23 Treasury Function Manual - Draft

Chapter 23 Treasury Management
ONGC Ltd. Finance Manual Chapter 23:Treasury Management
Table of Contents
Content 1. Introduction 1.1 1.2 Process overview Process objectives
Page Reference
7 9 10
2. Accounting policies 3. Process narratives & flowcharts 3.1 Centralized fund and non-fund based credit facilities (operation & accounting) 3.1.1 Allocating drawing power across locations 3.1.2 Monitoring day-end balances 3.1.3 Cash credit interest monitoring and accounting 3.1.4 Renewal/extension/enhancement of cash credit and credit facilities 3.2 Bank accounts (operation & maintenance) 3.2.1 Bank account (opening & closing procedures) 3.3 3.4 Cash forecasting Investment planning & investment of short term surplus funds 3.4.1 Procedure for investment decision 3.4.2 Investment procedure post investment decision 3.5 3.6 3.7 Raising of short term funds Credit rating Foreign currency transactions
11 12 14 15 16
18 18 20 24 25 33
38 39 41
Private & Confidential
Draft for discussion
Content 3.7.1 Procedure for review and finalization of bank panel for foreign exchange purchase
Page Reference 41 45 52 55
3.7.2 Procedure for outward remittances 3.7.3 Procedure for inward remittances
3.7.4 Repayment and revaluation of foreign loans

4. Process documentation 5. Accounting entries 6. Information system and reporting 7. References 7.1 Circular No 201 Preparation of cash forecast including cash expenditure and variance analysis report. Department of Public Enterprises guidelines for investment of short term surplus funds by Public Sector Enterprises Reserve Bank of India ECB 2 format 64 57 60 63
7.2
66
7.3
67
8. Appendix 8.1 8.2 8.3 8.4 Appendix 1: Glossary of terms used Appendix 2: Cash forecast template Appendix 3: Permitted investment avenues Appendix 4: Composition and quorum of the Investment Committee Appendix 5: Guidelines principles for Investment Committee Appendix 6: List of invitees Appendix 7: Exposure limits 68 70 78 79
8.5 8.6 8.7
79 80 81
Content 8.8 8.9 Appendix 8: Notice of Investment Committee Appendix 9: Quotation for investment of short term surplus funds Appendix 10: Comparative statement Appendix 11: Investment authority note Appendix 12: Format of forex register 8.12.1 List of inward remittances made during the month 8.12.2 Bank-wise summary of remittances made during the month 8.12.3 Currency-wise summary of remittances made during the month 8.13 Appendix 13: Daily booking sheet template
Page Reference 82 83
8.10 8.11 8.12
86 88 89 89 90 9 1
92
ACRONYMS
Acronym BDP BoD BPV CA CFM C&MD CS D (F) D (HR) DDN DGM DPE F&A FEMA FI FDR GGM GM GOI IAN IC IN INR L1 LC LIV
Meaning of the term Book of Delegated Powers Board of Directors Bank Payment Voucher Corporate Accounts Corporate Funds Management Chairman & Managing Director Company Secretary Director Finance Director Human Resources Dehradun Deputy General Manager Department of Public Enterprises Finance & Accounts Foreign Exchange Management Act Financial Integration Fixed Deposit Receipts Group General Manager General Manager Government of India Investment Authority Note Investment Committee Instruction Note Indian National Rupee Lowest Letter of Credit Logistics Invoice Verification
Acronym LoC MoM MRPL OVL RTGS SBI ST TBills TDR TDS TMG TT USD
Meaning of the term Line of Credit Minutes of Meeting Mangalore Refinery and Petrochemicals Limited ONGC Videsh Limited Real Time Gross Settlements State Bank of India Short Term Treasury Bills Term Deposit Receipt Tax Deducted at Source Treasury Management Group Telegraphic Transfer United States Dollar
1
1.1
Introduction
Process overview This chapter describes the policies, procedures, controls, roles & responsibilities, related to treasury management. The processes involved in treasury management are the following:

Centralized fund and non-fund based credit facilities (operation and accounting); Bank accounts (operation and maintenance); Cash forecasting; Investment planning and investment of Short Term (ST) surplus funds; Raising of short term funds; Credit rating; and Foreign currency transactions. Centralized fund and non-fund based credit facilities (operation and
a) accounting)
The company has availed Cash Credit (CC) facilities from State Bank of India (SBI) which is utilised across locations as per their requirements. Day-end balances from each location are transferred on a daily basis to SBI, Tel Bhavan, DDN managed by Corporate Accounts (CA) section, Dehradun (DDN). This exercise facilitates CA section, DDN to monitor the overall funds position on a daily basis and prepare weekly cash forecasts. Operation and accounting of centralized CC system is the responsibility of the CA section, DDN and includes the following activities:

Allocating drawing power across locations; Monitoring day-end locational balances for CC; CC interest monitoring and accounting; Renewal/ extension/ enhancement of sanctioned limits for various credit facilities.
b)
Bank accounts (operation and maintenance) Opening and closing of bank accounts is centralized through the CA section, DDN. Operation and maintenance of these accounts is the responsibility of the designated officer at the respective locations.
c)
Cash forecasting As per the existing practice cash forecast is prepared at CA section, DDN after compiling the cash forecasts of all project locations and considering all other payments and revenues of the company on a composite basis.
d)
Investment planning and investment of short term funds The company regularly invests its short term surplus funds in accordance with the Department of Public Enterprise (DPE) guidelines as well with the decisions taken by the Board of Directors (BoD) of the company with respect to investment avenues, exposure limits, delegations, etc.
e)
Raising of short term funds The company regularly raises short term funds in accordance with the decisions taken by the BoD of the company. The following sources/instruments are used for these borrowings:

Term loans; External commercial borrowings; Inter-corporate borrowings; Commercial papers; and Certificate of deposit.
f)
Credit rating A credit rating assesses the credit worthiness of an individual, corporation, or even a country. Credit ratings at the Company are notional ratings as a preparatory step in view of impending overseas investments through ONGC Videsh Ltd (OVL) rather than for the purpose of raising funds.
g)
Foreign currency transactions Forex section is responsible for outward remittances, inward remittances and forex loan repayments. Its activities include review and finalization of bank panels for making forex purchases, updation of bank panel in SAP, updating receipt of request for currency, updating forex payments, obtaining competitive quotations for borrowings, conducting comparative analysis and dispatching of cheques for making forex payments. Inward remittances include receipt of foreign currency, finalization of cash rate, authorization to bank for credit of forex, followed by recording of required entries in SAP.
1.2
Process objectives

To monitor funds position and ensure adequacy of fund utilization; To centrally monitor the opening and closing of bank accounts thereby mitigating the risk of unauthorised opening/ closing of a bank account; Proper funds management to facilitate decision-making for investment of surplus funds; To deploy the short term surplus funds of the company from time-to-time to avoid idling of funds and to generate returns; To assess the company's ability to repay debts in both foreign and local currencies and to determine the credit worthiness of the company; and To ensure that accurate & authorized payments and receipts are made in foreign currency.
2
2.1
Accounting policies
Current investments are carried in the financial statements at the lower of cost or fair value whichever is less. The cost or fair value is determined for each individual investment; The cost of investments/ part of the holding of an individual investment is determined on the basis of average carrying amount of the total holding of that investment; On disposal of an investment, the difference between the carrying amount and the disposal proceeds, net of expenses, is charged or credited to the Profit & Loss (P&L) account.
2.2 2.3
10
Process narratives & flowcharts
3.1 Centralized fund and non-fund based credit facilities (operation & accounting) The Companys centralized credit facilities comprise of the following at present: S. No A Type of credit facility* Fund based Cash credit (CC) Line of credit (LoC) B Non- fund based Letter of credit (LC) Bank Guarantee Total 1,000 1,100 3,600 500 1,000 Sanctioned limit (INR Crs.)*
* These are subject to change depending on the management decisions
The Company has availed this facility from State Bank of India (SBI) and it utilises this facility across locations as per its requirement. With regard to CC facility, day end balances from each location are transferred to SBI, Tel Bhavan, and DDN on a daily basis. This facilitates the CA section, DDN to monitor the overall funds position on a daily basis and prepare the weekly cash forecasts. Operation and accounting of centralized CC system is the sole responsibility of the CA section, DDN and includes the following key activities:

