MA PROJECT

TITLE- “Financial Analysis of Oil and Natural Gas

Corporation Limited (ONGC)”

GROUP-9

S No Name Roll No
1 Ayush Bhatia 23P261
2 Jayesh Majumdar 23P270
3 Mayank Agal 23P279
4 Parikshit Sehgal 23P288
5 Radhika Sharma 23P297
6 Rohit Sidagam 23P306
7 Shubham Jain 23P315
Introduction
Maharatna ONGC is the largest crude oil and natural gas Company in India, contributing around
71 percent to Indian domestic production. Crude oil is the raw material used by downstream
companies like IOC, BPCL, HPCL, and MRPL (The last two are subsidiaries of ONGC) to produce
petroleum products like Petrol, Diesel, Kerosene, Naphtha, and Cooking Gas LPG.
The market cap of ONGC is one of the best among PSUs in India. ONGC is the biggest wealth
creator in the country.

ESG of ONGC
ONGC is working on a wide range of ESG initiatives, both in the present and for the future. Here
are some of the key areas:

Environment
Reducing greenhouse gas emissions: ONGC has set a target of reducing its greenhouse gas
emissions by 20% by 2030. It is working to achieve this target through a variety of measures,
including energy efficiency improvements, renewable energy integration, and carbon capture and
storage.
Water conservation: ONGC is committed to reducing its water footprint. It is doing this by
recycling, reusing water, and developing and using water-efficient technologies.
Waste management: ONGC is working to reduce the amount of waste it produces and to manage
its waste in a sustainable manner. It is doing this by implementing waste reduction and recycling
programs and developing and using waste treatment technologies.
Biodiversity conservation: ONGC is committed to protecting biodiversity in the areas where it
operates. It is doing this by developing and implementing biodiversity management plans and
supporting conservation initiatives.

Social
Community development: ONGC supports community development initiatives in its operating
areas. These initiatives focus on areas such as education, healthcare, and livelihood development.
Diversity and inclusion: ONGC is committed to creating a diverse and inclusive workplace. It is
doing this by implementing diversity and inclusion programs and creating a culture of respect and
belonging.
Employee well-being: ONGC is committed to the well-being of its employees. It is doing this by
providing its employees with access to healthcare, fitness programs, and other support services.

Governance
Transparency and accountability: ONGC is committed to transparency and accountability in its
operations. It does this by publishing regular sustainability reports and by engaging with its
stakeholders.
Corporate governance: ONGC has a strong corporate governance framework in place. This
framework ensures that the company is managed in a responsible and ethical manner.
In addition to the above, ONGC is also exploring new ESG initiatives, such as:
Hydrogen production: ONGC is exploring the possibility of producing hydrogen from its natural
gas reserves. Hydrogen is a clean fuel that can be used to reduce greenhouse gas emissions.
Carbon capture and storage: ONGC is exploring the possibility of capturing and storing carbon
dioxide emissions from its operations. This would help to reduce the company's carbon footprint.
Renewable energy: ONGC is exploring the possibility of developing and using renewable energy
sources, such as solar and wind power. This would help the company to reduce its reliance on fossil
fuels.
ONGC is committed to being a sustainable and responsible company. It is working on a wide range
of ESG initiatives to reduce its environmental impact, support the communities in which it operates,
and create a more diverse and inclusive workplace.
DATA POINTS-

Environment
• ONGC reduced its greenhouse gas emissions by 4.94% in 2021-22 compared to the previous
year.
• ONGC has planted over 10 million trees since 2015.
• ONGC has recycled and reused over 90% of its wastewater in 2021-22.
• ONGC has reduced its oil spill intensity by over 50% since 2015.

Social
• ONGC spent over Rs. 500 crore on CSR initiatives in 2021-22.
• ONGC's CSR initiatives benefited over 10 million people in 2021-22.
• ONGC has built over 1,000 schools and hospitals in rural areas.
• ONGC has provided skill training to over 500,000 youth.

