Arl Internship Report

July 20, 2017 | Author: Chaudhry Rashid | Category: Depreciation, Debits And Credits, Accounts Payable, Invoice, Taxes
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INTERNSHIP REPORT Attock Refinery Limited

From July 13 to August 10-2009 & July 19 to August 13-2010 (8 weeks)

Prepared By: Ch. Muhammad Rashid Amin BBA (Hons) Major In Finance

Foundation University Institutes Of Engineering and Management Sciences Page 1

Abstract I am Ch Muhammad Rashid Amin student of BBA (Hons) Finance in Foundation University Institutes of Engineering and Management Sciences. I have done my internship in finance department From July 13 to August 10-2009 & July 19 to August 13-2010 (8 weeks) It was my first experience in any company. A.R.L is giving a suitable environment to internees. I have also improved my communication and persuasive skills. The purpose of this report is to describe my experience at Attock Refinery Limited and the knowledge that I gained at this prestigious organization. This report is primarily focused at the understanding of this company and the different tasks assigned to me by my supervisor so as to know how this company functions and to get accustomed to its day to day activities as well as its working environment. This report also shows how this internship program helps students grow into professionals and mature them into hardworking members of the society and apply them in is practical life.

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Introduction of organization

The Attock Oil Group of Companies ARL is a member of Attock Group of Companies, a fully integrated group covering all segments of oil and gas industry from exploration, production and refining to marketing of a wide range of petroleum products besides also engaged in manufacturing and trading of cement, information technology, etc. Some of the leading Companies of the Group in Pakistan are as under:


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Attock Refinery Limited

Attock Refinery Limited (ARL) was incorporated as a Private Limited Company in November, 1978 to take over the business of the Attock Oil Company Limited (AOC) relating to refining of crude oil and supplying of refined petroleum products. It was subsequently converted into a Public Limited Company in June, 1979 and is listed on the three Stock Exchanges of the country. The Company is also registered with Central Depository Company of Pakistan Limited (CDC). Original paid-up capital of the Company was Rs 80 million which was subscribed by the holding company i.e. AOC, Government of Pakistan, investment companies and general public. The present Paid-up capital of the Company is Rs. 852.93 million. ARL is the pioneer of crude oil refining in the country with its operations dating back to 1922. Backed by a rich experience of more than 85 years of successful operations, ARL’s plants have been gradually upgraded/replaced with state-ofthe-art hardware to remain competitive and meet new challenges and requirements.

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ARL profile Vision To be a world class and leading organization continuously providing high quality diversified environment friendly energy resources and petrochemicals.

Mission We will utilize best blend of state-of-the-art technologies, high performing people, excellent business processes and synergetic organizational culture thus exceeding expectations of all stakeholders.

Core Values Our success will not be a matter of chance, but of commitment to the following enduring beliefs and values that are engrained in the way we think and take actions to pursue a climate of excellence:

• • • • • •

Integrity & Ethics Quality Social Responsibility Learning & Innovation Team work Empowerment

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Departments of ARL are: 


Commercial & Material Management

Information Technology

Human Resources

Maintenance Department


Technical Services / Engineering


Quality Control Laboratory

Planning and development

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Finance Department

Financial Reportin g

Oil Accounti ng

Budgetin g and Planning

Corporat e Affairs Finance





Assets Treasury Section

The Finance Department is charged with the responsibility of monitoring the activities of the General Ledger. This includes the Accounts Payable and Payroll functions. In conjunction with this task the Finance Department is responsible for the compilation and administration of the City of Altus budget, the administration of the Hotel/Motel Tax, internal auditing to insure compliance with all local, state and federal laws, and financial reporting to the City Council. It also renders support services to other functional areas for enhancing organizational efficiency and effectiveness for long term value creation.

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Oil Accounting It is basic and important section of Finance .All the purchase of crude oil and sales of the products process in this section. There are three basic functions are held by oil accounting as follows: a. Purchase of crude oil b. Transport of crude oil( South Bound) c. Sale of refined oil products and other by-products

Purchase accounting: The purchase of crude oil by ARL is carried out from two regions Northern and southern. Northern crude is delivered at door step of ARL while the crude from Southern region is delivered to the nearest refinery i.e. Parco, NRL, PRL, and BYCO. As ARL arranges to bring in the crude by itself from the southern fields it has to incur some charges in the transportation that is recovered by ARL through IFEM (Inland freight equalization margin) along with the product sale invoices dispatched to customers. The price to purchase the crude is calculated on weekly basis according to the international market price that is communicated through a publication called “Plates Oilogram”. Prices are applicable as per crude sales/purchase agreement. Price includes the following component. A) Pricing determination on weekly basis B) Discount (discount offered is deposited in Govt. Treasury) C) Insurance Page 8

D) Transportation The crude oil supplier normally raises the invoices of crude supplied for all the fields simultaneously at the end of each month. To pay a supplier an invoice voucher is booked by Khan Sahib against the party that is later on processed by account payable section. Different crude suppliers are as under: 1. Oil and Gas Development Co. (OGDC) 2. Pakistan Oilfields Limited 3. Pakistan Petroleum Limited 4. Government Holdings Private Limited 5. MOL Pakistan Limited 6. Dewan Petroleum Limited 7. Oil and Gas Investment Limited 8. Orient Petroleum Incorporated (OPI) 9. British Petroleum Pakistan 10.