Allocating drawing power across locations; Monitoring day end locational balances for CC; CC interest monitoring and accounting; Renewal/ extension/ enhancement of sanctioned limits for various credit facilities.
11
3.1.1
Allocating drawing power across locations CA section, DDN allocates drawing power for CC utilization to each location on a weekly basis based on an assessment of fund requirement at each location.
3.1.1.A Process narrative S. No 3.1.1.A1 Activities including controls Projects/ locations prepare cash forecasts for the subsequent year with monthly break-up on roll-over basis and weekly break-ups for the first three months. Each project/ location forwards the cash forecast to CA section, DDN in the last week of each month. Based on the cash forecast received the fund requirement for each project/ location is assessed by CA section, DDN and drawing power is allocated to each project/ location for the week. This exercise is required to be done on a weekly basis and to help take into account unexpected payments and receipts during the week. Designated officer, CA section, DDN prepares an intimation letter specifying the project/ location wise drawing power and forwards the same to SBI. If an unexpected payment is required to be made by a project/ location at a particular point of time, wherein the project/location may exceed the allocated drawing power, then intimation is sent to CA section, DDN through SAP mail / fax by the respective project/ location. CA section, DDN in turn intimates SBI to enhance the drawing power of the respective project/ location. Responsibility Designated officer at project/ location
3.1.1.A2
Designated officer, CA section, DDN
3.1.1.A3
Designated officer, CA section, DDN Designated officer, CA section, DDN
3.1.1.A4
12
3.1.1.B Process flowchart
Cash forecast received from projects/ locations
Assessment of fund requirement for each project / location on a weekly basis
Allocation of drawing power to each project/ location and preparation of intimation letter for the same
Intimation letter to SBI
Forwarding intimation letter to SBI for execution
13
3.1.2
Monitoring day-end balances Under the CC facility, day end balances with banks at all locations are transferred to SBI, Tel Bhavan, and DDN. In order to bring the books of account in line with the bank statement, a specific set of activities is followed by CA section, DDN. The procedure is explained herewith.
3.1.2.A Process narrative S. No 3.1.2.A1 Activities including controls Bank statement is received by CA section, DDN from SBI giving the day end balances for each location at the end of each day. CA section, DDN enters the locational balances in SAP to transfer day end balances to the respective locations. To perform this task three steps are followed, for which under mentioned Transaction Codes (T-Codes) are used in the Financial Integration (FI) module in SAP: FF73 : to enter amount of day end balance for each location as per bank statement; FF.9 : to park amounts in General Ledger (GL); and c) SM35: to post amounts to GL. Refer accounting entries mentioned below:
Accounting entry no. AE/TR/001 GL code Account description 120112 IUT Payments A/c 91*** Bank A/c Accounting entry no. AE/TR/002 GL code Account description 91*** Bank A/c 120112 IUT Payments A/c Dr/Cr Dr. Cr.
Responsibility Designated officer, CA section, DDN Designated officer, CA section, DDN
3.1.2.A2
Dr/Cr Dr. Cr.
14
3.1.3
Cash credit interest monitoring and accounting CC interest is debited by SBI on a quarterly basis. It is the responsibility of CA section, DDN to ensure accuracy of the CC interest debited by SBI.
3.1.3.A Process narrative S. No 3.1.3.A1 Activities including controls At the end of each quarter a CC interest calculation sheet is obtained from SBI by the CA section, DDN. Responsibility Designated officer, CA section, DDN Designated officer, CA section, DDN Designated officer, CA section, DDN
3.1.3.A2
CA section, DDN verifies the interest calculation and ensures that the interest debited by the bank is accurate.
3.1.3.A3
On ensuring that the interest is correct, an accounting entry is passed to account for the CC interest using the following TCodes in SAP: F. 65: for parking amounts in GL; and FBV0: for posting amounts to GL. Refer accounting entry no. AE/TR/003 mentioned below:
GL code 201621 091461 Account description Interest on cash credit A/C SBI (Main) A/c Dr/Cr Dr. Cr.
15
3.1.4
Renewal/ extension/ enhancement of Cash Credit and other credit facilities Depending on the utilization trends of credit facilities by various locations the CA section, DDN assesses the need to renew/ extend/ enhance the sanctioned limits. Given below is a detailed procedure for renewing/ extending/ enhancing the credit facilities.
3.1.4.A Process narrative S. No 3.1.4.A1 Activities including controls A credit facility utilization statement is obtained from SBI for each quarter. Responsibility Designated officer, CA section, DDN Designated officer, CA section, DDN
3.1.4.A2
The utilization statement along with cash forecast is reviewed by the designated officer, CA section, DDN to assess whether the credit facility sanctioned limits are sufficient or whether they require renewal/ extension/ enhancement. In the event that there is a necessity, a proposal is prepared specifying the amount of renewal/ extension/ enhancement for each credit facility and the reasons thereof. The proposal is then forwarded to the competent authority in CA section, DDN for approval.
3.1.4.A3
Designated officer, CA section, DDN Competent authority, CA section, DDN Competent authority, CA section, DDN
3.1.4.A4
3.1.4.A5
The approved proposal is forwarded to SBI for execution, with one copy being retained as the office copy.
16
Utilization statement obtained from SBI
Assessment of fund requirement and enhancement of credit facilities
Proposal specifying the need for renewal/extension/ enhancement of credit facilities is prepared
Proposal for renewal/ extension/enhancement
Intimation letter forwarded to competent authority for approval
Approved Intimation letter forwarded to SBI for execution
17
3.2 3.2.1
Bank accounts (operation & maintenance) Bank accounts (opening & closing procedures) Opening and closing of bank accounts is centralized through the CA section, DDN. Operation and maintenance of these accounts is, however, the responsibility of the designated officer at the respective location. This section explains the procedure for opening and closing a bank account.
3.2.1.A Process narrative S. No 3.2.1.A1 Activities including controls Designated officer from the respective project/location prepares a proposal which reflects the requirement for opening/closing a bank account and specifies the name of the principal officer. The signature of the principal officer is sent in triplicate for bank verification purposes. The proposal is forwarded from the project/location to CA section, DDN. Responsibility Designated officer, project /location
3.2.1.A2
Designated officer, project/ location Designated officer, CA section, DDN. D (F)
3.2.1.A3
CA section, DDN prepares a proposal based on the proposal received from project/location and forwards it to Director, Finance (D (F)) for approval. D (F) approves the proposal and sends it to the company secretary (CS). The CS, based on the approval of D (F) prepares a letter addressed to the bank and sends it to CA section, DDN. CA section, DDN forwards the letter to the project/location.
3.2.1.A4
3.2.1.A5
CS
3.2.1.A6
18
S. No 3.2.1.A7
Activities including controls Project/location on receipt of the letter from CA section, DDN completes the formalities with the bank and the bank account is opened or closed as required.
Responsibility Designated officer, project/ location
Proposal specifying requirement to open/close a bank account
CA section, DDN prepares a proposal on the project requirement and sends it to D(F) for approval
D(F) approves the proposal and sends it to CS
Proposal for opening/closing bank account
CS prepares a letter addressed to the bank and sends it to CA sectio, DDN
Letter from CS
CA section, DDN sends the letter to the project/location
Project/location then completes the formalities for opening/closing the bank account
19
3.3
Cash forecasting As per the existing practice cash forecast is prepared at CA section, DDN after compiling the cash forecasts of all project locations and considering all other payments and revenues of the company on composite basis. For detailed guidelines on preparation of cash forecast including cash expenditure and variance analysis report, refer Para 7.1 mentioned below. Figure 1 herewith outlines the inflows and outflows that are used in the preparation of the cash forecast.
Inflows & Outflows used in the preparation of Cash forecast
( Opening Balance + Inflows (A) Project Outflows (B) Corporate Outflows (C) = Cash Surplus/ Deficit
Inflows (A)
Project Outflows (B)
Corporate Outflows (C)
Sales Receipt Maturity of investments Interest on investments Interest on MRPL Final dividend Re-payment from OVL Interest on oil bonds
Offshore expenses JVC Sales tax/ VAT Cess Royalty Foreign debt Other payments Onshore expenses Sales tax/ VAT Cess Royalty Indian debt including interest Other payments
Corporate tax payment Payment to OVL Investments Fringe benefit tax Dividend/ other payments CPF soft loan Annual incentive Subsidy TDS on investments
Figure 1
20
3.3.A S. No
Process narrative Activities including controls Designated officer at respective project/ location prepares the cash forecast and forwards the same to CA section, DDN. Responsibility Designated officer, project/ location Designated officer, CA section, DDN
3.3.A1
3.3.A2
CA section, DDN receives the cash forecast and takes inputs from persons responsible for royalty, dividend, advance tax payments, sales inflows, investments maturity and prepares cash forecast for the whole year with weekly forecasts for the first three months and monthly forecasts for the rest of the year. CA section, DDN consolidates the cash forecasts on the basis of the above mentioned inputs and prepares an MS Excel spreadsheet. The cash forecast details the assumptions made for the preparation of the forecast, the variation vis--vis the previous forecast and reasons thereof. For Cash forecast template, refer Para 8.2 given below.
3.3.A3
3.3.A4
The cash forecast is then forwarded for approval of competent authority.
3.3.A5
Approval of cash forecast is obtained from the competent authority.
Designated officer, CA section, DDN Competent authority
21
S. No 3.3.A6
Activities including controls The approved cash forecast is forwarded to Treasury Management Group (TMG) by SAP mail with a post copy by courier/ dak box on a fixed day of every week decided by CA section, DDN after prior approval of Head, CA section, DDN to have better control and accuracy over the forecasting system. In case there is a holiday on the decided day the cash forecast is forwarded on the subsequent working day. In addition to the weekly cash forecast, cash forecast during the week may also be forwarded on request from TMG/Investment Committee (IC). Expected daily sales receipts for two weeks are also provided by CA section, DDN to TMG as required.
Responsibility Designated officer, CA section, DDN
22
3.3.B
Process flowchart
Designated officer at respective project/location sends the cash forecast
Cash forecast received from all locations
Cash forecast
Inputs taken by CA section DDN from the respective locations are as shown below
Investments maturity
Sales Inflow
Advance tax payments
Royalty payment
Dividend payments
CA section, DDN consolidates cash forecasts on basis of above mentioned inputs
Consolidated cash forecast
The cash forecast is sent for the approval of the competent authority
Approval of the competent authority is obtained by CA section, DDN
The cash forecast is forwarded to TMG Delhi by SAP mail with a post copy by courier/dak box
23
3.4 Investment planning & investment of short term surplus funds The Company regularly invests its short term surplus funds in accordance with the guidelines issued by the Department of Public Enterprises (DPE) as well as with the decisions taken by the Board of Directors (BoD) of the company with respect to investment avenues, exposure limits, delegations, etc. within the overall framework of DPE. For DPE guidelines for investment for short term surplus funds by Public Sector Enterprises, refer Para 7.2 mentioned below. Investment of short term surplus funds involves the following activities:
Determining investable surplus on the basis of cash forecast prepared at corporate level on the basis of inputs with regard to expected payments and receipts from different locations in the company; Inviting quotations from eligible parties, as approved by the competent authorities from time-to time; Investment decisions after necessary deliberations and recommendations by the IC, a group of senior officials of the company instituted by the BoD, and approval of a designated committee of company directors comprising of Chairman & Managing Director (C&MD) & D (F) and D (HR), to whom powers of investment of surplus funds up to a specified limit has been given by the BoD; Deployment of funds with successful bidders in line with investment decision; Settlement activities at the time of investments as well as at the time of maturity; and Generating relevant MIS based on financial results of the empanelled entities/ market intelligence reports or other sources and providing the same to the higher management. In particular, reporting of the investment transactions to the BoD as required by DPE Guidelines and seeking BoD approval/ratification, wherever required.
For the sake of convenience this process has been divided into two sub-processes, viz, procedure for investment decision and investment procedure post investment decision.
24
3.4.1
Procedure for investment decision empanelled banks The surplus funds available are calculated based on the cash forecast received from CA section, DDN. A decision with respect to allocation of funds is made by TMG and bids are invited accordingly. The notice of investment is then put up to the IC which deliberates on the investment decision and submits its recommendations. This is then forwarded to C&MD & D (F) and D (HR) for approval. After approval is obtained, Cash & Bank section is authorised by TMG for investment, after considering expected payments, if any, which were not considered during preparation of cash forecast. The tendering process is being done manually as well as in the system using the internet enabled Ebidding software (For details on e-bidding procedure, refer Para 3.4.1.2 mentioned below). The process narrative below explains the manual process.
3.4.1.1 Procedure for investment decision using manual process for invitation of bids from
3.4.1.1.A Process narrative S. No 3.4.1.1.A1 Activities including controls CA section, DDN prepares the cash forecast and forwards it to TMG through an e-mail/ SAPMAIL or fax. Responsibility Designated officer, CA section, DDN Designated officer, TMG
3.4.1.1.A2
TMG analyses the expected surplus funds available based on the cash forecast and after incorporating inputs received from CA section, DDN regarding expected receipts and expenses. TMG also considers investments made/ matured if not updated in the cash forecast. Based on the DPE guidelines and approval from BoD, investable surplus funds available for more than six days are invested. The TMG may decide to invest in term deposit receipts (TDRs), commercial papers, treasury bills (T-Bills), government securities etc. Investable surplus funds not available for more than six days are invested in UTI Liquid Plan. Tenure of the investment is decided based upon the value of expected payments as per the cash forecast. For Permitted investments avenues, refer Para 8.3 mentioned
3.4.1.1.A3
Designated officer, TMG
25
S. No below. 3.4.1.1.A4
Activities including controls
Responsibility
Once investable surplus is ascertained for investment by TMG a notice for meeting is forwarded to the IC.
a) In case a decision is made to invest in TDRs,

commercial papers, T-Bills, government securities etc, TMG follows a bidding procedure; and
b) In case investment is to be made in UTI Liquid Plan

no tendering process is required. For composition and quorum of the IC as approved by the BoD and guidelines and principles for IC, refer Para 8.4 and Para 8.5 respectively mentioned below. 3.4.1.1.A5 Invitation of bids for TDRs, commercial papers, T-Bills, government securities, etc. Quotations are invited, with approval of an IC member, from bidders having sufficient exposure limits within the approved exposure limits, belonging to an approved list of invitees. For approved list of invitees and exposure limits, refer Para 8.6 and Para 8.7 respectively mentioned below. For Notice of Investment Committee refer Para 8.8. For quotation for investment of short term surplus funds refer Para 8.9. Key details forming a part of the invitation letter are as follows:

