Project Report

(Submitted for the Degree of B.Com.Honours in Accounting & Finance under the Calcutta
University of Calcutta)

TITLE OF THE PROJECT:

“CASH MANAGEMENT”
OF
“OIL AND NATURAL GAS CORPORATION”

Submitted by:
Name of the Student:AYUSH RUNGTA
Registration Number:017-1121-0314-12
Name of the College:THE BHAWANIPUR EDUCATION SOCIETY COLLEGE
College Roll No.:255

Supervised by:
Name of the Supervisor:PROF. DIVYESH SHAH
Name of the College:THE BHAWANIPUR EDUCATION SOCIETY COLLEGE

Month & Year of Submission

February,2015
 Acknowledgement

I have created projectonCASH MANAGEMENT.For the best of my knowledge and sources which I have
taken from the internet. I have gone through many of websites and taken the latest information from that
websites which is related toCASH MANAGEMENT. After some analysis, I have come to a result and
gathered some data, which I have mentioned in this project.

I take this opportunity to express my profound gratitude and deep regards to my guide Prof. DIVYESH
SHAHfor his exemplary guidance, monitoring and constant encouragement throughout the course of this
project. The blessing, help and guidance given by him time to time shall carry me a long way in the journey
of life on which I am about to embark. 

I also take this opportunity to express a deep sense of gratitude to my friends for their cordial support,
valuable information and guidance, which helped me in completing this task through various stages.

Lastly, I thank almighty, my parents, brother, sisters and friends for their constant encouragement without
which this assignment would not be possible.

Ayush Rungta

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 TABLE OF CONTENT
SERIAL
PARTICULARS PAGE NO.
NO.
1. INTRODUCTION 4-11
1.1 Background 4-8
1.2 Literature Review 9
1.3 Need of The Study 10
1.4 Objective of the Study 10
1.5 Limitation of the study 10
1.6 Methodology 10-11
2. CONCEPTUAL FRAMEWORK 12-16
2.1 Introduction 12-13
2.2 Achievements 13
? 2.3 Products 13
2.4 Financial Performance 14-16
3. ANALYSIS & FINDINGS 17-28
 ANALYSIS OF FINANCIAL STATEMENT 17-24

1. Introduction 17
2. Role Of Ratio Analysis 17-18
3. Ratio Analysis 18-24
 MANAGEMENT OF CASH. IT’S FINANCING & 24-27

ESTIMATION
1. Cash Forecasting 24
2. Inflows & Outflows. 25
3. Process Flowchart 26
4. Raising Of Fund 27
 FINDINGS 28

4. CONCLUSION & RECOMMENDATIONS 29-30

 Conclusion 29

 Recommendations 29-30

5. BIBLIOGRAPHY OR REFERENCES 31
6. SUPERVISOR’S CERTIFICATE (ANNEXURE -1A) 32
7. STUDENT DECLARATION (ANNEXURE -1B) 33

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 CHAPTER – 1

1.1 Background
1.2 Literature Review
1.3 Need of the Study
1.4 Objective of the project
1.5 Limitation of the study
1.6 Methodology

1.1. BACKGROUND

“THE MAJOR OBJECTIVE OF THIS STUDY IS FOR THE PROPER UNDERSTANDING OF THE CASH MANAGEMENTOF OIL AND
NATURAL GAS CORPORATION AND TO SUGGEST NECESSARY MEASURES TO OVERCOME THE SHORTFALLS IF ANY IN THE
INDUSTRY.”

The project undertaken is on “Cash Management of OIL AND NATURAL GAS CORPORATION.” It describes
about how the company manages its cash and the various steps that are required in the management of
cash. Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund
operations, reinvest and meet capital requirements and payments. Understanding a company's cash flow
health is essential to making investment decisions. A good way to judge a company's cash flow prospects is
to look at its Working Capital Management (WCM).

The cash from operation is an important yardstick to measure the company’s operational and financial
efficiency. Any company should have a right amount of cash and lines of credit for its business needs at all
times. This project describes how the management of cash takes place at OIL AND NATURAL GAS
CORPORATION.

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There are numerous instances in the history of business world where inadequacy of cash has led to
business failures when a firm finds it difficult to meeting day to day affairs. Operating expenses essential
out lays may have to be postponed for wants of fund, operating plans will go out of gear & enterprise
objectives on investment slumps the suppliers & creditors of the firm may have to wait longer to raise their
dues & will hesitate to extend further credit to the firm.
Thus, efficient management of cash in an important prerequisite for successful working of a business
concern it reduces the chances of business failure generates a feeling of security and confidence in the
minds of personnel in the organization it assurance solvency of steady of the organization.

1. Introduction.
2. What Is Cash Or Cash Equivalents?
3. What Is Cash Management?
4. Importance Or Advantages.
5. Excess Or Inadequate Cash.
6. Disadvantages Of Redundant Of
Excessive Cash.
7. Disadvantages Of Inadequate Cash.
8. Factor Determining Cash Requirement.
9. Functions Of Cash Management.

1. Introduction
Cash, like the blood stream in the human body, gives vitality and strength to a business
enterprise. Though cash hold the smallest portion of total current assets. However, Cash is both the
beginning and end of working capital cycle - cash, inventories, receivables and cash. It is the cash, which
keeps the business going. Hence, every enterprise has to hold necessary cash for its existence. Moreover,
steady and healthy circulation of cash throughout the entire business operations is the basis of business
5
solvency. Now-a-days non-availability and high cost of money have created a serious problem for industry.
Nevertheless, cash like any other asset of a company is treated as a tool of profit. Further, today the
emphasis is on the right amount of cash, at the right time, at the right place and at the right cost.

2. WHAT IS CASH OR CASH EQUIVALENTS?

As per Accounting Standard 3- Cash Flow Statement, “Cash comprises cash on hand and demand
deposits with banks.” Whereas “Cash Equivalents are short-term, highly liquid investments that are
readily convertible into known amount of cash and which are subject to an insignificant risk of changes
in value.”

Cash may be in any form of currency, like banknotes and coins, which have a legal acceptance and
recognition in the market.The acceptance of cash by its user indicates that it has a trading value when
tendered for purchase of goods and services.

Cash Equivalents are held for the purpose of meeting short-term cash commitments rather than
for investment or other purposes. For an investment to qualify as cash equivalent, it must be readily
convertibleto a knownamount of cash and be subject to an insignificant risk of changes in value.

3. WHAT IS CASH MANAGEMENT?

The term cash management refers to the management of cash resource in such a way that
generally accepted business objectives could be achieved. In this context, the objectives of a firm can be
unified as bringing about consistency between maximum possible profitability and liquidity of a firm. Cash
management may be defined as the ability of a management in recognizing the problems related with cash
which may come across in future course of action, finding appropriate solution to curb such problems if
they arise, and finally delegating these solutions to the competent authority for carrying them out. The
choice between liquidity and profitability creates a state of confusion. It is cash management that can
provide solution to this dilemma.

