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1 COMPANY PROFILE
The origin of ONGC dated back to 1956, when it existed as Oil and Natural Gas Directorate. To function efficiently in the task of oil exploration and exploitation in October 1959, The Directorate was converted into a statutory body viz. Oil and Natural Gas Commission. Up to the fifties in most of India, oil wealth was undiscovered. The infrastructure to achieve this gigantic task of oil exploration was missing. ONGC filled this void within a short span of three decades made oil exploration and exploitation a wellplanned countrywide operation. ONGC made its debut in 1959 with the discovery of Cambay field. Since then, it has been steadily expanding its operation to cover the entire length and breadth of the country from the desert of Jaisalmer to the dense tropical forest of Assam, from tricky terrains of Himalayas to the deep waters of the Arabian Sea and Bay of Bengal. ONGC has discovered oil reserves onshore in Cambay basin in Tamilnadu. ONGC maintains about 200 onshore and 150 offshore production installations and network of 7,9000 kms. on land and2,800 kms. Submerse pipelines to carry oil and Gas. Its total Assist base exceeds Rs. 20,000 Crores. ONGC had significant successes in its harden venture, in the seventies. In 1974, oil was struck in Bombay High in western offshore. This was further consolidated with unprecedented growth and expansion in the eighties; oil was also struck in Eastern Offshore (Ravva field). In1989, ONGC was ranked at 275th position among the fortune global 5000 companies with a turnover of 4.8 billion. Though there was some slow down in the early nineties, a turnaround has been achieved in 1993 and the position has been further consolidated during 1994-1995 with the Crude oil production to 30.01 MMT and Gas production touching 20BCM. But ONGC could not sustain the increase in oil production in late nineties and the production comes down to 26.18 MMT in 1999-2000.ONGC also maintains its prominent position between the PSU‘s as the highest profit earning company with a net profit of Rs. 10,529 Crores for the year ending 2002-2003. ONGC today ranks among the top 20 oil Companies of the world with production exceeding 1 Million tones of oil and OEG and accounts for about 90% of India‘s production of crude oil and Natural Gas and has attained technological expertise in various aspects of upstream hydrocarbon exploration.
ONGC also strives to acquire hydrocarbon reserves abroad through its wholly owned subsidiary-ONGC Videsh Limited (OVL). OVL currently has a production-sharing contract in Vietnam jointly with British Petroleum and state oil (NORWAY) where 2 Trillion cubic feet gas reserves have been discovered. OVL has also taken stakes in production sharing contracts in Tanzania and Gulf of Suez in Egypt
1.1.1 Functions, Activities & Objectives
The main functions, activities and objectives of Oil and Natural Gas Corporation Limited are as under: Functions Exploration & exploitation of hydrocarbon reserves is required to cater the petroleum requirement of the country. In addition, alternative resources of energy are to be developed to meet the energy requirement of the country. Activities ONGC is the premier entity through which the Government explores for and develops oil and natural gas resources in India. Its activities are mainly the exploration and production of oil and natural gas. It had also started in participating in ―down stream activities‖ such as petroleum refining or distribution and related activities of refined products. Throughout its existence, it has been actively engaged in planning, promoting, organizing and implementing programmes for the development of petroleum resources with the objective of bringing India closer to its goal of self reliance in its petroleum needs. Since its formation, it has established 5,716 billion tones of oil and oil equivalent gas. The figure includes oil and oil equivalent gas of 372 billion tones in respect of the fields offered under joint venture and fields operated by private enterprises. Reserves of oil and oil equivalent gas on 1st April1997 (including reserves pertaining to the fields offered to joint venture and private parties) were as follows: OIL 698.55 MILLION TON GAS 648.71 BILLION CUBIC METERS Soon after independence, the Government formulated a national policy, which made development of oil resources the exclusive responsibility of the state. As first step towards the implementation of this policy, a Petroleum Division was created in October 1955 for
exploration in the country within Geological Survey of India, which grew in to the Directorate of Oil& Natural Gas and was then raised to the status of Commission on 14th August 1956. The Commission was later on converted in to a statutory body on 15th October 1959 with Headquarters at Tel Bhavan, Dehradun. Objectives To acquire the whole or any part of the undertaking, business, the assets/ liabilities, rights, obligations, power, goodwill, privileges, functions and associated establishment and personnel of whatever nature of Oil & Natural Gas Commission (established under Oil & Natural Gas Commission Act [No.43 of 1959] and for the purpose to enter into and carry into effect such agreements/ contracts/arrangements as may become necessary. To plan, promote, organize, exploit and implement programmes for the efficient development of petroleum and petroleum products and alternate resources of energy and the production, distribution, conservation and sale of petroleum and other products/services produced by it and for all the matters connected therewith. To carry out exploration and to develop and optimize production of hydrocarbons and to maximize the contribution to the economy of the country. To carry out geological, geographical or any other kind of surveys for exploration of petroleum resources, to carry out drillings and other prospecting operations, to probe and estimate the reserve of petroleum resources, to undertake, encourage and promote such other activities as may lead to the establishment of such reserves including geological, chemical, scientific and other investigations. To carry on all or any of the business of the sale and purchase of petroleum and other crude oils, asphalt, bitumen, natural gas, liquefied petroleum gas, chemicals and all kinds of petroleum products and to treat and turn to account in any manner whatsoever any petroleum and other crude oils, asphalt, bitumen, natural gas, liquefied petroleum gas and all kinds of petroleum products, chemicals and any such substances as aforesaid.
C. Achromatic Naphtha.1. Natural Gasoline. Calcutta West Bengal Project Mahanadi Bengal Purnia Project (MBP) Coal Bed Methane (CBM) 4 .N. Liquefied Petroleum Gas. Crude Oil. Superior Kerosene Oil.3 Regions and Work Centres of ONGC:Headquarter Dehradun New Delhi Mumbai Offshore Project with Headquarter at Mumbai Regional Office.1. Ethane/Propane.G. Mumbai Other establishment in Maharashtra Coast Uran Project Hazira Plant Central Region with Headquarter at Calcutta Regional Office.2 Major Products of O.1. 1. Natural Gas.
Eastern Region with Headquarter at Nazira Silchar Shivsagar Nazira Jorhat Agartala Northern Region with Headquarter at Dehradun Western Ganga Valley other than Dehradun Southern Region with Regional Office at Chennai Chennai Rajamundary Karaikal Hyderabad Liaison Office Western Region with Regional Office at Vadodara Vadodara Ankleshwar Ahmedabad Cambay Mehsan Jodhpur 5 .
Safety Audits and Environment Studies 6 . Stimulation Techniques.1. Down hole completion system. Artificial left design. Basic Evaluation. Training of manpower. Computer Application in petroleum Industry. Engineering and construction of offshore. Wells loading operation. Formation analysis and reservoir Modeling. Estimation of Reservoir and Reserves.1.4 ONGC’S Specialization Geochemical studies. techno-Economic Analysis. Long distance transportation of oil and gas. Reservoir management. Erection and Maintenance of Gas Sweetening Plants Corrosion and Maintenance: onshore and offshore. Bio-stat graphic Analysis. platforms and pipelines Equipment Management and Quality Assurance. Drilling operation including horizontal and drain hole. Design erection & maintenance of oil and gas production installation. Corrosion Studies in offshore structure.
INTEGRATED IN ENERGY BUSINESS WITH DOMINANT INDIAN LEADERSHIP &GLOBAL PRESENCE” NEW VISION OF ONGC ADOPTED ON 26TH APRIL’2010 ―To be global leader in integrated energy business through sustainable growth.1. ONGC is dedicated to excellence by leveraging competitive advantages in R&D and technology with involved people.‖ ONGC Mission: To be a world-class oil and gas company. 7 . knowledge excellence and exemplary governance practices. openness and mutual concern to make working a stimulating and challenging experience for our people Strive for customer delight through quality products and services.5 ONGC Vision & ONGC Mission ONGC Vision:“TO BE A WORLD CLASS OIL &GAS COMPANY. Imbibe high standards of business ethics and organizational values. ONGC also Fosters a culture of trust.1.
