ongc company analysis
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fin analysisTRANSCRIPT
ONGC(Financial analysis)Group B
About ONGC
Indian multinational oil and gas company headquartered in
Dehradun, India
Public Sector Undertaking (PSU) of the Government of India,
under the administrative control of the Ministry of Petroleum
and Natural Gas
India's largest oil and gas exploration and production company
Produces around 69% of India's crude oil and around 62% of
its natural gas
Market capitalisation was INR 2.6 trillion (as on 31st March
2013)
India's second largest publicly traded company
RECOGNITIONS
World’s no. 3 E&P company, as per Platts ranking
ONGC is ranked 23 among the global oil and gas companies by Forbe’s list
'2012 EU Industrial R&D Scoreboard' listed ONGC at 36 position in the list of oil & gas companies based on Research and Development (R&D) expenditure; the only company in this list from India
VISION To be the global leader in integrated energy business
through sustainable growth, knowledge excellence and exemplary governance practices
MISSION
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 ENERGY BUSINESS
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 enhance India's energy availability
Shareholding pattern
69.23
9.69
6.27
1.130.04 10.09
1.83 0.071.6
Shareholding pattern
President of India Banks, FI and Insurance Companies Foreign Institutional Investors
Mutual Funds & UTI NRIs Qualified Foreign Investor
Government Companies Other Corporate bodies Employees
Public
Total number of shares: 8,555,490,120
FINANCIAL ANALYSIS
COMPARING THE FINANCIAL STATEMENTS PREPARED FOR THE YEAR ENDED 31ST MARCH, 2013 WITH THE ONES PREPARED FOR THE YEAR ENDED 31ST MARCH,2012
BALANCE SHEET
In million Rupees
Particulars As on 31st March 2013 As on 31st March 2012
Long-term borrowings 88,427.49 52,085.83
Deferred tax liabilities 1,48,490.07 1,27,258.48
Other Long term liabilities 16,224.42 10,758.24
Long-term provisions 2,52,962.76 2,41,739.57
Short-term borrowings 1,16,080.84 1,00,538.21
Trade payables 1,86,188.99 1,76,035.87
Other current liabilities 1,70,970.11 2,02,916.89
Short-term provisions 10,482.14 23,924.21
Non-Current Liabilities
CurrentLiabilities
Long Term Borrowings
Long term borrowings increased by 36,342 million which may help to reduce requirement of liquid capital for short duration.
Various subsidiaries and joint ventures, including MRPL, OMPL and PLL, increased secured long term borrowings from banks by 34,451 million
Deferred Tax
Liabilities
Other Long Term
Liabilities
Deferred Tax Liabilities: Liabilities:
Increased from 206,041.64 millions to 249,603 (by 21%) over 2012
Major chunk comes from Depreciation and depletion of producing properties
Assets Increased 28 % over 2012 Due to provisions for unpaid income tax and doubtful debts
Net increased by 5,466 million out of which 4,908 million increased due to liquidated damages
Long-term Provisions
Long term provisions:
Increased by 11,223 million out of which 6,919 million increased in
post-retirement medical & terminal benefits and provision for
abandonment increased by 3,273 million
Short-term Borrowings
Short term borrowings:
Decreased risk by significantly increasing unsecured short term loans
from banks by around 190 % (39,700 million) over the previous year,
which also signifies creditworthiness of organization
Trade Payables
Trade payables to other than micro and small enterprises increase by
10,089 million, contributing to increase in trade payables by 10,153
million
Other Current
Liabilities
Though superannuation benefits increased significantly, ONGC
managed to reduce other current liabilities by 31,947 million by
paying back most of advances from customers and capital goods
Short Term Provisions
Managed to decrease short term provisions by 56 %, approx.
13,450 million, by reducing proposed dividend, hence also saving
on tax on dividend
Equity and Liabilities
Shareholders’s Fund
As at 31st March 2013
As at 31st March 2012
Share Capital 42777.60 42777.60
Reserves and Surplus
1482502.45 1321613.70
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• In respect of subsidiary, MRPL, Capital redemption Reserve on redemption of Preference share capital is of 91.86 Million (previous year 45.93 Million)
• The subsidiary, ONGC Videsh Limited has followed the AS 11 - Effects of Changes in Foreign Exchange Rates financial statements of Non-integral Foreign Operation. Accordingly, the resulting exchange gain of 12,914.34 million (Previous Year 26,573.80 million) has been accounted as foreign currency translation reserve.
Current Assets
Particular 2012-2013
2011-2012
Current Assets 829.01 8,795.36
Inventories 127,803.87
131,680.10
Trade receivables 153,956.08
117,180.86
Cash and Cash equivalents
196,190.51
278,914.26
Short-term loans and advances
53,322.96
52,209.53
Other current assets 26,089.99
22,249.77
Total 558,192.42
611,029.88
In million rupees
Current Investments
Particular As on 31st March 2013
As on 31st March 2012
Non Trade Current Maturity of Long Term InvestmentInvestments in Government or Trust Securities
- 8,791.85
Other InvestmentsInvestments in Mutual Funds (Quoted)Other Investments (Unquoted)
421.20407.81
3.51-
Total Current investments Total 829.01 8,795.36
Quoted Investments 421.20 3.51
Total Unquoted Investments 407.81 8,791.8• 2012 value of current assets was dominated by the amount
received from maturity of term plan• 2013 value of current assets comprised only of investments• This difference was the reason for such a drastic change in total
current investment value of ONGC
In million rupees
Inventories
Particular As on 31st March 2013
As on 31st March 2012
Raw Material 4,305.1917,969.0
5
Raw Material in transit 26,029.2
232,634.9
730,334.4
150,604.0
2
Finished Goods (note 24.2) 39,624.9
628,836.9
7
Less: Provision for Stock loss 5.91 5.9139,619.0
528,831.0
6
Traded Goods 0.76 1.15
Stock in Process 2,351.30 1,961.45
Stores and spare parts
-on hand 57,642.4
149,045.5
2
-in transit 3,468.33 6,398.5661,110.
