summer project oil

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COMPANY PROFILE

1.1 HISTORY OF THE ORGANISATION

The story of oil exploration in India began in the dense

jungles and swamps of Assam in the 19th century. United

by geography with Burma and caught up in the cross-

currents of history, the region had the common blessing of

commercial oil.

Digboi Well No-1(1889-1890):- The well, started in

September 1889, was completed in November 1890 as aproducer at a total depth of 662 ft, with an initial production

of 200 gallons per day. The decision to drill was taken by

the Directors of the AR&T Co. in 1888 under the direction of

Mr. W L Lake, an employee of the company and an oil

enthusiast.

Uphill and Downhill (1890 1920):- After the successful

completion of the first well, Digboi Well No-2 was started inFebruary 1891 in the same area, only to be abandoned as

dry at 720 ft. The drilling activities of AR&T progressed

satisfactorily with 11 wells yielding oil in 1894. A new firm -

the Assam Oil Company (AOC), led by the same Chairman,

Lord Ribblesdale - was promoted in 1899 to take over the

petroleum interests of AR&T, including the Digboi and

Makum concessions. The AOC inherited 14 producing wells,

with a total production of 50 barrels of oil per day. Almost

immediately on inception, the company expanded the

concessional area of the field by purchasing the rights of the

Assam Oil Syndicate. In 1912 the rotary system was

introduced, Well 47 being the first well to be drilled by this

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method. Production almost trebled from 43 bpd in 1901 to

120 bpd in 1902, rising steadily to 247 bpd in 1911, and

reaching a maximum of 435 bpd in 1917. By 1920, the AOC

had completed 80 wells with a total average production of

350 bpd.

After math of Success (19531959):-The Nahorkatiya

oilfield was discovered in 1953. However, by 1956 only 16

wells had been drilled, and evidence suggested subsurface

faults which could have acted either as barriers or conduits

to oil movement. Despite this meagre evidence, the AOC

announced in September 1956 that proved and probable

reserves in the Nahorkatiya area were sufficient to plan a

production target of nearly 2.5 million tons of oil per year

with 45 million cubic feet of gas per day. On the basis of this

assurance, fortified later in the year by new discoveries at

Hugrijan and Moran, a public sector refinery was initiated in

1959 at Guwahati with help from Romania.

The success of Naharkatiya Well No-1 set in motion a series

of activities. The Burma Oil Company signed a Promotion

Agreement with the Government of India (GoI) in January

1958 to form a company - Oil India Private Limited (OIL) - to

take over the management of the AOC-discovered fields of

Nahorkatiya and Moran. OIL was incorporated on 18

February 1959, with two-thirds of the shares held by BOC

and the rest by GOI. The Agreement assured Burma Oil a

dividend of 10% and Digboi Refinery 1.3 million barrels of oil

per year. Mr.W.P.G. Maclachlan, a key player in the

negotiation ,became the first Chairman of, OIL.



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INTRODUCTION OF THE ORGANISATION


Oil India Limited

Type State-owned enterprise

Industry Oil and Gas

Founded February 18, 1959

Headquarter

sDuliajan, India

Key people Nayan Mani Borah (Chairman & MD)

Products

Fuels

Lubricants

Petrochemicals

Revenue8072.80 crore (US$ 1.53 billion) (2009-

10)

Profit2619.52 crore (US$ 497.71 billion)

(2009-10)

Website Oilindia.nic.in
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Government-owned_corporationhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/List_of_petroleum_companieshttp://en.wikipedia.org/wiki/Duliajanhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Fuelshttp://en.wikipedia.org/wiki/Lubricantshttp://en.wikipedia.org/wiki/Petrochemicalshttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Websitehttp://oilindia.nic.in/http://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/File:Oil_India_Logo.gifhttp://en.wikipedia.org/wiki/Government-owned_corporationhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/List_of_petroleum_companieshttp://en.wikipedia.org/wiki/Duliajanhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Fuelshttp://en.wikipedia.org/wiki/Lubricantshttp://en.wikipedia.org/wiki/Petrochemicalshttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Websitehttp://oilindia.nic.in/http://en.wikipedia.org/wiki/Types_of_business_entity


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The journey of oil exploration in India began in the dense

jungles and swamps of Assam in the 19th century, in theyear 1889. United by geography with Burma and caught up

in the cross-currents of history, the region had the common

blessing of commercial oil.

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Oil India (OIL) is a large state-owned oil and gas

company in India under the administrative control of the

Ministry of Petroleum and Natural Gas of the

Government of India. OIL is engaged in the business of

exploration, development and production of crude oil

and natural gas, transportation of crude oil and

production ofliquid petroleum gas.

The story of Oil India Limited (OIL) traces and symbolises

the development and growth of the Indian petroleum

industry. From the discovery of crude oil in the far east

of India at Digboi, Assam in 1889 to its present status as

a fully integrated upstream petroleum company, OIL hascome far, crossing many milestones.

On February 18, 1959, Oil India Private Limited was

incorporated to expand and develop the newly

discovered oil fields of Naharkatiya and Moran in the

Indian North East. In 1961, it became a joint venture

company between the Indian Government and Burma Oil

Company Limited, U.K.

In 1981, OIL became a wholly-owned Government of

India enterprise. Today, OIL is a premier Indian National

Oil Company engaged in the business of exploration,

development and production of crude oil and natural

gas, transportation of crude oil and production of LPG.

OIL also provides various E&P related services and holds

26% equity in NRL.

The Authorized share capital of the Company is Rs. 500

Crores. The Issued, Subscribed and Paid share capital of

http://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/Natural_gashttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Public_administrationhttp://en.wikipedia.org/wiki/Ministry_of_Petroleum_and_Natural_Gas_(India)http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Crude_oilhttp://en.wikipedia.org/wiki/Liquid_petroleum_gashttp://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/Natural_gashttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Public_administrationhttp://en.wikipedia.org/wiki/Ministry_of_Petroleum_and_Natural_Gas_(India)http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Crude_oilhttp://en.wikipedia.org/wiki/Liquid_petroleum_gas


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the company is Rs. 240.45 Crores. At present, The

Government of India, the Promoter of the Company is

holding 78.43% of the total Issued & Paid-up Capital of

the Company. The balance 21.57% of the Equity capital

is held by others.

OIL has over 1 lakh sq km of PEL/ML areas for its

exploration and production activities, most of it in the

Indian North East, which accounts for its entire crude oil

production and majority of gas production. Rajasthan is

the other producing area of OIL, contributing 10 percent

of its total gas production.

Additionally, Oils exploration activities are spread over

onshore areas of Ganga Valley and Mahanadi. OIL also

has participating interest in NELP exploration blocks in

Mahanadi Offshore, Mumbai Deepwater, Krishna

Godavari Deepwater, etc. as well as various overseas

projects in Libya, Gabon, Iran, Nigeria and Sudan.

In a recent CRISIL-India today survey, OIL was adjudged

as one of the five best major PSUs and one of three best

energy sector PSUs in the country. In the year 2010 OIL

also achieved Navratna Award from the government of

India.

The company has over 100,000 square kilometers of

license areas for oil and gas exploration. It has emerged

as a consistently profitable international company withexploration blocks as far as Libya and sub-Saharan

Africa.

