A STUDY ON FINANCIAL PERFORMANCE OF OIL AND

NATURAL GAS CORPORATION (ONGC)

A Project Report Submitted in Partial Fulfilment of the award of the Degree of

MASTER OF COMMERCE

By

S.DHANUSH KUMAR

REGISTER NO:1913182083101

Under the guidance of

Dr.M.ALAGUTHANKAMANI

M.COM.,M.Phil.,M.B.A., NET (Commerce)., Ph.D.,

Assistant Professor

POST GRADUATE AND RESEARCH

DEPARTMENT OF COMMERCE

NEW COLLEGE (AUTONOMOUS)

CHENNAI-600014

APRIL – 2021
 THE NEW COLLEGE (AUTONOMOUS)
PG AND RESEARCH DEPARTMENT OF COMMERCE

CERTIFICATE

This is to certify that the project entitled “A STUDY ON FINANCIAL

PERFORMANCE OF OIL AND NATURAL GAS CORPORATION (ONGC)”

submitted is a bonafide record of the research work done by S.DHANUSH

KUMAR (Register No.1913182083101) in partial fulfilment of requirement

for the award of Master‟s Degree in Commerce, University of Madras. This is a

bonafide work carried out by him, under my supervision and guidance.

HEAD OF THE DEPARTMENT SIGNATURE OF THE GUIDE

The viva voice Examination held on ---------------------------------

EXAMINERS

Date: 1.

Place: 2.
 DECLARATION

I S.DHANUSH KUMAR , hereby declare that the project work entitled

“A STUDY ON ON FINANCIAL PERFORMANCE OF OIL AND NATURAL GAS

CORPORATION (ONGC)” submitted by

me for the award of the degree of master of Commerce is the record of

independent research work carried out by me during the period of my study,

under the supervisor of Dr.M.ALAKUTHANKA MANI M.COM., M.Phil.,

NET (COMMERCE)., Ph.D.,Assistant professor and that this project work has

not previously formed the basis for the award of any degree, diploma,

Associateship, Fellowship or other similar title in this or any other similar

institution of higher learning.

Place: Signature of Candidate

Date: ( S.DHANUSH KUMAR )

 ACKOWLEDGEMENT

First of all, my thanks and praise to the lord almighty ALLAH, who gave me
strength, faith and blessings to complete my project successfully

I express my profound gratitude to research advisor

Dr.M.ALAGUTHNKAMANI.
M.COM.,M.Phil.,Ph.D.,NET(Commerce)., Post Graduate and Research
Department of Commerce, The New College (Autonomous) Chennai, for his
valuable guidance and moral support rendered at every phase of my study. I
acknowledge his constant motivation and dynamic approach, which helped me
in completing the study in a successful manner

My earnest thanks are due to Dr. S. BASHEER AHAMED.,

M.sc.,M.phil.,B.Ed.,Ph.D., principal The New College (Autonomous) Chennai
for permitting me to carry out the research work, for the continuous
encouragement and for the infrastructure facilities provided. My sincere thanks
due to the members of managing committee, The New College (Autonomous)
Chennai, for admitting me in this esteemed institution to pursue my project
work in M.Com Course
 PAGE NO

INTRODUCTION AND DESIGN OF THE

STUDY
(i) Introduction of the Study
(ii) Research Problem
(iii) Research Objectives
(iv) Research Methodology
(v) Limitations & Scope
(vi) Chapterisation Scheme 7-22
(a). Nature of data
(b). Method of data collection
(c)period of study
(d)data analysis

CHAPTER II Review of Literature 24-29

PROFILE
CHAPTER III Industry 31-34
Company
36-65
CHAPTER IV DATA ANALYSIS AND INTERPRETATION
FINDINGS, SUGGESTIONS AND 67-69
CHAPTER V
CONCLUSION
70-74
ANNEXURE AND BIBLIOGRAPHY
 SI. PAGE NO.
NO. LIST OF CHARTS AND GRAPHS
1 36
CURRENT RATIO

.2 38
QUICK RATIO:
3 40
TOTAL ASSETS TURNOVER RATIO:
4 42
PROPRIETARY/ NETWORTH RATIO:

5 44
NET PROFIT/ GROSS MARGIN RATIO:

6 46
INTEREST COVERAGE RATIO:

7 48
OPERATING RATIO:

8 50
OPERATING PROFIT RATIO:

9 DIVIDEND PAYOUT RATIO: 52

10 57
RETURN ON PROPRIETOR'S FUND:
11 59
TREND ANALYSIS OF NET PROFIT

12 59
TREND ANALYSIS OF NET PROFIT

13 TREND ANALYSIS OF TOTAL ASSETS 61

14 TREND ANALYSIS OF TOTAL LIABLITIES 63

15 64
TREND ANALYSIS OF EARNING PER
SHARE
 CHAPTER 1

INTRODUCTION
 INTRODUCTION
Organisational decision making necessitates accurate analysis and
interpretation of the financial statements. Generally financial statements are
prepared for the purpose of periodical review or assessment of progress made by
management. Measuring financial performance through financial statements is
crucial for taking actions. For every financial expert employed in framing
financial statement, there are dozens of people interested in analysing and using
such statements, particularly financial statements and income statements. These
people include creditors, bankers, investors, executives and the general public.
A carefully prepared financial statement should be interpreted in the same way
for the valuable results. Along with the rapid growth of accounting, there has
been a continuous improvement in the methods used in the analysis of financial
statements. These methods usually establish meaningful relationships between
the assorted parts of a statement.

FINANCIAL MANAGEMENT

Financial management is the managerial activity which is concerned with

the planning and controlling of the firm‟s financial resources.
“Financial management is concerned with the efficient use of an important
economic resource, namely capital funds”.
Financial management is necessary for the proper management of funds.
Finance manager must see that the funds are procured in the manner that the
risk, cost and control considerations are properly balanced in a given
situation and there is optimum utilization of funds.
“Financial management is concerned with management decisions that result
in the acquisition and financing of long term and short term credit for the
firm. As such it deals with the situations that require selection of specific
assets as well as the problem of size and growth of an enterprise. The
analysis of these decisions is based on the expected inflows and their effects
upon managerial objectives”.In the modern economy, finance is one of the
basic foundations of all kinds of economics activities. It is the master key,
which provides the access to all the sources for the being employed in
manufacturing and merchandising activities. Efficient management of every
business enterprise is closely linked with efficient management of finances.
Finance is the only common denominator for vast range of corporate
objectives. The major part of any corporate plan must be expresses in
financial term.

Finance is a specialized function and it draws heavily on their related

functions, finance has undergone a significant change and is concerned
with flow of funds and decisions relating to business operations
effecting the valuation of the firm. Finance functions cover decisions
relating to investment, financing and dividends.
SIGNIFICANCE OF THE STUDY

This core industry requires a huge amount of finance. Finance as a

resource, in this industry needs to be improved today. Improvement of
financial is possible by way proper planning and utilization of funds.
Finance is a means which improves the performance of this core
industry. Financial analysis helps a company to diagnose its profitability
and financial soundness.

Due to the above reasons this study namely “Financial statement analysis of OIL
AND NATURAL GAS CORPORATION “is necessary and is undertaken.

RESEARCH METHODOLOGY
Research Problem

 The main purpose of the study is to determine the working and growth of the
ONGC through its financial statements.
 The aim of financial performance is to assess the ONGC financial stability.

Objectives of the study

 To bring out the origin and growth of the ONGC of India in the Country.
 To know the financial position and profitability of the ONGC.
 To analyze the financial performance of the ONGC as a whole.
 To offer suggestion for further improvement in the performance of the
ONGC.

Research Design

The descriptive form of research is adopted for study. The major

purpose of descriptive research is description of state of affairs of the
institutions as it exits at
 present. The nature and characteristics of the financial statements of
OIL AND NATURAL GAS CORPORATION have been described in
this study.

Nature of Data

The data required for the study has been collected from secondary
sources. The relevant figures were taken from annual reports, journals
and contents gathered from internet.

