A

PROJECT REPORT

ON

INDUSTRIAL TRAINING

AT

ONGC
MEHSANA

SUBMITTED BY:

(1) VAIBHAVI PARIKH

S.Y. BBA SEM-IV

GUIDED BY:
PRN: 2017095900002692
MISS RIDDHI PATEL
(2) TITHI PATEL

S.Y. BBA SEM-IV

PRN: 2017095900002533
SUBMITTED TO:

SMT. S.B.PATEL INSTITUTE OF BUSINESS MANAGEMENT

VISNAGAR (384315)

AFFILIATED TO:

VISNAGAR

ACADEMIC YEAR (2018-2019)

Serial No Particular Page No
1. Prefacer
2. Acknowledgement
3. Executive Summary
Serial No Particulars Page No
1. General Information
1.1
1.2
1.3
1.4
1.5
1.6
1.7
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
3
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
4
4.1
4.2
4.3
4.4
4.5
4.6
5.
6.
 PREFACE

The research provides an opportunity to demonstrate the application of knowledge, skills and
competence required during the technical sessions, to evaluate the performance and to
provide feasible recommendation on the provided data.

Considering above research and data, we are pleased to submit the project report related with
the business management. This project an ample opportunity to explore various areas of
management, which increased our understanding of the concept studied. This has resulted in
enhancing our analytical, interpreting and creative skills.

I have prepared this project report on “Oil and Natural Gas Corporation (ONGC)”. On my
belief, ideas, understanding and observation in the company during the training period.
 ACKNOWLEDGEMENT

This industrial visit helped us in developing our practical ability. I am very grateful to Miss.
Jayshree Dutta, Principal of our institution who had arranged this type of industrial visit to
get more and more practical aspects of the company. I express my special gratitude to the Dr.
Bharat Bhargava (Director General) of Oil and Natural Gas Corporation (ONGC).

Finally, I would like to express my humble thanks to Miss. Riddhi Patel, the professor, for
constant guidance in particular area, support and useful suggestion and encouragement
throughout the project.

The success completion of this report would not have been possible without co-operation and
support of my professor, friends and the employees and staff of Oil and Natural Gas
Coperation (ONGC).
 EXECUTIVE SUMMARY

This project report of the Oil and Natural Gas Copreation (ONGC) includes various functions
like production, marketing, finance and human resources departments, this report is prepared
after the training at company location at Mehsana. It includes the analysis of various
department of the company.

This report mainly focuses on the production department in which it includes inventory
management, layout analysis, manufacturing process etc. This report has tired its best to
collect the information as much as possible about the company.

The report also includes Bibliography and final conclusion are used for preparation if the
project.
 GENERAL
INFORMATION
 1.1 HISTORY AND DEVELOPMENT OF THE UNIT

Oil and Natural Gas Coperation (ONGC) is an Indian multinational oil and gas company.
ONGC is Asia’s best Oil and Gas company. It was first set up as a commission on 14 August,
1956. The company later become corporate on Feb, 1994. ONGC was first corporate to
register a five-digit profit figure in the year 2002-2003. It contributes more than 70% of
India’s Crude Oil Production and more than 75% of India’s National Gas Production to the
economy of India.

Foundation to 1956:

Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of
India. In Assam the Assam oil company was producing oil at Dibol. A 50% joint venture
between govt. of India and Burma oil company was engaged in developing two newly
discovered large fields Naharkatiya and Moran in Assam. In west Bengal, the indo-stanvac
Petroleum project was engaged in exploration of work.

In 1955, Govt. of India decided to develop the oil and natural gas resources in the various
regions of the country as a part of public sector development. A delegation under the
leadership of Mr. K.D. Malviya, the minister of natural resources, visited several European
countries to study the status of oil industries pf those countries. In April 1956, the
Government of India adopted Industrial Policy Resolution, which placed Mineral Oil Industry
among the schedule 'A' industries, the future development of which was to be the sole and
exclusive responsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it became apparent that it
would not be possible for the Directorate with its limited financial and administrative powers
as subordinate office of the Government, to function efficiently. So in August, 1956, the
Directorate was raised to the status of a commission with enhanced powers, although it
continued to be under the government. In October 1959, the Commission was converted into
a statutory body by an act of the Indian Parliament, which enhanced powers of the
commission further. The main functions of the Oil and Natural Gas Commission subject to
the provisions of the Act, were "to plan, promote, organize and implement programs for
development of Petroleum Resources and the production and sale of petroleum and petroleum
products produced by it, and to perform such other functions as the Central Government may,
from time to time, assign to it ". The act further outlined the activities and steps to be taken
by ONGC in fulfilling its mandate.

1960-2000

Since its inception, ONGC has been instrumental in transforming the country's limited
upstream sector into a large viable playing field, with its activities spread throughout India
and significantly in overseas territories. In the inland areas, ONGC not only found new
resources in Assam but also established new oil province in Cambay basin (Gujarat), while
adding new proliferous areas in the Assam-Arakan Fold Belt and East coast basins (both
onshore and offshore). ONGC went offshore in the early 1970s and discovered a giant oil
field in the form of Bombay High now known as Mumbai High. This discovery, along with
subsequent discoveries of huge oil and gas fields in Western offshore changed the oil
scenario of the country. Subsequently, over 5 billion tonnes of hydrocarbons, which were
present in the country, were discovered.

2000- Present:

In 2003, ONGC Videsh Limited (OVL), the division of ONGC concerned with its foreign
assets, acquired Talsiman Energy’s 25% stake in the Greater Nile Oil project.

In 2006, a commemorative coin set was issued to mark the 50th anniversary of the founding
of ONGC, making it only the second Indian company (The State Bank of India) being the
first) to have such a coin issued in its honor.

In 2011, ONGC applied to purchase 2000 acres of land at Dahanu to process offshore gas.
ONGC Videsh, along with Statoil ASA (Norway) and Repsol SA (Spain), has been engaged
in deep-water drilling off the northern coast of Cuba in 2012. On 11 August 2012, ONGC
announced that it had made a large oil discovery in the D1 oilfield off the west coast of India,
which will help it to raise the output of the field from around 12,500 barrels per day (bpd) to
a peak output of 60,000 bpd.

In November 2012, OVL agreed to acquire ' 8.4% stake in ConocoPhillips’ the Kashangan
oilfield in Kazakhstan for around US$5 billion, in ONGC's largest acquisition to date. The
acquisition is subject to the approval of the governments of Kazakhstan and India and also to
other partners in the Caspian Sea field waiving their pre-emption rights.

In January 2014, OVL and oil India completed the acquisition of Videocon Group's ten
percent stake in a Mozambican gas field for a total of $2.47 billion.
In June 2015, Oil and Natural Gas Corporation (ONGC) gave a Rs27bn ($427m) offshore
contract for the Bassein development project to Larsen and Turbo (L&T).

In February 2016, the board of ONGC approved an investment of Rs. 5,050 crores
in Tripura for drilling of wells and creation of surface facilities to produce 5.1 million
standard cubic feet per day gas from the state's fields.

On 19 July 2017, the approved Government of India the acquisition of Hindustan Petroleum
Corporation by ONGC
1.2 SIZE OF THE ONGC AND FORM OF ORGANISATION

ORGANISATION CHART
 SIZE OF UNIT

ONGC is the world largest oil and natural gas unit. It is considered as large-scale unit. Its
branches are spread all over the India.
 1.3 PRODUCTS AND MANUFACTURING PROCESS

PRODUCTS OF ONGC:

 Crude oil
 Natural gas
 Ethane
 Superior kerosene oil
 LPG
 Motor spirit oil etc..