The institute is founded in Nov. capable of providing advance technical knowledge through training and offering plausible solution to field problems. Dehra Dun and its activities are focused towards development of new concepts for exploration and exploitation. geological and reservoir engineering is carried out. IDT: Institute of Drilling Technology. Panvel in Mumbai.1. Over the years the institute has emerged as a premier R&D center in South East Asia. quality and productivity. Dehra Dun in Uttrakhand was established in house the largest computing facility of Oil and Natural Gas Corporation Ltd. The institute is with highly qualified experienced scientist and engineer‘s carriers. ONGC has set up various institutions to meet its Research and Development need in exploration to exploitation. The institutes have developed multidimensional expertise. 1983 for innovation and development of the future plans 8 .1. Dehradun. Dehra Dun previously known as Institute of Management Development is an institution committed to excellence in the cause of HRD and the availability of the appropriate system and procedures for the knowledge and technology intensive. ONGC Academy: ONGC Academy. over the year in diverse fields of the upstream petroleum industry by harnessing the leading state of the art technologies form the international areas through acquisition and collaboration coupled with in R&D efforts. IEOT: Institute of Engineering and Ocean Technology. KDMIPE: Keshav Dev Malaviya Institute of Petroleum Exploration. And is one of the few centers around the world where integrated processing and interpretation of different geosientific data from seismic to petro physical. development of hydrocarbon resources generation and up gradation of geoscientific data and computer application. risky and complex oil and gas exploration and development industry in the energy sector with view to ensure managerial effectiveness.6 Various Institutes of ONGC The National Oil Company of India. List of important institutes of ONGC are: GEOPIC: Geodata Processing and Interpretation Centre. It is engaged in relentless efforts in R&D and has rendered excellent services in the area of oil and gas well drilling technology.
(No longer Present) 9 . INBIGS: Institute of Biotechnology & Geo-tectonic Studies. process and the environment. : Institute of Petroleum Safety. prepare development plans for new discovery to select and design enhanced oil recovery schemes.of ONGC to achieve self-reliance in related technology. Ahmedabad. geotechnical engineering and materials and corrosion engineering. IOGPT: Institute of Oil and Gas Production Technology. The institute is developed for improving production technology of ONGC. The institution was founded as a single source and multi service reservoir engineering agency with objectives to integrate the skills and technologies for better reservoir management. The Institute is committed to upgrade and develop human resources with a view to minimize the overall risk to human life. health and environment in petroleum sector in India. damage to property. Health & Environment Management. Panvel in Mumbai. maximize hydrocarbons recovery keeping the cost in mind with market realities. develop techniques for importing well productivity. IPSHEM: Institute of Petroleum Safety. IRS: Institute of Reservoir Studies. Health & Environment Management was established 1989 with the objective of promoting standards of safety. The institution has developed expertise in the field of concept evaluation and risk analysis.
to set up an export-oriented refinery of 7.60% subsidiary of ONGC. 24% and 26% respectively.98% : 48. IL&FS and AP Government. Kakinada Seaport Limited (KSPL).7 The ONGC Group of Companies comprises of: ONGC Videsh Limited (OVL): OVL is the wholly own subsidiary of ONGC which has been mandated to carry out international E&P business operations of the parent company. The project is being developed by a SPV between IL&FS. for declaring Special Economic Zones (SEZs) to boos industrial growth in the country. It is the only other listed company besides parent ONGC within the ONGC group. The company was incorporated in Netherlands and has 25% participating interest in the Greater Nile Oil Project in Sudan producing crude oil from on-shore blocks earmarked for the purpose. This joint venture aims to source equity oil and gas from abroad for securing India‘s energy independence. This joint venture will be involved in trading and shipping of oil and gas (including LNG) sourced by OMEL from abroad.1. Mangalore Refinery and Petrochemicals Limited (MRPL): This is a 71. in turn. Ltd. Govt.1. The project is estimated to cost around Rs. ONGC Mittal Energy Services Limited (OMESL): This is the joint venture between ONGC Videsh Limited and Mittal Investments Sarl with the same ownership structure as that of OMEL. (OTPCL): ONGC has embarked upon a project for generation of power with 750 MW gas based closed-cycle power plant. ONGC/MRPL has become co-promotor under 10 . Kakinada SEZ Limited: In tune with the recent initiatives of Ministry of Commerce and Industry.02% with SBI Capital holding the remaining 2%. ONGC Mittal Energy Limted (OMEL): This is the joint venture between ONGC Videsh Limited and Mittal Investments Sarl in the ratio of 49.of India. Kakinada Refinery & Petrochemicals Limited (KRPL): This is a public private joint venture company formed pursuant to an MOU between MRPL. ONGC Nile Ganga BV (ONG BV): This is the wholly owned subsidiary of ONGC Videsh Limited which. 3800 Crores and is expected to be commissioned during the first quarter of 2008.5 MMTPA capacity at Kakinada in coastal Andhra Pradesh which is envisaged to be integrated with bio-diesel facility. Government of Tripura and ONGC with an equity share of 50%. ONGC Tripura Power Company Pvt. is 100% owned by ONGC.
of India as its nominee for buying the crude oil to be produced from this block. Mangalore SEZ Limited: With a view to providing synergy with MRPL. This SPV is in the process of being incorporated. The SEZ will be an SPV with Karnataka Industrial Areas Development Board (KIEDB). a decision was taken to associate with a special economic zone (SEZ) Contemplated for development at Mangalore. large petroleum and petrochemicals based projects are envisaged to be developed at Mangalore. which will be located within this SEZ. has proposed to form a joint venture company named Rajasthan Refinery Limited (RRL).. and as per due facilitation by Rajasthan Govt. With view to optimizing the capital cost during the construction of the project and subsequently promoting sale of petrochemical intermediates. 11 .5 MMPPA Capacity and if found feasible will implement the same at a suitable location in Rajasthan. MRPL has been nominated by Govt. which will examine the techno-economic viability of establishing a well-head refinery of 7.public-private partnership to form this joint venture company and it is envistaged that KRPL and other gas infrastructure units will be located within the Kakinada SEZ to liverage financial initiatives and to bolster economic growth. ONGC is currently engaged in implementing its C2-C3 extraction project. Dahej SEZ Limited: ONGC participating in the initiative of Govt. MRPL. IL & FS has offered to take the remaining 51% equity. of Gujarat has formed a joint venture company under public private partnership to establish and develop necessary infrastructure facilities within a land of 1740 hectares in cooperation with Gujarat Industrial Development Corporation. Karnataka Chambers of Commerce and Industry (KCCL) and ONGC between them bringing in 49% equity with ONGC contributing 26%. its PSC partner in Rajashtan Block. Rajasthan Refinery Limited (RRL): With the recent discovery of waxy oil in Mangla and other adjoining structure by Cairn Energy India. in coordination with Cairn Energy.