Methods of Data Collection

This study is based on the annual report of OIL AND NATURAL GAS
CORPORATION. Hence the information related to, profitability, short
term and long term solvency and turnover are required for attaining the
objectives of the percent study.
Tools Applied

To have a meaningful analysis and interpretation of various

data collected the following tools were made, for of this study.
Comparative statement
Common size Statement
Ratio analysis
Trend Analysis
Period of Study:

This study covers a period of years from 2016-17 to 2019-

20. Data relate to 5 years were collected from the website of
ONGC.
Scope of the Study:
The present is study is meant for the ONGC under the study
because it deals with Financial performance of the ONGC by
analyzing the Profit and
Loss account and the Balance sheet.
 LIMTATIONA OF THE STUDY

All ratios could not be used for analyzing the financial

performance of the ONGC.
 The study was based on published annual reports.
 Due to time constraint the period of study is for five years

OPERATIONAL DEFINITIONS AND CONCEPTS FINANCE

Finance in common parlance refers to money. The edifice of

modern economy stands on the foundation of money i.e. finance.
All economic activities centre on making of money. Finance is the
backbone of all activities whether it is manufacturing, or servicing.
The entire idea of dong any economic activity is to make more
money out of money. However, this is possible only when the
finance is properly and prudently managed. So it goes without
saying that efficient management of an enterprise is closely related
to efficient management of its finances.
Financial Statement

A financial statement is an organized collection of data

according to logical and consistent accounting procedures. Its
purpose is to convey an understanding of some financial aspects of
a business firm. It may show a position at a moment of time as in
the case of a balance sheet, or may revel a series of activities over a
given period of time, as in the case of an income statement.

Basically there are two types of financial statement. They are

income statement and balance sheet.
Financial Statement Analysis

It is the process of identifying the financial strength and weakness of a

firm from the available accounting data and financial statement. The
analysis is done by properly establishing the relationship between the
items of Balance Sheet and Profit and Loss Account. The first task of
financial analyst is to determine the information in relevant to the
decision under consideration from the total information contained in the
financial statement. The second step is to arrange information in a way
to highlight significant relationship. The final step to provide is
information and drawing of inferences and conclusion. Thus financial
analysis is the process of selection relating and evaluation of the
accounting data/information.

This study contains the following analyses

 Ratio Analysis
 Trend Analysis
 Common Size Balance Sheet
 Comparative Balance Sheet

Comparative Financial Statement

Comparative financial statements are those statements which have been

designed in a way so as to provide time perspective to the consideration
of various elements of financial position embodied in such statements.
In these statements, figures for two or more periods are placed side by
side to facilitate comparison
Comparative Financial Statement

Comparative financial statements are those statements which have been

designed in a way so as to provide time perspective to the consideration
of various elements of
 financial position embodied in such statements. In these statements,
figures for two or more periods are placed side by side to facilitate
comparison.

But the income statement and balance sheet can be prepared in the form
of comparative financial statement.

Comparative Balance Sheet

Comparative balance sheet as on two or more different dates can be

used for comparing assets and liabilities and finding out any increase or
decrease in those items. Thus, while in a single balance sheet the
emphasis is on present position, it is on change in the comparative
balance sheet. Such a balance sheet is very useful in studying the trends
in an enterprise.

Common-Size Financial Statement

Common-size financial statements are those in which figures reported

are converted into percentages to some common base. In the income
statement the sales figure is assumed to be 100 and all figures are
expressed as a percentage of sales. Similarly, in the balance sheet, the
total of assets or liabilities is taken as 100 and all the figures are
expressed as a percentage of this total.

WORKING CAPITAL MANAGEMENT

Decisions relating to working capital and short term financing are referred to
as working capital management. These involve managing the relationship
between a firm‟s short- term assets and its short term liabilities. The goal of
working capital management is to ensure that the firm is able to continue its
operations and that it has sufficient cash flow to satisfy both maturing short-
term debt and upcoming operational expenses

By definition, working capital management entails short term decision-

generally, relating to the next one year periods- which are “reversible”.
These decisions are
 therefore not taken on the same basis as capital Investment Decisions
(NPV or Related, as above) rather they will be based on cash flows
and/or profitability.

operations and unavailable for other activities, management

generally aims at a low net count.

In this context, the most useful measure of profitability is Return on

Capital (ROC). The result is shown as a percentage, determined by
dividing relevant income for the 12month by capital employed; Return
on Equity (ROE) shows this result for the firms share holders. Firm
value is enhanced when, and if, the return on capital, which results from
working capital management, exceeds the cost of capital, which results
from capital investment decisions as above. ROC measures are
therefore useful as a management tool, in that link short-term decision
making. Economic Value Added (EVA).

Trend Analysis

Trend Analysis is a comparative study of the financial statement of several

Ratio

Ratio is a mathematical expression of relationship between figures

which

have connection in one way or the other. Ratios are expressed in two ways:
1. Times: One value is divided by another value. The expression is
“number of times” 2. Percentage: The quotient obtained above is
multiplied by 100. This gives the%
Ratio Analysis

Ratio analysis is a widely used tool of financial analysis. The term ratio
in it refers to the relationship expressed in mathematical terms between
two individual figures or group of figures connected with each other in
some logical manner and are selected from financial statement of the
concern. The ratio analysis is based on the fact that single accounting
figures by it self may not communicate any meaningful information but
when expressed as a relative to some other figures, it may definitely
provide some significant information the relationship between two or
more accounting figure / group is called a financial ratio helps to
express the relationship between two accounting figures in such a

way that users can draw conclusions about the performance, strengths
and weakness of a firm.

Accounting Ratio

The arithmetical method of ascertaining the interrelation between any

two numeric data ex- pressed in accounting statements is known as
Accounting Ratio. The definition implies that in use of an accounting
ratio both the components in the form of numerals or variables used in
computing a ratio are taken from the financial statements prepared in
financial accounting. For example it can be stated that if in a concern
the Net Sales at Rs 21,456.20 crore in March 2020 down 19.82%
from Rs. 26,758.46 crore in March 2019 indicates that the Net Profit
of the concern for that year is one-fifth portion of its Sales or for Sales
of Rs. 5 Net Profit is Rs. 1. In this case Sales and Net Profit both these
variable are taken out of the Profit and Loss Account prepared in
 financial accounting. For this reason this ratio is stated as Accounting
Ratio. In the opinion of J. Batty, accounting ratio “is used to describe
significant relationships which exist between figures shown on a
Balance Sheet, in a Profit and Loss Account in a Budgetary Control
System or in any other part of the
Steps in Ratio Analysis

The following steps are followed in analysis through accounting ratios:

Collection of information: In the first step of ratio analysis raw data
is collected from the financial statements for computing different
ratios.

Computation of ratios: In the second step necessary ratios are

computed between the figures having cause and effect inter-relationship.
Such ratios may be expressed in terms of times, multiples, proportion or
percentage depending on the specific requirement.

Making comparison: The ratios computed are compared with the

ratios of the past year or years of the same concern or with the standard
ratios of the industry to which the concern belongs.

Arriving at decisions on comments: In the next step the significance

of these ratios must be conceived on the basis of comparative
interrelationship among them in such a manner so that adequate
comments can be made for helping the users of accounting information
to arrive at their decisions.

Preparing report: In the final step necessary reports are to be prepared

for communicating analyzed information and the relevant comments to
the management.
Significance of Financial Statement Analysis:

1. Judging the earning capacity or profitability of a business concern.

2. Analyzing the short term and long term solvency of the business
concern.
3. Helps in making comparative studies between various firms.
4. Assists in preparing budgets.
Limitations of Financial Statement Analysis

Analysis of financial statements helps to ascertain the strength and weakness

of the business concern, but at the same time it suffers from the following
limitations
 It analyses what has happened till date and does not reflect the
future.
 It ignores price level changes.
 Financial analysis takes into consideration only monetary
matters, qualitative aspects are ignored.
 The conclusions of the analysis are based on the correctness of
the financial statements.
 Analysis is a means to an end and not the end itself.
 As there is variation in accounting practices followed by different
firms a valid comparison of their financial analysis is not possible.

