Capital Structure Analysis of Indian OilCorporation Limited (IOCL)A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATIONDEPARTMENT OF MANAGEMENT STUDIES, PONDICHERRY UNIVERSITY

UNDER THE GUIDANCE OFInstitutional guide:Dr. M.Basheer Ahmed Khan

Department of Management

Studies

Pondicherry University

Organisational guide: Mr. Himangshu Bardoloi Accounts Officer Guwahati Refinery (IOCL)

Submitted By:Kankan Deka

Regn. No.-13397039MBA 2rd Year.

DECLARATIONI hereby declare that the project report titled CAPITAL STRUCTURE ANALYSIS OF INDIA OIL CORPORATION LIMITED submitted in partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION at Department of Management Studies, Pondicherry University is an original piece of work and not submitted for award of any other degree, diploma, fellowship, or any other similar title or prizes.As per my knowledge and belief, the substance in the report does not form the part of any other business or research work. Also, this report has never been submitter earlier or used for any academic purpose.

Date-29.08.14 Kangkan deka

Place- Guwahati Regn no. 13397039

MBA, 3rd semester

Pondicherry University

2

GUIDES CERTIFICATECertified that this report entitled CAPITAL STRUCTURE ANALYSIS OF INDIAN OIL CORPORATION LIMITED is submitted in partial fulfillment for the award of MBA is record of independent research work carried out by KANGKAN DEKA under my guidance and no part of this corporate Exposure Training has been previously submitted earlier for the award of any degree/diploma.

Professor & Head Faculty Guide:

Dr. T .Nambirajan Dr.M.Basheer Ahmed Khan Department Of Management Department Of Management Studies Studies

Pondicherry University Pondicherry university

3

ACKNOWLEDGEMENTSThis project, though an individual project, wouldnt have been possible without the constant help and guidance of a few individuals whose support has been vital to the completion of the project.At the outset, I would like to thank Mr. Hitesh Barman (Manager Vigilance department) for providing me the opportunity to do a project at Indian Oil Corporation limited.This research project would not have been possible without the support of many people. I wish to express my gratitude to my supervisor, Mr. Vishal Maheshwari, who was abundantly helpful and offered invaluable assistance, support and guidance. Deepest gratitude are also due to the members of the finance department, Ms. Rina Choudhary, Mr. Munin Baradakai without whose knowledge and assistance this study would not have been successful.I would also like to convey my thanks to my college faculty, Prof. M. BasheerAhmed Khan.And finally I wish to express my love and gratitude to my beloved family; for their understanding & endless love through the duration of my internship.Place: Guwahati Kangkan dekaMBA 2nd yearPondicherry University4

TABLE OF CONTENTSCHAPTER 1: INTRODUCTION TO THE PROJECT

1.1: Introduction to the topic

1.2: Objective of the study

CHAPTER 2: PROFILE OF THE COMPANY AND THE MARKET SCENARIO

2.1: Origin of oil industry in India.

2.2: About IOCL and Guwahati refinery.

2.3: Vision, Mission and values. CHAPTER 3: RESEARCH METHODOLOGY

3.1: Research design.

3.2: Data source and collection.

3.3: Capital structure analysis.

CHAPTER 4: DATA INTERPRETATION AND ANALYSIS CHAPTER 5: CONCLUSION

5.1: FINDINGS

5.2: SUGGESTIONS

5.3: LIMITATIONS

5.4: CONCLUSION CHAPTER 6: BIBLIOGRAPHY

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CHAPTER 1: INTRODUCTION TO THE PROJECT6

