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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.
1. Liquefied Petroleum Gas.N.1. Superior Kerosene Oil.1. Calcutta West Bengal Project Mahanadi Bengal Purnia Project (MBP) Coal Bed Methane (CBM) 4 .2 Major Products of O.C. Ethane/Propane. Crude Oil. Natural Gas.3 Regions and Work Centres of ONGC:Headquarter Dehradun New Delhi Mumbai Offshore Project with Headquarter at Mumbai Regional Office. Mumbai Other establishment in Maharashtra Coast Uran Project Hazira Plant Central Region with Headquarter at Calcutta Regional Office.1.G. Achromatic Naphtha. Natural Gasoline.
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 .
4 ONGC’S Specialization Geochemical studies. Corrosion Studies in offshore structure. Long distance transportation of oil and gas. Design erection & maintenance of oil and gas production installation. Artificial left design. Estimation of Reservoir and Reserves. techno-Economic Analysis. Wells loading operation. Safety Audits and Environment Studies 6 . Training of manpower. Computer Application in petroleum Industry. Erection and Maintenance of Gas Sweetening Plants Corrosion and Maintenance: onshore and offshore. Basic Evaluation. Drilling operation including horizontal and drain hole. Reservoir management.1. platforms and pipelines Equipment Management and Quality Assurance. Engineering and construction of offshore.1. Bio-stat graphic Analysis. Stimulation Techniques. Down hole completion system. Formation analysis and reservoir Modeling.
openness and mutual concern to make working a stimulating and challenging experience for our people Strive for customer delight through quality products and services. ONGC is dedicated to excellence by leveraging competitive advantages in R&D and technology with involved people. Imbibe high standards of business ethics and organizational values.1. 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. 7 .‖ ONGC Mission: To be a world-class oil and gas company. ONGC also Fosters a culture of trust.5 ONGC Vision & ONGC Mission ONGC Vision:“TO BE A WORLD CLASS OIL &GAS COMPANY. knowledge excellence and exemplary governance practices.1.
Over the years the institute has emerged as a premier R&D center in South East Asia.6 Various Institutes of ONGC The National Oil Company of India. 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. It is engaged in relentless efforts in R&D and has rendered excellent services in the area of oil and gas well drilling technology. Dehradun. The institutes have developed multidimensional expertise. IEOT: Institute of Engineering and Ocean Technology. development of hydrocarbon resources generation and up gradation of geoscientific data and computer application. 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. 1983 for innovation and development of the future plans 8 . List of important institutes of ONGC are: GEOPIC: Geodata Processing and Interpretation Centre.1. Dehra Dun in Uttrakhand was established in house the largest computing facility of Oil and Natural Gas Corporation Ltd. And is one of the few centers around the world where integrated processing and interpretation of different geosientific data from seismic to petro physical. risky and complex oil and gas exploration and development industry in the energy sector with view to ensure managerial effectiveness. IDT: Institute of Drilling Technology. The institute is with highly qualified experienced scientist and engineer‘s carriers. KDMIPE: Keshav Dev Malaviya Institute of Petroleum Exploration. ONGC has set up various institutions to meet its Research and Development need in exploration to exploitation. capable of providing advance technical knowledge through training and offering plausible solution to field problems. The institute is founded in Nov. Panvel in Mumbai. Dehra Dun and its activities are focused towards development of new concepts for exploration and exploitation.1. quality and productivity. geological and reservoir engineering is carried out.
INBIGS: Institute of Biotechnology & Geo-tectonic Studies. (No longer Present) 9 . The Institute is committed to upgrade and develop human resources with a view to minimize the overall risk to human life. develop techniques for importing well productivity. Panvel in Mumbai. 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. maximize hydrocarbons recovery keeping the cost in mind with market realities. prepare development plans for new discovery to select and design enhanced oil recovery schemes. The institution has developed expertise in the field of concept evaluation and risk analysis. Health & Environment Management. damage to property. health and environment in petroleum sector in India. : Institute of Petroleum Safety. IOGPT: Institute of Oil and Gas Production Technology.of ONGC to achieve self-reliance in related technology. process and the environment. geotechnical engineering and materials and corrosion engineering. Ahmedabad. Health & Environment Management was established 1989 with the objective of promoting standards of safety. The institute is developed for improving production technology of ONGC. IRS: Institute of Reservoir Studies. IPSHEM: Institute of Petroleum Safety.
3800 Crores and is expected to be commissioned during the first quarter of 2008. Ltd. The project is being developed by a SPV between IL&FS.1. It is the only other listed company besides parent ONGC within the ONGC group. Government of Tripura and ONGC with an equity share of 50%.60% subsidiary of ONGC. IL&FS and AP Government. to set up an export-oriented refinery of 7. Kakinada Refinery & Petrochemicals Limited (KRPL): This is a public private joint venture company formed pursuant to an MOU between MRPL.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. ONGC/MRPL has become co-promotor under 10 .5 MMTPA capacity at Kakinada in coastal Andhra Pradesh which is envisaged to be integrated with bio-diesel facility. This joint venture aims to source equity oil and gas from abroad for securing India‘s energy independence. (OTPCL): ONGC has embarked upon a project for generation of power with 750 MW gas based closed-cycle power plant. The project is estimated to cost around Rs. for declaring Special Economic Zones (SEZs) to boos industrial growth in the country. 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. This joint venture will be involved in trading and shipping of oil and gas (including LNG) sourced by OMEL from abroad. Kakinada SEZ Limited: In tune with the recent initiatives of Ministry of Commerce and Industry. ONGC Mittal Energy Limted (OMEL): This is the joint venture between ONGC Videsh Limited and Mittal Investments Sarl in the ratio of 49. in turn.1. Mangalore Refinery and Petrochemicals Limited (MRPL): This is a 71. Govt. ONGC Nile Ganga BV (ONG BV): This is the wholly owned subsidiary of ONGC Videsh Limited which.98% : 48. ONGC Tripura Power Company Pvt.of India. is 100% owned by ONGC. 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. Kakinada Seaport Limited (KSPL).02% with SBI Capital holding the remaining 2%. 24% and 26% respectively.
