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Submitted By
A.AARIF KHAN
(Reg.No.11PCO 001)
Under the guidance of
Prof. R. KHADER MOHIDEEN
Principal & Head, Department of Commerce
Date:
CERTIFICATE
This is to certify that the Project Work is done under my guidance
and
the
Dissertation
entitled
STUDY
ON
FINANCIAL
SIGNATURE OF THE
HEAD OF THE DEPARTMENT
SIGNATURE OF THE
PROJECT ADVISOR
ACKNOWLEDGEMENT
At the out set, I wish to express
my sincere
thanks to the
Last but not least I like to thank my Parents and beloved friends for their
moral support for completing this project work successfully.
A.AARIF KHAN
CHAPTER 1
INTRODUCTION
1.1
INTRODUTION
Finance is regarded as the base of a business enterprise. This is because in the
modern money-oriented economy, finance is one of the basic foundations of all kinds
of economics activities. Finance provides access to the entire source being employed
in manufacturing and merchandising activities. It has rightly been said that business
means money to make more money. However, it is also true that money begets more
money only when it is properly managed. Hence, efficient management of every
business enterprise is closely linked with efficient management of its finance.
1.2
FINANCIAL MANAGEMENT
In the modern economy, finance is one of the basic foundations of all kinds of
economics activities. It is the master key, which provides the access to all the sources
for the being employed in manufacturing and merchandising activities. Efficient
management of every business enterprise is closely linked with efficient management
of finances. Finance is the only common denominator for vast range of corporate
objectives. The major part of any corporate plan must be expresses in financial term.
1.3
1.4
Finance
Finance in common parlance refers to money. The edifice of modern economy
stands on the foundation of money i.e. finance. All economic activities centre on
making of money. Finance is the backbone of all activities whether it is
manufacturing, or servicing. The entire idea of dong any economic activity is to make
more money out of money. However, this is possible only when the finance is
properly and prudently managed. So it goes without saying that efficient management
of an enterprise is closely related to efficient management of its finances.
Financial Statement
A financial statement is an organized collection of data according to logical
and consistent accounting procedures. Its purpose is to convey an understanding of
some financial aspects of a business firm. It may show a position at a moment of time
as in the case of a balance sheet, or may revel a series of activities over a given period
of time, as in the case of an income statement.
Basically there are two types of financial statement. They are income
statement and balance sheet.
3
Ratio Analysis
Trend Analysis
But the income statement and balance sheet can be prepared in the form of
comparative financial statement.
Comparative Balance Sheet
Comparative balance sheet as on two or more different dates can be used for
comparing assets and liabilities and finding out any increase or decrease in those
items. Thus, while in a single balance sheet the emphasis is
4
way that users can draw conclusions about the performance, strengths and weakness
of a firm.
Accounting Ratio
The arithmetical method of ascertaining the interrelation between any two
numeric data ex- pressed in accounting statements is known as Accounting Ratio. The
definition implies that in use of an accounting ratio both the components in the form
of numerals or variables used in computing a ratio are taken from the financial
statements prepared in financial accounting. For example it can be stated that if in a
concern the Sales of a particular year is Rs. 2.00.000 and the Net Profit is Rs. 40,000
Sales Ratio becomes 1:5 or 1/5 indicates that the Net Profit of the concern for that
year is one-fifth portion of its Sales or for Sales of Rs. 5 Net Profit is Rs. 1. In this
case Sales and Net Profit both these variable are taken out of the Profit and Loss
Account prepared in financial accounting. For this reason this ratio is stated as
Accounting Ratio. In the opinion of J. Batty, accounting ratio is used to describe
significant relationships which exist between figures shown on a Balance Sheet, in a
Profit and Loss Account in a Budgetary Control System or in any other part of the
accounting organization.
(ii)
(iii)
Making comparison: The ratios computed are compared with the ratios of the
past year or years of the same concern or with the standard ratios of the
industry to which the concern belongs.
(iv)
(v)
Preparing report: In the final step necessary reports are to be prepared for
communicating analyzed information and the relevant comments to the
management.
2.
Analyzing the short term and long term solvency of the business concern.
3.
4.
It analyses what has happened till date and does not reflect the future.
The conclusions of the analysis are based on the correctness of the financial
statements.