Introduction to the topic:Capital Structure of a Company refers to the composition or make up of its Capitalization and it includes all long term Capital resources i.e. loans, reserves, shares and bond. It shows the mix of a company's long-term debt, specific short-term debt, common equity and preferred equity. The capital structure is how a firm finances its overall operations and growth by using different sources of funds. In finance, capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities. A firm's capital structure is then the composition or'structure' of its liabilities. For example, a firm that sells $20 billion in equity and $80 billion in debt is said to be 20% equity-financed and 80% debt- financed. The firm's ratio of debt to total financing, 80% in this example is referred to as the firm's leverage. In reality, capital structure may be highly complex and include tens of sources. Gearing Ratio is the proportion of the capital employed of the firm which come from outside of the business finance, e.g. by taking a short term loan etc.Debt comes in the form of bond issues or long-term notes payable, while equity is classified as common stock, preferred stock or retained earnings. Short-term debt such as working capital requirements is also considered to be part of the capital structure structure. A company's proportion of short and long-term debt is considered when analyzing capital Structure. When people refer to capital structure they are most likely referring to a firm's debt-to-equity ratio, which provides insight into how risky a company is. Usually a company more heavily7financed by debt poses greater risk, as this firm is relatively highly levered. The long term creditors would judge the soundness of the firm on the basis of the long term financial strength measured in terms of ability to pay the interest regularly as well as repay the installment of the principal on due dates or in one lump sum at the time of maturity. Accordingly, there are two different, but mutually dependent and interrelated, types of leverage ratio First Ratio which are based on the relationship between borrowed funds and owners capital. In this Paper, researcher explain the different leverage ratio as also how they can be used to draw inferences regarding the financialsoundness of the firm.8

OBJECTIVES OF THE STUDY To examine the Capital Structure policy and pattern of IOCL.

To understand the capital structure of Indian Oil Corporation

To identify the share capital and debt of the company.

To Find out the earnings per share

To Find out the leverage

To give suggestions for improvement of the composition of Indian Oil corporation LtdCapitalStructure

Evaluate the contents of IOCL Debts and Equity.

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CHAPTER 2: PROFILE OF THE COMPANY AND THEMARKET SCENARIO10COMPANY OVERVIEWINDIAN OIL CORPORATION LTDIOCL (Indian Oil Corporation) was formed in 1964 as the result of merger of

Indian Oil Company Ltd. (Estd. 1959) and Indian Refineries Ltd. (Estd. 1958).

Indian Oil Corporation Ltd. is currently India's largest company by sales with a turnover of Rs. 2 441 329 600, and profit of Rs. 25 994 000 for fiscal 2009.

Indian Oil Corporation Ltd. is the highest ranked Indian company in the prestigious Fortune Global 500. It is ranked at 109th position in 2010. It is also the 20th largest petroleum company in the world.

Indian Oil and its subsidiaries today accounts for 49% petroleum productsmarket share in India.

Indian Oil group has sold 59.29mn tonnes of Petroleum including 1.74mn tonnes of natural gas in the domestic market and exported 3.33mn tonnes in the yr 2008-09.IOCL GROUPIOCL Group consists of Indian Oil Corporation Ltd. and the following subsidiaries:

Lanka IOC Ltd

Indian Oil (Mauritius) Ltd. IOCL Middle East FZEIndian Oil Technologies Ltd.

Chennai Petroleum Corporation Ltd. (CPCL) Bongaigaon Refinery & Petrochemicals Ltd (BRPL)

11Location of IOCL in India

12The current Refining capacity stands at 55.01 million ton per annum.

Yet another refinery is being set up on the East Coast at Paradip (Orissa). The outlay includes provision for Expansion of Barauni Refinery, Quality improvement for HSD at Haldia, Gujarat, Mathura, Grass Root Refinery in Eastern Sector, Residue Up gradation at Gujarat, and Implementation of Lube Quality improvement at Haldia etc.

The company is mainly controlled by the Government of India which owns approx.. 79% shares in the company. It is one of the Maharatna status companies of India apart from Coal India Limited, NTPC Limited, Oil and Natural Gas Corporation, Steel Authority of Indian Limited, Bharat Heavy Electricals Limited and Gas Authority of India Limited.