Cash itself is not capable of generating any sort of income on its own. It rather is the prime
requirement of income generating sources and functions. Thus, a firm should go for minimum possible
balance of cash, yet maintaining its adequacy for the obvious reason of firm's solvency. Cash management
deals with maintaining sufficient quantity of cash in such a way that the quantity denotes the lowest
adequate cash figure to meet business obligations.

4. IMPORTANCE OR ADVANTAGE OF ADEQUATE CASH AND CASH EQUIVALENTS:

 Solvency Of The Business: Adequate liquidity (Cash and Cash Equivalents) helps in maintaining the
solvency of the business by providing uninterrupted production.
 Goodwill:Sufficient amount of cash enables a firm to make prompt payments and makes and
maintain the goodwill.
 Cash Discounts: Adequate cash also enables a concern to avail cash discounts on the purchases
and hence reduces cost.
 Regular Supply of Raw Material:Sufficient cash ensures regular supply of raw material and
continuous production.

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 Regular Payment of Salaries, Wages and Other Day TO Day Commitments : It leads to the
satisfaction of the employees and raises the morale of its employees, increases their efficiency,
reduces wastage and costs and enhances production and profits.
 Exploitation of Favorable Market Conditions: If a firm is having adequate liquidity then it can
exploit the favorable market conditions such as purchasing its requirements in bulk when the
prices are lower and holdings its inventories for higher prices.
 Ability to Face Crises: A concern can face the situation during the depression.
 High Morale: Adequate cash brings an environment of securities, confidence, high morale which
results in overall efficiency in a business.

5. EXCESS OR INADEQUATE LIQUIDITY

Every business concern should have adequate amount of Cash and Cash Equivalentsto run its business
operations. It should neither have redundant or excess cash nor inadequate or shortages of cash. Both
excess as well as short liquidity positions are bad for any business. However, it is the inadequate
liquidity which is more dangerous from the point of view of the firm.

6. DISADVANTAGES OF REDUNDANT OR EXCESSIVE CASH

1.     Excessive Cash means ideal funds which earn no profit for the firm and business cannot earn the
required rate of return on its investments.
2.     Redundant Cashleads to unnecessary purchasing and accumulation of inventories.
3.     It may reduce the overall efficiency of the business.

7. DISADVANTAGES OF INADEQUATE CASH

The amount of Cash should be sufficient. Inadequate amount of Cash may create a lot of Financial
Problems for the business. It may even lead to closing down of Business Organization. Due to shortage
of Cash, Raw Materials cannot be purchased on time, payment to labours and suppliers cannot be
made on time which results in loss on Financial Reputation.

8. Factor Determining Cash Requirement

 Size of The Business: Greater the size of the business, greater is the requirement of Cash and Cash
Equivalents.
NOTE: ONGC HAS A VERY HIGH SCALE OF OPERATION THUS REQUIRES HUGE CASH.
 Production Policy: If the policy is to keep production steady it will require higher Cash levels
whereas if the production is slow lower level of Cash will be required.
NOTE:ONGC IS AMONG SOME OF THOSE COMPANIES WHOSE PRODUCTION CANNOT BE STOPPED
DUE TO HIGH DEMAND AS WELL AS HIGH FIXED COST INVOLVED, THUS HIGHER CASH LEVELS
SHOULD BE MAINTAINED.
 Market Competitiveness: In view of the competitive conditions prevailing in the market, the firm may
have to offer liberal credit terms to the customers, or even larger inventories may be maintained.
Thus the working capital requirement is higher which in turn requires high Cash.
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 NOTE: ONGC HAS THE MAJOR CHUNK OF MARKET SHARE. ALTHOUGH THERE ARE SOME OTHER
COMPANIES ALSO WORKING SUCH AS OIL, CAIRNS ENERGY, RIL BUT THE VERY LOW PRODUCTION
OF CRUDE OIL BY THESE COMPANIES AS COMPARED TO ONGC MAKES THE ONGC NEARLY
MONOPOLY FIRM IN THE MARKET
 Seasonal Variations: Generally, during the busy season, a firm requires larger cash levels than in
slack season.
NOTE: BEING AN OIL EXPLORATION &PRODUCTION COMPANY, OPERATIONS OF ONGC GOONS
THROUGHOUT THE YEAR AS DEMAND OF OIL IS VERY HIGH AS COMPARED TO ITS SUPPLY. SO THE
REQUIREMENT OF CASH ALMOST REMAINS CONSTANT THROUGHOUT THE YEAR.

9. FUNCTIONS OF CASH MANAGEMENT:

"Cash management is concerned with minimizing unproductive cash balances, investing

temporarily excess cash advantageously and to make the best possible arrangements for meeting planned
and unexpected demands on the firm's cash." Cash Management must aim to reduce the required level of
cash but minimize the risk of being unable to discharge claims against the company as they arise. All these
aims and motives of cash management largely depend upon the efficient and effective functioning of cash
management:-

1. Cash Planning: Cash planning is a technique, which comprises of planning for and controlling of
cash. It is a management process of forecasting the future need of cash, its available resources
and various uses for a specified period. A good cash planning aims at providing cash, not only
for regular but also for irregular and abnormal requirements.
2. Managing Cash Flows: The heading simply suggests an idea of managing properly the flow of
cash coming inside the business i.e. cash inflow and cash moving out of the business i.e. cash
outflow. These two are said to be properly managed only, if a firm succeeds in accelerating the
rate of cash inflow together with minimizing the cash outflow.
3. Optimizing the Cash Level: A financial manager should concentrate on maintaining sound
liquidity position i.e. cash level. All his efforts relating to planning, managing and controlling
cash should be diverted towards maintaining an optimum level of cash. The foremost need of
maintaining optimum level of cash is to meet the necessary requirements and to settle the
obligations well in time.
4. Investing Idle Cash: Idle cash or surplus cash refers to the excess cash or bank balances which
the company does not require in immediate future. The firm should invest these cash in liquid
securities in such a way that there is insignificant risk of loss with maximum returns.
8
 1.2 Literature Review

Cash management is defined by different authors in different ways and the same is explained below :

Cash has been defined in the Government Financial Statistics (GFS) manual.In GFS, cashon hand refers to
notes, coins, and deposits held on demand by government institutional unitswith a bank or another
financial institution. Cash equivalents are defined to be highly liquidinvestments that are readily
convertible to cash on hand. A major focus of this paper is onmanaging government cash on hand.
However, as will be seen in the discussion on active cashmanagement, Treasuries are also concerned about
managing cash equivalents. Cash management is necessary because there are mismatches between the
timing ofpayments and the availability of cash. Even if the annual budget is balanced, with realisticrevenue
and expenditure estimates, in-year budget execution will not be smooth, since both thetiming and
seasonality of cash inflows (which depend in turn on tax and nontax flows, and timingof grant or loan
disbursements) and of expenditures can result in conditions of temporary cashsurpluses or temporary cash
shortfalls. Definitions of cash management emphasize the time value of government money.