Current assets
Current Assets =
Current liabilities
Liquid Ratio:
The term liquidity refers to the ability of a firm to pay its short-term
obligation as and when they become due. The term quick assets or liquid assets refers
current assets which can be converted into cash immediately it
comprises all current assets except stock and prepaid expenses it is determined by
dividing quick assets by quick liabilities.
Liquid assets
Liquid Ratio =
Liquid liabilities
B) Leverage Ratios
Many financial analyses are interested in the relative use of debt and equity in
the firm. The term solvency refers to the ability of a concern to meet its long-term
obligations. Accordingly, long-term solvency ratios indicate a firms ability to meet
the fixed interest and cost and repayment schedule associate with its long-term
borrowings. (i.e) Debt Equity Ratio, Proprietary Ratio, etc.
11
efficient the management would be (i.e) Stock Turnover Ratio, Fixed Assets Turnover
Ratios etc.
Fixed assets turnover Ratio:
The ratio indicates the extent to which the investment in fixed assets
contribution towards sales. If the compared with a previous year. It indicates whether
the investment in fixed assets has been judious or not the ratio is calculated as
follows.
Net sales
Fixed assets turnover Ratio=
Fixed assets
Working capital turnover Ratio:
Working capital turnover ratio indicates the velocity of the utilization of net
working capital. The ratio indicates the number of times the working capital is turned
over in the course of a year. It is a good measure over-trading and under-trading.
Net sales
Working capital turnover Ratio =
Net working capital
Return on total assets:
Profitability can be measured in terms of relationship between net profit and
total assets. It measures the profitability of investment. The overall profitability can be
known by applying this ratio.
Net profit
Return on the assets = x 100
Total assets
Return on proprietors funds:
This ratio shows the rate of profit on proprietors funds. It relates the profit
available for the share holders to their total investment.
12
D) Profitability Ratios:
The profitability ratios of a business concern can be measured by the
profitability ratios. These highlight the end result of business activities by which alone
the overall efficiency of a business unit can be judged, (i) Gross Ratios, Net Profit
Ratio.
Net profit Ratio:
Net profit ratio establishes a relationship between net profit (after taxes) and
sales. It is determined by dividing the net income after tax to the net sales for the
period and measures the profit per rupee of sales.
Net profit
Net profit ratio = x 100
Net sales
Expenses Ratio:
This ratio establishes the relationship between various indirect expenses to net
sales.
Administrative expenses Ratio:
Administrative expenses
Administrative expense Ratio = x 100
Sales
Selling & distribution expenses Ratio:
Selling and distribution expenses Selling
& distribution expenses Ratio = x 100
Sales
13
14
15
16
17
18
CHAPTER II
REVIEW OF LITERATURE
INTRODUCTION
It is mandatory to review the literature available with respect to the area of the
research study. Measuring the performance of the corporate sector has always been an
area of controversies form the point of view of the government, share holders,
prospective investors, creditors, employees and any other stock holder. Several studies
have been undertaken to evaluate the financial performance in the corporate sector.
This chapter presents some of the examples of various studies conducted by financial
analysis.
S. Bain study in (1951) of 42 four digit us manufacturing Industries to
establish for the period 1936 40 was a pioneering work on profitability. He
has sought to establish the relationship between concentration and profitability
for this he regressed average, after tax return on equity of the liquidity firms
on eight firms concentration ratio. He found that the relationship was positive,
between concentration and profitability.
Hall. M. and Weiss I.W., (1967) in their important study found that size of the
firm as a major determinant of profitability. They found after tax on equity of
individual firm (341 large U.S. industries corporations) significantly related
more with size of the firm than with concentration.
Altman (1968) in his study on Financial Ratios, Discriminate analysis and
prediction of corporate Bankruptcy, took 66 firms in general and applied
multiple discriminate analysis to discriminate the failed firms from the nonfailed firms, on the basis to the weighted combination of working capital to
total liabilities, cumulative retained earnings to total Assets, market value of
equity to book value of total debt and sales to total Assets, market value of
equity to book value of total debt and sales tot total Assets, he was able to
predict the bankruptcy with 45 percent
19
Hilton (1976) in his study he pointed out that the rate of interest is used as a
proxy for the opportunity cost of carrying stock or as a measure of the cost of
funds needed to hold inventories. The study also found that inventories
generally accumulate with expansion of economic activities of the company.