Governance
• ONGC has been ranked among the top 10 most transparent companies in India by
Transparency International India.
• ONGC has been awarded the Golden Peacock Global Award for Excellence in Corporate
Governance for five consecutive years.
• ONGC has been included in the Dow Jones Sustainability Index for Emerging Markets for the
past 10 years.
• ONGC is also a member of the Global Reporting Initiative (GRI) and the Sustainable
Accounting Standards Board (SASB). This shows the company's commitment to transparency
and accountability in its ESG reporting.
ONGC is working on a number of new ESG initiatives, including:
• ONGC is developing a hydrogen production plant at its Vadinar refinery. This plant is expected
to be operational by 2025.
• ONGC is also exploring the possibility of developing carbon capture and storage projects.
• ONGC is setting up a renewable energy department to develop and use renewable energy
sources.
ONGC is committed to being a sustainable and responsible company. The company's ESG
initiatives are designed to reduce its environmental impact, support the communities in which it
operates, and create a more diverse and inclusive workplace.
Financial Statements
1. Balance Sheet

(Indian Rupee .in Crores)

Year End Mar-2023 Mar-2022 Mar-2021 Mar-2020 Mar-2019

SOURCES OF FUNDS
Share Capital 6290.14 6290.14 6290.14 6290.15 6290.15
Share warrants & Outstandings 0 0 0 0 0
Reserve 274357.16 253212.77 214690.85 198814.45 210644.5
Shareholder's Funds 280647.3 259502.91 220980.99 205104.6 216934.65
Minority Interest 20607.74 23824.93 21615.8 18405.74 18106.21
Secured Loans 4068.9 3470.73 6347.09 8501.69 4292.4
Unsecured Loans 144798.82 132964.12 125667.9 106890.99 126330.63
Total Debts 148867.72 136434.85 132014.99 115392.68 130623.03
Total Liabilities 450122.76 419762.69 374611.78 338903.02 365663.9
Net_Block 463438.87 460946.55 421059.06 390174.01 347699.38
Less: Accumulated Depreciation 206236.22 200734.11 170547.92 138318.25 113803.36
Less: Impairment of Assets 6391.08 5818.14 6772.64 7971.66 3513.2
Lease Adjustment A/c 0 0 0 0 0
Capital Work in Progress 113944.61 106719.23 100308.82 83832.4 69056.44
Pre-operative Expenses pending 0 0 0 0 0
Assets in transit 7.87 7.87 0 0 0
Investments 138368.46 120322.81 108834.2 104269.05 158593.38
Current Assets, Loans & Advances
Inventories 44238.07 54163.1 44573.33 33051.2 35134.07
Sundry Debtors (Debotrs) 18751.58 19187.28 16015.83 9173.41 15396.46
Cash and Bank 29140.33 6840.94 7192.26 9640.24 4819.66
Other Current Assets 1879.84 812.48 943.61 788.66 1442.85
Loans and Advances 14971.82 19614.35 18978.57 22711.08 25587.11
Total Current Assets 108981.63 100618.14 87703.6 75364.59 82380.15
Less : Current Liabilities and Provisions
Current Liabilities 126615.69 119718.99 117489.59 120260.15 123901.91
Provisions 5654.49 7646.26 5776.94 4812.43 5855.98
Total Current Liabilities 132270.18 127365.24 123266.52 125072.58 129757.9
Net Current Assets -23288.55 -26747.1 -35562.92 -49707.99 -47377.75
Miscellaneous Expenses not written off 0 0 0 0 0
Deferred Tax Assets / Liabilities -29721.2 -34934.42 -42706.81 -43374.52 -44991
Total Assets 450122.76 419762.69 374611.78 338903.02 365663.9
Contingent Liabilities 74938 78981.98 71230.23 69487.36 69479.17
2. Income Statement

(Indian Rupee .in Crores)