Zaver Petroleum Limited


Sui Southern Gas Pipeline Co.

Transportation: There are three departments involved in transportation freight payment system. 1) C & MM dept 2) Operation dept 3) Finance dept Page 9

Before making any payment to any party by finance a summery and detail explanation of all the penalties are communicated to finance dept in hard copies by operation dept. This information contained in hard copies is also maintained by operation dept on computer system. Where as the C&MM dept maintains the information regarding registration/deregistration, replacement of bowers etc. By receiving the hard copies regarding penalties, refunds etc, it is recorded in a manual register against a “reference number” uniquely created. To process the contractor’s bill a specialized sub-module “Cartage contractor billing” in Oil Accounting module is used. After performing all the necessary steps in this whole process will finally create and print a two report, one with a missing column “Received quantity” is dispatched to the contractors for their verification purpose, after verification contractor submit the report duly signed and stamped along with their invoice on the covering letter while the other with the said column is sent to treasury section after booking invoice voucher in financial. The treasury section then process the final payment through cheque or bank transfer.

Sales Accounting: By law the operation dept is responsible for generating “sales Tax invoice” as soon as a delivery is dispatched and enters the record into the system. On fort night basis a “product dispatch repot” is created and communicated by operations department to Finance dept for verification purposes. In finance dept a “Customer Billing Report” is processed, printed and the entries are checked with the “Product dispatch report”, the entries here to be checked are (1) Product quantity (2) Product Price (3) Total product price dispatched (4) Sales Tax verification. For sales Tax verification we print another document “Sales Tax summery” out of the system that has already been processed by operation department. This document includes Sales Tax calculated for each product Page 10

dispatched. In this case if the sales Tax entries are verified it means that the other data i.e. Price, quantity and levies are correct as well. I will specifically discuss the document “Customer Billing Report” that is result of the data entered by operations and commercial dept and processed by finance department. Let’s consider the following entries with in this document.

1) Refinery Price= Price/unit X Quantity dispatched  Price is always communicated by commercial dept through hard copy as well as updated in the system,  Quantity dispatched is provided by operation dept.

2) Sales Tax

 Sales Tax charge to a company is 17% off the refinery bill for a product dispatched

3) Total Govt. Levies  Adding up the sales Tax calculated (17%) to PDL amount (if any), Excise duty (if any), special Excise duty (if any) IFEM if any will result in Total Govt. Levies.

After verifying all the entries, the billing report along with a covering letter is sent to all the customers as invoice for requesting the receivable amount. After this an account receivable is booked in the oracle interface. A request is also made to Page 11

I.T for transferring of the data over to oracle financial from oracle interface. A final check is then made by printing out a document “Invoice GL distribution” to see if the entries have been gone to the right Ledgers by comparing them with “Customer Billing Report”.

Corporate Affairs This department is responsible for the dealing of share capital of the company in the stock market. The activities covered in the monthly charge for shares registrar services. 1) Maintenance of company’s members’ register. Issue of share transfer

receipts against share certificates lodged for transfer. 2) Manual/ Computer audit of share certificates and transfer deeds lodged for

transfer. 3) Maintaining specimen signature cards up to date. Verification of transferor’s

signatures on transfer deeds lodged for transfer. 4) Posting of transfer to members’ register. Interfacing with central depositary

system. 5) Daily balancing and reconciliation of shareholdings in central depository

register and company’s members’ register. 6) Reporting to Central Depository Committee the reconciliation of members’

register shareholding with Central Depository Register shareholding. 7) Issuing notices to CDC in respect of Corporate Actions. 8) Endorsing the physical transferred shares 9) After endorsement, the certificates are sent for Directors’ approval. 10) Custody of undelivered shares and dividend warrants returned undelivered. 11) Delivery /Dispatch of transferred shares to the shareholders, after

discharge of transfer receipts. Page 12

12) Serializing and filing of discharged transfer receipts. 13) Issue of duplicate share certificates and dividend warrants, against

appropriate indemnities and completion of formalities, in place of share certificates and dividend warrants reported lost 14) Maintaining records for income tax deductions/exemptions. 15) Maintaining records of change of address 16) Assistance to company’s auditors in their audit of share related affairs. 17) Daily dealing and correspondence with shareholders, solving their queries

and giving guidance. 18) Other standard share department works.