As per Storey (2003,Cash management is having the right amount of money in the right place and time to
meet the government’s obligations in the most cost-effective way.

As per investopedia, Cash Management means the corporate process of collecting, managing and (short-
term) investing cash. A key component of ensuring a company's financial stability and solvency. Frequently
corporate treasurers or a business manager is responsible for overall cash management.Successful cash
management involves not only avoiding insolvency (and therefore bankruptcy), but also reducing days in
account receivables (AR), increasing collection rates, selecting appropriate short-term investment vehicles,
and increasing days cash on hand all in order to improve a company's overall financial profitability. 

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As per David Babil , Cash management means the managementof liquidity inordertomeet their day to
daycommitment.Theresultofpoorfocusoncashmanagementoften meansthatthefinancialassetsarebound.

1.3 NEED OF THE PROJECT

1. This project is helpful in knowing the company’s position of funds maintenance and setting the
standards for working capital inventory levels, current ratio level, quick ratio, current asset turnover level
& size of current liability etc.
2. This project is helpful to the managements for expanding the dualism & the project viability & present
availability of funds.
3. This project is also useful as it combines the present year data with the previous year data and thereby it
shows the trend analysis, i.e. increasing fund or decreasing fund.
4. The project is done as a whole entirely. It will give overall view of the organization and it is useful in
further expansion decision to be taken by management.

1.4 OBJECTIVES OF THE PROJECT

The main objective of the study is to determine the effect of cash and cash equivalent on business
profitability which has to do with:-

1. Maintenance of cash and cash equivalents at appropriate level, and

2. Availability of ample funds as and when they are needed.

For accomplishment of these two objectives, the management has to consider the composition of current
assets pool. The working capital position sets the various policies in the business with respect to general
operations like purchasing, financing, expansion and dividend etc,

1.5 LIMITATION OF THE STUDY

The following are the various limitations involved in the study.

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1. The study in limited 5 years (2008-2009) to (2012-2013) performance of the company.
2. The data used in this study have been taken from published annual report only.
3. This study in conducted within a short period. During the limited period the study may not be retailed,
full-fledged and utilization in all aspects.
4. Financial accounting does not take into account the price level changes.
5. We cannot do comparisons with other companies unless and until we have the data of other
companies on the same subject.
6. Only the printed data about the company will be available and not the back–end details.
7. Future plans of the company will not be disclosed to us.

1.6 Methodology

This paper is formed as a case study; this means that the study is a deep analysis of Oil and Natural Gas
Corporation. The reason is to get a deeper understanding on the subject and makes it possible to focus on
the issues concerning cash management for Oil and Natural Gas Corporation.. This is needed to be able to
adapt an appropriate cash management system for the individual company. Cash management is a very
broad subject and includes a lot of factors, instead of discussing all the issues that concern cash
management and get a very wide 5 picture on the subject. I have formed this paper as a case study in
order to put more attention on issues that can improve the liquidity for Oil and Natural Gas Corporation.).
This case study is based on explanatory research. Explanatory research implies that the author is focusing
to define the best research design, collection of data and appropriate subject for the study. Explanatory
studies rely on qualitative studies where the information and data are gathered from internet data and
observations .This paper is mostly based on internet data and observations made with Oil and Natural Gas
Corporation, which gives me the opportunity to analyze the appropriate strategies for improving the
liquidity for the company. Although the most of the empirical findings are based on these internet data,
data are also collected from the income statement and balance sheet for Oil and Natural Gas Corporation,
as well. These data are needed to determine the liquidity position for the company by using key ratios. I
believe that it is important to have reliable sources, the theoretical framework are mostly based journal
articles to increase the reliability and validity of this thesis.

11
 CHAPTER – 2

Case Study on Oil and Natural Gas Corporation

An Introduction

2.1 Introduction
2.2 Achievements
2.3 Products
2.4 Financial Performance

12
 2.1 Oil and Natural gas corporation –An introduction

OIL AND NATURAL GAS CORPORATION (ONGC) is India's leading oil & gas exploration company. OIL AND
NATURAL GAS CORPORATION has produced more than 600 million metric tones of crude oil and supplied
more than 200 billion cubic meters of gas since its inception. Today, OIL AND NATURAL GAS CORPORATION
is India's highest profit making corporate. It has a share of 77 percent in India's crude oil production and 81
per cent in India's natural gas production.  

The origins of OIL AND NATURAL GAS CORPORATION can be traced to the Industrial Policy Statement of
1948, which called for the development of petroleum industry in India. Until 1955, private oil companies
such as Assam Oil Company at Digboi, Oil India Ltd (a 50% joint venture between Government of India and
Burmah Oil Company) at Naharkatiya and Moran in Assam, and Indo-Stanvac Petroleum project (a joint
venture between Government of India and Standard Vacuum Oil Company of USA) at West Bengal, were
engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining offshore
were largely unexplored. In 1955, Government of India decided to develop the oil and natural gas
resources in the various regions of the country as part of the Public Sector development. To achieve this
objective an Oil and Natural Gas Directorate was set up in1955, as a subordinate office under the then
Ministry of Natural Resources and Scientific Research.

The Industrial Policy Resolution of 1956 placed mineral oil industry among the schedule 'A' industries. In
August 1956, to ensure efficient functioning of the Oil and Natural Gas Directorate, the Directorate was
raised to the status of a commission with enhanced powers. In October 1959, the Commission was
converted into a statutory body by an act of the Indian Parliament, which enhanced powers of the
commission further. In 1960s, OIL AND NATURAL GAS CORPORATION found new resources in Assam and
established new oil province in Cambay basin (Gujarat). In early 1970s went offshore and discovered a
giant oil field in the form of Bombay High. After liberalization in 1991, OIL AND NATURAL GAS
CORPORATION was re-organized as a limited Company under the Company's Act, 1956 in February 1994.
Today, OIL AND NATURAL GAS CORPORATION has grown into a full-fledged horizontally integrated
petroleum company. Recently, OIL AND NATURAL GAS CORPORATION has made six new discoveries, at
Vasai West (oil and gas) in Western Offshore, GS-49 (gas) and GS-KW (oil and gas) in Krishna-Godavari
Offshore, ChinnewalaTibba (gas) in Rajasthan, and Laipling-gaon (oil and gas) and Banamali (oil), both in
Assam.  

