report of afs on ogdcl

8/8/2019 Report of Afs on OGDCL

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Project

On

Analysis of financials of Oil and GasCompany limited

Submitted to:

Burhan Shah

Submitted by:

Mu

mtaz Ali Hulio

MBA 3rd

Deportment of Administrative

Sciences

Quaid-i-Azam University

Islamabad


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Acknowledgements

I wish to thank Almighty Allah the most beneficent and

merciful for enabling me to reach here and use His sources

to complete my project. I am also grateful to Burhan Shah

who gave me opportunity to enhance my capabilities. This

project is very helpful for me because, I have learnt a lot by

applying theoretical knowledge in practical field. In addition,

we wish to say thanks to our parents to support us and

encourage us at every step.


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gas fields were discovered. Despite these gas discoveries, exploration activity

after having reached its peak in mid-1950s, declined in the late fifties. Private

Companies whose main objective was to earn profit were not interested in

developing the gas discoveries especially when infrastructure and demand

for gas was non-existent. With exploration activity at its lowest ebb several

foreign exploration contracting companies terminated their operation andeither reduced or relinquished land holdings in 1961.

Establishment of OGDC

On 04 March 1961, the Government of Pakistan signed a long- term loan

agreement with the USSR, where by Pakistan received 27 million to finance

the equipment and services of Soviet experts for exploration. Subsequently,

OGDC was created under an Ordinance dated 20 th September 1961 and was

charged with was prime responsibility to undertake a well thought out and

systematic exploratory programs and to plan and promote Pakistan's oil and

gas prospects.

As an instrument of policy in the oil and gas sector, the Corporation followed

the Government instructions in matters of exploration and development. The

day to day management was however, vested in a five-member Board of

Directors appointed by the Government. In the initial stages the financial

resources were arranged by the GOP as the OGDC lacked the ways and

means to raise the risk capital. The first 10 to 15 years were devoted to

development of manpower and building of infrastructure to undertake much

larger exploration programmes. Later, in July 1989, as the company

progressed as a result of major oil and gas discoveries, the Government off-

loaded the Company from the Federal Budget and allowed it to manage its

activities with self generated funds. The year 1989-90 was the company's

first year of self-financing. Today, OGDCL is the largest Exploration and

Production Company in Pakistan, listed on all three exchanges of the country as well

as the London Stock Exchange.

Initial Successes:

A number of donor agencies such as the World Bank, Canadian International

Development Agency (CIDA) and the Asian Development Bank provided the

momentum through assistance for major development projects in the form of

loans and grants. OGDC's intensive efforts were very successful as they

resulted in a number of major oil and gas discoveries between 1968 and

1982. Two oil fields were discovered in 1968 which paved the way for further

exploratory work in the North. During the period 1970-75, the Company

reformed the strategy for updating its equipment base and undertook a very

aggressive work programme. This resulted in discovery of a number of oil

and gas fields in the Eighties, thus giving the Company a measure of financial


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independence. These include the Thora, Sono, Lashari, Bobi, Tando Alam &

Dhodak oil/condensate fields and Pirkoh, Uch, Loti, Nandpur and Panjpir gas

fields which are commercial discoveries that testify to the professional

capabilities of the Corporation.

VISION STATEMENT

To be a leading multinational Exploration and Production Company

MISSION STATEMENT

To become the leading provider of oil and gas to the country by

increasing exploration and production both domestically and internationally,

utilizing all options including strategic alliances

To continue realign ourselves to meat the expectations of ourstockholders through the best management practices, the use of the latest

technology, and innovation for sustainable growth, while being sociably

responsible.

CORE VALUES:

Merit

Integrity

Teamwork safety

Dedication

Innovation

GOALS:

FINANCIAL GOALS:

Build strategic reserves for future growth and expansion

Growth and superior returns to all stockholders

Double the value of the company in the next five years


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Make the investment decisions by ranking projects on the bases of

best economic indicators

Maximize profit by investing surplus funds in profitable avenues

Reduce cost and time overrun to improve performance results

LEARNING AND GROWTH GOALS:

Motivate our work force, and enhance their technical, managerial and

business skills through modern HR practices

Acquire, learn and apply state of the art technology

Emphasis organizational learning and research through the effective

use of knowledge management system

Fill the competency gap with in the organization by attracting andretaining the best professionals

Attain full autonomy in financial and decision making matters

CUSTMERS GOALS:

Continuously improve quality of service and responsiveness to

maintain a satisfied customer base

Improve the reliability and efficiency of supply to the customers

Be a responsible corporate citizen

INTERNAL PROCESS GOALS:

Evolve consensus through consultative progress inter-linking activities

of all deportments

Excel in the exploration, development and commercialization

Synergize through effective business practices and teamwork

Have well defined SOPs with specific ownership and accountabilities

Improve internal business decision making and strategic planning

through state of the art MIS

Improve internal control

Periodic business process reengineering


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Liquidity Analysis

Liquidity ratios:

Liquidity reflects the ability of company to meet its short term obligations

using assets that are most readily converted into the cash. Assets that may

Ratio 2005 2006 2007 2008 2009

Current Ratio 5.35 7.09 6.65 3.72 4.08

Acid Test Ratio 5.33 7.06 6.69 3.76 4.10

A/R Turnover 3.59 4.28 3.81 3.44 2.59

Inventory Turn

Over

500.30 422.25 332.58 253.03 363.36

A/R turn over in

Days

101.59 85.36 95.79 106.14 141.13

Inventory turnover in days

0.73 0.86 1.10 1.14 1.00


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be converted into cash in a short period of time are referred as liquid assets

that are listed in financial assets as current assets. Current assets are often

referred as a working capital because these assets represent resources

needed for the day to day operations of the companys long term, capital

investments. Current assets are used to satisfy short term obligations. The

amount by which current assets exceed current liabilities is referred as thenet working capital.

Current ratio: Current asset/ Current liabilities

Acid test ratio: current assets inventory / c liabilities

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009

Acid Test RatioCurrent Ratio

Current ratio has improved last year as the traditional value of the current

ratio is 2. In 2008 the current ratio of OGDCL was 3.72 last year in 2009 it

improved to 4.08The current ratio of the OGDCL has remained greater

then 2 during the 5 years, which bears the testimony of the better

liquidity position of the company. As if we compare current ratios of

OGDCL from 2006 to 2009 then


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A/R turnover:

Inventory turnover:

0

100

200

300

400

500600

2005 2006 2007 2008 2009

A/R Turnover

Inventory Turn Over

A/R Turnover in days

Inventory turnover in days

020

40

60

80

100

120

140

160

2005 2006 2007 2008 2009

A/R turn over in Days

Inventory turn over in days

Long Term Debt Ratio Analysis

Ratio 2005 2006 2007 2008 2009

Debt Ratio 0.27 0.23 0.31 0.27 0.29

Debt equity

Ratio

0.37 0.29 0.39 0.38 0.41

Debt to

Tangible Net

Worth

2.68 3.32 1.85 1.76 1.49


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Times Interest

Earned

8246.1

4

6594.53 136.33 148.26 88.39

Fixed Charge

Coverage

8246.1

4

6594.53 136.33 148.26 88.39

Debt ratio

Debt to equity ratio

Debt to tangible net worth

0

0.5

1

1.5

2

2.5

3

3.5

2005 2006 2007 2008 2009

Debt Ratio

Debt equity Ratio

Debt to Tangible Net

Worth

Time interest earned:

Fixed charge coverage:


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0

1000

2000

30004000

5000

6000

7000

8000

9000

2005 2006 2007 2008 2009

Times Interest Earned

Fixed Charge Coverage

Profitability ratios

Ratio 2005 2006 2007 2008 2009

Return on

assets

26.78 36.28 34.03 30.68 33.63

Return on

operating A

39.83 52.10 46.09 54.55 49.56

Return on

Investment

30.09 40.21 36.89 34.34 38.24

Return ontotal equity

36.65 47.83 43.43 40.83 46.95

Total assets

turn over

60.72 77.08 75.75 87.12 79.22

Operating

A/turnover

60.72 77.08 75.75 87.12 79.22

Net profit

margin

65.60 67.59 60.84 62.62 62.54

Gross profitmargin

67.31 71.53 69.04 69.50 69.92

Fixed

assets turn

over

148.04 189.03 176.04 187.49 159.90


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Investor ratios:

Ratio 2005 2006 2007 2008 2009

Earning

per share

7.68 10.65 10.61 11.54 12.91

Book

value per

share

20.94 23.59 24.86 25.67 29.34

Dividend

payout R

0.98 0.85 0.86 0.92 0.64

Degree offinancial

leverage

1.00 1.00 1.01 1.01 1.01

% of

retained

earning

2.28 15.49 14.45 7.86 36.10

Dividend

yield

11.63 6.58 7.51 7.64 10.49

Priceearning

ratio

8.40 12.84 11.39 12.06 6.09


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report of afs on ogdcl

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