of India as its nominee for buying the crude oil to be produced from this block.. which will be located within this SEZ. a decision was taken to associate with a special economic zone (SEZ) Contemplated for development at Mangalore. its PSC partner in Rajashtan Block.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. and as per due facilitation by Rajasthan Govt. in coordination with Cairn Energy. MRPL has been nominated by Govt. The SEZ will be an SPV with Karnataka Industrial Areas Development Board (KIEDB). Mangalore SEZ Limited: With a view to providing synergy with MRPL. Rajasthan Refinery Limited (RRL): With the recent discovery of waxy oil in Mangla and other adjoining structure by Cairn Energy India. MRPL. With view to optimizing the capital cost during the construction of the project and subsequently promoting sale of petrochemical intermediates. Karnataka Chambers of Commerce and Industry (KCCL) and ONGC between them bringing in 49% equity with ONGC contributing 26%. which will examine the techno-economic viability of establishing a well-head refinery of 7. 11 . large petroleum and petrochemicals based projects are envisaged to be developed at Mangalore. IL & FS has offered to take the remaining 51% equity. has proposed to form a joint venture company named Rajasthan Refinery Limited (RRL). 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.5 MMPPA Capacity and if found feasible will implement the same at a suitable location in Rajasthan. This SPV is in the process of being incorporated. Dahej SEZ Limited: ONGC participating in the initiative of Govt. ONGC is currently engaged in implementing its C2-C3 extraction project.
In other words. Given that the oil industry‘s under-recoveries for FY11 will be higher than in FY10 in spite of the recent price increases.6% lower price to the oil major compared to the June 2009 quarter. is unlikely to ease. However . Even the ONGC management couldn‘t help call the subsidy burden ‗excessive‘. pulling lower the company‘s net realisation to $48. ONGC‘s subsidy. which stood at $58. with its production likely to increase gradually over next few years. which is expected to add Rs 3. The company‘s future prospects appear healthy. which appeared only 17. The net realisation on crude oil.000 crore. While the company‘s oil production stagnated.5 mms cmd gas sold from nominated fields. every barrel of oil sold during the quarter fetched 22.04.515 crore as discounts — highest in past seven consecutive quarters and 12-times the year-ago number.667 crore. it had to shell out Rs 5. Till June 2010 quarter. it basically was the higher revenues in its gas business that enabled ONGC to restrict fall in net sales to mere 8. Although the company made nearly Rs 850 crore higher profits on this count its net profit fell 24%.25 in June 2009 quarter. However.5% lower on y-o-y basis in dollar terms. with the government decontrolling petrol prices and raising diesel prices in June. With over 80% of this shared by ONGC. 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. Its attempts at diversifying the revenue base will also start giving results as its two petrochemical complexes and a power plant 12 .1.500 crore to its bottom line on an annualised basis. The subsidy burden was so heavy that the benefits of decontrolled gas prices failed to make a mark. which stood at Rs11. was actually 22. the oil industry‘s under-recoveries rose to Rs 20. The company continues to remain fundamentally strong.2 INDUSTRY ANALYSIS:ONGC‘s profit for June 2010 quarter plummeted more than expected as the subsidy burden surged. the subsidy sharing formula is set to change going forward. the government‘s ever-changing subsidy-sharing policy poses the keyrisk. which shows the severity of these subsidies. increasing the share of upstream companies to Rs 6. the upstream oil companies were required to contribute towards the under-recoveries only on autofuels.6% down in rupee terms. The administered pricing mechanism was dismantled in April on the 48. This amounted to nearly $33 per barrel of discount.555 crore in FY10 .1%. In the June 2010 quarter.
rising exploration and production expenditure. high subsidy payouts. "The concern areas are decline in production from ageing fields. ONGC and IOC are planning entry into the business in a major way as this is in line with their forward integration plans. At the same time. Besides finding new reserves of oil and gas. has set his sight on reversing decline in production from ageing fields and cutting rising expenditure during his tenure till 2011.000 ONGC employees after being appointed as chairman and managing director. He. The petrochemicals cycle is currently on a global uptrend thanks to growing demand from China and other developing nations. Though he was selected for the top job by government's headhunting panel PESB in August. the PMO wanted the invitation to be more explicit. Sharma promised tackling issues of morale and motivation of employees and opening promotional avenues to arrest the brain drain. however. Sharma listed employee attrition and rising payout on kerosene and LPG subsidy as areas of concern.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. who was director (finance) when the government in May 2006 refused extension of service to flamboyant Subir Raha. 1." he wrote.4 per cent to Rs 17. Sharma was again selected and his appointed confirmed by Prime Minister Manmohan Singh on July 2. 1. under-recoveries in gas business and employee attrition. Sharma. Even though the selection process of PESB invited professionals from private firms to apply. However. constraints of oil field services.024 crore in 2006-07. the Prime Minister's Office refused his confirmation in February.come up over next 18-20 months. who was recently appointed as the permanent head of Oil and Natural Gas Corp (ONGC) after an uncertainty of over 13 months. In the 13 .3. 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.3THE PRIORITIES :R S Sharma. In his message to more than 34. expressed concern at rising subsidy payout that increased 42. has been the acting head of the company since then. the subsidy uncertainties continue to make it a doubtful investment candidate for retail investors.