OIL AND NATURAL GAS CORPORATION has a fully owned subsidiary, OIL AND NATURAL GAS CORPORATION
Videsh Ltd (OVL) that looks for exploration opportunities in other parts of the world. OVL is pursuing
exploration of oil and gas in Russia, Iran, Iraq, Libya Myanmar and other countries. OIL AND NATURAL GAS
CORPORATION has also acquired 72% stake in MRPL with full management control of the 9.69 tonne,
state-of-the-art refinery. 

2.2 Achievements:

 OIL AND NATURAL GAS CORPORATION ranks as the Numerous Uno Oil & Gas Exploration & Production
(E&P) Company in Asia, as per Platt’s 250 Global Energy Companies List for the year 2011.
 OIL AND NATURAL GAS CORPORATION ranks 23 rd Leading Global Energy Major amongst the “Top 250
Energy Majors of the World in the Platt's List” based on outstanding performance in respect of Assets,
Revenues, Profits and Return on Invested Capital (RIOC) for the year 2011.
 OIL AND NATURAL GAS CORPORATION has 9th position in the Industry of Mining, crude oil production.
 OIL AND NATURAL GAS CORPORATION ranks 239th position in the prestigious Forbes Global 2000 and
13
 Numero Uno ranking amongst Indian Companies.
 OIL AND NATURAL GAS CORPORATION retainsNumero Uno position from India in terms of Profits with
overall global ranking of 121st.

2.3 Products of OIL AND NATURAL GAS CORPORATION are:

3. Crude Oil
4. Gas
5. LPG (Liquefied Petroleum Gas)
6. Natural Gas
7. Natural gas liquid
8. Aromatic naphtha
9. Superior kerosene oil
10. C2-C3 (Ethane -propane)

2.4 Financial performance of OIL AND NATURAL GAS CORPORATION for 2008-09 to 2012-13

------------------
- in Rs. Cr.
Profit & Loss account of Oil ------------------
and Natural Gas Corporation       -  
  Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 months 12 months 12 months 12 months 12 months

Income          
Sales Turnover 83,890.27 83,005.33 76,515.09 68,338.92 60,470.18
Excise Duty 0 0 0 0 218.41
Net Sales 83,890.27 83,005.33 76,515.09 68,338.92 60,251.77
Other Income 6,713.20 5,436.74 7,593.53 3,406.85 3,615.96
Stock Adjustments -104.28 23.02 91.34 12.91 118.04
Total Income 90,499.19 88,465.09 84,199.96 71,758.68 63,985.77
Expenditure          
Raw Materials 667.26 612.89 656.14 635.3 2,431.88
Power & Fuel Cost 193.54 170.55 157.86 142.57 260.38
Employee Cost 1,935.66 1,945.22 1,309.48 1,303.13 5,618.16

Other Manufacturing Expenses 3,783.88 3,673.08 19,692.63 17,453.44 26,652.82

Selling and Admin Expenses 0 0 0 0 -13,243.69
Miscellaneous Expenses 32,975.18 33,021.57 8,867.56 8,623.49 947.65
Preoperative Exp Capitalized 0 0 0 0 0
Total Expenses 39,555.52 39,423.31 30,683.67 28,157.93 22,667.20
  Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 months 12 months 12 months 12 months 12 months

           

14
Operating Profit 44,230.47 43,605.04 45,922.76 40,193.90 37,702.61
PBDIT 50,943.67 49,041.78 53,516.29 43,600.75 41,318.57
Interest 0.36 27.64 34.83 25.11 11,276.89
PBDT 50,943.31 49,014.14 53,481.46 43,575.64 30,041.68
Depreciation 10,925.89 8,373.57 7,495.92 7,676.69 5,242.66
Other Written Off 7,835.68 10,043.10 9,333.44 8,248.97 0
Profit Before Tax 32,181.74 30,597.47 36,652.10 27,649.98 24,799.02
Extra-ordinary items 250.19 -53.15 -9.55 -33.63 183.99
PBT (Post Extra-ord Items) 32,431.93 30,544.32 36,642.55 27,616.35 24,983.01
Tax 10,337.13 9,618.64 11,519.65 8,692.37 8,258.73
Reported Net Profit 22,094.81 20,925.70 25,122.92 18,924.00 16,767.56
Total Value Addition 38,888.26 38,810.42 30,027.53 27,522.63 20,235.33
Preference Dividend 0 0 0 0 0
Equity Dividend 8,127.72 8,127.72 8,341.61 7,486.05 7,058.28
Corporate Dividend Tax 1,380.72 1,301.16 1,328.62 1,215.65 1,161.56
Per share data (annualised)          
Shares in issue (lakhs) 85,554.90 85,554.90 85,554.90 85,554.90 21,388.73
Earning Per Share (Rs) 25.83 24.46 29.36 22.12 78.39
Equity Dividend (%) 190 190 195 175 330
Book Value (Rs) 159.81 145.47 132.03 113.97 408.08
           
------------------- in Rs. Cr.
Standalone Balance Sheet     -------------------    
  Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 months 12 months 12 months 12 months 12 months

           
Sources Of Funds          
Total Share Capital 4,277.76 4,277.76 4,277.76 4,277.76 2,138.89
Equity Share Capital 4,277.76 4,277.76 4,277.76 4,277.76 2,138.89
Share Application Money 0 0 0 0 0
Preference Share Capital 0 0 0 0 0
1,20,175.4
Reserves 1,32,447.25 6 1,08,678.97 93,226.67 85,143.72
1,24,453.2
Networth 1,36,725.01 2 1,12,956.73 97,504.43 87,282.61
Secured Loans 0 0 4,500.00 0 0
Unsecured Loans 0 0 0 0 16,405.64
Total Debt 0 0 4,500.00 0 16,405.64
1,24,453.2
Total Liabilities 1,36,725.01 2 1,17,456.73 97,504.43 1,03,688.25

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
  12 months 12 months 12 months 12 months 12 months
           
Application Of Funds          
Gross Block 2,44,464.27 96,463.86 90,019.55 80,501.56 71,553.78
Less: Revaluation Reserves 0 0 0 0 0
Less: Accum. Depreciation 1,48,401.76 68,980.39 68,341.41 61,862.02 55,905.28
Net Block 96,062.51 27,483.47 21,678.14 18,639.54 15,648.50
Capital Work in Progress 25,557.79 14,415.37 73,258.12 65,299.77 56,073.25
Investments 17,204.31 9,173.05 5,216.24 5,182.80 5,772.03
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Inventories 5,882.54 5,704.39 5,165.44 4,118.98 4,678.57
Sundry Debtors 8,165.67 6,863.72 6,194.82 3,994.68 3,058.64
Cash and Bank Balance 10,798.88 13,218.59 20,124.57 14,481.09 282.85
Total Current Assets 24,847.09 25,786.70 31,484.83 22,594.75 8,020.06
1,01,268.0
Loans and Advances 35,616.73 7 40,090.29 36,300.55 63,721.90
Fixed Deposits 0 0 0 0 17,948.18
1,27,054.7
Total CA, Loans & Advances 60,463.82 7 71,575.12 58,895.30 89,690.14
Deferred Credit 0 0 0 0 0
Current Liabilities 36,062.34 30,575.81 30,715.22 28,763.69 27,244.53
Provisions 26,501.08 23,097.63 23,555.65 21,749.29 37,092.46
Total CL & Provisions 62,563.42 53,673.44 54,270.87 50,512.98 64,336.99
Net Current Assets -2,099.60 73,381.33 17,304.25 8,382.32 25,353.15
Miscellaneous Expenses 0 0 0 0 841.32
1,24,453.2
Total Assets 1,36,725.01 2 1,17,456.75 97,504.43 1,03,688.25
           