In recent years, OIL has stepped up E & P activities

significantly including Gas monetization in the North-East

http://en.wikipedia.org/wiki/Internationalhttp://en.wikipedia.org/wiki/Libyahttp://en.wikipedia.org/wiki/Sub-Saharan_Africahttp://en.wikipedia.org/wiki/Sub-Saharan_Africahttp://en.wikipedia.org/wiki/Internationalhttp://en.wikipedia.org/wiki/Libyahttp://en.wikipedia.org/wiki/Sub-Saharan_Africahttp://en.wikipedia.org/wiki/Sub-Saharan_Africa


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India. OIL has set up the NEF (North East Frontier)

project to intensify its exploration activities in the

frontier areas in North East, which are logistically very

difficult and geologically complex. Presently, seismic

surveys are being carried out in Manbhum, Pasighat and

other Trust Belt areas. The Company operates a crude oil

pipeline in the North East for transportation of crude oil

produced by both OIL and ONGCL in the region to feed

Numaligarh, Guwahati, Bongaigaon and Barauni

refineries and a branch line to feed Digboi refinery.

1.2 OILs Core Purpose Statement

The fastest growing energy company with global

presence providing value to stakeholders

OIL's Vision

Oil India is the fastest growing Energy Company with

highest profitability.

Oil India delights the customers with quality products

and services at competitive prices.

Oil India is a Learning Organization, nurturing

initiatives, innovations and aspirations with best

practices.

Oil India is a team, committed to honesty, integrity,

transparency and



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Oil India is fully committed to safety, health and

environment.

Oil India is a responsible corporate citizen deeply

committed to socio-economic development in its areas

of operations.

1.3 INCEPTION OF OIL

In 1953, the first oil discovery of independent India

was made at Nahorkatiya near Digboi and then at

Moran in 1956. The success at Nahorkatiya was the

culmination of a long story of failure, frustration and

despair in the oil exploration activities of Upper

Assam. It was also the prelude to a string of oil

exploration programmes elsewhere in the country.

Oil India Private Ltd. was incorporated on February,

18, 1959, for the purpose of development and

production of the discovered prospects of Nahorkatiya

and Moran and to increase the pace of exploration in

the Northeast India. It was registered as a Rupee

Company with two-third shares owned by AOC/BOC

and one-third by the Government of India (GOI). By a

subsequent agreement on 27th July, 1961, GOI and

BOC transformed OIL to a Joint Venture Company (JVC)

with equal partnership.

OIL remained a Joint Venture Company for over two

decades. On 14th October, 1981 Oil India Limited



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(OIL) became a wholly owned Government of India

enterprise by taking over BOC's 50% equity and the

management of Digboi oilfields changed hands from

the erstwhile AOC to OIL. During this span of time, a

total of 1001 wells were drilled in the Digboi oilfield

in an area of only 13 sq. kms. with peak production

achievement of 900 Kilo Liters per day (KLPD).

1.4 PRESENT ACTIVITIES

The Company presently produces around 3.30 MMTPA

of crude oil (around 59,000 barrels per day), over 5

MMSCMD of Natural Gas and over 50,000 Tonnes of

LPG annually. Most of this emanates from its

traditionally rich oil and gas fields concentrated in the

North-Eastern part of India. OIL's intensely rich

oilfields in upper Assam include Naharkatiya (since1953), Moran (since 1956) and Jorajan (since 1967)

which are under production till date. Some of its

recent oilfields include those in Dikom, Kathaloni and

Shalmari oilfields. The search for newer avenues has

seen OIL spreading out its operations in the offshore

of Orissa, desert of Rajasthan, plains of Utter Pradesh,

riverbeds of Brahmaputra and Coastal of Saurasthra

and Cauvery basin



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1.5 OIL's CORPORATE OBJECTIVES

OIL Believes "superlative efforts precede superlative

results". To serve that very purpose, OIL has set the

highest challenges for itself to measure up to. Its

Organisational agenda is to :

Accelerate exploratory efforts in order to

increase hydrocarbon reserves.

Speedy development of discovered fields and

increase recovery from depleting and developed

fields,

To augment crude oil and gas production.

Ensure adequate return on capital by capacity

utilisation, cost effectiveness and optimumproductivity.

Ensure proper development and effective

utilization of human resources.



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Diversify into the field of oilfield services:

indigenous and overseas.

Undertake overseas venture in exploration,

development of oil and natural gas resources.

Promote oil related research and development

activities.

Maintain a professional and efficient corporate

character.

Maintain and promote environmental - friendly

measures.

Enhance safety measures in operations.

1.6 BUSINESS OPPORTUNITIES

With the liberalization policy of the Government ofIndia and keeping in view the dismantling of the

Administered Pricing Mechanism, the Company

decided to expand its business activities both within

and outside the country and also into hydrocarbon

related ventures like gas based power generation,

etc.

In the E&P sector, within the country, the Company

has signed Production Sharing Contracts (PSC) with

private companies like Essar Oil, Hindustan Oil

Exploration Company (HOEC), General Fiber Dealer

Ltd. (GFDL), Polish Oil and Gas Company (POGC),

Geoenpro Petroleum Limited, Enpro India Limited,



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Geopetrol International Inc, Reliance Industries

Limited, etc.

Within the country, the Company besides bidding on

its own has joined hands with ONGCL, GAIL and IOC inacquiring blocks for exploration offered under New

Exploration Licensing Policy (NELP) of the Government

of India.

Outside the country, the company is actively looking

for opportunities overseas and is examining few of the

offers. The Company has joined hands with ONGC-

Videsh and IOC to jointly bid for an Exploration Service

Contract in Iran.

Additionally, the Company has the requisite

experience and expertise to provide oilfield services

like drilling, cementing, oilfield management, 2-D land

and 3-D seismic data acquisition and processing etc.

and would welcome opportunities to provide these

services.

The Company is in the process of providing technical

consultancy to a private party in bidding for and

development of marginal oil field in Nigeria.

Within the country, and specifically in the NORTH

EAST, the Company would also welcome businessopportunities in the gas based industries including

power sector, trunk pipeline ventures, back-up

facilities for lease of telecommunication bandwidths,

etc.



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1.7 ACHIEVEMENTS

OIL bags India Pride Awards

Oil India Limited received the silver award in the Oil &

Gas category of India Pride Awards -Dainik Bhaskar

group. The award was received by Shri N.M. Borah,

Chairman & Managing Director, Oil India Limited.

OIL Receives PSU award

Oil India Limited received the Heavyweight

Miniratna PSU award at the 2nd, Dalal Street



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Investment Journal PSU Award 2010, ceremony at New

Delhi on 6th April, 2010.

OIL bags "PSU with the highest Book Value" award

Oil India Limited was conferred with the PSU with thehighest Book Value award by Dalal Street, the

renowned Financial and Investment Journal. The award

was given away by the Honble Chief Minister of Delhi

Shrimati Sheila Dikshit at a glittering ceremony at

New Delhi on 24th March, 2009. Shri N.M. Borah,

Chairman and Managing Director, while accepting the

award thanked the organizers for instituting the award

and gave the credit for the recognition to the

employees of Oil India Limited.

