akank

Certificate I, Ms. Akanksha Sharma, Roll No. 08980003912 certify that the Summer Training Report (Paper Code Ms-201) entitled Company Analysis and Peers Comparison is done by me and it is an authentic work carried out by me at Gail (India) limited. The matter embodied in this Report has not been submitted earlier for the award of any degree or diploma to the best of my knowledge and belief.

AKANKSHA SHARMA Date:

Certified that the summer Training Report (Paper Code MS-201) entitled Company Analysis and Peer Comparisons done by Ms. Akanksha Sharma, Roll No. 08980003912, is completed under my guidance.

Date:

Acknowledgement

With a sense of gratitude and respect, I would like to extend my heartiest thanks to all those who provided help and guidance to make this project a big success. This project would not have been possible without the whole hearted encouragement, support and co-operation of our guides.I am highly indebted and thankful to Mr. Ashish Kumar Purwar, Chief Manager (F&A) and Mr. S.K. Sinha, Chief Manager (F&A), my external guides and Dr. Sonali Yadav, my internal guide, who has been constant source of inspiration and encouragement to me.Last but not the least; I would like to thank everybody who has directly or indirectly helped me in completing this project report.

List of Tables

Table No. Title Page No.

1 Current Ratio Analysis 39

2Quick Ratio Analysis 40

3Gross Profit Ratio Analysis 41

4Operating Profit Ratio Analysis42

5Net Profit Ratio Analysis43

6Return on Investment Analysis44

7Return on Equity Analysis45

8Total Asset Turnover Ratio Analysis46

9Inventory Turnover Ratio Analysis47

10Debtors Turnover Ratio Analysis48

11Debt Equity Ratio Analysis49

12Earnings per share Analysis50

13Dividend Payout Ratio Analysis51

14P/E Ratio Analysis52

15Current Ratio Analysis53

16Quick Ratio Analysis54

17Gross profit Ratio Analysis55



20Return on Assets Analysis58


22Total Assets Turnover Ratio Analysis60



25Fixed Asset Turnover Ratio Analysis63


List of Figures

Figure No. Title Page No.

1Organisational Structure 20

2Current Ratio Analysis 39

3Quick Ratio Analysis 40

4Gross Profit Ratio Analysis 41



7Return on Investment Analysis44


9Total Asset Turnover Ratio Analysis46




13Earnings per share Analysis50

14Dividend Payout Ratio Analysis51

15P/E Ratio Analysis52

16Current Ratio Analysis53

17Quick Ratio Analysis54

18Gross profit Ratio Analysis55



21Return on Assets Analysis58


23Total Assets Turnover Ratio Analysis60



26Fixed Asset Turnover Ratio Analysis63


List of Abbreviations

Sr. No. Abbreviated NameFull Name

1LPGLiquefied petroleum Gas

2 CGDCity Gas Distribution

3JVsJoint ventures

4AIMAAll India mgmt. association

5PSUPublic sector undertaking

6MOUMemorandum of Understanding

7PETROFEDPetroleum Federation of India

8MMSCMDMillion standard cubic metre per day

9GPUGas processing unit

10GCUGas combustion Unit

11TPATonnes per annum

12E&PExploration & production

13NTPCNational thermal power corporation

14MWMega Watt

15MMTPAMillion metric tonnes per annum

16CNGCompressed Natural Gas

17HSEHealth, safety & employment

18FDIForeign Direct Investment

19CRMCustomer Relationship Management

20ITESInformation technology enabled services

21P/EPrice Earning

22NELPNew exploration Licensing policy

23SAPSystem, applications & products

24PMTPerformance monitoring team

25GOIGovt of India

26RTIRight to Information

27ISOInternational standards org.

28PNGRBPetroleum & Natural gas regulatory board

29ROCEReturn on Capital Employed

Executive Summary

EXECUTIVE SUMMARY

This project report includes the analysis of Financial Statements and analysis of market competitors with the aim to understand the Profitability, Liquidity and Efficiency of the company Gail.Gail (India) Limited is a Public Sector Undertaking with a turnover of more than 40000 crore. It has a market share of around 78% and has been recognised as Asia no. 1 Gas Utility Company and the worlds no. 1 downstream company. Currently, the company operates in India, Singapore, China and Egypt.Through this report, it has been tried to analyze the financial environment in which the company is operating.The main objectives of this Study is to evaluate the performance of the company by using ratios as a yardstick to measure the efficiency of the company, Interpret the financial statement so that the strength and weakness of a firm Historical performance and current financial condition can be determined., To understand the liquidity, profitability and efficiency position of the company during the study period, To make comparisons between the ratios during different periods, and To offer appropriate suggestions for the better performance of the organization .In the first chapter, there has been given a brief description about the company profile including its vision and mission, its Products, Board of Directors, subsidiaries and joint ventures.In the second chapter, Swot analysis of the company has been done in order to determine what may assist the firm in accomplishing its objectives,and what obstacles must be overcome or minimized to achieve desired results.The next chapter i.e. Literature Review, includes the detailed explanation of the topic and tool which has been used in the whole analysis.Later, the Collected Data has been presented in the next chapter under the head Data Collection and Presentation. This chapter was divided into two parts company Analysis and Peers comparison.For company Analysis, the Last five years data have been collected, analyzed and Inferences were drawn to appreciate their impact on companys performance. For Peers comparison or Competitors Analysis, again Ratio Analysis tool was used to analyze and compare the performance of Gail with its major competitors. The major competitors whose performances have been compared with that of Gail are RIL, ONGC and IOC. The performances of the competitors have also been compared on the basis of the last five years data, i.e. from March 2008 to March 2012. The Scope of this project was -1) To view companys Business profile at a glance2) An Aerial view of the companys financial performance3) In depth analysis of Various Factors affecting the growth of the company as well as sector as a whole4) Factors driving growth, Issues & Challenges5) To find out the Strength, weakness, opportunities and threats6) financial comparison of the company with its peersThe Research Design used in the study is Descriptive in nature because it provides an accurate picture of some aspects of market environment.Methods of Data Collection were secondary sources such as Internet, Published Data and books.At the end of this report, Findings have been shown on the basis of the analysis done in the Data Presentation. Also, it was followed by conclusions and references.

Chapter 1. Introduction

Profile of the company Nature Vision & Mission Product range of the company Size of organisation Organisation structure Market share and position Present leadership Source of Data Collection

1. Company Profile

1.1. Profile of the company GAIL (India) Ltd is India's flagship Natural Gas Company, integrating all aspects of the Natural Gas value chain including Natural Gas Transmission, Liquid Hydrocarbon, LPG Transmission, Petrochemicals, City Gas Distribution, Exploration & Production, GAILTEL and Electricity Generation. It is a Public Sector Undertaking conferred with the status of Maharatna on 1st Feb, 2013, by the government of India.1.1.2. Registered Office AddressIt is a Multinational company with its The corporate office or the head office Situated at New Delhi with following details:GAIL (India) Limited 16, Bhikaiji Cama Place, R K Puram, New Delhi -110066Tel: 011-26172580 011-26182955Fax: 011-26185941Email: [email protected]: http://www.gailonline.com1.1.3. Geographical Areas of Operation GAIL has a big marketing network spread over the country with locations at New Delhi, Pata, Noida, Jaipur, Ahmedabad, Bhopal, Mumbai, Hyderabad, Kochi, Chandigarh, Chennai, Kolkatta, Lucknow and Bengaluru .It is a pioneer in City Gas Distribution (CGD) business in India, with Indraprastha Gas Limited (IGL) in Delhi and Mahanagar Gas Limited (MGL) in Mumbai being its biggest success stories. Besides IGL and MGL, GAIL has set up several JVs for CGD to supply gas to households, transport sector & commercial consumers in various cities including Hyderabad, Agartala, Kanpur, Indore, Vadodara, Lucknow, Agra and Pune.

1.2. Nature Gail (India) Ltd was incorporated on 14th August 1984 with the purpose of production, transportation, marketing and Distribution of Natural Gas. It is India's principal Gas transmission and marketing company.It has a number of subsidiaries and joint ventures-1.2.1. Subsidiaries1.2.1.1. Brahmaputra Cracker and Polymer Limited (BCPL)1.2.1.2. GAIL Global (Singapore) Pte Limited1.2.1.3. GAIL Gas Limited1.2.1.4. GAIL Global (USA) INC1.2.2. Joint Ventures1.2.2.1. Aavantika Gas Limited (AGL)1.2.2.2. Bhagyanagar Gas Limited (BGL)1.2.2.3. Indraprastha Gas Limited (IGL)1.2.2.4. Mahanagar Gas Limited (MGL)1.2.2.5. Maharashtra Natural Gas Limited (MNGL)1.2.2.6. ONGC Petro-additions Limited (OPaL)1.2.2.7. Petronet LNG Limited (PLL)1.2.2.8. Ratnagiri Gas and Power Private Limited1.2.2.9. Tripura Natural Gas Company Limited (TNGCL)1.2.3. Awards and accolades won by GAIL (India) Limited

GAIL (India) Limited has an impeccable record of consistently winning national and international awards and laurels in all areas of Corporate Governance , management, production , health safety and environmental (HSE) standards, customer relationship, wealth creation and a number of other areas. That is why it is the most diversified and one of the excellent Navratna energy Company of India.It has won - Platts Global Energy Award, 2011 for Worlds No. 1 Company in Downstream Operations, Prime Ministers Excellence Award for the year 2009-10 for Best Performing CPSE in the Petroleum Sector consecutively for second year , 11th ICSI National Award for Excellence in Corporate Governance, 2011 , Corporate Governance Award 2012 by Indian Chamber of Commerce, Commendation Certificate from SCOPE for Corporate Governance in 2010-11, Commendation Certificate from PetroFed for being leading transporter of Oil & Gas in 2011., AIMA Managing India Awards 2011 for Outstanding PSU of the Year., Kaizen Warrior Award for Most Efficient Navratna PSU, 2011, No.1 gas utility company in Asia and No.2 gas utility company globally, PLATTS Top 250, 2010., Petroleum Federation of India (PETROFED) Awards 2010 for Oil & Gas Marketing Company of the Year., ICSI National Award for Excellence in Corporate Governance, 2010, Prime Ministers MoU Excellence Award for the year 2008-09 , Petroleum Federation of India (PETROFED) Awards 2008 for Oil & Gas Marketing Company of the Year.