Contingent Liabilities 51,693.35 35,810.89 27,810.71 20,465.03 39,178.54
Book Value (Rs) 159.81 145.47 132.03 113.97 408.08

         
------------------- in Rs. Cr.
Cash Flow     -------------------    

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
  12 months 12 months 12 months 12 months 12 months

Net Profit Before Tax 32431.93 30544.33 36642.57 27616.37 24983.84

Net Cash From Operating
Activities 37809.58 32191.74 35919.31 39338.37 20388.01
Net Cash (used in)/from -30471.91 -23649.97 -26316.98 -24644.27 -13237.1
Investing Activities          
Net Cash (used in)/from
Financing Activities -9757.37 -15447.75 -3958.85 -11722.63 -8016.08
Net (decrease)/increase In
Cash and Cash Equivalents -2419.71 -6905.98 5643.48 2971.47 -865.18
Opening Cash & Cash
Equivalents 13218.59 20124.57 14481.09 11509.62 19096.21

Closing Cash & Cash

Equivalents 10798.88 13218.59 20124.57 14481.09 18231.04
           

16
 1. Introduction
2. Role Of Ratio Analysis
3. Ratio Analysis

CHAPTER –3

Analysis of Financial Statement

1. Analysis of Financial Statement –an Introduction

Financial statement analysis is a judgmental process. One of the primary objectives is identification of
major changes in trends, and relationships and the investigation of the reasons underlying those changes.
The judgment process can be improved by experience and the use of analytical tools. Probably the most

17
widely used financial analysis technique is ratio analysis, the analysis of relationships between two or more
line items on the financial statement. Financial ratios are usually expressed in percentage or times.
Generally, financial ratios are calculated for the purpose of evaluating aspects of a company's operations
and financial position.

Ratio analysis is the powerful tool of financial statements analysis. A ratio is defined as “the indicated
quotient of two mathematical expressions” and “as the relationship between two or more things”. The
absolute figures reported in the financial statement do not provide meaningful understanding of the
performance and financial position of the firm. Ratio helps to summaries large quantities of financial data
and to make qualitative judgment of the firm’s financial performance

2. ROLE OF RATIO ANALYSIS

Ratio analysis helps to appraise the firms in the term of their profitability and efficiency of performance,
either individually or in relation to other firms in same industry. Ratio analysis is one of the best possible
techniques available to management to impart the basic functions like planning and control. As future is
closely related to the immediately past, ratio calculated on the basis historical financial data may be of
good assistance to predict the future, the ratio analysis may be able to locate the point out the various
areas which need the management attention in order to improve the situation. E.g. Current ratio which
shows a constant decline trend may be indicate the need for further introduction of long term finance in
order to increase the liquidity position. As the ratio analysis is concerned with all the aspect of the firm’s
financial analysis liquidity, solvency, activity, profitability and overall performance, it enables the interested
persons to know the financial and operational characteristics of an organization and take suitable decisions

3. RATIO ANALYSIS
ii. Current Ratio: This ratio is an indicator of the firm's commitment to meet its short-term
liabilities. The current ratio is the ratio of current assets and current liabilities.
Formula: Current Ratio= Current Assets .
. Current Liabilities

Standard Current Ratio: 2: 1

CURRENT RATIO TABLE

YEAR 2013-14 2012-13 2011-12 2010-11 2009-10

CURRENT ASSETS 24,847.09 25,786.70 31,484.83 22,594.75 8,020.06
CURRENT LIABILITIES 36,062.34 30,575.81 30,715.22 28,763.69 27,244.53
CURRENT RATIOS 0.69 0.84 1.03 0.79 0.29

CURRENT RATIO INDEX

18
 CURRENT RATIOS
1.20

1.00

0.80
CURRENT RATIOS
0.60

0.40

0.20

0.00

2013-14 2012-13 2011-12 2010-11 2009-10

Interpretation:The financial performance of the company is not very sound as the standard ratio is
between 2 and 1,but it not is in the current year i.e. 2013-14 and neither in past four years. Current Ratio
in 2013-14 has shown a sudden decrease comparing to last two years and has reached a far beyond the
standard ratio of 2:1. The company should ensure their Current Ratio should increase further as it will lead
to increasing of funds in Current Assets and thereby increase Rate of Return.

iii. Quick Ratio / Liquidity Ratio:This Ratio indicates whether the company is in a position to pay
their Current Liabilities immediately in case they arise.
Formula: Quick Ratio / Liquidity Ratio = Quick Assets .
. Current Liabilities
where Quick Assets = Total Current Assets – Inventories – Prepaid Expenses.

Standard Quick Ratio: 1.5: 1

QUICK RATIO TABLE

YEAR 2013-14 2012-13 2011-12 2010-11 2009-10

CURRENT ASSETS 24,847.09 25,786.70 31,484.83 22,594.75 8,020.06
Inventories 5,882.54 5,704.39 5,165.44 4,118.98 4,678.57
QUICK ASSETS 18,964.55 20,082.31 26,319.39 18,475.77 3,341.49
CURRENT LIABILITIES 36,062.34 30,575.81 30,715.22 28,763.69 27,244.53
QUICK RATIOS 0.53 0.66 0.86 0.64 0.12

QUICK RATIO INDEX

19
 QUICK RATIOS
0.90
0.80
0.70
0.60
0.50 QUICK RATIOS
0.40
0.30
0.20
0.10
0.00

2013-14 2012-13 2011-12 2010-11 2009-10

Interpretation:The immediate financial position of the company was very appreciatingtill last year as the
standard ratio was between 1.5 and 1,but in the current year i.e. 2013-14, it has shown a sudden decrease
and has gone below the 1.5:1 mark. This indicates that the company has low liquidity position and should
try to increase Quick Assets.

iv. Cash to Current Asset Ratio:This ratio indicates the proportion of Cash (including Bank Balance)
held as a percentage of Current Asset.
Formula: Cash To Current Asset Ratio = Cash and Cash Equivalent .
. Current Assets