Indicative investment amount; Indicative dates of investment; Indicative tenure; Last date/time for submission.
Following conditions are applicable to the bidding procedure:

Invitations for bids are a minimum of INR 5 Cr.
Invitations can be forwarded through fax/email/website and quotations be invited in seal
26
S. No
Activities including controls cover/email. In exceptional cases invitations may be forwarded through ordinary post/by hand to authorized representative of the bidders. Bids must be invited directly from the bidders and no brokers should be involved.
Responsibility
The invitation of bids does not in any way bind the Company for placement of fund with any of the bidders. The Company reserves the right to reject any bid without any further reference to the bidders. 3.4.1.1.A6 In case of manual process, bids are submitted in a bid box kept at a specified location in a company location where the TMG is situated, within the stipulated date and time. The bidders submit bids either by courier/registered post. Late offers are not considered. If any bidder after submitting bids withdraws/amends any term or condition, such bidder, with the approval of C&MD and/or D (F) may not be considered for present tender and/or for future invitation of bids. 3.4.1.1.A7 For TDRs, commercial papers, T-Bills, certificates of deposits etc, the bids are opened by TMG at the specified due date and time. Bidders are requested to depute an authorized representative to remain present at the time of bid opening, though this is not mandatory. A bid opening register, showing the details of bids received duly signed by the bidders representatives, if any present at the time of bid opening, is maintained by TMG. The comparative statement is prepared and validated by TMG, and is put up to the IC for its deliberations and recommendations on the investment decision. For comparative statement refer Para 8.10. 3.4.1.1.A8 In case of TDRs, commercial papers, T - Bills, certificates of

IC Designated officer, TMG
IC Designated officer, TMG
IC
27
S. No
Activities including controls deposit, etc and UTI Liquid Plan, the IC comprises of such officials and quorum as decided by the BoD from time to time. The deliberations and recommendations of the IC are recorded and validated by the participating members. If an IC member is unable to be present physically he/she does with the consent of other IC members participate by telephone or by similar means. Designated officer, TMG prepares minutes of meeting of the IC meeting to document the deliberations during the IC meeting (MoM). For Investment Authority Note refer Para 8.11.
Responsibility
3.4.1.1.A9
The recommendations of the IC present in the MoM are put up to the C&MD, D (F) and D (HR) for their respective approvals on immediate priority to avoid delays in investment action. Before authorising C&B section, investable surplus is reviewed by TMG by checking unexpected receipts/payments across locations telephonically with CA section, DDN. In case unforeseen payments lead to significant reduction in investable surplus funds, investment amount is reduced/ cancelled with intimation to IC. In case of no such unforeseen payments an MS Excel spreadsheet for determining the maturity value of the investable funds is prepared. Consequently, TMG initiates an entry in SAP in the CFM module.
C&MD D (F) D (HR) Designated officer, TMG
3.4.1.1.A10
3.4.1.1.A11
28
S. No 3.4.1.1.A12
Activities including controls TMG issues an Investment Authority Note (IAN) to Head, Finance & Accounts (F&A) section, Delhi specifying the amount of investment, name and address of the borrower, particulars of instrument, rate of return, date of investment, date of maturity and maturity amount for making investments in accordance with the approvals obtained. A copy of IAN is forwarded to Head, CA section, DDN for accounting purposes. The IAN is authorised by any two officers of the TMG OR any one member of the TMG and one member of the IC or designated members. Head, F & A, Delhi / Head, CA section, DDN invests the surplus funds in accordance with the IAN issued by TMG.
Responsibility Designated officer, TMG
29
3.4.1.1.B
Cash forecast
Process flowchart
CA section, DDN forwards the cash forecast to TMG
TMG in alliance with CA section, DDN determines expected receipts and expenses. No Funds available for more than six days ? Yes Decision taken by TMG to invest in TDRs, commercial papers, T - Bills, government securities etc Notice of investment with cash forecast is sent to IC Notice of investment Decision taken by TMG to invest in UTI liquid plan.
Notice of investment
Notice of investment with cash forecast is forwarded to IC
IC deliberates over investment in UTI liquid plan and MoM is recorded and validated
IC deliberates over investment decision
Quotation for investment of ST Surplus funds
Bids are invited from the eligible parties by issuing a tender for bids
Bid documents
Bids received within the specified time are opened by TMG
Comparative statements
Quotations are reviewed by TMG and comparative statements are prepared
IC deliberates over bid documents, comparative statement and approves the investment decision .
Minutes of meeting
MoM of the IC deliberations on the investment decision are prepared
30
TMG forwards the MoM of IC meeting to CMD & D (F) and D (HR) for approval.
Approvals of CMD & D (F) and D (HR) are obtained.
TMG checks for unexpected receipts/payments across locations telephonically from CA section, DDN
Unforeseen payments
Yes
Investment cancelled with intimation to IC
No MS Excel spreadsheet for determining the maturity value of investable funds is prepared MS Excel spreadsheet
Initiation of entry in SAP in CFM Module and prepares an IAN
IAN forwarded to C&B section & Head, CA section, DDN
31
3.4.1.2 E bidding procedure for tendering process E-bidding process refers to tendering that is based on the use of internet technology to replace paper based systems. The user can manage masters, tender activities, bid opening activities and investment activities using this system. The user can go to the URL http://e-funds.ongc.co.in on the internet and log in to the E Bidding system by entering the required username and password. The user can then proceed to the dashboard (main home page showing the status and details of tenders open for bidding). The bidder logs in to the same system using the same URL in the same way as the TMG user, and is also required to enter a digital signature certificate when the system prompts for it. Digital signature certificates are electronic files that act like online passports. They are issued by a certificate authority which verifies the identity of the certificates holder. Depending on the security (high or medium) the system prompts for private key popup with password as well. After these verifications are completed, the user logs in to the respective dashboard. Tender document is created by the TMG user as per the procedure outlined in the E bidding manual and all the routine activities related to the bidding procedure during investment of surplus funds executed in the system are as per the manual procedure outlined in Para 3.4.1.1 above. For more information on navigation in the system and creation of masters, user registrations etc please refer E bidding manual available with the TMG.
32
3.4.2
Investment procedure post investment decision This section explains procedures with regard to settlement activities once the investment decision has been made. These activities primarily include cheque issuance, drawing power for clearing of cheques, custody of deposits, maturity of investments, collecting maturity proceeds, releasing the deposit receipts at the time of maturity, informing CA section, DDN about investment maturity, etc.
3.4.2.A Process narrative S. No 3.4.2.A1 Activities including controls Based on the IAN received from the TMG, designated officer, C&B section prepares an Instruction Note (IN) for the bank, which is authorised by the competent authority as per the Book of Delegated Powers (BDP) and forwards a copy of the IN to TMG. Following are the key details which are entered in the IN:

Responsibility Designated officer, C&B section
Type of investment; Date of investment; Tenor of investment; Maturity date; Maturity amount; Rate of interest;
Relevant partys RTGS number or cheque number, as the case may be. Payment is either made through Real Time Gross Settlements (RTGS) or through an issue of a cheque. For further details on bank payment procedure refer Para 3.3, Chapter 5, Cash and Bank. 3.4.2.A2 IN is forwarded to the bank and transaction is completed in SAP where the transaction gets posted to the GL using the following T - codes:

TBB1: to initiate a deal in SAP F. 53 : to post a transaction to GL
33
S. No
Activities including controls Refer accounting entry no AE/ TR/004 mentioned below:
GL code 191103 91302 Account description Payment request clearing A/c Bank A/c Dr/Cr Dr. Cr.
Responsibility
3.4.2.A3
Amount debited by the bank (either on same day or next day morning) is then verified by the designated officer, C&B section through the online banking facility against the IAN and the IN to ensure that correct amount has been debited by the bank. TDRs/ Fixed Deposit Receipts (FDR) are received from the bank, details (such as the interest and maturity date & value) of which are verified by designated officer, C&B section, against the IAN and the IN within two working days from the date of receipt of instrument. Investment instruments are maintained under a dual lock and key system wherein one key is maintained with the cashier and the other is with the designated officer, C&B section. Head, F&A section, Delhi / Head, CA section, DDN, as the case may be, retains a photocopy of all investment instruments. In the event that the instrument (TDR/ FDR) is not received within one week from the date of investment, Head, F & A, Delhi /Head of CA section, DDN, as the case may be, follows up the matter with the concerned bank/ institution. If the matter is not resolved within a period of two weeks, the matter is formally intimated to TMG.
Designated officer, C&B section
3.4.2.A4
Designated officer, C&B section Head F & A, Delhi/ Head, CA section, DDN
3.4.2.A5
On verification of the TDR/ FDR, if there is any discrepancy then the designated officer (C&B section) prepares and forwards intimation along with the TDR/ FDR to the concerned bank for rectifying the errors. Designated officer, C&B section follows this procedure in consultation with Head, F&A, Delhi /Head of CA section, DDN, as the case may be
Designated officer, C&B section Head F&A section,
34
S. No and with TMG.
Responsibility Delhi/ Head, CA section, DDN Designated officer, C&B section
3.4.2.A6
A register containing details of investments & maturity is maintained manually by the designated officer, C&B section. The key contents of this register are as follows:

Date of investment; Type of investment; Maturity value; Rate of interest; Date of receipt of instrument;
Reference to the Bank Payment Voucher (BPV), IAN and IN. This register is updated every time a new investment is made or an existing investment matures. 3.4.2.A7 Based on the investment register a tracking mechanism is in place wherein investment maturity is tracked by the designated officer, C&B section. On the date of investment maturity the designated officer, C&B section verifies whether maturity value is correctly credited by the bank or not. The maturity proceeds credited by the bank are verified against the IAN and intimation is forwarded to TMG and CA section, DDN. TDS certificates with respect to the tax deducted on interest on investments are collected by C&B section from respective banks. The following T - codes are used in SAP to account for the investment maturity and interest on maturity:

Designated officer, C&B section
TM02 : to verify details of investment
TBB1 : to initiate the investment maturity transaction; FB05: to post the investment maturity transaction.
35
S. No
Activities including controls Refer accounting entry no. AE/TR/005 mentioned below:
GL code 191103 120136 Account description Payment request clearing A/c IUT CFM A/c Dr/Cr Dr. Cr.
Responsibility
3.4.2.A8
Accrued interest on investments is tracked by the designated officer, CA section, DDN. A database of investments is maintained in an MS Excel spreadsheet which is updated for every investment made and matured, on the basis of IAN and maturity intimation respectively. On the basis of this database the accrued interest is calculated on a quarterly basis and accounted for by passing a RJV in the FI module of SAP. For this purpose the following T- codes are used:
Designated officer, CA section, DDN Competent authority
F - 65 : for parking the transaction by designated officer, CA section, DDN FBV0: for posting the transaction by competent authority as per BDP.
Refer accounting entry no. AE/TR/006 mentioned below:

GL code 0919** 2303** Account description Interest accrued A/c Interest on investments A/c Dr/Cr Dr. Cr.
36
IAN received from TMG
IN prepared by designated officer, Cash and Bank section
Payment is either made through RTGS or by issuing a cheque
Instruction note (IN)
IN forwarded to the bank and transaction completed in SAP by the Cash and Bank section
Bank payment voucher generated
Verification of the debit to bank account against the IN and the IAN by Cash and Bank section
TDR/ FDR obtained from the bank
Verification of the TDR/ FDR details against the IN and the IAN by the designated officer Cash and Bank section
TDR/ FDR details are verified.
Is there an error identified?
Yes
Intimation bank about the errors and TDR FDR sent / back to the bank for rectification
Rectified TDR/ FDR obtained from the Bank
One key maintained with the cashier and the other key is maintained with designated officer, Cash and Bank section
No
TDR/ FDR stored in the dual lock storage and entry made in the investment register (manual) Physical verification of TDRs / FDRs by auditors on a quarterly basis
37
3.5 Raising of short term funds The Company raises short term funds as and when required in accordance with the decisions taken by the BoD of the Company. The following sources/instruments are used for these borrowings: a) b) c) Term loans; External commercial borrowings; Inter-corporate borrowings; Commercial papers; and Certificate of deposit. Term loan is a loan from a financial institution which may be secured or unsecured in nature for a particular period of time. Secured loans are loans secured wholly or partly against an asset, whereas unsecured loans are loans which are not secured by mortgage/pledge/hypothecation of assets. The unsecured portion of the partly secured loans is hence classified as unsecured loans. External commercial borrowings are foreign currency loans taken from overseas lending institutions at either fixed or floating rates. Such loans are repaid in the designated foreign currency only. These are converted at the exchange rate ruling at the year-end date (evidenced by a bank certificate) or forward contract rate (if it exists). Inter-corporate borrowings are made using an inter office memo including details of amount to be borrowed by the Company, terms and conditions, period and rate of interest. Subsequently a BoD resolution is passed to approve the borrowing. Commercial papers are unsecured promissory notes issued by corporations and foreign governments. These are low cost alternatives to bank loans for large credit issuers such as the Company. It is usually not used to finance long-term investments but rather for purchases for inventory or to manage working capital. Certificate of deposit is a document evidencing a time deposit placed with a depository institution and contains details of amount of deposit, date of maturity, rate of interest, and the method under which the interest is calculated. The procedure for borrowing of short-term funds is similar to the procedure for investment of surplus funds explained in Para 3.4 and involves the following activities:

d) e)
Determination of amount to be borrowed; Invitation of quotations from the eligible/empanelled parties as approved by competent authorities periodically; Necessary deliberations and recommendations based on which approval of competent authority delegated by the BoD is obtained, and amount is borrowed;
38
Activities related to repayment and settlement of borrowed amounts.
3.6 Credit rating A credit rating assesses the credit worthiness of an individual, corporation, or even a country. Credit ratings are calculated based on financial history and current assets and liabilities. Typically, a credit rating tells a lender or investor the probability of the subject being able to pay back a loan. The ratings lie on a spectrum ranging between highest credit quality on one end and default or junk on the other. Longterm credit ratings are denoted with a letter: a triple A (AAA) is the highest credit quality, and C or D (depending on the agency issuing the rating) is the lowest or junk quality. Within this spectrum there are different degrees of each rating, which are, depending on the agency, sometimes denoted by a plus or negative sign or a number. 3.6.A Process narrative At the Company credit rating was envisaged in May, 2005 as a preparatory step in view of impending overseas investments through OVL. For getting the credit rating done by an external agency limited tenders are invited and based on the rates quoted by Lowest (L1) bidder the agency is selected and awarded the contract. The TMG section provides the following information to the agency:
a) b) c) d) e) f) g) h) i) j) k)
l)
Copies of annual reports for the year; Annual report of subsidiaries, OVL & Mangalore Refinery & Petrochemicals Limited (MRPL); Details of budget estimates of the Company; Detailed financial projections with underling assumptions; Block wise in place and recoverable oil & gas reserves; Block wise production of oil & gas; Block wise finding and lifting costs; Block wise drilling success ratio; Block wise reserve replacement ratio; Detailed capital expenditure programme; Break up of the capital expenditure undertaken into geological & geophysical, research and development, exploratory drilling and development drilling. Pricing formula for sale of crude oil to key customers.
39
Once the rating is determined by the rating agency, it is submitted to D (F) and C&MD for review and approval. On approval the ratings are finalized and the documents are retained in the TMG and published through the companys corporate communication section. The TMG monitors the contract with respect to. to its terms & conditions from the time of initiation of the contract. The agreement with the credit rating agency includes a provision for annual surveillance of the credit rating. This is ensured by submitting the requisite information to the rating agency. A compliance certificate on timely payments of all debt obligations is issued to the credit rating agency on quarterly basis.
40
3.7 Foreign currency transactions The companys Forex section is responsible for outward forex remittances, inward forex remittances and forex loan repayments. Procedure for review and finalization of bank panel includes review and finalization of bank panel for foreign exchange purchases, updation of bank panel in SAP etc. Outward remittances involve receipt of request for currency, updation of forex payments in forex register, obtaining competitive rates, comparative analysis and acceptance of best rate followed by updation in SAP and dispatch of cheque. Inward remittances include receipt of foreign currency, finalization of cash rate, authorization to bank for forex credit followed by recording of required entries in SAP.
3.7.1
Procedure for review and finalization of bank panel for foreign exchange purchase. This involves periodic review of existing panel of banks, sometimes resulting in empanelment of new banks, depanelment of banks and finalization of top ten banks for high value transactions as detailed below:
3.7.1.A Process narrative S. No 3.7.1.A1 Activities including controls The review and finalization of bank panel for foreign exchange purchase is done on a quarterly basis. The designated officer, Forex section and the Chief Manager F&A section, Forex section initiates this exercise and gets the panel approved by the Deputy General Manager (DGM), F&A section and GM, F&A section. Responsibility
Designated officer, Forex section Chief Manager, F&A section Designated officer, Forex Section Chief Manager, F&A section
3.7.1.A2
Review of the existing panel of banks is conducted to delete from the list, the non-performing banks and to add the new banks, if the selection criteria are met as mentioned in Para 3.7.1.A5 below. For the purpose of the review, performance of banks for the last twelve months based on the successratio (number of successful calls as a proportion of total calls is assessed). A new bank is included in the panel in the event the bank approaches the company for empanelment. All parameters specified in Para 3.7.1.A5 below need to be satisfied by the bank. Therefore, in addition to the ascertainment of the same,
3.7.1.A3
De signated officer, Forex
41
S. No
Activities including controls a certificate from a renowned chartered accountant firm is obtained certifying that the bank is adhering to all selection parameters. Thereafter, a recommendation to include the bank on the panel is included in the quarterly review report for review and finalisation of bank panel.
Responsibility section,
Chief Manager, F&A section
3.7.1.A4
In case it is observed that the success ratio of a bank during the previous year is 0%, then these banks can be deempanelled. The fact that the success ratio is 0% indicates that the bank was unable to offer competitive quotes and that it was virtually dormant, thereby diluting the competition. Therefore, a recommendation to de-empanel such banks is included in the quarterly review report for review and finalisation of the bank panel. Based on the success ratio, banks are given rankings and the top ten banks are selected which are eligible for purchase of foreign exchange between USD Fifteen million and USD Fifty million.
Designated officer, Forex section Chief Manager, F&A section
3.7.1.A5
Designated officer, Forex section Chief Manager, F&A section Designated officer, Forex section Chief Manager, F&A section
3.7.1.A6
Following parameters are considered to include a bank for the first time in the bank panel:

Foreign exchange trading bank; Market-maker;
Average daily volume in the last six months not less than USD Twenty Five million equivalent; Largest single transaction in the last six months not less than USD Ten million equivalent;
Given below are the underlying criteria for effecting revisions to the list of empanelled banks:
Past experience with respect to quotes: Success
42
S. No
Activities including controls Ratio = No. of Deals struck vs. no. of calls made Negative performance with respect to back-office operations
Responsibility
Any new bank applying for empanelment provided it fulfilled the criteria listed above.
3.7.1.A7
On identifying the revisions to the bank panel (empanelment and de-empanelment) these details along with the success ratios and list of top ten banks are documented in the quarterly review recommendation for finalization of the bank panel.
Designated officer, Forex section Chief manager, Forex section DGM, F&A section GM, F&A section Designated officer, Forex section
3.7.1.A8
The above recommendation is forwarded to the DGM (F&A) and GM (F&A) for review and approval. Further, the respective banks are intimated with regard to their inclusion or de-empanelment.
3.7.1.A9
On approval of the banks empanelment, the designated officer, Forex section creates a bank master in SAP using TCode BUP1 for inclusion of new bank in the CFM module to update the bank masters.
43
3.7.1.B
Process flowchart
Initiate quarterly review process for finalization of the bank panel for purchase of foreign currency
Calculate success -ratio for each bank for the respective quarter
Does bank reflect a 0% success ratio ?
Propose for de -empanelment
Identify top 10 banks for foreign currency transactions more than $ 50 million in order of success ratios determined If a bank approaches the Company for inclusion in the panel, bank is assessed against the selection creteria . Yes Does the bank qualify all the selection criteria ? No Quarterly review recommendation prepared by designated officer , Forex section Quarterly review recommendation for finalization of panel Include in the bank panel Certificate from a chartered accountant validating satisfaction of selection criteria
Forward the quarterly report to DGM, F&A section and GM , F&A section for approval
Intimate respective bank with regard to inclusion or de empanelment
Update SAP in CFM module to create /remove the master in case a new bank is empanelled or de -empanelled
44
3.7.2
Procedure for outward remittances Outward remittances involve receipt of request for currency, updation of forex payments in forex register, obtaining competitive rates, comparative analysis and acceptance of best rate followed by updation in SAP and dispatch of cheque.
3.7.2.A Process narrative S. No 3.7.2.A1 Activities including controls Respective asset locations intimate requirement of foreign exchange to Forex section for making payments. A letter addressed to bank detailing the beneficiary name, bank account details, swift code, location, etc for requesting payment along with required supporting documents are obtained. The supporting documents include the following: Calculation sheet showing gross value payable, Tax Deducted at Source (TDS), other taxes and bank charges (if any);
Responsibility Designated officer at respective location
Logistics Invoice Verification (LIV) against which the payment is requested;

