Patel Darshana -Ratio Analysisongc

8/6/2019 Patel Darshana -Ratio Analysisongc

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A

PROJECT REPORT`

ON

INDUSTRIAL TRAININGAT

OIL AND NATURAL GAS

CORPORATION LIT

SUBMITTED TO

HEMCHANDRACHARYA NORTH GUJARAT UNIVERSITY

PATAN

GUIDED BY: PREPARED BY:

MS.SWATI BATIYA PATEL DARSHANA D

TYBBA

ROLL NO-71

EXAM NO-

SMT.S.B.PATEL INSTITUTE OF BUSINESS

MANAGEMENT VISNAGAR

ACADEMIC YEAR 2008-2009


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PREFACEThis report has been prepared in accordance with the guideline of

SMT.S.B.PATEL INSTITUTE OF BUSINESS MANAGEMENT

VISNAGARforTYBBA. Curriculcum to understand industrial training for

21 days.

This report covers specialy Finance department This type of industrial

training can put as one step in related field and addition in theoretical

knowledge with the help of industrial training, the knowledge of students can

really increased and they can get a golden chance in future. I have tried my

level best to prepare this report. If mistake any Wrong information has been

enclosed in the report please forgive me.

In every field of education important to the student practical training.if

possible should be given to the student. This will help the student to bring out

& exhibit the qualities, which is no way can. Be exhibited by theoretical

training.. It helps us to get a better prospectus and understanding of working

condition of the various industries.

Patel Darshana


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ACKNOWLEDGEMENTIt was indeed as opportunity to prepare this report New

experience fill with enthusiasm & zeal. For a student of T.Y.B.B.A.

levelpreparation of such kind of report calls for intellectual

nourishment, professional help encouragement from many quarteas

Practical knowledge is very vital for management student. It helps

him to develop his managerial skill and to increase our skill. Our institute

organizes industria training.

I forget Mr. M.S.Garasia HR Executive of my company who gave

me a strong support and proper guidelines to complete my project and other

staff members of the company.I also thanks to Mr.S.k.jain for supporting me.

I am very thankful to our principal Mr.Madhubhai for

giving me an opportunity to visit such a big organization Oil And Natural

Gas Corporation Ltd.

I am very thankful Ms. Swati Bhatiya, who have shaped my

understanding

Patel Darshana


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EXECUTIVE SUMMURY

I am the student of T.Y.B.B.A So,as a part of training for 21 days , I have

selected Oil And Natural Gas Corporation fy training . This company is a

large scale unit .

This project in which matter has been theoretically

described and the student have gained practical knowledge from the course.

The topic selected by me is Ratio Analysis of Oil and Natural Gas

Corporation limited in Mehsana city.

Executive summary is the brief introduction are

mentioned in the report.. My report has included the ratio analysis of Oil and

Natural Gas Corporation limited Company. My project has also included the

company details.

.


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INTRODUCTION OF ONGC:

A modest entity in the serene Himalayan settings - Oil and Natural Gas

Corporation Limited (ONGC) was set up as a Commission on August 14,

1956. The company became a corporate on June 23, 1993, which has now

grown into a full-fledged horizontally integrated petroleum company. Today,

ONGC is a flagship public sector enterprise and Indias highest profit making

corporate, achieving the record of being the first Indian corporate to register a

five digit profit figure of Rs. 10,529 Crore in the year 2002-03.

ONGC has produced more than 600 million metric tons of crude oil

and supplied more than 200 billion cubic meters of gas since its inception,

thus fuelling the increasing energy requirements of the Indian economy.

Today, ONGC is the most valuable company in India, contributing 77 percentof Indias crude oil production and 81 per cent of Indias natural gas

production.

To sustain this growth, ONGC has drawn up ambitious strategic

objectives, which include doubling the oil and gas reserves. Having accreted

six billion tons oil and oil equivalent reserves in its first 45 years of

operation, ONGC now aims to double these reserves by 2020. The second

strategic objective is to augment the global recovery factor from the existing

28 per cent to the global norm of 40 per cent in next 20 years. Out of the sixbillion tons of oil and gas reserve accretion, four billion tons is expected to

come from Offshore and Deep Waters. To improve the recovery factor from

the existing fields, ONGC is investing Rs. 2,000 crore in 15 re-development

schemes.