1.8 Awards & Accolades

Rated No. 1 Public Sector Company, 2006 by the

Department of Public Enterprises, Government of India

based on performance

"Excellent" performance rating by Government of India

for past 4 years



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Performance Excellence Award, 2005-06 by the Indian

Institution of Industrial Engineering (IIIE)

Counted among the 5 Best Public Sector Undertakings

and the 3 Best in the Energy Category by the IndiaToday-CRISIL Survey in 2005

Best Project Award for Corporate Social Responsibility,

2005 by TERI, among 130 participating companies

Corporate Social Responsibility Award, 2003-04, by

TERI for good corporate citizenship and sustainable

initiatives among companies with turnover above Rs

500 crore

Green Tech Award for Environment Management, 2002

Golden Peacock Award for Corporate Social

Responsibility, 2002

Special Commendation Award for Human Resource

Management, 2001-2002 by National Petroleum

Management Programme - for OILs continuously

evolving technology and business environment and the

Companys initiatives to enhance safety in operations

and quality of work life via good practices

Excellent Performing Public Sector Enterprise Award,

1998-99

"Excellent" performance rating by Government of Indiafor 1997-98, 1998-99 and 1999-2000

Longest Accident Free Period - 1997-98, 1998-99

Excellent Performing Public Sector Enterprise Award,

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Excellence in Riverbed Survey Award, 1998-99

Best Oil & Gas Processing Unit Award, 1997-98

International Green Land Society National Award,1997-98 for best energy conservation and

implementation

Corporate Performance Award 1985 from Harvard

Business School Association of India and Economic

Times

Ranked 1 fir Profitability in terms of paid-up capital, net

assets and sales from 1981-82 to 1983-84 by theIndian Institute of Public Opinion, among 100 largest

corporate enterprises in India

1.9 Accreditations



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ISO-9000:2000 Certification (Quality Management

System) : LPG Plant

ISO-9001:2000 Certification: Gas Based Power Plant

ISO-9000:2000 (Quality Management System) : Trunk

Pipeline

ISO: 9001:2000: OIL Hospital at Duliajan

ISO-14001 (Environment Management) : Trunk Pipeline

OHSAS 18001 (Occupational Health and Safety

Assessment Series) : Trunk Pipeline

ISO/IEC 17025: 2005 accreditation by NABL,

Government of India for OILs R&D Department, the

first among E&P company laboratories to get this

accreditation



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1.9 EXPLORATIONS

OILs systematic and scientific approach to exploration has

been rewarded with a high success ratio of 65% of

exploratory wells drilled. OIL also possesses 2D and 3Dseismic data acquisition capabilities, with excellent support

services ranging from satellite navigation systems to

remote blasting units.

OIL owns a vast array of advanced computing systems and

experienced personnel to process and interpret geo-

scientific data through integrated exploration applications

such as Remote Sensing, Structural and Stratigraphic

Interpretation, Seismic Attribute Analysis, Source Rock

Evaluation, Biostratigraphy, Petrophysics, Sequence

Stratigraphy, Basin Analysis, Techno-economic Evaluation,

etc. Formation evaluation through an integrated approach

of geological, geophysical, geo-chemical and reservoir

engineering studies has allowed OIL to develop and exploit

deep (3500-4700 m) thin sand prospects. Today, these

reservoirs contribute over 50% of OILs production. It isenvisaged that the current introduction of extensive 3D

seismic will assist in reservoir management in both new as

well as ageing fields, heralding a new chapter in reservoir

engineering studies.

OIL has so far acquired, processed and interpreted over

70,000 line km of 2D and 5,000 sq km of 3D seismic data in

a variety of terrains, including hills, deserts, rivers, marshes,

etc.



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1.10 Reservoir Management

OIL has pioneered the implementation of the concepts of

modern reservoir management in the Indian oil industry.

Numerical reservoir simulation, introduced by OIL in India

for the first time in the early seventies, has remained its

forte since inception. Simulation has been used as an

important tool for management planning, production

forecasting and decision making. Based on numerical

simulation studies, gas and water injection, and water and

polymer flooding projects have been successfully

implemented in OILs fields, yielding recoveries averaging

over 20% in excess of the recoverable solely by primary

depletion.

OIL has also developed special expertise in reservoirmanagement of ageing fields. Today, OIL has state-of-the-

art numerical reservoir simulators with dedicated

workstations and a valuable knowledge-base to handle cost-

effective reservoir evaluation, development and

management in all demanding environments.

An integrated database management system designed and

developed in-house has been extremely efficient in

processing / analysing reservoir monitoring data. Apart from

routine activities for reservoir surveillance, many other

operations such as transient well tests, nodal analysis,

collection of crude / condensate / gas samples for PVT



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analysis, analysis of side-wall and conventional cores, etc.

are carried out as an integral part of reservoir management.

1.11 PRODUCTION and SPECIAL SERVICES

OIL has accumulated over a hundred years of experience in

oil and gas production since the discovery of Digboi oilfieldin 1889. From well completion to well bore servicing,

installation, operation and maintenance of modern surface

handling facilities, OIL has the expertise to manage the

entire range of operations required for onshore oil and gas

production.

About 50% of crude oil production comes from depleting

oilfields. Artificial lifting and EOR techniques adopted since

late 1960s have played an important role in augmenting

production and enhancing the ultimate recovery from these

oilfields.

CRUDE OIL PRODUCTIONPERFORMANCE

YEARCRUDE OIL PRODUCTIONin(MMT)

2006-07 3.017

2007-08 3.1012008-09 3.4682009-10 3.5722010-11 3.568



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2011-12 3.842

OIL produces around 5 MMSCUMD of natural gas and has a

dedicated pipel in network for collection and supply of gas

as fuel and feedstock to nearby industries such as

refineries, fertilizer and petrochemical plants, power

generation plants and 200 tea gardens. Over 90% of the

internal energy requirement of varied oilfield plants and

equipment is met by natural gas.

GAS PRODUCTION PERFORMANCE

YEARGAS PRODUCTION in(MMSCM)

2006-07 2264.57

2007-08 2340.462008-09 2268.38

2009-10 2415.6

2010-11 2471.899

2011-12 2178.15



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OIL utilises a SCADA (Supervisory Control and Data

Acquisition) system for online monitoring of production,

injection, storage-cum-flowback and distribution of natural

gas. It has the expertise to design, install and commission

gas compressor stations and gas collection and distribution

networks. OIL achieved natural gas production of 2264.57

MMSCUM and sale 1767.505 MMSCUM during 2006-2007.

PRODUCTION PERFORMANCE OF LPG

YEAR LPG PRODUCTION in (MT)

2006-07 43750

2007-08 48165

2008-09 47610

2009-10 44950

2010-11 45010

2011-12 52020



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An LPG plant was set up in 1982 to process 2.2 MMSCMD of

gas using the Turbo Expander Technology for the first time

in Asia. This plant is producing over 50,000 MT of LPG

annually with feedstock supplied from Oils internal gas

production, due to efficient operation and maintenance. The

plant also handles LPG bottling.