Vendor invoice;
Application for issue of foreign Telegraphic Transfer (TT) single customer credit transfer; Format for declaration cum undertaking as per Foreign Exchange Management Act (FEMA);
Form A2 for remittance of foreign currency abroad;
Income tax clearance certificate from Income Tax authority in case of non-resident companies.
3.7.2.A2
To obtain the total forex requirement, the forex requirement of all the locations is consolidated in a MS Excel spreadsheet on a daily basis by designated person in Forex section and is maintained in the forex register. For format of forex register, refer Para 8.12 mentioned below.
Designated officer, Forex section
3.7.2.A3
Procedure for payment/ purchase of foreign currency has
Designated
45
S. No
Activities including controls been outlined in the minutes of 69th meeting of Board of Directors dated 10th January 2001, No. MSGF/ND/103/01. Given below is a snapshot of the procedure: Once the total amount of foreign currency payment is finalized, the total foreign currency payment is broken down in convenient lots, each lot not exceeding USD Five Million. Procedure for selection of banks for obtaining competitive offers and type of foreign currency rate to be applied is dependent on the size of total amount of foreign currency to be purchased. Guidelines for various categories are given below: If the total foreign currency payment is between USD Twenty Thousand and USD Fifteen Million
Responsibility officer, Forex section
Competitive offers are obtained from three banks out of all the empanelled banks. These three banks are selected in alphabetical order, the third bank being the one which was successful in the previous bid. The offers are with reference to tom rates only. If the total foreign currency payment is between USD Fifteen Million and USD Fifty Million
Competitive offers are obtained from three banks out of the top 10 empanelled banks. These three banks are selected in alphabetical order, the third bank being the one which was successful in the previous bid. The offers are with reference to tom rates only.
If the total foreign currency payment is above USD Fifty Million Foreign exchange coverage is carried out in smaller lots over a period of one week through short dated forwards. These forwards are generally procured through SBI only. If, however, procurements are made from two to three different banks, then the D (F) is appraised with the same.
3.7.2.A4
This procedure is applicable to all the work
Designated
46
S. No
Activities including controls centres where Reuters or similar wire line information service such as Bridge Station are installed with the approval of D (F). The above procedure, however, does not apply to cases where the total foreign currency payment is in less than USD Twenty Thousand. In such cases the SBI tom card rates as obtained from SBI are applied and payments are effected through SBI.
Responsibility officer, Forex section
3.7.2.A5
Tom rates are obtained in two rounds from the banks telephonically by at least two designated officers, Forex Section. These are recorded in the daily booking sheet. Further, the Reuters ask rates are obtained, simultaneous to obtaining rates from the banks, from the Reuters software by deducting the relevant discount to arrive at the tom rates. These too get documented in the daily booking sheet. Once the bank tom rates are obtained a comparative analysis is done and the bank offering the lowest rate is selected. This rate is also compared with the Reuters tom rate for the purpose of drawing a reference to the international rates. The respective bank is then telephonically informed about the acceptance of the offer. For Daily booking sheet template, refer Para 8.13 mentioned below.
3.7.2.A6
3.7.2.A7
Proposal for making forex payments based on rate finalized Designated as per procedure outlined in Para 3.7.2.A6 above is prepared officer, Forex by the designated Officer in Forex Section and forwarded to section DGM, F&A section and Group General Manager (GGM), F&A Chief section for approval. manager, F&A section On approval of the proposal for making forex payment relevant entries are made in SAP CFM server by the designated officers, Forex Section on a daily basis. Given
3.7.2.A8
47
S. No
Activities including controls below are the T- codes for the same: TX13: To create an offer, enter all the quotes obtained and save the lowest quote.
Responsibility
Chief Manager, F&A section
TX02: To execute the contract, check details and round off to the nearest rupee in F type 0020. If there are any bank charges then enter the same in F type 0010. Save the transaction. Again enter T-CodeTX02, settle and save the transaction. Before saving the transaction it is ensured that the rates, value date, rounding off and bank charges have been correctly entered.

TBB1: To post accounting entries.
Refer accounting entries mentioned below:

Accounting entry no. AE/TR/007 GL code Account description 191101 Forex currency clearing A/c (Forex amount x at M rate) 191102 Forex liability clearing A/c (Forex amount x at M rate) Accounting entry no. AE/TR/008 GL code Account description 191102 Forex liability clearing A/c (Forex amount x Actual rate) 191103 Payment request clearing A/c (Forex amount x Actual rate) Accounting entry no. AE/TR/009 GL code Account description 201923 Treasury Charges A/c 201429 Rounding off A/c 191103 Payment request clearing A/c
Dr/Cr Dr. Cr.
Dr/Cr Dr. Cr.
Dr/Cr Dr. Dr./Cr. Cr.
F111: To effect a payment.
48
S. No
GL code 191103 91302


Account description Payment request clearing A/c Bank A/c Dr/Cr Dr. Cr.
Responsibility
SP01: To print cheques.
ZFIFXTRF: To transfer documents/ LIV transactions from R3 server to CFM server to facilitate allocation of payments made against respective LIV. TB11: To allocate forex payments made against respective LIV. To verify the vendor details for each LIV, enter T-Code FBLIN in R3 server. At the end of this exercise the unallocated amount field reflects a zero balance indicating that all the LIVs against which payments have been made are linked. In case this field reflects some balance then the respective LIV is manually identified and then entered under TB11.
SQ01: To generate report showing all allocated documents/ LIVs.
TBB6: To account for exchange rate difference between the M rate and the actual rate.

GL code 191102 201923 201923 Account description Forex liability clearing A/c Cash exchange loss/ gain on treasury transactions A/c (in case of gain) Cash exchange loss/ gain on treasury transactions A/c (in case of loss) Dr/Cr Dr. Cr. Dr.
In cases where transactions are with SBI, cheque is not required to be printed since the Company has an account with SBI. Only intimation is forwarded based on which the bank account gets debited. 3.7.2.A9 To facilitate the accounting entries in SAP (CFM and R3), the designated officer, Forex Section is required to enter the forex rates for all currencys on a daily basis. The SBI card rates Designated officer, Forex section
49
S. No
Activities including controls are obtained on a daily basis through a fax. Based on the TT and bill selling and buying rates the average TT rate (i.e. M rate) and the average Bill rate is calculated. Average rate = Buying rate + Selling rate 2 Given below are the T-Codes for entering the forex rates:
Responsibility
In CFM module
S_DCE_68000174: To enter the M rates for all currencys
In R3 server
0B08: To enter TT buying rates, TT selling rates, M rate, Bill buying rate, Bill selling rate and Bill average rate for all currencies. 3.7.2.A10 On completion of the cheque printing activity, the cheques along with all the documents (as specified in Para 3.7.2.A1 above, except the LIV) are forwarded to the bank for effecting the payment. At this stage the transactions have already been pulled in the CFM server from the R3 server and also have been allocated to the payments made. Now, the payments and foreign exchange fluctuation is recorded in the R3 server for which the following T-Codes have to be used: F-04: To post all transactions pertaining to forex payments which include payments made against specific LIVs, bank charges and exchange rate difference.
3.7.2.A11
F-03: To clear the parking account, viz, Forex currency clearing A/c (account number 191101).
On executing the above T-Codes all accounting entries generated in CFM server (refer Para 3.7.2.A8 mentioned above) get posted in the R3 server.
50

Letter addressed to bank for forex payment Forex requirements of all locations are consolidated on a daily basis to obtain total requirement of forex Forex register
Is forex requirement more than $20,000 Yes Is forex requirement more than $15 million
No
SBI tom rates obtained by fax on a daily basis are used for making payments
No
Forex requirement split in lots , each lot not exceeding $5 million
Yes
Quotes (tom rates ) are taken for each lot from three of the 16 empanelled banks by two officers of Forex section Quote (tom rate ) is taken by two officers of forex section from the top 10 of the empanelled banks on phone
Is forex requirement more than $ 50 million Yes Forex requirement is fulfilled by procurement of short dated forwards from SBI over a maximum period of one week
No
The tom rates obtained from the banks are compared with ask rates obtained to check for best available rates
Quotes are taken in two rounds from each bank and the lowest tom rate is fixed
Daily booking sheet
Daily booking sheet is prepared by the designated person and authorized by Head , Forex section Proposal for forex payments is prepared and is forwarded to DGM (F&A) and GGM (F &A) for approval On approval of the proposal required entries are made in R3 server and CFM server in SAP
Proposal for payment
Automated cheque printing is done through SAP .
Cheques along with the relevant documents are sent to the respective bank
51
3.7.3
Procedure for inward remittances Inward remittances include receipt of foreign currency, finalization of cash rate, authorization to bank for forex credit followed by recording of required entries in SAP.
3.7.3.A Process narrative

S. No 3.7.3.A1 Activities including controls Intimation with regard to the details of sales made to customers giving the invoice number, invoice amount (gross and net), forex amount receivable, due date, etc are received from the respective locations Sales section. Intimation is generally received telephonically. On the specified date, bank intimates the Forex section once the foreign currency is received. This intimation is either verbal or through a bank advice. Forex section checks the bid rate in the Reuters software and arrives at final cash rate after adjusting applicable premium. This rate is approved by the Chief Manager, F&A section. Responsibility Designated officer, Sales section
3.7.3.A2
3.7.3.A3
Designated officer, Forex section Chief Manager (F&A), Forex section
3.7.3.A4
Designated officer, Forex section prepares and forwards an authority letter intimating the approved cash rate at which the foreign currency is credited to the companys bank account in INR. Designated officer, Forex section records the receipts in SAP (R3 server) through a direct FI entry. Refer accounting entry no. AE/TR/012 mentioned below:
GL code 91302 201427 120*** Account description Bank A/c Bank charges A/c Customer A/c Dr/Cr Dr. Dr. Cr.
3.7.3.A5
52
S. No
Responsibility
3.7.3.A6
On credit to the bank account at the rate as intimated by the company, the bank forwards a credit advice to the company giving details of the same.
53
3.7.3.B
Process Flowchart
Information received verbally from locations on case to case basis intimating details of sales made to customers SBI intimates Forex section through a bank advice or verbally on receipt of foreign currency
Forex section checks the bid rate in the Reuters program and arrives at final cash rate
Designated officer in Forex section prepares and forwards an authority letter to the bank for crediting the bank account
Authority letter to the bank
Credit advice is sent by the bank to the Forex section
Credit advice
Accounting entry made in SAP
54
3.7.4
Repayment and revaluation of foreign loans Foreign currency loans are taken from overseas lending institutions at either fixed or floating interest rates. Such loans are repaid in the designated foreign currencies only. The repayment schedules for these loans are entered in the CFM module specifying the respective due dates, principal amount and rates of interest. Presently, the Company has a yen loan outstanding which is being repaid as per specified schedule and revalued at period end.
3.7.4.A Process narrative S. No 3.7.4.A1 Activities including controls Repayment of foreign loans On the specified due date the designated officer, Forex section verifies the CFM module for the instalment outstanding. The symbol I indicates that the loan instalment has already been repaid and the symbol P indicates that the amount is payable. The spot exchange rate is obtained from SBI two days prior to the due date. The following exercise is performed to account for the difference between the rate of borrowing at the time of repayment on the due date and the M-rate. The M-rate is the monthly average of the TT buying and selling rates. The T codes TBB1 and F111 are executed in CFM module to account for the payment made at the borrowing rate. Subsequently, the T code F 04 is executed in R3 module to clear the balance in the loan technical clearing account against the foreign currency clearing account. Refer accounting entries mentioned below:
Accounting entry no. AE/TR/013 GL code Account description 160301 Secured/Unsecured/DPG loans 201601 Interest on loans 191105 Loan technical clearing account Accounting entry no. AE/TR/014 Dr/Cr Dr. Dr. Cr.
Responsibility Designated officer, Forex section
55
S. No
GL Code 191105 191101

