Professional Documents
Culture Documents
INTRODUCTION
1
PARCO Internship Report
country, especially for a developing country like Pakistan, where demand for
Incorporated in May 1974, Pak Arab Refinery Ltd. (PARCO) has now been in
(GOP) and Abu Dhabi. Its authorized capital is Rs. 5 billion and paid up capital
is Rs. 2160 million of which 60% is held by the GOP and 40% by Abu Dhabi
This long awaited project has been setup despite facing numerous obstacles and
behalf of oil marketing companies OMC’s from Karachi to Mahmood Kot near
Multan and to Faisalabad and Machike near Lahore through its 1,230 kms.
acquisition system.
Multan, a distance of 864 kms. And operating on the basis of two pumping
1994 at Bubak (Sindh) and at Fazilpur (Punjab) increased the pumping capacity
2
PARCO Internship Report
to 4.5 million tons per annum. Later, with further technological upgrading of
the system the pumping capacity was increased to 6 million tons. This
of petroleum products in the central and northern areas of the country, which
account for over 60% of the country’s demand of petroleum products. This
increased capacity will also come in extremely handy for transporting 4.5
million tons of crude and 1.5 million tons per year of products through the
In June 1997, PARCO completed its 364 Kms. MFM pipeline extension project
and extended its operations to Faisalabad and Machike. The project design
allows for further expansion of the pipeline from Faisalabad at Kharian besides
PS-1 Korangi
PS-2 Bubak
PS-3 Shikarpur
PS-4 Fazilpur
3
PARCO Internship Report
TS-1 Keamari
TS-3 Faisalabad
TS-4 Machike
connection of 4.5 kms. To the joint oil marketing companies facilities called
JIMCO.
All PARCO terminals and pumping stations have been designed according
to the latest international standards and laid out in a standardized fashion for
BOARD OF DIRECTORS
quite satisfied with their management. The workers are drawing handsome
employees.
Financial Year
The financial year of the company begins from 1st July to 30th June.
5
PARCO Internship Report
• ANB-AMRO Bank
• Bank of America
• Deutsche Bank
• Mashreq Bank
6
PARCO Internship Report
The auditors of the company are Taseer Hadi Khalid & Co. Chartered
Accountants.
NUMBER OF DEPARTMENTS
Finance Department.
Process.
Electrical / Instrument.
Mechanical
Technical Services.
Engineering Services
Company Secretary
7
PARCO Internship Report
Corporate Office
Corporate Headquarters,
Karachi- 75190,
Pakistan.
Registered Office
Avari Plaza,
87, Shahrah-e-Quaid-e-Azam,
Lahore. Pakistan.
Refinery Office
Distt. Muzaffargarh,
Pakistan.
8
PARCO Internship Report
9
PARCO Internship Report
Due to the following reasons PARCO’S mid country refinery project come into
existence:
total requirement.
• PARCO Mid country Refinery has a lead of at least 3-5 years on any
products.
• Refinery coupled with the White Oil Pipeline Project (WOPP) gives
10
PARCO Internship Report
for the people of Pakistan, since it has been put up in the last 2 years despite
benefits are:
EMPLOYMENT OPPORTUNITIES
for 10.000 people, especially during the construction phase and gives a
chance to people to enhance their skills. Further they will expand it for
The operation of the Refinery will result in greater foreign exchange saving
($ 100 million per year) for the country by reducing the import of petroleum
products and stream line transportation logistics and generating nearly $24
11
PARCO Internship Report
units in the area, and it will provide and opportunity for the development of
All these benefits will contribute to the economic growth of the country and
OBJECTIVES OF PARCO
The following long term corporate objective, which are inherently embodied in
12
PARCO Internship Report
LOCATION
CONSTRUCTION
cost. The total cost of the refinery is around US$886 million of this colossal
and US$ 28 million have been spent on buildings and civil works, including the
13
PARCO Internship Report
• Utility supplies have been secured through adjacent power plants and
14
PARCO Internship Report
15
PARCO Internship Report
CAPACITY
“Capacity is the minimum rate of output for a facility”
The Refinery complex includes 11 onsite units process units besides numerous
off site / utilities units and other permanent facilities with 51 tanks to store the
barrels per day or 4.5 million tons per annum making it the largest in the
country.
16
PARCO Internship Report
17
PARCO Internship Report
FINANCE DEPARTMENT
Finance department is the center point of my internship. Finance department is
In MCR only Trial Balance prepare, all Accounts are maintained in Karachi
head office. Sophisticated techniques are used, LAN & WAN systems, Inter
From this quick and better work is possible. These techniques are very effective
and prove efficient for growth and progress of this organization. Now it will
employee of PARCO.
