Indian Oil Corporation Project 2

8/3/2019 Indian Oil Corporation Project 2

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SUMMER INTERNSHIP PROJECTRATIO ANALYSIS

SUBMITTED BY:MONICA GOEL

FW 2008-10

IIPM

UNDER THE GUIDANCE OFMs. ANURADHA GARG

Sr. FINANCE MANAGER

INDIAN OIL CORPORATION LTD.

(MARKETING DIVISION)


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ACKNOWLEDGEMENT

It gives my immense pleasure to express my sincere gratitude to my respected

mentor, Ms. ANURADHA GARG, Sr. Finance Manager, Indian oil corporation

LTD. (Marketing Division) for providing me the much required inspiration by way

of expert guidance and ceaseless encouragement throughout my training

programme.

I would also like to place on records my thanks to International Institute of

planning and management (IIPM) for encouraging me to exhibit my

innovativeness and communication skill through which I got an opportunity to gettraining under IOCL.

Ms. ANURADHA GARG MONICA GOEL

(SUPERVISOR) FW 2008-10


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Comparative Ratio

Analysis of IOC LTD

and BPCL


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Ratios are used to analyze financial statements and to explainrelationships between individual amounts in the financial

statements (i.e., revenues and expenses; assets and liabilities;

revenue to assets; and expenses to liabilities). A ratio in isolation

is typically of little value. Ratios become more meaningful when

they are compared to:

Organizations past performance.

Organizations of similar size.

INTRODUCTION


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INDIAN OIL

CORPORATION


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Sarthak Behuria is the Chairman of Indian Oil

Corporation. He is also serving as Chairman (part-

time) of subsidiary companies, Bongaigaon Refineries

& Petrochemicals Ltd and Chennai Petroleum

Corporation Ltd. He is also on board of Indian Oil

Tanking Ltd., a joint venture for building and

operating services for petroleum products.


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PROFIT & LOSS A/C OF IOC LTD.

Profit & Loss A/C ..in Rs. Cr

Mar '04 Mar '05 Mar '06 Mar '07 Mar '0812 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 133,911.11 153,588.52 193,216.88 238,348.37 270,402.30

Excise Duty 17,022.57 14,374.20 18,321.76 21,849.52 23,051.25

Net Sales 116,888.54 139,214.32 174,895.12 216,498.85 247,351.05

Other Income 1,494.67 1,197.76 1,605.16 3,810.01 3,136.73

Stock Adjustments 728.72 1,653.90 2,599.33 -180.73 1,958.09Total Income 119,111.93 142,065.98 179,099.61 220,128.13 252,445.87

Expenditure

Raw Materials 98,575.39 123,234.27 159,012.86 193,290.80 223,214.64

Power & Fuel Cost 350.32 401.60 218.29 291.31 357.82

Employee Cost 1,537.18 1,829.10 1,799.23 2,586.80 2,894.86

Other ManufacturingExpenses 547.76 851.19 742.93 821.56 1,200.32

Selling and AdminExpenses 5,602.28 6,533.28 7,435.51 8,528.96 10,084.29

Miscellaneous Expenses 615.27 581.88 867.22 526.75 642.54

Preoperative ExpCapitalized 0.00 0.00 -406.74 -542.83 -403.58

Total Expenses 107,228.20 133,431.32 169,669.30 205,503.35 237,990.89

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 10,389.06 7,436.90 7,825.15 10,814.77 11,318.25PBDIT 11,883.73 8,634.66 9,430.31 14,624.78 14,454.98

Interest 470.86 604.17 995.44 1,496.25 1,589.73


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FINANCIAL REVIEW

TURNOVER

The turnover (exclusive of excise duty) of Indian oil for the year ended 31 st March, 2008was Rs.

2, 47,351crore as compared to Rs.216499crore in the previous year. The total sale of petroleumproducts (including natural gas) for 2007-08 was 62.62MMT, as against 57.97MMT during

2006-07.