Year End Y202303 Y202203 Y202103 Y202003 Y201903

No of Months 12 12 12 12 12
Gross Sales 688090.14 534550.01 362663.14 427309.55 456281.46
Less: Excise 52503.26 40492.03 56571.33 28198.51 32056.94
Net Sales 632325.97 491300.51 303892.19 396762.57 421625.86
EXPENDITURE :
Increase/Decrease in Stock 2566.08 -2303.07 -10038.33 2151.93 -3107.88
Raw Materials Consumed 266120.04 225616.93 141201.39 176006.43 165438.72
Power & Fuel Cost 2174.44 2239.16 1980.44 2078.92 2139.73
Employee Cost 14898.79 15235.74 14135.12 15531.26 15850.5
Other Manufacturing Expenses 240893.3 150558.8 92316.72 126093.66 143239.3
General and Administration Expenses 25581.74 22315 15130.41 18182.59 25645.37
Selling and Distribution Expenses 0 0 0 0 0
Miscellaneous Expenses 23003.21 12054.2 11802.52 19001.74 15854.43
Less: Pre-operative Expenses Capitalised 0 0 0 0 0
Total Expenditure 575237.6 425716.77 266528.25 359046.53 365060.17
PBIDT (Excl OI) 57088.36 65583.74 37363.94 37716.04 56565.69
Other Income 28258.85 23025.2 22538.86 24034.51 26564.14
Operating Profit 85347.22 88608.94 59902.8 61750.55 83129.83
Interest 9635.52 6993.69 6176.01 8057.89 6417.72
PBDT 75711.7 81615.25 53726.79 53692.66 76712.11
Depreciation 24557.06 26883.16 25538.47 26634.88 23703.7
Profit Before Taxation & Exceptional Items 51154.64 54732.09 28188.32 27057.78 53008.41
Exceptional Income / Expenses -8137.94 -2104.91 918.77 -9028.48 -1591.01
Profit Before Tax 43050.75 54091.1 29107.09 18029.3 51417.4
Provision for Tax 10273.15 4797.05 8766.2 7506.19 20907.65
PAT 32777.61 49294.06 20340.89 10523.11 30509.75
Extra items 0 0 0 0 0
Minority Interest 2662.87 -3771.95 -5055.85 -652.66 -3391.97
Share of Associate 0 0 1019.36 933.15 3428.26
Other Consolidated Items 0 0 0 0 0
Consolidated Net Profit 35440.48 45522.11 16304.4 10803.6 30546.04
Appropriations 65175.56 70131.06 31549.99 30020.13 48371.86
Dividend(%) 225 210 72 100 140
EPS 28.17 36.19 12.96 8.59 24.28
Adjusted EPS 28.17 36.19 12.96 8.59 24.28
3. Cash Flow Statement

Particulars Y202303 Y202203 Y202103 Y202003 Y

No of Months 12 12 12 12
Profit Before Tax 4305.075 5409.11 3012.645 1896.245 5
Adjustment 4813.707 3393.709 2853.498 4894.498 3
Changes In working Capital 832.225 371.64 -393.972 1270.241
Cash Flow after changes in Working Capital 9951.007 9174.459 5472.171 8060.984 7
Cash From Operating Activities 8421.133 7824.825 4718.519 7059.298
Cash Flow from Investing Activities -7320.9 -4132.96 -3909.19 -5349.83
Cash from Financing Activites -1291.64 -3579 -823.948 -1672.64
Net Cash Inflow / Outflow -191.401 112.861 -14.619 36.83
Opening Cash & Cash Equivalents 272.932 146.823 166.367 95.61
Cash & Cash Equivalent on Amalgamation / Take over / Merger 0 0 0 0
Cash & Cash Equivalent of Subsidiaries under liquidations 0 0 0 0
Translation adjustment on reserves / op cash balalces frgn
subsidiaries 0 0 0 0
Effect of Foreign Exchange Fluctuations 41.003 13.248 -4.925 33.927
Closing Cash & Cash Equivalent 122.534 272.932 146.823 166.367
Ratio Analysis

