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Introduction:
Indian oil began operations in 1959 as Indian Oil Company Ltd. The Indian Oil Corporation was
formed in 1964; with the merger of Indian Refineries Ltd. Indian Oil is biggest oil producer and
marketers in India.
Indian Oil Corporation Limited or Indian Oil is an Indian state-owned oil and gas corporation
with its headquarters in New Delhi, India. The company is the worlds 83 rd largest public
corporation, according to the Fortune Global 500 list, and largest public corporation in India.
Following table shows other information about company:
Type : Public
Industry: Oil and Gas
Owner: Government of India
Founded in : 1964
Head Quarter: Mumbai , Maharashtra, India
Chairman of IOCL.: Shri R.S Bhutola
Products: Fuel ,Lubricants, Petrochemicals
Trade as :BSE:530965,
NSE:IOC
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Production:
Indian oils products range covers Indane gas ,Natural gas, Auto gas, Petrol/Gasoline ,Diesel/Gas
oil, Crude oil ,Jet fuel ,Kerosene, Bitumen, Petrochemical. Special product includes SARVO
lubricants & greases.
Services:
Indian Oil Corporation is concern with refining, marketing, research and development, training
activities.
Joint Venture with:
Company Date of Incorporation
AVI Oil Pvt. Ltd. 04.11.1993
Delhi Aviation Fuel Facility Pvt. Ltd. 28.03.2010
Green Gas Ltd. 07.10.2005
Indo Cat Pvt. Ltd. 01.06.2006
IOT Infrastructure & Energy services Ltd. 28.08.1996
Indian Oil Skytanking Limited 21.08.2006
Petronet Ltd. 02.04.1998
NPCIL- Indianoil Nuclear Power Corporation Ltd. 06.04.2011
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Balance sheet data for the year march-2012 and March-2011:
Particulars Mar-12 Mar-11
Net Worth 57,876.70 55,332.32
Total Liabilities 128,200.63 108,066.19
Net Block 60,119.33 58,187.40
Total Current Assets 117,627.19 84,903.08
Total Current Liabilities 81,659.12 67,204.64
Net Current Assets 35,968.07 17,698.44
Total Assets 128,200.63 108,066.19
Profit and loss related data for the year march-2012 and March-2011:
Particulars Mar-12 Mar-11
Revenue From Operations(Net) 408924 309797
Total Revenue412111.
2 313245
Total Expenses:400678.
3 303060
Profit Before Prior Period ,Exceptional Items And Tax11432.8
9 10184.9
Profit Before Exceptional Items And Tax
11162.6
4 10255.7
Profit Befor Tax 3454.82 10255.7
Profit 3685.48 7972.48
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Common Size Statement of Balance Sheet:
Particulars Mar-12 Percentage Mar-11 Percentage
Liabilities
Share Capital 2427.95 1.893867 2,427.95 2.246725
Reserves & Surplus 55,448.75 43.25154 52,904.37 48.95552
Net Worth 57,876.70 45.14541 55,332.32 51.20225
Secured Loans 13,045.97 10.17621 20,379.65 18.85849
Unsecured Loans 57,277.96 44.67838 32,354.22 29.93926
Total Liabilities
128,200.6
3 100
108,066.1
9 100Assets
Gross Block 99,455.46 77.57798 92,696.69 85.7777
(-) Acc. Depreciation 39,336.13 30.68326 34,509.29 31.93348
Net Block 60,119.33 46.89472 58,187.40 53.84422
Capital Work In Progress. 13,434.77 10.47949 12,620.44 11.67844
Investments. 18,678.46 14.56971 19,544.76 18.08592
Inventories 56,829.20 44.32833 49,284.52 45.60586
Sundry Debtors 15,502.87 12.09266 8,869.65 8.207609
Cash And Bank 307.01 0.239476 1,294.42 1.197803
Loans And Advances 44,988.11 35.09196 25,454.49 23.55454
Total Current Assets117,627.1
9 91.75243 84,903.08 78.56581
Current Liabilities 66,510.58 51.88007 60,441.18 55.92978
Provisions 15,148.54 11.81628 6,763.46 6.258627
Total Current Liabilities 81,659.12 63.69635 67,204.64 62.18841
Net Current Assets 35,968.07 28.05608 17,698.44 16.37741
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Misc. Expenses 0 15.15 0.014019
Total Assets128,200.6
3 100
108,066.1
9 100
Common Size Statement Of Profit And Loss Account:
Particulars Mar-12 Percentage Mar-11 Percen
Revenue From Operations(Gross) 438023.8 100 340658
Less: Excise Duty 29099.73 6.6434 30861 9
Revenue From Operations(Net) 408924 93.3565 309797 90
Other Income 3187.13 0.7276 3447.69
Total Revenue 412111.2 94.0842 313245 9
Expenses:
Cost Of Material Consumed 207632 47.4019 150042 44Purchase Of Stock-In-Trade 157250.8 35.9000 127654 37
Change In Inventory -3470.95 -0.7924 -5613.8 -
Employee Benefit Expenses 5300.09 1.2100 6734.24
Financial Cost 5894.65 1.3457 2985.7 0
Depreciation And Amortization 5309.26 1.2120 4932.62
Other Expenses 22762.43 5.1966 16325.4 4
Total Expenses: 400678.3 91.4740 303060 88
Profit Before Prior Period ,Exceptional ItemsAnd Tax 11432.89 2.6101 10184.9 2
Income/(Expenses) Pertaining To PriorYears(Net) 270.25 0.0616 -70.88 -0
Profit Before Exceptional Items And Tax 11162.64 2.5484 10255.7 3
Exceptional Items -7707.82 -1.7596 -
Profit Before Tax 3454.82 0.7887 10255.7 3
Tax Expenses -269.95 -0.0616 2028.36 0
Profit For The Period 3724.77 0.8503 8227.38 2
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Less: Share Of Maturity 39.29 0.0089 254.9 0
Profit 3685.48 0.8413 7972.48 2
Calculation of Various Ratios:
1. EPS = PAT/ No. of equity shares
2012 2011
EPS=4265.27/242.795= 17.55
EPS=8085.62/242.795=33.30
Interpretation:
Earnings per Share is decreased by 47.30% in 2012.It is not good condition for share
holders. It also shows that company was not performing well in financial year 2011-2012.
2. Book Value=Net worth/No. of equity shares
2012 2011Book Value=62310.62/242.795
=256.22
Book Value=63232.88/242.795
=260.44
Interpretation:
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Book value per share is Rs.260.44 in financial year 2010-2011 which is goes down at Rs.
256.22. In 2011-2012.It reduce by 1.62 %.
3. Net working capital=Current Assets-Current Liabilities
2012 2011
Net working capital=125977.44-132518.95= (6541.51)
Net working capital=102286.67-100024.18=2262.49
Interpretation:
In financial year 2011-12, Net Working Capital is having negative figures which reveal
that company is facing financial crises for the short term operations. This figure is
admirable in 2010-11.
4. Current Ratio=Current assets/Current Liabilities
2012 2011
Current Ratio=125977.44/132518.95
=0.951
Current Ratio=102286.67/100024.18
=1.023
Interpretation:
Current ratio is 0.951 in 2011-12, which is 1.023 in financial year 2010-11.The current
Ratio is not up to the mark in financial year 2011-12.
5. Acid test ratio=(Current Assets-Stock)/Current Liabilities
2012 2011
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Acid test ratio
=(125997.44-63851.04)/132518.95=0.4688
Acid test ratio
=(102286.67-54906.02)/100024.18=0.4737
Interpretation:
This ratio shows liquidity condition of the firm. In the financial year 2011-12, the ratio is
0.4688.it shows that if there are Rs.100 liabilities then only Rs.46.88 is available to fulfill
it. This condition is somewhat same as financial year 2010-11.
6. Cash Ratio=(Cash in bank+ marketable securities)/Current Liabilities
2012 2011
Cash Ratio=(821.95+13774.83)/132518.95
=0.1101
Cash Ratio=(1537.83+15003.53)/100024.18
=0.1653
Interpretation:
This ratio shows availability if cash to pay the current liabilities. This ratio is also not
acceptable in both the financial years. Cash ratio is quite higher in the year 2010-11 as
compare to 2011-12.
7. Debt Equity Ratio=( Long term Debt+ Deferred tax liabilities )/Equity
2012 2011
Debt Equity Ratio=24991.17/62210.62
= 0.4
Debt Equity Ratio=25009.47/63232.88
=0.3955
Interpretation:
This ratio is not varies highly in the year 2011-12 with respect to 2010-11.We can say
that it is stable in both the years. We can say that when equity is Rs.100, the debt is
Rs.40. It shows that company doesnt borrowed higher fund for their operations.