Profit Before Tax

The corporations profit before tax was Rs. 10,098 crore during 2007-08 as compared to Rs.

10,502 crore in 2006-07.

PBDT 11,412.87 8,030.49 8,434.87 13,128.53 12,865.25

Depreciation 1,873.79 2,072.80 2,201.46 2,590.31 2,709.70

Other Written Off 0.00 0.00 10.47 113.43 236.53

Profit Before Tax 9,539.08 5,957.69 6,222.94 10,424.79 9,919.02

Extra-ordinary items 144.33 21.45 498.45 76.73 178.64

PBT (Post Extra-ordItems) 9,683.41 5,979.14 6,721.39 10,501.52 10,097.66

Tax 2,646.40 1,063.80 1,790.38 2,949.46 3,104.54

Reported Net Profit 7,004.82 4,891.38 4,915.12 7,499.47 6,962.58

Total Value Addition 8,652.81 10,197.05 10,656.44 12,212.55 14,776.25

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 2,452.83 1,693.62 1,460.02 2,250.89 732.29

Corporate Dividend Tax 314.27 237.29 204.77 361.72 0.00

Per share data (annualized)

Shares in issue (lakhs) 11,680.12 11,680.12 11,680.12 11,680.12 11,923.74

Earning Per Share (Rs) 59.97 41.88 42.08 64.21 58.39

Equity Dividend (%) 210.00 145.00 125.00 190.00 55.00

Book Value (Rs) 197.32 222.47 250.88 298.22 344.58

Source : Asian CERC


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Profit After TaxThe corporation has ended a Profit after Tax of Rs. 6963 crore during the current financial year

as compared to Rs.7499 crore in 2006-07.

Depreciation & Amortization

Depreciation for the year 2007-08 was Rs. 2,709 crore, as against Rs.2590 crore for the year2006-07.

Interest (net)Interest Expenditure (net) of the Corporation for the current year was Rs. 408 crore, as against

Rs. 675 crore during 2006-07.


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BALANCE SHEET OF IOC LTD.

Balance Sheet ..in Rs. Cr


Sources Of Funds

Total Share Capital 1,168.01 1,168.01 1,168.01 1,168.01 1,192.37

Equity Share Capital 1,168.01 1,168.01 1,168.01 1,168.01 1,192.37Share ApplicationMoney 0.00 0.00 0.00 24.36 0.00Preference ShareCapital 0.00 0.00 0.00 0.00 0.00

Reserves 21,879.40 24,816.35 28,134.66 33,664.92 39,893.88

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Net worth 23,047.41 25,984.36 29,302.67 34,857.29 41,086.25

Secured Loans 3,175.21 2,491.23 7,793.54 5,671.42 6,415.78

Unsecured Loans 9,003.35 14,829.01 18,610.77 21,411.27 29,107.39

Total Debt 12,178.56 17,320.24 26,404.31 27,082.69 35,523.17

Total Liabilities 35,225.97 43,304.60 55,706.98 61,939.98 76,609.42


Application Of Funds

Gross Block 36,386.16 39,869.26 43,662.84 54,770.29 56,731.50

Less: Accum.Depreciation 14,339.55 16,488.47 18,639.42 21,400.07 23,959.68

Net Block 22,046.61 23,380.79 25,023.42 33,370.22 32,771.82Capital Work inProgress 5,261.30 8,719.47 9,620.03 4,394.30 9,170.22

Investments 5,595.43 5,554.93 14,521.39 19,990.86 21,535.78

Inventories 14,951.08 19,504.82 24,277.79 24,702.69 30,941.48

Sundry Debtors 3,973.12 5,689.87 6,699.48 6,736.06 6,819.23

Cash and Bank Balance 697.66 434.70 729.54 916.24 815.05

Total Current Assets 19,621.86 25,629.39 31,706.81 32,354.99 38,575.76


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Loans and Advances 11,436.06 11,791.63 10,729.93 11,601.54 14,920.93