Standard Quick Ratio: 5 - 10 %

CASH TO CURRENT ASSETRATIO TABLE

YEAR 2013-14 2012-13 2011-12 2010-11 2009-10

CASH & CASH EQUIVALENTS 10798.88 13218.59 20124.57 14481.09 18231.04
CURRENT ASSETS 24,847.09 25,786.70 31,484.83 22,594.75 8,020.06
CASH TO C.A. RATIO 43.46% 51.26% 63.92% 64.09% 227.32%

CASH TO C.A. RATIO

250.00%
200.00%
150.00%
CASH TO C.A. RATIO
100.00%
50.00%
0.00%

2013- 2012- 2011- 2010- 2009-

14 13 12 11 10
20
Interpretation:It has been noticed that there is high fluctuations in this ratio i.e. Cash toCurrent Asset
Ratio. The Company should avoid such high fluctuations and should ensure steady cash policy. In the
earlier two years, the cash was much high while it suddenly to around 65%. However, in the current year
i.e. 2013-14 it has come down to 45% which is still not within the Standard levels.

v. Cash Position Ratio:This ratio is calculated as the ratio of Cash to Current Liability. It helps in
analyzing the level of liquid resources in relation to current obligations.
Formula: Cash Position Ratio = Cash and Cash Equivalent .
. Current Liabilities

Standard Quick Ratio: 30- 35 %

CASH POSITION RATIO TABLE

2009
YEAR 2013-14 2012-13 2011-12 2010-11 -10
CASH & CASH EQUIVALENTS 10798.88 13218.59 20124.57 14481.09 18231.04
CURRENT LIABILITIES 36,062.34 30,575.81 30,715.22 28,763.69 27,244.53
CASH POSITION RATIO 29.95% 43.23% 65.52% 50.35% 66.92%

Interpretation:A higher cash position ratio implies that the firms unable to make profitable use of cash
resources. So, lower the ratio of cash to current liabilities, favorable it is. In our case, this ratio was beyond
its standard limit of 35% in the last year but later recovered this year to 29.95% which is within the
standard limit.

vi. Cash to Sales Ratio:This is one of the most important ratios of assessment of control of cash
flows. This ratio provides a deep insight into the amount of cash balance held by a concern .
Formula: Cash toSales Ratio = Cash and Cash Equivalent .
. Net Sales

CASH TO SALES RATIO TABLE

2010 2009
YEAR 2013-14 2012-13 2011-12 -11 -10
CASH & CASH EQUIVALENTS 10798.88 13218.59 20124.57 14481.09 18231.04
Net Sales 83,890.27 83,005.33 76,515.09 68,338.92 60,251.77
CASH TO SALES RATIO 12.87% 15.92% 26.30% 21.19% 30.26%

Interpretation:Since there had been high fluctuations in Cash and Bank balances thus there has been high
fluctuation in Cash to Sales Ratio. Earlier the ratio is very much high but there was sudden decrease in cash
which decrease the ratio to 21.19% and 26.30% which has later being brought down to normal levels to
12.87% in the current year.

A comparison has been drawn between ‘Cash To Current Asset Ratio’,‘Cash Position Ratio’&‘Cash To
Sales Ratio’ in the form of a line graph. The line graph drawn below represents the ratios in the form of
21
lines drawn over the last five years. It helps in comparing the three ratios together as well as over the
period of five years.

350.00%

300.00%

250.00%

200.00%
CASH TO C.A. RATIO
150.00% CASH POSITION RATIO
CASH TO SALES RATIO
100.00%

50.00%

0.00%

2013-14 2012-13 2011-12 2010-11 2009-10

Interpretation:The graph clearly indicates that there has been high fluctuation in the Cash and Cash
Equivalent levels. In the year 2009-10& 2010-11 the company had low level of cash. It can be seen that in
2011-12 with the rise in cash and cash equivalents all the three ratios goes up suddenly but the ‘Cash to
Current Asset Ratio’ goes up higher than ‘Cash to Sales Ratio’ indicating that the rate of rise in Current
Assets was less as compared with the rate of rise in Sales. Then in year 2012-13 again sales go down than
creditors. Later in 213-14 all the ratios fall further due to fall in cash but the rate of fall in ‘Cash to Current
Assets’ was much faster steeper than the fall in ‘Cash to Sales’ and has by-passed its line indicating the rise
in Current Assets was much higher that the rise in Sales.

vii. Return On Capital Employed:This ratio tell that how effectively a company is making use of its
resources. It gives the return on the total amount of money that is infused in an organization. This
is the most important ratio for comparing the company’s performance over the years as well as
with that of other companies.
There are no Standard Ratio set for such types of Ratios. It is simple higher the better. However it
should not be less that the Required Rate of Return by the Investors.
Formula: Return On Capital Employed = Net Profit X100
. Capital Employed

RETURN ON CAPITAL EMPLOYED TABLE

YEAR 2013-14 2012-13 2011-12 2010-11 2009-10

Net Profit 22,094.81 20,925.70 25,122.92 18,924.00 16,767.56
Capital Employed 136,725.01 124,453.20 117,456.75 97,504.43 102,846.93
Return On Capital Employed 16.16% 16.81% 21.39% 19.41% 16.30%

Interpretation:It can be seen that the company had been getting an average Return on Capital Employed
of 19% over the past 4 years. However, there has been a sharp fall in return in the current year due to fall
in Net Profit. In the current year the Return on Capital Employed has fallen to 16.16% from 16.81%. A close
look at the Financial Statement revels that in spite of rise in revenue the net profit of the company has
fallen due to higher rise in expenses. The company should have a control over its expenses.
22
 viii. Cash Profit Margin Ratio:- Cash Profit Margin Ratio indicates the portion of Cash Profit as of Sales.
This ratio is vital from the point of view of the Cash Management Team. The company should
consider the amount of Cash Profit before managing its cash in order to know the margin of Cash
Generated from sales.
Again there is no Standard Ratio for this ratio but in any case it should not be negative. The
company should at least generate such amount of cash so that it can payoff its expenses on time.
Formula: Cash Profit Margin Ratio = Cash Profit X 100
. Net Sales

CASH PROFIT MARGIN RATIO TABLE

2010 2009
YEAR 2013-14 2012-13 2011-12 -11 -10
Net Profit Before Tax 32431.93 30544.33 36642.57 27616.37 24983.84
Net Sales 83,890.27 83,005.33 76,515.09 68,338.92 60,251.77
CASH PROFIT RATIO 38.66% 36.80% 47.89% 40.41% 41.47%

Interpretation:In the earlier years i.e. 2009-10 and 201-11 the Cash Profit Margin Ratio in the range on
40% to 42 % indicating average returns. Then in the year 2011-12 it rose to 47.89% which fall to 36.80% in
2012-13 indicating higher returns and high cash profit. Thus there was more need for cash management as
the cash return was higher. Now in the year 2013-14 it again rise to 38.66% which is again normal and thus
the better management of cash is possible.