Indian Oil Corporation Limited operates a network of 11,214 km long crude oil, petroleum product and gas pipelines with a capacity of 77.258 million metric tonnes per annum of oil and 10 million metric standard cubic meter per day of gas. Cross-country pipelines are globally recognized as the safest, cost-effective, energy-efficient and environment friendly mode for transportation of crude oil and petroleum products. Indian Oil has one of the largest petroleum marketing

and distribution networks in Asia with over 35,000 marketing points.

13VISION OF IOCLA major diversified, transnational, integrated energy company, with national leadership and a strong environment conscience, playing a national role in oil security & public distribution.

MISSION OF IOCLIOCL has the following mission:

To achieve international standards of excellence in all aspects of energy and diversified business with focus on customer delight through value of products and services and cost reduction.

To maximize creation of wealth, value and satisfaction for the stakeholders.

To attain leadership in developing, adopting and assimilating state- of- the-art technology for competitive advantage.

To provide technology and services through sustained Research and

Development.

To foster a culture of participation and innovation for employee growth and contribution.

To cultivate high standards of business ethics and Total Quality

Management for a strong corporate identity and brand equity.

To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience.

14VALUES OF IOCLValues exist in all organizations and are an integral part of any it. Indian Oil nurtures a set of core values:

1. CARE

2. INNOVATION

3. PASSION

4. TRUST

OBJECTIVES OF INDIAN OILIOCL has defined its objectives for succeeding in its mission. These objectives are:

To serve the national interests in oil and related sectors in accordance and consistent with Government policies.

To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil refining, transportation and marketing activities and to provide appropriate assistance to consumers to conserve and use petroleum products efficiently.

To enhance the country's self-sufficiency in crude oil refining and build expertise in laying of crude oil and petroleum product pipelines.

To further enhance marketing infrastructure and reseller network for providing assured service to customers throughout the country.

To create a strong research & development base in refinery processes,

product formulations, pipeline transportation and alternative fuels

15with a view to minimizing/eliminating imports and to have next generation products.

To optimize utilization of refining capacity and maximize distillate yield

and gross refining margin.

To maximize utilization of the existing facilities for improving efficiency and increasing productivity.

To minimize fuel consumption and hydrocarbon loss in refineries and stock loss in marketing operations to effect energy conservation.

To earn a reasonable rate of return on investment.

To avail of all viable opportunities, both national and global, arising

out of the Government of Indias policy of liberalization and reforms.

To achieve higher growth through mergers, acquisitions, integration and diversification by harnessing new business opportunities in oil exploration & production, petrochemicals, natural gas and downstream opportunities overseas.

To inculcate strong core values among the employees and continuously update skill sets for full exploitation of the new business opportunities.

To develop operational synergies with subsidiaries and joint ventures and continuously engage across the hydrocarbon value chain for the

benefit of society at large.

16Major Divisions of IOCL:IOCL

Indian Oil Corporation Limited (Indian Oil) owns and operates a network of crude oil and petroleum product pipeline in India. It has two divisions: Refineries Division and Marketing Division. The Refineries Division is focused on managing the public sector refineries and the Marketing Division is focused on distribution not only the entire production of public sector refineries but also the deficit products imported. It is organized in two segments: sale of petroleum products, and other businesses, which comprises sale of imported crude oil, sale of gas, petrochemicals, explosives and cryogenics, wind mill power generation and oil

and gas exploration activities jointly undertaken in the form of unincorporated

17joint ventures. The Digboi Refinery of Assam Oil Division processed 0.623 million metric tons (MMT) of crude oil during the year. The Division sold about 1.067

MMT of products. IBP Division comprises the explosives and cryogenics business.

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CHAPTER 3: RESEARCH METHODOLOGY19RESEARCH DESIGNA research design is the specification of method and procedure for accruing the information needs. It is overall operational pattern of frame work of project that stipulates what information is to be collected for source by the procedures.

Descriptive Research design is appropriate for this study.

Descriptive study is used to study the situation. This study helps to describe the situation. A detail description about present and past situation can be found out by the descriptive study.