1.2.4. CompetitorsThe major competitors of Gail India Limited1.2.4.1. Oil and Natural Gas Corporation (ONGC)1.2.4.2. Indian Oil Corporation Limited (IOCL)1.2.4.3. Reliance Industries Limited (RIL)1.2.4.4. Hindustan Oil Exploration company (HOEC)1.2.4.5. Jindal Drilling & Industries Limited1.2.4.6. Cairn India Limited1.2.4.7. Nagarjuna Oil Refinery Limited (NORL)1.2.4.8. Bharat Petroleum Corporation Limited (BPCL)1.2.4.9. Great Eastern energy Corporation Limited1.2.4.10. Petronet LNG Limited1.2.4.11. Mahanagar Gas Limited (MGL)1.2.4.12. Indraprastha Gas Limited (IGL)1.2.4.13. Green Gas Limited (GGL)1.3. Vision & Mission1.3.1. VisionBe the Leading Company in Natural Gas and beyond, with Global Focus, Committed to Customer Care and Value Creation for all Stakeholders and Environmental Responsibility 1.3.2. MissionTo accelerate and optimize the effective and economic use of Natural Gas and its fractions to the benefit of national economy1.4. Product range The company has been dealing in various business segments such as Natural Gas Transmission, Liquid Hydrocarbon, LPG Transmission, Petrochemicals, City Gas Distribution, Exploration & Production, GAILTEL and Electricity Generation.1.4.1. Natural Gas TransmissionNatural gas comes in four basic forms Liquefied Natural Gas (LNG) Regasified Liquefied Natural Gas (RLNG) Compressed Natural gas (CNG) Piped Natural gas (PNG)Currently, GAIL sells around 51 % of Natural Gas sold in the country. Of this, 37% is to the power sector and 26% to the fertilizer sector. Currently, GAIL is supplying around 60 MMSCMD of Natural Gas from domestic sources to customers across India. They are present in 11 states, i.e., Gujarat, Rajasthan, Madhya Pradesh, Delhi, Haryana, Uttar Pradesh, Maharashtra, Tamil Nadu, Andhra Pradesh, Assam, and Tripura. They are further extending their coverage to states of Kerala, Karnataka, Punjab, Uttarakhand, West Bengal and Bihar through their upcoming pipelines.1.4.2. Liquid HydrocarbonGAIL is marketing Gas Processing Unit's (GPU's) products namely liquefied petroleum gas, propane, pentane, naphtha and by-products of polymer plant namely MFO, propylene & hydrogenated C4 mix. LPG is being sold exclusively to PSU oil marketing companies (OMCs) while other products are sold directly to customers in retail segment. GAIL is India's major producer of propane, popularly known as GAIL Propane. It is an eco-friendly fuel and provides an effective way of reducing pollution and increasing productivity. GAIL is presently operating seven gas processing units (GPU) located at Vijaipur (2 Units), Auraiya, Vaghodia, Usar, Lakwa & Gandhar plant for production of LPG and GCU at Pata plant for production of polymer. 1.4.3. LPG TransmissionLPG is the most widely used domestic and commercial fuel in India. Over the past four years GAIL has emerged as one of the major LPG producers in the country. Around 90 per cent of the LPG is consumed in India as fuel by the household sector, while the balance is sold to industrial and commercial customers. GAIL has seven LPG Plants, two at Vijaipur and one at Vaghodia, and one each in Lakwa (Assam), Auraiya (UP), Gandhar (Gujarat) and USAR (Maharashtra), producing over 1 million TPA LPG and other liquid hydrocarbons. GAIL is the first company in India to own and operate pipelines for LPG transmission. It has 1,900 km LPG pipeline network 1,300 km of which connects the western and northern parts of India and 600 km of networks is in the southern part of the country connecting Eastern Coast. It has a share of about 10% of the Indian LPG market in LPG production and 7% in LPG sales.1.4.4. PetrochemicalsGAIL diversified from gas marketing and transmission into polymer business by setting up North India's first gas based Petrochemicals complex. GAIL commissioned the plant successfully in year 1999 by rigorous team work and project management capabilities. Currently petrochemical business is one of the core focus area of GAIL. GAIL has set up a world-scale gas cracker plant, petrochemical complex at Pata in Auraiya district of Uttar Pradesh with an investment of 2,500 crore. GAIL Pata is the only HDPE/LLDPE plant operating in Northern India and has a dominant market share in North India GAIL has set up a joint venture, Brahmaputra Cracker and Polymer Limited BCPL, to construct a Greenfield petrochemical plant in Assam. 1.4.5. City Gas Distribution GAIL is the pioneer of city gas distribution in India. GAIL took many initiatives to introduce PNG for households and CNG for the transport sector to address the rising pollution levels. Pilot projects were launched in early 1990s in two metros Delhi and Mumbai through joint venture companies Indraprastha Gas Limited (IGL) and Mahanagar Gas Limited (MGL) leading to the start of commercial operation of city gas projects. Based on the success of IGL and MGL, GAIL has further set up six more JVs viz Bhagyanagar Gas Limited, Andhra Pradesh; Avantika Gas Limited in Madhya Pradesh; Central U P Gas Limited & Green Gas Limited in Uttar Pradesh; Maharashtra Natural Gas Limited in Pune Maharashtra and Tripura Natural Gas Company Limited in Tripura. for CGD projects in various cities. 1.4.6. Exploration and ProductionAs the Indian Economy opened up around the year 2000, the business environment changed dramatically. For GAIL, liberalisation meant competition in our core business i.e. midstream and downstream national gas distribution. Apart from securing sources for Natural Gas, there were other compelling reasons for GAIL to get into E&P: Integration in supply-chain Large gap in Gas demand and supply National Gas security Balancing of Business portfolio Global opportunity. GAIL is currently participating in 31 exploration blocks, in Basins such as Mahanadi, Mumbai, Cambay, Assam-Arakan, Tripura Fold Belt, Gujarat Kutch, Krishna Godavari, Cauvery and Cauvery Palar. GAIL has partnership in these blocks with various companies such as ONGC, OIL, GSPC, Hardy Exploration & Production, Petrogas, JOGPL, Eni and Daewoo as Operators. 1.4.7. GAILTEL GAILTEL, the Telecom & Telemetry services arm of GAIL (India) Limited, is providing communication services for its business critical pipeline Supervisory Control and Data Acquisition (SCADA), Enterprise Resource Planning (ERP) for automation of organization-wide business processes/functions and inter/intra office communications apart from commercially leasing telecom services to telecom operators across India since 2001. GAILTEL, today serves most of the Telecom operators of the country, which include Vodafone, TCL(VSNL), Bharti Airtel, Idea Cellular, Tulip Telecom, Tata Tele services, PGCIL, DEN Network to name a few.1.4.8. Electricity GenerationRatnagiri Gas and Power Pvt. Ltd. (RGPPL) is a joint venture company between GAIL (India) Ltd, NTPC Limited, Indian Financial Institutions (IFIs) and MSEB Holding Company Limited. The promoters have incorporated and registered the company as a private limited company on 8 July 2005. The authorised share capital of the company is 20 billion and the shareholdings of GAIL, NTPC and IFI's are 28 1/3% each and MSEB 15%. The project is located at Ratnagiri district of Maharashtra state about 340 km south of Mumbai. The project has power generation capacity of 2150 MW along with an integrated 5 MMTPA LNG terminal. Primary fuel for the power plant is natural gas.1.5. Size of OrganisationGail has the turnover of Rs 40,281 crore in 2011-2012 and owes its success to continuous commitment of its workforce to which the company proudly refers to as 'Team GAIL'. Presently there are about 3937 efficient employees are engaged in the company as per the record on March 31, 2012.

