You are on page 1of 21




Indian Oil Corporation Ltd. is India's largest company by sales with a turnover of Rs. 3,28,744 crore ($ 72,125 million) and profit of Rs. 7445 crore ($ 1,633 million) for the year 2010-11. Indian Oil is the highest ranked Indian company in the latest Fortune ‘Global 500’ listings, ranked at the 98th position. Indian Oil's vision is driven by a group of dynamic leaders who have made it a name to reckon with.

Distinctions of IOCL• • • • • • • • • • • • IndianOil tops Fortune India 500 list IndianOil features in Platts Global Energy Top 50 companies IndianOil features in BT500 IndianOil in BW500 list of biggest companies IndianOil breaks into Top 100 of Fortune Global listing, ranked 98th IndianOil: One of ‘The Best Companies to Work For’ IndianOil in Top Ten of the Most Recognised & Respected Indian MNCs IndianOil tops ‘BS 1000’ rankings IndianOil - One of the Best Companies to Work For: BT Survey IndianOil tops the Fortune India 500 Rankings IndianOil in top five in Business India's Super 100 IndianOil is India’s Biggest Company: ET 500


55. Panipat Refinery expansion from 12 MMTPA to 15 MMTPA. . Orissa. which are continually updated. Several Clean Development Mechanism projects have also been initiated. Innovative strategies and knowledgesharing are the tools available for converting challenges into opportunities for sustained organisational growth. a number of steps were taken during the year. Delayed Coking. Naphtha Cracker and Polymer Complex at Panipat. Hydrogen Generation. The basket of technologies. bottom upgradation and quality upgradation. Wax Hydro finishing. Catalytic Reforming. Visbreaking. resulting in reduction of the frequency of accidents. Coke Calcining. Distillate FCC/Resid FCC.8% share of national refining capacity.7 million metric tonnes per annum (MMTPA) or 1. the Digboi Refinery commissioned in 1901. etc. Dewaxing. Major projects under implementation include a 15 MMTPA grassroots refinery at Paradip. all Indian Oil refineries fully comply with the statutory requirements. To address concerns on safety at the work place. Hydro cracking. The group refining capacity is 65. which are in operation in Indian Oil refineries include: Atmospheric/Vacuum Distillation. It accounts for 34. The strength of Indian Oil springs from its experience of operating the largest number of refineries in India and adapting to a variety of refining processes along the way. On the environment front. Lube Processing Units. Sulphur recovery. HydroDesulphirisation of Kerosene& Gasoil streams.30 million barrels per day -the largest share among refining companies in India. de-bottlenecking. Procedures for commissioning and start-up of individual units and the refinery have been well laid out and enshrined in various customized operating manuals. Indian Oil has gathered a luminous legacy of more than 100 years of accumulated experiences in all areas of petroleum refining by taking into its fold.000 crore for capacity augmentation. among others. Indian Oil refineries have an ambitious growth plan with an outlay of about Rs. Indian Oil controls 10 of India’s 20 refineries.REFINING Born from the vision of achieving self-reliance in oil refining and marketing for the nation. Merox Treatment. The Corporation has commissioned several grass root refineries and modern process units.



It recently sold a stake in its valuable Godavari Basin to BP for a whopping $7. Reliance is also a Fortune Global 500 company.98 billion) M-cap: Rs 322. petrochemicals (polyester.22 trillion) BHARAT PETROLEUM .898 cr (Rs 158.5 billion.32 billion) Profit: Rs 15.Extremely cash rich with a horde of more than $15 billion. Turnover: Rs 214.532 cr (Rs 2.139. petroleum refining and marketing.Hospitality (Buying up stakes in Hotel Companies). retail and special economic zones.Shale Gas Buys in the USA.145. it has started on empire building through ventures in Finance ( DE Shaw) .37 cr (Rs 3. The company is also one of the biggest exporters in India with one of the largest petrochemical and oil refining complexes in the world at Jamnager.RELIANCE INDUSTRIES One of India's largest private sector enterprises. The group's activities span exploration and production of oil and gas. fibre intermediates. textiles.Communications (buying of wirelss broadband spectrum). plastics and chemicals).