Fixed Deposits 0.41 11.62 14.63 9.73 9.38

Total CA, Loans &Advances 31,058.33 37,432.64 42,451.37 43,966.26 53,506.07

Deferred Credit 0 0.00 0.00 0.00 0.00

Current Liabilities 20,928.14 24,553.64 28,377.36 32,305.52 39,326.07

Provisions 7,880.85 7,262.68 7,589.38 7,633.41 1,172.99

Total CL & Provisions 28,808.99 31,816.32 35,966.74 39,938.93 40,499.06

Net Current Assets 2,249.34 5,616.32 6,484.63 4,027.33 13,007.01


Total Assets 35,225.97 43,304.60 55,706.98 61,939.98 76,609.42

Contingent Liabilities 14,955.23 11,466.17 8,724.76 22,676.47 25,574.96

Book Value (Rs) 197.32 222.47 250.88 298.22 344.58

Source : Asian CERC

FINANCIAL REVIEW

Capital Assets

Gross Fixed Assets (including Capital Work in Progress) increased from Rs. 59,165 crore as on31st March, 2007 to Rs. 65902 crore as on 31st March, 2008.

Investments

Investments, including advances for investment, as on 31st March, 2008 were Rs. 21,536 croreas compared to Rs. 19,991crore as on 31st March, 2007. The changes in investments during the

year are mainly on net increase in Government of India Special Oil Bonds. The aggregate market

value of the quoted investments as on 31st

March,2008i.e., investments made in oil & natural gas

corporation Ltd., GAIL(India) Ltd., Petronet LNG Ltd. and Lanka IOC Ltd., is Rs.21,438 crore(As against the cost price of Rs.2, 854 crore).

.

Net Current AssetsNet Current Assets as on 31st March, 2008 were Rs. 18,350 crore, as against Rs. 9,351 crore ason 31st March, 2007.


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RATIO ANALYSIS

LIQUIDITY RATIOS

1.) Current Ratio

Formula to calculate current ratio:

Current ratio = Current assets

Current liabilities

Current ratio definition and explanation:

The current ratio is used to evaluate the liquidity, or ability to meet short term debts.

High current ratios are needed for companies that have difficulty borrowing on short

term notice.

The generally acceptable current ratio is 2:1

The minimum acceptable current ratio is 1:1

Therefore,

Mar08, Current Ratio = 38575.76

40499.06

= 0.95

2.) Quick Ratio

Formula to calculate quick ratio:

Quick ratio = (Current AssetsClosing Stock)

Current liabilities

Quick ratio definition and explanation:

The quick ratio is used to evaluate liquidity.

Higher quick ratios are needed when a company has difficulty borrowing on

Short term notice.

A quick ratioof over 1:1 indicates that if the sales revenue disappeared, the business

could meet its current obligations with the readily available "quick" funds on hand.

Therefore,

Mar08, Quick Ratio =53496.6930941.48

40499.06

= 0.55


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SOLVENCY RATIOS

3.) Debt-Equity Ratio

Formula to calculate debt to equity ratio:

Debt to Equity Ratio = Long Term Debt/Total Shareholders Equity

Debt to equity ratio definition and explanation:

Thedebt to equity (debt or financial leverage)ratio indicates the extent to which

the business relies on debt financing.

Upper acceptable limit of thedebt to equity (debt or financial leverage) ratio is

usually 2:1, with no more than one-third of debt in long term.

Therefore,

Mar08, Debt - Equity Ratio = 35523.17/41086.25

= 0.86: 1

4.) Operating Profit Margin

Formula to calculate Operating Profit Margin:

Operating Profit Margin = EBITDA/Net Revenues

Therefore,

Mar08, Operating Profit Margin = 11318.25/247351.05

= 4.57%

5.) Interest Coverage Ratio

Formula to calculate Interest Coverage Ratio:

Interest Coverage Ratio = Income before interest and tax expenses

Interest on Long term debt

The interest coverage ratioindicates the extent of which earnings are available tomeet interest payments.