1.6. Organisation Structure

CMD

BOARD OF DIRECTORS

EXECUTIVE DIRECTORS

DIRECTOR (PROJECTS)DIRECTOR (FINANCE)DIRECTOR (HR)

DIRECTOR (BD)DIRECTOR (MARKETING)

General ManagerGeneral ManagerGeneral ManagerGeneral Manager

General Manager

Chief Manager

Chief ManagerChief ManagerChief ManagerChief Manager

Senior ManagerSenior ManagerSenior ManagerSenior ManagerSenior Manager

Manager Manager Manager Manager Manager

Senior EngineersSenior EngineersSenior EngineersSenior EngineersSenior Engineers

Figure 1.6.1.Organisation Structure of GAILGAIL (India) limited has tall organisation structure. The pros of tall structures lie in clarity and managerial control. The narrow span of control allows for close supervision of employees. Tall structures provide a clear, distinct layer with obvious lines of responsibility and control and a clear promotion structure. GAIL structure at the top is CMD, followed by board of Directors, Executive Directors, General Managers, Deputy General Managers, Chief Managers, Senior Managers, Managers, Deputy Manager and Senior Engineers, each having own responsibility and roles.The clear roles and responsibilities also enable GAIL to delegate powers to different level. Greater delegation of Power (DOP) to executives frees up senior management for devoting their time to bigger and strategic aspects which are important to organisational growth. This enables board members to concentrate more on macro and strategic issues which are vital for the growth of existing and new businesses. DOP not facilitates quick decision making but also provide operational flexibility thereby reducing the procedural delays and speeding up organisation responsiveness.It works under the Ministry of Petroleum and Natural Gas (MoPNG), Government of India, New Delhi.The company's general policies and administrative matters are finalized by the Board of Directors. The Board of Directors have special enhanced powers as the company is listed as a Navratna Company. The functional and financial autonomy of the company is enhanced time to time with Government of India's notifications regarding Navratna public sector companies of India. The Directors are appointed by President of India through Ministry of Petroleum and Natural Gas (MopPNG). The number of Directors cannot be less than three and not more than twenty. There is a statutory Audit Committee having Board level members, which looks after every internal system and practice. The Company has also constituted Ethics Committee to ensure ethical conduct of business.1.7. Market share & position GAIL, a major player in Indias natural gas industry, handling about 74% of the market share, is today an integrated company across the Natural Gas Value Chain expanding its business to become a global player. The government of India owns 57% of the company. Presently, GAIL has been ranked sixth among the top companies in the industry.1.8. Present LeadershipDuring my Summer Training at GAIL I have interacted with Mr. Ashish Kumar Purwar and Mr. S.K. Sinha, who work as Chief Managers under Finance & Accounts Department in GAIL.1.9. Sources of Data CollectionThe Information in this research study was collected from secondary sources. To collect the data Company annual report, annual magazine, last 5 year balance sheet, and cash flow statements had been referred.

Chapter 2. SWOT Analysis

Strengths Weaknesses Opportunities Threats Best Practices Variations/Deviations in Practices followed

2. SWOT ANALYSIS

SWOT Analysis is a tool that identifiesthestrengths,weaknesses,opportunities andthreats of an organization. Specifically,SWOT is a basic, straightforward model that assesses what an organization can and cannotdo as well as itspotentialopportunities and threats. Themethod of SWOT analysis is to take the information froman environmental analysis and separate it into internal(strengths and weaknesses) and external issues (opportunities and threats). Once this is completed, SWOTanalysis determines what may assist the firm in accomplishing its objectives,and what obstacles must be overcome or minimized to achieve desired results.The SWOT analysis of the company is as follows:2.1. Strengths & Weaknesses2.1.1. Strengths 2.1.1.1. Gail India Ltd. Played a key role as Gas Market developer. 2.1.1.2. Companys share of gas transmission business is around 74% in India. 2.1.1.3. The company maintains a dominant position in gas business. 2.1.1.4. Gail has been ranked no.2 gas utility company in Asia and 2nd in gas utility globally. 2.1.1.5. Worlds No. 1 company in downstream operations. 2.1.1.6. Awarded with the status of Maharatna by Government of India.2.1.1.7. First in Indias oil and gas sector to be listed in BSE-GREENEX., the first environment friendly equity index launched by Bombay Stock Exchange.2.1.1.8. Operating more than 2/3rd of country's CNG stations.2.1.1.9. Gas Supply for about of the India fertilizer produced.2.1.1.10. Highly efficient and engaged workforce according to the survey undertaken by M/s Aon Hewitt Pvt Ltd. 2010-2011.2.1.1.11. The company has the largest gas based polymer plant of India at Pata (U.P) 2.1.1.12. The Company received the coveted Scope Corporate Governance Award for 2007-08 for excellence in propagation and implementation of Corporate Governance.2.1.1.13. It has increased global ventures for energy security. 2.1.2. Weaknesses2.1.2.1. Shortage of supply with respect to Demand.2.1.2.2. Large dependence on internal supply chain.2.1.2.3. Drop in gas supply leading to unreliability.2.1.2.4. Since a govt. entity, decision making is affected.2.2. Opportunities & Threats2.2.1. Opportunities2.2.1.1. More & more new customers and major private players are joining hands with Gail.2.2.1.2. Demand for clean energy sources like natural gas is growing exponentially.2.2.1.3. Demand for gas is growing in its volume.2.2.1.4. New ventures with gulf companies.2.2.1.5. 100 per cent FDI is allowed for petroleum products and pipeline sector as well as natural gas/LNG pipeline, for infrastructure related to marketing of petroleum products, market study of formulation and investment financing.2.2.2. Threats2.2.2.1. Gas supply shortage poses threat to GAILs capacity utilization.2.2.2.2. Gail is also facing tough competition from its competitors like, ONGC, RIL, etc.2.2.2.3. Shortfall in supply of domestic gases.2.3. Some Best Practices followed by GAIL in different functional areas2.3.1. Finance2.3.1.1. GAIL have recently introduced RTGS/NEFT facility for making E-payments in secure way, through HDFC bank, to vendors having bank account with any bank under which all payments are made only through electronic transfers by mapping all vendor bank accounts to their vendor management systems.2.3.1.2. Balance sheets prepared by the company are in accordance of Companies Act, 1956 as well as Accounting standards issued by the institute of Chartered Accountants of India.2.3.1.3. It monitors the preparation of cost records in accordance the cost Accounting Standards issued by ICWAI.2.3.2. Human Resource (HR)2.3.2.1. The safety and health of employees and external stakeholders are embedded in the core organisational values of the company.2.3.2.2. It has endeavoured to keep its employees fully aware of the HSE aspects and to meet this objective; it provides regular training to employees, contract worker through internal as well as external resources.2.3.2.3. It ensures the implementation of safe work practices, and continual improvement in Safety Management System in compliance with statutory rules and regulations.2.3.2.4. The Company has been offering various training programs related to the gas value chain for professional development of executives working in the oil & Gas sector from its training centres GAIL Training Institute (GTI).2.3.2.5. Senior Management Development Centre (SMDC) exercise has been undertaken with an objective of development of its senior level executives and preparing them for future leadership positions.2.3.3. Marketing2.3.3.1. It has implemented an online bidding portal through which existing customers can bid for supply of spot RLNG gas. 2.3.3.2. Gail is making its presence in the polymer sector.

2.3.4. Information Technology (IT)2.3.4.1. GAIL has taken new IT initiatives to enhance productivity-SAP based Gas Management System (GMS),Governance, Risk & Compliance (GRC) and Reverse Auction modules have been implemented to enhance transparency, efficiency and customer satisfaction.2.3.4.2. It has implemented Electronic Document Management System for maintaining all the important information and records of the company in digitized form.2.3.4.3. Many initiatives such as Tender Monitoring System, e-QRP system, online written examination in e-recruitment module, etc have been undertaken to ensure transparency in systems & procedures.2.3.4.4. The Business Information Systems department of this Company is certified with ISO 9001:2008 standard.

2.3.5. Production2.3.5.1. GAIL follows Total Quality Management in all the processes, systems and functional areas.2.3.5.2. It has implemented Tender Monitoring System to enhance & bring better transparency in the procurement process.

2.3.6. Operations2.3.6.1. With increase in demand, Gail is laying more new pipelines.

2.3.7. Customer Relationship Management (CRM)2.3.7.1. The company is committed to promote globally comparable levels of health, safety, Environment Management System in the areas of its business operations with a focus on improving harmony with environment through Sustainable Development.2.3.8. Corporate Social Responsibility (CSR)2.3.8.1. GAIL contributes 2% of its companys performance after tax to CSR activities. 2.3.9. Sustainable Development 2.3.9.1. GAIL (India) Limited is spreading clean and green fuel and energy to households, commercial vehicles, small industries and big industrial sector in India and abroad to enrich growth in economy and protecting environment and ecology of the country.

2.4. Variations/Deviations in practices followed by Gail2.4.1. According to the F.W.Taylor training should be given to employees from the very beginning so they may achieve competence as early as possible, GAIL follows this principle and provides training at the very beginning.2.4.2. The company follows scientific training and development of workers so as to achieve highest level of efficiency.2.4.3. It has maintained close cooperation between management and labour to ensure that the work is carried out in accordance with the principles which are developed.2.4.4. GAIL follows the principle of Division of Work which states that a worker or group of workers is assigned a specialized task in order to increase efficiency.2.4.5. There is total transparency in the management and working of the company.

