. With
this system you can transfer money to other bank a\c with maximum 2 hours.
In this system there is a limit that you have to transfer money only above Rs. 1
lakh and for money below Rs. 1 lakh transactions, banks are instructed to offer
the NEFT facility to their customers. This is because; KTGS is mainly used for
high value clearing. As of now, customers can use the RTGS facility only up to
3.30 pm and inter – bank transactions are possible upto 5pm.
Here we outline the major advantages that RTGS has over core banking
facilities.
DD/ Pay order/ Other instruments RTGS
Customers arrange for instruments in Immediate arrangement
advance
Funds credited in IOC a/c after 2-3 Funds credited on the same day if
days, subsequent to clearing by bank transaction done within the RTGS
time span.
Banks enjoy the float till funds are not Float of 2-3 days phased out

ATNCC, SHIVAMOGGA
38
cleared
Cost of IOCL instrument collection No such cost
DCR generation & checking
depositing at branch follow up
Chances of dishonor No chances of dihonour as it’s a
confirmed mode of realization of
collection
Decentralized control Centralized control

The RTGS solution at Indian oil has been implement by its primary banker i.e
SBI. The main parameters behind choosing SBI as their RTGS vendor are
 A primary & lead banker
 Has long term b/s relation with IOCL
 Flexible in the past to accommodate IOCL requirements.
 Zero day float of funds.
 Besides customer code detail, also provide product details by generating
them in the MIS and then for posting it in SAP
 CMP annual charges currently incurred shall be reduced once replaced by
RTGS having nit cost.
 RTGS with one banker is recommended as customer should not have choice
to select banks in which case there may be no control over collections.

Procedure of RTGS Collection at Indian Oil

Being able to transact with IOCL through RTGS system, its customers need to
register themselves with SBI by mapping in their details. The is just a one time

ATNCC, SHIVAMOGGA
39
process which will enable IOCL’s customers to get their username and ID
created and involve in electronic transactions with Indian Oil.
To summarize the role of the user we can say that
 A username is created for making payments in his own Id on day to day
basis.
 Access rights as “Authoriser” are assigned to the user.
 The role is submitted to the bank branch for approval and flow up is done.
 IOCL –RTGS is mapped as “Supplier”.
 Liaison with IOCL state office for approval.
 Once the a/c is operational, the user is authorized to make payments to
IOCL in the following fashion
 Customer provides following details during remittance at his bank branch.
 Customer’s a/c no, beneficiary bank, beneficiary customer name, IFSC code
of receiving branch, amount and IOCL a/c no.
 IOCL a/c no – An 18 digit code & unique for each customer.
 First 11 digits – IOCL SBI RTGS a/c no.
 12 digit – Alpha & variable (A-Y) denotes CCA code.
 Last 6 digits – SAP code of customer.

30210428604 A 122995

a/c no veriable sap code

The remitting bank branch of customer processes the transaction and transmits
to RBI which in turn processes the transaction on real time basis and sends it to
the beneficiary bank i.e SBI.

ATNCC, SHIVAMOGGA
40
SBI on receipt of incoming RTGS affords credit to IOCL RTGS a/c reading the
first 11 digits and simultaneously generates MIS using 12th digit as product
code description and 13-18th digits as SAP code of remitting customer.
MIS is sent through E-mail by SBI CMP section which is updated in SAP for
crediting customers account under respective CCA.
The client who has made the payment can take his delivery as soon as possible
as and when the details appear in SAP.
Customers bank Options Charges Timings
State bank of Internet banking No charges 24 x7 hours
India Core banking 0.1% of During bank
transaction hours only.
amount [ max Rs
1250]
RTGS transfer in Max Rs. 25 per 9am -4.30 pm
IOCL 18 digit a/c transaction for [Mon – Fri]
no with BNP transfers Rs. 1-5 9am -12.30 am [
Paribas lakh Max RS. 50 / Sat]
transaction for
transfers above
Rs. 5 lakh.
State bank of Online RTGS Max Rs. 25 / 9am- 4.30 pm [
India transaction for Mon- Fri]

RTGS [IOCL SBI transfer Rs 1-5 9am – 12.30 am

Associated banks lakh [Sat]

ATNCC, SHIVAMOGGA
41
 a/] in 18 digit a/c Max Rs. 50/
no transaction for 9am 12.30 am
transfers above Rs [Sat]
5 lakh

SUGGESTIONS
 Integrate system so details of customers directly appear in SAP, so
middleman can be avoided.
 Still a no. of people using E- banking is not significant, so create awareness
among customers by telling them advantages of system.
 Giving them assurance about security of payment can increase no . of users.