DESIGNATIONS
18
PARCO Internship Report
2. MANAGER.
3. DEPARTMENT HEAD :
Chief Accountant
4. SECTION HEADS :
Senior Accountant
5. GRADE-V :
Accountant I
6. GRADE-VI :
Accountant II
7. GRADE-VII :
Accountant III
8. GRADE-VIII :
Assistant Accountant I
9. GRADE-IV :
Assistant Accountant II
10. TRAINEE :
19
PARCO Internship Report
20
PARCO Internship Report
and Head office. Head office deals Banking section, Payroll section, Insurance
Section, Import Section, Income Tax accounting while Refinery office deals
or cash section, MIS Section, Invoice Section, Cost, Budget & Sales Section.
Also other section which are not directly linked with accounts but also
The main functions of these sections are record the business transactions.
Sections are restricted up to the recording and maintaining the accounting data.
For proper maintain the accounts, used coding techniques on their voucher.
CASH VOUCHER: These vouchers are prepared for payment of petty cash.
21
PARCO Internship Report
payment to any party. In accounting term, party name will be debited and
Vouchers are prepared after every transaction. Write narration about these
vouchers. These vouchers are signed by certain authorities e.g. (prepared by,
IMPREST/CASH SECTION:
22
PARCO Internship Report
• Payment of Utilities
Grade II- Entertainment 1000/= per month and current value of 250 liters petrol
paid.
Grade III – Rs.600/= per month as entertainment and current value of 200
Grade IV- Rs.400/=per month as entertainment and 175 liters petrol paid.
maintenance of record.
23
PARCO Internship Report
This section received the bills or invoices that including tax amount that may
differ according to the nature of bill and paid within 10 days. Payments of
CHEQUE. For this Payment till Rs.5000/= may issue CHEQUE without
deducted from the total amount of bill. 3.5 % tax deducted on all receipt of
This section made the payment to contractors who provide the Inventories or
Supplies and Services. Payable section refunded the amount that has paid to
Now here the question arises, what is the procedure of Bills payment?
Chief Accountant received the Bills from concern parties. Bills are checked by
payable section. They tally the amounts of 1-Purchase order 2-Material Receipt
24
PARCO Internship Report
RECEIVEABLE SECTION
This section, we may call banking section. It deals revenues. If there is capital
in our banks, The amount of taxes will be credited. The record of all
that PARCO sale via its own Brand Name “Pearl”. The revenue through sale
of Oil Marketing Companies (OMC’s) deals Head Office. Central Excise Duty
(CED) paid advance Rs.85 per metric ton. Whenever the product is being sold,
the shipping department prepare the four copies of Article Removal 1(AR1)
and Article Removal 2 (AR2). One copy held in its own possession and
remaining copies are send to Receive able Section, Concerned party, and in the
office of Excise and Taxation. AR2 is prepared when product sold through
Duties and Taxes are paid later on. AR1 received Receive able Section of
Refinery office.
25
PARCO Internship Report
Refinery office use these banks: National Bank of Pakistan (NBP). Allied Bank
each party.
JOURNAL VOUCHER is used for the adjustment of taxes. When party paid
amount. Bank is debited and the Party Name credited. When duty paid.
Central Excise duty is debited and Bank account credited. We prepare Journal
Voucher or make adjustment when Central Excise Duty is paid. This section
used the term Tax Withdraw Voucher or Journal Voucher (JV) Or Journal
Receipts (JR).
MIS SECTION
Management Information System Section prepares the Trial Balance via the
MIS Section receive Journal vouchers from pay able section, cash section, and
sales tax section. By posting in specific code, these posting adjust in Trial
Every section has coding system, either Budget cost or Center cost. They post
26
PARCO Internship Report
named PPT personnel Protection Equipment and Library System etc. Oracle
INVOICE SECTION
We may call this section Sales section. The product of refinery sold via OMC’s,
PEARL, and direct to the direct consumer. Pipe line and Gantry means of
transportation. Parties submit the Projection/ Agreement and the amount of that
product, they required in the projection. Payment made through D.D or T.T. In
When Invoice Section prepare invoice, it deduct the sales tax amount 15 % of
sale, Central and Excise Duty Rs.85 per metric ton and development surcharge
from the Sales and calculate the Net amount. After posting dispatch to Head
Office.
department, there are Control Room1 (CR1) and Control Room 2 (CR 2) that
are used as gate pass. Invoice Section receive the Delivery Advice (D.A)
which shipping department prepare. This D.A includes capisty and number of
tanker.