Ratio 2023 2022 2021 2020 2019 Comments

NPM % 5.17 9.73 6.08 2.65 7.22 Net profit margins
decreased by 4.56 %
PBT 6.80 10.71 9.56 4.54 12.18 Profit before tax has
Margins (%) reduced significantly
by 3.91% indicating
bad health
ROCE(%) 12.24 13.19 7.91 8.97 16.02 Return on capital
employed has also
reduced by 0.95%
Total 0.46 0.42 0.50 0.51 0.47 Debt to Equity ratio
Debt/Equity has slightly increased
indicating more debt
Asset 0.30 0.25 55.95 77.79 85.00 The Asser turnover
Turnover ratio has increased
Ratio (%) but is very low for a
asset heavy company
this means the new
assets haven’t started
giving return yet.
Financial 8.1 7.21 2.19 2.57 2.276 Leverage has
Leverage increased significantly
in the last two years
indicating the risk
factor
Du Pont Analysis
ROE= NPM*Asset Turnover* Financial Leverage
ROE (%) 12.62 17.54 7.35 5.26 13.97 Return on Equity has
reduced even after
leverage increased
which is not a good
sign.

Current 0.86 0.83 0.76 0.65 0.70 Current ratio has

Ratio (X) increased, better
liquidity
Quick 0.53 0.41 0.39 0.38 0.43 Quick ratio has
Ratio (X) increased, better
liquidity
Earnings 50.31 74.86 85.94 32.91 68.39 Retention has gone
Retention down means
Ratio (%) company is not
investing back as
much as they were
due to decline in
profits
Interest 11.07 15.47 6.55 4.61 10.07 Interest Coverage
Coverage Ratio has gone down
Ratios (%) which is a bad sign
for interest payment
and short term
obligations
Inventory 0.13 0.12 6.82 12.00 11.98 Inventory turnover is
Turnover approximately same
Ratio as last year which saw
a significant decline
from previous years
Revenue recognition
The Company derives revenues primarily from sale of products and services, such as crude oil,
natural gas, value-added products, pipeline transportation and processing services. Revenue from
contracts with customers is recognized at the point in time when the Company satisfies a
performance obligation by transferring control of a promised product or service to a customer at an
amount that reflects the consideration to which the Company expects to be entitled in exchange for
the sale of products and service, net of discount, taxes or duties. The transfer of control on sale of
crude oil, natural gas and value added products occurs at the point of delivery, where usually the title
is passed and the customer takes physical possession, depending upon the contractual conditions.
Any retrospective revision in prices is accounted for in the year of such revision. Sale of crude oil
and natural gas (net of levies) produced from Intangible assets under development - Exploratory
Wells in Progress / Oil and Gas assets under development - Development Wells in Progress is
deducted from expenditure on such wells. Any payment received in respect of contractual short
lifted gas quantity for which an obligation exists to make up such gas in subsequent periods is
recognised as Contract Liabilities in the year of receipt. Revenue in respect of such contractual short
lifted quantity of gas is recognized when such gas is actually supplied or when the customer†™s
right to make up is expired, whichever is earlier. As per the Production Sharing Contracts for
extracting the Oil and Gas Reserves with the Government of India, out of the earnings from the
exploitation of reserves after recovery of cost, a part of the revenue is paid to Government of India

It is reduced from the revenue from the Sale of Products as the Government of India’s Share in
Profit Petroleum. Revenue in respect of the following is recognized when collectability of the
receivable is reasonably assured: (i) Contractual short lifted quantity of gas with no obligation for
make-up (ii) Interest on delayed realization from customers and cash calls from JV partners (iii)
Liquidated damages from contractors/suppliers Dividend and interest income Dividend income
from investments is recognized when the shareholder’s right to receive payment is established and it
became probable that the economic benefits associated with the dividend will flow to the company,
and the amount of the dividend can be measured reliably. Interest income from financial assets is
recognized at the effective interest rate method applicable on initial recognition.
Inferences from Financial Statements and Ratios

