Final Fm Assign

7/27/2019 Final Fm Assign

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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
http://en.wikipedia.org/wiki/File:Indian_Oil_Logo.svg


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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.

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