crates. ropes Water pipe. The following are the major uses of the products: Polymer Products and the uses Product LDPE/LLDPE HDPE Uses Consumer packaging/film. electrical wires. woven sacks. sheets Automotive tyres and tubes. monofilament yarn. going forward: 14 . 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. extrusion wires. luggage. 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. pipes Polypropylene (PP) PVC Polybutadeine (PBR) Rubber Cement packaging. cable coatings Fertilizers. Major beneficiaries of this uptrend are the integrated players such as Reliance Industries. cartons. GAIL and IPCL (to some extent).domestic markets. household packaging. cables. 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.
GAIL utilizes natural gas for its petrochemicals capacity. Further. thereby reducing external dependence to a large extent. gas prices are regulated but in short supply. IPCL uses Reliance's vast and widespread marketing network to reach out to global consumers. These players are therefore vulnerable to raw material prices. IPCL and Haldia Petrochemicals (HPL)). petrochemical players have little bargaining power against the suppliers. Of the three companies mentioned. the lean gas is transmitted to consumers such as power and fertilizer industry.1. 15 . Further. Rich natural gas is evacuated into the pipelines and after separation of the hydrocarbons such as ethane. Low Bargaining power vis-à-vis customers: In case of increase in input costs. would add further to the profitability of these integrated companies. On the other hand. Reliance Industries uses naphtha from its own Jamnagar refinery as a feedstock for the petrochemicals production. as this would help reduce duplication of production. petrochemicals business being a high value add. propane and butane.3.3.2 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. 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. IPCL forms a part of the Reliance stable while GAIL is set to pick up stake in HPL. Refineries realize the import parity prices on naphtha produced and in case of high feedstock prices. 1. Such high concentration is likely to benefit these players. Synergies: Most of the petrochemical players have integrated facilities. To put things in perspective.3 Weaknesses: Low bargaining power vis-à-vis the suppliers: Input costs form nearly 50% to 60% of the raw material costs. while naphtha is an expensive source of feedstock.
16 . Dow Chemicals and Shell into the business. ONGC is also venturing into petrochemicals business. 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. However.4Threats: Customs duties: Historically.1. 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. the domestic industry has been protected from overseas competition by high import duties imposed by the government.3. India. which could result in squeezing margins. As part of its commitment to various multilateral and bilateral trade agreements. of late. Further. with huge market potential. These global majors with deep pockets can actually lead into a pricing war. might witness entry of global majors such as ExxonMobil. Import duty on polymers has been steadily reduced and is currently at 20%. With commitments to reduce and eliminate tariff and non-tariff barriers.
2. the primary data collection is not used since it is based on secondary data which is already available. Step 2. to be constructed and information is collected from the respondent.e. In my project report working capital Analysis in ONGC ltd.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.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.3 Primary Data It means collection of information for the first time.1 Problem Formulation Following steps have been carried out for the project undertaken: Step 1.2.Got acquainted with the organization to understand its setup in Order to be able to appreciate its functioning. To know which is the most profitable company. 2. 18 .. in which the investor can currently invest. To assess the ratios of ONGC Ltd. Step 3. and suggest remedial measures to improve the same in future. In order to collect such type of information questioner i.
2.chevron. Oil-India and Chevron ONGC LTD website: www.4 Secondary Data Secondary data are information.com Library of ONGC at KDMIP 19 . In order to carry out my project successful I have relied on the secondary data already available.oilindia.5 Sources of Secondary Data Annual report of ONGC Ltd.ongcindia.com OIL-INDIA LTD website:www.2.com CHEVRON LTD website:www. which has already been collected by others.
Long term creditors on the other hand are more interested in the long term solvency of the firm .1:. it can be grouped In various classes according to financial activity or function to be evaluated . the failure of a company to meet its obligation due to lack of sufficient liquidity . liquidity ratios measures the ability of the firm to meet its current obligation . a very high degree of liquidity also bad . provide a quick measure of liquidity . but liquidity ratios by establishing a relationship between cash and other current assets to current obligation . In view of the requirements of the various users ratios . similarly owners concentrates on the firm profitability and financial condition . 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 . 3. Profitability ratios.LIQUIDITY RATIOS It is extremely essential for a firm to be able to meet its obligation as they become due. loss of creditor‘s confidence .the parties interested in financial and short and long term creditors mainly interested in liquidity position or shortterm solvency of the firm. will result in a poor creditworthiness . management is interested in evaluating every aspects of the firm grows profitably. Leverage ratios. in fact analysis of liquidity needs the preparation of cash budgets and cash and fund flow statements .RATIO ANALYSIS Several ratios are calculated from the accounting data .or even legal tangles resulting in the closure of the company . Liquidity ratios. Activity ratios. idle asset earn nothing . we may classify them into four important categories. The most common ratios which indicate the extent of liquidity and the lack of liquidity are : - 20 .
prepaid expenses are also included in the current assets as they represent the payments that will not be made by the firm in future . marketable securities.1.08 As on 31March08 285477 108763 2. debtors and inventories .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 .62 21 .income tax liability and long term debt maturing in the current year.26 As on 31 March11 434298 176083 2. debtors. Idle current ratio = = 2:1. bills payable . such as marketable securities .3. inventory of finished material.77 As on 31 March09 326279 105951 3. As on 31 March12 Current Assets Current Liability Current Ratio 476443 211051 2. accrued expenses . current liabilities include creditors . short – term bank loan . net provision for bad debt and doubtful debts.47 As on 31 March10 387850 139932 2. bill receivable and prepaid expenses. semi-finished and finished goods.all obligation maturing within a year are included in current liabilities . 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.