FINANCIAL ANALYSIS OF INDIAN OIL CORPORATION LIMITED

Financial statement analysis
Is defined as the process of identifying financial strengths and weaknesses of
the firm by properly establishing relationship between the items of the balance
sheet and the profit & loss account.

There are various methods or techniques that are used in analyzing financial
statements, such as comparative statements, schedule of changes in working
capital, common size percentages, funds analysis, trend analysis, and ratios
analysis.

Financial statements are prepared to meet external reporting obligations and

also for decision making purposes. They play a dominant role in setting the

ATNCC, SHIVAMOGGA
42
framework of managerial decisions. But the information provided in the
financial statements is not an end in itself as no meaningful conclusion can be
drawn from these a statements alone. However, the information provides in the
financial statements is of immense use in making decisions through analysis
and interpretation of financial statements.
The technique of financial statement analysis used by me in this project is ratio
analysis.

Profitability Ratios
Profitability ratios measure the results of business operations or overall
performance and effectiveness of the firm. Some of the most popular
profitability rations are as under.
 Gross profit ratio
 Net profit ratio
 Operating ratio
 Expense ratio
 Return on shareholders investment or net worth
 Return on equity capital
 Return on capital employed (ROCE) ratio.
 Dividend payout ratio
 Dividend yield ratio
 Earnings per share ratio
 Price earning ratio

ATNCC, SHIVAMOGGA
43
Liquidity Ratios
Liquidity ratios measure the short term solvency of financial position of a firm.
These ratios are calculated to comment upon the short term paying capacity of
a concern or the firm’s ability to meet its current obligations. Following are the
most important liquidity rations.
 Current ratio
 Liquid / quick ratio.

Activity Rations
Activity ratios are calculated to measure the efficiency with which the
resources of a firm have been employed. These ratios are also called turnover
ratios because they indicate the speed with which assets are being turned over
into sales.

Following are the most important activity ratios

 Stock turnover ratio
 Debtors turnover ratio
 Average collection period
 Creditors turnover ratio
 Working capital turnover ratio
 Fixed assets turnover ratio
 Over and under trading

ATNCC, SHIVAMOGGA
44
Long term Solvency of leverage ration
Long term solvency or leverage rations convey a firm’s ability to meet the
interest costs and payment schedules of its long term obligations. Following are
some of the most important long term solvency ratios.
 Debt to equity ratio
 Propitiatory or equity ratio
 Ratio of fixed assets to shareholders funds
 Ratio of current assets to shareholders funds
 Interest coverage ratio.
 Capital gearing ratio
 Over and under capitalization

LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS

There are various advantages of financial statements analysis. The major
benefit is that the investors get enough idea to decide about the investments of
their funds in t he specific company. Secondly, regulatory authorities like
International a/cing standards board can ensure whether the company is
following accounting standards or not.

Income statement for the year ended 31st March 2014

Income Amount
Sale Turnover 3,29,806.88
Excise duty 22,682.89
Net sales 307123.92
Other Income 2,905.92

ATNCC, SHIVAMOGGA
45
 Stock adjustment 1,679.56
Total Income 302543.51

Expenditure Amount
Raw materials 273,708.98
Power & fuel cost 447.19
Employee cost 5686.96
Other manufacturing expenses 1053.32
Selling & dis exp 10709.66
Miscellaneous exp 804.51
Preoperative exp capitalized -544.01
Total expenses 291,866.61

PROFITABILITY RATIOS FOR THE YEAR ENDING 31ST MARCH

2014
Gross profit ratio
Indicates the relationship b/w net sales revence and the cost of goods sold
Gross profit
Net sales
= 10676
329806
= 3.23%
The gross profit margin has fallen marginally from last year due to the rise in
the cost of expenditure incurred.