There are different ways by which financial statement analysis can be

undertaken and one among them is “Ratio Analysis”.

CLASSIFICATION OF RATIOS:

a) Liquidity Ratios
b) Leverage Ratios
c) Activity Ratios
d) Profitability Ratios

Liquidity Ratios

These ratios portray the capacity of the business unit to meet

its short term obligation from its short-term resources (i.e0 Current
Ratio, Quick Ratio.
Current Ratio:

Current ratio may be defined as the relationship between current assets

and current liabilities it is the most common ratio of measuring
liquidity. It is calculated by dividing current assets and current
liabilities. Current assets are those, the amount of which can be realized
with in a period of one year. Current liabilities are those amounts which
are payable with in the period of the year.

Current assests
as Current Assets =
––––––––––––––––––––
Current liabilities

Liquid Ratio:

The term „liquidity‟ refers to the ability of a firm to pay its short-term
obligation as and when they become due. The term quick assets or
liquid assets refers current assets which can be converted into cash
immediately it comprises all current assets except stock and prepaid
expenses it is determined by dividing quick assets by quick liabilities.

Liquid
assets Liquid Ratio = –––––––––––––
––––––––––
Liquid liabilities
Leverage Ratios

Many financial analyses are interested in the relative use of

debt and equity in the firm. The term „solvency‟ refers to the ability of a
concern to meet its long-term obligations. Accordingly, long-term
solvency ratios indicate a firm‟s ability to meet the fixed interest and
cost and repayment schedule associate with its long-term borrowings.
(i.e) Debt Equity Ratio, Proprietary Ratio, etc….
Debt equity Ratio:

It expresses the relationship between the external equities and internal

equities or the relationship between funds and „owners‟ capital. It is a
popular measure of the long-term financial solvency of a firm. The
relationship is shown by the debt equity ratio. The ratio indicates the
relative proportion of debt and equity in financing the assets of a firm.
This ratio is computed by dividing the total debt of the firm by its
equity (i.e) net worth.

Outsider‟s
fund
s Debt equity Ratio= –––––––––––
–––
Proprietor‟s funds

Proprietary ratio:

Proprietary ratio relates to the proprietors funds to total assets. It reveals

the owners contribution to the total value of assets. This ratio shows the
long-time solvency of the business it is calculated by dividing
proprietor‟s funds by the total tangible assets.
Proprietor‟s funds
Proprietary Ratio =
–––––––––––––––––––––
Total tangible assets
Fixed assets to net worth Ratio:

The ratio shows the relationship between fixed assets and proprietors
funds. The purpose of ratio is to find out the percentage of the owners
fund invested in fixed assets.

Fixed assets
 Fixed assets to net worth Ratio= –––––––––––––––––––
Proprietor‟s funds

Ratio current assets to proprietor’s funds:

The ratio of current assets to proprietor‟s funds establishes the

relationship between current assets and proprietor‟s funds.

Current assets
Ratio current assets to proprietors funds= –––––––––––––––––––––––
Proprietor‟s funds

Ratio of current assets to fixed assets:

The ratio establishes the relationship between current assets and fixed

assets. Current assets

Ratio of current assets to fixed assets = –––––––––––––––––––
Fixed assets

Stock to working capital Ratio:

Stock on inventory
S ck to working capital Ratio = ––––––––––––––––––––––
t Working capital
o
 Activity Ratios
These ratios evaluate the use of the resources of the business concern
along with the use of the components of total assets. They are intended
to measure the effectiveness of the assets management the efficiency
with which the assets are used would be reflected in the speed and
rapidity with which the assets are converted into sales. The greater the
rate of turnover, the more efficient the management would be (i.e)
Stock Turnover Ratio, Fixed Assets Turnover Ratios etc.

Fixed assets turnover Ratio:

The ratio indicates the extent to which the investment in fixed assets
contribution towards sales. If the compared with a previous year. It
indicates whether the investment in fixed assets has been judious or not
the ratio is calculated as follows.

Net sales
sales Fixed assets turnover Ratio=
––––––––––– c
Fixed assets

Working capital turnover Ratio:

Working capital turnover ratio indicates the velocity of the utilization of

net working capital. The ratio indicates the number of times the
working capital is turned over in the course of a year. It is a good
measure over-trading and under- trading.

Net sales
Working capital turnover Ratio = ––––––––––––––––––––
Net working capital
 Return on total assets:

Profitability can be measured in terms of relationship between net profit

and total assets. It measures the profitability of investment. The overall
profitability can be known by applying this ratio.

Net profit
Return on the assets = –––––––––––––––––––– x 100
Total assets

Return on proprietor’s funds:

This ratio shows the rate of profit on proprietor‟s funds. It relates the
profit available for the share holders to their total investment.

Net profit after interest & tax

Return on proprietor‟s funds = ––––––––––––––––––––––
–
Proprietor‟s funds

Net profit after interest & tax Return on proprietor‟s funds = Proprietor‟s
funds

Profitability Ratios:

The profitability ratios of a business concern can be measured by the

profitability ratios. These highlight the end result of business activities
by which alone the overall efficiency of a business unit can be judged,
(i) Gross Ratios, Net Profit Ratio.
Net profit Ratio:

Net profit ratio establishes a relationship between net profit (after taxes)
and sales. It is determined by dividing the net income after tax to the net
sales for the period and measures the profit per rupee of sales.

Net profit
Net profit ratio = –––––––––––––––––
– x 100
Net sales

Expenses Ratio:

This ratio establishes the relationship between various indirect expenses to

net sales.

Administrative expenses Ratio:

Administrative expenses
Administrative expense Ratio = ––––––––––––––––––––––––– x
100
Sales

Selling & distribution expenses Ratio:

Selling and distribution expenses

Selling & distribution expenses Ratio = ––––––––––––––––––––––
––––– x 100
Sales
 Chapter 2
REVIEW OF LITERATURE
REVIEW OF LITERATURE

INTRODUCTION

It is mandatory to review the literature available with respect to the area

of the research study. Measuring the performance of the corporate
sector has always been an area of controversies form the point of view
of the government, share holders, prospective investors, creditors,
undertaken to evaluate the financial performance in the corporate
sector. This chapter presents some of the examples of various studies
conducted by financial analysis.

S. Bain study in (1951) of 42 four digit us manufacturing Industries to

establish for the period 1936 – 40 was a pioneering work on profitability.
He has sought to establish the relationship between concentration and
profitability for this he regressed average, after tax return on equity of the
liquidity firms on eight firm‟s concentration ratio. He found that the
relationship was positive, between concentration and profitability.

Hall. M. and Weiss I.W., (1967) in their important study found that
size of the firm as a major determinant of profitability. They found after
tax on equity of individual firm (341 large U.S. industries corporations)
significantly related more with size of the firm than with concentration.
Altman (1968) in his study on “Financial Ratios, Discriminate analysis
and prediction of corporate Bankruptcy”, took 66 firms in general and
applied multiple discriminate analysis to discriminate the failed firms
from the non-failed firms, on the basis to the weighted combination of
working capital to total liabilities, cumulative retained earnings to total
Assets, market value of equity to book value of total debt and sales to
total Assets, market value of equity to book value of total debt and sales
tot total Assets, he was able to predict the bankruptcy with 45 percent
degree of accuracy. He also revealed that the predictive ability of the
model declined.

Edward I Altman (1986) in the Dean Solvency predictors. He was the

first person to successfully use step-wise multiple discriminate analysis
to develop a prediction
model with a high degree of accuracy using the sample of 66 companies,
33 failed and 33 successful, Altman‟s model achieved an accuracy rate of
as percent. Altman‟s model takes the following form

.
Z = 1.2 A + 1.4 B + 3.3 C + 0.6 D + 0.99 E

A = Working Capital to total assets

B = Retained earnings to total

assets C = EBIT to total assets
D = Market value of equity / Book value
of liabilities E = Sales to total assets.
Smith K.V (1974) readers to profitability US liquidity trade in working
capital management. The study suggested that parallel monthly for costs of
liquidity and profitability can be useful in evaluating tradeoff between two
goals. This study also
discussed individual and collect effects of account receivables, inventories,
accounts payable and other ocular on profitability and liquidity

Hilton (1976) in his study he pointed out that the rate of interest is
used as a proxy for the opportunity cost of carrying stock or as a
measure of the cost of funds needed to hold inventories. The study
also found that inventories generally accumulate with expansion of
economic activities.