Even the ONGC management couldn‘t help call the subsidy burden ‗excessive‘. with its production likely to increase gradually over next few years. the subsidy sharing formula is set to change going forward. which appeared only 17.25 in June 2009 quarter.515 crore as discounts — highest in past seven consecutive quarters and 12-times the year-ago number. pulling lower the company‘s net realisation to $48. The subsidy burden was so heavy that the benefits of decontrolled gas prices failed to make a mark. The 7% appreciation in rupee against the year-ago period played another trick on the company‘s financial numbers as it bills its customers in rupees. it had to shell out Rs 5.1%. which stood at $58.6% lower price to the oil major compared to the June 2009 quarter. The net realisation on crude oil. This amounted to nearly $33 per barrel of discount. However . which shows the severity of these subsidies.6% down in rupee terms. However. The company‘s future prospects appear healthy. Although the company made nearly Rs 850 crore higher profits on this count its net profit fell 24%.667 crore. which stood at Rs11. the government‘s ever-changing subsidy-sharing policy poses the keyrisk.5% lower on y-o-y basis in dollar terms. which is expected to add Rs 3. ONGC‘s subsidy.04. Its attempts at diversifying the revenue base will also start giving results as its two petrochemical complexes and a power plant 12 . With over 80% of this shared by ONGC. was actually 22. In the June 2010 quarter. The company continues to remain fundamentally strong. increasing the share of upstream companies to Rs 6. every barrel of oil sold during the quarter fetched 22.1.500 crore to its bottom line on an annualised basis. with the government decontrolling petrol prices and raising diesel prices in June. the upstream oil companies were required to contribute towards the under-recoveries only on autofuels.000 crore. In other words. Till June 2010 quarter.5 mms cmd gas sold from nominated fields. is unlikely to ease. Given that the oil industry‘s under-recoveries for FY11 will be higher than in FY10 in spite of the recent price increases. While the company‘s oil production stagnated.2 INDUSTRY ANALYSIS:ONGC‘s profit for June 2010 quarter plummeted more than expected as the subsidy burden surged. it basically was the higher revenues in its gas business that enabled ONGC to restrict fall in net sales to mere 8. the oil industry‘s under-recoveries rose to Rs 20.555 crore in FY10 . The administered pricing mechanism was dismantled in April on the 48.
the Prime Minister's Office refused his confirmation in February. expressed concern at rising subsidy payout that increased 42. Besides finding new reserves of oil and gas. constraints of oil field services. has been the acting head of the company since then. Sharma listed employee attrition and rising payout on kerosene and LPG subsidy as areas of concern. In his message to more than 34. He. however.3THE PRIORITIES :R S Sharma. At the same time.come up over next 18-20 months. The petrochemicals cycle is currently on a global uptrend thanks to growing demand from China and other developing nations.1OPPORTUNITIES:The Indian petrochemicals industry is finally discarding its nascent stage tag and the companies are now vying for a major chunk of the global pie of the petrochemicals market. under-recoveries in gas business and employee attrition. has set his sight on reversing decline in production from ageing fields and cutting rising expenditure during his tenure till 2011. rising exploration and production expenditure. Sharma. Sharma promised tackling issues of morale and motivation of employees and opening promotional avenues to arrest the brain drain. the subsidy uncertainties continue to make it a doubtful investment candidate for retail investors. Sharma was again selected and his appointed confirmed by Prime Minister Manmohan Singh on July 2. who was director (finance) when the government in May 2006 refused extension of service to flamboyant Subir Raha. "The concern areas are decline in production from ageing fields. 1. Though he was selected for the top job by government's headhunting panel PESB in August.024 crore in 2006-07.4 per cent to Rs 17." he wrote. high subsidy payouts. 1. Even though the selection process of PESB invited professionals from private firms to apply. ONGC and IOC are planning entry into the business in a major way as this is in line with their forward integration plans. the PMO wanted the invitation to be more explicit. Indian major Reliance has recently acquired a German polyester major Trevira GmbH and this marks the private sector giant's entry into the European markets in a big way.000 ONGC employees after being appointed as chairman and managing director.3. who was recently appointed as the permanent head of Oil and Natural Gas Corp (ONGC) after an uncertainty of over 13 months. However. In the 13 .
household packaging. GAIL and IPCL (to some extent). woven sacks. pipes Polypropylene (PP) PVC Polybutadeine (PBR) Rubber Cement packaging. growing activity in infrastructure and construction segments coupled with strong growth in the auto sector on the back of lower interest rates have actually boosted the performance of the petrochemicals sector. monofilament yarn. cables. The following are the major uses of the products: Polymer Products and the uses Product LDPE/LLDPE HDPE Uses Consumer packaging/film.domestic markets. going forward: 14 . luggage. crates. sheets Automotive tyres and tubes. cable coatings Fertilizers. conveyor belts and footwear Let us now do a SWOT analysis on the industry so as to have a better understanding of the prospects for the industry. Major beneficiaries of this uptrend are the integrated players such as Reliance Industries. cartons. ropes Water pipe. A low per capita consumption of 4 Kgs of plastic as compared to a global average of 20 Kgs leaves enough scope for capacity expansion resulting in ONGC and IOC venturing into the business. extrusion wires. electrical wires.
3 Weaknesses: Low bargaining power vis-à-vis the suppliers: Input costs form nearly 50% to 60% of the raw material costs. These players are therefore vulnerable to raw material prices. 1. the lean gas is transmitted to consumers such as power and fertilizer industry. propane and butane. On the other hand. IPCL forms a part of the Reliance stable while GAIL is set to pick up stake in HPL. Low Bargaining power vis-à-vis customers: In case of increase in input costs. Further.3. Rich natural gas is evacuated into the pipelines and after separation of the hydrocarbons such as ethane. the companies might not be able to pass on the rise to the consumers as the prices of products is highly influenced by factors such as international prices and supply. Reliance Industries uses naphtha from its own Jamnagar refinery as a feedstock for the petrochemicals production. Further.1. as this would help reduce duplication of production. while naphtha is an expensive source of feedstock. IPCL and Haldia Petrochemicals (HPL)). Synergies: Most of the petrochemical players have integrated facilities. petrochemical players have little bargaining power against the suppliers. gas prices are regulated but in short supply. would add further to the profitability of these integrated companies.2 Strengths: Consolidation: The Indian petrochemicals industry has witnessed consolidation over the last few years and nearly 85% of the polymer capacity in the domestic market is with the top three participants (Reliance. thereby reducing external dependence to a large extent. Such high concentration is likely to benefit these players. GAIL utilizes natural gas for its petrochemicals capacity.3. Refineries realize the import parity prices on naphtha produced and in case of high feedstock prices. To put things in perspective. Of the three companies mentioned. 15 . IPCL uses Reliance's vast and widespread marketing network to reach out to global consumers. petrochemicals business being a high value add.
which could result in squeezing margins. Import duty on polymers has been steadily reduced and is currently at 20%. Growing competition: The domestic industry is likely to witness immense competition going forward with IOC all set to enter the segment with its Rs 64 bn project in FY06. India. Further. ONGC is also venturing into petrochemicals business. These global majors with deep pockets can actually lead into a pricing war. 16 . might witness entry of global majors such as ExxonMobil. As part of its commitment to various multilateral and bilateral trade agreements. the government is likely to reduce duties going forward and this is likely to reduce the cushion enjoyed by the domestic players as against the landed cost of imported products. of late. with huge market potential.1.4Threats: Customs duties: Historically. Dow Chemicals and Shell into the business. the domestic industry has been protected from overseas competition by high import duties imposed by the government. With commitments to reduce and eliminate tariff and non-tariff barriers.3. However.
to be constructed and information is collected from the respondent. Step 2. the primary data collection is not used since it is based on secondary data which is already available. 2.2.2 Objective of the study The main objectives of the research undertaken are as follows: To find out and compare the ratios of other exploration companies with ONGC Ltd. In my project report working capital Analysis in ONGC ltd. Step 3.Classified the relevant data and carried out the required calculations to determine the ratios to be analyzed.Studied the annual financial reports of the company for the last five years and the relevant data was sorted out from the maize of information therein.e. 18 . in which the investor can currently invest..Got acquainted with the organization to understand its setup in Order to be able to appreciate its functioning.1 Problem Formulation Following steps have been carried out for the project undertaken: Step 1. 2. To know which is the most profitable company. To assess the ratios of ONGC Ltd. and suggest remedial measures to improve the same in future.3 Primary Data It means collection of information for the first time. In order to collect such type of information questioner i.
