Oil India Limited

OIL INDIA LIMITED DULIAJAN

( FOR INTERNAL USE ONLY)

Ref: ERP/C/55/2005 Date: 25.11.2005

ALL HEADS OF DEPARTMENT

Sub: Enterprise Resource Planning (ERP) in OIL -Change in Processes & Practices-F&A

Implementation of ERP in OIL is in progress and the system would “GO-LIVE” in all locations of OIL except RP and BEP w.e.f. 01-12-05. There would be several changes on existing business procedures/practices of the Organization in the ERP environment. Few of the key changes in the business procedures/practices pertaining to Finance & Accounts department in the ERP system are mentioned below :

 Cash advances taken for various departmental activities will be linked to the Personal Account of the employee drawing such advance. These advances will be identified separately and will be adjusted on submission of detailed expenditure statement. However, if the expenditure statements are not submitted within 45 days of drawing the advance, the same will be treated as salary advance.

 Employee advances like Traveling, Medical, LFA/LTC advances and related claims are presently routed through their personal account. After implementation of the ERP system, all such payments will be made through Off-Cycle payroll (which can be run on any day of the month) and the payment will be credited to the employee’s bank account or paid by cheque or cash.

 Personal Account will be maintained for both executives and employees. Such Personal A/C will be created by adding 7000000 to the Salary code or Registration No. For example, against salary code 2145 or Registration no. 09/8486 the personal Account No. will be 7002145 and 7098486 respectively.

 All employee related payments having income tax implications will have to be routed through payroll including Doctors’ Pool Fund payments.

 Presently expenditure statements against amount drawn by various departments against imprest cash are submitted to F&A department for adjustment. In SAP, such adjustments will be done by the Departments themselves directly through the system with proper approval from the HOD as per DOP. Hard copies of vouchers and supporting documents will be maintained by the departments for audit purposes. Periodic replenishment of the imprest amount will be made by F&A department on request made through the HOD.

Contd… Page …2  Payment vouchers will not be routed through planning or any other department since all payments will be processed against approved Purchase Orders, Contracts or specific events only, based on the prior approval from competent authorities .

 Presently Salary and wages are booked to various cost centers based on monthly Wage Allocation Advices sent by respective departments to F&A. This practice will be discontinued as, in SAP, manpower Cost will be booked directly to respective Cost Centers at primary level as and when payroll is processed.

 Presently various departments send Monthly Motor Transport Allocated vehicle Return to F&A department in respect of Company owned vehicles. Similarly concerned departments provide information like electricity consumption, water consumption etc to F&A departments for cost allocation purposes. However, these information were provided in hard copies.

In SAP, all such information will have to be furnished by respective departments through the system using the SKF (Statistical Key Figure) entry screen .

The Company Vehicle Transfer Requisition (VTR) will be handled through Internal Service Order under plant Maintenance module.

 Issuance of Special Revenue Job Numbers will be discontinued. However, prior approval of the competent authorities will be required for carrying out such non recurring activities, as is being done at present, till system control on revenue budget is put in place through implementation of Funds Management module in SAP.

Departments will use the Transfer Job Numbers (Cost centers) for booking such expenses, including the expenditure against already issued Special Revenue Job Numbers. Similarly maintenance expenses will be booked through Plant Maintenance Orders under Plant Maintenance module in SAP.

 Capital Job numbers will be handled through the Project Systems (PS) module in SAP for which individual Work Breakdown Structure (WBS) elements will be created for expense booking and budget control.

 The Standing Revenue Job Numbers will be called Cost Centers in SAP. The numbering logic for Cost centers will be as under :

 a) First three digits = Department or sphere, say Production / Delhi  b) Next two digits = Sub Location or field , say Digboi /Naharkotia  c) Next one digit = Type of cost center say  A=Operation B=Maintenance and C= Common  d) Last four digits = existing job numbers

Contd…

Page …3  Example =  OILNKA0651 = OCS 5- Operations (Job No. 06/0651)  OILNKB0652 = OCS 5- Maintenance (Job No. 06/0652)  ELENKC0580 = CE- Electrical office (Job No. 17/0580)  DELDLC0703 = Delhi office (Job No. 17/0703)

Necessary circular has already been issued showing the new cost centers against existing Job numbers.

Above changes will be applicable w.e.f. 1st December, 2005 in all the locations of OIL (except RP and BEP) where ERP will go live. The changed processes and practices to be followed in the ERP environment are being explained in detail to the participants undergoing End Users’ Training at Duliajan.

For any further clarification, you may please contact our ERP FICO team at OIL Phone No. 7178 or mail to [email protected].

Kindly give wide publicity to the above changes amongst the employees of your department to make the transition from the existing system to the ERP system smooth and effective.

N.Sen Head – Accounting Policy

Copy: Head of Accounts of respective spheres.