Generally a quick ratio of 1 to 1 is considered to represent a satisfactory current financial condition. assets and current liabilities. Inventories are considered to be less liquid.48 which mean that the money is lying idle either in the organization or in the form of bank balance. a company with a high value of quick ratio can suffer from the shortage of funds if it has slow paying. doubtful and long duration outstanding debtors. 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. 22 . Inventories normally require some time for realizing into cash. 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. 3.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. or liquid. Thus. This represents the poor investment policy of the management as this amount can be utilized elsewhere. An asset is liquid if it can be converted into cash immediately.1.2 QUICK RATIO Quick ratio also called acid test ratio establishes a relationship between Quick. The cash and bank balance is 121405.
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. since the company does not have much raw material as the company is into the exploration sector.792743816 2.0650743 2.554898093 2.268770977 2. Since the inventory does not play a major role in the current assets.71which shows that there is not much difference between the current and quick ratio.388542059 Quick Ratio 3 2. The inventory is 40606.5 2 1. This can be explained by the fact that ONGC being into an exploration sector requires fewer amounts of raw materials.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. the difference between quick and current ratio is not high. 23 .5 1 0.
3. As on 31st March12 UNSECURED 267.35 LOANS DEBT SHARE CAPITAL RESERVES AND SURPLUS EQUITY CAPITAL EMPLOYED NET WORTH 267.69 494832 535934 468454.39 As on 31st March08 1490 1490 14259.12 As on 31st March10 696 696 21388. Measuring leverage:A good deal of confusion arises in discussions among people who use different definitions of leverage.39 As on 31st March09 1069. and has multiple definitions in each field.87 684785. Important examples are: A public corporation may leverage its equity by borrowing money. The term is used differently in investments and corporate finance.76 1069.15 421416 463142 24 .87 915729 640583 780848 706173. as opposed to variable.87 597850.76 14259. A business entity can leverage its revenue by buying fixed assets.35 21389 765965. buying fixed assets and using derivatives.Common ways to attain leverage are borrowing money. the less equity capital it needs. This will increase the proportion of fixed.To judge the long term financial position of the firm financial leverage ratios are calculated.99 605213 699435 619239. There are different kind of leverage ratio we will consider debt ratio. so any profits or losses are shared among a smaller base and are proportionately larger as a result. leverage is a general term for any technique to multiply gains and losses . costs. The more it borrows .26 541440 614099 539596.28 454194.2 LEVERAGE RATIO :In finance.3 525337.28 As on 31st March11 369 369 21388. meaning that a change in revenue will result in a larger change in operating income.
debentures/bonds. and other assets such as 'goodwill').0004168 March11 As on 31st March10 As on 31st March09 As on 31st March08 0.003548244 25 . a company's debt ratio should be compared with their industry average or other competing firms. fixed assets.000527569 0.3 DEBT RATIO:Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt.001287116 0. or alternatively: For example. Total debt will include short and long term borrowings from financial institutions.3.002166545 0.000 in total liabilities would have a debt ratio of 25%. It is the ratio of total debt (the sum of current liabilities and long-term liabilities) and total assets (the sum of current assets. deferred payment arrangements for buying capital equipments. Several debt ratios may be used to analyze the long term solvency of a firm. bank borrowings. Like all financial ratios. As on 31st As on 31st March12 DEBT RATIO = TOTAL DEBT/CAPITAL EMPLOYED 0. The firm may be interested in knowing the proportion of the interest bearing debt in the capital structure. Public deposits and any other interest bearing loan. a company with $2 million in total assets and $500.
The accounts receivable turnover shows how quickly a company collects what is owed to it. and total assets. these accounts are used in the denominator of the most popular activity ratios.4% to . For the last 5 year show that the company has been more faithful to equity finance. The ratio states that the company has only used 0.3% of debt financed cost structure for the last 5 year.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.0025 0. Activity ratios measure the efficiency of the company in using its resources.003 0.0035 0.001 0.4 ACTIVITY RATIO:Activity ratios measure company sales per another asset account—the most common asset accounts used are accounts receivable. Since most companies invest heavily in accounts receivable or inventory.004 0.0015 0. 26 .002 0. Accounts receivable is the total amount of money due to a company for products or services sold on an open credit account. 3. inventory.Debt Ratio 0. 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.
27 . the average inventory cost is used in the denominator. which is the total annual sales or the cost of goods sold divided by the cost of inventory. since different companies would have different markups to the sale price. because it is money invested that does not earn a return. The best measure of inventory utilization is the inventory turnover ratio (inventory utilization ratio). which would overstate the actual inventory turnover. where the amount of inventory can vary widely throughout the year. In seasonal businesses. it must be able to manage its inventory. 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.Accounts Receivable Turnover = Total Credit Sales ──────────────── Accounts Receivable For a company to be profitable.