Chapter 3. Data Collection & Presentation

Data Collection Data Presentation

3. DATA COLLECTION & PRESENTATION

A. DATA COLLECTION3. A.1. Marketing3. A.1.1. Product Planning ProcessThe production planning in GAIL starts with exploration of crude oil and produced (upstream) and then transformed into various petroleum products with different end uses in refineries and finally marketed to retail customers (downstream). Except Aviation Turbine Fuel (ATF) and Liquefied Petroleum Gas (LPG), all the end products are sent to intermediate storage plants through terminal/depots and finally to retail customers . As regards ATF it is distributed directly to the Airfields or Air stations and refined LPG is dispatched to LPG storage bottling plants for liquefaction and marketing to retail customers.3. A.1.2. Pricing Policies/StrategiesPrice of Natural gas produced from nominated fields of ONGC Ltd and OIL Ltd is governed by orders from MOP&NG from time to time. As per extant MOP&NG order, company is allowed to levy a marketing margin of Rs. 200/MSCM on the gas sold at APM/non APM prices. GAIL also prevents misuse of price sensitive information by anyone by preserving the confidentiality of price sensitive information.3. A.1.3. Channel Planning &ManagementChannel planning is required to maximize the returns from the existing infrastructure and to plan future investments and other changes that maintain or improve position by:Implementation of Strategic plansAcquisition/rationalisation/rebuild/conversionImproving decision makingImproving competitive advantageManaging changeThe journey of channel planning in GAIL starts with Site classification, competition assessment (no. of competitors in that area), Individual site strategy depending on the kind of consumers coming in, proposal evaluation working on financial, technical, marketing and economic feasibility of a proposed plan , network optimization , performance measurement with regular and sudden audits.3. A.1.4. CRM PoliciesGAILs main aim is to develop products to meet changing market demands and specific customer requirements for their current and future business growth. They have devised a customer suggestion scheme and redressal mechanism module to address customer enquiries and grievances. Customers are given easy access to these tools on their corporate website. Their customer satisfaction surveys help them to assess the level of their customers satisfaction and their key expectations. It also organizes customer meets and felicitation events to further their relationship with their customers. To improve customer satisfaction they have employed the latest technologies in their gas management and metering system. They have made a policy in which they address queries raised by customers through customer relationship portals, satisfaction surveys and other means of engagement. They have expand their retail presence to a large number of cities and towns for replacing polluting fuels with CNG and bringing PNG to the doorsteps of domestic and commercial consumers.

3. A.1.5. Advertisement ProcessTheir advertising and marketing initiatives are supported by product brochures, road-shows and campaigns, internet advertising etc.

3. A.2. HRM 3. A.2.1. Recruitment, Selection ProcessThe company ensures that they acquire the right talent to fuel our growth and give them the right exposure and opportunity for their overall development. Their efforts focus on recruitment from some of Indias best academic institutions. They also conduct a stringent all India competitive test to give fair and transparent opportunities to talent across the country and train them in their high class training facilities supported by the GTI (GAIL Training Institute). The company has a well designed e-Recruitment System in practice where in the posts are advertised through company's website, applications are received online, processed and scrutinized online and all other important recruitment business is done electronically. The company being a public sector company follows the reservation policy as well. The organization also does not force employees to deposit their original certificates pertaining to educational qualification or Date of Birth at the time of joining.In each Interview board there is SC/ST representative to safeguard the interest of SC/ ST applicants. In case vacancies against which selection to be made, is less than 10, Efforts are made to have a Minority community member in such Boards/ Committees.

3. A.2.2. Training, Performance Appraisal & Recognition SystemsGAIL ensures that they provide their employees an engaging atmosphere through their welfare activities and internal communication. Therefore, it fulfils commitment towards employee development by providing adequate opportunities to them to hone their technical and inter-personal skills. Companys annual performance review program, employee suggestion schemes, employee engagement surveys and internal review meetings help employees in identifying and responding to their employees key concerns and support these measures by on-going means of interaction including internal magazines, newsletters and the intranet.In the year 2012, Gail Training Institute (GTI) had launched e-Gyan Prawah an e-Learning initiative for senior executives through Harvard Management Mentor covering 44 e-learning modules to support the key developmental areas.

3. A.2.3. Industrial Relations, Welfare, Career Development & Grievance Handling PoliciesGAIL has put efforts to effectively implement RTI Act at GAIL. In this regard, during the year, they provided 11 training programs to 200 employees on the key elements and enforcement areas for this Act. GAIL endeavours to create an organization free from corruption and is inclined towards upholding high ethical values. To this end, they have signed a MoU with Transparency International (TI) in 2007 for ratification of Integrity Pact Programme in consultation with the CVC to maintain and foster ethical and corruption free business environment. This pact is also mandatorily signed by vendors / suppliers having high value contracts.They have defined specific roles and responsibilities of the key departments in GAIL to address the grievances, monitor them, and ensure that they are addressed in a timely and efficient manner. They are one of the few companies in India to set up a focused Board committee to address grievances of all stakeholders through the Stakeholders Grievance Redressal Committee. This committee is empowered to take decisions on disputes referred by stakeholders and resolve them amicably. To improve retention and satisfaction amongst the employees, they have taken consistent investment efforts towards building adequate infrastructure and promoting welfare activities grievance Redressal Committee consisting of senior officers including the Advisor-Coordination & officer on special duties has been constituted to handle day to day labour grievances in coordination with the contractors representative & the contractors workers for prompt disposal & for maintenance of a harmonious work environment.They have announced a number of measures to address some of the challenges that women face at work such as sexual harassment, child care leave of up to 2 years etc. The company has a policy whereby minimum age for employment is prescribed and child labour is strictly denied.

3. A.2.5.Safety Policies & PracticesThey have stringent security arrangements to handle and manage any mishaps or untoward incidents due to the increasing geo-political instability. They have also invested on trained security staff to ensure seamless operations. In order to ensure greater transparency in all aspects of the company, it has adopted a Whistle Blower Policy .This policy provides for adequate safeguards against victimization of employees who avail of the mechanism. They have a workplace policy on HIV/AIDS prevention and control to prevent discrimination and create awareness on HIV/AIDS. They have established occupational health, safety and wellbeing plans for all work centres in our company. Despite dealing with hazardous processes/products, the company has endeavoured to protect human lives by deploying state-of-the-art technology, regular maintenance of Equipment and activities such as mock drills. The organisation also conducts various training programmes pertaining to Safety, Health and Environment such as Lay-Off Protection Analysis, Hazardous Waste Management and Environment Protection, First Aid etc.3. A.3. Production & Operations

3. A.3.1. Production & Procurement Planning3. A.3.1.1.GAIL has appointed Independent External Monitors (IEM) of high repute to lend transparency to their procurement procedures.In order to enhance clarity and transparency in their procurement procedures, they have initiated Procurement through reverse auction for high value procurement. They have formed a transparent procedure for reverse auction, which was applied first to tenders involving steel procurement, necessitated by the problem of fluctuation in steel prices.The company has expansion plans for building more than 7500 km of gas pipelines in the country and it is very ambitious to go in a very big way for expending its networks. The Company is going to invest more than Rs. 30000 crores in next five years to install new pipelines in gas transmission. These would include large trunk pipelines along with smaller pipelines which would help the Company to complete its dream project of 'National Gas Grid.'The company owns and operates the biggest gas based petrochemical plant of India at Pata and has planned to double its production capacity in coming five years.

3. A.3.2. Supply chain Management such as Vendor Development, Logistics, Inventory ManagementSupply Chain Management of GAIL includes Refiner, Manufacturer, Distributer, Marketer and Consumers. It has adopted a Gas Management System to handle multiple sources of supply and delivery of gas in a co-mingled form and provide a seamless interface between shippers, customers, transporters and suppliers. At GAIL, they have deployed a Bill Watch System to improve processing of vendor bills, increase transparency for vendors during tracking of payment, and enhance trust through independent nature of the system involved.Similarly, they have also upgraded their File Management System on similar lines to track the movement of files within GAIL and also promote vigilance awareness through their internal magazine, Jagrook, which provides information on proactive vigilance and describes several successful case studies. This is supported by appropriate measures to boost awareness of major vendors towards the need for proactive vigilance and ethics. They have an Operation and Maintenance Policy, which outlines the objective, targets, philosophy and guidelines for maintenance across their operations. This policy focuses on increasing process efficiency and decreasing downtime to ensure optimum use of resources.

3. A.3.3. Quality Assurance & Quality ControlAll the gas processing and petrochemical plant and LPG pipeline systems and Natural Gas Compressor Stations under operation in Gail are ISO 9001, ISO 14001 and OHSAS 18001 certified. We have designed an Integrated Management System (IMS) based on systemic requirements of ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 for all our processes, activities, products and services across locations. These systems enable us to effectively control and manage our performance.

3. A.3.4. Maintenance PracticesTo have a focused approach on HSE issues, they have constituted a separate HSE sub-committee of Directors at the Board level to closely monitor the performance and emergency preparedness of our operations.Several steps were taken to improve handling and disposal of hazardous waste by ensuring proper disposal of hazardous waste through CPCB-authorized waste handlers who process these wastes and ensure minimum impact on the environment from their disposal.Managing Water resources- GAIL understands that the depleting water resources pose a major threat for the sustainability of major ecosystems and significant risk to the sustainability of any business. They are consciously optimizing consumption of water and at the same time make provisions for the nearby communities by trying to minimize their use of groundwater. GAIL is making continuous effort to use recycled water and thus reducing the overall water consumption.