Ramamoorthy (1978) has found profitability and solvency as the twin

goals of working capital management. According to him a firm‟s survival
and growth depend on its ability to achieve these goals. If liquid Assents can
pay off current liabilities, financial strength can be created and the firm can
sustain its Neputation.

Bhabatosh Banerjee (1979) has analyzed the different turnover

ratios such as debtors, creditors and the stock turnover ratio. The
cash position and cash movement is also examined with the effect
of the liquidity ratio.

Singh (1981) has found out that the size of the unit has a significant
role in the capital structure of the cement industry. His study has
revealed that the returns and profitability can be increased by
increasing the size firm small to big.

Desai, B.H (1983) “The capital structure is a part of financial structure and
is a structure of funds to finance all the fitted Assets. Which a company is
supposed to keep permanently carrying in the business”.

Pandey (1985) conducted another empirical study examining the

industrial patterns, trend and volatilities of Leverage and the impact of size
profitability and growth on leverage.

George Paul (1985) studied the financial performance of diversified

companies in India. A comparative study of diversified and Non-
diversified companions. The financial performance of 32 relatively
matched pairs of diversifying and non-
diversifying generally outperform non- diversifying on indicators of
growth, profitability, safety and market evaluation. However inter-
industry differences in the benefits of diversification are selectively useful.

Kumar (1985) in this study on “Corporate Growth and profitability in the

Large Indian companies” has examined the relationship between
profitability and growth in 83 large companies in India‟s corporate sector
during 1969-70. The study reveals a significant inter- Industry difference
in the growth process of firms under study. The very low value or R2 in all
the cases shows that only a small fraction of the growth firm in India
corporate sector has been explained by profitability.

Dr. P.K. Bhattacharyya (1987) analysed the capital structure and

profitability of central sector under takings. According to him
government‟s liberal policy of granting loan to public enterprise which
severely curtailed their profitability. He suggested the enlargement of
equity base and improvement of profitability of such enterprises.

Harbir Sing (1990) in his study has stated that the financial health of a
company can be improved if stringent control is exercised on raw materials,
stores and spares and also by reducing the unprofitable investment blocked
in current assets. The cash flow can be regulated if the companies prepare
weekly cash flow statement and also cash budget on a regular basis.

Panigrahi (1990) in his study discussed the objectives of working capital

analysis and its impact on profitability. The study reveals that liquidity
position is not satisfactory. The impact of working capital ratios on
profitability showed both negative and positive impacts on profitability in
transport sector.

Srinivasa Rao. G. and Indrasense Reddy. P (1995) in their study entitled Financial
performance in paper Industry. A case study stated that the financial position of the
company has been improving form year to year. The company‟s performance in
relations to generating internal funds in the form of reserve and surplus
was excellent and also soundesd
Srinivasa Rao. G. and Indrasense Reddy. P (1995) in their study
entitled Financial performance in paper Industry. A case study stated that
the financial position of the company has been improving form year to
year. The company‟s performance in relations to generating internal funds
in the form of reserve and surplus was excellent and also soundesd

as it was revealed by current on quick ratios which were above the

standard. The solvency ratios showed that the company had been
following the policy of low capital gearing from this year. The
performance of the company in relation to its profitability was not up to
the Expected level. The company‟s ability to utilize assets for generation
of sales has been improved much during the study period as it was
revealed by its turnover ratios.

Van Horne, J.C (1996) study pointed that “the term liquidity means the ability
of an organization to realize value in money the most liquid among all assets”.

Sakthivel Murgan. M (1999) in his study on working capital

management – A case analysis revealed that one of the several indicators
of efficient management of working capital is to examine whether
adequate liquidity is maintained. The „Z‟ score analysis reveals that the
organization. Maintains the „Z‟ score above 3 points for all the year taken
for the study. This shown that the company is maintaining adequate
working capital by investing sufficient funds in its current assets, is also
able to meat the current obligations without inviting the risk of
bankruptcy.

Rajeswari N. (2000) in her study, an attempt has been made to evaluate

the efficiency of liquidity management in Tamil Nadu cement corporation.
The ratios namely current Ratio, quickly ratio and absolute liquid ratio
have been used. The study shows that the liquidity position of TANCEM is
 not stable due to abnormal increases of ideal assets by the corporation
during the study period.

Business wire New York year MARCH,2019 It will help you to identify and explain information
sources besides annual financial statements and supplementary information; learn the

mechanics of the accounting process, which is the foundation for financial

reporting assess the securities valuation implications of any financial
statement element or
transaction comprehend income statements, Balance sheet and Cash flow
statements and become familiarized with the different financial analysis
techniques such as ratio analysis and common size financial statements that
provide valuable insight into a company‟s operation risk characteristics and
valuation beyond what readily apparent by examining raw data.
 Chapter 3 COMPANY

OF PROFILE

COMPANY PROFILE
ONGC Represents India's Energy Security Through its Pioneering Efforts.
Maharatna ONGC is the largest crude oil and natural gas Company in India,
contributing around 75 per cent to Indian domestic production. Crude
oil is the raw material used by downstream companies like IOC,
BPCL, and HPCL (subsidiary of ONGC) to produce petroleum
products like Petrol, Diesel, Kerosene, Naphtha, and Cooking Gas-
LPG.
This largest natural gas company ranks 11th among global energy majors (Platts).
It is the only public sector Indian company to feature in Fortune‟s „Most
Admired Energy Companies‟ list. ONGC ranks 18th in „Oil and Gas operations‟
and 220 overall in Forbes Global 2000. Acclaimed for its Corporate Governance
practices, Transparency International has ranked ONGC 26th among the biggest
publicly traded global giants. It is most valued and largest E&P Company in the
world, and one of the highest profit-making and dividend-paying enterprise.

ONGC has a unique distinction of being a company with in-house service

capabilities in all areas of Exploration and Production of oil & gas and related
oil-field services. Winner of the Best Employer award, this public sector
enterprise has a dedicated team of over 30,000 professionals who toil round the
clock in challenging locations.
ONGC Videsh Limited, a Miniratna Schedule “A” Central Public Sector
Enterprise (CPSE) of the Government of India under the administrative control
of the Ministry of Petroleum & Natural Gas, is the wholly owned subsidiary and
overseas arm of Oil and Natural Gas Corporation Limited (ONGC), the flagship
national oil company (NOC) of India. The primary business of ONGC Videsh is
to prospect for oil and gas acreages outside India, including exploration,
development and production of oil and gas. ONGC Videsh owns Participating
Interests in 37 oil and gas assets in 17 countries and produced about 30.3% of
oil and 23.7% of oil and natural gas of India‟s domestic production in 2019-20.
In terms of reserves and production, ONGC Videsh is the second largest
petroleum company of India, next only to its parent ONGC.
ONGC subsidiary Mangalore Refinery and Petrochemicals Limited (MRPL) is a
schedule „A‟ Miniratna, Central Public Sector Enterprise (CPSE) under the
Ministry of Petroleum & Natural Gas. The 15.0MMTPA (Million Metric Ton per
annum) Refinery has got a versatile design with complex secondary processing
units and a high flexibility to process Crudes of various API,
delivering a variety of quality products. MRPL, with its parent
company Oil and Natural Gas Corporation Limited (ONGC), owns
and operates ONGC Mangalore Petrochemicals Limited (OMPL), a
petrochemical unit capable of producing 0.905 MMTPA of Para
Xylene and 0.273 MMTPA of Benzene.
ONGC subsidiary HPCL is a Maharatna CPSE. HPCL has the second
largest share of product pipelines in India with a pipeline network of
more than 3370 kms for transportation of petroleum products and a
vast marketing network consisting of 14 Zonal offices in major cities
and 133 Regional Offices facilitated by a Supply & Distribution
infrastructure comprising Terminals, Pipeline networks, Aviation
Service Stations, LPG Bottling Plants, Inland Relay Depots & Retail
Outlets, Lube and LPG Distributorships. Consistent excellent
performance has been made possible by highly motivated workforce of over
9,500 employees working all over India at its various refining and marketing
locations.