Other Ratios:- Several other ratios has been calculated and derived to further analyse the Financial Statement for
better understanding of Cash Management at Oil And Natural Gas Corporation. These Ratios have been presented in
the following table. Please have a look-
Other Financial Ratios

Oil And Natural Gas Corporation Limited          

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 12 12 12 12
Particulars Months Months Months Months Months
Turnover Ratios:          
Inventory Turnover Ratio 11.79 12.71 11.19 14.02 29.28
Debtors Turnover Ratio 11.1 11.98 13.58 14.04 14.27
Fixed Asset Turnover Ratio 0.54 1.31 1.32 1.21 1.14
Asset Turnover Ratio 0.88 0.99 1.06 0.94 1.14
           
Cash Flow Indicator Ratios:          
Earnings Per Share 25.83 24.46 29.36 22.12 78.39
Dividend Payout Ratio Net Profit 35.88 38.94 34.47 38.91 42.55
Dividend Payout Ratio Cash Profit 18.44 19.91 18.8 28.27 21.66
Earning Retention Ratio 63.99 60.69 60.67 59.39 55.21
23
 Cash Earning Retention Ratio 81.53 79.99 79.84 70.84 77.78

Interpretation:
Turnover Ratios: Turnover Ratios indicate the number of time the item has been used to generate
sales in a given period generally an accounting year. A
high turnover ratio indicates higher number of times the
particular asset has been used to generate sales. So,
1. Cash Forecasting higher the turnover ratio the better it is. It can be seen
that the Asset Turnover Ratio has remained more or less
2. Inflows & Outflows.
constant at an average of 1.5 times whereas the Fixed
Asset Turnover Ratio has almost came down to half (0.54)
3. Process Flowchart
than that in 2009-10(1.14). It may be due to the
4. Raising Of Fund Depreciation charged on Fixed Assets over the period of
time. Little fluctuations have been noticed in Inventory
Turnover Ratio and Debtors Turnover Ratio which is
normal for any business.
Cash Flow Indicator Ratio: After discussing several major Cash Ratios here are some other Cash
Ratios which further help in understanding the Cash Management of the Company. First starting
with the EARNING PER SHARE which indicates the profit earned per share. However the ratio is very
important but it is of little use from Cash Management point of view. Secondly, Dividend Payout to
Net Profit Ratios has been calculated which indicate the percentage of Dividend Paid as a
percentage of Net Profit. It has been found that this ratio normally lies between 30-45% but has
fallen down to 38.94% in the year 2012-13 indicating low dividend distribution. Thirdly, Dividend
Payout to Cash Profit Ratio has been calculated which is lowest in 2012-13 and highest in2009-10.
However in the current year it is at a moderate level of 35.88%. Fourthly, Earning Retention Ratio
has been calculated which shows the percentage of Earnings retained. The company should retain
higher when it has more opportunities of investing those funds at a good rate of return. It can be
seen that the company has been retaining more earnings as compared to earlier figures which
indicate that the company has some good investment project in which it has been investing it.
Finally, Cash Earning Retention Ratio has been calculated as Cash Earning Retainedas a percentage
of Cash Profit.The company has very high cash earning retention ratio indicating the company is
saving major portion of their cash earnings and so they have a huge potential of investing it in some
good projects thereby earning high returns.

Management of Cash and it’s Financing

and Estimation

24
 1. Cash Forecasting

As per the existing practice, cash forecast is prepared at Corporate Accounts Section (CAS) after
compiling the cash forecasts of all project locations and considering all other payments and receipts of the
company on a composite basis. A reasonable portion of funds, in the form of cash is required to be kept
aside to overcome the period anticipated as the period of cash deficit. This period may either be short and
temporary or last for a longer duration of time. Normal and regular payment of cash leads to small
reductions in the cash balance at periodic intervals. Making this payment to different employees on
different days of a week can equalize these reductions. Another technique for balancing the level of cash is
to schedule cash disbursements to creditors during that period when accounts receivables collected
amounts to a large sum but without putting the goodwill at stake.

The following table herewith outlines the inflows and outflows that are used in the preparation of
the cash forecast.

2. Inflows and Outflows

Inflows & Outflows used in the preparation of Cash forecast

(Opening Balance + Inflows(A) – Project Outflows (B) – Corporate Outflows(C) = Cash Surplus/Deficit)

Inflows (A) Project Outflows (B) Corporate Outflows (C)

 Sales Receipt  Offshore expenses  Corporate tax payment

 Maturity of Investments  JV Cash Calls  Payment to OVL
 Interest on Investments  Sales tax / VAT  Investment
 Interest on Loan(s) to Cess  Fringe benefit tax
subsidiary(ies)/ Associate(s)  Royalty  Dividend / Other Payments
 Final dividend  Foreign debt  CPF soft loan
 Re-payment of loans by Other Payments  Annual incentive
subsidiary(ies)  Onshore expenses  Subsidy
 Interest on oil bonds  Sales tax / VAT  TDS on investment
 Maturity of Oil Bond(s)  Cess
 Royality
 Indian debt including interest
 Other Payments

25
The above cash flows shows the various Cash Inflows and Outflows of the project. Consideration should be
given to these cash flows by the management to ensurebetter Cash Management in the company. These
cash flows also determine whether the company has Cash Surplus or Cash Deficit.

3. Process Flowchart:

Cash Forecast received from

Project / Locations
Assessment of Fund requirement
for each project / location on a
weekly basis.

Allocation of drawing power to

each project location and Intimation letter to SBI
preparation of intimation letter
for the same26
 Forwarding intimation letter to
SBI for execution

Significant unexpected receipts/

Payments not included in the
cash forecasts are intimated to
CAS

Total debit and total credit of the

respective bank accounts are sent
to the CAS through SAP mail

Variation between cash forecast

and actual fund utilization is sent
to CAS on monthly basis.

4. Raising of short term funds

The Company raises short term funds as and when required in accordance with the decisions taken by the
Board of Directors (BOD) of the Company. The following sources instruments are used for these
borrowings:

a) Cash Credit/ Over Draft

b) Inter-corporate borrowings;
c) Commercial papers; and
d) Certificate of deposit.

Inter-corporate borrowings are made using an inter-office memo including details of amount to be
borrowed by the Company, terms and conditions, period and rate of interest. Subsequently a BOD
27
resolution is passed to approve the borrowing.

Commercial papers are unsecured promissory notes issued by corporations and foreign governments.
These are low cost alternatives to bank loans for large credit issuers such as the Company. It is usually not
used to finance long-term investments but rather for purchases for inventory or to manage working
capital.