com CHEVRON LTD website:www.2. 2.4 Secondary Data Secondary data are information.ongcindia.com Library of ONGC at KDMIP 19 .com OIL-INDIA LTD website:www. In order to carry out my project successful I have relied on the secondary data already available.chevron.5 Sources of Secondary Data Annual report of ONGC Ltd. which has already been collected by others. Oil-India and Chevron ONGC LTD website: www.oilindia.
or even legal tangles resulting in the closure of the company . 3. a very high degree of liquidity also bad . Liquidity ratios. but liquidity ratios by establishing a relationship between cash and other current assets to current obligation . it can be grouped In various classes according to financial activity or function to be evaluated . The most common ratios which indicate the extent of liquidity and the lack of liquidity are : - 20 . loss of creditor‘s confidence . Activity ratios. the firm‘s funds will be unnecessarily tied up in current assets therefore it is necessary to strike a proper balance between high liquidity and lack of liquidity . in fact analysis of liquidity needs the preparation of cash budgets and cash and fund flow statements . Long term creditors on the other hand are more interested in the long term solvency of the firm . In view of the requirements of the various users ratios .1:. provide a quick measure of liquidity . the failure of a company to meet its obligation due to lack of sufficient liquidity . management is interested in evaluating every aspects of the firm grows profitably. Profitability ratios. Leverage ratios. liquidity ratios measures the ability of the firm to meet its current obligation .the parties interested in financial and short and long term creditors mainly interested in liquidity position or shortterm solvency of the firm.RATIO ANALYSIS Several ratios are calculated from the accounting data . idle asset earn nothing . we may classify them into four important categories. similarly owners concentrates on the firm profitability and financial condition . will result in a poor creditworthiness .LIQUIDITY RATIOS It is extremely essential for a firm to be able to meet its obligation as they become due.
1.47 As on 31 March10 387850 139932 2. debtors and inventories .3. bills payable . marketable securities.26 As on 31 March11 434298 176083 2.77 As on 31 March09 326279 105951 3.all obligation maturing within a year are included in current liabilities .1 CURRENT RATIO Current ratio = current assets /current liability Current assets include cash and those assets which can be converted in to cash within one year . current liabilities include creditors .08 As on 31March08 285477 108763 2. net provision for bad debt and doubtful debts. accrued expenses . such as marketable securities . prepaid expenses are also included in the current assets as they represent the payments that will not be made by the firm in future . debtors.62 21 . semi-finished and finished goods. As on 31 March12 Current Assets Current Liability Current Ratio 476443 211051 2. bill receivable and prepaid expenses. Idle current ratio = = 2:1.income tax liability and long term debt maturing in the current year. inventory of finished material. short – term bank loan . Current assets includes Inventories Debtors Cash and bank balances Loans and advances Current liabilities includes Sundry creditors Liability for royality/sales tax Depositors Other liabilities Unclaimed dividend Current assets of a firm represents those assets which can be converted into cash within a short period of time not exceeding one year and include cash and bank balance.
Current Ratio 4 3 2 1 0 2012 INTERPRETATION 2011 2010 2009 2008 Although the high ratio shown by the graph says that the company can easily meet its current liabilities. On the other hand a company with a low value of quick ratio may really be prospering and paying its current obligation in time if it has been turning over its inventories efficiently. Inventories normally require some time for realizing into cash. or liquid. Inventories are considered to be less liquid. Generally a quick ratio of 1 to 1 is considered to represent a satisfactory current financial condition. a company with a high value of quick ratio can suffer from the shortage of funds if it has slow paying. 22 . doubtful and long duration outstanding debtors. The cash and bank balance is 121405. assets and current liabilities.48 which mean that the money is lying idle either in the organization or in the form of bank balance. yet too high a ratio is also not beneficial for the company as it shows that due to the poor investment policy of the management.2 QUICK RATIO Quick ratio also called acid test ratio establishes a relationship between Quick. An asset is liquid if it can be converted into cash immediately. 3.1. This represents the poor investment policy of the management as this amount can be utilized elsewhere. Thus.
since the company does not have much raw material as the company is into the exploration sector. The inventory is 40606.5 2 1.5 1 0.268770977 2. the difference between quick and current ratio is not high.Quick assets =current assets-inventory As on 31st march12 435836 As on 31st march11 399492 As on 31st march10 387512 As on 31st march 09 295894 As on 31st march08 259785 Quick ratio= quick assets/total current liabilities 2.5 0 As on 31st As on 31st As on 31st As on 31st As on 31st march12 march11 march10 march09 march08 INTERPRETATION Generally a quick ratio of 1:1 is considered to represent a satisfactory current financial condition.388542059 Quick Ratio 3 2. This can be explained by the fact that ONGC being into an exploration sector requires fewer amounts of raw materials.554898093 2.71which shows that there is not much difference between the current and quick ratio.792743816 2.0650743 2. Since the inventory does not play a major role in the current assets. 23 .
28 454194.3 525337. the less equity capital it needs. as opposed to variable.87 915729 640583 780848 706173. The more it borrows . leverage is a general term for any technique to multiply gains and losses . As on 31st March12 UNSECURED 267.87 684785.26 541440 614099 539596. so any profits or losses are shared among a smaller base and are proportionately larger as a result. meaning that a change in revenue will result in a larger change in operating income.69 494832 535934 468454.28 As on 31st March11 369 369 21388.12 As on 31st March10 696 696 21388.2 LEVERAGE RATIO :In finance.39 As on 31st March08 1490 1490 14259. Measuring leverage:A good deal of confusion arises in discussions among people who use different definitions of leverage. There are different kind of leverage ratio we will consider debt ratio.Common ways to attain leverage are borrowing money. The term is used differently in investments and corporate finance.To judge the long term financial position of the firm financial leverage ratios are calculated.87 597850.35 LOANS DEBT SHARE CAPITAL RESERVES AND SURPLUS EQUITY CAPITAL EMPLOYED NET WORTH 267. buying fixed assets and using derivatives.76 14259.99 605213 699435 619239.35 21389 765965. A business entity can leverage its revenue by buying fixed assets. Important examples are: A public corporation may leverage its equity by borrowing money.15 421416 463142 24 .76 1069. and has multiple definitions in each field. costs.3.39 As on 31st March09 1069. This will increase the proportion of fixed.
a company with $2 million in total assets and $500. fixed assets.003548244 25 . Total debt will include short and long term borrowings from financial institutions. and other assets such as 'goodwill').001287116 0. deferred payment arrangements for buying capital equipments. Several debt ratios may be used to analyze the long term solvency of a firm. a company's debt ratio should be compared with their industry average or other competing firms. It is the ratio of total debt (the sum of current liabilities and long-term liabilities) and total assets (the sum of current assets. The firm may be interested in knowing the proportion of the interest bearing debt in the capital structure.000527569 0. debentures/bonds. Like all financial ratios.3. bank borrowings.000 in total liabilities would have a debt ratio of 25%. Public deposits and any other interest bearing loan. or alternatively: For example.3 DEBT RATIO:Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt. As on 31st As on 31st March12 DEBT RATIO = TOTAL DEBT/CAPITAL EMPLOYED 0.002166545 0.0004168 March11 As on 31st March10 As on 31st March09 As on 31st March08 0.