Oil and Natural Gas Corporation Ltd

Type Public Sector Undertaking

Traded as NSE: ONGC
BSE: 500312
BSE SENSEX Constituent
NSE NIFTY 50 Constituent
1ISIN INE213A01029
Industry Oil,Gas and Power
Founded 14 August 1956; 64 years ago
Headquarters Deendayal Urja Bhawan, Vasant
Kunj, New Delhi
Area served Worldwide
Key people Shashi Shanker[1]
(Chairman,CEO and
Managing Director)
Products
Petr
oleum
Natural
gas LNG
Lubricants
Petrochemic
als
Electricity
Revenue 433,532.97
crore (US$61 billion) (2020)[2]
Operatin 26,067.92
g crore (US$3.7 billion) (2020)[2]
income 11,560.15
crore (US$1.6 billion) (2020)[2]
Net
503,898.07
crore (US$71 billion) (2020)[2]
income 224,780.50
crore (US$32 billion) (2020)[2]
Total

assets

Total

equity

Owner Government of India

(60.409%) LIC (9.477%)
Indian Oil (7.845%)
GAIL (2.451%)
[3]
Number of employees
33,650 (2019)[4]
Subsidiaries Hindustan Petroleum Corporation
Limite
d
MRPL
ONGC
Videsh Ltd
OPAL
ONGC Tripura Power Company
Imperial Energy Corporation
Website www.ongcindia.com
History[
Foundation to 1956[

Before the independence of India in 1947, the Assam Oil Company in the north-
eastern and Attock Oil company in the north-western part of the undivided
India were the only oil-producing companies, with minimal exploration input.
The major part of Indian sedimentary basins was deemed to be unfit for the
development of oil and gas resources.[10]
After independence, the Central Government of India realized the importance
of oil and gas for rapid industrial development and its strategic role in defense.
Consequently, while framing the Industrial Policy Statement of 1948, the
development of the petroleum industry in the country was considered to be of
utmost necessity.[10]
Until 1955, private oil companies mainly carried out exploration of hydrocarbon
resources of India. In Assam, the Assam Oil Company was producing oil
at Digboi (discovered in 1889) and Oil India Ltd. (a 50% joint venture between
Government of India and Burmah Oil Company) was engaged in developing
two newly discovered large fields Naharkatiya and Moraan in Assam. In West
Bengal, the Indo-Stanvac Petroleum project (a joint venture between the
Government of India and Standard Vacuum Oil Company of USA) was engaged
in exploration work. The vast sedimentary tract in other parts of India and
adjoining offshore remained largely unexplored.[10]
In 1955, the 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. With this objective, an Oil and Natural Gas Directorate was set up
towards the end of 1955, as a subordinate office under the then Ministry of
Natural Resources and Scientific Research. The department was constituted with
a nucleus of geoscientists from the Geological Survey of India.[10]
A delegation under the leadership of the Minister of Natural Resources visited
several European countries to study the status of the oil industry in those
countries and to facilitate the training of Indian professionals for exploring
potential oil and gas reserves. Experts from Romania, the Soviet Union,
the United States and West Germany subsequently visited India and helped the
government with their expertise. Soviet experts later drew up a detailed plan
for geological and geophysical surveys and drilling operations to be carried out
in the 2nd Five Year Plan (1956–61).
In April 1956, the Government of India adopted the Industrial Policy
Resolution, which placed Mineral Oil Industry among the schedule 'A'
industries, the future development of which was to be the sole and exclusive
responsibility of the state.[10]
Soon, after the formation of the Oil and Natural Gas Directorate, it became
apparent that it would not be possible for the Directorate with its limited
financial and administrative powers as a subordinate office of the Government,
to function efficiently. So in August 1956, the Directorate was raised to the
status of a commission with enhanced powers, although it continued to be under
the government. 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. The main functions of the Oil and Natural Gas Commission
subject to the provisions of the Act were "to plan, promote, organize and
implement programs for development of Petroleum Resources and the
production and sale of petroleum and petroleum products produced by it, and to
perform such other functions as the Central Government may, from time to time,
assign to it ". The act further outlined the activities and steps to be taken by
ONGC in fulfilling its mandate.
 Chapter 4

DATA ANALAYSIS AND INTERPRETATION

 FINANCIAL PERFORMANCE OF ONGC- AN ANALYSIS

RATIOS

1.CURRENT RATIO
It is used for measuring short-term liquidity or solvency. Whether the current
assets of the firm are sufficient to meet its current liabilities that is assessed
through the current ratio

Current assets
Current Assets=
–––––––––––––––––––
Current liabilities

TABLE -1

(Rs. In Crores)

CURRENT CURRENT RATIO

YEAR
ASSESTS LIABLITIES (TIMES)
(₹) (₹)
2015-16 30,773.19 17,878.15 1.04

2016-17 29,907.28 19,233.47 0.96

2017-18 21,516.58 49,361.86 1.12

2018-19 28,390.35 46,716.88 0.89

2019-20 26,986.00 40,567.02 1.02

(SOURCE: FINANCIAL REPORTS OF

ONGC)
 INTERPRETATION:

The Ideal Standard is 2:1. In no year the standard ratio was reached by
the company.
The short term solvency ratio had been fluctuating during the period of
study. It ranged between “0.89 to 1.12”.
A low current ratio than the standard indicates a bad liquidity, over- trading,
less Working capital and unsatisfactory debt repayment capacity of the
firm.
The investment of creditors in a firm having a low current ratio may not be
too safe.

RATIO (TIMES)
1.2

0.8

0.6

0.4

0.2

0
YEA 2015-16 2016-17 2017-18 2018-19 2019-20
R
2.QUICK RATIO:
It is used to verify the short-term liquidity position of the firm as indicated by
the current ratio and supported by the quick ratio. It is in fact used to measure
the cash position of the firm.

(Cash + Marketable Securities)

Liquid Ratio=
–––––––––––––––––––––––––––––
Quick or Liquid Liabilities

TABLE 2

(Rs. In Crores)

CURRENT
YEAR QUICK ASSETS (₹) RATIO
LIABLITIES
(₹)
2015 7,750.04 64,252.78 0.12

2016 8,907.15 87,930.19 0.10

2017 8,569.57 80,711.49 0.11

2018 19,839.92 1,03,793.58 0.19

2019 41,057.56 77,778.95 0.53

(SOURCE: FINANCIAL REPORTS OF ONGC)

 INTERPRETATION:

 The ideal standard is 1:1. The Current Liability was fluctuating

during theperiod of study.
 The Liquid Ratio was below the standard throughout the period of study.
During period 2018 to 2019 it was very low ranging from 0.10 to 0.19 and in
2012 it increased to 0.53.
 Since the current ratio and the quick ratio were not satisfactory a low
absolute liquid ratio indicates that the debt repayment capacity of the firm
was not sound.

CHART 3

Chart Title
0.60

0.50

0.40

0.30

0.20

0.10

0.00

CURRENT LIABLITIES (₹)

CURRENT LIABLITIES (₹)
3.TOTAL ASSETS TURNOVER RATIO:
It is used to measure the managerial efficiency with which the firm has
utilised its investment in fixed assets and its overall activity. It indicates the
generation of sales for per rupee invested in fixed asset.

TOTAL INCOME
TOTAL ASSETS TURNOVER RATIO = ––
TOTAL ASSETS

TABLE- 4

(Rs. In Crores)

RATIO
YEAR TOTAL INCOME (₹) TOTAL ASSETS (₹)
(%)

2015-16 1,01,115.25 80,175.90 1.26

2016-17 1,07,999.69 1,00,193.98 1.08

2017-18 1,07,232.27 1,26,775.78 0.85

2018-19 1,24,294.52 1,23,620.37 1.01

2019-20 1,55,709.69 1,53,870.74 1.01

(SOURCE: FINANCIAL REPORTS OF ONGC)

 INTERPRETATION:

 The table shows that Fixed Asset during the period is almost
increasing trend due to new addition in the assets and sales shows
increasing trend.
 Total Turnover Ratio was ranged between “0.85 to 1.26”. It shows that
the company is doing extremely well.
A high fixed assets turnover ratio is an indicator of efficient utilisation
of fixed assets in generating sales. It reveals that use of less fixed
assets made possible higher generation of sales.