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Therefore,

Mar08, Interest Coverage Ratio = 10097.66/1589.73

= 6.35 times

TURNOVER RATIOS

6.) Inventory Turnover Ratio

Formula to calculate Inventory Turnover Ratio:

Inventory Turnover Ratio = Cost of Goods Sold

Average Inventories

The inventory turnover ratiomeasures the number of times a company sellsits inventory during the year.Therefore,

Mar08, Inventory Turnover Ratio = 237990.89

27822.085

= 8.55 times

7.) Debtors Turnover Ratio

Formula to calculate Debtors Turnover Ratio:

Debtors Turnover Ratio = Net Credit Sales

Average A/C Receivables

Therefore,

Mar08, Debtors Turnover Ratio = 247351.05

6777.645

= 36.49 times

8.)Average Collection Period (in Days)

Formula to calculate Average Collection Period (in Days):Average Collection Period = 365

DTR


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Therefore,

Mar08, Average Collection Period (in Days) = 365

36.49

= 10 days

9.)Fixed Assets Turnover Ratio

Formula to calculate Fixed Assets Turnover Ratio:

Fixed Assets Turnover Ratio = Net Sales

Net Fixed Asset

Therefore,

Mar08, Fixed Assets Turnover Ratio = 247351.05

32771.82

= 7.54 times

PROFITABILITY RATIOS

10.) Gross Profit Ratio

Formula to calculate Gross Profit Ratio:

Gross Profit Ratio = Gross Profit * 100

Net Sales

Low gross profit margin ratio indicates that low amount of earnings, required to payfixed costs and profits, are generated from revenues.

The gross profit margin ratio is a good ratio to benchmark against competitors.

Therefore,

Mar08, Gross Profit Margin Ratio = 247351.05237990.89* 100

247351.05

= 3.78%


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11.) Net Profit Margin

Formula to calculate Net Profit Margin:

Net Profit Margin = Net Profit after Tax*100

Net Sales

Indicates the revenue required to earn a dollar profit after tax.

Therefore,

Mar08, Net Profit Margin = 6962.58*100

247351.05= 2.81%

12.) Return on Net Worth

Formula to calculate Return on Net Worth:

Return on Net Worth = (PATPreference Dividend)* 100

Equity Shareholders Funds

A return of over 10% indicates enough to pay common share dividends and retainfunds for business growth.

Therefore,

Mar08, Return on Net Worth = (6962.580.00)* 100

(41086.25124.59)

= 16.99%

13.) Earning Per Share (EPS)

Formula to calculate Earning per Share:

Earning Per Share = Profit after Tax

No. of Shares

Therefore,

Mar08, EPS = 6962.58

1192374306

= 58.39


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CALCULATION OF RATIOS OF IOC LTD FROM FINANCIAL

YEAR MARCH 2004 TO MARCH 2008.

Earning Per Share 59.97 41.88 42.08 64.21 58.39

Ratios Mar04 Mar05 Mar06 Mar07 Mar08

Current Ratio 0.68 0.81 0.88 0.81 0.95

Quick Ratio 0.55 0.56 0.50 0.48 0.55

Debt-equity Ratio 0.52 0.67 0.90 0.78 0.86

Operating ProfitRatio

8.88% 5.34% 4.47% 4.99% 4.57%

Interest CoverageRatio

20.56 9.9 6.75 7.01 6.35

Inventory

Turnover Ratio

7.40 7.74 7.75 8.39 8.55

Debtors Turnover

Ratio

29.3 28.81 28.23 32.23 36.50

Fixed AssetsTurnover Ratio

5.30 5.95 6.98 6.48 7.54

Average

Collection Period

12days 13days 13days 11days 10days

Gross Profit Ratio 8.26% 4.15% 2.98% 5.07% 3.78%

Net Profit Ratio 5.99% 3.51% 2.81% 3.46% 2.81%

Return on NetWorth

30.5% 18.84% 16.8% 21.6% 16.99%


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Intra-firm comparison of ratios of IOC LTD

From the above calculation it has been observed that;

Current ratio:It has increased to 0.95 from March04 to March08 but this current ratio

is below generally accepted norm of 1.33:1. Therefore, resources provided by the

financial institutions are not efficiently utilized.