20
Ramamoorthy (1978) has found profitability and solvency as the twin goals
of working capital management. According to him a firms survival and
growth depend on its ability to achieve these goals. If liquid Assents can pay
off current liabilities, financial strength can be created and the firm can sustain
its Neputation.
Bhabatosh Banerjee (1979) has analyzed the different turnover ratios such as
debtors, creditors and the stock turnover ratio. The cash position and cash
movement is also examined with the effect of the liquidity ratio.
Singh (1981) has found out that the size of the unit has a significant role in the
capital structure of the cement industry. His study has revealed that the returns
and profitability can be increased by increasing the size firm small to big.
Desai, B.H (1983) The capital structure is a part of financial structure and is
a structure of funds to finance all the fitted Assets. Which a company is
supposed to keep permanently carrying in the business.
Pandey (1985) conducted another empirical study examining the industrial
patterns, trend and volatilities of Leverage and the impact of size profitability
and growth on leverage.
George Paul (1985) studied the financial performance of diversified
companies in India. A comparative study of diversified and Non-diversified
companions. The financial performance of 32 relatively matched pairs of
diversifying and non- diversifying generally outperform non- diversifying on
indicators of growth, profitability, safety and market evaluation. However
inter- industry differences in the benefits of diversification are selectively
useful.
21
in the growth process of firms under study. The very low value or R in all the
cases shows that only a small fraction of the growth firm in India
corporate sector has been explained by profitability.
Dr. P.K. Bhattacharyya (1987) analysed the capital structure and profitability
of central sector under takings. According to him governments liberal policy
of granting loan to public enterprise which severely curtailed their
profitability. He suggested the enlargement of equity base and improvement of
profitability of such enterprises.
Harbir Sing (1990) in his study has stated that the financial health of a
company can be improved if stringent control is exercised on raw materials,
stores and spares and also by reducing the unprofitable investment blocked in
current assets. The cash flow can be regulated if the companies prepare weekly
cash flow statement and also cash budget on a regular basis.
as it was revealed by current on quick ratios which were above the standard.
The solvency ratios showed that the company had been following the policy of
low capital gearing from this year. The performance of the company in relation
to its profitability was not up to the Expected level. The companys ability to
utilize assets for generation of sales has been improved much during the study
period as it was revealed by its turnover ratios.
Van Horne, J.C (1996) study pointed that the term liquidity means the
ability of an organization to realize value in money the most liquid among all
assets.
Sakthivel Murgan. M (1999) in his study on working capital management
A case analysis revealed that one of the several indicators of efficient
management of working capital is to examine whether adequate liquidity is
maintained. The Z score analysis reveals that the organization. Maintains the
Z score above 3 points for all the year taken for the study. This shown that
the company is maintaining adequate working capital by investing sufficient
funds in its current assets, is also able to meat the current obligations without
inviting the risk of bankruptcy.
Rajeswari N. (2000) in her study, an attempt has been made to evaluate the
efficiency of liquidity management in Tamil Nadu cement corporation. The
ratios namely current Ratio, quickly ratio and absolute liquid ratio have been
used. The study shows that the liquidity position of TANCEM is not stable due
to abnormal increases of ideal assets by the corporation during the study
period.
Business wire New York year Dec 2008
It will help you to identify and explain information sources besides annual
financial statements and supplementary information; learn the
23
24
CHAPTER-III
INDUSTURY PROFILE
3.1
Raj, at a time when petroleum first became a primary global energy source.
Independence, 1947-1991
After India was granted independence in 1947, the new government naturally
wanted to move away from the colonial experience which was regarded as
exploitative. In terms of economic policy this meant a far bigger role for the state.
This resulted in a focus on domestic industrial and agricultural production and
consumption, a large public sector, economic protectionism, and central economic
planning.