002 0. 3. 26 . This is because the company is not involved in investment activities hence does not need outside finance thus the ratio has decreased over the year.003 0.001 0. Accounts receivable is the total amount of money due to a company for products or services sold on an open credit account. and total assets.0035 0. Since most companies invest heavily in accounts receivable or inventory.4% to .004 0.0025 0. The ratio states that the company has only used 0. inventory.3% of debt financed cost structure for the last 5 year.0015 0.4 ACTIVITY RATIO:Activity ratios measure company sales per another asset account—the most common asset accounts used are accounts receivable.0005 0 As on 31st March12 As on 31st March11 As on 31st March10 As on 31st March09 As on 31st March08 INTERPRETATION The debt ratio ONGC Ltd. these accounts are used in the denominator of the most popular activity ratios. The accounts receivable turnover shows how quickly a company collects what is owed to it.Debt Ratio 0. For the last 5 year show that the company has been more faithful to equity finance. Activity ratios measure the efficiency of the company in using its resources.
which would overstate the actual inventory turnover.Accounts Receivable Turnover = Total Credit Sales ──────────────── Accounts Receivable For a company to be profitable. because it is money invested that does not earn a return. since different companies would have different markups to the sale price. the average inventory cost is used in the denominator. 27 . where the amount of inventory can vary widely throughout the year. which is the total annual sales or the cost of goods sold divided by the cost of inventory. The best measure of inventory utilization is the inventory turnover ratio (inventory utilization ratio). and allows a more direct comparison with other companies. Total Annual Sales or Cost of Goods Sold Inventory Turnover = ─────────────────────────────── Inventory Cost Using the cost of goods sold in the numerator is a more accurate indicator of inventory turnover. it must be able to manage its inventory. In seasonal businesses.
61 0.42 1.48 from 160143.635528331 Cash Ratio 2 1. and therefore is of interest to short term creditors.98 0 130150.467164055 88169.9328018 CASH RATIO As on 31st As on 31st march11 march10 160143.e.11 0.5 CASH RATIO The cash ratio measures the extent to which a corporation or other entity can quickly liquidate assets and cover short term liabilities.90 0.06 0 92030. 5.5 0 As on As on As on As on As on 31st 31st 31st 31st 31st march12 march11 march10 march09 march08 INTERPRETATION The above graph shows that the concerned ratio is quite satisfactory in all the previous years because it is much higher than the rule of thumb i. This means that there has been a decrease in the short term financial position of the company. Moreover a higher ratio in all the years shows that the company has improved its needed short term financial position.04 in 11. CASH Marketable securities Current liabilities Cash ratio As on 31st march12 121405.08 0 0 109151.5 1 0.65 0 65270.7 1.655623991 As on 31st march08 58488.3.04 136705. 28 . The above graph shows that the cash and balance for the year 10 has declined and has come down to 121405.550476865 As on 31st march09 42792.
00% 15. because it will leave higher margin of profit on sales. The ratio indicates the extent of sales that is absorbed by the cost of goods sold and the operating expenses. c) Ch For 11-12 Operating expense 123812 Sales 639681 For 10-11 106823 601370.2 17.93% Operating expense 19. For 10-11 For 09-10 For 08-09 29 . The variations in the ratio.93% For 08-09 76762 482009 15.6 OPERATING EXPENSE RATIO The operating expense ratio explains the changes in the profit margin (EBIT to sales) ratio.00% For 11-12 INTERPRETATION The operating ratio is the measurement of the efficiency and profitability of the business enterprise. Lower the operating ratio.00% 10. the better it is.00% 0. b) Change in the demand for the product.76% For 09-10 102016 569123.00% 5. A higher operating expenses ratio is unfavorable since it will leave a small amount o operating income to meet interest.00% 20. dividends etc.1 17.3.36% ratio Operating Expense Ratio 25. temporary or long lived can occur due to several factors such as: a) Change in the sales prices.
00% 52. 30 . while PAT represents residue income of shareholders As on 31st March12 PBIT CAPITAL EMPLOYED 319684 640583 As on 31st March11 314790 604844 52.00% 56. ROCE shows a good trend of average 54% in the past five years. It shows the strong profitability and god performance efficiency.00% 50.RETURN ON CAPITAL EMPLOYED The term investment may refer to total assets or net assets.67% As on 31st March 09 283731 493763 57.00% As on 31st March12 As on 31st March11 As on 31st March 10 As on 31st March 09 As on 31st March 08 INTERPRETATION Return on Capital employed judges the overall performance of the enterprise.00% 58.04% As on 31st March 10 306465 540744 56.00% 48. Capital employed represents pool of funds supplied by shareholders and lenders.00% 46.00% 54. The conventional approach of calculating return on investment (ROCE) is to divide PBDIT or PBIT by capital employed.46% As on 31st March 08 246784 419926 58.77% ROCE= 49.00% 44.91% PBIT/CAPITAL EMPLOYED ROCE 60.
25 0.29 0. A return on shareholders‘ equity is calculated to see the profitability of owner‘s investment.26 0.26052 As on 31st March11 0. As on 31st March12 ROE= PAT/EQUITY 0. It shows that equity shareholder‘s funds are being used efficiently.23650 As on 31st March10 0. 31 . A constant trend also helps in increased trust worthiness of organization among its shareholders.RETURN ON EQUITY (ROE) Common or ordinary shareholders are entitled to the residual profits.25261 As on 31st March09 0. the earnings may be distributed to shareholders or retained in the business.26743 As on 31st March08 0.28 0.21 As on 31st As on 31st As on 31st As on 31st As on 31st March12 March11 March10 March09 March08 INTERPRETATION ONGC is capable of earning a return of average 25% on the equity employed in the last five years.23 0.27 0. The rate of dividend is not fixed.22 0.27714 Return on Equity 0. The shareholders equity or net worth will include paid up share capital. share premium and reserves and surplus less accumulated losses.24 0.
82 0.92 463142 0. As on 31st March12 CAPITAL EMPLOYED NET WORTH CAPITAL EMPLOYED RATIO 780848 0.92 0.76 As on 31st March12 As on 31st March11 As on 31st March10 As on 31st March09 As on 31st March08 32 .86 0.88 0.88 535934 0.9 0.86 614099 0.8 0.82 640583 As on 31st March11 605213 As on 31st March10 541440 As on 31st March09 494832.CAPITAL EMPLOYED RATIO This is yet another alternative way of expressing the basic relationship between debt and equity.94 0.90 C E Ratio 0.78 0.84 0.76 As on 31st March08 421416 699435 0.
89 34806.42 24874.2 262658.9 220328.98 30361.1 As on 31st March09 482443.58 30384. (days) 41 42 51 50 33 .R 8.9 32571.5 30337.86 43 I. INVENTORY I.T.09 8.37 319809 314790 306465 283731 246784 286580.R.65 7.58 30384.5 40606.94 25691.94 25691.9 As on 31st March08 467112.INVENTORY TURNOVER RATIOS Inventory turnover is the ratio of cost of goods sold to inventory.71 34806.T.2 As on 31st March10 569123.9 24056.26 28038.1 198712.37 30337.48 37706.4 8.80 8. This ratio indicates how many times inventory is created and sold during the period: As on 31st March12 NET SALES 639493 As on 31st March11 601370.5 319684 GROSS PROFIT COST OF GOODS SOLD OPENING INVENTORY CLOSING INVENTORY AVG.
(in Days) 60 50 40 30 20 10 0 2012 2011 2010 2009 2008 INVENTORY TURNOVER 10 8 6 4 2 0 2012 2011 2010 2009 2008 INTERPRETATION ONGC is turning its inventory of finished goods into sales 8. In other words it holds average inventory for 43 days in 2012.48 times in 2012.R.T.I. The average inventory figures smoothes out the fluctuations 34 . The average inventory figure is more appropriate to use than the yearend inventory figure because the levels of inventories fluctuate over the year.