3. A.4. Use of ITeSTo enhance productivity, transperancy, efficiency, and customer satisfaction GAIL have implemented SAP based Gas Management System (GMS), Governance, Risk & Compliance (GRC) & Reverse Auction modules. It has also implemented online biding portal through which existing customers can bid for supply of spot RLNG gas.

B. DATA PRESENTATION3. B.1. Intra-firm Financial Statement Analysis for 2007-2008 to 2011-2012:Analysis of Liquidity Position of GAIL -Liquidity refers to the existence of the assets in the cash or near cash form. This ratio indicates the ability of the company to discharge the liabilities as and when they mature. To fulfil this objective the following ratios were calculated:3. B.1.1 Current Ratio It is calculated by dividing current assets and current liabilities. The ideal current ratio is 2.1 i.e. Current Assets should be equal to Current Liabilities. Year 2007-08 2008-09 2009-10 2010-11 2011-12

Current Ratio 1.40 1.29 1.16 1.11 0.95

Table 3.B.1.1.1. Current Ratio Analysis

Figure 3.B.1.1.2. Current Ratio AnalysisInterpretation The Current Ratio of GAIL was reasonably good in the year 2007-2008 but it had shown a declining trend from 2008-2009. In the year 2011-2012, it had a ratio less than 1 that means companys current liabilities exceed the current Assets. 3. B.1.2. Quick Ratio It is obtained by dividing the quick assets by quick liabilities. Quick Assets are obtained by deducting stocks from Current Assets. Quick Liabilities are obtained by deducting bank overdraft from Current Liabilities. Year 2007-08 2008-09 2009-10 2010-11 2011-12

Quick Ratio 1.33 1.22 1.11 1.04 0.85

Table 3.B.1.2.1. Quick Ratio Analysis

Figure 3.B.1.2.2. Quick Ratio Analysis

InterpretationThe quick ratio of GAIL had been more than 1 in the past four years but the ratio went down in 2010-2011 and then again declined in 2011-12.

Analysis of Profitability Position of GAIL-The Profitability ratios are calculated to measure the operating efficiency of the company. To fulfil this objective the following ratios were calculated:3. B.3. Gross Profit Ratio This is the ratio expressing relationship between gross profits earned to net sales. The ratio shows whether the mark-up obtained on cost of production is sufficient however it must cover its operating expenses. Year 2007-08 2008-09 2009-10 2010-11 2011-12

Gross Profit Ratio 18.78 20.03 20.56 18.15 15.18

Table 3.B.3.1. Gross Profit Analysis

Figure 3.2.3.2. Gross Profit AnalysisInterpretationThe gross profit ratio of GAIL has been highest in the year 2009-2010 but in the next two years it has shown declining trend.

3. B.4. Operating Profit Ratio This ratio shows the relationship between cost of goods sold plus operating expenses & Net sales. . It shows the efficiency of the company in managing the operating costs base with respect to sales. The higher the ratio, the less will be the margin available to proprietors. Year 2007-08 2008-09 2009-10 2010-11 2011-12

OPR 21.95 17.33 18.77 17.03 15.02

Table 3.B.4.1. Operating Profit Ratio Analysis

Figure 3.B.4.2.Operating Profit Ratio

InterpretationThe operating profit ratio of GAIL has shown a decline in 2008-09 and then again in 2010-11, and has declined in 2010-11 and 2011-2012.

3. B.5. Net Profit Ratio Net profit ratio establishes the relationship between net profit (after tax) & sales and indicates the efficiency of the management in manufacturing selling, administrative and other activities of the firm. Year 2007-08 2008-09 2009-10 2010-112011-12

NPR 14.44 12.01 12.59 10.97 9.49

Table 3.B.5.1.Net Profit Ratio Analysis

Figure 3.B.5.2. Net Profit Ratio Analysis

InterpretationGAIL's net profit ratio was less during 2008-09 and it increased next year but again it decreased from 2010 to 2012.

3. B.6. Return on Investment Return on Investment indicates the probability of business & is very much in use among financial analysis. Year 2007-08 2008-09 2009-10 2010-112011-12

ROI 18.16 17.89 17.22 16.52 14.21

Table 3.B.6.1.Return on Investment Analysis

Figure 3.B.6.2.Return on Investment Analysis

InterpretationReturn on investment of GAIL has shown a declining trend after 2007-2008 .

3. B.7. Return on Equity Return on equity shows what percentage of profit is earned on the capital invested by ordinary shareholders. Year 2007-08 2008-09 2009-10 2010-112011-12

ROE 20.00 18.98 18.69 18.50 16.89

Table 3.B.7.1.Return on Equity Analysis

Figure 3.B.7.2.Return on Equity Analysis

InterpretationThe return on equity of the company has shown a declining trend as the ROE has decreased from 20.00 in 2007-08 to 16.89 in 2011-12.

Analysis of Turnover Position of GAIL-They are basically productivity ratios which measure the output produced from the given input deployed. If asset turnover is high, it shows efficient or productive use of input. To fulfil this objective the following ratios were calculated:3. B.8. Total Asset Turnover Ratio It is the ratio which measures the efficiency with which the assets were turned over a period. It is the ratio of sales to total assets. Year 2007-08 2008-09 2009-10 2010-112011-12

TATR 1.261.491.371.511.50

Table 3.B.8.1.Total Asset Turnover Ratio Analysis

Figure 3.B.8.2. Total Asset Turnover Ratio Analysis

InterpretationThe total asset turnover ratio of GAIL has increased from1.26 times in 2007-08 to 1.50 times in 2011-12.

3. B.9. Inventory Turnover Ratio The number of times the average stock is turned over during the year is known as Stock turnover ratio. Year 2007-08 2008-09 2009-10 2010-112011-12

ITR45.9775.7797.51101.3679.18

Table 3.B.9.1. Inventory Turnover Ratio Analysis

Figure 3.B.9.2. Inventory Turnover Ratio Analysis

InterpretationThe inventory turnover ratio of GAIL has increased from 45.97 times in 2007-08 to 101.36 times in 2010-11 .The highest ratio for the company in the last 5 years was 101.36 times in the year 2010-2011.

3. B.10. Debtors Turnover Ratio The debtor turnovers suggest the number of times the amount of credit sales is collected during the year. Year 2007-08 2008-09 2009-10 2010-112011-12

DTR 19.7920.28 17.8618.4619.32

Table 3.B.10.1.Debtors Turnover Ratio Analysis

Figure 3.B.10.2. Debtors Turnover Ratio Analysis

InterpretationThe debtors turnover ratio of GAIL was 20.77 times in 2006-07,but it has shown a declining trend after that and in 2009-10 it went to the lowest of 17.86 times (in the last 5 years). In 2010-11 the ratio has increased to 20.28.

Analysis of Leverage Position of GAIL- Leverage ratios are used to calculate the financial leverage of GAIL, to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. . To fulfil this objective the following ratios were calculated:3. B.11. Debt Equity Ratio It establishes relation between the outside long- term liabilities and owner funds. It shows the proportion of long term external equity and internal equities. Year 2007-08 2008-09 2009-10 2010-112011-12

DER 0.09 0.08 0.08 0.11 0.25

Table 3.B.11.1.Debt equity Ratio Analysis

Figure 3.B.11.2. Debt equity Ratio Analysis

InterpretationThe debt-equity ratio of GAIL was 0.09 in 2007-08 then it declined later on and it went to 0.11 again in 2010-11 and 0.25 in 2011-2012.Analysis of Valuation Ratios of GAIL Valuation ratios are generally presented on a per share basis and are more useful to the equity investors. To fulfil this objective the following ratios were calculated:3. B.12. Earnings per share This ratio measures profit available to equity shareholders on per share basis. It is not the actual amount paid to shareholders as dividend but is the maximum that can be paid to them. Year 2007-08 2008-09 2009-10 2010-112011-12

EPS30.76 22.10 24.75 28.07 28.80

3.B.12.1. Earnings per share Analysis

Figure 3.B.12.2.Earnings per share AnalysisInterpretationThe earnings per share of the company were 30.76 in 2007-08 and then it declined in 2008-10 and then again increases in 2010-12.3. B.13. Dividend Payout Ratio This ratio indicates split of EPS between cash dividends and reinvestment of profit. If the company has profitable projects than it will prefer to keep dividend payout ratio lower. Year 2007-08 2008-09 2009-10 2010-112011-12

DPR 32.5031.6730.3026.7230.21

3.B.13.1. Dividend Payout Ratio Analysis

Figure 3.B.13.2. Dividend Payout Ratio Analysis

InterpretationThe dividend payout ratio of GAIL has shown a declining trend and from 32.50 in 2007-08 it came down to 30.21 in 2011-12.

3. B.14. P/E Ratio It is computed by dividing the current market price of a share by earning per share. Year 2007-08 2008-09 2009-10 2010-112011-12

P/E Ratio 5.00 5.27 5.35 5.40 5.91

Table 3.B.14.1. P/E Ratio Analysis

Figure 3.B.14.2.P/E Ratio Analysis

InterpretationPrice earnings ratio of the company has shown increasing trend from 2007 2012. Highest P/E ratio in the last 5 years is 5.91.