ATNCC, SHIVAMOGGA
46
Net profit ratio
A measure of net income rupees generated by each rupee of sales
Net Income
Net sales
= 2949.55
307123.99
= 0.95

Operating Income Margin

A measure of the operating income generated by each rupee of sales
Operating Income
Net sales
= 13582.82 / 307123.99
=4.42%

Operating expense ratio

Measures the relationship b/w the admin, selling & distribution expenses to
the ratio of net sales
Administration + selling & distribution
Net Sales
= 4.87%

ATNCC, SHIVAMOGGA
47
Return on equity
Measure the income earned on the shareholder’s investment in the b/s
Net earnings
SH equity
= 2949.55
1192.37
= 2.47

Return on Capital employed

Measures the income earned on the invested capital
Net earnings
Long term liabilities + equity
= 2949.55
201.47
=14.64%

Dividend Payment ratio

It calculates the percentage of earnings paid to SH in dividends
Dividend per share
Earnings per share
=7.50
14.64
= 0.51 or 51%

ATNCC, SHIVAMOGGA
48
Earnings per share
Profit after tax – preference dividend
No of equity shares
= 2949.55
201.47
= 14.64
Dividend Yield ratio
Dividend per share
Market price per share
= 7.50
347.15
= 0.021

Price earning ratio

Market price of share
Earning / share
= 347.15
14.64
= 23.71

ATNCC, SHIVAMOGGA
49
Summarized Ratio analysis of Indian oil corporation
Key financial ratios %
Profitability ratio
Gross profit ratio 3.23
Net profit ratio 0.95
Operating Income margin 4.42
Operating exp ratio 4.87
Return on equity 2.47
Return on capital employed 14.64
Dividend payout ratio 51
Earning per share 14.64
Dividend yield ratio 0.021
Price earning ratio 23.71

RISK MANAGEMENT AT INDIAN OIL CORPORATION

Post deregulation of oil sector Indian oil has been exposed to currency and
interest rate risk.
Indian oil has adopted a risk management policy duly approved by the board of
directors. Primary objective of the policy is to limit exposure to tolerable levels
under selective hedging

Interest rate risk Management

 To optimise interest rate risks and costs following parameters applied to
each FC loan separately
 Floating rates ; minimum 25% of O/s loans

ATNCC, SHIVAMOGGA
50
 Fixed rates : Minimum 25% of O/s loans
 Balance amount : fixed / floating depending on sriws
 Long term rupee borrowings to be a judicious mix of fixed, floating & semi
fixed.
 Policy to be constantly reviewed by Indian oil’s consultants.

OTHER RISK MANAGEMENT FUNCTIONS

Weekly monitoring of exposures and finished goods inventory levels.
Monthly report on risk management put up to director (finance)
Quarterly report to board of directors on operations of risk management policy

STRATEGIES RECENTLY ADOPTED FOR EXCHANGE RATE

MANAGEMENT
 Selective heading of long term foreign currency loans in addition to short
term
 To increase heading of total foreign currency loans exposure in case of
sharp appreciation of rupee with the approval director.
 To hedge through forwards & options
 Hedging considering overall cost of loan including forward / option
premium within cost of rupee loan.

ATNCC, SHIVAMOGGA
51
 CHAPTER 5

DATA ANALYSIS AND INTERPRETATION

ATNCC, SHIVAMOGGA
52
 DATA ANALYSIS AND INTERPRETATION

SURVEY ANALYSIS

 Survey research is one of the most important areas of measurement which is

applied in social and search. The dictionary meaning of survey is "survey is
the technique for the gathering information from a large number of users.
Survey can be anything from a short paper and a pensile feedback from to
an intensive interview. Survey means going into depth at the respondent and
collecting his inner expression for the purpose at knowing his attitudes
about which the survey is conducted.
 The survey I was conducted among the different class and sections of
people who are residing in Shimoga city. Random sampling method was
used for selecting the customers.
 Random sampling is the purest form of the probability sampling. Each
member of the population has an equal and knows chance of being selected.
Where there are very large populations it is often difficult or impossible to
identify every members of the population.
 For the survey the method of questionnaire techniques is adopted. Answers
given by the respondents are analyzed and classified. The main aim of the
survey is to study the opinion of the people residing in Shimoga city about "
“Evaluation of cash management and banking system with a financial
analysis of Indian oil Corporation Limited "
 So consumers have responded to questionnaire and have helped to make
this survey success. The percentage wise opinion as also shown in all the
tables formed below for this purpose.