03 32318.9 As on 31st March 08 467112.76 37293.61 12.48 Opening balance(debtors) Closing balance 43603.58 37167. Receivables Debtors Turnover Ratio AVG COLLECTION PERIOD(days) 24 15. This ratio is calculated as: As on 31st March 12 Net credit sales 639493 As on 31st March 11 601370.66 27594.66 27594.915 30235.06 As on 31st March 09 482443.45 21 20 27 23 35 .98 15. Acc.DEBTORS TURNOVER RATIO Debtor‘s turnover ratio establishes the relationship between the net credit sales and average debtors of the year.4 37042.89 17.05 43603.07 23177. Average debtors are calculated by dividing the sum of debtors in the beginning and at the end by 2.14 42221 35599.07 Avg.99 40838.4 37042.53 16.76 37293.23 As on 31st March 10 569123.
Debtors Turnover Ratio 20 18 16 14 12 10 8 6 4 2 0 As on 31st March 12 As on 31st March 11 As on 31st March 10 As on 31st March 09 As on 31st March 08 AVG COLLECTION PERIOD(DAYS) 30 25 20 15 10 5 0 2012 INTERPRETATION The above graph shows that ONGC is able to turnover it‘s debtors 15. its debtors remain outstanding for 24 days in the year 2012. The graph shows that in the year 10 the average collection period has increased from 21 days in the year 08 to 24 days in 10. 2011 2010 2009 2008 36 .14 times a year in 2012. In other words. The increased average collection period in the last two years is not a good indicator since it shows the deficiency of collection policies in the management.
302 NET PROFIT MARGIN 0.27 0.NG.35 0.2 0.302 OIL-INDIA(11-12) INTERPRETATION The net profit margin shows the relative efficiency of the firm after taking into account all the expenses and income taxes but not extraordinary charges. The firm with a high net profit margin is in a better position to survive in the face of falling selling prices.C (11-12) PAT SALES NET PROFIT MARGIN 167016. 37 .91 0.NET PROFIT MARGIN O.1 0.063 OIL-INDIA(11-12) 216168.47 601370.05 0 0.063 O.15 0.NG.25 0.C (11-12) CHEVRON(11-12) 0.3 0.27 CHEVRON(11-12) 10483 167402 0.23 0. rising costs of production or declining demand for the product. It establishes the relationship between net profit and sales and indicates the management‘s efficiency in manufacturing.India is better as compared to Chevron.40 713971. From the above graph it is clear that the net profit margin of ONGC and Oil.
38 .C (11-12) P.C (11-12) CHEVRON (11-12) OIL-INDIA (11-12) 49.70%.00% 20.00% 30. The high ROCE shows the strong profitability and good performance efficiency.79 RETURN ON CAPITAL EMPLOYED 60.96% 319684 640583 CHEVRON (11-12) 18528 126300 OIL-INDIA (11-12) 338697.90% 14.90% 14.90% and 50.NG.96% INTERPRETATION The return on capital employed judges the overall performance of the enterprise. However the ROCE of Chevron is only 14.00% 0.00% 40. By seeing the figures it is clear that the ONGC and Oil-India has strong profitability and good performance efficiency as compared to Chevron.00% O.I.00% 10.70% 50.00% 50.03 664578.RETURN ON CAPITAL EMPLOYED O. The ROCE of ONGC and Oil-India is 49.T CAPITAL EMPLOYED RETURN ON CAPITAL EMPLOYED 49.B.70% 50.96% respectively.NG.
4). DEBT TO CAPITAL EMPLOYED O.N.G.C (11-12) CHEVRON (1112) LONG TERM DEBT 267 CAPITAL EMPLOYED DEBT TO CAPITAL 0.0004168 EMPLOYED 0.0986 0.428 640584 10130 102691 36263.62 84628.96 OIL-INDIA (11-12)
DEBT TO CAPITAL EMPLOYED
0.2 0.1 0 0.0986 0.428
0.0004168 ONGC(11-12) CHEVRON (11- OIL-INDIA (1112) 12)
From the above graph it is clear that the debt to capital employed is the minimum in the case of ONGC, whereas it is maximum in case Oil –India. The decrease in the debt to capital employed ratio in case of ONGC states that the company does not borrow money from the public whereas Chevron and Oil –India borrow money from the public. The graph states that ONGC is in sufficient to manage its operations. Also Oil- India borrows heavily from the government. 39
3.7 TREND ANALYSIS :3.7.1TURNOVER
YEAR 2008 2009 20010 20011 2012 Table :-7
700000 600000 500000 400000 300000 200000 100000 0 2008 2009 2010 2011 2012
TURNOVER(IN Rs. million) 467098 482009 569037 601373 639493
diagram The above graph shows continuous increase turnover of the company fronm yeafr 2008 to 2012, It has increased approximately at a CAGR of 7.38% in 5 years, This is mainly due to highest reserve accretion in the current year in last two decades, This is good for the company and increase the reputation of the company, Turnover has increased due to high production of 61.85 mote and also to increased oil recovery programs (28n to 33%), 40
3.7.2:-NET PROFIT :NET PROFIT(In Rs million) YEAR
2012 Table :180000 160000 140000 120000 100000 80000 60000 40000 20000 0 2008 2009
The above graph shows continuous increase in the turnover of the company from the year 2008 to 2012 and then a decrease in the year 2010 of approximately 3%, It has increased approximately at a CAGR of 6% in 5 years, This decrease is mainly due to sharing of huge burden under recoveries of oil marketing companies to the extent of Rs 282252. Taking in account the recession this is good performance by the company,
this decrease is mainly due to sharing of huge burden under recoveries of oil marketing companies to the extent of Rs 282252 million.7. 42 .3:-OPERATING INCOME :YEAR OPERATING INCOME(PBIT) 2008 2009 2010 2011 2012 220000 184768 199158 211471 216811 198835 210000 200000 190000 Series 3 180000 170000 160000 2008 2009 2010 2011 2012 the above graph shows continuous increase in the operating income of the company from the year 2008 to 2011 and then a decrease in year 2012 of approximately 8. taking in account the high volatility of crude oil prices this is good performance by the company.29%.5% in 5 years. this decrease is mainly due to high volatility of crude oil prices in the year 2011-12 which went up to 147$ barrel.3. it has increased approximately at a CAGR of 1.
This is favorable for the reputation of the company.4:-NET WORTH :YEAR 2008 2009 2010 2011 2012 NET WORTH(IN Rs million) 463142 535934 614099 699435 780848 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 2008 2009 2010 2011 2012 The above graph shows continuous increase in the net worth of the company from the year 2008 to 2012 with increase of 12%in the current year.3. 43 . It has increased approximately at a CAGR of 16. This is mainly due to increase in reserves and surplus during the years.5% in 5 years.7.
5:-CURRENT LIABILITIES AND PROVISIONS : YEAR 2008 2009 2010 2011 2012 250000 CURRENT LIABILITIES AND PROVISION 108763 105951 139932 176083 211051 200000 150000 Series 3 100000 50000 0 2008 2009 2010 2011 2012 The above graph shows continuous increase in the current liabilities of the company from the year 2009 to 2012 only a decrease of 2.5%in the year 2009.7. It has increased approximately at a CAGR of 16% in 5 years. 44 . The reason behind this is that sundry creditors and other current liabilities are increasing.3.
8%. This decrease is mainly due to sale of investments in the following years.7. And no new investments are done by the company.3. 45 .6:-INVESTMENTS :YEAR INVESTMENTS(IN Rs MILLIONS) 2008 2009 2010 2011 2012 70000 60000 50000 40000 30000 20000 10000 0 2008 2009 2010 50903 58995 57021 48865 403567 Series 3 2011 2012 This above graph shows continuous decrease in the investments of the company from the year 2008 to 2012 and a increase in year 2008 of approximately 15.
It has increased approximately at a CAGR of 11. This is due to increase in finished goods inventory and raw materials. This shows bad inventory management of the company. Diagram:-12 The above graph shows continuous increase in the investments of the company from the year 2008 to 2012. 46 .3.7.7:-INVENTORIES:- INVENTORIES YEAR 2008 2009 2010 2011 2012 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2008 2009 2010 2011 2012 Series 3 25692 30385 30338 34806 40607 Table :-13 .6% in 5 years.