Certificate of deposit is a document evidencing a time deposit placed with a depository institution and
contains details of amount of deposit, date of maturity, rate of interest, and the method under which the
interest is calculated.

Computation of Average Collection Period (figures in Rupees Crore)

Sales: Rs. 83,890.27

Average Sundry Debtors: Rs. 8165.67

Operating Cycle: Sales=83,890.27

. Avg. Sundry Debtors 8165.67

= 10.27

Debtors Turnover Ratio: 365 = 365 .

. 0perating Cycle 10.27

= 35.53 or 36 days

Findings

28
Cash management is important aspect of financial management. The study of cash management ofOIL
AND NATURAL GAS CORPORATIONhas revealed that the current ratio as well as the liquidity ratio was as
per the standard industrial practice excluding that in the current year(2013-14) where these ratios showed
an un-usual rise. The study has been conducted on Cash To Current Asset Ratio, Cash To Current Liabilities
Ratio, Cash To Sales Ratio, Return On Capital Employed, Cash Profit Margin Ratio and Various Other
Turnover and Cash Flow Indicator Ratios which helped the company to manage its cash efficiency and
affectively.
1. In the earlier two years 2009-10 & 2010-11, the company has moderate amount of cash at around
Rs.16000 Crore. Then in 2011-12 the cash suddenly moved up to Rs. 21000 Crores and then moved
down to Rs. 10000 Crores in 2012-13. Finally, it further came down to Rs. 11000 Crores at the end
of March 2014.
2. The company has maintained positive working capital which indicates that company has the ability
to pay off its short terms liabilities.
3. Profits of the company has decreased in the current year (2013-14) inspite of rise in revenue
because of the increase in the expenses.
4. Company’s current assets in the current year has been more than requirement and has thus
affected the profitability of the company.
5. The Earning Per Share (EPS) Ratio of the Company has shown a huge fall in the year 2011-12
because of the rise in number of equity shares of the company and not because of fall in profits.
6. Return on Capital Employed has fallen over the years (except in 2011-12 in which it has risen) from
16.30% in 2009-10 to 16.16% in the current year (2013-14).
7. The Reported Net Profit of the company has increased from Rs. 16,000 Crores 2009-10 to Rs. 23000
Crores in 2013-14. The only year in which it showed an un-usual rise is 2011-12 when its reported
net profit was Rs. 25,000 Crores due to rise in Sales as well as other incomes.
8. However there is a downfall in the Manufacturing Expenses of the company in the current year but
still the total expenses of the company has increased due to un-usual rise in Misc Expenses and
Employee Cost of the company.

CHAPTER –3

Conclusion
Cash is the lifeline of every industry, irrespective of whether it’s a manufacturing industry, services
industry. Cash is the prime and most important requirement for carrying out the day to day operations of
the business. Cash and cash equivalent gives the much-needed liquidity to the business. Working Capital

29
Finance reduces the overall fund requirement, required to build up the Current Assets, which in turn help
you improve your Turn-Over Ratio.

The company is performing exceptionally well due to the up wising in the global market followed by the
domestic market. It is an upcoming one with good and innovative ideas and believed in improving all the
areas of its operations. The company has a good liquidity position and does not delay its commitment in
case of both its creditors and debtors. The company being mostly dependent on the cash and cash
equivalents, it is maintaining very good relationship with their banks and their cash management is well
balanced.

1. The cash position of the company is not sound due to high cash in handbut the various sources
through which it is funded are optimal.

2. The company has used its dividend policy, purchasing, financing and investment decisions to good
effect can be seen from the inferences made earlier in the project.

3. There has been high fluctuations in cash and cash equivalents of the company over the years which
shows poor management of cash leading to lower returns on the assets.

The firm has not compromised on profitability despite the high liquidity is commendable.

RECOMMENDATIONS

Suggestions can be use by the firm for the betterment increased of the firm after study and analysis of
project report on study and analysis of cash and cash equivalents. The suggestions are:-

1. Company should raise funds through short term sources for short term requirement of funds,
which is comparatively economical as compare to long term funds.

2. Company should take control on cash inflows and outflows which is major part of current assets.

30
 3. Company has to take control on cash balance because cash is non-earning assets and increasing
cost of funds. High fluctuations in the cash balances should be avoided to ensure stability of the
enterprise.

4. High balance of Cash in Hand should be avoided so that funds could be utilized in effective manner
to provide higher returns to the company.

5. Company should reduce the inventory holding period with use of zero inventory concepts.

6. The current assets should be managed more effectively so as to avoid unnecessary blocking of
capital that could be used for other purposes.

7. There are various global challenges that are faced by every company in the present competitive
environment and OIL AND NATURAL GAS CORPORATION is not any exemption. To face the present
global challenges the human resources department should be develop to improve various skills
among the employees specially the motivational skills and having the regular training for the
employees about various developments in the market.

8. Return on the capital employed is decreasing continuously over the last 5 years excluding the
financial year 2011-12.This is because of the increase investments in producing properties such as
basins and oil fields leading to decrease in the ROCE. Alsoit has shown steepest fall in the current
year2013-14. It is because of fall in profit due to rise in expenses.To arrest this decreasing trend the
company may probably explore and adopt more cost effective technology for its activities.

BIBLIOGRAPHY OR REFERENCES

1. List of books

 M.Hanif&Mukherjee: Financial Accounting (Vol. 3)

2.Website
31
  www.moneycontrol.com

 www.economictimes.indiatimes.com

 www.ongcindia.com

 www.wikipedia.com

 www.google.com

 www.bseindia.com

Annexure-IA

Supervisor’s Certificate

This is to certify that Mr.AYUSHRUNGTA , a student of B.Com. Honours in Accounting & Finance THE
BHAWANIPUR EDUCATION SOCIETY COLLEGE under the University of Calcutta has worked under my
supervision and guidance for his/her Project Work and prepared a Project Report with the title Cash
Managementwhich he/she is submitting, is his/her genuine and original work to the best of my knowledge.

32
Place: KolkataSignature:
Date :
Name: Divyesh Shah
Designation:
Name of the College:The Bhawanipur Education Society College

Annexure-IB

Student’s Declaration
I hereby declare that the Project Work with the title (in block letters) CASH MANAGEMENT submitted by
me for the partial fulfilment of the degree of B.Com. Honours in Accounting &Finance under the University
of Calcutta is my original work and has not been submitted earlier to any other University /Institution for
the fulfilment of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been incorporated in thisreport
from any earlier work done by others or by me. However, extracts of any literature which has been used
for this report has been duly acknowledged providing details of such literature in the references.

Date:

Place: Kolkata Signature: Ayush Rungta

Name:AYUSH RUNGTA Address:

489/1,G.T.Road
33
Shibpur , Howrah
Howrah-711102
Registration No.: 017-1121-0314-12

34