PRODUCTION PROCESS:

Step1. A Geologist & Geophysics survey was conducted by Sub Surface team for the
searching of Reservoir rocks which are tracked in the mother earth. They usually
search for tracked reservoir because they have tendency to remain at one place for
years. Extracting fossil fuel from them become easier as they are placed at one place.

Step2. Once the survey is done, an accurate estimation is done based on the data
available. On the basis of estimation a production facilities and other installation is
madeat that particular field.

Step 3. After installation of production facilities drilling process start. They do

drilling by two ways:

 Vertical Oil Well Drilling

 Directional Oil Well Drilling

At the bottom of the Rig, One cutting machine is there which is called the BIT. It is
used to cut the heavy stones while drilling. The bit is made up of diamonds which is
helpful in the cutting of the stones.

Step 4. Once the drilling is completed, tubing pipes is used to extract crude oil and
otherhydro carbon from the earth. Along with Tubing pipes, Casing pipes are also
attached withit to provide support to it.
Step 5. The crude oil extract from well is transferred to GGS (Group Gathering
Section) forseparation of Natural Gas from Crude Oil. GGS is a separator which have
dome likestructure from which Natural Gas is separated from upper side of machine
as it is light ascompared to Crude Oil. The Natural Gas separated is transfer to GAIL.
The Crude Oil thatremains is the mixture of Crude oil and Water.

Step 6. The mixture of Crude oil and water is transfer to CPF (Central Processing
Facilities). CPF is Heater-Treater machine water is burnt without allowing oxygen to
enterin process in order to convert water into gas so that water can be separated from
crudeoil.

Step 7. The crude oil after processing in CPF is ready for sale which is transferred
toRefineries such as IOCL, BPCL & HPCL through pipelines.
 1.6 CONTIBUTION OF UNIT TO THE INDUSTRY

Role of Oil and Natural Gas Industry in India GDP-Highlights

 India is the 6th largest consumer of petroleum

 By the year 2010, India is expected to rank 4th in terms of consumption of energy
 The contribution of the Indian Oil and Natural Gas Industry is nearly US$ 13.58 billion
 All of the oil refineries in India, apart from two are operated by the states
 The total refinery output in the period 2005-06 was 130.11 million tonnes
 The growth rate of the refinery output was increased by 2.1 % in the year 2005-06
 The crude oil output at the end of 2006-07 was 33.98 million tonnes
 The growth rate of the crude oil output was increased by 5.6% in the year 2006-07
 The production of natural gas in the year 2006-07 was 31.55 billion cubic meters
 Indian petroleum demand depends highly on import of oil and natural gas
 Around 70% of the demands are fed by the imports of oil and natural gas
 The security pertaining to energy has become one of the primary concerns of the Central
Government
 Presently India is trying to grab a share of the oil and gas fields from Central Asia to
Myanmar and Africa
 The area of interest for the Indian Oil and Natural Gas Industry is to search for petroleum in
both offshore and onshore blocks

Role of Oil and Natural Gas Industry in India GDP-World's refiner

 The cost effective refining in India is attracting the attention of several international players
 India is one of the most important markets for petroleum products and crude oil
 The crude oil from Middle East is easily transported to India by means of the sea routes

Role of Oil and Natural Gas Industry in India GDP-Investments Abroad

 India is one of the largest investors in oil fields located abroad

 Most of the Government owned oil companies have share in the oil and gas fields in
different places of the world such as Sudan, Egypt, Libya, Ivory
 Coast, Vietnam, Myanmar, Russia, Iraq, Qatar, and Australia
 India has 20 % share in Sakhalin-I oil project in Russia
 The Oil and Natural Gas Corporation (ONGC) has entered into an agreement with ENI to
acquire 20-25 % share of the Congo oil block
 1.4 TIME KEEPING SYSTEM
Depends on your posting and which department you work.

You can be assigned any duty of below

1. 8 hour general shift

2. morning , evening, ,night shift 6days on 2days off
3. 12 hour day and night shift
4. 21 days on,14 days off
5. 14 days on ,14 days off, offshore

The ONGC works 24/7 and day is divided into 3 shifts:

 7:00 AM to 2:00 PM
 3:00 PM to 10:00 PM
 11:00 PM to 7:00 AM
 1.5 EMPLOYEE SERVICE

MEDICAL FACILITY

All regular employees and their dependent family members are provided free medical facility
through the dispensaries/hospitals of ONGC and through empanelled hospitals, which
includes OPD as well as indoor treatment facility. Retired employees and their spouses as
well as dependents of employees who die in harness are also provided free medical facility at
par with regular employees.

LOANS AND ADVANCES

In order to mitigate financial hardships for acquiring land / house, vehicle, etc. loan facility is
available to employees. Employees are also eligible for Children Education Loan to enable
their wards to pursue higher education both in India and abroad.

HOUSING FACILITIES

ONGC has established townships at most of its work centres. In addition, ONGC also takes
houses on lease for its employees. Bachelor Accommodation is also provided to employees
who are posted on bachelor status. The Employee Beneficial Scheme of ONGC also
facilitates its employees to avail self- lease facility where adequate housing facilities do not
exist.

EDUCATION FACILITES

ONGC has established 24 Project Schools at most of its work centres. Of these, 15 are
Kendriya Vidyalayas. In addition, ONGC has also established 9 Shishu Vihar Schools for
imparting pre-school and Kindergarten level education. These schools are being managed by
the ONGC Officers’ Mahila Samiti at the work centres.

CANTEENS

ONGC provides canteen facility at all its work centres on ‘No Profit’ basis. In operational
areas such as drill sites and offshore where extended stay is involved, free boarding and
lodging facilities are provided by the company to its employees.
  WORKING AND LIVING CONDITIONS:

OFFICES

ONGC is constructing its upcoming offices at Delhi, Dehradun. Mumbai and Kolkata, as
‘Green Buildings’. The Green Buildings at Dehradun and Mumbai were inaugurated in 2013
and 2014 respectively. In other work centres also, systemic improvements in office
accommodation and facilities is undertaken.

RESIDENTIAL COMPLEXES

Renovation of existing colonies/guest houses is being done at many work centres to make the
facilities more in sync with present day requirements. In addition, energy supply through
alternate sources of energy such as wind energy and solar panels have also been introduced in
some of the townships. Water Harvesting has been institutionalized in all ONGC residential
colonies.

RESIDENT WELFARE ASSOCIATIONS

Resident Welfare Associations have been set up at various residential townships of the
company at work centres for ensuring better customer satisfaction among residents by way of
speedy Redressal of complaints, organizing socio-cultural activities and other welfare
initiatives for the residents.

EMPLOYEE WELFARE COMMITTEES

Employee Welfare Committees have been set up in all work centres of the company for
promoting and organizing employee welfare activities like sports, games, literary and
cultural activities among employees and their family members.
PERSONNEL
MANAGEMENT
2.1 ORGANISATION OF PERSONNEL MANAGEMENT
 2.2 RECRUITMENT AND SELECTION PROCESS

How To Apply

The candidate has to register online and fill up necessary details against each vacancy
notified. Only those candidates who fulfil eligibility criteria of age, qualification and are
accompanied with copies and testimonials are accepted.

Selection Process:

The company conducts recruitment process every year to select new candidates. The
selection process of the company consists of 3 rounds. These rounds are as follows:

 Online Written Test (GATE)

 Technical Interview
 HR Interview

Academic Criteria:

 60 percent throughout (Class X, XII and Graduation).

