INDIAN OIL CORPORATION

LIMITED

•IndianOil is also the highest ranked Indian company in the prestigious Fortune 'Global 500' listing, having moved up 19 places to the 116th position in 2008. It is also the 18th largest petroleum company in the world.

FINANCIAL STATEMENT

ANALYSIS

OF

COMPANY

RATIOANALYSIS

Liquidity

Ratios

Coverage

RatiosTurnover Ratios

Leverage

Ratios

Profitability

Ratios

LIQUIDITYRATIO

CURRENTRATIO

QUICKRATIO

CASH RATIO

CURRENT RATIOYEAR C.R

2005 1.2921

2006 1.4053

2007 1.3996

2008 1.3302

2009 1.5181

2010 1.25380

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

YEAR 2004 2005 2006 2007 2008 2009

QUICK RATIO

YEAR Q.R

2005 0.643985

2006 0.629437

2007 0.547197

2008 0.540943

2009 0.679925

2010 0.6160930

0.1

0.2

0.3

0.4

0.5

0.6

0.7

04 05 06 07 08 09

QR

QR

CASH RATIOYEAR C.R

2005 0.0553

2006 0.0458

2007 0.0313

2008 0.0293

2009 0.0238

2010 0.0224 0

0.01

0.02

0.03

0.04

0.05

0.06

04 05 06 07 08 09

C.R

C.R

ANALYSIS• The current ratio for the last 6 years is appox.

1.3:1 which is quite unsatisfactory according to the standard norms, but in this industry sector it is fair enough.

• The quick ratio is 0.6:1 which is again unsatisfactory. It implies that the company may find it difficult to pay its current liabilities.

• The cash ratio is also not adequate in meeting the short-term obligations of the firm.

LEVERAGERATIOS

Debt

Equity Ratio

Equity

Asset Ratio

Interest

Coverage Ratio

Debt

Asset RatioPreference Dividend

Coverage Ratio

DEBT EQUITY RATIO

YEAR D/E

2005 0.64845

2006 0.78237

2007 1.02594

2008 0.84554

2009 0.94480

2010 1.07531 0

0.2

0.4

0.6

0.8

1

1.2

04 05 06 07 08 09

D/E

D/E

DEBT ASSET RATIO

YEAR D/A

2004 0.209052

2005 0.240617

2006 0.296022

2007 0.266715

2008 0.287211

2009 0.324213 0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

04 05 06 07 08 09

D/A

D/A

ANALYSIS

• From the debt-equity, debt-asset and equity-asset ratios, we interpret that most of the money involved is of owner’s and it is safe for creditors to invest money in this company.

• Thus we can say that company can perform satisfactorily in long term.

TURNOVERRATIO

INVENTORYTURNOVER

RATIO

DEBTORSTURNOVER

RATIO

AVERAGECOLLECTION

PERIOD

TOTALASSET

TURNOVERRATIO

INVENTORY TURNOVER RATIO

YEAR

ITR(times)

2004 6.699831

2005 5.836031

2006 6.686472

2007 6.915437

2008 7.885222

2009 11.084820

2

4

6

8

10

12

04 05 06 07 08 09

ITR

ITR

DEBTORS TURNOVER RATIO

YEAR DTR(times)

2004 14.48785

2005 13.65056

2006 18.74085

2007 17.55006

2008 13.02869

2009 17.187330

24

68

1012

1416

1820

04 05 06 07 08 09

DTR

DTR

TOTAL ASSET TURNOVER RATIO

YEAR TATR(times)

2004 1.89321

2005 1.79170

2006 1.89715

2007 2.07175

2008 1.91765

2009 2.166250

0.5

1

1.5

2

2.5

04 05 06 07 08 09

TATR

TATR

ANALYSIS• The avg. Inventory turnover ratio for the last 6

yrs is approx 6 times per year,which is satisfactory. It implies that the inventories have been sold fast.

• The avg. Debtors turnover ratio is 15 times per year (industrial avg. is 7) which is quite high and indicates that there is a short time-lag between sales and cash collection

• The TATR is around 1.8 (avg. of 6 yrs)• From the above turnover ratios we can conclude

that the company’s trade credit management is satisfactory.

PROFITABILITYRATIOS

Gross Profit Margin

Ratio

Net Profit Ratio

Operating

Profit RatioEarning Power Ratio

Return

on Total

Assets

NET PROFIT RATIO

YEAR NPR(%)

2004 5.79

2005 3.897

2006 2.654

2007 3.572

2008 3.298

2009 0.7570

0.01

0.02

0.03

0.04

0.05

0.06

04 05 06 07 08 09

NPR

NPR

RETURN ON TOTAL ASSET

YEAR ROTA(%)

2004 10.9617

2005 6.9833

2006 5.0367

2007 7.401

2008 6.3257

2009 1.64110

0.02

0.04

0.06

0.08

0.1

0.12

04 05 06 07 08 09

ROTA

ROTA

EARNING PER RATIO

YEAR EPR(%)

2004 16.0656

2005 9.8272

2006 8.4142

2007 12.0844

2008 10.5712

2009 5.38330

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

04 05 06 07 08 09

EPR

EPR

ANALYSIS•The Net Profit Margin (avg. of 6

yrs) is 3.25% which is a little low. But since the inventory turnover ratio is high it can earn a high rate of return on investments.

•There is a huge drop in ROTA from 2004 to 2009. In 2004 the analysis shows that the firm did utilize it’s assets efficiently.

DU PONTANALYSIS

Pioneered by Du Pont Company of USA. It analyses important inter-relationships based

on information found in financial statements. It is defined as- Net Profit = Net Profit × Net

Sales Total assets Net sales Total

assets ROTA NPM TATR Such a decomposition helps in understanding

how the return on total assets is influenced by the net profit margin and the total asset turnover ratio.

YEAR 2005 2006 2007 2008 2009 2010

NPM 0.0579 0.03897 0.02654 0.03572 0.03298 0.00757

TATR 1.8932 1.79170 1.89715 2.07175 1.91765 2.16625

NPM X

TATR

0.1096 0.06983 0.05036 0.07401 0.06325 0.01641

= = = = = = =

ROTA 0.1096 0.06983 0.05036 0.07401 0.06325 0.01641

OVERALL ANALYSIS

Thus, we see that the short-term financial state of the company is slightly weak but it is satisfactory in the long-term. The assets are employed efficiently by the firm. The use of capital employed is also done efficiently.

But there is a huge drop in ROTA, in the year 2010. In fact the net profit has also dropped a great extent in this year. One of the major reasons for this drop is the fluctuations in the international crude oil price.

Otherwise, the company has been performing well over the period from ’05 to ’09.