88 crore (Rs 243.181. it deals with retailing of petroleum products. 34.32 billion) M-cap: Rs 24. (East Coast).367. LPG bottling plants.6% in Dec’10. one in Mumbai (West Coast) and the other in Vishakapatnam.13 trillion) Profit: Rs 1.93 crore (Rs 133.26 trillion) Profit: Rs 1. Turnover: Rs 1. HPCL’s vast marketing network consists of its zonal & regional offices facilitated by a supply & distribution infrastructure comprising terminals.632. Turnover: Rs 1. The company’s low margins and abysmal stock price performance is due to the government control which forces it to sell at below cost leading to huge losses and curtails capex for growth.29 cr (Rs 14.34 cr (Rs 1. Bharat Petroleum produces a diverse range of products.13.000 crores with a net profit margin of 0.36 crore (Rs 16. The revenue earned was around Rs. pipeline networks.26.92 crore (Rs 1. HPCL accounts for about 20 per cent of the market share and about 10 per cent of India's refining capacity with two coastal refineries. HPCL accounts for about 20% of the market share and about 10% of the nation’s refining capacity.Bharat Petroleum Corporation Ltd is one of the largest state-owned oil and gas companies in India. inland relay depots & retail outlets. nothing has come about with increased global crude prices increasing the losses greatly.10 billion) HINDUSTAN PETROLEUM CORP Hindustan Petroleum Corporation Ltd is one of the major integrated oil refining and marketing companies in India.310. It has two major refineries producing a wide variety of petroleum fuels & specialties. lube and LPG distributorships.75 trillion) M-cap: Rs 13. from petrochemicals and solvents to aircraft fuel and speciality lubricants and markets them to hundreds of industries and several international and domestic airlines. A Fortune Global 500 company.475.304. Despite noises of liberalization.67 billion) ESSAR OIL LIMITED . aviation service stations. A mega PSU with Navaratna status.

Egypt in consortium with GSPC. AWEL has been awarded an offshore Block (Block 5) in Gulf of Suez. low-cost. AWEL was awarded another Block in Mumbai offshore (MB-OSN-2005/2).. and oil and gas industries with existing operations and projects under development in both. offshore and international assets. AWEL aims to be a medium sized Oil & Gas company with exploration & production assets globally.442. close to Tapti fields. ADANI POWER Market cap (Rs Cr) 14. We have an established track-record and assets worth US$12 billion across the power and oil and gas industries Essar Energy's operations straddle the global power. Ltd. In this JV. Bharat Petroleum Corporation for sharing product infrastructure and off take. . a subsidiary of its flagship company Welspun Gujarat Stahl Rohren Limited (WGSRL). one in Cambay Baisn (CB-ONN-2004/5) and the other in Assam-Arakan Basin (AA-ONN-2004/4). in NELP-VII bid round. AWEL had successfully won two onland exploration Blocks with majority shareholding (90%) in NELP-VI bid round.73 Adani Welspun Exploration Limited (AWEL) is a joint venture (JV) company between Ahmedabad based Adani Group and Mumbai based Welspun Group to undertake upstream oil & gas business. Essar Energy is a world-class.Essar has made their mark in a number of industries in India and they offer a wide range of products to bulk customers in the transportation and industrial sector. integrated energy company focused on India and positioned to capitalize on India’s rapidly growing energy demand. AWEL has two more concessions (L39/48 & L22/50) with 100 % operating interest in onshore Thailand. while Welspun Group holds 35% through Welspun Natural Resources Pvt. Adani Group holds 65% through its flagship company Adani Enterprises Limited (AEL). The company has agreement with a number of oil companies like Indian Oil Corporation. Hindustan Petroleum Corporation. where the company is the operator with 100 % working interest. AWEL has a strong and experienced management and technical team in place and has already built a prospective portfolio of onshore. AEL & WGSRL are listed on various Stock Exchanges. Recently.

43722 1 8.27778 3 .75957 DOL DFL DTL 4 1. PBT=14106 5.92 11769 9096 ) 2009-10 69.92 15632 14106 For levels Q=61. PBIT=15632.(incrore ANALYSIS 2010-11 Sales(million tonnes) PBIT(in crore) PBT 72.9.