 No backlogs should be there.

Pattern of GATE Exam:

The ONGC TEST PARTTERN breakup is given below:

Testing Areas

Number of Questions

Aptitude

10

Technical
55

Total

65

The total time allotted to the written exam is 180 minutes. There is 1/3rd negative marking in
the paper. Although there is no negative marking in case of Numerical Ability Section.

 Aptitude section consists of questions based on Mathematics, General Awareness

and Reasoning. The section consists of data interpretation and logical reasoning
questions. Also, there are questions based on topics such as puzzles, graphs, charts,
tables, etc.
 Technical section consists of question from core subjects such as mechanical,
electrical and electronics. The section is tough and thorough knowledge of subjects
is required to excel in the exam.
Overall the level of the paper is moderate. Only those candidates who clear the written exam
will qualify for the technical interview and HR round.
 2.3 TRAINING AND MANAGEMENT DEPARTMENT

An integral part of ONGC’s employee- centred policies is its thrust on their knowledge up
gradation and development. ONGC Academy, previously known as Institute of Management
Development (IMD), which has an ISO 9001 certification, along with 7 other training
institutes, play a key role in keeping our workforce at pace with global standards. ONGC
Academy is the premier nodal agency responsible for developing the human resource of
ONGC. It also focuses on marketing its HRD expertise in the field of Exploration
&Production of Hydrocarbons.

The academy conducts approximate 250 programs catering to over 5000 executives and over
a lakh training man days every year. The vast training programs of ONGC are divided into
the Following spectrums:-

1. Induction Training

2. In-service Training

 INDUCTION TRAINING:

One year induction training program for graduate trainees training of ONGC is divided into
the following modules:-

 Orientation Introductory Training (OIT) and Multi-disciplinary Theoretical

Familiarization Training (MDIT)
 Multidisciplinary Field Familiarization Training (MDFF)
 Functional Specialized Training (ST)
 Functional on the job training (FJIT)
 Final Evaluation (FE)
 Multidisciplinary Field Familiarization Training (MDFF) This module covers
exposure of the newly inducted trainees to the various field operations in the
following areas:- Introduction to Exploration management Exploration of
Hydrocarbons Introduction to drilling technology Introduction to production
technology Introduction to technical services General management Financial
management Material management Information management
 IN-SERVICE TRAINING:.

By in-service training program we mean the periodical training given to the working
employees to enhance their knowledge and skills so that they can work efficiently
The various programs carried by ONGC under this type of training are as follows:-

1. Technical training

2. Exploration training

3. Management training

4. Product engineering training

5. Finance training
 2.4 JOB DESCRIPTION AT MANAGERIAL LEVEL

A job description or JD is a document that describes the general tasks, or other related
duties, and responsibilities of a position. It may specify the functionary to whom the
position reports, specifications such as the qualifications or skills needed by the
person in the job, and a salary range. Job descriptions are usually narrative, but some
may comprise a simple list of competencies; for instance, strategic human resource
planning methodologies may be used to develop a competency architecture for an
organization, from which job descriptions are built as a shortlist of competencies.

 ONGC General Manager Job Responsibilities:

Obtains profit contribution by managing staff; establishing and accomplishing

business objectives. General managers are in charge of the operations for a large areas
within a company. General managers often oversee local managers and their
employees, as well as a local office of employees. General managers set policies,
operations, create and maintain budgets, and coordinate with local management in the
company to evaluate employees, company performance and efficiencies.

 JOB SKILLS AND REQUIREMENTS

 Leadership Skills: You will have to keep your employees motivated, resolve conflicts
and make hard decisions for your employees.
 Time Management: You will be working with employees, customers and management.
Time management is essential to make sure everything gets done.
 Math and Budgeting: General managers are expected to create, keep and maintain a
budget, as well as make projections based on previous expenditures. You will need to be
confident in using math skills to make sure you know where your company's money is
going.
 Analytical Skills: You will be in charge of overseeing the hiring of new employees, and
being a good judge of character will help ensure that you hire the right people to
maintain an efficient and motivated team. You will also need analytical skills to be able
to solve problems that may come up during a typical work day.
 Decision-Making Skills: The buck stops with you. Whether it is dealing with
employees, customers, top executives or vendors, you will have to make decisions that
 affect the company. Having the ability to make hard and fast decisions is crucial to your
success.
 Speaking and Writing: General managers do a lot of communicating. This might be in
negotiations with contractors, in front of a group of employees, or in a meeting with
other management. You might be called upon to write reports and recommendations.
Great verbal communications and writing skills will help you in any of these scenarios

 GENERAL MANAGER JOB DUTIES:

 Increases management's effectiveness by recruiting, selecting, orienting, training,

coaching, counseling, and disciplining managers; communicating values, strategies,
and objectives; assigning accountabilities; planning, monitoring, and appraising job
results; developing incentives; developing a climate for offering information and
opinions; providing educational opportunities.
 Develops strategic plan by studying technological and financial opportunities;
presenting assumptions; recommending objectives.
 Accomplishes subsidiary objectives by establishing plans, budgets, and results
measurements; allocating resources; reviewing progress; making mid-course
corrections.
 Coordinates efforts by establishing procurement, production, marketing, field, and
technical services policies and practices; coordinating actions with corporate staff.
 Builds company image by collaborating with customers, government, community
organizations, and employees; enforcing ethical business practices.
 Maintains quality service by establishing and enforcing organization standards.
 Maintains professional and technical knowledge by attending educational workshops;
reviewing professional publications; establishing personal networks; benchmarking
state-of-the-art practices; participating in professional societies.
 Contributes to team effort by accomplishing related results as needed.
 2.5 PROMOTION AND TRANSFER

 TRANSFER:

Employees can apply for transfer after working 3 years at your initial posting but controlling
officer should not have a problem with that. First they will ask your controlling officer after
employees can apply for transfer, if he/she does not have a problem then they proceed for
checking availability at your preference locations keeping in view the operational
requirement of the organisation. It is not necessary that you will get transfer at one of
your preferences only.

Employees can apply for the transfer before completing 3 years also (Not in North East) but
you should have a very strong reason for that and once again your controlling officer should
be in favour of your transfer.

Normally, all those executives at the level E1 to E4 who have complete more than 5 years in
the sector/ Station shall be liable for transfer, except out of North East sector for which
minimum tenure is of 3 years.
If you want to stay in North East after completion of 3 years, you need to take extension
from competent authority else you are liable for transfer.