15 10345.990.25 10649.38 25103.35 60043.3.50 The above table shows the comparision of some financial parameters with ONGC which is way ahead of other firms in case of total Assets .88 298.76 473.65 3.68 78.25 MARKET CAP IN(cr) 257.31 GAIL 15969.73 54.24 Reliance Natura Petronet LNG 3321.8 :-FINACIAL COMPARISION OF VARIOUS FIRMS WITH ONGC:COMPANIES TOTAL ASSETS ONGC 94771.25 3139.39 73.55 5891.12 MARKET PRICE(Rs) 1204.82 NET PROFIT 16.78 63.32 4734. 47 . market capitalization .80 310.oil leads in the stock price.72 SALES TURNOVER 64017.573.126.15 58834. turnover and net profit with oil being distant 2nd .09 404.84 Carin India 31.
78 257.25 0.74 0.29 0.52 5.59 81.24 507.79 4536.00 249.19 1011.01 85.48 20.95 18.00 9.00 9802.00 31.578.71 752.18 19.99 4085.784.80 19.00 Petronet LNG Mar’12 10.73 0.831.98 0.49 Mar’12 24.00 24.04 48 .04 0.55 Selling and adminExpenses Miscellaneous expenses Preoperative exp Total expenses -4470.90 0.68 6.77 0.02 0.77 0.10 -16.79 176.29 64.86 4.649.28 338.53 23.09 92.02 146. fuel cost Employee cost Other manufacturing expenses Mar’12 64342.00 10649.20 43.27 42.86 32.292.10 68170.68 10905.23 16651.73 276.00 3.23 869.00 10746.09 0.ONGC GAIL Carin india Mar’12 3.32 0.00 146.85 495.00 270.43 Reliance Natura Mar’12 270.33 9671.51 270.44 2.51 576.003.00 279.67 833.00 0.48 0.74 19667.32 (INCOME) Sales Turnover Excise Duty Net Sales Other income Stock Adjustments Total Income Raw materials Power.71 17.00 416.542.
73 12684.253.00 4875.97 760.00 70.00 133.10 0.68 -10.32 57.40 22.02 29.62 0.05 36338.29 0.00 0.96 0.49 4204.12 116.30 0.40 27853.05 101.43 4355.46 11.00 0.288.34 132.01 195.78 1400.95 0.77 18.50 368.ONGC GAIL March’12 Carin India March’12 Reliance Neutra March’12 Petronet LNG March’12 March’12 Operating profit PBDIT Interest PBDT Depreciation Other written off Profit before tax Extraordinary items PBT(Post extra 0rd items) Tax Per share data Share in issue(lakhs) Earnings per share(Rs) Equity dividend(%) Book value 21.06 0.31 847.331.95 20.00 0.03 0.83 2.83 0.46 790.00 17.89 599.53 -142.29 183.89 599.30 7500.96 559.00 0.13 71.08 71.44 168.88 167.00 23.91 0.81 4214.497.03 24.49 8437.00 32.05 112.388.32 160.09 4773.43 5.83 8485.68 16.02 112.01 75.08 95.966.80 49 .00 20.00 944.08 71.24 4122.39 320.
00 470.00 0.00 0.51 666.32 0.00 30055.00 2234.53 0.50 3549.89 2138.57 0.57 816.00 31990.42 0.61 0.48 1268.63 1100.23 17603.00 1800.61 50941.13 15969.00 0.13 1200.00 983.00 13501.60 3321.12 Mar’12 1268.990.70 94771.00 750.88 0.80 0.86 50 61355.67 38.81 4734.80 Total Liabilities Application of funds Gross block Less:Accum.98 8553.00 1484.60 1521.67 1896.00 14769.9:.20 101.88 2299.00 16035.23 0.89 0.00 31.38 9050.735.3.15 0.00 78.00 0.90 0.00 0.00 100.18 0.78 Petrone t LNG Mar’12 750.000.70 16035.ANALYSIS AND COMPARISON OF BALANCE SHEET ITEMS OF VARIOUS FIRMS WITH RESPECT TO ONGC Balance Sheet (Rupees in crore’s) ONGC GAIL Cairn india Reliance Natura Mar’12 816.00 1521.69 Source of funds Total share capital Equity share capital Share application money Preference share capital Reserves Revaluation reserves Net Worth Secured loans Unsecured loans Total debt Mar’12 2138.66 0. Depreciation Net block 10414.04 2499.00 0.65 .76 Mar’12 1896.00 76596.00 0.06 368.06 0.70 2882.48 0.77 200.
95 55964.00 5661.62 222.36 538.00 Total current assets Loans and advances Fixed deposits Total CA.34 Book Value(Rs) 368.48 ONGC 2426.34 133.02 18934.14 168.26 337.84 874.25 GAIL 54.57 15969.00 74.33 156.71 0.97 155.45 989.31 0.39 0.68 1227.Capital work in progress Investments Inventories Sundry debtors Cash and Bank balance 52923.26 503.37 Petrone tLNG 729.78 0.03 3322.00 26854.14 31990.54 139.12 116.00 6833.85 9638.77 0.68 1975.52 0.61 2238.49 0.80 161.79 1.00 1963.03 29225.80 351.98 57512.67 31.advances Deferred credit Current liabilities Provisions Total CA &Provisions Net current assets Miscellaneous expenses 8305.12 1222.62 650.12 36024.00 33.74 83204.19 85.00 1.11 156.48 3.40 0.84 0.33 1737.65 -5.40 0.32 4060.19 5090.00 Total assets Contigent Liabilities 94771.11 30657.00 1071.09 2755.90 12393.93 0.16 0.88 2850.45 2761.00 33.3 0.02 0.46 11.06 74.09 25692.27 601.Loans.76 11352.17 1318.05 1064.74 3321.67 0.41 1503.00 107.21 2711.22 0.00 Carin India Reliance Natura 3.67 4083.00 51 .00 4734.244 3976.
54 0.25 2.003 .9.1.3:-ACTIVITY RATIO :COMPANY ONGC OIL SHELL DEBTOR TURNOVER 15.65 17.13 QUICK RATIO 2.9.1:-FINANCIAL RATIOS 3.3.60 19.81 The current ratio of ONGC is best amongst all the OIL has too high CR which means it has idle cash lying with itself . 3.2:-LEVERAGE RATIO:COMPANY ONGC OIL SHELL DEBT EQUITY RATIO . similarly in case of SHELL it is too low.1:-LIQUIDITY RATIOS :COMPANY ONGC OIL SHELL CURRENT RATIO 2.06 2.42 RATIO 52 .9. The quick ratio of ONGC is also best as OIL has high quick ratio and SHELL has too quick ratio from industry accepted levels.005 .9. 3.008 THE above table shows good market position of all the companies amongst which ONGC has least use of debt hence it has better reputation.70 1.
%INC IN PROFIT -3% 3.2:-ROCE(RETURN ON CAPITAL EMPLOYED):COMPANY ONGC OIL SHELL ROCE 49.ONGC mainly due to sharing burden of under recoveries of oil marketing companies and also due to sharing of huge subsidy burden of around 11500 crores here OIL performs better with increase in profit.00 22.214.171.124-PROFITABILITY:3. high 53 .10 30.9.00 The table here shows ONGC having highest ROCE amongst all due to profit.9.1:-PERCENTAGE INCREASE IN PROFIT:COMPANY ONGC 31.4. 3.60% OIL -52.The above graph shows that ONGC has best position on case of debtors turnover hence better position in the industry then the others.00 SHELL The table here shows ONGC AND SHELL having decrease in profit .