PIPELINE

OIL, the pioneer in crude oil transportation in south-east

Asia, owns and operates 1,432 km of cross-country crude oil

pipelines. Commissioned in 1962, Oils crude oil pipeline

traverses 79 river crossings, including the mighty

Brahmaputra River rushing through paddy fields, tropical

rain forests and the worlds greatest watershed zone - the

Teesta Area. The state-of-the-art pipeline can transport over

8.0 MTPA of crude oil, feeding 4 Public Sector Refineries in

North-east India. OIL owns 10 crude oil pumping stations

and 17 repeater stations spread across the eastern India

states ofAssam, West Bengal and Bihar.

SPECIALIZED SERVICES



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Hot Tapping

Stoppling

Pipe Cutting and Shearing off

RESEARCH & DEVELOPMENT

OIL is carrying out research and field trials in development

of intelligent Cathodic Protection System, which will help in

acquisition and monitoring of real time PSP data and control

of impressed current and voltage, besides mitigating

abnormal conditions, to keep the pipeline and associatedsystems under protection at all times and in all conditions.

1.12 PERFORMANCE

The company has been consistently showing excellent

financial performance over the year and has been able to

build up a strong financial base. The company has been able

to improve the financial position year after year because ofWorking capital Page 24 of84


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sound financial management. The company has also been

able to maintain a consistently healthy return on its capital

employed.

FINANCIAL PERFORMANCE OF NET WORTH, REVENUE,

PROFIT (Rs. In bn)

PERFORMANCE OF NET WORTH, REVENUE,PROFIT (RS in bn)

YEARNETWORTH REVENUE PROFIT

2006-

07 64 54 162007-08 79 61 182008-09 93.31 72.41 222009-10 137.45 79.06 26.112010-11 156.02 83.03 28.882011-12 180.71 98.63 34.47



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FINANCIAL PERFORMANCE OF PROFITABILITY OF OIL

DULIAJAN

PROFITABILITY OF OIL DULIAJAN

YEAR PBIDT PBT PAT

2006-07 27.56 24.83 16.4

2007-08 30.57 27.13 17.89

2008-09 37.73 33.87 21.62

2009-10 43.8 38.95 26.11

2010-11 48.05 43.13 28.88

2011-12 45 51.02 34.47



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FINANCIAL PERFORMANCE OF DIVIDEND PAYOUT

DIVIDEND PAYOUT

YEARDIVIDEND in % ofPAT

2006-07 33.93

2007-08 32.9

2008-09 30.19

2009-10 31.32

2010-11 31.23

2011-12



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FINANCIAL PERFORMANCE OF DISTRIBUTED

DIVIDENDS

DISTRIBUTEDDIVIDENDS (%)

YEAR DIVIDENDS2006-07 2602007-08 2752008-09 3052009-10 3402010-

11 3752011-12



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FINANCIAL PERFORMANCE OF EARNING PER SHARE

OF OIL INDIA

EARNING PERSHARE OF OIL

YEAR EPS

2006-07 77

2007-08 84

2008-09 101

2009-10 114

2010-11 120

2011-12 143



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FINANCIAL PERFORMANCE OF DEBT EQUITY RATIO OF

OIL INDIA

DEBT EQUITYRATIO

YEAR RATIO

2006-07 0.12

2007-08 0.02

2008-09 0.006

2009-10 0.003

2010-11 0.066

2011-12



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FINANCIAL PERFORMANCE OF BOOK VALUE PER

SHARE (Rs.)

BOOK VALUE PER SHARE(Rs)

YEARBOOK VALUE PERSHARE

2006-07 3202007-08 3712008-09 4362009-10 572

2010-11 6492011-12



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FINANCIAL PERFORMANCE OF RETURN ON NET

WORTH

RETURN ON NET WORTH (%)

YEAR RETURN ON NET WORTH (%)

2006-07 23.94

2007-08 22.55

2008-09 23.172009-10 18.99

2010-11 18.51

2011-12



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1.13 50 GLORIOUS YEARS OF OIL

Its celebration time for Team OIL and the

Companys stakeholders!

FLASHBACK:

By arrangement with the AR&T Co Ltd., the Burma Oil

Company (BOC) of UK, which was at that time operating in

Burma across the Patkai Hills, took over the operation of the

Assam Oil Company in 1921. BOC/AOC continued

development of the Digboi oilfield and intensified

exploration activities. In 1953, the first oil discovery of

independent India was made at Nahorkatiya, repeated at

Moran in 1956.

Oil India Private Ltd. was incorporated on February 18, 1959

for the development and production of the discovered

prospects of Nahorkatiya and Moran and to increase the

pace of exploration in Northeast India. It was registered as aWorking capital Page 33 of84


34/84

Rupee Company with two-third shares owned by AOC/BOC

and one-third by the Government of India (GoI). Via a

subsequent agreement on July 27, 1961, GoI and BOC

transformed OIL into a Joint Venture Company (JVC) with

equal partnership. OIL remained a JVC for over two decades.

On October 14, 1981 Oil India Limited (OIL) became a

wholly-owned GoI enterprise by taking over BOCs 50%

equity, and the management of Digboi oilfield changed

hands from the erstwhile AOC to OIL.

GOLDEN JUBILEE CELEBRATIONS OIL has celebrated

two milestone years till date. First was the Silver Jubilee

Year 1984, and second, a hundred years of the discovery of

crude oil in Digboi in 1989. The Digboi discovery wascelebrated primarily because OILs legacy has its roots in

Asias first and the worlds second commercially successful

oil exploration activity at Digboi, Assam in 1889. The Silver

Jubilee Year was celebrated in 1984 because on February

18, 1959, Oil India as a Company (Oil India Private Limited)

was born. Though the nature of ownership changed from

the private sector to the public sector, Oil India in essence

retained its name and continued to carry out its core

activity as an E&P company. Today as the pioneering and

second-largest national upstream Oil and Gas Company with



35/84

a pan Indian presence and growing global footprint, OIL is

all set to conquer newer horizons of all-round growth and

excellence.

2. METHODOLOGY USED

Methodology of the study refers to the methods used to

collect the required data for research work. The data

required has been collected from the following sources:

PRIMARY SOURCES:

Discussions with the management. Briefings with the

concerned officers.

SECONDARY SOURCES:



36/84

The secondary data of the organization helped me a

lot. I have collected all the figures from the Annual

Reports and Financial Statements of Oil India Ltd.

Records of the company: This helped me to get details

regarding the history of the organization.

Library Research: A number of books on finance were

referred to collect the oriental background related to

finance.

Oil India Ltd website.

3. CONCEPTS OF WORKING CAPITAL AND

ITS WORKING

3.1 Working capital (abbreviated WC) is a financial metricwhich represents operating liquidity available to a business,organization or other entity, including governmental entity.

Along with fixed assets such as plant and equipment, workingcapital is considered a part of operating capital. Net working

capital is calculated as current assets minus current liabilities.It is a derivation of working capital that is commonly used invaluation techniques such as DCFs (Discounted cash flows). Ifcurrent assets are less than current liabilities, an entity has aworking capital deficiency, also called a working capital deficit.



37/84

There are 2 concepts of working capital : Gross and Net. Theterm gross working capital also referred to as a workingcapital means the total current assets. The term networking capital can be defined in 2 ways.

The most common definition of net working capital isthe different between current assets and currentliabilities

Alternate definition of net working capital is thatportion of current assets which is financed with longterm funds.