DATA SOURCE AND COLLECTIONThis research is based on secondary data. This means the data are already available, i.e. the data which have been already collected and analyzed by someone else.

Secondary data are used for the study of ratio analysis of this company and also its competitors. To collect the data, company annual report, internet websites has been used.

Analyzing and interpreting the information available in the financial statements and drawing meaningful conclusions from them.20CAPITAL STRUCTUREA mix of a company's long-term debt, specific short-term debt, common equity and preferred equity . The capital structure is how a firm finances its overall operations and growth by using different sources of funds.

Debt comes in the form of bond issues or long-term notes payable, while equity is classified as common stock, preferred stock or retained earnings. Short-term debt such as working capital requirements is also considered to be part of the capital structure. But the IOCL does not issue the preference shares and debenture to the public of the company

COMPONENTS OF CAPITAL STRUCTURE:CAPITAL STRUCTURE Shareholder s fund s

Borrowed funds-equity capital-preference capital (Nil)

-debenture (Nil)-Term loan

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CHAPTER 4: DATA ANALYSIS22SHARE CAPITAL60005000400030002000

Authorised Capital(CR)Issued Capital (CR)

100002014 2013 2012 2011 2010AUTHORISED CAPITAL: The maximum equity capital a company canraise, which is mentioned in the Memorandum of Association and Articles of Association of the Company. However, share premium is excluded from the definition of authorized capital.

SSUED CAPITAL: Issued capital is the amount of nominal value of share held by the shareholders. It is the face value of the shares that have been issued to the shareholders. Issued share capital and share premium represent the amount invested by the shareholders in the company. It is also known as the subscribed capital or subscribed share capital.

Analysis: But here, IOCL issued very less share capital IN Previous years if I compared to Authorized capital. IOCL is only issued the limited share to the shareholders

Paid up capitalFrom - ToInstrumentShares(nos)Face valueCapital

2013 2014Equity share2427952482102427.95

2012 2013Equity share2427952482102427.95

2011 2012Equity share2427952482102427.95

2010 2011Equity share1192374306101192.37

2009 2010Equity share1192374306101192.37

2008 2009Equity share77867480910778.67

Paid up capital:The amount of a company's capital that has been funded by shareholders, Paid-up capital can be less than a company's total capital because a company may not issue all of the shares that it has been authorized to sell. Paid-up capital can also reflect how a company depends on equity financing.

Here, from 2011 to 2013, the companys Paid up capital remain same. Its means the IOCL collected average funded by shareholders and they have to issue more share capital to shareholders in future periods.

TOTAL DEBTThe IOCL has only two debts:Secured loan

Unsecured loan

Total debt means here included debenture, Bonds, Long term loans, short term loan etc. But Indian Oil Corporation limited (IOCL) did not issued debenture, bonds etc.

Secured loan:

Secured loans are those loans that are protected by an asset or collateral of some sort. The item purchased, such as a home or a car, can be used as collateral, and a lien is placed on such item. The finance company or bank will hold the deed or title until the loan has been paid in full, including interest and all applicable fees. Other items such as stocks, bonds, or personal property can be put up to secure a loan as well.

Secured loans are usually the best (and only) way to obtain large amounts of money. A lender is not likely to loan a large amount with assurance that the money will be repaid. Putting your home or other property on the line is a fairly safe guarantee that you will do everything in your power to repay the loan.

Secured loans usually offer lower rates, higher borrowing limits and longer repayment terms than unsecured loans. As the term implies, a secured loan means you are providing "security" that your loan will be repaid according to the agreed terms and conditions. It's important to remember, if you are unable to repay a secured loan, the lender has recourse to the collateral you have pledged and may be able to sell it to pay off the loan.

Unsecured loan:On the other hand, unsecured loans are the opposite of secured loans and include things like credit card purchases, education loans, or personal (signature) loans. Lenders take more of a risk by making such a loan, with no property or assets to recover in case of default, which is why the interest rates are considerably higher. If you have been turned down for unsecured credit, you may still be able to obtain secured loans, as long as you have something of value or if the purchase you wish to make can be used as collateral.