7455,444.
08
Less: Provision for non-moving 5,864.99 5,344.5655,245.7
550,099.5
2
Unserviceable Items 252.6 182.9
Total 1,27,803.
871,31,680.
10
• No significant change in total value of inventories
In million rupees
Trade Receivables
Significant change in considered goods (others) which has caused a large change in trade receivables in 2013 as compared to 2012
Crude Oil Sales Agreements (COSA) with various organizations was signed. Since the COSA is made effective from 1 April, 2010, necessary adjustments made in books of accounts during 2012-13, by way of issue of credit notes
Particular As on 31st March 2013
As on 31st March 2012
Secured, Considered GoodTrade Receivables - Outstanding for a period exceeding six months Other
108.85-
108.85
7.48-
7.48Unsecured, Considered Good unless otherwise statedTrade Receivables - Outstanding for a period exceeding six months:- Considered Good- Considered DoubtfulLess:Provision for Doubtful debts
38,307.25 666.86666.86
38,307.25
30,369.85 618.46618.46
30,369.85Other:- Considered Good- Considered Doubtful - Less:Provision for Doubtful debts
115,539.98220.84220.84
115,539.98
86,803.5317.8117.81 86,803.53
Total 153,956.08 117,180.86
Cash and cash
equivalents
Particular As on 31st March 2013
As on 31st March 2012
Balance with Bank On Current Accounts
11,655.55 16,344.09
Cash on hand 17.30 16.54
Short Term Investment in Mutual Funds
19.75 1,092.06
Bank Deposit 183,322.00 260,599.97
Deposit towards margin money against guarantees issued 62.63 56.13
On Deposit Accounts for more than 12 months maturity 724.80 388.60
Unclaimed Dividend Account 388.48 416.87
Total 196,190.51 278,914.26• Bank balance and bank deposits reduced owing to the spending by ONGC for the purpose of acquisitions
Short-term loans and advances
Particular As on 31st March 2013
As on 31st March 2012
Total 53,322.96 52,209.53
• No significant change in short term loans and advances• Cash call receivables from JV partners increased significantly from
Rs. 7380.52 million to Rs. 10153.00 million
NON-CURRENT ASSETS
FIXED ASSETS
The company has not disposed off a substantial part of fixed assets during the year
LONG-TERM LOANS AND ADVANCES
Granted secured loans to three parties
DEFFERED TAX
An asset that may be used to reduce any subsequent period’s income tax expense
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED 31ST March, 2013
REVENUES
In terms of the decision of Government of India (GOI), the company has shared under-recoveries of Oil Marketing Companies (OMCs) on price sensitive products viz. Diesel, Domestic LPG and PDS Kerosene for the year 2012-13 by extending the discount in the prices of Crude Oil, Domestic LPG and PDS Kerosene based on the rates of discount communicated by Petroleum Planning and Analysis Cell (PPAC) and Ministry of Petroleum and Natural Gas (MoP&NG)
OTHER INCOMES
Interest income from long term investments, deposits with banks, loans and advances to associate/employees
Income from tax refund, site restoration fund deposit, delayed payments from customers
Dividend income, excess provisions written back, liabilities no longer required written back, profit on sale of investment, contractual receipts
PRODUCTION, TRANSPORTATION, SELLING AND DISTRIBUTION EXPENDITURE
Government of India has revised the Cess rate from 2500/MT to 4500/MT w.e.f.17.03.2012 resulting in the material increase in the expenditure
During the year, company recognized additional liability of 5,077 million towards Revision in Long Service Rewards Scheme
And 18,504.79 million towards superannuation benefits to employees
FINANCE COST
It includes foreign currency loans, short term loans, cash credit, lease finance charges, foreign exchange fluctuations and the like
TAX
MAT Credit
Deferred tax
Fringe benefit tax
Financial Health
Liquidity Ratios 2012-13 2011-12
Current Ratio 1.14 1.21
Debt-Equity Ratio 0.06 0.04
Debtor Turnover Days 34 28
Earning Per Share 28.31 32.90
Book Value Per Share 177 158
Net Profit to Equity 16.04 20.81
• Considering the fact that Current ratio, earnings per share and net profit to equity has decreased, the financial position of ONGC is not as strong as it was an year back
• The same can be confirmed by increased debt-equity ratio and debtor turnover days
• The only positive for the shareholder’s is the increase in Book value per share
OVERALL PERFORMANCE
Total production during FY'13 (including overseas assets) has been 58.71 MMtoe; slightly lower than the production during FY'12 (61.18 MMtoe) mainly on account of lower production from South Sudan and Syria; two countries badly affected by the geo-political unrest.
Besides, the natural decline in domestic matured fields has also contributed a little to the overall dip in production
Considering this conservative and capital-strained macroeconomic ecosystem largely characterized by a mediocre growth outlook, ONGC performed well, by most standards, registering the highest-ever turnover of `833.09 billion (up 8.35% from FY'12)
The turnover of the ONGC Group at `1,658.49 billion has also been the highest-ever
The Net Profit stood at `209.257 billion. This was 16.7% less than previous year primarily due to sharing the highest-ever under-recovery burden of `494.21 billion which is 11.1% higher than the previous year
Payment of additional Cess of `42.14 billion was also another factor that contributed to the fall in our profit