Capital Budgeting

Topics: Petroleum, Oil refinery, Net present value Pages: 63 (10025 words) Published: August 21, 2013
A PROJECT REPORT ON

“CAPITAL BUDGETING”

AT

INDIAN OIL CORPORATION LTD. (GUWAHATI REFINERY, NOONMATI)

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE POST GRADUATE DIPLOMA IN MANAGEMENT

PREPARED BY:

JAHNABI CHOUDHURY

GURU NANAK INSTITUTE OF MANAGEMENT PUNJABI BAGH, NEW DELHI
2009-2011

SUBMITTED TO:

NP SINGH

FINANCE FACULTY

[1]

TABLE OF CONTENTS

PREFACE ACKNOWLEDGEMENT DECLARATION
EXECUTIVE SUMMARY

SL. NO.| PARTICULARS| PAGE NO.|
| | |
| PART - IGENERAL INFORMATION| |
1.| About Indian Oil Corporation Limited| |
2.| Board of Directors| |
3.| History of IOCL| |
4.| Mission, Objective, Obligation| |
5.| Branded Product of IOCL| |
6.| About Guwahati Refinery| |
7.| Manufacturing process| |
8.| Structure, Department, Section| |

[2]

| PART - IIFINANCE PROJECT WORK| |
9.| Brief Description| |
| Background of the Study| |
| Importance of the Study| |
| Need for Improvement of MS Quality| |
10.| Overview of the Project| |
| Objective of the study| |
11.| Scope and Limitations of the Study| |
12.| Capital Investment Analysis| |
| Need and Justification| |
| Market and commercial assessment| |
| Technical Feasibility Study| |
| Financial Analysis| |
| Sensitivity and Risk Analysis| |
13.| Results and Findings| |
14.| Conclusions| |

[3]

LIST OF ANNEXURE

SR.NO.| PARTICULARS| ANNEXURENO.| PAGENO.|
| PART – 1 GENERAL| | |
1.| Phasing of the investment.| | |
2.| Sources of capital.| | |
3.| Calculation of interest on long term debt.| | |
| PART – 2 ESTIMATED| | |
4.| Project cost on the basis of April 2000 prices.| | | 5.| Calculation of block of assets.| | |
6.| Value of assets.| | |
7.| Depreciation as per Income Tax Act (WDVmethod).| | | 8.| Annual sales realization.| | |
9.| Calculation of IRR and NPV.| | |
| PART – 3 ACTUAL| | |
10.| Project cost on the basis of average prices(2006).| | | 11.| Calculation of block of assets.| | |
12.| Value of assets.| | |
13.| Depreciation as per Income Tax Act (WDVmethod).| | | 14.| Annual sales realization.| | |

[4]

PREFACE

In today‘s era of globalization and competition, coping up with technological advancement, which is undergoing evolution at a very fast rate, holds the key to the survival and growth of any organization. Installing technology, well-equipped facilities or going for modification in the existing ones are the means to attain better performance efficiency and hence further the value addition.

Indian Oil, the largest commercial enterprise of India (by sales turnover) is India‘s sole representative in Fortunes prestigious listing of world‘s 500 largest corporations, ranked 135th for the year 2007. To maintain strategic edge in the market place, Indian Oil has given importance to capital budgeting because capital investment decisions often represent the most important decisions taken by an organization, and they are extremely important, they sometimes also pose difficulties.

The evaluation of projects should be performed by a group of experts who have no axe to grind. It is necessary to ensure that an impartial group scrutinizes projects and that objectivity is maintained in the evaluation process.

A company in practice should take all care in selecting a method or methods of investment evaluation. The criterion selected should be a true measure of the investment‘s profitability (in terms of cash flows), and it should lead to the net increase in the company‘s wealth (that is, its benefits should exceed its cost adjusted for time value and risk). It should also be seen that the evaluation criteria do not discriminate between the investment proposals. They should be capable of...
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