When you apply for a loan that is unsecured, the lender believes that you can repay the loan on the basis of your financial resources. You will be judged based on the five (5) C's of credit -- character, capacity, capital, collateral, and conditions these are all criteria used to assess a borrower's creditworthiness. Character, capacity, capital, and collateral refer to the borrower's willingness and ability to repay the debt. Conditions include the borrower's situation as

well as general economic factors.26SECURED LOAN25000200001500010000

(CR)

500002014 2013 2012 2011 2010(CR) 17866 13046 20380 18292 17565Analysis:In 2014 the secured loan proportion is high than 2013. The India oil corporation limited (IOCL) has try to reduce the secured loan because secured loan effect the assets of the company and it will be effect on future periods so the IOCL Increasingly firms are moving from secured debt to unsecured debt in order to free their assets.

Secured loans have the largest positive impact on Companys credit when

they are repaid. If company have never taken a secured loan, companys

credit may be low despite your good record of repayment.27UNSECURED LOAN700006000050000400003000020000100000

(CR)

Here unsecured loan is constantly high from 2010 to 2013. Indian oil corporation limited ( IOCL).Unsecured loan is more better than secured loan Because secured loan will be affect the assets of the company in future period of time so the IOCL has increasing the unsecured loan for reducing the risk of the company . Most of the company has preferred the unsecured debt which will not affect any assets of the company.

In some cases, IOCL may be able to reduce IOCL unsecured debts by negotiating with creditors for a lower balance. Either IOCL can talk to

creditors on IOCL own, or IOCL can solicit the help of a credit counseling

28organization. In some cases, credit counselors can negotiate with creditors better than debtors can. However, if IOCL choose to work with a credit counselor make sure the organization is reputable.

EARNING BEFORE INTEREST AND TAXEarnings before interest and tax A measure of a Indian oil corporation limited (IOCL) earning power from ongoing operations, equal to earnings before deduction of interest payments and income tax. EBIT excludes income and expenditure from unusual, non-recurring or discontinued activities. In the case of a IOCL with minimal depreciation and amortization activities, EBIT is watched closely by creditors, since it represents the amount of cash that such a company will be able to use to pay off creditors. also called operating profit.

As you can re-arrange the formula to be calculated as follows:EBIT=

Revenue - COGS-Operating Expenses

Also known as Profit before Interest & Taxes (PBIT), EBIT equals Net

Income with interest and taxes added back to it.

EBIT was the precursor to the EBITDA calculation, which includes depreciation and amortization expenses.

29Financial managers spend a considerable amount of time analyzing and understanding their EBIT. EBIT is short for earnings before interest and taxes and is synonymous with net operating income. EBIT is calculated by taking revenue and subtracting cost of goods sold and all operating expenses. The calculation is useful because it provides a look at how profitable a business is before loan decisions and tax considerations are included to arrive at net income. If you plan on improving EBIT while holding sales constant, your only

option will be to reduce costs.

30Earnings before interest and tax200001500010000

( CR)

50000Analysis:In 2014, the operating profit of Indian oil corporation limited (IOCL) is Rs

13359.43 (Cr). But at present generally they are earning average operating profits. so IOCL has try to reduce the long term borrowed fund and issue the more share capital to the shareholders in different areas.

Analyze Indian Oil Corporation limited (IOCL) internal structure and look for areas where operations can be centralized or more productive. For instance, labor is sometimes redundant or inefficiently organized. Writing out your processes in a flow diagram can help you identify and eliminate or reorganize them. Consider introducing new, long-term cost saving technologies for inventory, production and sales. These systems can greatly

increase efficiency, creating costs savings.

31EARING PER SHARE (EPS)Earnings per share represent a portion of a company's profit that is allocated to one share of stock. Therefore, if you were to multiply the EPS by the total number of shares a company has, you'd calculate the company's net income. EPS is a calculation that many people who watch the stock market pay attention to.