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8. Debt Assets Ratio=Total Debt /Total Asset
2012 2011
Debt Assets Ratio=157510.12/219827.22
=0.7165
Debt Assets Ratio=125033.65/184601.89
=0.6773
Interpretation:
Debt Assets ratio is 0.6773 in financial year 2010-11 which is rise by 5.79%.But the total
debt is not match to the total Asset.
9. Interest Coverage Ratio = EBIT/Interest
2012 2011
Interest Coverage Ratio=17327.54/5894.65= 2.9395
Interest Coverage Ratio=13170.56/2985.7=4.4112
Interpretation:
This ratio shows in the year 2010-11,EBIT is 4.4112 times higher than the interest butin
the year 2011-12 it is only 2.9395 time higher than the interest which is not good for
company.
10.Inventory Turnover Ratio= Cost Of Goods Sold/Average Inventory
2012 2011
Inventory Turnover Ratio
=238519.18/59378.53
= 4 Times
Inventory Turnover Ratio
=183047.67/47996.79
=4 Times Appx.
Interpretation:
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Inventory turnover ratio is 4 times in a year and it is same for both the above financial
years. So we can say that the company may suffer from high carrying cost.
11.Debtors Turnover Ratio=Net Credit Sales/Average Debtors
2012 2011
Debtors Turnover Ratio
=408924.03/9618.21
=43 Times Appx.
Debtors Turnover Ratio
=309797.02/6630.39
=47 Times Appx.
Interpretation:
Debtors turnover ratio is 43 times approximately for the year 2011-12 and 47 Times
approximately for the year 2010-11.Thr debtors turnover ratio is decrease so it good for
the firm.
12.Fixed Assets Turnover Ratio=Net Sales/Average Fixed Assets
2012 2011
Fixed Assets Turnover Ratio=408924.03/76777.28
=5 Times
Fixed Assets Turnover Ratio=309797.02/53254.84
=6 Times
Interpretation:
This Ratio shows that Net sales is 5 times higher in the year 2011-12 which is not good as
compare to the year 2010-11 which is having 6 times more Net sales than the Fixed assetsin that year.
13.Gross Profit Margin= (Gross Profit/ Net Sales)*100
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2012 2011
Gross Profit Margin=11703.14/408924.03
= 2.86 %
Gross Profit Margin=10113.98/309797.02
=3.20 %
Interpretation:
Gross profit margin is very less in both the years. The gross profit margin is 3.2% in
2010-11 which is decrease by 10.63% in 2011-12.It shows operating inefficiency of the
firm.
14.Net Profit Margin= (Net Profit/ Net Sales)*100
2012 2011
Net Profit Margin=4265.27/408924.03
= 1.04 %
Net profit Margin = 8085.62/309797.02
=2.61 %
Interpretation:
Net profit margin is also very less in both the years.Net profit margin ins 2.61% in 2010-
11 which is become 1.04% in 2.11-12.It is not good for the company as well as for the
stack holder of the company.
15.Return on Assets =(PAT/ Average Total Assets)*100
2012 2011
Return on Assets= (4265.27/161056.945)*100
=2.65 %
Return on Assets=(8085.62/116792.49)*100
=6.92%
Interpretation:
Return on Assets is 6.92% in the year 2010-11 which is reduced in 2011-12 by 62% .It
shows inefficiency of the firm.
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16.Return on Capital Employed=PBIT(1-T)/Average Total Assets
2012 2011
Return on Capital Employed
=17327.54(1-0.35)/161056.945
=0.0699
Return on Capital Employed
=13170.56(1-0.35)/116792.49
=0.0739
Interpretation:
Return on capital employed is 7.39% in The year 2010-11 which is slightly decrease in
the year 2011-12 by 5.41%.
17.Return on Equity= (PAT-preference shares dividend) /Net worth
2012 2011
Return on Equity=4265.27/62210.62
=0.0685
Return on Equity=8085.62/63232.88
=0.1279
Interpretation:
Return on equity is 0.1279 in the year 2010-11 which is reduced by 46.44% in financial
year 2011-12. This may not be acceptable from the side of investors and it is also not
good for the firm.