RATIO (%)
1.4

1.2

0.8

0.6

0.4

0.2

0
2015-16 2016-17 2017-18 2018-19 2019-20
4.PROPRIETARY/ NETWORTH RATIO:
It is used in the analysis of long-term solvency and financial stability of tie
firm. The proportion of total assets of a firm collected through proprietors
fund can be understood from this ratio.

SHAREHOLDER‟S FUND
PROPRIETARY/ NETWORTH RATIO= –––––––––––––––––––––––––
TOTAL ASSETS

TABLE- 5

(Rs. In Crores)

SHARE HOLDER'S
YEAR TOTAL ASSETS (₹) RATIO
FUND (₹)

2015-16 165,774.65 80,175.90 0.97

2016-17 185,538.38 1,00,193.98 0.92

2017-18 193,384.68 1,26,775.78 0.80

2018-19 202,992.56 1,23,620.37 0.93

2019-20 194,338.09 1,53,870.74 0.89

(SOURCE: FINANCIAL REPORTS OF ONGC)

 INTERPRETATION:

The Ideal Norms is 1:3 (33%) of Total Assets collected through

proprietary capital. Here Proprietary Ratio was high ranging between
“0.80 to 0.97”. It was adequate and above the standard norms.
A high proprietary ratio indicates more use of proprietors funds in
acquiring total assets of the firm.
This situation shows a favourable long-term solvency and a satisfactory
financial stability of the firm. So a high proprietary ratio is favourable to
the long-term creditors and investors.

CHART- 6

Chart Title
50
40
30
20
10
0
Year 2015-16 2016-17 2017-18 2018-19 2019-20
-10
-20
-30
5.NET PROFIT/ GROSS MARGIN RATIO:
It is used to measure the overall profitability and the efficiency of the
Management in generating additional revenue over and above the total
operating costs.
It does not make any difference between operating and non operating
expenses and shows the relation between net profit and net sales.

NET PROFIT
NET PROFIT/ GROSS MARGIN RATIO= --------------- 100
NET SALES

TABLE – 7

(Rs. In Crores)

YEAR NET PROFIT (₹) NET SALES (₹) RATIO

2015-16 20,221.05 96,772.56 20.90

2016-17 20,170.88 1,04,634.68 19.28

2017-18 19,727.57 1,02,223.99 19.30

2018-19 22,824.97 1,18,002.86 19.34

2019-20 28,428.91 1,47,305.72 19.30

(SOURCE: FINANCIAL REPORTS OF

ONGC)
 INTERPRETAION:

 The Net Profit Ratio shows that the Net Contribution made by
sales ofrupee 1 to the owners fund.
 The study unit showed and average of 19.5%.
 The table shows that the higher Net profit Ratio by the
corporation, thisindicates better overall profitability and managerial
efficiency.
 It expresses how much the total revenue earned is more than the
total expenses incurred.

Chart Title

30

25

20

15

10

0
2015-16 2016-17 2017-18 2018-19 2019-20

RATIO
6.INTEREST COVERAGE RATIO:
It is used for measuring long-term solvency and the effect of fixed interest
charges on profit earned. It explains the relation between earnings before
interest and tax and the interest paid on debt capital. From the lenders‟
viewpoint it is used to measure the safety of return on investment.

EBIT
INTEREST COVERAGE RATIO=
––––––––––––––––––––––––––––––
FIXED INTEREST CHARGES

TABLE – 8

(Rs. In Crores)

FIXED INTEREST
YEAR EBIT (₹) RATIO
CHARGE (₹)

2015-16 40,595.98 135.30 300.04

2016-17 42,861.48 238.51 179.71

2017-18 44,818.98 502.19 89.25

2018-19 48,299.16 457.15 105.65

2019-20 58,725.50 434.94 135.02

(SOURCE: FINANCIAL REPORTS OF

ONGC)
 INTERPRETAION:

 The table show that the earnings before interest and tax and the
operatingprofit are same. So the interest coverage ratio measures as to how
many times the interest burden of the firm is covered by the operating
profit of the firm.
 The highest was 300.14 times in the year 2019 it indicates better debt
servicing capacity. It is beneficial from the viewpoints of both the firm and
the lenders. From the viewpoint of the firm it is beneficial because it
indicates more shock absorbing capacity in case of lower profit and the
reduced risk of default in interest payment.
The lowest was 4.17 in the year 2016 it reveals that the lenders have a low
safety of return on their investment, it is also unfavourable to the firm
because in such case the firm’s profitability in relation to its interest payment
commitment is low and it is not in a position to take recourse to further debt
financing in case of any need.

CHART- 9

Chart Title
1.4

1.2

0.8

0.6

0.4

0.2

0
YEA 2015-16 2016-17 2017-18 2018-19 2019-20
R
RATIO (%)
7.OPERATING RATIO:
It is used to analyse profitability and managerial efficiency. It explains the
proportion of operating expenses in sales of rupee 1.

(Cost of Goods Sold + Operating Expenses)

Operating ratio =
–––––––––––––––––––––––––––––––––––––x 100
Net Sales

TABLE – 10

(Rs. In Crores)

COST OF GOODS
YEAR SOLD+OPERATING NET SALES (₹) RATIO
EXPENSES (₹)

2015-16 56,286.67 96,772.56 58.16

2016-17 61,428.80 1,04,634.68 58.71

2017-18 57,777.89 1,02,223.99 56.52

2018-19 70,595.39 1,18,002.86 59.83

2019-20 89,044.34 1,47,305.72 60.45

(SOURCE: FINANCIAL REPORTS OF ONGC)

 INTERPRETATION:

 Generally the range of 70% to 80% is accepted standard ratio. Here the
corporation has not reached the standards during the study period.
 The
highest was 60.45% during the year 2019-20 and the lowest was
56.52% during the year 2018-19.
 A low operating ratio indicates that the firm has more surpluses in its
hand after meeting operating costs. This surplus can be used for payment
of tax, payment of dividend, transfer to reserve, etc. Therefore, an
indicator of high profitability and good efficiency.

RATIO
61

60

59

58

57

56

55

54
2015-16 2016-17 2017-18 2018-19 2019-20
8.OPERATING PROFIT RATIO:
If this ratio is used along with other profitability ratios it provides a more
meaningful Interpretation of a firm‟s profitability and managerial efficiency. It is
relevant to mention in this context that the operating profit ratio and the
operating ratio are complementary to each other. If a firm‟s operating ratio is
80% its operating profit ratio will be (100-80)% or 20%.

Operating Profit
Operating profit Ratio = ––––––––––––––––––
x100
Net Sales

TABLE- 11

(Rs. In Crores)

OPERATING
YEAR NET SALES (₹) RATIO
PROFIT (₹)

2015-16 40,595.98 96,772.56 41.95

2016-17 42,861.48 1,04,634.68 40.96

2017-18 44,818.98 1,02,223.99 43.84

2018-19 48,299.16 1,18,002.86 40.93

2019-20 58,725.50 1,47,305.72 39.87

(SOURCE: FINANCIAL REPORTS OF ONGC)

 INTERPRETATION:

 The table shows that operating profit ratio of ONGC had been
rangingbetween 39.87% to 43.84%.
 Generally an operating profit in the range of 20% to 25% is acceptable
standard in manufacturing firms.
 Here it is seen that it was above the standards. This is the indicator of
goodprofitability and efficient managerial ability.

RATIO
45

44

43

42

41

40

39

38

37
2015-16 2016-17 2017-18 2018-19 2019-20
9.DIVIDEND PAYOUT RATIO:
It is used to assess the scope of dividend of the equity shareholders and the
extent of self financing made by the company.