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HISTORY & DEVELOPMENT

1947-1960

During the pre-independence period, the Assam Oil Company in the

northeastern and Attock Oil company in north-western part of the undivided

India were the only oil companies producing oil in the country, with minimal

exploration input. The major part of Indian sedimentary basins was deemed

to be unfit for development of oil and gas resources.

After independence, the national Government realized the importance oil and

gas for rapid industrial development and its strategic role in defense.

Consequently, while framing the Industrial Policy Statement of 1948, the

development of petroleum industry in the country was considered to be of

utmost necessity.

Until 1955, private oil companies mainly carried out exploration of

hydrocarbon resources of India. In Assam, the Assam Oil Company was

producing oil at Digboi (discovered in 1889) and the Oil India Ltd. (a 50%

joint venture between Government of India and Burmah Oil Company) was

engaged in developing two newly discovered large fields Naharkatiya and


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Moran in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a joint

venture between Government of India and Standard Vacuum Oil Company of

USA) was engaged in exploration work. The vast sedimentary tract in other

parts of India and adjoining offshore remained largely unexplored.

In 1955, Government of India decided to develop the oil and natural gas

resources in the various regions of the country as part of the Public Sector

development. With this objective, an Oil and Natural Gas Directorate was set

up towards the end of 1955, as a subordinate office under the then Ministry of

Natural Resources and Scientific Research. The department was constituted

with a nucleus of geoscientists from the Geological survey of India.

A delegation, under the leadership of Mr. K D Malviya, the then Minister of

Natural Resources, visited several European countries to study the status of

oil industry in those countries and to facilitate the training of Indian

professionals for exploring potential oil and gas reserves. Foreign experts

from USA, West Germany, Romania and erstwhile U.S.S.R visited India and

helped the government with their expertise. Finally, the visiting Soviet

experts drew up a detailed plan for geological and geophysical surveys and

drilling operations to be carried out in the 2nd Five Year Plan (1956-57 to

1960-61).


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In April 1956, the Government of India adopted the Industrial Policy

Resolution, which placed mineral oil industry among the schedule 'A'

industries, the future development of which was to be the sole and exclusive

responsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it became

apparent that it would not be possible for the Directorate with its limited

financial and administrative powers as subordinate office of the Government,

to function efficiently. So in August, 1956, the Directorate was raised to the

status of a commission with enhanced powers, although it continued to be

under the government. In October 1959, the Commission was converted into

a statutory body by an act of the Indian Parliament, which enhanced powers

of the commission further. The main functions of the Oil and Natural Gas

Commission subject to the provisions of the Act, were "to plan, promote,

organize and implement programmed for development of Petroleum

Resources and the production and sale of petroleum and petroleum products

produced by it, and to perform such other functions as the Central

Government may, from time to time, assign to it ". The act further outlined

the activities and steps to be taken by ONGC in fulfilling its mandate.


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1961-1990

Since its inception, ONGC has been instrumental in transforming the

country's limited upstream sector into a large viable playing field, with its

activities spread throughout India and significantly in overseas territories. In

the inland areas, ONGC not only found new resources in Assam but also

established new oil province in Cambay basin (Gujarat), while adding new

petroliferous areas in the Assam-Arakan Fold Belt and East coast basins

(both inland and offshore).

ONGC went offshore in early 70's and discovered a giant oil field in the form

of Bombay High, now known as Mumbai High. This discovery, along with

subsequent discoveries of huge oil and gas fields in Western offshore

changed the oil scenario of the country. Subsequently, over 5 billion tons of

hydrocarbons, which were present in the country, were discovered. The most

important contribution of ONGC, however, is its self-reliance and

development of core competence in E&P activities at a globally competitive

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After 1990

The liberalized economic policy, adopted by the Government of India in July

1991, sought to deregulate and de-license the core sectors (including

petroleum sector) with partial disinvestments of government equity in Public

Sector Undertakings and other measures. As a consequence thereof, ONGC

was re-organized as a limited Company under the Company's Act, 1956 in

February 1994.