25
The foreign companies continued to play a key role in the oil industry. Oil India
Limited was still a joint venture involving the Indian government and the British
owned Burma Oil Company (presently, BP) whilst the Indo- Stanvac Petroleum
project in West Bengal was between the Indian government and the American
company SOCONY-Vacuum (presently, ExxonMobil).[5] This changed in 1956 when
the government adopted an industrial policy that placed oil as a schedule A industry
and put its future development in the hands of the state.[5] In October 1959 an Act of
Parliament was passed which gave the state owned Oil and Natural Gas Commission
(ONGC) the powers to plan, organize, and implement programmes for the
development of oil resources and the sale of petroleum products and also to perform
plans sent down from central government. In order to find the expertise necessary to
reach these goals foreign experts from West Germany, Romania, the US, and the
Soviet Union were brought in. The Soviet experts were the most influential and they
drew up detailed plans for further oil exploration which were to form part of the
second five-year plan. India thus adopted the Soviet model of economic development
and the state continues to implement five-year plans as part of its drive towards
modernity. The increased focus on exploration resulted in the discovery of several
new oil fields most notably the off-shore Bombay High field which remains by a long
margin Indias most productive well.
Liberalization, 1991-present
The process of economic liberalization in India began in 1991 when India
defaulted on her loans and asked for a $1.8 billion bailout from the IMF. This was a
trickle-down effect of the culmination of the cold war era; marked by the 1991
collapse of the Soviet Union, Indias main trading partner. The bailout was done on
the condition that the government initiates further reforms, thus paving the way for
Indias emergence as a free market economy.
For the ONGC this meant being reorganized into a public limited company
(it is now called for Oil and Natural Gas Corporation) and around 2%
26
of government held stocks were sold off. Despite this however the government still
plays a pivotal role and ONGC is still responsible for 77% of oil and 81% of gas
production while the Indian Oil Corporation (IOC) owns most of the refineries
putting it within the top 20 oil companies in the world. The government also
maintains subsidized prices. As a net importer of oil however India faces the
problem of meeting the energy demands for its rapidly expanding population and
economy and to this the ONGC has pursued drilling rights in Iran and Kazakhstan
and has acquired shares in exploration ventures in Indonesia, Libya, Nigeria, and
Sudan.
Indias choice of energy partners however, most notably Iran led to concerns
radiating from the US. A key issue today is the proposed gas pipeline that will run
from Turkmenistan to India through politically unstable Afghanistan and also through
Pakistan. However despite Indias strong economic links with Iran, India voted with
the US when Irans nuclear program was discussed by the International Atomic
Energy Agency although there are still very real differences between the two countries
when it comes to dealing with Iran.
27
3.2
ONGC- A PROFILE
around 77% of India's crude oil (equivalent to around 30% of the country's total
demand) and around 81% of its natural gas. It is one of the largest publicly traded
companies by market capitalization in India. ONGC has been ranked 357th in the
Fortune Global 500 list of the world's biggest corporations for the year 2012. It is also
among the Top 250 Global Energy Company by Platts.
HISTORY
1961 to 2000
Since its inception, ONGC has been instrumental in transforming the country's
limited upstream sector into a large viable playing field, with its activities spread
throughout India and significantly in overseas territories. In the inland areas, ONGC
not only found new resources in Assam but also established new oil province in
Cambay basin (Gujarat), while adding new petroliferous areas in the Assam-Arakan
Fold Belt and East coast basins (both inland and offshore). ONGC went offshore in
early 70's and discovered a giant oil field in the form of Bombay High, now known as
Mumbai High. This discovery, along with subsequent discoveries of huge oil and gas
fields in Western offshore changed the oil scenario of the country. Subsequently, over
5 billion tonnes of hydrocarbons, which were present in the country, were discovered.
The most important contribution of ONGC, however, is its self-reliance and
development of core competence in E&P activities at a globally competitive level.
ONGC became a publicly held company in February 1994, with 20% of its
equity were sold to the public and eighty percent retained by the Indian government.
At the time, ONGC employed 48,000 people and had reserves and surpluses worth
104.34 billion, in addition to its intangible assets. The corporation's net worth of
107.77 billion was the largest of any Indian company.
2000 to present:
In 2003, ONGC Videsh acquired Talisman Energy's 25% stake in the Greater
Nile Oil project.
29
In 2006 a commemorative coin set was issued to mark the 50th anniversary of
the founding of ONGC, making it only the second Indian company (State
Bank of India being the first) to have such a coin issued in its honour.
ONGC Videsh, along with Statoil ASA (Norway) and Repsol SA (Spain), has
been engaged in deepwater drilling off the northern coast of Cuba in 2012.
On 11 August 2012, ONGC announced that it had made a large oil discovery
in the D1 oilfield off the West coast of India, which will help it to raise the
output of the field from 2/23/13 Oil and Natural Gas Corporation around
12,500 barrels per day (bpd) to a peak output of 60,000 bpd.