Dividend per Share

Dividend Payout ratio =
–––––––––––––––––––––
Earning per Share

TABLE 12

(Rs. In Crores)

DIVIDEND PER EARNING PER

YEAR RATIO
SHARE (₹) SHARE (₹)

2015-16 170.00 12.58 33.85

2016-17 151.00 13.95 33.93

2017-18 132.00 15.54 35.78

2018-19 140.00 20.86 65.59

2019-20 100.00 10.19 29.34

(SOURCE: FINANCIAL REPORTS OF ONGC)

INTERPRETATION:

The table shows that how much percentage of dividends paid by the
company from the profit earned by the company.
The highest payout ratio was 65.59% during the year 2019-20 and lowest
was the 29.34% during the year 2019-20 From the viewpoint of the
financial health of the company a high dividend payout ratio is never
desirable because in such case retention of profit becomes less..A low
dividend payout ratio indicates less distribution and more retention is
helpful for the sustained growth of the company.

DIVIDEND PAYOUT RATIO

70

60

50

40

30

20

10

0
YEA 2015-16 2016-17 2017-18 2018-19 2019-20
R
10. RETURN ON PROPRIETOR'S FUND:

It is used to analyse the profitability of the firm from the point of view of
funds employed and to evaluate the efficiency of the management. This ratio
explains the Relationship between the operating profit i.e. net profit before
interest and tax and Proprietor‟s fund.

Net Profit before Interest and Tax

Return on proprietor‟s fund= –––––––––––––––––––––––––––––– x 100
Proprietors Funds or Equity

TABLE 13

(Rs. In Crores)

NET OPERATING
PROPRIETOR'S
YEAR PROFIT AFTER RATIO
FUND (₹)
TAX
(₹)
2015-16 20,221.05 78,086.62 25.90

2016-17 20,170.88 92,223.50 21.87

2017-18 19,727.57 1,01,406.64 19.45

2018-19 22,824.97 1,15,327.25 19.79

2019-20 28,428.91 1,36,439.13 20.84

(SOURCE: FINANCIAL REPORTS OF ONGC)

 INTERPRETATION:

The table reveals that how much percentage of return from the
Proprietor’s fund. Here highest was 25.90% during the 2016-17 and
lowest was the 19.45%.
This ratio is a real test of the profitability and managerial efficiency. The
higher the return on Proprietor’s fund the higher is the profitability and
the sound is the managerial ability.
From the viewpoint of shareholders and the management a high return
on capital employed is always favourable.

Chart Title
20

15

10

0
Year 2015-16 2016-17 2017-18 2018-19

-5
11. TREND ANALYSIS
Trend analysis is very helpful in making a comparative study of the financial
statements of several years. Under this technique, information for a number of
years is taken up and one year-usually the first year-is taken as the base year.
Each item of the base year is taken as 100 and on that basis the percentages for
the other years are calculated.

TREND ANALYSIS OF SALES:

TABLE -14

Year Sales (₹) Trend % Difference %

2015-16 1,01,834.91 100.00 0

2016-17 1,09,412.94 107.44 7

2017-18 1,06,638.27 97.46 -3

2018-19 1,23,157.47 115.49 15

2019-20 1,51,121.10 122.71 23

(SOURCE: FINANCIAL REPORTS OF ONGC)

 INTERPRETATION:

From the above table- 5.11, the sales have been raising year after year
except the year 2018-19.
It can be seen that there has been steep rise from 2016-2017 to 2017-
2018 (i.e) Rs.1,01,834.91 to Rs.1,09,412.94.
There is a slight decrease in the year 2018-19 , increase of 15% in the
year 2019-20 and increase of 23% in the year 2019-20.

Chart Title
20

15

10

0
Year 2015-16 2016-17 2017-18 2018-19

-5
12. TREND ANALYSIS OF NET PROFIT

TABLE – 15

TREND PERCENTAGE OF NET PROFIT

NET PROFIT
Year Trend % Difference %
(₹)

2015-16 20,221.05 100.00 0

2016-17 20,170.88 99.75 -0.25

2017-18 19,727.57 97.80 -2.20

2018-19 22,824.97 115.70 15.70

2019-20 28,428.91 124.55 24.55

(SOURCE: FINANCIAL REPORTS OF
ONGC)

INTERPRETATION:

The table shows that Trend percentage of Net profit was fluctuating
during the period of study.
The lowest was 97.80% during the year 2018-19. A low net profit ratio
reveals that the net earning is insufficient and the profitability and
managerial efficiency were not up to the mark.
Here we can clearly see that for the past two years 2018-19 and 2019- 20
it was in the increasing Trend. The highest is 124.55% (i.e) 24.55% higher
than the base year.
 A higher
net profit ratio indicates better overall profitability and
managerial efficiency. It expresses how much the total revenue earned is
more than the total expenses incurred.
If a firm has a low net profit ratio in spite of having a high gross profit
ratio,
it seems that it has excessive indirect expenses on which it has not been
able to enforce control.

Chart Title
30

25

20

15

10

0
2015-16 2016-17 2017-18 2018-19 2019-20
-5

Difference %
13. TREND ANALYSIS OF TOTAL ASSETS

TABLE -16

TREND PERCENTAGE OF TOTAL ASSETS

TOTAL
Year Trend % Difference %
ASSETS
(₹)
2015-16 80,175.90 100.00 0

2016-17 1,00,193.98 124.97 24.97

2017-18 1,26,775.78 126.53 26.53

2018-19 1,23,620.37 97.51 -2.49

2019-20 1,53,870.74 124.47 24.47

(SOURCE: FINANCIAL REPORTS OF

ONGC)

INTERPRETATION:

The table 5.13 shows that there is a slight fluctuation in the Total Assets.
If the total assets of a firm increase without any corresponding increasein
its operating profit, the return on total assets will come down. It
reveals that the increase in investment has not resulted in the welfare
of the owners.
Here we can clearly understood that the operating profit adequate from
the table 5.8 which shows that it is resulted in the welfare of the
owners.
 Chart Title
30

25

20

15

10

0
Year 2015-16 2016-17 2017-18 2018-19 2019-20

-5
 14. TREND ANALYSIS OF TOTAL LIABLITIES

TABLE – 17

TREND PERCENTAGE OF TOTAL LIABLITIES

TOTAL
Year Trend % Difference %
LIABLITIES
(₹)
2015-16 64,252.78 100.00 0

2016-17 87,930.19 136.85 36.85

2017-18 80,711.49 91.79 -8.21

2018-19 1,03,793.58 128.60 28.60

2019-20 77,778.95 74.94 -25.06

(SOURCE: FINANCIAL REPORTS OF

ONGC)

INTERPRETATION:

The Table-5.14 shows that there is a fluctuation in the Total liabilities.

There is increase by 36.85% in the year 2016-17, decrase by -8.21% in
the year 2018-20, increase by 28.60 in the year 28.60% and decrease
by -25.06 in the year 2019-20.
Here it is evident from the table 5.1 the ONGC has not reached the
standard ratio of 2:1. The investment of creditors in a firm having a low
current ratio may not be too safe.
 Chart Title
50
40
30
20
10
0
Year 2015-16 2016-17 2017-18 2018-19 2019-20
-10
-20
-30

15. TREND ANALYSIS OF EARNING PER SHARE

TABLE – 18

TREND PERCENTAGE OF EARNING PER SHARE (EPS)

EARNING PER
Year Trend % Difference %
SHARE (₹)

2015-16 94.54 100.00 0

2016-17 94.31 99.76 -0.24

2017-18 92.23 97.79 -2.21

2018-19 26.68 28.93 -71.07

2019-20 33.23 124.55 24.55

(SOURCE: FINANCIAL REPORTS OF

ONGC)
 INTERPRETATION:

The table-5.15 shows that the Earning per Share is in decreasing

trendexcept in the year 2019-20 (i.e) 24.55%
A high price earning ratio indicates either a fall in earning per share or
an increase in market price per share. A high price earning ratio
resulting from increased market price per share is beneficial to the
shareholders. It indicates high managerial efficiency, high profitability
and good market reputation.
A low price earning ratio not caused by an increased earning indicates
reduced market price per share. It also reveals a low level of managerial
efficiency and profitability. It is against the interest of the shareholders.
If the low price earning ratio is caused by an increased earning per
share it does not indicate an unfavourable situation for the shareholders.