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.5 1 0.65 0 65270.3.550476865 As on 31st march09 42792.11 0.467164055 88169. and therefore is of interest to short term creditors.04 136705.e.655623991 As on 31st march08 58488. The above graph shows that the cash and balance for the year 10 has declined and has come down to 121405.06 0 92030.635528331 Cash Ratio 2 1.48 from 160143. Moreover a higher ratio in all the years shows that the company has improved its needed short term financial position.90 0.7 1.5 CASH RATIO The cash ratio measures the extent to which a corporation or other entity can quickly liquidate assets and cover short term liabilities.61 0. 28 .9328018 CASH RATIO As on 31st As on 31st march11 march10 160143. 5.08 0 0 109151. CASH Marketable securities Current liabilities Cash ratio As on 31st march12 121405. This means that there has been a decrease in the short term financial position of the company.04 in 11.42 1.98 0 130150.
00% 15. c) Ch For 11-12 Operating expense 123812 Sales 639681 For 10-11 106823 601370.00% 20.6 OPERATING EXPENSE RATIO The operating expense ratio explains the changes in the profit margin (EBIT to sales) ratio. temporary or long lived can occur due to several factors such as: a) Change in the sales prices.93% For 08-09 76762 482009 15.1 17.00% 5.76% For 09-10 102016 569123. The ratio indicates the extent of sales that is absorbed by the cost of goods sold and the operating expenses. Lower the operating ratio.2 17. the better it is. The variations in the ratio. b) Change in the demand for the product. For 10-11 For 09-10 For 08-09 29 .00% 10.00% For 11-12 INTERPRETATION The operating ratio is the measurement of the efficiency and profitability of the business enterprise. because it will leave higher margin of profit on sales.93% Operating expense 19.3.36% ratio Operating Expense Ratio 25. A higher operating expenses ratio is unfavorable since it will leave a small amount o operating income to meet interest.00% 0. dividends etc.
67% As on 31st March 09 283731 493763 57. The conventional approach of calculating return on investment (ROCE) is to divide PBDIT or PBIT by capital employed.00% 48. Capital employed represents pool of funds supplied by shareholders and lenders. It shows the strong profitability and god performance efficiency.00% 58.00% 50.46% As on 31st March 08 246784 419926 58.00% 52. while PAT represents residue income of shareholders As on 31st March12 PBIT CAPITAL EMPLOYED 319684 640583 As on 31st March11 314790 604844 52. ROCE shows a good trend of average 54% in the past five years.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.RETURN ON CAPITAL EMPLOYED The term investment may refer to total assets or net assets.77% ROCE= 49.91% PBIT/CAPITAL EMPLOYED ROCE 60.00% 44.00% 46. 30 .00% 54.04% As on 31st March 10 306465 540744 56.00% 56.
28 0.26743 As on 31st March08 0.RETURN ON EQUITY (ROE) Common or ordinary shareholders are entitled to the residual profits.22 0.25 0.27714 Return on Equity 0. As on 31st March12 ROE= PAT/EQUITY 0.23650 As on 31st March10 0.26 0. 31 .25261 As on 31st March09 0.24 0. A return on shareholders‘ equity is calculated to see the profitability of owner‘s investment.23 0. the earnings may be distributed to shareholders or retained in the business.27 0. The shareholders equity or net worth will include paid up share capital. share premium and reserves and surplus less accumulated losses. It shows that equity shareholder‘s funds are being used efficiently. The rate of dividend is not fixed.29 0. A constant trend also helps in increased trust worthiness of organization among its shareholders.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.26052 As on 31st March11 0.
76 As on 31st March08 421416 699435 0.94 0.76 As on 31st March12 As on 31st March11 As on 31st March10 As on 31st March09 As on 31st March08 32 .86 614099 0.84 0.82 0.8 0.92 463142 0.88 0.9 0.CAPITAL EMPLOYED RATIO This is yet another alternative way of expressing the basic relationship between debt and equity.90 C E Ratio 0.86 0. As on 31st March12 CAPITAL EMPLOYED NET WORTH CAPITAL EMPLOYED RATIO 780848 0.92 0.88 535934 0.78 0.82 640583 As on 31st March11 605213 As on 31st March10 541440 As on 31st March09 494832.
89 34806.T.37 30337.71 34806.58 30384.9 32571.T.86 43 I.42 24874.R 8.94 25691.37 319809 314790 306465 283731 246784 286580.R.9 220328.94 25691.2 As on 31st March10 569123.2 262658.65 7.1 198712.80 8.5 30337. INVENTORY I.98 30361.48 37706.58 30384. 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 601370.4 8.5 40606.INVENTORY TURNOVER RATIOS Inventory turnover is the ratio of cost of goods sold to inventory. (days) 41 42 51 50 33 .1 As on 31st March09 482443.26 28038.9 24056.9 As on 31st March08 467112.09 8.5 319684 GROSS PROFIT COST OF GOODS SOLD OPENING INVENTORY CLOSING INVENTORY AVG.
In other words it holds average inventory for 43 days in 2012. The average inventory figure is more appropriate to use than the yearend inventory figure because the levels of inventories fluctuate over the year.I. (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. The average inventory figures smoothes out the fluctuations 34 .48 times in 2012.T.R.