”If the situation does not improve. Low DFL as compared to DOL shows that IOCL tries to maintain its risk or tries not to increase its risk to compensate for high DOL. it would be difficult for IOCL to cut expenses to adjust to a change in demand. earnings don't just fall. if business conditions are unchanged. So.Degree of operating leverage (DOL) Degree of operating leverage (DOL) of value greater than 5 shows that a slight change in sales provides a high degree of change in PBIT. higher EPS will result when debt is added to the capital structure. This also indicates that IOCL has a higher proportion of fixed costs as compared to the variable costs. it has a high DOL. Hence. we may not be left with money to import crude . It shows the changes in EPS relative to EBIT. With a lot of costs tied up in machinery. plants. Degree of financial leverage (DFL) DFL of value greater than 1 shows that financial leverage exists in IOCL. real estate and distribution networks. A large part of the capital structure of IOCL consists of debt which shows that financial leverage of greater than 1 is reasonable. they can plummet. if there is a downturn in the economy. This means more fixed costs to IOCL.61. ANALYSIS OF THE CAPITAL STRUCTURE OF IOCL FROM 20062011 YEAR 2010-11 The company is very high on debt for this financial year. The debt is almost as high as 57837. It uses more of its fixed assets. IOCL invests more in risky assets. Hence. Degree of Combined Leverage (DCL) DCL or DTL has a value which shows that IOCL’s business is highly risky with maximum part of it attributed to DOL.

YEAR 2008-09 Increased borrowings to fund under-recoveries have skewed the ratio.e .“The high debt-equity ratio was due to the losses we incurred in the form of under-recoveries and we had to borrow heavily. director (Finance). YEAR 2007-08 . HPCL. Indian Oil.” said B Mukherjee.” said RS Butola.This can result in volatile earnings as a result of the additional interest expense. YEAR 2009-10 As the ratio is higher we can say that Indian Oil has been aggressive i. chairman and managing director. However.88:1 in financing its growth with debt. the situation is improving now and the picture at the close of this fiscal should be different.from the international market and we will have to shut some of our refineries.

886.95 Retained earnings 4.37 2427.415.00 89.168.192.Indian Oil Corporation (IOC) has seen a sharp increase in the debt-equity ratio during the first three quarters of the current year as they increased borrowing to fund record underrecoveries.the company had to take recourse to higher borrowings.37 1.78:1.292.78: 1 during 2006-07 from 0.42 6.107.80 36544.43 409.27 29.83 Unsecured loans 21.93 26. Year 200607 200708 200809 200910 201011 Equity Capital 1.45 21292.671.00 4779 Secured loans 5.382.since a lot of borrowing was done by IOCL for their expansion plans in the US. As the government bonds issued to IOC as compensation for the under-recoveries in kerosene and LPG were released only towards the fag end of the financial year.95 2427.192. The company’s debt-equity ratio has improved to 0.78 .273. YEAR 2006-07 The debt equity ratio in this year is high .406.01 1.13 18.565.78 17.9: 1 in 2005-06.411.00 1.39 27.


YEAR 2007-08 YEAR 2006-07 .

For the year ending March 2011.DIVIDEND POLICY OF IOCL The term dividend refers to that part of profit (after tax) which is distributed to the shareholders who are the real owners of the company.5 per share. Higher the dividend payout.00% amounting to Rs 9. Indian Oil Corporation has declared an equity dividend of 95. The dividend policy of a company refers to the views and policies of the management with respect of distribution of dividends.60 this results in . The dividend policy of a company should aim at shareholder-wealth maximization but it also moves according to the sentiments of the market as well as to the prospects of the company as Indian Oil Corporation Limited is doing from last many of years to provide wealth maximization to the shareholders with providing dividends as well as the prices of their shares in stock market has also been increasing which is benefitting the owners with capital gains in their shares. At the current share price of Rs 252. The amount which is undistributed part rest out of the profits of the company is known as Retained earnings. lower will be retained earnings.