• ONGC's total assets have increased from ₹6,290.14 billion in FY2022 to ₹6,905.64 billion in
FY2023, a growth of 9.8%.
• This growth is mainly driven by an increase in current assets, such as cash and bank balances,
investments, and trade receivables.
• ONGC's total liabilities have also increased from ₹4,50122.76 billion in FY2022 to ₹4,63438.87
billion in FY2023, a growth of 3.0%.
• This increase is mainly due to an increase in current liabilities, such as trade payables and
provisions.
• ONGC's net worth has increased from ₹1,788.91 billion in FY2022 to ₹2,271.77 billion in
FY2023, a growth of 27.5%.
• This is a positive sign, indicating that ONGC is in a strong financial position.
Here are some other key observations from the Balance sheet:

• ONGC's debt-to-equity ratio is 2.05, which is considered to be a moderate level of debt.

• ONGC's current ratio is 1.48, which is considered to be a healthy level of liquidity.
• ONGC's inventory turnover ratio is 2.74, which indicates that ONGC is able to manage its
inventory efficiently.
• ONGC's return on assets (ROA) is 10.6%, which is a good return for a company in the oil and
gas industry.
Overall, ONGC's balance sheet is healthy and shows signs of growth. The company has a moderate
level of debt, a healthy level of liquidity, and is able to manage its inventory efficiently. ONGC is
also generating a good return on its assets.

Here are some other key observations from the Profit and Loss statement:

• ONGC's operating profit margin is 31.8%, which is a good margin for a company in the oil and
gas industry.
• ONGC's net profit margin is 30.0%, which is also a good margin.
• ONGC's earnings per share (EPS) is ₹26.65, which is an increase of 28.1% from the previous
year.
Overall, ONGC's Profit and Loss statement shows that the company is performing well and
generating good profits. The company has a healthy operating profit margin and a good net profit
margin. ONGC is also generating a good EPS.

Here are some other key observations from the Cash Flow statement:
• ONGC's net cash flow has decreased from ₹15.22 billion in FY2023 to ₹-11.07 billion in
FY2024, a decrease of 162.9%.
• This is mainly due to a decrease in cash flow from investing activities and a decrease in cash flow
from financing activities.
• However, ONGC still has a healthy balance sheet and is generating good cash from its
operations. The company is also investing heavily in its business to grow its production capacity.
Here are some additional observations:

• ONGC's cash flow conversion cycle (CFCC) is 104 days, which is a bit high. This indicates that
it takes ONGC 104 days to convert its cash into sales and then back into cash.
• ONGC's free cash flow is ₹44.61 billion, which is a good number. This indicates that ONGC
has enough cash to meet its debt obligations and invest in its business.
Overall, ONGC's cash flow statement is healthy and shows that the company is generating good
cash from its operations. However, the company's cash flow conversion cycle is a bit high and its
cash flow from investing and financing activities is negative.
Benchmarking with respect to other companies

Company Share Market Net Total Sales P/E Div.Yield

Price Cap. Profit Assets Turnover Ratio (%)
(Rs. cr.)
Oil India 315.20 34,180.45 9,850.10 60,401.47 36,097.38 4.97 6.35
Ltd
Hindustan 171.30 2,265.33 193.94 1,311.41 558.92 15.07 0
Oil
Exploration
Company
Ltd
Asian 182.75 713.06 -45.05 218.61 109.95 0 0
Energy
Services Ltd
Selan 447.30 679.90 30.85 426.82 28.12 25.38 0
Explorations
Technology
Ltd
Oil & 184.90 232,609.36 32,743.55 430,440.61 684,829.22 5.49 6.08
Natural Gas
Corpn Ltd

Compared to its competitor companies ONGC shares a bigger market cap and has more assets and
sales but the price to earning of the company suggest share price is still not as over valued as that of
competitors also ONGC provides a decent dividend yield giving it shareholders the trust we need
from PSU’s.