Account Description Loan technical clearing account Foreign currency clearing account Dr/Cr Dr. Cr.
Responsibility
3.7.4.A2
Revaluation of foreign loans Revaluation of foreign loans is done at the end of each quarter. The Tcode FNSA is executed for revaluation of the loans and the Tcode FNRA is executed to account for accrued interest. Subsequently loss or gain on revaluation of the foreign currency loan based on the difference between the borrowing rate and the M-rate. Refer accounting entries mentioned below:
Accounting entry no. AE/TR/015 GL code Account description 201901 Loss / Gain on revaluation of foreign currency loans 160301 Secured/Unsecured/DPG loans Accounting entry no. AE/TR/016 GL code Account description 201601 Interest on loans 190521 Interest Accrued But Not Due On Loans Dr/Cr Dr. Cr.
Dr/Cr Dr. Cr.
56
4.
S. No 1 2 3 4 5 6
Process documentation
Activity reference 3.1.1.A1 3.1.1.A3 Document Name Project/ location wise cash forecast Intimation letter to SBI specifying the project/ location wise drawing powers Bank statement CC interest calculation sheet Utilization statement Proposal for renewal/ extension/ enhancement of credit facilities Proposal forwarded by designated person at project location to CA section, DDN. Proposal forwarded by CA section, DDN to D (F) Letter prepared by the CS addressed to the bank. Cash forecasts received from project locations Cash forecast Notice of IC Invitation Letter Quotation for investment of ST surplus Document retention Designated officer CA section, DDN Designated officer CA section, DDN Designated officer CA section, DDN Designated officer CA section, DDN Designated officer CA section, DDN Designated officer CA section, DDN Designated officer CA section, DDN
3.1.2.A1 3.1.3.A1 3.1.4.A1 3.1.4.A3
3.1.4.A4
3.2.1.A3
Designated officer CA section, DDN Designated officer CA section, DDN Designated officer CA section, DDN Designated officer, TMG Designated officer, TMG Designated officer, TMG Designated officer, TMG
3.2.1.A5
10
3.4.1.1.A2
11 12 13 14
3.4.1.1.A3 3.4.1.1.A5 3.4.1.1.A5 3.4.1.1.A5
57
S. No
Activity reference funds
Document Name
Document retention
15 16 17
3.4.1.1.A7 3.4.1.1.A8 3.4.1.1.A12
Comparative statement MoM IAN
Designated officer, TMG Designated officer, TMG Designated officer, Cash and Bank Designated officer, Cash and Bank Designated officer, Cash and Bank
18
3.4.2.A1
IN
19
3.4.2.A4
Investment Instrument (TDR/ FDR or any other instrument depending on the type of investment) Investment Register
20
3.4.2.A6
Designated officer, Cash and Bank Designated officer, Cash and Bank Designated officer, Cash and Bank Designated officer, Forex section Designated officer, Forex section
21
3.4.2.A6
Bank payment voucher
22
3.4.2.A8
Quarterly review recommendation
23
3.7.1.A7
Application from banks for inclusion in bank panel Letter to bank along with supporting documents for forex payment obtained from respective location Forex register
24
3.7.2.A1
25
3.7.2.A2
Designated officer, Forex section Designated officer CA
26
3.7.2.A2
MS Excel spreadsheet used for consolidating inputs received from the
58
S. No
Activity reference
Document Name project locations (Refer Para 3.4.1 mentioned above )
Document retention section, DDN
27
3.7.2.A6
Daily booking sheet template
Designated officer, Forex section Designated officer, Forex section
28
3.7.3.A2
Bank advice received from the bank intimating the receipt of foreign currency Authority letter intimating the cash rate to the bank Credit advice received from the bank intimating credit to bank account in INR
29
3.7.3.A4
Designated officer, Forex section Designated officer, Forex section
30
3.7.3.A6
59
5.
Accounting entries
Number Activity ref 3.1.2.A2 A/c Code 120112 91*** A/c Name IUT Payments A/c Bank A/c Dr/ Cr Dr. Cr. Amount XXX XXX
AE/TR/001
(Being day-end locational balances transferred to respective locations)
AE/TR/002
3.1.2.A2
91*** 120112
Bank A/c IUT Payments A/c
Dr. Cr.
XXX XXX
(Being locational balances being accounted for at the locations)
AE/TR/003
3.1.3.A3
201621 091461
Interest on cash credit A/C SBI (Main) A/c
Dr. Cr.
XXX XXX
(Being interest on cash credit for the quarter ended _______ accounted for)
AE/TR/004
3.4.2.A2
191103 91302
Payment request clearing A/c Bank A/c
Dr. Cr.
XXX XXX
(Being cheque issued/ payment made toward forex sums payable, net of bank charges )
AE/TR/005
3.4.2.A7
191103 120136
Payment request clearing A/c IUT CFM A/c
Dr. Cr.
XXX XXX
(Being investment maturity proceeds accounted for)
AE/TR/006
3.4.2.A8
0919** 2303**
Interest accrued A/c Interest on investments A/c
Dr. Cr.
XXX XXX
(Being accrued interest on investments accounted for)
AE/TR/007
3.7.2.A8
191101 191102
Forex currency clearing A/c (Forex amount x m rate) Forex liability clearing A/c (Forex amount x m rate)
Dr. Cr.
XXX XXX
60
Number
Activity ref
A/c Code
A/c Name
Dr/ Cr
Amount
(Being liability created for forex payable at the average daily TT rate/M rate, which is average of the daily TT buying and selling rate)
AE/TR/008
3.7.2.A8
191102 191103
Forex liability clearing A/c (Forex amount x actual rate) Payment request clearing A/C (Forex amount x actual rate)
Dr. Cr.
XXX XXX
(Being forex amount parked in the payment clearing account at actual rate for effecting the payment)
AE/TR/009
3.7.2.A8
201923 201429 191103
Treasury charges A/c Rounding off A/C Payment request clearing A/c
Dr. Dr./ Cr. Cr.
XXX XXX XXX
(Being forex amount parked in the payment clearing account at actual rate for effecting the payment)
AE/TR/010
3.7.2.A8
191103 91302
Payment request clearing A/c Bank A/c
Dr. Cr.
XXX XXX
(Being cheque issued/ payment made toward forex sums payable, net of bank charges )
AE/TR/011
3.7.2.A8
191102 201923
Forex liability clearing A/c Cash exchange loss/ gain on treasury transactions A/C (in case of gain) Cash exchange loss/ gain on treasury transactions A/C (in case of loss)
Dr. Cr.
XXX XXX
201923
Dr.
XXX
(Being exchange rate difference between M rate and actual rate accounted for)
AE/TR/012
3.7.3.A5
91302 201427
Bank A/c Bank charges A/c
Dr. Dr.
XXX XXX
61
Number
Activity ref
A/c Code 120***
A/c Name Customer A/c
Dr/ Cr Cr.
Amount
(Being receipts in foreign currency accounted for against the respective sales invoices)
AE/TR/013
3.7.4.A1
160301 201601 191105
Secured/Unsecured/DPG loans Interest on loans Loan technical clearing account
Dr. Dr. Cr.
XXX
XXX
(Being repayment of loan being made including interest on the loan at the rate of borrowing)
AE/TR/014
3.7.4.A1
191105 191101
Loan technical clearing account Foreign currency clearing account
Dr. Cr.
XXX XXX
(Being balance in loan clearing account being cleared against the foreign currency clearing account)
AE/TR/015
3.7.4.A2
201901 160301
Loss / gain on revaluation of foreign currency loans Secured/unsecured/DPG loans
Dr. Cr.
XXX XXX
(Being loss/gain as a result of revaluation of foreign currency loan accounted for)
AE/TR/016
3.7.4.A2
201601 190521
Interest on loans Interest accrued but not due on loans
Dr. Cr.
XXX XXX
(Being accrued interest on account of loan amounts repaid accounted for)
62
6.
S. No 1
Information system and reporting

Report Name Investment report is prepared which specifies the number of investments made matured. Report on Funds position Frequency Monthly Report generation process Investment position report using the IAN of the previous day. Funds position (monthly) report using investment position reports for the month Daily share prices are obtained from Reuters. Is generated based on the investment position report and funds position report. Repayment details of loan details including name of bank, principal amount interest are compiled List of remittances made, bankwise, currencywise, currencywise and category-wise summary of remittances Report used by/circulation to Funds Section and Corporate Budget Cell Appendix reference --
Daily
Corporate Planning Department ,C & MD
--
Share price
Daily
Corporate Planning Department C&MD
--
Investment agenda
Monthly
--
Form ECB 2
Quarterly
Reserve Bank of India
Refer Para 7.3 mentioned below
Forex register
Monthly
Treasury Management Group
Refer Para 8.12 mentioned below
References
63
7.1
Circular No 201 - Preparation of cash forecast including cash expenditure and variance analysis report. OIL & NATURAL GAS CORPORATION LTD CORPORATE ACCOUNTS SECTION TELBHAWAN: DDN
File no: HQ/CA/FUND/CIRCULAR/yyyy CIRCULAR NO. 201
Dated: dd.mm.yyyy
Subject: Preparation of Cash Forecast including Cash Expenditure and Variance Analysis report. As per the existing practice, cash forecast is prepared at Corporate Fund Section after compiling the cash forecasts of all projects and considering all other payments and revenues of the Corporation on composite basis. Cash forecast is required for proper fund management including taking of investment decisions of surplus funds. Looking to the importance of cash forecast, need has been felt to issue the following guidelines while preparing the cash forecast at project level: 1. CASH FORECAST:
Cash forecast be prepared in the enclosed format. Forecast should be prepared on monthly basis, first three months with weekly break-up
and next nine months with monthly break-up. Forecast must be singed by minimum E- 4 level officer after obtaining approval of head of finance. Cash forecast be sent through fax/system by 20th of the preceding month and on rolling basis. Forecast should be reviewed on regular basis and if any significant change is expected, after sending the same to Corporate Fund Section, the same must be intimated to Corporate Fund Section through fax/system/hotline/telephone. Any pre-ponement/deferment of expenditure in the forecast must be intimated to Corporate Fund Section to incorporate the same in forecast and in investment decision. Any single expenditure in a particular day exceeding Rs. 25 crores for the first three months, the same must be specified with date of payment (other than statutory payments)
2. DAILY BANK REPORT (DBR): As per existing system all projects linked under centralized cash credit system are required to submit DBR, after obtaining the same from bank, on daily basis to Corporate Fund Section through fax system in the following format on the same day or on the next day. i) Gross Debit of the day ii) Gross credit of the day iii) Net Debit/Credit of the day This should be adequately adhered to.
64
3. DRAWING POWER: Drawing Power is given to the projects on the basis of requirement of the projects which are reflected in their cash forecast. Any additional requirement of funds must be intimated in advance, so that proper fund arrangement can be done at Head Quarter level. Any deferment of expenditure is also to be reported to Corporate Fund Section at HQ, so that drawing power if can be re-allocated accordingly. There should not be any excess expenditure than drawing power. 4. CASH EXPENDITURE: Cash expenditure be sent in the prescribed format by7th of the succeeding month. Cash expenditure be signed by minimum E-4 level officer.
5. VARIANCE ANALYSIS: With the cash expenditure statement all projects are required to send Variance analysis statement between cash forecast and cash expenditure in the prescribed format. Variance analysis be signed by minimum E - 4 level officer after showing to finance head. Any abnormal variation be reported with proper reasons.
6. EXPECTED SALES RECEIPTS: As ONGC is providing 21/30 days credit period to its customers, it is possible to incorporate the actual expected sales realization for next 21/30 days in the forecast. Thus every project where invoices are prepared must submit to the corporate fund section the date-wise expected sales receipts in such a fashion to cover full sales realization (say every fortnightly). The same must be in the following format i) ii) iii) iv) v) Billing date. Name of the customer. Amount of the bill (Rs. in crores). Expected receipt date. Name of the bank with whom the same will be credited.
65
7.2
Department of Public Enterprises guidelines for investment of short term surplus funds by Public Sector Enterprises The GOI issued vide 14th December 1994, 1st November 1995 and 11th March 1996 detailed guidelines on investment of surplus funds by the public sector undertakings. The memorandum was prepared to ensure that no misuse of PSU funds recurs. These guidelines are in consultation with the Ministry of Finance. The key highlights of the memorandum are enumerated below:
a)
b)
PSUs are not allowed to invest surplus funds in public or private mutual funds except for Units/ Scheme of UTI, as they are equity based and are, therefore, inherently risky. There should be proper commercial appreciation before any investment decision of surplus finds is taken and best estimates of availability of surplus funds may be worked out in consultation with their administrative Ministry. The availability should be worked out taking into account working capital requirements for the period. While one year ceiling on the remaining maturity period shall hold good for the general instruments the public enterprises can also select treasury bills and GOI securities up to three years maturity period. Regarding term deposits with a bank, the net worth of the bank must not be less than Rs 100 Cr i.e. paid up capital and free reserves must not be less than Rs. 100 Cr. Credit ratings by agencies must be classified into investment grade and non-investment grade. Since highest credit rating would mean the top most in the investment grade which would limit choice and probably lower the overall yield, PSUs will now be free to invest in instruments falling under investment credit rating The GOI has reiterated that inter-corporate borrowing programme can also be credit rated by rating agencies and the public enterprise may invest surplus funds only on the basis of such ratings. Funds should not be invested by the PSEs at a particular rate of interest for a particular period of time while the PSE is resorting to borrowing at an equal or higher rate of interest for its requirements for the same period of time. Decision of investment of surplus funds shall be taken by the PSU board. However decisions involving investing short term surplus funds up to one year maturity may be delegated up to prescribed limits of investment to a designated group of directors. Where such delegation is made the delegation order should spell out the levels of approval.
c)
d)
e)
f)
g)
66
7.3
Reserve Bank of India ECB 2 format The ECB (External Commercial Borrowings) Format 2 as per Reserve Bank of India under Foreign Exchange Management Act, 1999 is used to report the repayment details of loans including name of bank, principal amount and interest.
67
8
8.1 S. No 1
Appendix
Appendix 1: Glossary of terms used
Term
Definition
T- Bills
Treasury bills are government bonds issued by the GOI through the RBI. They are debt financing instruments of the Government.
Commercial papers
Commercial paper is a money market security issued by large banks and corporations. It is generally not used to finance longterm investments but rather for purchases of inventory or to manage working capital.
Certificate of deposit GOI Securities
A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks. GOI securities are sovereign securities which are issued by the Reserve Bank of India on behalf of Government of India, in lieu of the Central Governments market borrowing programme Cash forecast is a detailed statement showing the expected inflow and outflow of funds that helps determine the cash position. Short term funds are funds that are available for investment upto a period of one year. Investable funds are those surplus funds that can be allocated towards investment after considering unforeseen payments, rate of interest, date of maturity etc. The spot market refers to instruments that are traded and settled within two business days of a transaction. The spot rate refers to the current market rate for a currency. Interest is either added on
Cash forecast:
Short term funds
Investable funds
Spot rate
68
S. No
Term
Definition
(premium) or subtracted from (discount) this rate to determine pricing for non-spot trades, which are referred to as forwards in the FX market. 9 Cash rate Cash rate is used to denote the interest rate which financial institutions pay to borrow or charge to lend funds in the money market on an overnight basis. The lower range of interest rate quotations i.e. interest rate that a bank is prepared to pay for purchasing foreign exchange.
10
Bid rate
11
Ask rate
The price at which foreign exchange is offered for sale.
12
Short dated forwards M-rate
Transactions in bank deposits or in exchanging currencies which extend for a period of up to a month. Based on the TT selling and buying rates the average TT rate i.e. M rate, the average M - rate is calculated. Average rate = (Buying rate + Selling rate)/2
13
69
8.2
Appendix 2: Cash forecast template