Net Working Capital = Current Assets Current Liabilities

Net Operating Working Capital = Current Assets NonInterest-bearing Current Liabilities

Equity Working Capital = Current Assets Current Liabilities Long-term Debt

A company can be endowed with assets and profitabil ity butshort of liquidity if its assets cannot readily be converted intocash. Positive working capital is required to ensure that a firmis able to continue its operations and that it has sufficientfunds to satisfy both maturing short-term debt and upcomingoperational expenses. The management of working capital

involves managing inventories, accounts receivable andpayable, and cash



38/84

3.2DETERMINANTS OF WORKING CAPITAL: Numbers ofrules are formulated to determine the working capitalrequirement of the firm. a large number of factors influencethe working capital needs of the firm. All these factors have

different importance, also the importance of the factorchange for a firm over time. Therefore analysis of therelevant factor should be made in order to determine thetotal investment in working capital requirements of the firm.

Nature and size of business

Seasonality of operation

Production policy

Marketing conditions

Business cycle fluctuation

Credit policy

Conditions of supply

Working capital policy

Current assets in relation to sales

NET WORKING CAPITAL OF OIL INDIA LIMITED

FOR THE LAST 6 YEARS



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Working Capital Management


TEMS 2006-07

2007-08

2008-09

20009-10

2010-11

2011-12

INVENTORIES

501 533.32

DEBTORS 404.73 1051.81

CASH &BANK

6070.01 10935.48

INTERESTACCRUED

352.47 701.62

INTERESTONINVESTMENT

0.07

LOAND &ADVANCES

1027.14 1205.86

GROSSWORKINGCAPITAL

8355.35

CURRENTLIABILITIES

1463.67 3141.86

PROVISIO

NS

1627.70 1216.69

NETWORKINGCAPITAL

5263.99 12806.64


40/84

Working capital managementinvolves the relationshipbetween a firm's short-term assets and its short-term liabilities. Thegoal of working capital management is to ensure that a firm is able tocontinue its operations and that it has sufficient ability to satisfy both

maturing short-term debt and upcoming operational expenses. Themanagement of working capital involves managing inventories,accounts receivable and payable, and cash.

In other words Working Capital is the money used to make goods

and attract sales. The less Working Capital used to attract sales, the

higher is likely to be the return on investment. Working Capital

management is about the commercial and financial aspects of

Inventory, credit, purchasing, marketing, and royalty and investment

policy. The higher the profit margin, the lower is likely to be the level

of Working Capital tied up in creating and selling titles. The faster

that we create and sell the higher is likely to be the return on

investment.

NEED FOR WORKING CAPITAL: In order earn sufficientprofits a firm has to depend on its sales activities apart fromothers . We know that sales are not analysis converted intocash immediately. i.e, there is a time lack between the saleof a product and the realization of cash so, an adequateamount of working capital is required by a firm in the formof different current assets for its activities to continue uninterrupted and to tackle the problem that may arisebecause of the time lay. Practically this happens simplyowing to the operating cycle (or) cash cycle, involvesthe following steps.

Conversion of cash into inventory. Conversion of inventory into receivables.

Conversion of receivables into cash.



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The task of the financial manager in managing workingcapital efficiency is to ensure sufficient liquidity in theoperation of the enterprise. The liquidity of a business firmis measured by its ability to satisfy short term obligations asthey become due. The three basics measure of a firmsoverall liquidity are:

The acid test ratio

The net working capital

The current ratio

In brief , they are useful in inter firm comparison ofliquidity . Net working capital as a measure of liquidity, isnot very useful for comparing the performance of differentfirms, but it is quite useful for internal control. The networking capital helps in comparing the same firm over time.

NATURE OF WORKING CAPITAL: The term workingcapital refers to current assets which may be defined as

Those which are convertible in to cash or

equivalents with in a period of one year and Those which are required to meet day

operations.

This fixed assets as well as current assets, both requiredinvestment of funds. So, the management of working capitaland of fixed assets, appearently seen to involve same typeof consideration but it is not so. The management of capitalinvolves different concepts and methodology than the

techniques used in fixed assets management. The reasonfor this different is obvious. The very basics of fixed assetsdecision process (i.e the capital budgeting) and the workingcapital decision process are different. The fixed assetsinvolve long period perspective and therefore, the conceptof time value of money is applied where as in workingcapital the time horizon is limited, in general, to one year



42/84

only and the time value of money concept is not considered.The fixed assets the long term profitability of the while thecurrent assets affect the short term liquidity position.Managing current assets may require more attention than

managing fixed assets. The financial manager must.

Therefore continuously monitor the assets to ensure thatthe desire levels are being maintained. Since the amount ofmoney invested in current assets can change rapidly. Sodoes the financing required. Miss management of currentassets can be costly. Too large an investment in currentmeans tying up funds that can be productively used else

where (or it means added interest cost if the firm hasborrowed funds to finance the investment in current assets).Excess investment may also expose the firm to undue risk.Example: In case, the inventory cannot be sold or thereceivable cannot be collected.

On the other hand, too little investment also can beexpensive for example: insufficient inventory may meanthat sales are lost as the goods which a customer wants arenot available. The results is that financial managers spend alarge chunk of their time managing the current assetsbecause level of these assets changes quickly and a lack ofattention paid to them may result in appreciably lower

profits for firm. So, in the working capital management, afinancial manager is faced with decisions involving someconsideration as follows:

What should be the total investment in workingcapital of the firm?

What should be the level of individual currentassets?

What should be the relative proportion ofdifferent sources to financial the working capitalrequirements?



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Thus the working capital management may be defined asthe management of firms sources and uses of workingcapital in order to maximize the wealth of the share holders.The proper working capital management requires both the

medium term planning (say up to 3 years) and theimmediate to changes arising due to fluctuation in operatinglevels of the firm.

THE OPERTING CYCLE AND THE WORKING CAPITALNEEDS: The working capital requirement of a firm depends,to a great extent up on the operating cycle of the firm. Theoperating cycle may defined as the duration from the

procurement of goods or raw materials and ending withsales realization. The length and nature of the operatingcycle may differ from one firm to another depending up orthe size and nature of the firm.

In a treading concern there is a serious of activities starting

from procurement of goods ending with realization of salesrevenue. Similarly in case manufacturing concern . Thisserious start form procurement of raw material and endingwith the sales realization of finished foods. In both the caseshowever there is a time gap between the happening of thefirst event and the happening of last event . This time gap iscalled operating cycle. Thus the operating cycle of a firmconsists of time required for the completion of chronologicalsequence of some or all of the following:

Procurement of raw material and services Conversion of raw material in the work in

progress.

Conversion of work in progress in to finishedgoods.



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Sales of finished goods. (Cash or credit).

Conversion of receivable into cash.

Figure 1: Operating cycle

The firm is after required to extend credit facilities tocustomers. The finished goods must be kept in store to takecare of the orders and minimum cash balance must bemaintained. It must also have minimum of raw material tohave smooth and uninterrupted production process. So inorder to have a proper and smooth running of the businessactivities, the firm must make investment in all these


RAW

MATERIALCASH

WORK IN

PROGRESS

CONVERSI

ON OF

RECEIVABL

ES

SALESFINISHED

GOODS


45/84

current assets. This requirement of funds depend up on theoperating cycle period of the firm and also denoted as theworking capital needs of the firm.