Chart Title
1.4

1.2

0.8

0.6

0.4

0.2

0
YEA 2015-16 2016-17 2017-18 2018-19 2019-20
R
RATIO (%)
 Chapter 5
FINDINGS, SUGGESTIONS AND CONCLUSION
FINDINGS

 During 2019-20, the turnover of ONGC (on standalone basis) has been
Rs. 76,887 Crore with net profit of Rs.25,123 Crore; the highest-ever
despite sharing under-recovery of Rs.44,466 Crore to the Oil Marketing
Companies (OMCs) as per the instructions of the Government of India.
Net worth of ONGC (on standalone basis) has been Rs.1,11,784 Crore.

 Short term Solvency Ratio had been fluctuating during the study period.
It ranged between “0.89 to 1.12”. Investment of creditors in the
corporation might not be too safe. Because the Current Ratio was low
(i.e) below 2.

 Liquid Ratio was below the standard (i.e) 1 through out the period from
2016 to 2020, it was very low ranging from “0.10 to 0.19” and in 2020, it
increased to just 1.25.

 Total Assets Turnover Ratio was ranged between “1.25 to 1.75”. It

decreased in the first three years (2018-19) and increased in the recent
two years (2019-20).

 Proprietory Ratio was ranging between “1.25 to .1.75”. It is adequate

and above the standard norms (0.33). It indicates the better overall
profitability and managerial efficiency of the corporation.

 Operating Ratio prevailed between “56.52 to 60.45” ,which was low

(70% to 80%) that the corporation had less surpluses in its hand after
meeting operating cost. Therefore it affects the profitability of the
corporation.
  Operating Profit Ratio of ONGC had been ranging between 38.87% to
43.84%. This is the indicator of good profitability and efficient managerial
ability of the corporation.

 In the year 2019-20, the Dividend Payout Ration of 65.59% was highest
during the study period. From the view point of financial health of the
company a high Dividend Payout Ratio is never desirable because in
such case the retention of profit become less.

 Return on Proprietors fund was ranging between 19.45% to 25.90%. The

higher return on profitability and the sound is the managerial ability.

 Sales in the Corporation had been rising year after year.

 Total Liabilities increased by 36.85%, in the year 2017-18 decreased by

-8.21% in the year 2017-18 increased by 28.60% and decreased by

25.06% in the year 2019-20. This fluctuation is not desirable to the
growth of the Corporation.

 During the year 2019, Networth was 97.39%. Total Debt was 1.18%
and Minority interest was 1.43% of Total Liabilities. It is clear from the
above result that the majority (97.39%) of total liabilities constitutes
Networth.

 During the year 2020, Net Block was 64.56%, Capital Work in Progress
was 32.30%, investment was 1.90% and Net Current Asset was 1.24%
of Total Assets. It is clear from the above statement the majority
(64.56%) of Total Liability constitute to Net Block.

SUGGESTIONS
 The Corporation has to increase the Current Assets to meet out
 Current Liabilities and to maintain Standard norms of 2:1.
 The Corporation has to try to increase the Operating Ration by way of
reducing the Operating Cost in order to boost up its Profitability..

 The Corporation should maintain the Quick Assets properly to face the
emergency needs of cash.

 The corporation should have less Dividend Payout Ratio (i.e) less
distribution and more retention is helpful for the substained growth of the
company.

 The Fixed Assets of Corporation should be used more effectively o

t
reduce the cost of production and maintain their sales.

 The company shall increase the profitability so as to improve the

effectiveness and soundness of the organisation.

CONCLUSION

The Growth and Development of the organisation is highly

depending on financial position. From the above study it is concluded that the
company‟s fund position is good in terms of key financial indicators of the
performance. ONGC one of the largest Asia based Oil and Gas exploration and
Production Companies. But in recent years there is a slow downs lockdown in
the business activities due to recession and more subsidies. Proper steps to be
taken by the company to overcome its adverse economic condition and make
better profit with its sound Financial Recourses experienced technically skilled
Human Resource and with help of continuous research the company can
restore its reputation and efficiently in near future.

Annexure
BALANCE SHEET MAR 20 MAR 19 MAR 18 MAR 17 MAR 16
OF OIL AND
NATURAL GAS
CORPORATION (in
Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND
LIABILITIES

SHAREHOLDER'S
FUNDS

Equity Share Capital 6,290.15 6,290.15 6,416.63 6,416.63 4,277.76

TOTAL SHARE 6,290.15 6,290.15 6,416.63 6,416.63 4,277.76

CAPITAL

Reserves and 188,047.94 196,702.40 186,968.05 179,121.75 161,496.92

Surplus

TOTAL RESERVES 188,047.94 196,702.40 186,968.05 179,121.75 161,496.92

AND SURPLUS

TOTAL 194,338.09 202,992.56 193,384.68 185,538.38 165,774.68

SHAREHOLDERS
FUNDS

NON-CURRENT
LIABILITIES

Long Term 2,245.10 0.00 0.00 0.00 0.00

Borrowings

Deferred Tax 26,344.10 28,070.38 26,259.16 22,163.21 19,297.28

Liabilities [Net]

Other Long Term 5,247.24 830.26 920.65 1,029.15 242.37

Liabilities

Long Term 27,939.21 23,624.74 21,301.84 19,285.29 18,684.38

Provisions

TOTAL NON- 61,775.64 52,525.38 48,481.64 42,477.65 38,224.03

CURRENT
LIABILITIES

CURRENT
LIABILITIES

Short Term 11,704.01 21,593.57 25,592.21 0.00 0.00

Borrowings

Trade Payables 7,113.63 8,825.00 7,334.55 5,154.80 5,126.45

Other Current 20,651.84 14,712.65 15,176.91 11,945.89 12,047.37

Liabilities

Short Term 1,097.53 1,585.66 1,258.19 2,132.78 704.33

Provisions

TOTAL CURRENT 40,567.02 46,716.88 49,361.86 19,233.47 17,878.15

LIABILITIES

TOTAL CAPITAL 296,680.75 302,234.81 291,228.18 247,249.49 221,876.85

AND LIABILITIES

ASSETS

NON-CURRENT
ASSETS

Tangible Assets 127,518.10 124,244.66 119,515.55 104,718.71 94,212.54

Intangible Assets 180.96 174.46 112.86 88.34 66.54

Capital Work-In- 20,016.58 15,523.54 13,545.06 15,782.81 16,671.19

Progress

Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 163,924.60 159,469.35 155,012.00 139,762.95 128,174.88

Non-Current 72,429.99 84,881.54 85,730.80 50,515.42 36,827.79

Investments
Deferred Tax Assets 0.00 0.00 0.00 0.00 0.00
[Net]

Long Term Loans 1,182.48 1,046.13 2,133.47 2,807.11 4,148.76

And Advances

Other Non-Current 32,157.69 28,447.45 26,835.36 24,256.74 21,949.86

Assets

TOTAL NON- 269,694.75 273,844.46 269,711.63 217,342.21 191,101.29

CURRENT ASSETS

CURRENT ASSETS

Current Investments 0.00 0.00 0.00 3,634.33 3,003.24

Inventories 8,566.62 7,749.17 6,688.91 6,165.32 5,625.57

Trade Receivables 4,777.39 8,439.96 7,772.64 6,476.21 5,431.42

Cash And Cash 968.23 504.06 1,012.70 9,510.78 9,956.64

Equivalents

Short Term Loans 511.73 633.93 1,402.12 1,426.95 1,027.21

And Advances

OtherCurrentAssets 12,162.03 11,063.23 4,640.19 2,693.70 5,731.48

TOTAL CURRENT 26,986.00 28,390.35 21,516.55 29,907.28 30,773.19

ASSETS

TOTAL ASSETS 296,680.75 302,234.81 291,228.18 247,249.49 221,876.85

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