27
PARCO Internship Report
Budget is allocated for every year. This period start from 1st July to30th June.
We can classify the budget in to two main heads, Revenue Budget and Capital
Budget. Revenue Budget is allocated for operating expenses which are helpful
for generate the revenue e.g. telephone, store and supplies etc. Capita Budget
is allocated for fixed expenses e.g. furniture and fixture, machinery etc.
These are allocated in proper heads, either about Revenue items or Capital
items. This will helpful in better coding and maintaining the record. Each
receipts statement (MCR), when material received. From this received material,
This summary is send via approval of Manager. Board of Director approved it.
Sales Tax:
28
PARCO Internship Report
Sales Tax has coordinated relationship between sales output invoices and
have to pay sales tax, and if the amount purchase input invoices increase, we
favorable balance, we will not received and carry forward for next transaction.
Four copies of Invoices are classified as such. First original invoice, send to
triplicate copy receive Parco finance department and quadruplicate copy send
tax 15 % and remaining unregistered parties that pay the sales tax 15 % plus 1.5
% deduct as sales tax, not as the whole 16.5 % deduct as sales tax. Sales tax
pays up to 15th date to next month. Head Office purchases the crude oil by the
Letter of Credit. We can refund the sales tax amount under Section 22(1) a,
Sales tax act 1990. We adjust the favorable balance, carry forward for next
transactions.
29
PARCO Internship Report
MATERIAL MANAGEMENT
“Material Management is concerned about short range decisions about supplies,
Material is important for PARCO because the Refinery will optimize product
products to the central and northern regions of the country, which about for
Impact of inventory:
Inventory has direct impact on the profitability of the organization. Parco can
not keep much more inventory, because if they do so, they bear much more cost
of holding.
MANAGEMENT
30
PARCO Internship Report
PURCHASING:
Parco will import three vessels per month, approximately carrying 64,000
SUPPLIER:
The supplier of the crude oil for Parco is ARAMCO. PARCO entered a crude
oil sales agreement with ARAMCO for the purchase of 30,000 barrels/day of
light ARABIN crude. The agreement was signed at Dahran on Jun 18,2000.
CONTRACTING:
Contract for the transportation of crude oil for the MID-COUNTRY Refinery,
from Saudi Arabia and Abu Dhabi, was signed with Pakistan National Shipping
INVENTORY MANAGEMENT
“INVENTORY IS A STOCK OF ANY THING HELD TO MEET THE
TYPES OF INVENTORY
RAW MATERIAL:
Raw material used by the Mid-Country Refinery is the crude oil ( light Arabian
31
PARCO Internship Report
FINISHED GOODS
HOBC JP-4
LDO HSD
Fuel Oils
When ever the number of the units are drawn out of the inventory stores they
judge the position of the inventory that whether it is a time to reorder of not. In
In a p system the lot size may change form one order to the next, but time
32
PARCO Internship Report
PARCO USING THE PERIOD reviews system. It means that lot size vary
but the time between orders is fixed. As PARCO will import three vessels
per month approximately carrying 64,000 metric tons each, but the first
vessel brought 66,000 metric tons of crude oil for the Mid –Country
Refinery.
QUALITY CONTROL
Total quality management (TQM) stresses three principles:
Employee involvement
Continuous improvement
Customer satisfaction
EMPLOYEE INVOLVEMENT
involvement consist of
CULTURAL CHANGE
In TQM, every one in the organization must share the view that quality control
33
PARCO Internship Report
INDIVIDUAL DEVELOPMENT
PARCO distributed the 7, 10, 15 and 20 years service awards among their
employees.
Every year one of Parco’s terminal pumping stations is given “the best station
award” after being assessed on the standard of its house keeping and safety.
CONTINUOUS IMPROVEMENT
PARCO improve the quality continuously. For optimization and product quality
products. If the quality of products are not satisfied they are reprocessed until
CUSTOMER SATISFACTION
consumers tank on timely basis, through the safest and shortest routes and at
the lowest costs. Further more the objective of this initiative is to provide
34
PARCO Internship Report
Also where measures are instituted to ensure that the customer is properly
informed and that lessons are learnt to prevent re-occurrence of errors. Parco’s
existing infrastructure and expertise should assist in achieving this aim and
35
PARCO Internship Report
36
PARCO Internship Report
SIGNIFICANT OF ACCOUNTING
Summary of Significant Accounting Policies are as follow.