Quick ratio:It has increased from 0.55 to 0.56 from year Mar04 to Mar05. After that it

has declined to 0.48 in the year 07 and then increased to 0.55 in the year Mar08. Thus,

IOCL is not able to meet its current obligations as it doesnt have readily available funds.

Debt-equity ratio:Very low ratio during March04. Based on a standard ratio of 1.5: 1.

In the year 08, debt equity ratio has increased to 0.86:1. Company is relying more on debt

for financing its assets.

Operating ratio: This ratio has drastically decreased to 4.57% in the year 2008 from

8.88% in the year 2004.

Debtor turnover ratio: This ratio has increased from 29.3times to 36.50times from the

year 2004 to 2008.

Fixed asset turnover ratio: This ratio has increased from 5.30times to 6.98times from

year 2004 to 2006 and after that it has decreased to 6.48times in the year 2007 and in the

year it reached to 7.54times. Growth in the efficiency of fixed assets utilization.

Gross profit ratio: It has decreased to 2.98% from the year 2004 to year 2006. This ratio

reached to 5.07% in the year 2007 after that it comes down to 3.78%. Company have to

pay fixed costs out of the revenues as it has low earnings.

Net profit ratio: Net profit ratio is 2.81% in the current year as compared to 3.46% in

the previous year. Therefore, this ratio has been decreased by 81.21%.

Return on net worth: 28.57% improvement over 2005-2006. But in the year 2008 it

comes down to 16.99% from 21.6% in the previous year. It shows not a very goodoperational efficiency.

Earnings per Share:Earnings per Share for the year 2007-08 work out to Rs. 58.39 as

compared to Rs. 62.90 in the previous year. Cash Earnings per Share for the current year

work out to Rs.81.10 as compared to Rs. 84.97 in the previous year.


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Accreditation

Indias largest commercial enterprise with leading market Shares in

downstream segment of Oil business.

Highest ranked Indian company in the Fortune 'Global 500' listing (movedup 19 places to 116th position in 2008).

18th largest petroleum Company in the worldFortune Global 500.

Awards/recognitions: Indias No. 1 Corporate in annual listing of Business Standard (BS

1000).

Indias leading company in Economic Times (ET 500) Listing.

Rated amongst top ten in Business India (BI Super 100) and amongstIndias top valuable companies in BT 500 listing.

Frost & Sullivan award for Industry Innovation & advancement inIndian Bio-fuel industry.

Emerged as the Most Trusted Fuel Pump Brand in a Surveyconducted by Readers Digest and AC Nielsen.


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BHARAT

PETROLEUMCORPORATION


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Ashok Sinha is Chairman and Managing Director,

Bharat Petroleum Corporation Ltd. An electrical

engineer and an alumnus of IIM Bangalore with 29

years of experience in the petroleum industry, he has

received several awards, including the India CFO

Award 2001 for Information and knowledge

Management by the Economic Intelligence Unit (EIU)

India and American Express.


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PROFIT & LOSS A/C OF BHARAT PETROLEUM CORPORATION

Profit & Loss account ..in Rs. Cr.Mar '04 Mar '05 Mar '06 Mar '07 Mar '0812mths 12 mths 12 mths 12 mths 12 mths

INCOME

Sales Turnover 53,448.36 63,857.00 85,149.62 107,452.27 121,684.07

Excise Duty 5,464.34 5,979.60 9,616.32 10,895.42 11,475.94

Net Sales 47,984.02 57,877.40 75,533.30 96,556.85 110,208.13

Other Income 448.45 405.03 304.66 550.99 1,091.63

Stock Adjustments -284.03 1,586.25 754.4 205.45 -392.5Total Income 48,148.44 59,868.68 76,592.36 97,313.29 110,907.26