 PROMOTION POLICY

Promotion shall mean movement of executives from the post in the lower grade to the post in
the next higher grade in the line of promotion as defined herein. Jumping of scale(s) /grades
shall not be allowed. The promotions will be given effect from 1st January and 1st July. The
Executives completing qualifying service during 1st July to 31st December will be given
promotion from 1st January and those completing the qualifying service from 1st January to
30th June will be given promotion from 1st July. However, the monetary benefits will accrue
from the actual date of taking over charge of the promoted post by the Executives. All
promotions shall be subject to completion of minimum qualifying period and other
requirements as laid down in this policy. Mere fulfilment of the qualifying period of service
will not confer any right for promotion. Promotions from E-0 to E-1, E-1 to E-2 and E-2 to
E-3 shall be on the basis of seniority-cum-merit and of combined sanction of all the posts in
the cluster. In other word, vacancies will not be constraint for promotion within the cluster of
grades. The promotions from E-3 to E-4, E-4 to E-5, E-5 to E-6 and E-6 to E-7 shall be on
merit-cum-seniority basis. Promotions from E-3 to the cluster of E-4 & E-5 and from E-5 to
E-6 and E-6 to E-7 shall be subject to availability of vacancies. The number of executives to
be considered for promotion, in case of promotions where the promotions are vacancy based,
shall not exceed five times the number of available vacancy (ies). Executives shall be
considered for promotion strictly in accordance with the approved line of promotion for each
category or posts. Executives of MECL on deputation to other PSU/Central
Government/Autonomous body and are retaining lien in the Company, shall be entitled for
perform promotion in MECL. The Promotion will be effective only after the employee
repatriates to the Company. The eligibility for qualifying service for promotion to next
higher grade will be determined on the basis of continuous service in the lower grade. The
training period of Engineer Trainees/Officer Trainees shall be counted towards qualifying
service. EOL on medical grounds up to the permissible limits and other authorized leave shall
count as qualifying period for promotion. The basic induction level in the Executive cadre in
the Company will be E-1 grade to which the entry will be largely through Officer Trainee
Scheme. To provide promotional avenue to the Executives in E-0 grade, the mode of
recruitment to the posts in E-1 grade shall be 30% by promotion and 70% by direct
recruitment.

The minimum qualifying period for promotion from E-0 to E-7 based on the qualifications
shall be us under: Grade Qualifying Period From (1) To (2) B.E/M.Sc./ M.Tech. (Applied
Geology/Geol ogy/Applied Geoph./Geoph y/Chemistry/ Phys.)/MBA/M CA/CA/ ICWA/CS
or equivalent (3) Diploma in Engg./Graduation + P.G.Diploma(one year)/Inter CA/Inter
ICWA or equivalent (4) M.Com/MA/B.Sc B.Com./BBA/BA or equivalent (5) E-0 E-1 03 yrs
04 yrs 05 E-1 E-2 02 yrs 04 yrs 07 E-2 E-3 04 yrs 05 yrs 07 E-3 E-4 04 yrs 05 yrs Not
eligible E-4 E-5 04 yrs 05 yrs Not eligible E-5 E-6 03 yrs Not eligible Not eligible E-6 E-7 03
yrS Not eligible Not eligible

Note:1. The details of the qualifications indicated under Col.-3 of the above table are given
in Annexure-I based on which criteria of qualifying period under Col.-3 will be determined. -
6- 2. The existing employees in their present positions will continue. However, for future
promotions the Committee of functional Directors is authorized to consider relaxations for
one level from E-0 to E-1 and E-1 to E-2 in case of Matriculates and Matriculates with ITI
qualifications on merit of each case. 10. The Executives who acquire higher qualification
after joining in a particular lower post, which is similar to or higher then as provided in the
above table, then he will be considered for his next promotion with lesser qualifying period as
in the col.3 or 4 of above table, as the case may be. 11. Promotion to the post of Manager (E-
4), Deputy General Manager (E/6) and General Manager (E/7) will be subject to availability
of vacancy. 12. In case where an executive under consideration for promotion from E-5 to E-
6 or E-6 to E-7 is senior in the seniority list but has not completed the qualifying service on
the relevant cutoff date, he shall also be considered for promotion along-with his juniors
(who have completed the qualifying service on the relevant cut-off date). This dispensation
shall, however, be given to an executive only once in his entire service career. The short fall
in the qualifying period of the senior executive vis-à-vis his junior in the same panel will be
notional and with effect from the date the executive completes eligibility period for
promotion. His inter-se-seniority shall also remain unaltered unless determined otherwise by
the DPC.
 2.6 PERFORMANCE APPRAISAL

Performance Appraisal Reports shall constitute 50 marks in all in the cases of promotions
where five PARs are considered and 20 marks in the cases of promotions where only two
Performance Appraisal Reports are considered. The appraisal system will be on a five points
scale i.e. Outstanding, Very Good, Good, Average and Poor. For the purpose of aggregation
marks shall be allotted to various ratings as under: Outstanding : 10 Very Good : 08 Good :
06 Average : 04 Poor : 00 The minimum qualifying marks for promotion in PAR shall be 32,
where five PARs are considered and 14, where two PARs are considered. -7- 13.3 The DPC
shall award up to a maximum of 10 marks to each eligible Executive keeping in view his
general conduct, aptitude, sense of involvement, commitment to the organization and the
potentiality and suitability for the specific job position to which he is to be promoted. The
minimum qualifying marks will be 05 for general candidates and 04 for SC/ ST candidates.
13.4 Qualifying marks secured by each eligible candidate in terms of sub-paras 13.2 and 13.3
shall be aggregated. To qualify for promotion each eligible candidate must secure minimum
aggregate marks as indicated below:

A) In the cases where 05 PARs are considered: 37 marks by general candidates and 36 marks
by SC/ST candidates. B) In the cases where 02 PARs are considered: 19 marks by general
candidates and 18 marks by SC/ST candidates. 14.0 Promotion from Assistant Manager (E-3)
to Manager (E-4) and above. 14.1 Since the posts of E-4 & E-5 are in one cluster, the
promotions from E3 to E-4 will be based on the vacancies available in the combined cluster
of E-4 & E-5. However, the numbers of posts in E-5 grade out of the combined cluster of E-4
& E-5 posts, will not exceed 50% of the sanctioned strength of E-4 & E-5 posts.

Promotion from Manager (E-4) to Sr. Manager (E-5) Promotion of Executives from the post
of Manager (E-4) to Sr. Manager (E-5) being in the same cluster, will be based on the
condition of vacancy as provided and as assessed by the DPC of their performance in their
PARs and other parameters provided in Para 14.4 to 14.6 below. 14.3 Performance appraisal
reports : 60 marks Performance Appraisal Reports shall constitute 60 marks in all. The
appraisal system will be on a five points scale i.e. Outstanding, Very Good, Good, Average
and Poor. For the purpose of aggregation marks shall be allotted to various ratings as under: -
8- Outstanding : 12 Very Good : 10 Good : 08 Average : 06 Poor : 00 The minimum
qualifying marks for promotion in PAR shall be 44. 14.4 Interview: 30 marks The DPC will
award up-to a maximum of 30 marks to eligible executive for interview keeping in view the
relevant factors like educational qualifications, professional knowledge, ability to reason out
logically, presentation of ideas coherently, leadership, potential for decision making and
communication skills, etc. The minimum qualifying marks in the interview will be 15 for
general candidates and 13 for SC/ST candidates. 14.5 Qualifying marks secured by each
eligible candidate in terms of sub-paras 14.3 and 14.4 shall be aggregated. To qualify for
promotion each eligible candidate must secure a minimum aggregate of 59 marks in case of
General Candidates and 57 marks in case of SC/ST Candidates.
 2.7 WAGES AND SALARIES ADMINISTRATION

The salary in ONGC depends on level and designation. These levels are E, S, W and A. E
level includes the Directors, Managers, engineers and assistant engineers. A level includes
junior engineers, assistant in grade 2 and junior assistant. Workers, attendant grade and junior
attendant are in group W.