3. B.2. Peers Comparison The competitors analysis has been done using the ratio analysis as a tool to analyze and compare the performance of Gail with its major competitors. The major competitors whose performances have been compared with that of GAIL are RIL, ONGC and IOCL. The performances have been compared on the basis of the last five years data, i.e. from March 2007 to March 2012. Comparison of Liquidity Position of peers with GAIL-3. B.2.1. Current RatioCurrent Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL1.41.291.161.120.95

ONGC1.561.451.391.361.15

RIL1.011.081.111.221.68

IOCL0.840.610.760.8 1.44

Table 3.B.2.1.1. Current Ratio Analysis

Figure 3.B.2.1.2. Current Ratio Analysis

InterpretationThe current ratio of Gail is reasonably good but it has shown a declining trend from 2008-09,its competitor ONGC has been good throughout but just like GAIL it has also shown a decline in the current ratio.RIL unlike GAIL and ONGC has shown increasing trend throughout in its current ratio which shows that the company is now having a good position to meet its current liabilties.IOCL has shown an increase in its current ratio from 2008-09 but still its current ratio is quiet less as compared to the competitors, but after 2010-2011 it has shown some improvement in the current ratio.

3. B.2.2. Quick RatioQuick Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL1.311.211.091.040.85

ONGC1.391.271.221.21.05

RIL0.930.90.761.011.17

IOCL0.540.460.440.50.74

Table 3.B.2.2.1.Quick Ratio Analysis

Figure 3.B.2.2.2. Quick Ratio AnalysisInterpretationThe overall quick ratio of GAIL and ONGC has been good and this shows that these companies are having a good position to pay their current financial obligations with the available quick funds in hand. IOCL has shown a consistency but still its quick ratio is less as compared to its competitors and RIL has shown an increase in the ratio after 2009-10 and it is the good sign for the company to meet its current financial obligations.

Comparison of Profitability Ratio of peers with GAIL-3. B.2.3. Gross profit RatioGross Profit Ratio 2007-2008 2008-2009 2009-2010 2010-20112011-2012

GAIL18.7814.9716.5215.0213.07

ONGC42.9943.5853.8750.8737.99

RIL13.1413.3510.139.766.80

IOCL3.473.464.42.433.09

Table 3.B.2.3.1.Gross Profit Analysis

Figure 3.B.2.3.2.Gross Profit Analysis

InterpretationThe gross profit ratio of ONGC has been the highest as compared to its competitors this shows that the company is more efficient in controlling its production cost and the company has enough revenue available to cover overhead, other expenses and profits. GAIL has been a better performer than IOCL and RIL in these five years, IOCL has the lowest gross profit ratio whereas RIL has been better than IOCL this is the area of concern for the management of IOCL and also for RIL as they have not performed so well as compared to the others.

3. B.2.4. Net Profit RatioNet Profit Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL14.0111.412.2910.88.94

ONGC25.9323.526.3526.4331.02

RIL14.4510.658.358.085.99

IOCL2.780.953.742.220.89

Table 3.B.2.4.1.Net Profit Analysis

Figure 3.B.2.4.2.Net Profit Analysis

InterpretationThe net profit ratio of ONGC has been the highest among the competitors and thus this shows the company's high margin of safety, i.e. lower risk that a decline in sales will erase profits and result in a net loss. GAIL's net profit margin was less during 2008-09 and it increased next year but again it decreased from 2010 to 2012.RIL's net profit ratio has shown a declining trend after 2007-08, this is not a good sign for the company in terms of net profit ratio. IOCL has the lowest net profit margin as compared with others.

3. B.2.5. Operating Profit RatioOperating Profit Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL21.9517.3318.7717.0315.02

ONGC49.5150.3962.5761.247.79

RIL16.7617.0115.615.2410.25

IOCL4.564.45.63.84.20

Table 3.B.2.5.1.Operating Profit Analysis

Figure 3.B.2.5.2.Operating Profit Analysis

InterpretationThe operating profit ratio of GAIL has shown a decline in 2008-09 and then again in 2010-11, this shows that the company's revenue has not been consistent and has declined in 2010-11 and 2011-2012. ONGC has shown an increasing trend in its operating profit ratio this shows that the company is performing well from its competitors and shows that the sales of the company have been highly profitable. RILs performance has not been so good as compared to GAIL and ONGC, its operating ratio has decreased in 2009-10 and has continued the declining trend in 2010-2012. IOCL has been the poorest performer in terms of operating ratio as compared to its competitors.3. B.2.6. Return on AssetsReturn on Asset2007-20082008-20092009-20102010-20112011-2012

GAIL1.531.161.321.511.70

ONGC3.273.654.041.131.32

RIL5.488.024.194.625.07

IOCL3.433.682.082.272.38

Table 3.B.2.6.1.Return on Assets Analysis

Figure 3.B.2.6.2. Return on Assets Analysis

InterpretationThe ROA of RIL has been the highest, it has shown a decline after 2008-09 but still its ROA has been higher than its competitors, which shows that the company is efficient in utilization of its assets to generate profit. The ROA of GAIL has been very low as compared to its competitors but it has shown an increase after 2008-09.The ROA of IOCL has shown a decline in the trend after 2008-09 which is the area of concern for the company. The ROA of ONGC has also shown a sharp decline after 2009-10 which is the area of concern for the management.3. B.2.7. Return on EquityReturn on Equity2007-20082008-20092009-20102010-20112011-2012

GAIL2018.9818.6918.4916.89

ONGC23.8720.6519.3919.5622.24

RIL12.6413.3624.6619.4912.29

IOCL16.996.7120.2213.456.83

Table 3.B.2.7.1.Return on Equity Analysis

Figure 3.B.2.7.2. Return on Equity Analysis

InterpretationThe ROE of GAIL has shown a decline after 2007-08 but it has been reasonably good. The ROE of RIL has shown a major increase after 2008-09 but has again fallen in 2010-11.The ROE of IOCL has been inconsistent and ROE of ONGC has shown a declining trend after 2007-08.Comparison of Turnover Position of peers with GAIL-3. B.2.8. Total Asset Turnover RatioTotal Asset Turnover Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL1.271.51.391.521.52

ONGC0.730.680.580.580.65

RIL1.150.791.481.661.91

IOCL3.243.472.853.093.47

Table 3.B.2.8.1. Total Asset Turnover Analysis

Figure 3.B.2.8.2.Total Asset Turnover AnalysisInterpretationThe total asset turnover ratio of IOCL has been the highest and this shows that the company's performance with respect to the sales has been good, but the total asset turnover ratio has decreased after 2008-09 but again increased after 2009-2010. GAIL has shown an increase during 2010-11 and thus shows an improvement.RIL has shown an increasing trend after a downfall in total asset turnover ratio in 2008-09 which is a good sign for the company. ONGC has been the lowest as compared to others and thus becomes the area of concern for the company.3. B.2.9. Inventory Turnover RatioInventory Turnover Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL79.18101.3697.5175.7745.97

ONGC122.77111.9887.8294.6914.88

RIL10.5712.928.299.5910.42

IOCL9.0913.988.377.568.15

Table 3.B.2.9.1. Inventory Turnover Analysis

Figure 3.B.2.9.2. Inventory Turnover AnalysisInterpretation The inventory turnover ratio of GAIL has been good even though it has decreased after 2008-09, the ratio of GAIL reflects that the company is quiet efficient in management of inventories. ONGC'S inventory turnover ratio has been better than its competitors even though it has declined after 2007-08 and thus shows more efficient management of inventories. The inventory turnover ratios of RIL and IOCL are very less as compared to GAIL and ONGC and therefore this shows the less management of inventories of IOCL and RIL. 3. B.2.10. Debtors Turnover RatioDebtors Turnover Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL19.3218.4617.8620.2819.79

ONGC16.8715.1616.8719.1715.24

RIL26.8726.2923.6717.0518.40

IOCL36.548.1545.9145.1536.01

Table 3.B.2.10.1.Debtors Turnover Analysis

Figure 3.B.2.10.2.Debtors Turnover AnalysisInterpretationThe debtors turnover ratio of IOCL has been the highest as compared to its competitors, this shows that IOCL is good enough to collect its debts more quickly.RIL is reasonably good but it has shown a big decline after 2009-10.The debtors turnover ratio of GAIL has been less as compared to IOCL and RIL but the ratio has increased after 2010-11 and this is a good sign for the company .The debtors turnover ratio of ONGC has been the lowest as compared to the others.3.B.2.11. Fixed Asset Turnover RatioFixed Asset Turnover Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL1.071.361.21.481.56

ONGC1.051.050.850.820.40

RIL1.291.011.241.582.05

IOCL4.384.983.783.614.49

Table 3.B.2.11.1.Fixed Asset Turnover Analysis

Figure 3.B.2.11.2.Fixed Asset Turnover AnalysisInterpretationThe fixed asset turnover ratio IOCL has been highest as compared to its competitors but It has shown a declining trend after 2007-08.The fixed asset turnover ratio of ONGC has been the lowest as compared to others .The fixed asset turnover ratio of GAIL is lower than that of IOCL but it has shown an increase in the year 2011-12.The fixed asset turnover ratio of RIL has also shown an increase after 2008-09.