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Financial Reporting They compile all financial information from all sections, and organized it for annual report. They also make financial statement as follows:  Balance sheet  Profit and loss account  Cash flow statement  Statement of changes in equity This section also prepares and compiles the following • Tax Depreciation Schedule • Schedule of tax on P/loss on retirement of fixed assets • Telephone fax and postage charges statement • Training expenses report • Working of impairment loss • Statement of comprehensive income • Statement of changes in income • Letter to/from different companies for reconciliation and consolidation of unrealized profit • Comparative statement of own fuel consumed • Delayed payment changes schedule • Details of customer wise sales • Status of tax affairs • Foreign exchange saving schedule • Credit quality of different creditors • Period wise breakup of overdue debtors • Comparison of interest income schedule Page 14

Accounts Payable It is a section of Finance department that is responsible for almost all types of payments that are payable by ARL to suppliers, contractors and for services of course. First of all a need for an item is initiated by a department, a requisition is generated in the store for the availability, if the item is there then its ok but if the item is out of stock, the procurement department is informed about the item needed, here a few quotation are called in from different suppliers, one of them is selected and a purchase order is raised for the selected company by procurement department. After receiving the delivery of the stuff is checked by procurement department using the software “Maximo” if the stuff has already been received it should have been updated (debited) in Maximo. The Finance department must have already got a copy of purchase order from the procurement department, so will also get the invoice generated by the supplier with in 1 or2 days of the delivery. After matching both the documents the account payable section process the payment with application of with holding TAX and other surcharges of 4.25 % from the supplier that is not included in Large Tax payer Unit. Some of the companies are exempted from the said tax, in order to avoid the Tax application they check certificate of exemption for the company. In account payable section the services payoff is dealt by Chaudhry Muhammad Amin who books invoice vouchers with the tax code of 6% is forward to Tanveer for processing and creating the payment voucher.

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Treasury Section Treasury section actually does the cash management, bank reconciliation and defines actual mode of payment performed by ARL. A “cash register” is maintained shows opening balance, expenditure of the period and closing cash balance. Actually the section hold a safe which they call “bank” maintain some cash for the payment of daily small expenses for which they cannot write a chaque to pay for. They use three modes of payment on purchases;  Letter of credit (LC): It is used when there is new supplier. Both the companies use their banks and banks provide grantees; if customer’s bank received document of product (that they want to import), than it will pay for it. Both companies are secured in this mode.  Cash against Document (CAD): In this mode purchaser paid first and there is no grantee from bank. This mode is used when the company have permanent supplier.  Wire Transfer: It is an advance payment mode. When purchases are under 10,000 dollar, they use wire transfer. They also match sales and purchases book of company with the bank record at the end of month. This process is called Bank Reconciliation.

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Fixed Assets There are six categories of fixed assets: 1. Land 2.



Plant and machinery(10%depreciation)




Furniture, fixture and equipments(10%depreciation)


Vehicles(20%depreciation) They charge depreciation on building, Plant and machinery, Computers, Furniture, Fixture, and Equipments Vehicles. They complete their work on monthly bases. They inter daily information about depreciation of assets in excel worksheet and every end of the month they upload data through “Automatic Data Interface” (ADI) in Oracle Application Software. This software generates a depreciation report, through this report they make a summary of fixed assets and transfer it to final accounts section for general ledger information. When a new asset purchase for use then capital cost account would be debited and capital clearing account would be credited.

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Taxation This department deals in all tax related to this company such as income tax, sales tax, import/export, direct/indirect all types of tax are seen to be this department. It uses income from different sources to calculate the various taxes bound to be levied.

Budgeting and Planning It is also an important section of finance. Planning of future projects and process of their budgeting is done here. They record the estimated amount that shall be invested on new projects next year. Budgeting is the financial term of planning. Its has two types. 1. Capital Budgeting: That gives benefit more than one year. 2. Revenue Budgeting: That gives benefit with in one year 3. Extra ordinary Revenue Budget: The Extra Ordinary Revenue Budget is a Budget which lies somewhere between the capital and revenue budget, it shows the expenditure which are of around five years of life.

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Internship experience at Arl Learning as internee I have learn lot of things in that organization, some basic things which help me are given below

Personal experience in organization: It was a tremendous experience that I have availed with devotion and commitment. I have an interest in oil and gas industry that’s because OGRA is the back bone of the economy of the country. But one thing I want to share its not easy that looks it has a great toughness and complications in its process but the overall it was nice and great. Here I am sharing some of my learning regarding my internship in different sections of finance department.

Work experience in finance department: · First I met Mr. Atif saleem the HR representative of ARL. Who explain the periodic schedule of internship in different sections. • then I have sended to the finance department, I go to the oil accounting where I discussed about the marketing practices going on in the international Oil market and how oil prices have to maintain by the refinery through the instructions of government . • · In the oil accounting I have learnt about how they maintain crude oil and oil products supply record. • · I learnt that how payments have been made to their customers and mode of transaction and involvement of banking activities in these transactions. • · I also performed some task in the corporate affairs section like how to calculate the no of share holder’s contribution in the company, making of annual report call for annual general meeting and how dividend divided. • · I learnt about the marketing procedure and required of the documents and dealing with customers. All the record is saved. • · During my internship I learnt about the value that customer is the only who come first. There is no need of making advertising for sales and development because of regular base customer. • · The quality control as well inception in the finance department should be parallel. • · I learnt about the HR policies that how many types of hiring ARL is using. •

And what are the procedures of the Attock about HR matters. Page 19

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