After the conversion of business of the erstwhile Oil & Natural Gas

Commission to that of Oil & Natural Gas Corporation Limited in 1993, the

Government disinvested 2 per cent of its shares through competitive bidding.

Subsequently, ONGC expanded its equity by another 2 per cent by offering

shares to its employees.

During March 1999, ONGC, Indian Oil Corporation (IOC) - a downstream

giant and Gas Authority of India Limited (GAIL) - the only gas marketing

company, agreed to have cross holding in each other's stock. This paved the

way for long-term strategic alliances both for the domestic and overseas

business opportunities in the energy value chain, amongst themselves.

Consequent to this the Government sold off 10 per cent of its share holding in

ONGC to IOC and 2.5 per cent to GAIL. With this, the Government holding


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in ONGC came down to 84.11%.

In the year 2002-03, after taking over MRPL from the A V Birla Group,

ONGC diversified into the downstream sector. ONGC will soon be entering

into the retailing business. ONGC has also entered the global field through its

subsidiary, ONGC Videsh Ltd. (OVL). ONGC has made major investments

in Vietnam, Sakhalin and Sudan and earned its first hydrocarbon revenue

from its investment in Vietnam.


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ORGANIZATION STRUCTURE


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MANAGEMENT BODY

BOARD OF DIRECTORS

Shri R.S.Sharma -Chairman&Managing DirectorsShri A.k.Gupta -ED Asset Manager

Shri M.L.G upata production manager

Shri S.K.Gove - Finance manager

Shri S.R.Maddodi -H.R.Manager

BANKER

State Bank Of India

REGISTERED OFFICE)

K.D.M.Bavan,

Palavasana,

Mehsana

CORPORATE OFFICE

Jeevan bharti Tower-2,

124-Indian Chowk,

Connaught Place,

New Delhi-110001


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MISSION &VISION

To be a world-class Oil and Gas Company integrated in energy businesswith dominant Indian leadership and global presence.

World Class

Dedicated to excellence by leveraging competitive advantages in R&D

and technology with

involved people.

Imbibe high standards of business ethics and organizational values.

Abiding commitment to safety, health and environment to enrich quality

of community life.

Foster a culture of trust, openness and mutual concern to make working a

stimulating and challenging experience for our people.

Strive for customer delight through quality products and services.

Integrated In Energy Business


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Focus on domestic and international oil and gas exploration and

production business opportunities.

Provide value linkages in other sectors of energy business.

Create growth opportunities and maximize shareholder value.

Dominant Indian Leadership

Retain dominant position in Indian petroleum sector and enhanceIndia's energy availability.


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2

FINANCE

DEPARTMENT


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INTRODUCTION

In modern economy money may be defined as the provision of the

money at the time it is wanted. Finance is necessary for any business or

organization because money is the blood for any business . The ambition of a

businessman would remain more dreams unless adequate capital is available.

In past the labor was more important relatively then capital therefore capital

was not much consequence the industial revolution changed therefore it is

necessary to have a sound capital structure.


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FINANCIAL INFORMATION OF THE COMPANY

ACCOUNTING POLICIES:

The company follows the accrual method of accounting. The

company has followed all the applicable accounting standards mad

mandatory by the institute of chartered accountants of India.

EQUITY CAPITAL:

The fully paid up equity capital of the company was as.During the

year under review there was no change in the equity capital structure of

There is no issued preference capital in Sterling Ceramic Ltd.There are no

warrants waiting to be convered into equity. Nearly per-cent of the

companys equity is comprised of bonus shares. The company last made a

bonus issue in issuing two bonus shares for one share held in the

company.

LOANS :Oil and Natural Gas Corporation Ltd loan funds decreased from in the

previous year to during the year. During the current year the ratio of

secured long-term funds to tangible net worth increased to in the previous

year.