DESIGNATION LEVEL Pay Scale

Executive Director E-9 Rs.150000-

300000

Group General Manager E-8 Rs.120000-

280000

General Manager E-7 Rs.120000-

280000

Deputy General Manager E-6 Rs.120000-

280000

Chief Manager/Chief E-5 Rs.100000-

Geophysicist/Chief 260000
Geologist/Chief
Chemist/Chief Engineer

Manager/Superintending E-4 Rs.90000-

Geophysicist/Superintending 240000
Geologist/Superintending/Chemist
DESIGNATION LEVEL Pay Scale

Superintending Engineer

Deputy Manager/Deputy E-3 Rs.80000-

Superintending Geophysicist/Deputy Superintending 220000
Geologist/Deputy Superintending Chemist/ Deputy
Superintending Engineer

Senior (**) Officer/Assistant E-2 Rs.70000-

Executive Engineer/Senior Geologist/Senior Chemist 200000

(**) Officer/Assistant Executive E-1 Rs.60000-

Engineer/Geophysicist/Geologist/Chemist 180000

Assistant (**)Officer/Assistant Engineer/Personal Secretary E-0 Rs.50000-

160000

Chief Superintendent/Senior Foreman S-IV Rs.32000-

56000

Senior Superintendent/Senior Foreman S-III Rs.28000-

52500

Superintendent/ Foreman S-II Rs.24000-

48500

Assistant Superintendent/Assistant Foreman S-I Rs.20000-

45000
DESIGNATION LEVEL Pay Scale

Junior Engineer/Junior A-V Rs. 16000-

Superintendent/Junior Accountant 36000

Topman/Chargeman/Assistant Grade I A-IV Rs.15000-

35000

Junior Technician/Rig man/Assistant Grade II A-III Rs.13500-

31000

Assistant Junior Technician/Assistant A-II Rs.12000-

Rig man/Assistant Grade III 27000

Assistant Technician/Junior A-I Rs.11000-

Assistant 24000

Head Worker W-VII Rs.20000-

45000

Deputy Head Worker W-VI Rs.15000-

35000

Senior Worker W-V Rs.13500-

31000

Attendant Grade –I W-IV Rs.12000-

27000

Attendant Grade -II W-III Rs.11000-

DESIGNATION LEVEL Pay Scale

24000

Attendant Grade –III W-II Rs.10500-

21000

Junior Attendant W-I Rs.10000-

18000
 2.8 STUDY OF PROVIDENT FUND

The Employees’ Provident Fund (EPF) is a savings scheme introduced under Employees’
Provident Fund and Miscellaneous Act, 1952. It is administered and managed by the Central
Board of Trustees that consists of representatives from three parties, namely, the government,
the employers and the employees. The Employees’ Provident Fund Organization (EPFO)
assists this board in its activities. EPFO works under the direct jurisdiction of the government

and is managed through the Ministry of Labour and Employment.

tHe EPF scheme basically aims at promoting savings to be used post-retirement by various
employees all over the country. Employees’ Provident Fund or EPF is a collection of funds
contributed by the employer and his employee regularly on a monthly basis. The employer
and employee contribute 12% each of the employee’s salary (basic + dearness allowance) to
the EPF. These contributions earn a fixed level of interest set by the EPFO. The amount of
interest to be received on the deposit along with the total accumulated amount is totally tax-
free, i.e. the employee may withdraw the entire fund without worrying about paying any kind
of tax on it.

The accrued amount may also be withdrawn by the nominee or the legal heir of the employee
post his death or can be withdrawn by the employee himself post-resignation.

The Employees’ Provident Fund is a fund where both the employer as well as the employee
contributes a part of the salary. These contributions are made regularly on a monthly basis.
The interest rate fixed depends upon the employee’s basic pay along with the dearness
allowance in his salary.

In general, the contribution rate for the employee is fixed at 12%. However, the rate is fixed
at 10% for the below-mentioned organizations:

 Organizations or firms employing a maximum of 19 workers.

 Industries declared as sick industries by the BIFR

 Organizations suffering annual loss much more as compared to their net value.

 Coir, guar gum, beedi, brick and jute industries.

 2.9 TRADE UNION
ONGC have an employee association that is recognized by management:

A. Executive Cadre: The Association of Scientific and Technical Officers (ASTO) has been
recognized to represent the issues related to the officers.

B. Non-Executive Cadre: Twelve recognized unions as under:

1. ONGC (BOP) Karmachari Sanghatana, Mumbai

2. ONGC Workmens’ Association, Kolkata

3. Petroleum Employees Union, Chennai

4. Petroleum Employees Union, Karaikal

5. Petroleum Employees Union, Rajahmundry

6. Petroleum Mazdoor Sangh, Ahmedabad

7. ONGC Mazdoor Sangh, Ankleshwar

8. ONGC Employees Mazdoor Sabha, Baroda

9. ONGC Purbanchal Employees’Association Sivasagar

10. National Union of ONGC Employees, Dehradun

11. ONGC Workers Union, Agartala

12. Trade Union of ONGC Workers, Silchar. Besides above All India SC/ST Employees
Welfare Association and All India OBC/ MOBC are recognized by the Company.

 OBJECTIVES AND NEED OF TRADE UNION

 Wages and salaries-Wages and salaries and the most important subjects of Trade
Unions. In the organized industry, wages and benefits are determined through
processes such as collective bargaining, wage boards, conciliation, and adjudication.
Working of all these processes deserves systematic inquiry. Union power and
objective facts hopefully influence the wage scene through these forums.
 Working conditions-Another major objective of the Trade Unions is to insure the
safety of workers. While working every worker must be provided with basic facilities
like. Drinking water, minimum working hours, paid holidays, social security, safety
equipments, lights and others.
 Personnel policies-Any personal policy of the employer with respect to promotion,
transfer and training may be challenge by Trade Unions if arbitrary.
 Discipline-Trade Unions also protect the workers from arbitrary discipline action
taken by management against any worker. No worker should be victimized by
management in the form of arbitrary transfer or suspension.
 Welfare-The main objective of the Trade Union is to work for the welfare of the
workers. This includes welfare of the family members or children of the worker.
 Employee and Employer Relations-for an industrial peace there must be harmony
between employer and employee. But due to superior power of the management
sometimes conflict arises in this situation Trade Union represent the whole group of
workers and continue negotiations with management.
 Negotiating Machinery-Trade Unions may also put proposals before management, as
this policy is based on the principle of “Give and Take” Trade Unions protect the
interest of workers through collective bargaining.
 Safeguarding Organisational Health and the Interest of the Industry-Trade Unions
also help in achieving employee satisfaction. Trade unions also help in better
industrial relation by creating procedure to resolve the industrial dispute.
 Alone workers feel weak. Trade Union provides him a platform to join others to
achieve social objectives.
 FUNCTIONS OF TRADE UNIONS IN INDIA
 Collective Bargaining-Hon'ble Supreme Court of India has defined Collective
bargaining as“the technique by which dispute as to conditions of employment is
resolved amicably by agreement rather than coercion” in this process negotiations
and discussions take place between employer and employee in respect to working
conditions. Refusing to bargain collectively is an illegal trade practice. Collective
bargaining helps to resolve the issues of workers. Collective Bargaining is the
foundation of the movement and it is in the interest of labour that statutory
recognition has been accorded to Trade Union and their capacity to represent
workmen.
 Trade Unions protect the worker from wages hike, provides job security through
peaceful measures.
 Trade Unions also help in providing financial and non-financial aid to the workers
during lock out or strike or in medical need.
 It has also to be borne in mind while making an agreement that the interest of the
workers who are not the members of Trade Union are also protected and the workers
who are not members of the Trade Union are also protected and the workers are not
discriminated.
 2.9 GRIVENCES HANDLEING PROCEDURE