ONGC Videsh:
ONGC Tripura Power Company Ltd (OTPC) is a joint venture which was
formed in September 2008 between ONGC, Infrastructure Leasing and
Financial Services Limited and the Government of Tripura. It is developing a
726.6 MW CCGT thermal power generation project at
30
Palatana in Tripura which will supply electricity to the power deficit areas
of the north eastern states of the country.
Frontiers of Technology
State-of-the-art seismic data acquisition, processing and interpretation
facilities
Uses one of the Top Ten Virtual Reality Interpretation facilities in the world
Alliances with Transocean, Schlumberger, Halliburton, Baker Hughes, IPR,
Petrobras, Norsk, ENI and Shell
One of the biggest ERP implementations in the Asia
Best In Class Infrastructure And Facilities
The Company operates with 27 Seismic crews, manages 240 onshore
production installations, 202 offshore installations, 77 drilling (plus 44 hired)
and 58 work-over rigs (plus 30 hired), owns and operates more than 26,598
kilometers of pipeline in India, including 4,500 kilometers of sub-sea
pipelines.
ONGC has adopted Best-in-class business practices for modernization,
expansion and integration of all Infocom systems.
Financials (2011-12)
ONGC group's turnover during 2011-12 has been Rs. 150,185 Crore with net
profit of Rs. 28,144 Crore. ONGC paid the highest-ever dividend of Rs. 8,342
Crore. The Net Worth of ONGC Group of companies is Rs. 135,266 Crore.
During 2011-12, the turnover of ONGC (on standalone basis) has been Rs.
76,887 Crore with net profit of Rs.25,123 Crore; the highest-ever despite
sharing under-recovery of Rs.44,466 Crore to the Oil Marketing Companies
(OMCs) as per the instructions of the Government of India. Net worth of
ONGC (on standalone basis) has been Rs.1,11,784 Crore.
31
OVL's consolidated gross revenue increased by 21% from Rs. 18,671 Crore
during 2010-11 to Rs.22,637 Crore during 2011-12 and consolidated net profit
increased by 1% from Rs. 2,621 Crore during 2010-11 to Rs. 2,721 Crore
during 2011-12.
The turnover of MRPL has been Rs.52,207 Crore, up 19% from Rs.43,800
Crore and net profit has been Rs.909 Crore during 2011-12.
MOU ratings
MOU performance rating of ONGC during the last four years is as given
below:
Year
Score
Grading/Rating
2007-08
1.81
Very good
2008-09
1.70
Very good
2009-10
1.53
Very good
2010-11
1.79
Very good
32
installations certified with QHSE, 240 operational units audited for HSE Performance,
130 employees trained on HUET, 14 HSE awareness programs completed.
Corporate Disaster Management Plan and guidelines have been developed for
uniform disaster management all across ONGC. ONGC has also developed
Occupational Health physical fitness criteria for employees deployed for offshore
operations. Occupational Health module has now been populated on SAP system.
Human Resources
ONGC has vast pool of skilled and talented professionals the most valuable
asset for the company. 32,909 ONGCians (as on 31st March, 2012) dedicate
themselves for the excellent performance of the company. ONGC extends several
welfare benefits to the employees and their families by way of comprehensive
medical care, education, housing and social security.
Vision Statement:
To be global leader in integrated energy business through sustainable
34
Designation
Sudhir Vasudeva
K S Jamestin
A Giridhar
Government Director
Deepak Nayyar
Independent Director
S K Barua
Independent Director
35
Anita Das
Director
Deepak Nayyar
Additional Director
Joeman Thomas
Director
O P Bhatt
Additional Director
S V Rao
Director
Director Finance
D Chandrasekharam
Independent Director
Arun Ramanathan
Independent Director
Om Prakash Bhatt
Independent Director
Shaktikanta Das
Government Director
Shashi Shanker
Director
Arun Ramanathan
Additional Director
S K Barua
Additional Director
Shaktikanta Das
Government Director
36
CHAPTER-IV
RESEARCH METHODOLOGY
4.1
Research Problem
The main purpose of the study is to determine the working and growth of the
ONGC through its financial statements.
4.2
To bring out the origin and growth of the ONGC of India in the Country.
4.3
Research Design
The descriptive form of research is adopted for study. The major purpose of
4.4
Nature of Data
The data required for the study has been collected from secondary sources.