48 Opening balance(debtors) Closing balance 43603.03 32318.06 As on 31st March 09 482443.61 12. Receivables Debtors Turnover Ratio AVG COLLECTION PERIOD(days) 24 15.66 27594.07 23177.76 37293.07 Avg. This ratio is calculated as: As on 31st March 12 Net credit sales 639493 As on 31st March 11 601370.89 17.23 As on 31st March 10 569123.99 40838.14 42221 35599. Average debtors are calculated by dividing the sum of debtors in the beginning and at the end by 2.45 21 20 27 23 35 .66 27594.53 16.58 37167.915 30235.4 37042. Acc.76 37293.4 37042.98 15.05 43603.9 As on 31st March 08 467112.DEBTORS TURNOVER RATIO Debtor‘s turnover ratio establishes the relationship between the net credit sales and average debtors of the year.
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. In other words. its debtors remain outstanding for 24 days in the year 2012.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. 2011 2010 2009 2008 36 . 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.14 times a year in 2012.
27 CHEVRON(11-12) 10483 167402 0.India is better as compared to Chevron.23 0.25 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.063 O.05 0 0.35 0.91 0.15 0. It establishes the relationship between net profit and sales and indicates the management‘s efficiency in manufacturing.302 NET PROFIT MARGIN 0.NET PROFIT MARGIN O.3 0.47 601370.27 0.C (11-12) CHEVRON(11-12) 0. 37 .40 713971.C (11-12) PAT SALES NET PROFIT MARGIN 167016.NG. rising costs of production or declining demand for the product.1 0.NG. From the above graph it is clear that the net profit margin of ONGC and Oil.063 OIL-INDIA(11-12) 216168. The firm with a high net profit margin is in a better position to survive in the face of falling selling prices.
00% 30.70% 50.90% and 50.B.C (11-12) P.79 RETURN ON CAPITAL EMPLOYED 60.96% respectively. The high ROCE shows the strong profitability and good performance efficiency.96% INTERPRETATION The return on capital employed judges the overall performance of the enterprise.00% 50.I.70% 50.90% 14.NG.96% 319684 640583 CHEVRON (11-12) 18528 126300 OIL-INDIA (11-12) 338697.00% O. 38 .00% 10. The ROCE of ONGC and Oil-India is 49.00% 0.03 664578. However the ROCE of Chevron is only 14.NG.RETURN ON CAPITAL EMPLOYED O.90% 14.C (11-12) CHEVRON (11-12) OIL-INDIA (11-12) 49.00% 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.T CAPITAL EMPLOYED RETURN ON CAPITAL EMPLOYED 49.70%.00% 20.
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,
3. this decrease is mainly due to sharing of huge burden under recoveries of oil marketing companies to the extent of Rs 282252 million.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.5% in 5 years. 42 . it has increased approximately at a CAGR of 1.29%. this decrease is mainly due to high volatility of crude oil prices in the year 2011-12 which went up to 147$ barrel.7.
It has increased approximately at a CAGR of 16. This is favorable for the reputation of the company.3. This is mainly due to increase in reserves and surplus during the years.5% in 5 years. 43 .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.7.
44 .5%in the year 2009. It has increased approximately at a CAGR of 16% in 5 years.3.5:-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 2.7. The reason behind this is that sundry creditors and other current liabilities are increasing.
8%.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 15.7.3. And no new investments are done by the company. 45 . This decrease is mainly due to sale of investments in the following years.
46 . Diagram:-12 The above graph shows continuous increase in the investments of the company from the year 2008 to 2012.7:-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 .7. It has increased approximately at a CAGR of 11.3. This is due to increase in finished goods inventory and raw materials.6% in 5 years. This shows bad inventory management of the company.
573.35 60043.39 73.68 78.8 :-FINACIAL COMPARISION OF VARIOUS FIRMS WITH ONGC:COMPANIES TOTAL ASSETS ONGC 94771.88 298.990.73 54.84 Carin India 31.09 404.25 3139.38 25103.50 The above table shows the comparision of some financial parameters with ONGC which is way ahead of other firms in case of total Assets .15 10345.126. market capitalization .76 473.3.82 NET PROFIT 16.25 MARKET CAP IN(cr) 257.72 SALES TURNOVER 64017.25 10649. 47 . turnover and net profit with oil being distant 2nd .55 5891.15 58834.12 MARKET PRICE(Rs) 1204.65 3.24 Reliance Natura Petronet LNG 3321.78 63.80 310.31 GAIL 15969.oil leads in the stock price.32 4734.
ONGC GAIL Carin india Mar’12 3.29 0.20 43.649.78 257.43 Reliance Natura Mar’12 270.99 4085.02 146.00 10649.79 176.831.90 0.73 0.73 276.23 16651.86 4.28 338.53 23.00 3.10 68170.51 270.00 Petronet LNG Mar’12 10.00 0.01 85.00 31.44 2.00 10746.542.578.04 48 .00 416.24 507.00 270.00 146.71 752.292.29 64.00 249.68 6.59 81.51 576.49 Mar’12 24.79 4536.52 5.09 0.86 32.48 20.98 0.74 0.77 0.85 495.68 10905.00 24.19 1011.00 279.25 0.71 17.48 0.32 0.95 18.74 19667.32 (INCOME) Sales Turnover Excise Duty Net Sales Other income Stock Adjustments Total Income Raw materials Power.003.04 0. fuel cost Employee cost Other manufacturing expenses Mar’12 64342.00 9802.09 92.23 869.02 0.00 9.77 0.33 9671.784.27 42.67 833.18 19.80 19.10 -16.55 Selling and adminExpenses Miscellaneous expenses Preoperative exp Total expenses -4470.