Comparison of Leverage Ratio of peers with GAIL-3. B.2.12. Debt Equity RatioDebt -Equity Ratio2007-20082008-20092009-20102010-20112011-2012

GAIL0.090.080.080.110.25

ONGC0.170.20.180.180.04

RIL0.460.640.480.460.36

IOCL0.861.020.880.951.22

Table 3.B.2.12.1.Debt-EquityAnalysis

Figure 3.B.2.12.2.Debt-Equity AnalysisInterpretationThe debt-equity ratio of GAIL has shown consistency through these five years and shows good long term financial position and sound long term financial policies of the firm. ONGC has also shown consistent trend and reflects sound long term financial position, but after 2010-2011 it has shown a huge decline. RIL's debt-equity ratio is higher than that of ONGC and GAIL, but it has shown a decline n the trend and thus shows that the company is now relying less on debt. The debt-equity ratio of IOC has been the highest and thus shows that company is relying more on the long term debt than the shareholder's equity and therefore it shows that there is higher degree of risk for the lenders as compared to the other competitors.

Chapter 4. Functional Analysis of the company

Finance Marketing Human Resource Information Technology

4. FUNCTIONAL ANALYSIS

4.1. Finance 4.1.1. GAIL follow the process of converting physical shares into electronic format i.e. dematerialisation of shares.4.1.2. It provides Investor education and protection Fund.4.1.3. The company has put up an adequate risk assessment and minimization procedure, with a vision to integrate risk management with the overall strategy and operational practices Risk Management Policy and framework has been established in the company. 4.1.4. GAIL ensures greater transparency in all aspects of the companys functioning; it has adopted resolution no.89 of Govt. of India pertaining to public Interest Disclosure and protection of informer and implemented the same as Whistle Blower Policy in the company.

4.2. Marketing4.2.1. GAIL follow social marketing discipline transactional by nature and focus on Price, Product, Place and Promotion to determine what benefits and costs they would consider acceptable to reach consumers effectively (Andreason, 1995). 4.2.2. One of the major Marketing practices is consumer satisfaction and to improve customer satisfaction GAIL have employed the latest technologies in their gas management and metering system. They have made a policy in which they address queries raised by customers through customer relationship portals, satisfaction surveys and other means of engagement.4.2.3. The organisation also conducts various training programmes pertaining to Safety, Health and Environment such as Lay-Off Protection Analysis, Hazardous Waste Management and Environment Protection, First Aid etc.

4.3. Human Resource 4.3.1. Torrington (2008) explains that human capital signifies the combined intelligence and experience of staff as a source of competitive advantage that cannot be imitated by rivals therefore; their efforts focus on recruitment from some of Indias best academic institutions and They also conduct a stringent all India competitive test to give fair and transparent opportunities to talent across the country and train them in their high class training facilities supported by the GTI (GAIL Training Institute).4.3.2. According to Mullins (2010), to guarantee high performance, feedback must be given as means of checking goals attainment and a basis for any revision of goals. They have built committee to address grievances of all stakeholders through the Stakeholders Grievance Redressal Committee. This committee is empowered to take decisions on disputes referred by stakeholders and resolve them amicably. To improve retention and satisfaction amongst the employees, they have taken consistent investment efforts towards building adequate infrastructure and promoting welfare activities grievance Redressal Committee consisting of senior officers including the Advisor-Coordination & officer on special duties has been constituted to handle day to day labour grievances in coordination with the contractors representative & the contractors workers for prompt disposal & for maintenance of a harmonious work environment.4.3.3. Huselid (1995) used some HRM practices in his study and these include personnel selection, performance appraisal, incentive compensation, grievance procedures, information sharing, attitude assessment, labour management participation, recruitment efforts, employee training and promotion criteria. GAIL follows all of them to achieve the best Human Resource Practices in their company.

4.4. Information Technology4.4.1. The Company has SAP management System, Enterprise Resource Planning (ERP) System, Six Sigma System and a number of other best Practices in its operations.4.4.2. The company has introduced e-Recruitment, e- Performance Management System (e-PMS), Online Vigilance Complaint Registration System, e- Budgeting System, Management Information System.

Chapter 5. Summary & Conclusions

Findings/Results Suggestions Limitations of study

5. SUMMARY & CONCLUSIONS

5.1. FindingsAfter going through the various ratios, I have found that:5.1.1. The Current Ratio of the company is less than 1 therefore it is finding difficulty in meeting its financial obligations. 5.1.2. The quick ratio of the company indicates that the business can meet its current financial obligations with the available quick funds on hand.

5.1.3. The Gross Profit ratio shows that the company is more efficient in handling the production cost in the year 2009-10.5.1.4. The Operating Profit Ratio of the company shows that the company's revenue has not been consistent.5.1.5. The net profit ratio is little low in the current year as compared with the previous year which means that the company is less profitable in that year.5.1.6. Return on investment of the company shows that the company has less productivity & Earnings.5.1.7. There is a decline in Return on Equity which shows higher increment in reserves & surplus of the company.5.1.8. The total asset turnover ratio shows that the company is using its asset efficiently to generate sales.5.1.9. Inventory Turnover Ratio shows that the company has become more efficient in management of inventory.5.1.10. Increase in Debtors Turnover Ratio in the current year shows that company is more efficient in determining the outstanding cash balances from its customers during an accounting period.5.1.11. The debt equity ratio shows that the financial position of the company is highly solvent & shows sound long term financial policies.5.1.12. The earnings per share are maximum in the current year which shows that the company is profitable.5.1.13. The dividend payout ratio of the company is little low therefore the shareholders looking for quick returns would a bit disappointment as they prefer high ratio but those investors who are looking for capital appreciation would be satisfied with dividend payout ratio. On the basis of the above findings we can conclude that the company is managing its current assets effectively, it has shown an upward trend over the years and expected to grow with the same compounded annual growth rate over next few years. Overall it has a decent Financial Management.Being an undisputed leader in the Natural Gas market in India and a significant player in the global natural gas industry, by growing aggressively while maintaining the highest level of operating standards, GAIL focuses on all aspects of the Natural Gas value chain and beyond including Exploration, production, Transmission, Marketing, Extraction, processing, Distribution, Utilization including petrochemicals & Power and Natural Gas infrastructure, Products and Services. Gail is also committed to operational excellence in everything they do with a focus on continuous efforts to improve environmental performance for themselves and their customers and will be sensitive to the needs of the environment in all its actions. Its overall vision is to accelerate and optimize the effective and economic use of Natural Gas and its fractions to the benefit of national economy and to Anticipate and exceed customer expectations through the provision of highest quality infrastructure, products and services. 5.3. Suggestions5.3.1. Gail should search for alternatives to get gas to meet the demand.5.3.2. The company should maintain the current ratio in such a manner that it does not face any difficulty in meeting its financial obligations.5.3.3. It would be good for the company if it maintains its ROCE higher as low ROCE indicates inefficiencies.5.3.4. Liquidity refers to the ability of the concern to meet its current obligations as and when these become due. The company should improve its liquidity position. 5.3.5. The profit ratio is decreased in current year so the company should pay attention to this because profit making is the prime objective of every business.5.3.6. The long term financial position of the company is very good but the company should pay little attention to its short term solvency.

5.4. Limitations of the studyThe analysis and interpretation are based on secondary data contained in the published annual reports of GAIL India Limited for the period, so it is subject to all limitations that are inherent in the condensed published financial statements. Due to the limited time available the study has been confined for a period of 8 weeks only. The study of financial performance of the company through ratio itself will not completely show the companys good or bad financial position.

Bibliography

B IBLIOGRAPHY

WEBSITES1. http://money.rediff.com/companies/gail-india-ltd/15120010/balance-sheet2. http://www.gail.nic.in/final_site/index.html3. www.gailonline.com4. Economicstimes.com5. www.indiainfoline.com6. www.ongcindia.com7. www.ril.com8. http://www.moneycontrol.com/financials/gailindia/ratios/GAIL9. www.ioc.com10. http://www.ijhssnet.com/journals/Vol_2_No_22_Special_Issue_November_2012/32.pdf BOOKS1. Khan M.Y. and Jain P.K. Financial Management Mc Grew Hill Publishing Co. Ltd., New Delhi, Third Edition.2. Annual reports of GAIL India Ltd.