FIXED ASSETS:

The gross and net block of the company as on were and respectively.

plant and machinery constituted of the gross block and net block

respectively.


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DEPRECIATION:

Depreciation accounted for in the current year compared to in the

previous year compared to in the previous year. There is no change in the

accounting policy for depreciation over the last year.

CORPORATE TAX:

In view of loss during the year under review, the company has not

provided for any tax liability this year also.

DEBTORS:

During the year under the review the sundry debtors were compared to in

the previous year representing of sales compared to of sales in the previous

year. The sundry debtors are net of provision for doubtful debts of The

increase in sundry debtors is due to market conditions

INVENTORIES:

Inventories decreased from in the previous year to during the current year

to during the current year. Of this finished goods, raw materials and spares

inventory of stock in process however increased by

WORKING CAPITAL:

The working capital gap during the current year was lower at which is

lower than in the previous year. The working capital of is founded by bank

borrowing to the extent of and the balance is founded out of companys own

resource. Each rupee of working capital generated of gross turnover in the

current year compared to in the previous year. Oil And Natural Gas

Corporation Ltd shall continue to make efforts to further improve working

capital management by stricter control over inventories and book debts.

RESERVES:


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Oil And Natural Gas Corporation Ltd reserves stood at as on Nearly per

cent of the companys reserves were earned; per cent comprised capital

reserves. There were no revaluation reserves as on . During the year under

review a sum of representing exceptional items and representing deferredrevenue expenditure have been adjusted against general reserve.


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3.RATIO ANALYSIS

LIQUIDITY RATIO

This ratio measures the firms ability to meet current obligation. A firm

ensures that it does not surer from lack of liquidity and also does not have

excess liquidity. The failure of a company to meet its obligation due to lack

of sufficient liquidity will result in a poor credit worthiness loss of creditors

confidence or even in legal tangle resulting in the closure of the company.

Current Ratio = Current Asset

Current Liabilities

2007-2008= 387850 =2.77:1

139932

2006-2007= 326279 =3.08:1

105951

2005-2006 = 285477 =2.62:1

108763

RATIO

2.6

2.7

2.8

2.9

3

3.1

3.2

2005-06 2006-07 2007-08

RATIO

The ONGC has current ratio is more than 2:1. The current ratio

represent margin of safety for creditors, the firms ability to meet their

obligation.


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o Quick Ratio:

Quick Ratio =Current Asset Inventories

Current Liabilities2007-2008 = 387850-30338 =2.55:1

139932

2006-2007= 326279-30385 =2.79:1

105951

2005-2006= 285477-25692 =2.38:1

108763

YEAR RATIO

2005-2006 2.38

2006-2007 2.79

2007-2008 2.55

RATIO

2

2.2

2.4

2.6

2.8

3

2005-06 2006-07 2007-08

RATIO

The ONGC has quick ratio is also more than 2:1 which indicate more

penetrating test of liquidity than the current ratio.


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o Net Working Capital Ratio:

NWC = NWC or Net Current Asset

Net Asset or Capital Employed

2007-2008 = 307063.43 =0.56

540744

2006-2007 = 265735.87 =0.52

493763

2005 -2006= 227860.02 =0.54

419926

YEAR RATIO

2005-2006 0.54

2006-2007 0.52

2007-2008 0.56

RATIO

0.5

0.52

0.54

0.56

0.58

2005-06 2006-07 2007-08

RATIO

The ONGC has Net working capital ratio indicate the firms

potential reservoir of funds.


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o Debt-Equity Ratio:

Debt-Equity Ratio =Total Debt

Net Worth

2007 -2008= 27594 =1.29:1

21389

2006-2007 = 37043 =2.59:1

14259

2005-2006 = 37293 =2.61:1

14259

YEAR RATIO

2005-2006 2.61

2006-2007 2.59

2007-2008 1.29

RATIO

0

0.5

1

1.5

2

2.5

3

2005-06 2006-07 2007-08

RATIO

The ONGC has Debt-Equity ratio indicate, numerator is an

equity part while denominator is a debt part. So we can easily say that equity

part is more than debt part.