46 790.91 0.13 71.31 847.00 23.497.05 36338.40 27853.89 599.53 -142.00 0.12 116.05 112.29 0.44 168.09 4773.73 12684.49 8437.331.00 0.81 4214.06 0.68 16.62 0.95 20.77 18.83 2.78 1400.253.03 0.32 160.40 22.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 21.00 133.68 -10.00 944.83 0.30 7500.96 0.01 195.388.30 0.00 4875.00 0.95 0.89 599.00 70.83 8485.01 75.32 57.96 559.08 71.00 17.02 29.49 4204.10 0.39 320.34 132.46 11.80 49 .50 368.02 112.88 167.03 24.00 0.08 95.43 5.43 4355.29 183.00 20.08 71.05 101.288.97 760.966.00 32.24 4122.
80 Total Liabilities Application of funds Gross block Less:Accum.00 100.38 9050.00 0.50 3549.00 1484.51 666.00 76596.00 0.06 0.80 0.60 1521.90 0.57 816.60 3321.12 Mar’12 1268.735.42 0.61 0.98 8553.00 16035.86 50 61355.78 Petrone t LNG Mar’12 750.00 0.67 1896.00 31990.89 2138.13 15969.70 94771.00 78.88 2299.15 0.04 2499.48 1268.00 0.65 .70 16035.70 2882.61 50941.57 0.77 200.18 0.88 0.00 0.67 38.00 1800.53 0.13 1200. Depreciation Net block 10414.3.000.81 4734.00 0.00 470.9:.00 0.89 0.06 368.990.00 14769.20 101.00 13501.32 0.00 983.63 1100.76 Mar’12 1896.48 0.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 2138.23 17603.00 2234.00 30055.00 31.23 0.00 750.66 0.
49 0.34 Book Value(Rs) 368.14 31990.02 18934.00 1071.00 5661.09 2755.06 74.00 107.00 74.85 9638.244 3976.46 11.74 83204.48 3.41 1503.3 0.11 30657.00 33.90 12393.00 26854.09 25692.76 11352.97 155.71 0.78 0.00 1.40 0.39 0.37 Petrone tLNG 729.52 0.80 161.03 29225.54 139.advances Deferred credit Current liabilities Provisions Total CA &Provisions Net current assets Miscellaneous expenses 8305.19 5090.40 0.00 1963.67 0.61 2238.00 Carin India Reliance Natura 3.14 168.03 3322.80 351.45 2761.88 2850.93 0.Loans.67 31.32 4060.79 1.31 0.27 601.05 1064.57 15969.22 0.33 1737.12 116.77 0.12 1222.67 4083.95 55964.00 6833.45 989.62 222.26 503.21 2711.12 36024.84 874.02 0.17 1318.74 3321.84 0.11 156.00 Total current assets Loans and advances Fixed deposits Total CA.98 57512.36 538.Capital work in progress Investments Inventories Sundry debtors Cash and Bank balance 52923.00 33.16 0.68 1975.62 650.34 133.19 85.25 GAIL 54.65 -5.00 51 .26 337.33 156.00 4734.68 1227.00 Total assets Contigent Liabilities 94771.48 ONGC 2426.
The quick ratio of ONGC is also best as OIL has high quick ratio and SHELL has too quick ratio from industry accepted levels.9.003 .1.60 19.13 QUICK RATIO 2. 3.70 1.005 .54 0.3:-ACTIVITY RATIO :COMPANY ONGC OIL SHELL DEBTOR TURNOVER 15.2:-LEVERAGE RATIO:COMPANY ONGC OIL SHELL DEBT EQUITY RATIO .9.06 2.3.1:-LIQUIDITY RATIOS :COMPANY ONGC OIL SHELL CURRENT RATIO 2.9.1:-FINANCIAL RATIOS 3.65 17.81 The current ratio of ONGC is best amongst all the OIL has too high CR which means it has idle cash lying with itself .42 RATIO 52 .25 2. similarly in case of SHELL it is too low.9.008 THE above table shows good market position of all the companies amongst which ONGC has least use of debt hence it has better reputation. 3.
The above graph shows that ONGC has best position on case of debtors turnover hence better position in the industry then the others.4-PROFITABILITY:3.10 30.2:-ROCE(RETURN ON CAPITAL EMPLOYED):COMPANY ONGC OIL SHELL ROCE 22.214.171.124.00 SHELL The table here shows ONGC AND SHELL having decrease in profit .60% OIL -52.00 8.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.1:-PERCENTAGE INCREASE IN PROFIT:COMPANY ONGC 31.4.9. high 53 . %INC IN PROFIT -3% 3.00 The table here shows ONGC having highest ROCE amongst all due to profit. 3.
00 The above table shows SHELL having decrease in revenue due to decrease in production whereas as ONGC and OIL having increase in revenues.5.1:-CHANGE IN REVENUES COMPANY ONGC OIL SHELL %INC IN REVENUE 126.96.36.199.5:-REVENUES :3.5. 3.9. 2:-But OIL is the only company who’s EPS is increasing from previous years. 54 .2:-EPS:COMPANY EPS 75 ONGC 101 OIL 104 SHELL 1:-EPS of SHELL best amongst all companies.00 38.40 -31.
ONGC has a sound capital and asset based which also indicates that it is in a position to clear all its current liabilities. In fact it has become a debt free company. The liquidity position of corporation very safe.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. 55 . The corporation operates very efficiently as can be seen from the profit margin. this means that ONGC is in a quite credit worthy position.4.