18.Net Profit margin=PAT/No. of shares
2012 2011
Net Profit margin=4265.27/242.795
=17.567
Net Profit margin=8085.62/242.795
=33.30
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Interpretation:
Net profit margin is Rs.33.30 per share in the year 2010-11.This margin is decrease by
47.26% in 2011-12. Decrease in profit margin is not good for the firm as well as for theinvestors.
19.Total Assets Turnover Ratio=Net sales/Average Total Asset
2012 2011
Total Assets Turnover Ratio=408924.03/161056.945
=2.539 Times
Total Assets Turnover=309797.02/116792.49
=2.65 Times
Interpretation:
This Ratio shows that Net sales is 2.539 times higher than than the Total Fixed Assets in
the year 2011-12 which is not good as compare to the year 2010-11 which is having 2.65
times more Net sales than the Total Fixed assets in that year.
20.Operating Leverage =Contribution/EBIT
2012 2011
Operating Leverage =407417.41/17327.54
=23.5127
Operating Leverage =308576.57/13170.56
=23.4293
Interpretation:
Operating Leverage shows ratio between contribution and EBIT. The operating leverage
is somewhat same in both the financial year. As operating leverage is very high in both
the financial year which shows high utilization of debt for operating activities of the firm.
21.Financial Leverage=EBIT/EBT
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2012 2011
Financial Leverage=17327.54/3995.32
=4.3370
Financial Leverage=13170.56/10113.98
=1.3022
Interpretation:
Financial leverage is 1.3022 in the year 2010-11 which is increase in 2011-12 by more
than 200% of previous year which shows that company is borrowing more funds for
financing the business activities.
22.Combine leverage= Operating Leverage * Financial Leverage
2012 2011
Combine leverage=23.5127*4.3370
=101.9746
Combine leverage=23.4293*1.3022
=30.5096
Interpretation:
Combine leverage shows the overall debt used by the firm for it operating activities as
well as financing activities. Combine leverage is very high in the year 2011-12 as
compare to 2010-11.The combine leverage is increase in 2011-12 by more than 200% as
compared to previous years. It may create problem for company in future.
23.Operating Cycle= Inventory period + Account receivable period
Inventory period=Average Inventory*365/COGS
2012 2011
Inventory period=59378.53*365/238519.18
=90 Days
Inventory period=47996.79*365/183047.67
= 96 Days
Account receivable period=Average Account receivable *365/Net Credit Sales
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2012 2011
Account receivable period
=9618.21*365/408924.03
= 9 Days
Account receivable period
=6630.39*365/309797.02
= 9 Days
Operating Cycle:
2012 2011
Operating Cycle=90 +9= 99 Days
Operating Cycle=96 + 9=105 Days
Interpretation:
Operating Cycle is 105 days in March-2011 which is reduced by 6 days in March-2012.
It is occurs because of reduction in inventory period in the year 2011-12.
24.Cash cycle=Operating cycle - Account payable period
Account payable period= Average Account Payable*365/Net credit purchase
2012 2011
Account payable period=30783.185*365/212583.46
= 53 Days
Account payable period= 44188.03*365/142930.445
= 62 Days
Cash Cycle:
2012 2011
Cash Cycle =99 - 53=46 Days
Cash Cycle = 105 + 62= 43 Days
Interpretation:
Company Collects is receivables in 43 Days in 2010-11. This period is increase by 3 days
in 2011-12 at 46 days. It doesnt having major changes in operations of the firm in 2011-12and 2010-11.
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Conclusion:
The investors should take opportunity by investing in Oil and Gas sector because
nowadays petrol products are necessary for us. It may result in good demand of such
product in future.
Investment in Indian Oil Corporation is risk as the records of the financial year 2011-12
is worse as compare to 2010-11.
Earnings per share, book value per share is reduced in March 2012 as compare to
preceding year.Net working capital is also shows negative figures which indicate
financial crises for the short term period. Current ratio, acid test ratio and cash ratio are
not up to the mark. It is also reveal the liquidity condition of the firm.
Debt equity ratio is acceptable. Debtors turnover ratio is very high. Gross profit margin,
Net profit margin is very low which is not good for the investors point of view.
As operating leverage is very high in both the financial year which shows high utilization
of debt for operating activities of the firm. Financial leverage is less as compare to
operating leverage. Operating cycle is very long as compare to cash cycle because of long
inventory storage period.