OPERATING CYCLE PERIOD: The length or time durationof the operating cycle of any firm can be defined as the sumof its inventory conversion period and the receivableconversion period.

INVENTORY CONVERSION PERIOD: It is the time requiredfor the conversion of raw material in to finished goods sales.In a manufacturing concern the ICP is consisting of rawmaterials conversion period (RMCP), work in progressconversion period (WPCP), and the finished goods

conversion period (FGCP). The RMCP refers to the period forwhich the raw material is generally kept in store before isissued to the production department. The WPCP refers tothe period for which the raw material remains in the

production process before it is taken out as a finished unit.The FGCP refers to the period for which finished unitsremain in stores before being sold to the customers.

RECEIVABLES CONVERSION PERIOD: (RCP) It is thetime required to convert the credit sales in to cashrealization. It refers to the period between the occurrenceof credit sales and collection of debtors. The total of ICPand RCP is also known as total operating cycle period(TOCP). The firm might be getting some credit facilitiesfrom the supplier of raw material wage earners etc. this

period for which the payment it these parties are deferredor delayed is known as deferral period. The net operatingcycle of a firm is arrived at by deducting the deferral

period from total operating cycle period. Thus NOC =

TOCP-D = ICP+RCP- DP. OPERATING CYCLE The durationof time required for completing the following sequences ofevents in case of manufacturing firm called the operatingcycle.

Conversion of cash into raw material.



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Conversion of raw material into work inprogress.

Conversion of work in progress into finishedgoods.

Conversion of finished goods into debtors & billsreceivable through sale.

Conversion of debtors & bills receivable intocash.

CASH, ACCOUNTS RECIEVABLE, RAW MATERIAL, FINISHEDGOODSWORK IN PROGRESS. The duration of the operatingcycle for the purpose of estimating working capital

requirement is equivalent to the sum of duration of each ofthese tables less the credit period allowed by the suppliersof the firm.

FACTORS DETERMINING WORKING

CAPITAL REQUIERMENT OF OIL INDIA LTD

Nature of Business: OIL is in the business of exploration

and production (E & P) of hydrocarbons. E&P business

require large capital expenditure in the development of

platforms, rigs, pipelines etc, to extract the oil lying down

beneath the earth crust. So huge amount of money gets

blocked in the form of machinery forming fixed assets of the

company. Hence, it can be said that high initial investment

is required in the business.

Business Cycle Fluctuations: In one of the worst global

recessions witnessed by the world in 2008-09, OIL has not

only stood up the pressure but also help the Indian economy



47/84

to get back to the track. There were not major fluctuations

in the business cycle of OIL and entire working capital

management went swiftly.

Seasonal Operations: Being an oil exploration and

production company, operations of OIL go on throughout the

year as demand of oil is very high as compared to its supply.

So the requirement of working capital almost remains

constant throughout the year.

Market Competitiveness: In terms of the market

competitiveness, OIL has the second major chunk of market

share after ONGC. Although there are some other E&P

companies also working such as CAIRNS ENERGY, RIL

(RELIANCE INDUSTRIES LTD) but the very low production of

crude oil bythese companies as compared to OIL and ONGC

makes the OIL second largest firm in the market.

Credit Policy: OIL has the very strict credit policy for the

OMCs such as IOC (Indian Oil Corporation), HPCL (Hindustan

Petrleum Corp. Ltd), BPCL (Bharat Petroleum Corp.Ltd), GAIL

(Gas authority Of India Ltd). OIL gives the credit period of 15

days for the supply of crude oil and 7 days credit period for

the natural gas.



48/84

WORKING CAPITAL POLICY FOLLOWED IN

OIL INDIA

There are three types of working capital policies which a

firm may adopt. Namely: Moderate working capital policy,

Conservative working capital policy and Aggressive working

capital policy. These policies describe the relationship

between sales level and the level of current assets.


Current

Conservative


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Oil India follows the CONSERVATIVE working capital policy,

as the increase in sales result in more than proportionate

change (more than 4 times) in current assets. This means

that percentage increase in sales (4.68%) is much more to

the increase in current assets (20.63%).

The calculations are as follows:

SALES (Rs. In crores)

For 2010-11: 8320.60

For 2011-12: 9863.23

Increase in sales = 9863.23-8320.60

= 1542.63


Sales Levels

Moderate

Aggressive


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Percentage Increase in sales = 1542.63/8320.60*100

= 18.54%

CURRENT ASSETS (Rs. In crores)

For 2010-11: 14057.78

For 2011-12: 15948.50

Increase in Current Assets = 15948.50-14057.78

= 1890.72

Percentage Increase in Current Assets=

1890.72/14057.78*100

=13.45%

This type of policy has many implications:

The risk of insolvency of the firm decreases as the firm

maintains higher liquidity.

The firm is exposed to lower risk, as it may be able to

face unexpected change in the market.

Increased investment in current assets will result in

decrease in profitability of the firm.



51/84

CURRENT ASSETS AND CURRENT

LIABILITIES OF OIL INDIA



52/84


TEMS 2006-07

2007-08

2008-09

20009-10

2010-11

2011-12

INVENTORIES

501 533.32

DEBTORS 404.73 1051.81

CASH &BANK

6070.01 10935.48

INTERESTACCRUED

352.47 701.62

INTERESTONINVESTMENT

0.07

LOAND &ADVANCES

1027.14 1205.86

GROSSWORKINGCAPITAL

8355.35

CURRENTLIABILITIES

1463.67 3141.86

PROVISIO

NS

1627.70 1216.69

NETWORKINGCAPITAL

5263.99 12806.64


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0

2000

4000

6000

8000

10000

12000

14000

16000

200720082009201020112012

Current assets

Current liabilities

Net workingcapital

Figure 2

From the above figure we have a clear picture of theamount of Current assets and Current liabilities of Oil India.

They have a very sound working capital. Their Current

assets is in an increasing trend making the company more

liquid.



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Current Ratio: This ratio is an indicator of the firms commitment tomeet its short-term liabilities. The current ratio is the ratio of currentassets and current liabilities.

Formula= Current assetsCurrent liabilities

Standard Ratio is 2:1

2006-07 Current Ratio = 5510.67 = 5.33:1

1031.99

2007-08 Current Ratio = 6176.56 = 3.52:1

1754.052008-09 Current Ratio = 8355.35 = 2.70:1

3091.36

2009-10 Current Ratio = 12269.54 = 3.75:1

3269.29

2010-11 Current Ratio = 14801.05 = 4.45:1

3321.61

2011-12 Current Ratio = 15948.50 = 5.08:1

3141.86



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Working Capital Turnover Ratio: This ratio indicates whetherworking capital has been effectively utilized in sales or not. So weshould know it by calculating following ratio.

Formula= Total salesNet working capital

Here, Net Working Capital = Current Assets Current Liabilities

2006-07 Working Capital Turnover Ratio = 5285.09 = 1.18:1

4478.68

2007-08 Working Capital Turnover Ratio = 5965.31 = 1.34:14422.51


5263.99


9000.25


11479.44


12806.64



56/84

Debt Equity Ratio: This ratio tells us about the position of total debtof the company with respect to the total equity.

Formula= Debt .