Expenditure

Raw Materials 41,909.81 54,571.66 71,461.39 88,745.19 101,743.99

Power & Fuel Cost 82.99 19.69 47.72 66.64 61.75

Employee Cost 661.83 752.29 881.35 1,003.70 1,297.21

Other ManufacturingExpenses 123.59 141.54 205.27 243.43 229.54

Selling and Admin

Expenses 1,667.23 1,765.58 2,059.31 2,365.31 2,508.57


Preoperative ExpCapitalized 0 0 0 0 0

Total Expenses 44,831.06 57,771.43 75,186.55 93,044.50 106,664.67



Operating Profit 2,868.93 1,692.22 1,101.15 3,717.80 3,150.96

PBDIT 3,317.38 2,097.25 1,405.81 4,268.79 4,242.59

Interest 104.97 139.8 247.41 477.35 672.47

PBDT 3,212.41 1,957.45 1,158.40 3,791.44 3,570.12

Depreciation 561.16 596.04 768.01 904.11 1,098.21


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FINANCIAL REVIEW

The gross profit before interest, depreciation and tax (PBDIT) for the year stood at Rs.43, 679.65million, representing an increase of 3.89% over the previous year. The profit before tax for the

year of Rs. 25,972.87 million has declined by 6.16 % as compared to Rs. 27,676.44 million in

2006-07.

After providing for tax, (including deferred tax and fringe benefit tax)of Rs. 10,167.26 million as

against Rs. 9,621.69 million during the last year, the profit after tax for 2007-08 stood at Rs.

15,805.61 million as compared to Rs. 18,054.75 million in 2006-07, reflecting a decline of

12.46% over the previous year.

The Board of Directors has recommended a dividend of 40% (Rs.4 per share) for the year on

the paid-up share capital of Rs.3, 615.42 million, which would absorb a sum of Rs. 1,537.78

million out of the profit after tax, inclusive of Rs. 91.61 million towards Corporate DividendTax on distributed profits.

Other Written Off 0 0 0 0 0

Profit Before Tax 2,651.25 1,361.41 390.39 2,887.33 2,471.91

Extra-ordinary items -28.25 31.53 17.81 -126.5 118.65

PBT (Post Extra-ordItems) 2,623.00 1,392.94 408.2 2,760.83 2,590.56

Tax 928.44 427.14 116.56 955.33 1,010.00

Reported Net Profit 1,694.57 965.8 291.65 1,805.48 1,580.56

Total Value Addition 2,921.24 3,199.77 3,725.15 4,299.32 4,920.68

Preference Dividend 0 0 0 0 0

Equity Dividend 525 375 90.39 578.47 144.62

Corporate Dividend Tax 67.27 52.04 12.68 91.87 9.16

Per share data (annualized)

Shares in issue (lakhs) 3,000.00 3,000.00 3,000.00 3,615.42 3,615.42

Earning Per Share (Rs) 56.49 32.19 9.72 49.94 43.72

Equity Dividend (%) 175 125 25 160 40

Book Value (Rs) 194.99 212.95 302.6 284.16 322.97

Source : Asian CERC


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BALANCE SHEET OF BHARAT PETROLEUM CORPORATION

Balance Sheet in Rs. Cr...

Mar '04 Mar '05 Mar '06 Mar '07 Mar '0812mths 12 mths 12 mths 12 mths 12 mths

Sources of funds

Total Share Capital 300 300 300 361.54 361.54

Equity Share Capital 300 300 300 361.54 361.54

Share Application Money 0 0 61.54 0 0

Preference Share Capital 0 0 0 0 0

Reserves 5,549.72 6,088.43 8,777.88 9,912.00 11,315.30Revaluation Reserves 0 0 0 0 0