ATNCC, SHIVAMOGGA
53
 Table -1
Age wise classification of the respondents

Age No. of respondents Percentage

18-25 13 26%
25-50 15 30%
Above -50 22 44%
Total 50 100%
Source: Field survey

60

50

40

30 No. of respondents
Percentage
20

10

0
18-25 25-50 Above -50 Total

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 44% of them belongs to age group Above 50 years. About 30% of
respondents belong to age group of 25-50 years 26% of respondents belongs to
40-50 years and 2% of respondents belong to 18-25 years.

ATNCC, SHIVAMOGGA
54
 Table -2
Qualification wise classification of the respondents

Qualification No. of Respondents Percentage

Under Graduate 15 30%
Post graduate 30 60%
Graduate 5 10%
Total 50 100%
Source: Field survey

50
45
40
35
30
25 No. of Respondents
20 Percentage
15
10
5
0
Under Post Graduate Total
Graduate graduate

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 60% of them belongs to post graduate. About 30% of respondents
belong to under graduate, 10% of respondents belongs to graduates.

ATNCC, SHIVAMOGGA
55
 Table- 3
Occupation wise classification of respondents

Occupation No of respondents Percentage

Students 8 16%
Government employee 14 28%
Private employee 11 22%
Self employee 17 34%
Total 50 100%
Source: Field survey

60
50
40
30
20
Percentage
10
No of respondents
0

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 54% of them belongs to self employee. About 28% of respondents
belong to government employee, 22% of respondents belongs to private
employee and 16% of respondents students.

ATNCC, SHIVAMOGGA
56
 Table-4
How many companies have you dealt so far?

Particular No .of respondents Percentage

More than 2 20 40%
2 17 34%
Only one 13 26%
Total 50 100%
Source: Field survey

No .of respondents

More than 2
2
Only one
Total

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 40% of them belongs to more than 2. About 34% of respondents
belong to 2, 26% of respondents belong to only one.

ATNCC, SHIVAMOGGA
57
 Table -5
Which company do you think is the best?

Companies No. of respondents Percentage

IOCL 20 40%
Bharath 20 40%
HP 10 20%
Total 50 100%
Source: Field survey

No. of respondents

IOCL
Bharath
HP
Total

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 40% of them belongs to IOCL. About 40% of respondents belong to
BHARATH, 20% of respondents belongs to HP.

ATNCC, SHIVAMOGGA
58
 Table -6
Which company is best in quality?

Companies No. of respondents Percentage

IOCL 23 46%
Bharath 17 34%
HP 10 20%
Total 50 100%
Source: Field survey

IOCL
Bharath
HP
Total

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 46% of them belongs to IOCL. About 34% of respondents belong to
BHARATH, 20% of respondents belongs to HP.

ATNCC, SHIVAMOGGA
59
 Table-7
Best customer satisfying company

Company No. of respondents Percentage

IOCL 28 56%
HP 12 24%
Bharath 10 20%
Total 50 100%
Source: Field survey

60

50

40
Percentage
30
No. of respondents
20

10

0
IOCL HP Bharath Total

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 56% of them belongs to IOCL. About 24% of respondents belong to
BHARATH, 20% of respondents belongs to HP.

ATNCC, SHIVAMOGGA
60
 Table -8
Which companies deliver goods on time?

Company No. of respondents Percentage

IOCL 24 52%
Bharath 12 24%
HP 12 24%
Total 50 100%
Source: Field survey

Total

HP
No. of respondents
Percentage
Bharath

IOCL

0 20 40 60

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 52% of them belongs to IOCL. About 24% of respondents belong to
BHARATH, 24% of respondents belong to HP.