When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of-the-period.

Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number.

32EPS of IOCL Shareholders from 2010 to 2014:50403020 (Rs)100Analysis:In 2014, IOCL shareholders earned per share of Rs 28.91. But in 2010, EPS was Rs 42.1. At that time shareholders of IOCL was earned more than last year. So constantly decreasing the earning capacity of shareholders of the IOCL, But still there EPS is good if I compared to other companies.

IOCL is to increase earnings or decrease the number of shares. In order to increase earnings, a business has to increase revenues, reduce expenses or both. In order to decrease the number of shares, do a share buyback from

shareholders.

33LEVERAGEThe degree to which an investor or business is utilizing borrowed money. Companies that are highly leveraged may be at risk of bankruptcy if they are unable to make payments on their debt; they may also be unable to find new lenders in the future. Leverage is not always bad, however; it can increase the shareholders ' return on investment and often there are tax advantages

associated with borrowing. Components of leverage are:

LEVERAGEFinancial leverage Operating leverageFinancial leverage:Financial leverage is a leverage created with the help of debt component in the capital structure of a company. Higher the debt, higher would be the financial leverage because with higher debt comes the higher amount of interest that needs to be paid. Leverage can be both good and bad for a business depending on the situation. If a firm is able to generate a higher return on investment (ROI) than the interest rate it is paying, leverage will

have its positive effect shareholders return. The darker side is that if the said

34situation is opposite, higher leverage can take a business to a worst situation like bankruptcy. the Degree of Financial Leverage (DFL) can be calculated with the following formula:

DFL = % Change in EPS / % Change in EBIT

Where EPS is the Earnings per Share and EBIT is the Earnings before interest and Taxes.

Operating leverage:Operating leverage, just like the financial leverage, is a result of operating fixed expenses. Higher the fixed expense, higher is the operating leverage. Like the financial leverage had an impact on the shareholders return or say earnings per share, operating leverage directly impacts the operating profits (Profits before Interest and Taxes (PBIT)). Under good economic conditions, due to operating leverage, an increase of 1% in sales will have more than 1% change in operating profits.

The formula used for determining the Degree of Operating Leverage or DOL

is as follows:

DOL = % Change in EBIT / % Change in Sales

So, Indian oil corporation limited (IOCL) need to be very careful in adding any of the leverages to your business viz. financial leverage or operating

leverage as it can also work as a double edged sword.

35Degree Financial leverage of IOCL:21.510.5

(Ratio)

0Analysis:In 2014 degree of financial leverage of Indian Oil Corporation limited (IOCL)

ratio is 1.61 and it has constantly higher than previous years.

By borrowing funds, the IOCL incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use. Indian Oil Corporation limited that successfully uses leverage demonstrates by its success that it can handle the risks associated with carrying debt. This can become an important factor when additional financing is needed. Not only will loans more likely be available, but they will be available at more attractive interest rates. Like

individuals, companies with solid financials.

36Degree of Operating leverage of Indian Oil Corporationlimited (IOCL):1.151.11.051 (Ratio)0.950.9Analysis:In 2014 Indian oil corporation limited has degree of operating ratio is 1.12

.which is constantly almost same from 2011 to 2014. According to this chart IOCL having a good position in future period of time. The more operating leverage a company has, the more it has to sell before it can make a profit. IOCL with a high operating leverage must generate a high number of sales to cover high fixed costs, and as this sales increase, so does the profitability of the company. Conversely, a company with a lower operating leverage will not see a dramatic improvement in profitability with higher volume, because variable costs, or costs that are based on the number of units sold, increase

with volume.

37Total leverage of Indian Oil Corporation limited:32.521.510.50

(Ratio)

Analysis:Combined or total leverage measures total risk of the Indian oil corporation limited (IOCL). In this year Indian Oil Corporation has minimum risk than last year which ratio was 2.43. In this diagram is measured by percentage change in earning per share (EPS) due to percentage change in sales.