Equity Shareholders Funds

2006-07 Debt Equity Ratio = 814.01 = 0.12:1

6849.07


7932.97


9331.02


13763.79


15601.87


18070.67



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Total Assets to Debt Ratio: This ratio measures the extent of thecoverage of long term debt by total assets. The higher the totalassets to debt ratio indicate that assets have been mainly financedby the owners funds, and the long term debt is adequately coveredby assets.

Formula: Total assets

Long term debt

1

2006-07 Total Assets to Debt Ratio = 8467.48 = 10.40:1

814.00


174.88


56.452009-10 Total Assets to Debt Ratio = 14805.70 = 394.82:1

37.50


1026.79

2011-12 Total Assets to Debt Ratio = 22681.27 = 100:0

0



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Return on Capital Employed: This ratio tells us that how effectivelya company is making use of its resources. It gives the return on thetotal amount of money that is in use in an organization.

Formula= PBIDT .Total capital employed

2006-07 Return on Capital Employed = 2756.13 * 100 = 39%

7141.36


7393.26

2008-09 Return on Capital Employed = 3773.33 * 100 = 42%8919.22


13019.15


15727.73


15727.73



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Return on Shareholders Funds: This ratio is very important fromshareholders point of view in assessing whether their investment inthe firm generates a reasonable return or not. It should be higherthan the return on investment otherwise it would imply that

companys funds have not been employed profitably.Formula= Profit after tax

Shareholders Funds

2006-07 Return on Shareholders Funds = 1639.98 = 0.24

6849.07

2007-08 Return on Shareholders Funds = 1788.93 = 0.23 7932.97


9331.01


13763.79


15601.87


18070.67



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Receivable Turnover Ratio: is one of the accounting activity ratios,a financial ratio. This ratio measures the number of times, onaverage receivables are collected during the period. A popularvariant of the receivables turnover ratio is to convert it into an

Average Collection Period in terms of days. Remember that theReceivable turnover ratio is figured as "turnover times" and the

Average collection period is in "days".Formula= Credit sales

Average receivables

2006-07 Receivables Turnover Ratio = 5285.09 = 11

471.37

= 365/11 = 33.18 days

2007-08 Receivables Turnover Ratio = 5965.31 = 11.70

509.84

= 365/11.70 = 31.19 days


507.86

= 365/14.05 = 25.97 days


532.20

= 365/14.55 = 25.08 days


454.57

= 365/17.84 = 20.41 days


643.23

= 365/15.33 = 23.81 days

Inventory Turnover Ratio: In accounting the Inventory turnover is ameasure of the number of times inventory is sold or used in a time

period such as a year. The equation for inventory turnover equals



61/84

the cost of goods sold divided by the average inventory. Inventoryturnover is also known as inventory turns, stock turns, turns,and stock turnover.

Formula = Cost of goods sold

Average receivables

2006-07 Inventory Turnover Ratio = 5285.09 = 13.09

403.48

= 365/13.09 = 27.88 days

2007-08 Inventory Turnover Ratio = 5965.31 = 13.89429.46

= 365/13.89 = 26.27 days

2008-09 Inventory Turnover Ratio = 7139.72 = 15

475.95

= 365/15 = 24.33 days


477.19

= 365/16.23 = 22.48 days


476.87

= 365/17.01 = 21.45 days

2010-11 Inventory Turnover Ratio = 9863.23 = 15.33643.23

= 365/15.33 = 23.81 days



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We should be aware of these problems the following are some of the

limitationsof ratio analysis:

It is difficult to decide on the proper basis of

comparison. The comparison is rendered difficult because of

differences in situations of two companies or of one

company over years.

The price level changes make the interpretation of

ratios invalid. The differences in the definitions of items

in the balance sheet and the profit & loss statement

make the interpretation of ratios difficult.

The ratios calculated at a point of time or less

informative and defective as they suffer from short term

changes.

Difference in accounting policies and accounting period

make the accounting data of firms non comparable as

also the accounting ratios.

It is very difficult to generalize weather a particular ratio

is good or bad.

For ex: a low current ratio may be said bad from the

point of view of low liquidity. But a high current ratio

may not be good. As this may result from in efficient

working capital management.



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Sensitivity analysisSensitivity analysis (SA) is the study of how the variation

(uncertainty) in the output of a statistical model can be attributed to

different variations in the inputs of the model. Put another way, it is a

technique for systematically changing variables in a model to

determine the effects of such changes.

In any budgeting process there are always variables that are

uncertain. Future tax rates, interest rates, inflation rates, headcount,

operating expenses and other variables may not be known with greatprecision. Sensitivity analysis answers the question, "if these

variables deviate from expectations, what will the effect be (on the

business, model, system, or whatever is being analyzed)?"

In more general terms uncertainty and sensitivity analysis investigate

the robustness of a study when the study includes some form of

statistical modeling Sensitivity analysis can be useful to computer

modelers for a range of purposes including:

Support decision making or the development of

recommendations for decision makers (e.g. testing the

robustness of a result);

Enhancing communication from modelers to decision makers

(e.g. by making recommendations more credible,

understandable, compelling or persuasive);

Increased understanding or quantification of the system (e.g.

understanding relationships between input and outputvariables); and

Model development (e.g. searching for errors in the model).



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Sensitivity analysis of Working Capital of Oil India

Here we will systematically increase all the elements of

working capital of Oil India by 20% and then will try to find

out its effect on the total working capital of Oil India. We will

have a clear view of which is more sensitive to change and

which is less

SENSITIVE ANALYSIS OF INVENTORY

YEAR 2006-07 2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Workingcapital

4478.68 4422.51

5263.99

9000.25

11479.44

12806.64

Inventor

y

408.02 450.89 501 453.38 500.36 533.32

Inventor

y after

20%

increase

489.62 541.07 601.20 544.05 600.43 639.98

Effect on

Total

working

capital

4560.28 4512.6

9

5364.1

9

9090.9

2

11579.5

1

12913.

30



65/84

Percenta

ge

increase

1.82 2.03 1.90 1.01 0.87 .83

0

2000

4000

60008000

10000

12000

14000

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Old Working

CapitalNew workingcapita



66/84

SENSITIVE ANALYSIS OF SUNDRY DEBTORS

YEAR 2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

2012

Working

capital

4478.6

8

4422.5

1

5263.9

9

9000.

25

11479.

44

12806.6

4

Sundry

debtors

408.67 610.99 404.73 659.6

7

249.47 1051.81

Sundry

debtors

after 20%

increase

490.40 733.18 485.67 791.6

0

299.36 1262.17

Effect on

Total

working

capital

4560.4

1

4544.7

0

5344.9

3

9132.

18

11529.

33

13017

Percentag

e increase

1.82 2.76 1.54 1.47 0.43 1.64



67/84

0

2000

4000

6000

8000

10000

12000

14000

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Old WorkingCapital

New WorkingCapital



68/84

SENSITIVE ANALYSIS OF CASH AND BANK

BALANCE

YEAR 2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Working

capital

4478.

68

4422.5

1

5263.9

9

9000.2

5

11479.

44

12806.

64

Cash and

Bankbalance

3275.

70

4280.8

3

6070.0

1

8542.9

1

11769.

28

10935.