ATNCC, SHIVAMOGGA
61
 Table -9
Are you happy with companies replay?

Particulars No. of respondents Percentage

yes 36 72%
No 14 28%
Total 50 100%
Source: Field survey

60

50

40

30 Percentage
No. of respondents
20

10

0
yes No Total

ATNCC, SHIVAMOGGA
62
 Table -10
Which company comes first in your mind?

Particulars No. of respondents Percentage

IOCL 27 54%
Bharath 12 24%
HP 11 22%
Total 50 100%
Source: Field survey

No. of respondents

IOCL
Bharath
HP
Total

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 54% of them belongs to IOCL. About 24% of respondents belong to
BHARATH, 22% of respondents belongs to HP.

ATNCC, SHIVAMOGGA
63
 Table-11
Which company has best customer satisfaction?

Particular No. of respondents Percentage

IOCL 20 40%
Bharath 19 38%
HP 11 22%
Total `50 100%
Source: Field survey

Percentage
120%

100%

80%

60%
Percentage
40%

20%

0%
20 19 11 `50
IOCL Bharath HP Total

Interpretation

From the above table it is interpreted that, out of the total respondents so
contacted 40% of them belongs to IOCL. About 38% of respondents belong to
BHARATH, 22% of respondents belongs to 40-50 years and 2% of
respondents belong to 50-60 years.

ATNCC, SHIVAMOGGA
64
 Table -12
Do you Know IOCL?

Particular No. of respondents Percentage

Yes 42 84%
No 8 16%
Total 50 100%
Source: Field survey

50

40
30
No. of respondents
20
Percentage
10
0 Percentage
No. of respondents
Yes No
Total

ATNCC, SHIVAMOGGA
65
 CHAPTER 6
FINDINGS, SUGGESTIONS AND CONCLUSION

ATNCC, SHIVAMOGGA
66
FINDINGS, SUGGESTIONS AND CONCLUSION
FINDINGS
IOCL has issued less shares capital to the shareholders, constantly from 2010
to 2014. IOCL does not fulfill the of authorized share capital which is mention
in memorandum of association.
 IOCL preference share and debenture not existent in the industry.
 The return on investment ratio of IOCL is the lowest among its
competitions which imply that the degree of efficiency of IOCL in utilizing
the funds entrusted by shareholders and long term creditors is lower than its
competitors.
 IOCL has maximum no. of total debts in the period of 2014, if I compared
40 with previous years.
 In 2014, unsecured loan is constantly higher than previous years.
 In 2014, IOCL has maintained the secular low amounts. Which is mostly
remain same with previous year.
 EBIT is very less in 2014, it is constantly decreasing from 2010 to 2014.
 In 2014, earning per share value is Rs 28.91, which is higher than 2013 but
overall 5 years . IOCL shareholders has earned minimum EPS in 2014.
 IOCL has degree of operating leverage almost same with last 5 years. IOCL
having a good position in future period of time.
 In 2014, degree of financial leverage is very high than previous years. IOCL
increase a debt that must be paid. But, this debt is paid in small installments
over a relatively long period of time.
 The overall efficiency of IOCL is higher than those of its compotators in 41
previous years of comparison.

ATNCC, SHIVAMOGGA
67
SUGGESTIONS
 The company should utilize the debt funds more efficiently to maximize
shareholders return,
 Increasingly firms are moving from secured debt to unsecured debt in order
to free their assets.
 For IOCL, to issue maximum number of share to the public and they have
to reduce the share price is minimum. And IOCL try to fulfill the limit of
authorized share capital.
 IOCL have to reduce total debts of the company against of issuing more
share to the public.
 IOCL need to minimize the degree of financial leverage. Otherwise which
will be affect in future period of time.
 The company should try to increase the profit before interest and tax so that
the investments in the firm are attractive as the investors would like to
invest only where the return is higher.
 The company can be invest in marketable securities to improve its cash 42
position.

ATNCC, SHIVAMOGGA
68
CONCLUSION

Petrol bunks are indispensable to the progress of the nation. Petrol or diesel is
the primary source of fuel mainly in transportation.