IOCL ask their existing shareholders to issuing common stock rights. Stock rights allow existing shareholders to purchase additional shares at below- market prices, in order to raise equity. While this practice does improve a companys financial strength, it also dilutes the current shareholders

percentage of ownership.

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CHAPTER5: CONCLUSION39FINDINGS IOCL has issued less shares capital to the shareholders, constantly from

2010 to 2014. IOCL does not fulfill the of authorized share capital which is mention in memorandum of association.

IOCL, Preference share and Debenture not existent in the industry.

The return on investment ratio of IOCL is the lowest among its competitors which imply that the degree of efficiency of IOCL in utilizing the funds entrusted by shareholders and long term creditors is lower than its competitors.

IOCL has maximum no of total debts in the period of 2014, if I compared with previous years.

In 2014, unsecured loan is constantly higher than previous years.

In 2014, IOCL has maintained the secured loan amounts. Which is mostly remain same with previous years.

EBIT is very less in 2014; it is constantly decreasing from 2010 to 2014.

In 2014, earning per share (EPS) value is Rs 28.91, which is higher than 2013 but overall five years, IOCL shareholders has earned minimum EPS in 2014.

IOCL has Degree of operating leverage almost same with last five years.

IOCL having a good position in future period of time.

40In 2014, degree of financial leverage is very high than previous years, IOCL incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time.

The overall efficiency of IOCL is higher than those of its competitors in previous years of comparison.

SUGGESTIONS The company should utilize the debt funds more efficiently to maximize

shareholders return.

Increasingly firms are moving from secured debt to unsecured debt in order to free their assets.

For IOCL, to issue maximum number of share to the public and they have to reduce the share price is minimum. And IOCL try to fulfill the limit of authorized share capital.

IOCL have to reduce total debts of the company against of issuing more share to the public.

IOCL, Need to minimize the degree of financial leverage .otherwise which will be affect in future period of time.

The company should try to increase the profit before interest and tax so that the Investments in the firm are attractive as the investors would like to

invest only where the return is higher.

41The company can invest in marketable securities to improve its cash position.

IOCL can try to reduce the secured loan because secured loan can be affect

the assets of the company in future.

LIMITATIONS OF THE STUDY The scope of the study is limited to Guwahati Refinery.

Time taken to complete the study is very limited.

The analysis of the analysis of the companies and suggestion totally depends upon the information shared.

Non-monetary aspects are not considered making the results unreliable.

CONCLUSIONFrom the above discussion it can be concluded that Indian Oil Corporation limited running with low debt fund. Therefore, they may increase it to get benefits of low cost capital. It has found that IOCL largely employing shareholders funds in their as sets it has crossed even 100% in the first two years. Moreover EOL is on high degree financial risk. Therefore, they may reduce the debt capital and employ more equity fund. The study undertaken has brought in to the light of the following conclusions. According to this project I came to know that from the analysis of capital structure analysis it is clear that Indian Oil Corporation Ltd have been doing a satisfactory job. But the firm has certain areas to ponder upon like capital employment. So the firm should focus on getting of profits in the coming years by taking care internal as well as external factors. And with regard to

resources, the firm is take utilization of the borrowed fund in a right place.

42

BIBLIOGRAPHY43

WEBSITE REFERENCES: www.moneycontrol.com www.iocl.comBOOKS REFERENCES: K.R Das, Priti chandna B.B Dam, & Anju Kakoty 1st Edition

(2013):Financial Statement Analysis.

THANK YOU44Financial statements of Indian Oil Corporation Ltd.

45

46

47

4820142013201220112010

(CR)62733.15727832354.226273.827406.7Analysis:

20142013201220112010( CR)

13359.43

12050.65

16773.88

11157.05

15057.96

20142013201220112010

(Rs)28.9120.6116.2930.6742.1

20142013201220112010(Ratio)1.611.911.491.311.11

20142013201220112010(Ratio)1.121.141.091.131.01

20142013201220112010(Ratio)1.822.431.641.491.21