Академический Документы
Профессиональный Документы
Культура Документы
OGDCL is the national oil & gas company of Pakistan and the flagship of the country’s E&P
sector. OGDCL was created under an Ordinance dated 20th September 1961 with the prime
responsibility to undertake an organized and systematic exploratory program and to plan and
promote Pakistan's oil and gas prospects. Government of Pakistan holds 85.02% of shares in
the company.
OGDCL financial performance in the current year is quite impressive. Sales growth is about
25% , the reason for the high sales is rise in oil and is prices in the country. Gross profit,
operating profit, Net profit of the company are high as compared all companies in the industry,
this is because of the less decommissioning cost, no financial leverage, and other incomes.
While in turnover, company’s debtor turnover is less as compared to other companies showing
managerial inefficiency and ineffectivity. Earning per share of company is ever rising due to
rising net income, while it is less as compared to companies in industry; this is because of 22
times more share of OGDCL than any other company in industry. OGDCL has a growth of
almost 40%.
An in future prospect, the company’s growth is expected to be 37.61% under sustainable growth
method, while 35.31% under varying growth method, showing the company is growing robustly.
OGDCL is 85% government owned, so the major income of it goes to the government revenues.
Table of Contents
• Background
• Business prospects
• Cross-Sectional Analysis
Background
Business Prospects
Introduction to OGDCL
OGDCL is the national oil & gas company of Pakistan and the flagship of the country’s E&P
sector. The Company is the local market leader in terms of reserves, production and acreage,
and is listed on all three stock exchanges in Pakistan and also on the London Stock Exchange
since December 2006. The Company is all set to ride the wave of E&P activity, equipped with its
Vision & Mission, Business and Strategic Plan, a debt-free and robust balance sheet and
healthy cash reserves. The Company is ready to take on the challenges of a volatile E&P
industry.
Initially stages the financial resources were arranged by the Government of Pakistan as the
OGDC lacked the ways and means to raise the risk capital. 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. Government of Pakistan holds 85.02% of
shares in the company.
• Unsystematic: Bureaucratic
o Management Style
o
Business Analysis
(Business Strategy)
BUSINESS ANALYSIS OF OGDCL
Business strategy
Capital Structure:
OGDCL is 100% equity financed company out of which 85% share is of Government of Pakistan
and remaining 15% is issued to general public and some shares are also bought by
international investors.
Growth in Sales:
The sales of OGDCL has also grown insignificantly. In 2002 the sales of OGDCL 8 million
barrels of oil and now it has reached to 14500 barrels of oil. This growth in sales is due to
increasing demand of oil. The sale of Gas has also increased from 250000 MMcF in 2002 to
300000 in 2005 which was also same in 2007, now it has increased to 350000.
The EPS of OGDCL has increased from 4 in 2002 to 11.54 in 2008. The Dividend payout rate of
OGDCL is very high because of the government control due to 85% share in capital.
Government covers its losses of petrol by getting these dividends.
Operating Leverage:
OGDCL has high operating leverage as it has high total Fixed Expenditures as
compare to variable expenditure, it gives a magnifying effect. It also shows that the
company is risky one.
A.Trend Analysis
B.Cross Sectional Analysis
Trend Analysis
I. Current Ratio
Ratios Reason for Deviation
Year Current Previous Deviation
1. Increase in:
• Dividend payable
• GST
2005 12.17 4.96 -59% • Creditors
• Compensated absences
• Benevolent payables.
2. Though C.A also increase but
percentage increase in C.L is higher.
1. Decrease in trade and other payables
2. Accrued liabilities increased due to
payment of benevolent fund and some
other employee related liabilities.
2006 6.51 4.96 +31.25% 3. The C.L. decreased by about 19.5%
and Current assets also increased by
6%.
1. Other financial assets decreased due
to decrease in Term Deposit Receipts
by about 18bn.
2. Net increase in C.L. is about 1bn ,
3. Provision for taxation decreased by
2007 6.16 6.51 -5.38% 3bn and
4. Trade and other payables increased
by about 4bn, due to increase in
unpaid dividend by 2bn.
1. C.L. has shown a heavy increase due
to:
• The royalty payables, which rose
2008 3.69 6.16 -40.1% from Rs 2.397 billion to Rs 6.606
billion
• Accrued liabilities.
2. The tax payable at the end of the year
amount also was high, as it included
advance tax from last year as well
3. C.A also rose in the year, primarily due
to the massive increase in trade debts,
from Rs 27873.515 billion from last
year to Rs 40626.931 billion.
Still the increase in liabilities is much
higher than the Increase in C.A. and as
compared to previous year.
II. Quick Ratio
Ratios Reason for Deviation
Year Current Previous Deviation
2008 3.66 3.83 -4.4% Although rise in sales was high, but the
rise in debtors is relatively higher than
sales
VIII. ROCE/ROE
Note: We are analyzing both ROCE & ROE under same head as there is no debt
involved
Ratios Reason for Deviation
Year Current Previous Deviation
2005 41% 33% +24.3% Increase in NI by 45% and
increase in total capital is 9.2%,
as evident by OPM & NPM &
ROA of the respective years.
Capital increased by 13% due
to increase in appropriated
2006 52% 41% +26.8% profit but comparative increase
in NI is much more that is about
44%.
Net income decreased by 0.7%
2007 47% 52% -9.6% and Average capital increased
by 6%.
The rate of increase in Net
2008 47% 47% 0% income is equal to that of
increase in Average Capital
IX. Return on Investment
Where;
b = Dividend Payout ratio
= Assets to sales
For OGDCL:
b = 82%
= 40%
= 0 (OGDCL is fully equity Financed)
= 1.20
Where;
Div. = Dividends
= Net profitmargin
= Current year sales
Eq. = 100
New Eq. = 0
Div. = Rs9.82
=0
= 0.833147
= 40%
= Rs 125,445,674
SGR = 35.31%
3. Forecasted Financial Statements
Demonstrated in Excel sheet.