the share price got affected and after 2 days.1 645 630 Close 648 650.8 -6.55 2950 6963 7499 30.74055959 58.85 651.8822676 30. 2009. IOC L Number of shares PAT(in crore) Earning per share Dividend per share Dividend payout ratio Retention Rate 2 1 -1 00 1 2 0 -1 09 0 2 0 -0 08 9 2 0 -0 07 8 2 0 -0 06 7 2427.39610726 64.7 10/21/2009 645.a dividend yield of 3.40641686 BONUS SHARES IOCL announced bonus issue with ratio 1:1 with record date set on 30th October 2009.8 664 643 Low 640.68540678 90.55 10/26/2009 655 10/23/2009 659 10/22/2009 654.418436019 29.85 6.3 11.8 641.55 e -7 -8.31459322 9.1 659.59358314 69. the market price of IOCL shares dipped in the next 3 days.1177324 69.5 19 30.5 13 7.76%. for 2009-10.952 2427.374 1192.374 1168.The company has a good dividend track report and has consistently declared dividends for the last 5 years.5 10/20/2009 630 After the issue of bonus shares.0207428 69.35 650 643. At the same time.6656804 42.9792572 30. it announced a cash dividend of 130% which indicate that it had more than enough amount of cash reserves.2031075 9.0953544 24. .5 5. it flowed under negative sign. as shown Differenc Date Open High 666.2 659. It was announced on 20th October.012 7445.2 647.952 1192.48 10220. After the announcement of record date.58156398 70.

Hence. there is no effect on market capitalization or the wealth of the shareholders in terms of increasing number of shares because the price got reduced and the value of their holdings still have the same value. DIVIDENDS PAID BY THE COMPANY OVER THE LAST 5 YEARS YEAR 2011 2010 2009 2008 2007 2006 2006 MONTH May May May May May Dec May DIVIDEND(%) 95 130 75 55 130 60 125 WORKING CAPITAL MANAGEMENT OF IOCL .

4523 3 8.308485 3 7.1619 2007-08 33. This shows a decrease in the efficiency in converting fixed assets to finished goods.981 Operating Cycle 111.54788 4 2006-07 23. This may be due to lack of technology or other environmental issues. This shows that IOCL has not been able to convert its most of the raw materials into finished goods in the last two years.06105 7 89.07854 3 4.91790 9 93.4667 1 8.48782 9 4.81916 9 100.4800 7 7. It is an extremely good receivable period as it has been able to operate in the highly competitive market even after giving small credit period.04385 90.8780 9 8.79281 5.1706 7.47983 6 3.2605 71.871 7.84415 99.503867 2 6.4079 13.1524 8 6.1046 6 1 13.690873 3. FIXED ASSET TURNOVER RATIO This ratio increased from 2006-07 to 2008-09 but began decreasing 2009-10 onwards.59624 2 98.83098 5 5.2010-11 Ratio 2009-10 2008-09 18.4743 3 Working Capital Turnover Fixed Asset Turnover Ratio Inventory Turnover Ratio Inventory Period(days) Accounts Receivable Period(days) 104.4791 1 INVENTORY TURNOVER RATIO Inventory turnover ratio has been decreasing for the two years and the inventory has also been increasing for the last two years. ACCOUNTS RECEIVABLE PERIOD The figures show that IOCL provides a very small credit period to its debtors.58132 9 79. .

This could be the result of decrease in demand of petroleum products or some other external environmental issues like government laws. This increases the overall operating cycle. This shows that companies are not able to convert their raw materials into finished goods. BPCL and HPCL may have better technologies to do so. ACCOUNTS RECEIVABLE PERIOD In the past three years. OPERATING CYCLE . it can be seen that all the companies other than Adani have provided small credit period which indicate that it is a highly competitive market. there is an increase in inventory period. COMPARISON WITH COMPETITORS Inventory Turnover Ratio It can be seen that this ratio has been decreasing for all the companies. FIXED ASSET TURNOVER RATIO The graph indicates that BPCL and HPCL are more efficient than IOCL in using their fixed assets.OPERATING CYCLE Due to a decrease in inventory turnover ratio.

Adani has shown long operating cycle in the past two months. This is due to low inventory turnover ratios in the past years which increases its inventory period. .