Petroleum has a high potential market in India. This is done to the fact that
75% of the population is the users of petroleum. This means that 25% of
population are non – users of petroleum products.

The following are the conclusions there on drawn from the consumers:

Petroleum is a very common and popular product and is used by middle and
high class of people.

Petroleum is a costly item, the circumstances lead to their conclusion that the
majority of respondents who use are from middle and upper income groups.

There are no respondents who did not heard about Indian oil which is very
popular in market.

The respondents also by other brands like HPCL, BPCL, etc., Among then
IOC is largely used by consumer and it is a market leader.

ATNCC, SHIVAMOGGA
69
 ANNEXURE

 Questionnaire
 Bibliography

ATNCC, SHIVAMOGGA
70
 QUESTIONNAIR

Dear Respondent,
I am Anitha D.S pursing BBM in Acharya Tulsi National College of
Commerce Shivamogga. We have to under to project report in Final year
BBM. My topic is “Evaluation of cash management and banking system
with a financial analysis of Indian oil Corporation Limited”. I need your
expensive time. I assure you that this survey is only for academic purpose.
Thanking You
Yours faithfully
Anitha D.S

1. Name :
2. Address :
3. Sex :
a. Male [ ]
b. Female [ ]
4. Age :
a. 18- 25years [ ]
b. 26 – 50 years [ ]
c. Above 50 years ` [ ]
5. Qualification
a. Under graduate [ ]
b. Graduate [ ]
c. Post Graduate [ ]
d. Other [ ]

ATNCC, SHIVAMOGGA
71
6. Occupation
a. Student [ ]
b. Government Employee [ ]
c. Private employee [ ]
d. Self employee [ ]

7. How many companies have you deal till now ?

a. Only one [ ]
b. Two [ ]
c. More than two [ ]

8. Which company do you think is the best?

a. Indian oil corporation Ltd [ ]
b. Bharath [ ]
c. HP [ ]

9. Which company is best in quality?

a. IOCL [ ]
b. Bharath [ ]
c. HP [ ]
10.Best customer satisfying company.
a. IOCL [ ]
b. Bharath [ ]
c. HP [ ]
d. Others [ ]

ATNCC, SHIVAMOGGA
72
11.Which company deliver goods on time?
a. IOCL [ ]
b. Bharath [ ]
c. HP [ ]

12.Are you happy with company’s reply?

a. Yes [ ]
b. No [ ]

13.Which company comes first in your mind?

a. IOCL [ ]
b. Bharath [ ]
c. HP [ ]

14.Which company has best customer satisfaction?

a. IOCL [ ]
b. Bharath [ ]
c. HP [ ]
15.Do you know about IOCL ?
a. Yes [ ]
b. No [ ]
16.If Yes how did come to know about IOCL.
a. T.V [ ]
b. News paper [ ]
c. Mouth to mouth [ ]

ATNCC, SHIVAMOGGA
73
17.Did the advertisement motivate you?
a. Not at all [ ]
b. Don’t know [ ]
c. A bit [ ]
d. Highly Motivated [ ]

18.What are the factors that motivated you to use IOCL product?
a. Quality [ ]
b. Quantity [ ]
c. Prize [ ]
d. Durability [ ]

19.How much important do you give for the duration of IOCL product?
a. Not at all important [ ]
b. Less Important [ ]
c. Important [ ]
d. Very important [ ]

20.Have you made anyone to use Indian oil product ?

a. Yes [ ]
b. No [ ]
21.Any suggestion for your IOCL ----------------------
Date:
Place:
Signature.

ATNCC, SHIVAMOGGA
74
 Bibilography
Books
 Managerial finance – Weston and Copeland pg
 Multinational financial management – Alan – C shaipo
 Cash management – Khan and Jain
 Financial Management – Khan and Jain
 Financial Management – I M Pandey

Website:-
 http://www.iocl.com/aboutus.aspx
 http://www.iocl.com/product.aspx
 http://www.iocl.com/services.aspx
 www.money control. Com
 www. Yahoofinance.com
 http://www. Iocl.com

ATNCC, SHIVAMOGGA
75