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Activity Ratios

o Inventory Turnover Ratio:

Inventory Turnover ratio =Cost of goods sold

Inventories

2007 -2008=284110 =9.37

303382006 -2007=210666 =6.93

30385

2005 -2006=225670 =8.78

25692

6.93

2005 =360 =41.00

8.78

YEAR RATIO

2005-2006 8.78

2006-2007 6.93

2007-2008 9.37


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RATIO

0

2

4

6

8

10

2005-06 2006-07 2007-08

RATIO

The ONGC has Inventory turnover is indicate the inventory is

turning into receivable through sale which decrease than previous year.

o Asset Turnover Ratio:

Asset Turnover Ratio =Sales

Net Asset or Capital Employed

2007-2008 =590575 =1.09

540744

2006 -2007=494397 =1.00

493763

2005 -2006=472454 =1.13

419926

YEAR RATIO

2005-2006 1.13

2006-2007 1.00

2007-2008 1.09


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RATIO

0.9

0.95

1

1.05

1.1

1.15

2005-06 2006-07 2007-08

RATIO

The ONGC has asset turnover ratio indicate that the firms ability

to generate sales from all financial resource committed to total asset which is

better than the previous year.

o Working Capital Turnover Ratio:

Working Capital turnover Ratio =Sales

Net Working capital

2007-2008=590575 =1.94

304021

2006-2007 =494397 =1.86

265664

2005-2006 =246784 =1.16

212895

YEAR RATIO

2005-2006 1.16

2006-2007 1.86

2007-2008 1.94


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RATIO

0

0. 5

1

1. 5

2

2. 5

200 5-06 2006-07 2007-08

RATIO

The ONGC has Net working capital ratio 0.116 indicate that for

one rupee of sales, the co. needs Rs 0.116 of net current asset.

Profitability Ratios

o Gross Margin Ratio:

Gross Margin Ratio =Gross Profit or EBIT*

Sales

2007-2008 =306465 =0.5189 =51.89%590575

2006-2007 =283731 =0.5738 =57.38%

494397

2005 -2006=246784 =0.5220 =52.20%

472454

YEAR RATIO

2005-2006 0.5220


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2006-2007 0.5738

2007-2008 0.5189

RATIO

0.48

0.5

0.52

0.54

0.56

0.58

2005-06 2006-07 2007-08

RATIO

The ONGC has Gross margin ratio reflects the efficiency with which

management produce each unit of product. Gross profit is 52.20% which is

slightly less than previous year.

o Net Profit Ratio:

Net Profit Ratio =Profit after tax

Sales

2007-2008 =156429 =0.2648 =26.48%

590575

2006 -2007=144308 =0.2918 =29.18%

494397

2005 -2006=129830 =0.2747 =27.47%472454

YEAR RATIO

2005-2006 0.2747

2006-2007 0.2918


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2007-2008 0.2648

RATIO

0.25

0.26

0.27

0.28

0.29

0.3

2005-06 2006-07 2007-08

RATIO

The ONGC has Net profit ratio which indicates that

management efficiency in mfg., administering, and selling the product. Net

profit 27.47% which slightly less than previous year.

o Return on Equity:

Return on Equity =PAT

Net Worth

2007-2008 =156429 =0.2547 =25.47%

614099

2006 -2007=144308 =0.2692 =26.92%

535934

2005-2006=129830 =0.2800 =28.00%

463142

YEAR RATIO

2005-2006 0.2800

2006-2007 0.2692


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2007-2008 0.2547

RATIO

0.24

0.25

0.26

0.27

0.28

0.29

2005-06 2006-07 2007-08

RATIO

The ONGC has Return on Equity indicates that in this co. return on

Equity which is continuously increasing.


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4.

CONCLUSION


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CONCLUSION

This is my remember able moment to have training in Oil and naturalgas corporation Ltd. This is one the leading company in Oil and natural gas

corporation Ltd.. The members of management age of very efficient and co-

operative. It is small-scale industry somehow it was not provide us much

information regarding finance department I am very well familiar withal the

aspect and operation of the company. The management of company has

kindly provided me all the necessary information for preparing the project

report. I hope it would remain for long period of time as twinkle stars,

remains in the sky.