Net worth 5,849.72 6,388.43 9,139.42 10,273.54 11,676.84

Secured Loans 1,973.74 1,173.42 3,071.32 2,593.96 2,730.21

Unsecured Loans 715.98 2,708.20 5,302.28 8,235.28 12,292.17

Total Debt 2,689.72 3,881.62 8,373.60 10,829.24 15,022.38

Total Liabilities 8,539.44 10,270.05 17,513.02 21,102.78 26,699.22



Application Of Funds

Gross Block 11,157.80 12,668.84 17,376.84 19,457.58 21,500.93

Less: Accum.Depreciation 5,111.97 5,668.72 7,459.48 8,476.53 9,532.26

Net Block 6,045.83 7,000.12 9,917.36 10,981.05 11,968.67

Capital Work in Progress 1,407.65 1,348.55 1,168.11 852.34 766.71

Investments 1,976.97 1,677.14 3,877.42 7,385.42 9,358.01Inventories 4,286.02 6,258.56 9,044.77 8,661.26 10,603.84

Sundry Debtors 821.07 854.58 1,315.89 1,518.73 1,608.61

Cash and Bank Balance 625.72 351.5 491.19 863.05 960.67

Total Current Assets 5,732.81 7,464.64 10,851.85 11,043.04 13,173.12

Loans and Advances 2,811.19 3,016.10 2,676.22 3,797.44 7,797.30


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FINANCIAL REVIEW

Net Worth

BPCLs net worth as on 31st March, 2008 was Rs. 11,676.84 crore, as compared to Rs.

10,273.54 crore as at the end of the previous year.

InvestmentsInvestments, as on 31st March, 2008 were Rs. 9358.01crore as compared to Rs. 7385.42crore as

on 31st March, 2007.

Fixed Deposits 0.89 0.89 0.91 0.91 0.92

Total CA, Loans &Advances 8,544.89 10,481.63 13,528.98 14,841.39 20,971.34

Deferred Credit 0 0 0 0 0

Current Liabilities 8,549.62 9,633.85 10,466.36 11,881.37 15,379.36

Provisions 886.28 603.56 512.49 1,076.07 986.15

Total CL & Provisions 9,435.90 10,237.41 10,978.85 12,957.44 16,365.51

Net Current Assets -891.01 244.22 2,550.13 1,883.95 4,605.83

Miscellaneous Expenses 0 0 0 0 0

Total Assets 8,539.44 10,270.03 17,513.02 21,102.76 26,699.22

Contingent Liabilities 2,287.45 2,350.15 2,751.56 3,590.62 5,083.23

Book Value (Rs) 194.99 212.95 302.6 284.16 322.97

Source : Asian CERC


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CALCULATION OF RATIOS OF BHARAT PETROLEUM

CORPORATION FROM FINANCIAL YEAR MARCH 2004 TO MARCH2008.

Earning PerShare

56.49 32.19 9.72 49.94 43.72

Ratios Mar04 Mar05 Mar06 Mar07 Mar08

Current Ratio 0.7 0.77 0.67 0.61 0.74

Quick Ratio 0.43 0.4 0.39 0.47 0.61

Debt-equity Ratio 0.46 0.61 0.92 1.05 1.29

Operating ProfitRatio 5.97% 2.92% 1.45% 3.85% 2.85%

Interest CoverageRatio

26.12 10.98 3.21 7.5 4.51

Inventory

Turnover Ratio

11.3 9.32 8.4 11.24 11.64

Debtors Turnover

Ratio57.68 69.08 69.6 68.13 70.48

Fixed AssetsTurnover Ratio

6.95 7.34 7.8 8.47 5.15

Average

Collection Period

6days 5days 5days 5days 5days

Gross ProfitRatio

6.6% 3.41% 1.73% 4.11% 1.86%

Net Profit Ratio 3.53% 1.66% 0.38% 1.86% 1.43%

Return on Net

Worth28.97% 15.12% 3.19% 17.57% 13.53%


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Intra-firm comparison of ratios of Bharat Petroleum Corporation

From the above calculation it has been observed that;

Current ratio: It has increased to 0.74 in the current year from 0.61 in the previous year

but this current ratio is below generally accepted norm of 1.33:1. Therefore, resources

provided by the financial institutions is not efficient.