Basis of Presentation
Accounting Conversion
These accounts are prepared under the historical cost ‘convention’ as modified
Fixed assets except land are stated at cost less accumulated depreciation. Land
and capital work in progress are stated at cost. Cost in relation to certain fixed
differences e.g. (Assets and liabilities in foreign currencies are translated into
Pakistan. Prevailing on the balance date, except those which are covered under
37
PARCO Internship Report
Exchange gain/loss on loan relating to assets that have been fully depreciated is
directly charge to profit and loss account) and financial charges on borrowing
for financing the project until such projects are completed or become
operational.
cost of an assets are written of over its estimated useful life without taking into
accounts any residual value. Full year depreciated is charged on addition while
Maintaining and repaired are charged to income as and when incurred, major
renewals and improvements are capitalized and the assets so replace, if any, are
retired. Gains and losses are disposals of assets (If any) are included in income
currently.
Assets subjects to finance lease are stated at the lower of present value of
minimum lease payments under the lease agreement under the fair value of
assets, the related obligation of the lease are accounted for as liabilities. Assets
acquired under the finance lease are depreciated over the useful life of the
assets on the straight line method at the rate given:, Depreciation on lease assets
38
PARCO Internship Report
Borrowing Cost
production of fixed assets have been capitalization as the part of cost of the
relevant asset.
Investment:
Long Term
These are stated at cost. Provision is made for decline, other than temporary, in
Short Term
These are valued at the moving average cost, while items considered obsolete
are carried at nil value. Items in transit are valued at cost comprising invoice
Revenue Recognition:
products.
39
PARCO Internship Report
Investment
investment scheme and accrued for the period. The income is recognized on
the assumption that such investments will be held till the next terminal date.
Gratuity
The company operates a defined benefits funded gratuity scheme for all
supervisory staff. Contributions are made annually to the fund on the basis of
and indexation. The actuarial valuation is performed once every three year and
the most recent actuarial valuation of the scheme was carried out at 30th June
1997, which reflected the fair value of the fund’s assets and liabilities at
40
PARCO Internship Report
Pension Fund
The company operates a defined befits funded pension scheme for all
and indexation. An actuarial valuation is performed once in three years and the
most recent actuarial valuation of the scheme was carried out at 30th June 1997,
which reflected the fair value of the fund’s assets and the liabilities at
Starting from the year 1997, the company is also operation a defined benefit
funded pension scheme for all workmen staff. Contributions are made annually
Provident Fund
for all its regular permanent employees. Contributions are made equally by the
company and the employees @8.33% of basic salary, cost of living allowance
41
PARCO Internship Report
Taxation:
Current
Provision for current taxation is based on taxable income at the current rates of
Deferred
Provision for deferred taxation is made on all material timing differences using
42
PARCO Internship Report
RATIO ANALYSIS
Ratio analysis of financial statements refers to the process of Determining and
Accounting figures. Ratio analysis can be of use both in the trend or structural
Analysis and static analysis. Great care is needed while calculating meaningful
ratios and in interpreting them. Although there are several ratios which can be
employed by an analyst, yet the type of ratio, he would use entirely depends on
the purpose for which the analysis is done i.e., a creditor would keep himself
abreast about the ability of a concern to cover up its current obligations and so
would care about current and liquid ratios, turnover of receivable, coverage of
between the items of the balance sheet and the profit and loss account.
The need for ratios arises due to the fact that absolute figures are often
Rs.350,000/=, it may not be a good thing as appears. The increase in sales may
43
PARCO Internship Report
Expenses of Ratios
1- Actual ratios are arrived at by dividing one number by another e.g. current
2- Ratio between two numerical facts usually over a period of time e.g. Stock
profitability.
• It provides a good help in decision making for investors and to the financial
institutions.
44
PARCO Internship Report
CLASSIFICATION OF RATIOS
Ratios can conveniently be classified as follows:
with the relationship of two items and both are in the profit and loss account or
income statement. It is necessary for income statement ratios that both items
must belong to the same profit and loss account. The following are the
This ratio is of great importance in the analysis of the trading results of the
business. Gross profit Ratio is the ratio of gross profit to net sales expressed in
percentage. Thus it expresses the relationship between gross profit and sales.
It tells the management the ability of sales to generate earnings before any cost
FORMULA: -
Gross Profit
Net Sales
45
PARCO Internship Report
The figure of gross profit ratio is continuously increasing. Its mean that
The operating profit ratio measures the percentage of profit earned on each
sales dollar before interest and taxes. A high operating profit margin is
expenses. It is more important ratio than the simple gross profit ratio. It can be
FORMULA: -
Operating Profit
Sales
declining in the year 1997-98, and is increasing trend for next year.