Steps of Grievance handling procedure in ONGC are:

STEP 1: In the first step the grievance is to be submitted to departmental representative, who
is a representative of management. He has to give his answer within 48 hours.
STEP 2: If the departmental representative fails to provide a solution, the aggrieved
employee can take his grievance to head of the department, who has to give his decision
within 3 days.
STEP 3: If the aggrieved employee is not satisfied with the decision of departmental head, he
can take the grievance to Grievance Committee. The Grievance Committee makes its
recommendations to the manager within 7 days in the form of a report. The final decision of
the management on the report of Grievance Committee must be communicated to the
aggrieved employee within three days of the receipt of report.
An appeal for revision of final decision can be made by the worker if he is not satisfied with
it. The management must communicate its decision to the worker within 7 days
STEP4:
If the grievance still remains unsettled, the case may be referred to voluntary arbitration.
MARKETING
MANAGEMENT
3.1 ORGANISATION OF MARKETING DEPARTMENT
 3.2 PRODUCT PLANNING
Natural Gas is an invisible commodity which is a major source of clean energy. One cannot
see it, nor smell it, nor taste it. Only by human sense, one can tell, it is there. It is used in
many industries like Fertilizers and Petrochemical industries as a raw material and in power
plant & other industries as a heat-media. Natural gas can be either associated gas or non-
associated gas.

 Associated Gas: Associated gas is also known as dissolved gas. It is produced along
with crude oil. It must be disposed of simultaneously with the oil by re-injection, oil
field operation or by flaring. Flaring is considered environmentally bad because it
wastes natural resources and illegal in many countries. Associated gas is normally
rich in C3-C5 hydrocarbon which can be recovered as liquefied petroleum gas prior
to marketing.
 Non-associated Gas: Non-associated gas is also called as free gas. It is produced
independently from a gas reservoir. It may combine little or more hydrocarbons
heavier than methane. Its production is regulated based on demand in the market.

The natural gas industries structured into following four sub-industries

 Exploration and production

 Gas gathering & transmission

 Gas processing

 Gas distribution

Gas exploration requires a huge amount of risk capital because even after a huge investment
for exploration, no one can be sure of how much gas will be found, if, in fact, any is found
at all. Numerous technologies are used to find natural gas and to extract it from the ground.
Companies first use aerial or satellite surveys to gauge the lay of the land and to see if certain
areas are prone to sedimentary rock formations. Once an area is identified, a seismic survey is
taken. Seismic surveys use sound waves to identify rock structures below ground. Different
rocks reflect sound waves at different frequencies and that is how scientists determine where
to begin drilling.

The next step is to drill an exploration well followed by appraisal wells, if there is a
discovery. If there is a commercial discovery, the field is developed after drilling additional
development wells and establishment of gathering and processing facilities for moving the
well fluid from the wellhead to a centralized place, separate the gas from liquid stream (in
case of associate gas) and to process it for sale and transport on a downstream pipeline.
3.3 MARKET SEGEMENTATION
 3.4 PRICING POLICY

Long term nature of contractual relationship requires that the gas should be competitively
price over the duration of the contract. There is no ‘just’ price of gas. Seller wants to get the
highest price that reflects its true market value with respect to competing fuels and buyer
aims lowest price and cover future uncertainty. Final price agreed is a compromise between
buyer and seller.

Main issues influencing the gas pricing are;

a) General situation such as

Gas short or gas rich country

Risk sharing between seller and buyer

Share of Gas in energy market

b) Gas Quality

c) Market considerations such as

Competing fuels and their pricing

Market Structure

Possible Price Escalators

Both buyer and seller generally wish the price of gas to reflect the changing energy markets.
Therefore, it is not feasible to have a long-term contract with a fixed price. It is best to adjust
it over time on a regular basis using a price escalation formula. The range of indicators
which can be used in such a formula include:
Crude Oil. Quite commonly used in gas contracts and favoured by sellers, because oil prices
were expected to rise more rapidly than inflation. It is disliked by the buyers, as they do not
actually compete with crude in final energy markets.

Oil Product Prices. Generally, very popular with both buyers and sellers and widely used in
gas sales contracts. They are acceptable to buyers, because gas-oil and fuel oil are the main
competitors for gas in the industrial and commercial markets. They are also favoured by
sellers because oil product prices are closely linked to crude oil prices.

Electricity. This has considerable attractions for buyers, as electricity is one of the chief
competitors to gas in the domestic market. However, it is not one of the preferred escalators
for the sellers because oil companies suspect electricity prices may rise at less than the
inflation rate in future.

Coal. Again, this is an indicator widely favoured by buyers because coal prices are generally
expected to rise more slowly than oil prices. It tends to be rejected by sellers for the same
reason.

General Inflation. Perhaps surprisingly, general inflation indices, are popular with both
buyers and sellers. The buyers like it because inflation indices based price is expected to rise
less than an oil based one. Despite this, is also favoured by the sellers as it provides a very
useful hedge against falling oil prices and guarantees rising gas prices, albeit at modest rates.

Although there are points for and against these indicators described above, the experience of
both buyers and sellers is that it is very hard to predict which indicator will be best and so
both sides are generally happy to settle for a mixture of several different indicators and their
weighted value.
The gas price, will reflect the change in the weighted value of the agreed escalator prices
between the Base Period and the Review Period, multiplied by the base Price. The Base
Period is the period immediately prior to the date to which the Base Price applied whereas the
Review Period is the period immediately prior to the date on which the price is being re-
calculated. The contract also specifies how frequently prices are recalculated, generally
quarterly or yearly. In addition to the pricing formula, generally, there is a clause in the
contract which says that no matter what price is arrived by the price formula, the gas price
during the pre-defined period, will not drop below and increase over a pre-determined price,
to protect the interests of both buyers and sellers due to unexpected change of prices of
agreed escalators.
 3.5 DISTRIBUTION CHANNEL

Supply chain stages

 acquisition of onshore and offshore for exploration

 operations – exploration, forecasting, production.
 logistics management - delivering crude oil from remotely located oil wells to
refineries logistics drivers of supply chain of ONGC facilities they have a total of 21
rigs, nine of them deployed on the east coast and 12 others on the west. twelve of
them are one hire while nine others are owned by them have nearly 5,000 km of
pipeline for operation and maintenance.
 inventory • inventory in ONGC has been classified into two broad groups: • stores •
spares
 transportation for transportation ONGC uses pipeline, ship, rail or road. pipeline is the
cheapest for the bulk transportation but cannot be used for small quantity. small
quantities are supplied through road in remote areas. Coastal cities can be supplied
through sea. 4. Information oil and natural gas Corporation limited (ONGC) has
chosen the sap net weaver process integration (sap net weaver pi) offering. ongc

collaborates in real-time – gaining vast efficiencies in production and accounts

payable.
 sourcing state-owned oil and natural gas corp (ongc) has extended pact with hinduja
group for sourcing of liquefied natural gas from iran

Selling Mechanism

As the gas comes generally from non-associated gas fields, the quantities delivered on any
one day are determined by the buyer, concept known as Buyer’s Option under both Supply
and Depletion contracts. For associated gas this approach is not possible, as the gas is
essentially a by-product of oil production. In this case a Seller’s option contract is used
instead. The main features of these contracts are;

 In advance of each Contract Year, the seller would nominate either the quantity which
he would be able to sustain over that year or the quantities he would be able to sustain
over Shorter periods in that year.
  In respect of each day, the seller would nominate a quantity he expects to deliver to
buyer.