48

Cash and

Bank

balance

after 20%

increase

3930.

84

5136.9

9

7284.0

1

10251.

49

14123.

13

13122.

58

Effect onTotal

working

capital

5133.82

5278.67

6477.99

10708.83

13833.29

14993.74

Percentage

increase

14.62 19.36 23.06 18.98 20.50 17.08



69/84

0

2000

4000

60008000

10000

12000

14000

16000

20

06-

07

20

07-

08

20

08-

09

20

09-

10

20

10-

11

20

11-

12

Old WorkingCapital

New WorkingCapital



70/84

SENSITIVE ANALYSIS OF INTEREST ACCRUED

ON TERM LOANS

YEAR 2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Working

capital

4478.

68

4422.5

1

5263.9

9

9000.2

5

11479.

44

12806.

64

Interest

accrued on

term loans

157.2

0

228.36 352.47 306.61 474.77 701.62

Interest

accrued on

term loans

after 20%

increase

188.6

4

274.03 422.96 367.93 569.72 841.94

Effect on

Total

working

capital

4510.

12

4468.1

8

5334.4

8

9061.5

7

11574.

39

12946.

96

Percentage

increase

0.70 1.03 1.34 0.68 0.83 1.10



71/84

0

2000

4000

60008000

10000

12000

14000

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Old Working

CapitalNew WorkingCapital



72/84

SENSITIVE ANALYSIS OF INTEREST ACCRUED

ON INVESTMENT

YEAR 2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Working

capital

4478.

68

4422.5

1

5263.9

9

9000.2

5

11479.

44

12806.

64

Interest

accrued on

investmen

t

0.05 0.06 0.07 0.04 0.07

Interest

accrued on

investmen

t after 20%

increase

0.06 0.07 0.08 0.05 0.08

Effect on

Total

working

capital

4478.

69

4422.5

2

5267 9000.2

6

11479.

45

Percentage

increase

0.000

2

0.0002 0.0002 0.0001 0.0001



73/84

0

2000

4000

6000

8000

10000

12000

14000

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

Old WorkingCapital

New WorkingCapital



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SENSITIVE ANALYSIS OF LOANS AND

ADVANCES

YEAR 2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Working

capital

4478.

68

4422.5

1

5263.9

9

9000.2

5

11479.

44

12806.

64

Loans and

advances

1261.

07

605.48 1027.1

4

2306.9

3

1807.1

0

1205.86

Loans and

advances

after 20%

increase

1513.

28

726.57 1232.5

6

2768.3

1

2168.5

2

1447.0

3

Effect on

Total

working

capital

4730.

89

4543.6

0

5469.4

1

9461.6

3

11840.

86

13047.

81

Percentag

e increase

5.63 2.74 3.90 5.13 3.14 1.88



75/84

0

2000

4000

6000

8000

10000

12000

14000

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Old Working Capital

New Working Capital



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SENSITIVE ANALYSIS OF CURRENT LIABILITIES

YEAR 2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Working

capital

4478.

68

4422.5

1

5263.9

9

9000.2

5

11479.

44

12806.

64

Current

liabilities

781.8

0

1101.6

0

1463.6

7

1804.5

3

2099.5

9

3141.8

6

Current

liabilities

after 20%

increase

938.1

6

1321.9

2

1756.4

0

2165.4

3

2519.5

0

3770.2

3

Effect on

Total

working

capital

4322.

32

4202.1

9

4971.2

6

8639.3

5

11059.

53

13435.

01

Percentag

e

decrease

3.49 4.98 5.56 4.01 3.66 4.91



77/84

0

20004000

6000

8000

10000

12000

14000

16000

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Old Working Capital

New Working Capital



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SENSITIVE ANALYSIS OF PROVISIONS

YEAR 2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Working

capital

4478.

68

4422.5

1

5263.9

9

9000.2

5

11479.

44

12806.

64

Provisions 250.1

7

652.46 1627.7

0

1464.7

6

1222.0

2

1216.6

9

Provisions

after 20%

increase

300.2

0

782.95 1953.2

4

1757.7

1

1466.4

2

1460.0

2

Effect on

Total

working

capital

4428.

65

4292.0

2

4938.4

5

8707.3

0

11235.

04

13049.

98

Percentag

e

decrease

1.12 2.95 6.18 3.25 2.13 1.90



79/84

0

2000

4000

6000

8000

10000

12000

14000

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Old Working

CapitalNew WorkingCapital



80/84

Findings:

The financial performance of the company is verysound as the current ratio is above 2:1 but still the

companys current ratio is much more than standard

ratio of 2:1. In 2007 it was as high as 5.33 than it came

down but in 2012 it again went up to 5.08:1. So

company should try to control assets as it is not better

for the health of the company.

The companys working capital position is moderate inthe last six years. Position of company has become

better and company is able to meet its current

obligations whenever it is required.

The debt equity ratio of the company is less which is

favorable for the health of the company as it means

that total debt is reducing with every passing year and

company is operating on their own capital.

Although the profit of the company has increased in

the last five years but the total return on the capital

employed has come down from 39% on 2007 to 31% in

2011. ROCE is fluctuating because of unmannered

investments in oil producing properties such as basins

and oil fields which has lead to decrease in ROCE

despite of increase in profits.

The company has an average receivables turnover of

23.81 days which is good from the companies point of

view.



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They even have an Inventory turnover of 23.81 days.

Which mean that the goods are sold out within 23.81

days.

The companys total assets to debt ratio decreased inthe last year of 2011 to 17.47 from 394.82 of

2010.Low debt ratio provides security to creditors and

indicates reasonable funding and adequate security of

debt.

The sensitive analysis of working capital clearly shows

that cash and bank balance is the most sensitive to the

working capital of the company. It has an average

sensitivity of 19% towards the total working capital of

the company. The second most sensitive is the current

liabilities with a sensitivity of around 4%. Whereas the

least sensitive is the interest accrued on investment, it

is nearly nil. The second least sensitive is interestaccrued on term loans with a sensitivity of around 1%.

Recommendations:

The financial performance of the company is sound but

still the companys current ratio is much more than

standard ratio of 2:1. So the company should keep acheck on the amount it invests on its assets.

ROCE is fluctuating because of unmannered

investments in oil producing properties so it is



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recommended that the management makes prudent

investments.

The goal of shortening customers payment terms

must be balanced against the risk of jeopardizing therelationship.

Increased investment in current assets is resulting in

decreased profitability of the firm. So it is suggested

that the management give ample attention on this

regard.

The company has a huge amount of idle cash which is

not active so the management should try to figure out

how best to make use of the idle cash. The company

may take out some new ventures.

The sensitive analysis of working capital clearly shows

that cash and bank balance is the most sensitive to the

working capital. So it is suggested that the

management should give proper attention on how they

manage their cash and bank balance.

The second most sensitive was the current liabilities so

it will be wise to keep a check on the current liabilities

that they accumulate.



83/84

CONCLUTION

All the ratios of the company are satisfactory. The company

has been making profits presently and is making efficient

utilization of funds. The profit of the company can be

increased by making more appropriate management

decisions so that all the people are better prepared for

future events. However the management should giveproper

attention on how they manage their cash and bank balance.

In other words how to use the idle cash for better results.



84/84

summer project oil

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