The net profit ratio measures the percentage of each sales dollar remaining after
all expenses, including taxes, have been deducted. The higher the net profit
46
PARCO Internship Report
It is also useful for the proprietors of the business. This is a good yardstick in
FORMULA: -
D.OPERATING RATIO
This is the ratio of cost of goods sold plus operating expenses to net sales. It is
of sales. This ratio shows the operational efficiency of the business. Lower
operating ratio shows higher operating profit and vice versa. An operating ratio
FORMULA: -
This trend shows that operational efficiency of the business increasing each
year.
47
PARCO Internship Report
should neither too be high, nor too low. A too high inventory means higher
carrying cost sand higher risk of stocks becoming obsolete whereas too low
between the cost of goods sold during a particular period of time and the cost of
FORMULA: -
OR
Net Sales
Inventory
48
PARCO Internship Report
sales. Parco inventory turnover ratio is revealing that it is near about the
Balance sheet ratios deal with the relationship between two balance sheet
items, e.g. the ratio of current assets to current liabilities or the ratio of
proprietor’s funds to fixes assets. Both the items must pertain to the balance
sheet items:
A. CURRENT RATIO
Current ratio may be defined as the relationship between current assets and
current liabilities. This ratio is also known as working capital ratio. The current
ratio is the test of solvency or it is a test of short term, financial strength. It the
current ratio is higher it means the current assets are more free from debt claims
It is a good measure of general liquid and is most widely used to make the
for this ratio is 2: 1. It is calculated by dividing the total of the current assets
FORMULA: -
49
PARCO Internship Report
B. QUICK RATIO
This ratio is also termed as “acid test ratio” or “liquid ratio”, It is the ratio of
liquid assets to current liabilities. The true liquidity refers to the ability of a
firm to pay its short-term obligations as and when they become due. The
FORMULA: -
% 55.64 181.10
This is highly positive aspect toward the liquidity position of the firm.
A- RETURN ON INVESTMENT
50
PARCO Internship Report
It measures the return of total investment with the borrowed money or invested
assets.
FORMULA: -
% 28.15 5.39
B-RETURN ON EQUITY
for every Rs.10/= of capital invested in the firm how many rupees were
produced or lost this year. If it is increasing than the previous year then it is
good one. It may be obtained by dividing. Net profit on the sum total of
FORMULA: -
51
PARCO Internship Report
Trend shows that the return on ordinary capital of the company is increasing
and up to 1996-97 and decline in the year 1997-98, and increased again for
earning per share of other companies. Earning per share is a small variation of
return of equity capital and is calculated by dividing the net profit after taxes
FORMULA: -
The figures of earning per share are increasing continuously. Trend is very
positive for the shareholders of the company. Because the earning on the share
52
PARCO Internship Report
53
PARCO Internship Report
Suggestions
This year PARCO has been granted the Marketing License to sell POL
products. PARCO plans to market fuel products and LPG of kits refinery and
Being the internee of the largest oil refinery and pipeline network PARCO is
better placed to gradually become a major market player of the industry. With
its joint venture partner of Emirate of Abu Dhabi and their Austrian associates
OMV, PARCO has a multinational character. OMV owns the largest fuel and
lube refineries and retail outlets in other European countries around Austria. It
is also engaged in oil and Gas exploration Pakistan. This association will
expertise in laying and efficiently operating 1,228 Km. Long oil pipeline the
Project’ (WOPP) for laying a pipeline from Karachi to Mahmood Kot for
to execute this project at the lowest cost and operate it with least overheads as
compared to a new operator. It will also provide additional standby facility for
54
PARCO Internship Report
productivity. Housing facilities for the staff have been developed at Pumping
managed and profit oriented Joint Venture between Pakistan and Abu Dhabi. It
implement new projects for the benefit of shareholders and for the good of the
country.
It is a pleasure to state that keeping in line with its progress, your company is
playing its de role in the field of social and community welfare activities by
vicinity all along the route of our pipeline, including deploying of mobile
55
PARCO Internship Report
CONCLUSION
Every thing PARCO achieves is the product of team effort. All PARCO
employees share the achievements of the company and have every reason to
feel proud of what has been achieve so far. However with the diversification in
business activity, especially in the finance department, PARCO meet the new
There is need for proof any concept of refresher courses for the employees. If
I would like to recommend that the management should develop some policies
workers so it will create unrest among the workers. The management should
make sound policies for the promotion of efficient workers. This will not only
increase the productivity of workers but the management will also retain
56
PARCO Internship Report
57