Annexure

ANNEXURE -1BALANCE SHEETParticularsMar'12Mar'11Mar'10Mar'09Mar'08

Liabilities12 Months12 Months12 Months12 Months12 Months

Share Capital1268.481268.481268.481268.48845.65

Reserves & Surplus20356.0017984.8615530.5213501.1512159.23

Net Worth21624.4819253.3416799.0014769.6313004.88

Secured Loan3023.502310.001446.001100.001100.00

Unsecured Loan2323.35.0034.38100.13165.87

TOTAL LIABILITIES26971.3321563.3418279.3815969.7614270.75

Assets

Gross Block26306.6322144.3821037.6717603.9816957.86

(-) Acc. Depreciation10449.019740.819106.578553.668024.57

Net Block15857.6212403.5711931.109050.328933.29

Capital Work in Progress8241.765879.172640.512426.33816.66

Investments3548.932035.741763.011737.271490.88

Inventories1419.74855.11631.70601.41569.81

Sundry Debtors2176.521905.901295.041503.341073.54

Cash and Bank931.332131.354171.513456.154472.99

Loans and Advances9152.627399.317800.996833.034408.71

Total Current Assets13680.2112291.6713899.2412393.9310525.05

Current Liabilities9997.686986.317024.425661.244795.74

Provisions4359.514060.504930.063976.852699.39

Total Current Liabilities14357.1911046.8111954.489638.097495.13

NET CURRENT ASSETS-676.981244.861944.762755.843029.92

Misc. Expenses.00.00.00.00.00

TOTAL ASSETS(A+B+C+D+E)26971.3321563.3418279.3815969.7614270.75

ANNEXURE-2PROFIT & LOSS ACCOUNTParticularsMar'12Mar'11Mar'10Mar'09Mar'08

12Months12Months12Months12Months12Months

INCOME:

Sales Turnover40939.0032907.0925375.8024292.2418580.81

Excise Duty542.37448.45384.15507.53568.07

NET SALES40396.6332458.6424991.6523784.7118012.74

Other Income00000

TOTAL INCOME40828.5132962.6525532.7524580.9718567.99

EXPENDITURE:

Manufacturing Expenses1877.141574.621985.181703.061536.61

Material Consumed30704.9523861.6416840.0516646.2311371.17

Personal Expenses678.00784.09621.20576.67470.01

Selling Expenses190.95158.63151.2354.9342.28

Administrative Expenses1178.07588.38723.06698.03639.74

Expenses Capitalised-303.32-37.52-20.64-16.74-2.16

Provisions Made.00.00.00.00.00

TOTAL EXPENDITURE34325.7926929.8420300.0819662.1814057.65

Operating Profit6070.845528.804691.574122.533955.09

EBITDA6502.726032.815232.674918.794510.34

Depreciation790.71650.29561.82559.91571.02

Other Write-offs.00.00.00.00.00

EBIT5712.015382.524670.854358.883939.32

Interest313.43139.9085.18101.0994.25

EBT5398.585242.624585.674257.793845.07

Taxes1563.871678.861438.631400.321253.54

Profit and Loss for the Year3834.713563.763147.042857.472591.53

Non Recurring Items-55.5014.57-7.55-43.74-12.32

Other Non Cash Adjustments-125.37-17.20.35-10.0322.25

Other Adjustments.00.00.00.00.00

REPORTED PAT3653.843561.133139.842803.702601.46

KEY ITEMS

ANNEXURE 3BALANCE SHEET OF ONGC ParticularsMar'12Mar'11Mar'10Mar'09Mar'08


Share Capital4277.764277.762138.892138.892138.89


Net Worth112956.7397504.4387282.6078735.4270617.40

Secured Loan4500.00.00.00.00.00

Unsecured Loan.0017564.2616405.6416035.7012482.71


Assets

Gross Block191914.7580938.6071553.7861355.6057463.78


Net Block68056.9718639.5415648.5010414.3710518.01


Investments14398.825332.845772.035090.325899.50

Inventories5165.444118.984678.574060.673480.64

Sundry Debtors6194.823845.903058.644083.804360.37

Cash and Bank20124.5622446.5518231.0419096.2122417.66




Provisions23555.6534775.1937092.4630657.9821828.17


NET CURRENT ASSETS8121.6624945.8425353.1425692.6224854.07

Misc. Expenses.00796.02841.32650.61673.90


ANNEXURE 4PROFIT & LOSS ACCOUNT OF ONGCParticularsMar'12Mar'11Mar'10Mar'09Mar'08


INCOME:

Sales Turnover76887.0666487.1960470.1864342.2860466.48

Excise Duty371.96322.85218.41338.29401.38

NET SALES76515.0966164.3460251.7764003.9960065.10

Other Income00000

TOTAL INCOME80968.0771595.4563615.1168608.5064406.12

EXPENDITURE:




Selling Expenses.006812.246527.787005.916540.76

Administrative Expenses30207.24-22749.34-18823.82-10465.65-7871.06

Expenses Capitalised.00.00.00.00.00




EBITDA41023.2245925.2341065.9436857.7634081.28

Depreciation7495.926835.015242.664355.623915.76


EBIT33527.3039090.2235823.2832502.1430165.51

Interest34.8311133.3411276.898485.405016.88

EBT33492.4727956.8824546.3924016.7425148.64

Taxes12137.069177.538258.738437.788941.85


Non Recurring Items3140.55-403.04252.63-518.92-112.39

Other Non Cash Adjustments626.97547.70183.99790.68607.25


REPORTED PAT25122.9218924.0016767.5616126.3216701.65

KEY ITEMS

Preference Dividend.00.00.00.00.00

Equity Dividend8341.617486.057058.286844.396844.39

Equity Dividend (%)194.99174.99329.99319.99319.99

Shares in Issue (Lakhs)85554.9085554.9021388.7321388.7321388.73

ANNEXURE 5BALANCE SHEET OF RILParticularsMar'13Mar'12Mar'11Mar'10Mar'09


Share Capital3254.003271.003273.373270.371642.78


Net Worth180020.00166096.00151540.32137170.61126372.97

Secured Loan2422.006969.0010571.2111670.5010697.92

Unsecured Loan52101.0051658.0056825.4750824.1963206.56


Assets

Gross Block218745.00209552.00221251.97215864.71149628.70


Net Block115339.00114655.00137239.47144455.6288558.31


Investments52509.0054008.0037651.5423228.6221606.49

Inventories42729.0035955.0029825.3826981.6214836.72

Sundry Debtors11880.0018424.0017441.9411660.214571.38

Cash and Bank49547.0039598.0027134.8613462.6522176.53




Provisions4348.004258.004563.483565.433010.90



Misc. Expenses.00.00.00.00.00


ANNEXURE 6PROFIT & LOSS ACCOUNT OF RILParticularsMar'13Mar'12Mar'11Mar'10Mar'09


INCOME:

Sales Turnover371119.00339792.00258651.15200399.79146328.07

Excise Duty10822.009860.0010515.098307.924369.07

NET SALES360297.00329932.00248136.06192091.87141959.00

Other Income00000

TOTAL INCOME368295.00334489.00250824.04194285.00143672.38

EXPENDITURE:




Selling Expenses.005393.005353.104123.773095.27


Expenses Capitalised.00-37.00-30.26-1217.92-3265.65




EBITDA38785.0038388.0040520.6932162.2025865.77

Depreciation9465.0011394.0013607.5810496.535195.29


EBIT29320.0026994.0026913.1121665.6720670.48

Interest3036.002668.002328.301999.951774.47

EBT26284.0024326.0024584.8119665.7218896.01

Taxes5281.005710.004969.144324.973137.34


Non Recurring Items.001424.00670.63894.92-449.35

Other Non Cash Adjustments.00.00.00.00.00


REPORTED PAT21003.0020040.0020286.3016235.6715309.32

KEY ITEMS


Equity Dividend2628.002531.002384.992084.671897.05

Equity Dividend (%)81.3877.3772.8663.74120.56

Shares in Issue (Lakhs)32286.6332710.5932733.7432703.7415737.98

ANNEXURE 7BALANCE SHEET OF IOCLParticularsMar'12Mar'11Mar'10Mar'09Mar'08


Share Capital2427.952427.952427.951213.971192.37


Net Worth57876.7055332.3250552.8344003.2641086.25

Secured Loan13045.9720379.6518292.4517565.136415.78

Unsecured Loan57277.9632354.2226273.8027406.9329107.39


Assets

Gross Block99455.4692696.6971780.6062104.6456731.50


Net Block60119.3358187.4041581.0734778.4532771.82


Investments18678.4619544.7622370.2532232.1321535.78

Inventories56829.2049284.5236404.0825149.6030941.48

Sundry Debtors15502.878869.655799.285937.866819.23

Cash and Bank307.011294.421315.11798.02824.43




Provisions15148.546763.4610271.562603.461172.99



Misc. Expenses.0015.1518.1737.96124.59


ANNEXURE 8PROFIT & LOSS ACCOUNT OF IOCLParticularsMar'12Mar'11Mar'10Mar'09Mar'08


INCOME:

Sales Turnover463285.27357275.89291272.84329806.88270410.49

Excise Duty24455.5926141.0421834.7622682.8923051.25

NET SALES438829.68331134.85269438.08307123.99247359.24

Other Income00000

TOTAL INCOME442027.70334359.58272758.43309833.58249781.97

EXPENDITURE:




Selling Expenses4321.1112250.6810488.139684.048753.07


Expenses Capitalised.00-945.24-1121.28-544.01-403.58



EBITDA21641.6715835.7618419.0816233.9413718.63

Depreciation4867.794546.673227.142881.712709.70

Other Write-offs.00132.04133.98317.64236.53

EBIT16773.8811157.0515057.9613034.5910772.40

Interest5590.542702.141572.354020.981589.73

EBT11183.348454.9113485.619013.619182.67

Taxes-200.341297.713097.871364.713104.54


Non Recurring Items-7707.82330.21-130.67-5615.51705.81

Other Non Cash Adjustments278.76-41.93-36.52915.26178.64


REPORTED PAT3954.627445.4810220.552949.556962.58

KEY ITEMS


Equity Dividend1213.982306.553156.34910.48655.81

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