3. the firm must pay enough dividends to satisfy investors. 8. the firm should pay dividends regularly. The balance sheet figures are showing the declining trend since last year. manufacturing and labours for that. 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. This will help the management to know the causes and taling competitive action a to reduce the expense. seminars. because the company repaid the long term borrowing. 2. 6. For higher the profitability ratio of the firm. 7. In order to maximize wealth under uncertainty. by increasing profits. 56 . proper supervision and timely comparison of actual with budgeted overheads should be taken. coching classes etc.4. It should be the reason for higher inventory level which unnecessary blocked the money. select capable market representatives who are more efficient to recover the more market share. is required 5. Try to maintain the quality level as per the market demand which satisfies the customer more. arrangement of different training programs like meeting members. 4. To increase the work efficiency of the workers as well as of the staff members. For the innovations of new market. From the analysis of the liquidity ratio we are able to recommend that the liquidity position of the company is good. It should help to increase the moral of the investors and side by side also helps in long term financial strength of the firm. and also it is able to meet it current obligation. conferences. it is required to increase the sales along with.2 CONCLUSION 1. In order to increase the profit the firm should keep proper control over the expenses retaliating to the purchase of goods. The capital structure ratio shows the performance of the company is increasing . 9. So. Use more credit facility which is given by the creditors.
Ratios require some quantitative information for an informed analysis to be made. Ratios based on this information will not be very useful for decision making. But on their own.4:. asset valuations in the balance sheet could be misleading. Example . but if it results in revaluation surplus the surplus should be credited to revaluation reserve.IAS 16 allows valuetion of assets to be based on either revalued amount or at depreciated historical cost.Outdated information in financial statement The figures in a set of accounts are likely to be at least several months out of date. 3:-Ratios are not definitive measures Ratios need to be interpreted carefully. it has to be charged as an expense in income statement. Where historical cost convention is used.3 LIMITATIONS Limitation of financial ratio analysis are follows:1:-Different Accounting Policies The choices of accounting policies may distort inter company comparisons. 2:. . . 57 . requires that if an asset is revalued and there is a revaluation deficit. 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.Historical costs not suitable for decision making IASB Conceptual framework recommends businesses to use historical cost of accounting. and so might not give a proper indication of the company‘s current financial position. They can provide clues to the company‘s performance or financial situation. they cannot show whether performance is good or bad.4.5:. 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. Like the IAS 16 mentioned above.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. For example a high current ratio may indicate a strong liquidity position. It is likely to be done in a sensitive period. 8:-Price changes Inflation renders comparisons of results over time misleading as financial figures will not be within the same levels of purchasing power. This would be done to avoid the effects of an old accounting policy or gain the effects of a new one. 7:. perhaps when the business‘s profits are low. 10 :-Changes in Accounting policy Changes in accounting policy may affect the comparison of results between different accounting years as misleading. The problem with this situation is that the directors may be able to manipulate the results through the changes in accounting policy. The ratios are based on the summarised year end information which may not be a true reflection of the overall year‘s results. Through the summarisation some important information may be left out which could have been of relevance to the users of accounts.Interpretation of the ratio It is difficult to generalise about whether a particular ratio is ‗good‘ or ‗bad‘.6:. 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. there is need to consider 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. 9 :-Technology changes When comparing performance over time. 58 .Financial statements contain summarised information Ratios are based on financial statements which are summaries of the accounting records. The movement in performance should be in line with the changes in technology. 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.
This time the business will have good inventory levels. 59 . While as in planting seasons the company will have a lot of liabilities through the purchase of farm inputs. measuring and presenting financial transactions. the financial statements are based on year end results which may not be true reflection of results year round. Any change in standards will affect the reporting of an enterprise and its comparison of results over a number of years. Businesses may be within the same industry but having different financial and business risk. even when they are competitors in the same industry or market. For example. 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.Impact of seasons on trading:As stated above. 13:-Different financial and business risk profile:No two companies are the same. Using ratios to compare one company with another could provide misleading information. 12:. 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.Changes in Accounting standard:Accounting standards offers standard ways of recognising. a tobacco growing company will be able to show good results if accounts are produced in the selling season. receivables and bank balances will be at its highest. Businesses which are affected by seasons can choose the best time to produce financial statements so as to show better results.11:. 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. low cash balances and even nil receivables.
This can improve the current and quick ratios and make the 2003 balance sheet look good.Window dressing:These are techniques applied by an entity in order to show a strong financial position. 60 . it can provide useful insights into the firm‘s operations. comparing the performance of these two enterprises may be misleading. 15. then pay off the loan ahead of time on 3rd January 2004. MZ Trucking can borrow on a two year basis. unthinking manner is dangerous. For example. Ratios analysis conducted in a mechanical. holding the proceeds as cash. but analysts should be aware of these problems and make adjustments as necessary. K10 Million on 28th December 2003.:. but if used intelligently and with good judgement.14:-Impact of Government influence:Selective application of government incentives to various companies may also distort intercompany comparison. However the improvement was strictly window dressing as a week later the balance sheet is at its old position. Ratio analysis is useful. One company may be given a tax holiday while the other within the same line of business not.
& Jain.Y. 2009-2010 Annual Report – ONGC Ltd.com www.K. 2011-2012 WEBSITES www. P.com www. (2009) ―Financial Management‖.oilindia.Bibliography BOOKS AND READINGS Khan.chevron. M.com 61 .ongcindia. 2008-2009 Annual Report – ONGC Ltd. 2010-2011 Annual Report – ONGC Ltd. Tata McGraw-Hill Publishing Company Limited (fifth edition) ANNUAL REPORTS Annual Report – ONGC Ltd.
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