 Buyer is obliged to take delivery of the gas provided the quantities fall within the
limits set out in the contract. If the nomination is not within the defined limits,
discounts apply.

 On each day, the seller’s performance is measured against his nomination. Over-
deliveries would be discounted and under-deliveries subject to either Force Majeure
or default.

 The contract could be either dedicated or not dedicated. If the seller is reserving up to
20% for other buyers, this contract would contain a dedication clause. For
reservations of greater than 20%, there might be no dedication. Dedication is relevant
for single fields only.

 If there are more than one buyer, fixed agreed priority rules apply in the event of a
supply shortage. The contract would terminate when hydrocarbon production for the
supply source had permanently ceased.

 As the buyer has no control over the volumes, its value is lower and so the Seller’s
Option gas is generally sold at prices below those in a Buyer’s Option Contract.

Purchase Mechanism

The buyer essentially absorbs all the uncertainty of the recoverable reserves whereas in
supply contracts, the uncertainty is taken wholly by the seller. In partial purchase contracts,
both buyer and seller share the uncertainty. The characteristics of Partial purchase contracts
are;

 It has a specified supply profile and total contract quantity. However, the seller
has the right, by giving suitable notice, to vary the supply profile after the
Plateau Period.
 Actual changes to the supply profile, generally, attract price discounts. These
would be larger the shorter the notice period given (to reflect the greater
uncertainties imposed).
 Over the contract period, under-deliveries are treated as in a supply contract.
 3.6 MARKET RESEARCH
ECONOMIC ANALYSIS

 The economy of India is the eleventh largest economy in the world by nominal GDP.
 The fourth largest by purchasing power parity (PPP).
 India had established itself as the world's second-fastest growing major economy.

However, the year 2009 saw a significant slowdown in India's GDP growth rate to 6.8% as
well as the return of a large projected fiscal deficit of 6.8% of GDP which would be among
the highest in the world.

The fiscal year 2009-10 began as a difficult one. There was a significant slowdown in the
growth rate in the second half of 2008-09, following the financial crisis that began in the
industrialized nations in 2007 and spread to the real economy across the world. The growth
rate of the gross domestic product (GDP) in 2008-09 was 6.7 per cent, with growth in the last
two quarters hovering around 6 per cent. 6.

The fiscal year 2009-10 has been a time of inflationary concerns. It was a year of a somewhat
unusual inflation. While food inflation soared, inflation in the non-food sector was negligible.
The Government was concerned that the upward pressure on prices should not escalate to all
sectors.

 POLITICAL ENVIRONMENT

The United Progressive Alliance (UPA) lead by the Indian National Congress (Congress) was
re-elected to a second five year term in 2009. The UPA succeeded in gaining a stronger
electoral mandate in 2009 and therefore has had to rely less on left leaning coalition partners
in contrast to the coalition formed in 2004.

 FOREIGN EXCHANGE RESERVES

Taking into account the valuation effect, India‟s foreign exchange reserves recorded a
decline of

US $ 57.7 billion during 2008-09 to US $ 252.0 billion as at end-March 2009. Valuation loss
arising out of depreciation of major currencies against the US dollar, at US$ 37.6 billion,
accounted for 65.2 per cent of the total decline in foreign exchange reserves during 2008-09.
However, in 2009-10 foreign exchange reserves recorded an increase of US$ 29.3 billion in
H1 (April-September 2009) of which US$19.8 billion was on account of valuation gain

 DOMESTIC DEPOSIT RATES

Deposit rates of SCBs softened during 2009-10. Interest rates offered by PSBs on deposits
ofmaturity of one year to three years declined from the 8.00-9.25 per cent range in March
2009 to6.00- 7.25 per cent in December 2009, while those on deposits of maturity of above
three yearscame down from the 7.50 9.00 per cent range to the 6.25-7.75 per cent during the
same period.The term deposit rates of private-sector banks and foreign banks on deposits of
maturity of oneyear up to three years also declined from the 7.50-10.25 per cent and 2.50-
9.50 per cent rangerespectively in March 2009 to the 5.25-7.50 per cent and 2.25-7.75 per
cent range in December2009.

 INFLATION

The first half of the financial year 2008-09 was marked by high wholesale price index (WPI)-
based inflation, primarily due to the rise in global commodity and fuel prices. The subsequen
tglobal economic meltdown starting September 2008 reversed the trend and WPI inflation
slippedinto negative territory during June to August 2009. This was due to the decline in
commodity prices globally and the base effect. As regards food inflation, the upswing noticed
in the firstquarter of 2008-09, continued during 2009-10 due to unfavorable south-west
monsoon, the worstsince 1972. Though the current specter of double-digit inflation in food
articles is ascribable tosupply-side constraints, it is necessary to ensure that the monetary
policy stance does not lead to pressure.

 INDUSTRY ANALYSIS OIL AND NATURAL GAS SECTOR

THE ORIGIN OF THE OIL INDUSTRY in India can be traced back to the last part of the
19thcentury when petroleum was discovered in Digboi in north-east India. After
independence, theindustry - which had Burmah Shell, Esso and Caltex as major players - was
nationalized. Everyactivity - exploration, development, production, refining, marketing,
distribution - was controlled

by the various national oil companies. Since India‟s eco

nomic liberalization program started,however, the Indian oil and gas sector has gone through
some very fundamental changes.
FACTS

India is currently the fourth largest oil consumer in the Asia-Pacific region after Japan,
Chinaand South Korea. Estimated to increase at the rate of 7 % a year, the demand for
petroleum products, in absolute terms, is expected to be 155 and 195 million tones
respectively for the year2006-07 and 2011-12. India is endowed with 26 sedimentary basins
totaling around 1.72 millionsq. km. of which offshore area amounts to 0.38 million sq. km.
Most of the basins are undervarious stages of intensive/extensive exploration. The size of the
Indian Oil & Industry isestimated to be US$ 90 Billion. The Oil & Gas sector is also one of
the largest contributors toCentral and State exchequer amounting to US$13.58 Bn. Apart
from enhancing the domesticefforts in the sector Indian Companies are venturing overseas as
well to give the country a senseof energy security and strategic positioning. In the upstream
segment, we have OVL investing in Sakhalin, Sudan, Myanmar, Vietnam, Libya, Syria, Iraq
and Angola. Reliance has gone intoYemen. In the downstream, IOC has a presence in Sri
Lanka and has expressed its interest indistribution in Singapore and Malaysia as well Middle
East Markets. BPCL has also bid for retailoutlets in Sri Lanka. GAIL is eyeing the Egyptian
and UK markets also.
 FINANCIAL
MANAGEMENT
4.1 ORGANISATION CHART OF FINANCIAL
MANAGEMENT
4.3 CAPITALISATION
 4.2 FINANCIAL PLANNING

The most important ratio is Net Profit Margin percentage or Net margin. It tells us how much
out of every sale ONGC gets to keep after everything else has been paid for. It is highly
variable from one industry sector to another. An ideal company has consistent profit margin

From an investor's perspective, ROE is a key ratio. The ROE (after subtracting preferred
shares) tells common shareholders how effectively their money is being employed. Ideal long
term average ROE should be above 15%.