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5.

BIBLIOGRAPHY

BIBLIOGRAPHY

www.ongcindia.com

PRASANNACHANDRA -- Finance Management


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6.

ANNEXURE

Profit and Loss Account

(Rupees in millions)

2005-2006 2006-2007 2007-08

INCOME

Gross Sales 467112.48 482443.90 569123.06

Less: Excise Duty 3492.03 2729.01 2708.93

Net Sales 463620.45 479714.89 566414.13Other income 17251.47 23484.98 42291.99

480871.92 503199.87 608706.12

EXPENDITURE

(Increase)/Decrease in stock (298.62) (2115.83) 197.26

Purchase 51013.16 34337.97 59401.05

Production, Transportation, Selling

and Distribution Expenditure

168428.25 170296.55 210901.30

Depreciation, Depletion and

Amortization

162014.23 83021.72 94666.79

Financing Costs 409.63 298.14 394.79


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Provision and Write-offs(Net) 2828.25 3437.65 3342.34

284693.52 289276.20 368903.53

Profit before Tax, Prior Period

and Extraordinary

196477.02 213923.67 239802.59

Adjustments Relating to priorPeriod(Net)

178.43 (1957.84) (7851.08)

Extraordinary Items-Excess of

Insurance Claims Over Book Value

0.00 6405.39 4750.61

Profit before Tax 196655.45 218371.22 236702.12

Provision for Taxation

-Current Tax 69817.00 63481.00 77870.00

-For Earlier Years (26.22) 926.07 0.00

-Deferred Tax (2965.79) 9112.87 1869.65

-For Fringe Benefit Tax 0.00 543.50 533.30Profit after Taxation 129830.46 144307.78 156429.17

Surplus at the Beginning 0.31 0.10 0.43

BALANCE AVAILABLE FOR

APPROPRIATION

129830.77 144307.88 156429.60

Balance sheet

(Rupees in millions)

2005-2006 2006-2007 2007-08

Sources of Fund

Shareholders Fund

Share Capital 21388.87 14259.30 14259.30

Reserved and Surplus 597850.39 525337.39 454194.87

619239.26 539596.69 468454.15

Loans Fund

Unsecured loan 3737.39 1069.76 18221.55

Differed Tax Liability(Net) 65227.44 63551.33 54438.46

Liability for Abandonment Cost 147353.27 126153.35 80940.64

Total 835557.36 730374.13 622054.80


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Application of FundsFixe Assets

Gross Block 520380.67 478823.45 429838.49

Less: Depreciation and Impairment 431989.53 400401.48 371473.18

Net Block 88391.14 78421.97 58365.31Producing Properties

Gross Cost 614943.21 560896.49 486169.73

Less: Depletion and Impairment 319258.54 285063.12 256563.10

Net Producing Properties 295684.67 275833.37 229660.63

Capital Work - in Progress 48250.99 28231.01 43186.68

Exploratory/Development Wells-

in-Progress

34005.98 29602.83 17357.87

Investments 57020.51 48885.73 40366.66

Current Assets, Loans andAdvances

Interest Accrued 7268.63 3509.48 4357.27

Inventories 30337.58 27642.48 23924.19

Sundry Debtors 27594.40 37042.76 37293.07

Cash and Bank Balance 136705.08 42792.65 58488.06

Deposit with Scheduled Bank

Under the site Restoration Fund

Scheme

56102.86 45335.56 36180.55

Loans and Advances 185945.25 212549.33 159637.38Other Current Assets 0.35 0.21 10.11

Current Liabilities 88169.70 65270.11 51904.17

Provisions 48721.02 37866.81 40126.44

136890.72 103136.92 92030.61

Net Current Assets 307063.43 265735.87 227860.02

Miscellaneous Expenditure 5140.64 3663.35 5311.63

Total 835557.36 730374.13 622054.80


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