Quick ratio: It has decreased from 0.43 to 0.39 from year Mar04 to Mar06. After that it

has increased to 0.47 in the year 2007 and then increased to 0.61 in the year 2008. Thus,

BPCL is not able to meet its current obligations as it doesnt have readily available funds.

Debt-equity ratio:Very low ratio during March04. Based on a standard ratio of 1.5: 1.

It goes on increasing from year2005.In the year 2008 debt equity ratio has increased to

1.29:1 which is very close to standard ratio. This indicates the extent to which thecompany relies on debt financing.

Operating ratio: This ratio has drastically decreased to 2.85% in the year 2008 from

5.87% in the year 2004.

Debtor turnover ratio:This ratio has increased to 70.48 in the current year from 68.31

in the previous year.

Fixed asset turnover ratio: There has been an increasing trend in the fixed assets

turnover ratio for the past 4 years. But in the current year it comes down to 5.15times.

Gross profit ratio:It has decreased to 1.73% from the year 2004 to year 2006. This ratio

rises to 4.11% in the year 2007 after that it falls to 1.86%.

Net profit ratio: Net profit ratio is 1.43% in the current year as compared to 1.86% in

the previous year. Therefore, this ratio has been decreased by 76.88%.

Return on net worth: 50.78% improvement over 2005-2006. But in the year 2008 it

comes down to 13.53% from 17.57% in the previous year. It shows poor operational

efficiency.

Earning per share:The earnings per share stood at Rs. 43.72 in 2007-08 as compared to

Rs. 49.94 during 2006-07. Internal cash generation during the year was higher at Rs.

26,363.28 million as against Rs.22, 177.03 million in the previous year. BPCLs

contribution to the exchequer by way of taxes and duties during the year increased to Rs.

260,475.75 million from Rs.243, 562.22 million during the last financial year.


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Industry Market Share

Percentage Share

Key:

IOCL Indian oil group

BPCL Bharat Petroleum Corporation limited

HPCL Hindustan Petroleum Corporation limited

Note: All figures for FYE08 RIL Reliance industries limited

IOCL

48.84

BPCL

20.89HPCL

18.55

RIL

9.35

OTHERS

2.47

Category 1 Category 2 Category 3 Category 4 category5

Category 1

Category 2

Category 3

Category 4

category5

Market Size118.827MMT


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Inter-firm comparison of IOCL and BPCL

LIQUIDITY RATIOSIOCL is making better utilization of resources than BPCL. Current ratio of IOCL is greater

than the BPCL. But the quick ratio of BPCL is more i.e 0.61:1 than the IOCL i.e 0.55:1

SOLVENCY RATIOS

IOCL debt-equity ratio is more than that of BPCL. Therefore, IOCL finance its assets

through long-term borrowings.

TURNOVER RATIOS

These ratio measures the extent of turnover or volume of gross income generated by the fixed

assets of a company. Therefore, IOCL is making efficient utilization of fixed assets.

PROFITABILITY RATIOS

In terms of profitability ratios, IOCL is doing very well. Increase in RONW contributed by

improvement in both the net profit margin as well as net worth turnover. Net profit ratio of IOCL

is almost double the ratio of BPCL.

BRIEF ANALYSIS

Though both IOCL and BPCL have been performing well. IOCL has recorded improvement in

all areas except quick ratio, debt-equity ratio and debtor turnover ratio.

On all other parameters, IOCL performance is far better than the BPCL. However, stronger than

BPCL.

IOCL has the highest market size of 48.84% than the BPCL with 20.89%. Market size of IOCL

is more than the double of BPCL. Therefore, IOCL is the no.1 oil industry.


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BIBLIOGRAPHY

www.moneycontrol.com

Ambrish Gupta : Financial accounting for

management
http://www.moneycontrol.com/http://www.moneycontrol.com/

Date post:	06-Apr-2018
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