Average 2 year ROE of Oil & Natural Gas Corporation Ltd. : 10%
Current Ratio measures the company's current assets against its current liabilities. Ideally the
current ratio should be greater than 1.5. Avoid investing in companies whose current ratio is
less than 1. There are exceptions to this rule, some good companies can have less than 1 or
even a negative current ratio when they recieve money faster from their customers than they
have to pay to their vendors

Debt-to-Equity ratio varies across industries but many companies have a ratio larger than 1,
that is they have more debt than equity. If the ratio is very high, raising more cash through
borrowing could be difficult. Capital intensive industries such as auto manufacturing tend to
have a debt/equity ratio above 2, while IT companies have a debt/equity of under 0.5.
 4.4 MANAGEMENT OF WORKING CAPITAL

Working capital is the capital required for day to day function of business enterprises. It
required for the purchase of raw materials and for meeting day to day expenditure on salary,
wages, rent etc. Every organization requires a minimum amount of money to manage its
routine activities without financial bottleneck. This minimum amount may be differ from
each organization that’s depends on the nature of business. In the case of manufacturing firms
cash is converted in to raw material, raw material become work in progress, finally become
finished goods. The finished goods when sold become account receivables which would
finally turn in to cash to the firm. Thus, a minimum amount is always in circulation with in
the business. There for working capital is also called circulating capital or revolving capital
or liquid capital. There are two concepts of working capital, gross working capital and net
working capital. Gross working capital is the total amount invested current assets of the firm
is known as gross working capital. This concept is used by the management to evaluate the
current working capital position and to ensure the optimum investment in individual current
investment. Gross working capital is a qualitative concept. Net working capital is the excess
of current assets over current liability, the net working capital equal to current assets minus
current liabilities. The net concept is a qualitative concept it establish a relationship between
current asset and current liability. The gross concept is financial or going concern concept,
while net concept is an accounting concept. The net may be concept suitable only for sole
trader or partnership firms. But gross concept is very suitable foe company form of
organization

 MANAGEMENT OF CASH FLOWS

Cash management in managing the cash flows. The inflow the cash should be accelerated,
while, as far as possible, the out flow of cash should be decelerated, cash flow statement is
the major tool of controlling cash flows.

 MAINTAINING OPTIMUM CASH BALANCE

The firm should decide about the appropriation or optimum level of cash balance also.
Various factors determine the level of cash to be too maintained at any point of time. The cost
of excess cash deficiency should be matched to determine the optimum level of cash balance.
The satisfactory current ratio is 2:1 but thorough out the study period the current ratio of ONGC Ltd
is not satisfactory. A lower current ratio indicates the firm is not able to meet their current financial
obligation.

The acceptable liquidity ratio is 1:1. Here in this study the quick assets are more than current
liabilities then the concern may be able to meet its short term obligation. Quick ratio is a more
rigorous test of liquidity than current ratio.
Working capital turnover ratio is satisfy throughout the period and seen an increasing trend.
This result indicates the firm effectively utilizing working capital

The ideal cash ratio is 1:2 or 0.5 or 50 percent. This ratio is less than the standard and not
encouraging for the accounting year 2014-15 and 2016-17

The ratio will measure the ability to collect the receivable. Higher the ratio will indicate the
efficiency of the management to handle the liquidity. Here in this study the firm can collect
their receivables only after one month.
 4.5 PROFITABILITY AND DIVIDEND DISTRIBUTION

 PROFITABILITY
The net profit ratio of the firms increases form 2015 to 2018 i.e form 21.39 to 23.49%. the
debt equity ratio is almost nil for last five years.Assest turnover ratio decreases form 39.82 to
29.18%.

 DIVIDEND
ONGC remains one of the strongest and highest dividends paying company performers in
terms of dividend pay-out. The company has consistently maintained a dividend pay-out ratio
of over 45% in 11 of the last 13 years. In FY’17, the pay-out ratio was 52.2%. In fact, in the
past three years, a period when most global upstream oil companies had to resort oil stock
dividend to aggressive cuts in capex and project deferrals to honor their dividend
commitments, ONGC was only which was high dividend oil stock company as well as
initiate new mega projects ensuring long-term sustainable growth for Company. Total
dividend distribution for FY’17 stood at INR 93,430 million, inclusive of dividend
distribution tax and final dividend.

The dividends paid by our Company during the last thirteen fiscal years are presented below:
 4.6 MANAGEMENT OF FIXED ASSESTS

ONGC follows Accrual method of accounting, hence, while preparing the financial budget,
principles of accrual is kept in mind, as the budget process has to be aligned with the
Accounts. However, as the cash management is also equally important activity for the
company, the cash budget also forms a sub-set of the overall budget. Therefore the budget in
ONGC can be classified mainly into the following categories:

1. Cash Budget & Accrual Budget.

2. Operational Budget & Procurement Budget.

3. General Budget (Revenue Budget & Expenditure Budget)

4. Natural Head Budget Vs. Activity Budget

5. performance budget

 CASH BUDGET:
- Cash budget is scheduling for the cash inflows and outflows expected over the
budget period. Apart from the revenue & expenditure it also takes into consideration.
While arriving at the cash out go component of the budget, the cash payment made for
the last years liability and the liabilities created against the expenditure of this year for
which the payments will shift to next accounting year, need to be factored. This is
primarily the working capital change, which is forming the part of cash budget.

Though the budget is prepared on accrual basis, cash forecast is required for fund
management. Therefore, cash budget is basically prepared to have a proper control over the
cash flow. It helps in planning the investment of surplus cash, mitigates any crisis of cash
payments and avoids idling of funds.

 ACCRUAL BUDGET:

- Receipt of material/ services is important for accrual budget rather than actual cash outgo.
Hence, utilization for budget purpose occurs at the stage of creation of liability in the
accounts.

The expenditure, which is likely to be incurred during the budgetary period forms part of the
accrual budget. The payment against the expenditure may be made in the budgetary period
or it may spill into the next year. To explain this aspect more clearly, if an item has been
provided in the budget and the action against the same has been completed, the payment
may not be made in the same year against that item, but the liability has to be created, in
such cases the budget is deemed to be utilized under accrual concept for which the budget
need not to be carried in the year. Likewise, the items, which existed in the budget but no
action, could be taken, needs to be considered in the next budgetary period.

Form the costing and profitability point of view accrual budget is a healthy system of
budgeting.

 PROCUREMENT BUDGET:
- The procurement budget is prepared on the basis of accrual principle. Procurement
budget is planned for Capital, stores, Spares and Contractual on the principle of
accrual. While working out the procurement budget receipt of material/ service during
period is considered rather than actual consumption of the same.

 OPERATIONAL BUDGET:
- Operational budget is linked with activities. For working out operational budget,
operating expenditure for various services and production costs are considered. It
consists of consumption of Store & Spares, contractual payment, manpower and other
charges. Operational budget of various services and departments are allocated to
 various activities to workout the activity wise financial outlays, which forms part of
performance budget.

Thus procurement of materials forms part of procurement budget whereas consumption

forms part of operational budget. Difference between the procurement and consumption is
inventory variation, which is considered under working capital variation in projected
balance sheet.

 GENRAL BUDGET:
-This the total budget both indigenous and imported, of the corporation for the
current year and next year which is submitted after being approved by the ONGC
Board, to the Ministry by 15th October every year, in compliance with statutory
requirement as per O.N.G.C. Act. After submission the budget is discussed with the
Planning Commission where the final budget is approved. This budget is made of two
parts.

 REVENUE BUDGET:
- ONGC’s revenue accrues from the sale of Crude oil, Natural gas, LPG, NGL,
Naphtha, C2-C3 and other value added products. The revenue budget is prepared on
the basis of Sales programme, which depends on the production targets Finalized by
the Board.
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ANNEXURE