3.5.2:-EPS:COMPANY EPS 75 ONGC 101 OIL 104 SHELL 1:-EPS of SHELL best amongst all companies.9.3. 54 . 2:-But OIL is the only company who’s EPS is increasing from previous years.00 126.96.36.199:-REVENUES :3.5.1:-CHANGE IN REVENUES COMPANY ONGC OIL SHELL %INC IN REVENUE 6.40 -31.00 The above table shows SHELL having decrease in revenue due to decrease in production whereas as ONGC and OIL having increase in revenues.
The corporation operates very efficiently as can be seen from the profit margin. The liquidity position of corporation very safe. 55 . ONGC has a sound capital and asset based which also indicates that it is in a position to clear all its current liabilities.4. this means that ONGC is in a quite credit worthy position.1 FINDINGS On analyzing the performance analysis (ratio analysis) it can be summarized as follows: ONGC has got a very sound working capital management particular cash & debtors. In fact it has become a debt free company.
arrangement of different training programs like meeting members. To increase the work efficiency of the workers as well as of the staff members. So.2 CONCLUSION 1. Use more credit facility which is given by the creditors. For the innovations of new market. 6. seminars. 2. is required 5. It should help to increase the moral of the investors and side by side also helps in long term financial strength of the firm. 3. In order to maximize wealth under uncertainty. In order to increase the profit the firm should keep proper control over the expenses retaliating to the purchase of goods. Try to maintain the quality level as per the market demand which satisfies the customer more. It should be the reason for higher inventory level which unnecessary blocked the money. 7. because the company repaid the long term borrowing. The balance sheet figures are showing the declining trend since last year. 9. proper supervision and timely comparison of actual with budgeted overheads should be taken. coching classes etc. From the analysis of the liquidity ratio we are able to recommend that the liquidity position of the company is good. This will help the management to know the causes and taling competitive action a to reduce the expense. 8. it is required to increase the sales along with. 4.4. manufacturing and labours for that. the firm must pay enough dividends to satisfy investors. and also it is able to meet it current obligation. by increasing profits. The capital structure ratio shows the performance of the company is increasing . select capable market representatives who are more efficient to recover the more market share. Firm should also use more short term loans to recover the working requirement because the interest rate for short term loans is less and it should be flexible to use. 56 . For higher the profitability ratio of the firm. conferences. the firm should pay dividends regularly.
2:. Like the IAS 16 mentioned above. and so might not give a proper indication of the company‘s current financial position. Ratios require some quantitative information for an informed analysis to be made. They can provide clues to the company‘s performance or financial situation. Example .Outdated information in financial statement The figures in a set of accounts are likely to be at least several months out of date.3 LIMITATIONS Limitation of financial ratio analysis are follows:1:-Different Accounting Policies The choices of accounting policies may distort inter company comparisons. they cannot show whether performance is good or bad.4:. 3:-Ratios are not definitive measures Ratios need to be interpreted carefully. But on their own. So in order to improve on its profitability level the company may select in its revaluation programme to revalue only those assets which will result in revaluation surplus leaving those with revaluation deficits still at depreciated historical cost.Historical costs not suitable for decision making IASB Conceptual framework recommends businesses to use historical cost of accounting.4.IAS 16 allows valuetion of assets to be based on either revalued amount or at depreciated historical cost. it has to be charged as an expense in income statement. 57 . . asset valuations in the balance sheet could be misleading.5:. requires that if an asset is revalued and there is a revaluation deficit. Where historical cost convention is used. Ratios based on this information will not be very useful for decision making. . The business may opt not to revalue its asset because by doing so the depreciation charge is going to be high and will result in lower profit. but if it results in revaluation surplus the surplus should be credited to revaluation reserve.Creative accounting The businesses apply creative accounting in trying to show the better financial performance or position which can be misleading to the users of financial accounting.
which is good or excessive cash which is bad. 9 :-Technology changes When comparing performance over time. 8:-Price changes Inflation renders comparisons of results over time misleading as financial figures will not be within the same levels of purchasing power.Financial statements contain summarised information Ratios are based on financial statements which are summaries of the accounting records. For example a high current ratio may indicate a strong liquidity position. The movement in performance should be in line with the changes in technology. For ratios to be more meaningful the enterprise should compare its results with another of the same level of technology as this will be a good basis measurement of efficiency. there is need to consider the changes in technology. Through the summarisation some important information may be left out which could have been of relevance to the users of accounts. 7:. It is likely to be done in a sensitive period. Similarly Non current assets turnover ratio may denote either a firm that uses its assets efficiently or one that is under capitalised and cannot afford to buy enough assets. The ratios are based on the summarised year end information which may not be a true reflection of the overall year‘s results. 58 .Interpretation of the ratio It is difficult to generalise about whether a particular ratio is ‗good‘ or ‗bad‘. This would be done to avoid the effects of an old accounting policy or gain the effects of a new one. 10 :-Changes in Accounting policy Changes in accounting policy may affect the comparison of results between different accounting years as misleading. Changes in results over time may show as if the enterprise has improved its performance and position when in fact after adjusting for inflationary changes it will show the different picture.6:. perhaps when the business‘s profits are low. The problem with this situation is that the directors may be able to manipulate the results through the changes in accounting policy.
measuring and presenting financial transactions. a tobacco growing company will be able to show good results if accounts are produced in the selling season. 13:-Different financial and business risk profile:No two companies are the same. To un informed analyst he may feel like company two is better when in fact its low gearing level is because it can not be able to secure further funding. Using ratios to compare one company with another could provide misleading information. the financial statements are based on year end results which may not be true reflection of results year round. While as in planting seasons the company will have a lot of liabilities through the purchase of farm inputs. Any change in standards will affect the reporting of an enterprise and its comparison of results over a number of years. 12:. This time the business will have good inventory levels. For example.11:. even when they are competitors in the same industry or market.Changes in Accounting standard:Accounting standards offers standard ways of recognising. low cash balances and even nil receivables. One company may be able to obtain bank loans at reduced rates and may show high gearing levels while as another may not be successful in obtaining cheap rates and it may show that it is operating at low gearing level.Impact of seasons on trading:As stated above. receivables and bank balances will be at its highest. Businesses may be within the same industry but having different financial and business risk. 59 . Companies may have different capital structures and to make comparison of performance when one is all equity financed and another is a geared company it may not be a good analysis. Businesses which are affected by seasons can choose the best time to produce financial statements so as to show better results.
MZ Trucking can borrow on a two year basis. but analysts should be aware of these problems and make adjustments as necessary. it can provide useful insights into the firm‘s operations. but if used intelligently and with good judgement. unthinking manner is dangerous. For example. then pay off the loan ahead of time on 3rd January 2004. 15. 60 . One company may be given a tax holiday while the other within the same line of business not. However the improvement was strictly window dressing as a week later the balance sheet is at its old position. comparing the performance of these two enterprises may be misleading.14:-Impact of Government influence:Selective application of government incentives to various companies may also distort intercompany comparison. This can improve the current and quick ratios and make the 2003 balance sheet look good. Ratio analysis is useful.Window dressing:These are techniques applied by an entity in order to show a strong financial position.:. Ratios analysis conducted in a mechanical. holding the proceeds as cash. K10 Million on 28th December 2003.
P. M.ongcindia. 2009-2010 Annual Report – ONGC Ltd. (2009) ―Financial Management‖.com www.chevron. Tata McGraw-Hill Publishing Company Limited (fifth edition) ANNUAL REPORTS Annual Report – ONGC Ltd.Y. 2010-2011 Annual Report – ONGC Ltd. & Jain. 2011-2012 WEBSITES www.com www.Bibliography BOOKS AND READINGS Khan. 2008-2009 Annual Report – ONGC Ltd.com 61 .oilindia.K.
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