Cash forecast # from 16.04.2007 till March 2008
(Rs. In Crore) PARTICULARS 1623 APR OPENING BALANCE CL BAL AS ON 13.04.07 LINE OF CREDIT PENDING MESSAGE DEBIT PENDING MESSAGE CREDIT TOTAL INFLOWS 2430 APR 1-7 MAY 8-15 MAY 1623 MAY 2431 MAY JUN' 07 JUL' 07 AUG' 07 SEP' 07 OCT' 07 NOV' 07 DEC' 07 JAN' 08 FEB' 08 MAR' 08 Total
70

(Rs. In Crore) PARTICULARS 1623 APR Prices from Pricing section, Commercial and quantity from Sales section. Input on 1st two weeks from Projects Pricing TMG ADJUSTMENT OF SUBSIDY MATURITY OF INVESTMENTS INTEREST ON INVESTMENTS SALES RECEIPT 2430 APR 1-7 MAY 8-15 MAY 1623 MAY 2431 MAY JUN' 07 JUL' 07 AUG' 07 SEP' 07 OCT' 07 NOV' 07 DEC' 07 JAN' 08 FEB' 08 MAR' 08 Total
71

(Rs. In Crore) PARTICULARS 1623 APR TDS-INTEREST ON INVESTMENT Scheduled TMG OVL Scheduled INTEREST FROM MRPL(NET) FINAL DIVIDEND RE-PAYMENT FROM OVL INTEREST ON OIL BONDS TOTAL RECEIPTS OUTFLOWS OFFSHORE Projects cash JVC 2430 APR 1-7 MAY 8-15 MAY 1623 MAY 2431 MAY JUN' 07 JUL' 07 AUG' 07 SEP' 07 OCT' 07 NOV' 07 DEC' 07 JAN' 08 FEB' 08 MAR' 08 Total
72

(Rs. In Crore) PARTICULARS 1623 APR forecast Projects cash forecast Projects & Sales Section Projects & Sales Section Bombay cash forecast Bombay cash forecast TOTAL EXP. OFFSHORE OTHER PAYMENTS FOREIGN DEBT ROYALTY CESS SALES TAX/VAT 2430 APR 1-7 MAY 8-15 MAY 1623 MAY 2431 MAY JUN' 07 JUL' 07 AUG' 07 SEP' 07 OCT' 07 NOV' 07 DEC' 07 JAN' 08 FEB' 08 MAR' 08 Total
73

(Rs. In Crore) PARTICULARS 1623 APR ONSHORE Projects cash forecast Projects & Sales Section Projects & Sales Section Corp A/c DDN Projects cash forecast TOTAL EXP. ONSHORE INDIAN DEBT INCL INTEREST OTHER PAYMENTS ROYALTY CESS SALES TAX/VAT 2430 APR 1-7 MAY 8-15 MAY 1623 MAY 2431 MAY JUN' 07 JUL' 07 AUG' 07 SEP' 07 OCT' 07 NOV' 07 DEC' 07 JAN' 08 FEB' 08 MAR' 08 Total
74

(Rs. In Crore) PARTICULARS 1623 APR Corp tax deptt OVL CORPORATE TAX PAYMENT PAYMENT TO O.V.L INVESTMENTS Corp tax deptt CS FRINGE BENEFIT TAX DIVIDEND/OTHER PAYMENTS CPF SOFT LOAN ADD AND ANNUAL INCENTIVE TOTAL OUTFLOW / EXP. 2430 APR 1-7 MAY 8-15 MAY 1623 MAY 2431 MAY JUN' 07 JUL' 07 AUG' 07 SEP' 07 OCT' 07 NOV' 07 DEC' 07 JAN' 08 FEB' 08 MAR' 08 Total
75

(Rs. In Crore) PARTICULARS 1623 APR 2430 APR 1-7 MAY 8-15 MAY 1623 MAY 2431 MAY JUN' 07 JUL' 07 AUG' 07 SEP' 07 OCT' 07 NOV' 07 DEC' 07 JAN' 08 FEB' 08 MAR' 08 Total
SURPLUS / DEFICIT *SUBJECT TO ASSUMPTIONS IN NOTE SHEET
1) Amount of Subsidy adjustment from Ivth quarter 06-07 onwards has not been considered in want of exact information from Pricing. 2) No amount has been kept for OVL payout as OVL has started
76

(Rs. In Crore) PARTICULARS 1623 APR earning revenues to meet its Fx requirements, as per mail dated 26.02.07 from Manager (F&A)-OVL. 2430 APR 1-7 MAY 8-15 MAY 1623 MAY 2431 MAY JUN' 07 JUL' 07 AUG' 07 SEP' 07 OCT' 07 NOV' 07 DEC' 07 JAN' 08 FEB' 08 MAR' 08 Total
77
ONGC Ltd. Finance Manual Chapter No.24:Treasury Management
8.3 a) b) c) d) Board. e) f)
Appendix 3: Permitted investment avenues Term deposits with schedules commercial banks.
Public sector banks with a minimum net worth of Rs.100 Cr and also capital adequacy norms as prescribed by the RBI.
meeting the
Private sector banks, with a minimum net worth of Rs. 500 Cr and also meeting the capital adequacy norms as prescribed by the RBI. List of empanelled banks and the bank-wise exposure limit shall require approval of the Instruments rated AA or P2 or equivalent for example certificates of deposits, deposit schemes, or similar instruments issues by scheduled commercial banks. Commercial papers issued by corporates having highest credit rating (P1+ or equivalent) from an established credit rating agency. In case of Commercial paper of corporates, other than central PSEs the issuer must be a company whose shares are listed as Category A shares on Bombay Stock Exchange. Inter-corporate loans to central Navratna PSEs having highest credit rating (AAA or equivalent) Bonds issues by Central PSEs having highest credit rating (AAA or equivalent) Treasury Bills and Government of India securities Liquid TDR, automatic and value dated, with SBI for the minimum period. UTI Liquid Plan up to six days subject to a maximum limit of Rs.1000 Cr.
g) h) i) j) k)
78
8.4
Appendix 4: Composition and quorum of Investment Committee The Investment Committee will comprise of Chief/Head Corporate Affairs & Coordination at Delhi, GM (MM) Delhi, GM (F&A) Head Chief, Commercial and Treasury and Company Secretary and the proposals for investment of funds requiring approval of Director (HR) and Director (Finance) & C&MD should be put up by the Investment Committee and in case of absence of any member, any officer in his section not below the level of E-6(DGM) will represent the member in the Investment Committee and three members present in person or through such departmental officer, in case of investments for 15 days or above and two members in person or through such departmental officer in case of investments up to 14 days, would constitute the quorum for Investment Committee.
8.5
Appendix 5: Guidelines and principles for Investment Committee The IC will evaluate the offers on commercial principles. b) The investments shall strictly be made on the basis of tenders submitted by the bidders and no further negotiations or matching be held.
a)
c) Investments are to be made in accordance with the various exposure limits of the
bidders as may be approved and within the overall investments limits as approved by the BoD from time to time.
d) e)
IC will recommend investment upto maximum of one year. Investment transactions for more than one year will be put up to the BoD for ratification. Where the funds are available for a longer period but with temporary decline in availability during the period, Investment Committee may recommend investment of funds for the longer period by availing cash credit facility for such temporary deficit period. However such recommendation will normally consider maintaining at all times a cushion of INR Hundred Crores in cash credit limit for any day to day variations or unforeseen payments. Working capital demand Loan is not to be exposed for investments and should be kept fully available over and above the cushion in CC limit for any contingencies.
f)
In case of a tie in rates the investable amount may be distributed broadly in the proportion to the net worth of the respective bidders subject to their exposure limits and maximum/minimum amount acceptable to them. If such distributed amount falls below the minimum amount acceptable to any bidder or less than INR Five Crores then no amount may be placed with the said bidder.
g)
IC shall ensure that its recommendations are in accordance with the DPE guidelines on the subject.
79
8.6 Appendix 6: List of invitees
a)
The following parties are to be invited for investment of short term surplus funds by the Company subject to availability of exposure limits:
For investment in term deposits and rated instruments issued by banks, invitees shall comprise of the list of empanelled banks, as approved by the Board. For inter-corporate loans, the invitees shall comprise of central Navratna PSEs having highest credit rating. Accordingly, invitees will comprise IOCL, BPCL, NTPC, SAIL and BHEL, subject to availability of highest credit rating. For investment in rated bonds/CPs as well as T-bills/Govt securities, the invitees should comprise of Primary dealers promoted by one or more scheduled commercial banks (registered in India)/financial institutions, and operating at Delhi.
b)
In case of banks, invitation will be sent to the Zonal office at Delhi or to branch at Delhi designated by Zonal office of the respective bank. In case of SBI, the invitation shall be made to Tel Bhawan (where the banking facilities of ONGC are centralized) and New Delhi Main Branch (where the Company maintains its current account).
80
8.7
Appendix 7: Exposure limit Commercial Banks (investments in TDRs & STDRs) : As per the bank wise exposure limit approved by the board For commercial paper of corporates/bonds of Central PSEs.

a)
b)
Central PSEs: 25% of net worth subject to a cap of Rs 250 Cr Other corporates: 25% of its net worth, subject to a cap of Rs 25 Cr
c)
For inter-corporate loans to central Navratna PSEs: 25% of net worth, subject to a limit of

Rs 1000 Cr for Oil sector PSEs and Rs 500 Cr for non-oil sector PSEs.
d)
For T-bills and Government securities: No credit exposure limits, in view if sovereign exposure. The net worth of PSEs/other corporates shall be taken as per the latest available audited accounts of respective parties. UTI liquid plan up to six days subject to a maximum of Rs 1000 Cr. The above limits are further subject to following instrument wise limits
e)
T-bills/GOI securities: Rs 1000 Cr TDRs/ STDRs of banks: Rs 18000 Cr Rated Instruments of banks/FIs: Rs 1000 Cr Commercial papers/bonds of corporate: Rs 1000 Cr Inter-corporate loans to central PSEs: Rs 2000 Cr
81
8.8 Appendix 8: Notice of Investment Committee

OIL AND NATURAL GAS CORPORATION LIMITED TREASURY MANAGEMENT GROUP No. DLH/F&A/TMG/1.31./year NOTICE OF INVESTMENT COMMITTEE MEETING The next meeting of the Investment Committee is requested on../year (.day) at 1600 hours in the Office of GM (F&A)-TMG, ONGC, address to consider investment of surplus funds approximately upto Rs. .. Cr. Invitations have already been issued to the eligible parties as per the approved list for such investments. The deadline for submission of offer is 12:00 hours of .. yyyy with validity up to yyyy. Offers will be opened at 12:15 hours on ..yyyy for which request has been made to bidders' to depute their representatives. The bids will be finalized on yyyy. We look forward to the pleasure of assisting you at the meeting. In case any assistance is required in the meanwhile, kindly let us know. Date: ..
Distribution: 1. GM-Head (CA&C), ONGC, New Delhi 2. GM (MM) EPC Cell, ONGC, New Delhi 3. GM- Treasury, ONGC, New Delhi 4. Company Secretary, ONGC, New Delhi
Manager (F&A) TMG
Copy for kind information to: 1. Dy. General Manager (F&A), Delhi Office Likely date of investment will be from.... 2006 to .2006. 2. BY FAX - GM F&A - Corporate Accounts, ONGC, Tel Bhawan, DDN
Fax No. Copy for kind information to: 1. PS to Director (HR) 2. PS to Director (F)
82
8.9 Appendix 9: Quotation for investment of short term surplus funds

TENDER CLOSING AT 12.00 Noon(././07) No. DLH/F&A/TMG/1.31./07
Dated: .. Eligible BANKS/PSEs Sub: Quotation for investment of short-term surplus funds by ONGC
Dear Sir, ONGC wishes to invest approximately Rs.Cr. as per the details given in Para 2 below. If you are interested in accepting the deposit, you may kindly submit your firm and unconditional offer in a sealed cover marked Quotations - TMG 1.31/07 in the Treasury Bids Box kept at the reception of the company at the address given below latest by 12.00 NOON of . 2007 (.day) or by courier/registered post addressed to Treasury Management Group, Oil and Natural Gas Corporation Limited, Jeevan Bharti Building-Tower II (8th Floor), 124 Connaught Circus, New Delhi 110001, so as to reach positively within the stipulated date and time as mentioned above. It may please be noted that ONGC shall not, in any way, be responsible for any delay/ loss of bids in transit.
2. Details of Investments Tenure Between . to . Days Rs.........................Cr
Indicative Amount (Actual investments may be even more/ less than the amount indicated.)
Likely investment dates
Between ...2007 and ........2007
83
TENDER CLOSING AT 12.00 Noon(././07) Validity sought upto Maturity date Rate of interest (%) Quarterly compounding (yes/no) Minimum acceptable amount Maximum acceptable amount Validity offered .................2007 .................2007
3. Bidders are requested to submit their quotes as per above formats. Bidders may give additional information separately. In case of contradiction in the information, the information given in the prescribed format will be considered for evaluation.
4. In case bidder(s) does not submit any information in the suggested format, the bids will be evaluated on the following assumptions: a) In case the rate of interest is not mentioned, the bid will not be considered.
b) In case bidder(s) does not state whether quarterly compounding is available, for the purpose of evaluation, it will be assumed that quarterly compounding is not available. c) If minimum and/or maximum acceptable amount is not mentioned, it will be assumed that any amount can be placed with the bidder. d) If the validity of the bid is not mentioned, it will be assumed that the bid is valid till Validity sought upto as specified in the tender
84
TENDER CLOSING AT 12.00 Noon(././07)
5. Incomplete bids without the required information as mentioned above may not be considered. Further, if any bidder after submission of bids, withdraws/amends any term or condition and/or express inability in acceptance of any term/rate quoted, such bidders may not be considered for present evaluation as well as future invitation of bids.
6. The invitation of bids does not, in any way, bind ONGC for placement of fund with any of the bidders. ONGC reserves the right to reject any bid without any further reference to the bidders. Further, no brokers should be involved in the transaction between the Bidder and ONGC.
7. Bids shall be opened on ..../2007 at 12:15 hours at 8th Floor, Jeevan Bharati Building-Tower II, 124, Connaught Circus, New Delhi-1. Interested bidders may depute their authorized officials to be present at the time of bid opening.
Yours faithfully
Designation-TMG, ONGC,
This Tender Enquiry can be viewed by authorized users in the website viz., www.ongctenders.net
8.10
Appendix 10: Comparative statement
85
COMPARATIVE STATEMENT SHOWING DETAILS OF OFFERS AGAINST INVITATION DATED .../07 .... to .Days S. No BANKs/ FIs/PSEs Quarterly Compoundi ng Min (Rs. CR) Max (Rs. CR) Validity upto Limit Available (Rs. CR)
Interest (%)
Yield (%)
1 2 3 4 5 6 7
ALLAHABAD BANK ANDHRA BANK BANK OF BARODA BANK OF INDIA CANARA BANK INDIAN BANK STATE BANK OF INDIA* UNITED BANK OF INDIA upto 100 Cr. beyond 100 Cr.
UNION BANK OF INDIA UCO BANK PUNJAB NATIONAL BANK STATE BANK OF TRAVANCORE CORPORATION BANK
10 11
12
13
86
COMPARATIVE STATEMENT SHOWING DETAILS OF OFFERS AGAINST INVITATION DATED .../07 .... to .Days S. No BANKs/ FIs/PSEs Quarterly Compoundi ng Min (Rs. CR) Max (Rs. CR) Validity upto Limit Available (Rs. CR)
Interest (%)
Yield (%)
14
STATE BANK OF HYDRABAD STATE BANK OF BIKANER & JAIPUR ORIENTAL BANK OF COMMERCE BANK OF MAHARASTRA
15
16
17
18
STATE BANK OF INDORE HDFC BANK KOTAK MAHINDRA BANK NM: NOT MENTIONED *Note: For SBI there is an open limit for investment.
19 20
8.11
Appendix 11: Investment authority note
87
INVESTMENT AUTHORITY NOTE File Ref. No. DLH/F&A/TMG/../07 Value Date: . DGM (F&A), Delhi is hereby requested and authorized to make the following investment:-
Party name Name of bank Branch code RTGS code Account No Instrument Folio No Amount Rate of interest Investment date Maturity date .., 2007 Notice will be given 1 day in advance Approval of competent authority exists for the investment. Manager- (F&A) Treasury Copy: 1. By fax: 2. By Hand to xxx Fund 8.12 Appendix 12: Format of forex register F&A O - Treasury RsCr. (Rs. Crore Only )
88
8.12.1 List of inward remittances made during the month

Name of the qualifying bank Exchange rate offered by Curr Qualifying bank SBI Amt in INR (Crs)
S. No
Date of Booking
Value (Pmt) date
No. of quotes obtained
Amt in foreign Currency
Remarks (spot/tom/ forward)
1 2 3
89
8.12.2 Bank-wise summary of remittances made during the month

S. No Amt (Rs Crs) No. of bids sought No. of bids successful
Name of the Bank
Percentage
Remarks
1 2 3 4 5 6 7 8 9 10 Total remittances
90
8.12.3 Currency-wise summary of remittances made during the month S. No 1 2 3 4 5 6 7 8 Total remittances No. of transactions Amount in foreign Currency Amt (Rs. Crs)
Currency
Remarks
91
8.13
Appendix 13: Daily booking sheet template Daily Booking Sheet
Date ____ Reuters rates Spot Tom / Spot Premium Net Time
Currency and amount ______________ Bank Name: Tel: Contact: Quote 1 Quote 2 Quote 3
Name: Tel: Contact:
Name: Tel: Contact: Final Contract details Bank Rate
92
Daily Booking Sheet Time Signatory Signatory
93

23 Treasury Function Manual - Draft

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

23 Treasury Function Manual - Draft

Uploaded by

Copyright:

Available Formats

Chapter 23 Treasury Management

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Content 1. Introduction 1.1 1.2 Process overview Process objectives

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

3.7.4 Repayment and revaluation of foreign loans

8.5 8.6 8.7

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

8.10 8.11 8.12

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Process narratives & flowcharts

* These are subject to change depending on the management decisions

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Designated officer, CA section, DDN

Designated officer, CA section, DDN Designated officer, CA section, DDN

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

3.1.1.B Process flowchart

Cash forecast received from projects/ locations

Assessment of fund requirement for each project / location on a weekly basis

Intimation letter to SBI

Forwarding intimation letter to SBI for execution

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Responsibility Designated officer, CA section, DDN Designated officer, CA section, DDN

Dr/Cr Dr. Cr.

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

Private & Confidential

Draft for discussion

ONGC Ltd. Finance Manual Chapter 23:Treasury Management

3.1.4.B Process flowchart

Utilization statement obtained from SBI