The relevant figures were taken from annual reports, journals and contents gathered
from internet.
37
4.5
CORPORATION. Hence the information related to, profitability, short term and
long term solvency and turnover are required for attaining the objectives of the
percent study.
4.6
Tools Applied
Period of Study:
This study covers a period of years from 2007-08 to 2011-12. Data
deals with Financial performance of the ONGC by analyzing the Profit and Loss
account and the Balance sheet.
4.9
the ONGC.
The study was based on published annual reports.
Due to time constraint the period of study is for five years only.
38
CHAPTER-V
CURRENT RATIO
It is used for measuring short-term liquidity or solvency. Whether the
current assets of the firm are sufficient to meet its current liabilities that is
assessed through the current ratio
Current assets
Current Assets=
Current liabilities
TABLE - 5.1
(Rs. In Crores)
YEAR
CURRENT
ASSESTS ( )
CURRENT
LIABLITIES ( )
RATIO
(TIMES)
2007-08
66,604.64
64,252.78
1.04
2008-09
84,037.65
87,930.19
0.96
2009-10
90,788.99
80,711.49
1.12
2010-11
92,596.56
1,03,793.58
0.89
2011-12
79,688.44
77,778.95
1.02
39
INTERPRETATION:
The Ideal Standard is 2:1. In no year the standard ratio was reached by the
company.
The short term solvency ratio had been fluctuating during the period of study.
It ranged between 0.89 to 1.12.
A low current ratio than the standard indicates a bad liquidity, over-trading,
less Working capital and unsatisfactory debt repayment capacity of the firm.
The investment of creditors in a firm having a low current ratio may not be too
safe.
CHART - 5.1
CURRENT RATIO
1.20
1.12
1.04
1.00
1.02
0.96
0.89
0.80
0.6
0
CURRENT
RATIO
0.4
0
0.2
0
0.0
0
2007-08
12
2008-09
2009-10
2010-11
2011-
40
5.2
QUICK RATIO:
It is used to verify the short-term liquidity position of the firm as indicated by
the current ratio and supported by the quick ratio. It is in fact used to measure the
cash position of the firm.
(Cash + Marketable Securities)
Liquid Ratio=
Quick or Liquid Liabilities
TABLE- 5.2
(Rs. In Crores)
YEAR
QUICK ASSETS ( )
CURRENT
LIABLITIES ( )
RATIO
2008
7,750.04
64,252.78
0.12
2009
8,907.15
87,930.19
0.10
2010
8,569.57
80,711.49
0.11
2011
19,839.92
1,03,793.58
0.19
2012
41,057.56
77,778.95
0.53
41
INTERPRETATION:
The ideal standard is 1:1. The Current Liability was fluctuating during the
period of study.
The Liquid Ratio was below the standard throughout the period of study. During
period 2008 to 2011 it was very low ranging from 0.10 to 0.19 and in 2012 it
increased to 0.53.
Since the current ratio and the quick ratio were not satisfactory a low absolute
liquid ratio indicates that the debt repayment capacity of the firm was not
sound.
CHART 5.2
QUICK RATIO
0.60
0.50
0.40
0.30
QUICK
RATIO
0.20
0.10
0.00
2007-08
200809
200910
201011
201112
42
5.3
its investment in fixed assets and its overall activity. It indicates the generation of
sales for per rupee invested in fixed asset.
TOTAL INCOME
TOTAL ASSETS TURNOVER RATIO =
TOTAL ASSETS
TABLE- 5.3
(Rs. In Crores)
YEAR
TOTAL INCOME ( )
TOTAL ASSETS ( )
RATIO
(%)
2007-08
1,01,115.25
80,175.90
1.26
2008-09
1,07,999.69
1,00,193.98
1.08
2009-10
1,07,232.27
1,26,775.78
0.85
2010-11
1,24,294.52
1,23,620.37
1.01
2011-12
1,55,709.69
1,53,870.74
1.01
43
INTERPRETATION:
The table shows that Fixed Asset during the period is almost increasing trend
due to new addition in the assets and sales shows increasing trend.
Total Turnover Ratio was ranged between 0.85 to 1.26. It shows that the
company is doing extremely well.
A high fixed assets turnover ratio is an indicator of efficient utilisation of
fixed assets in generating sales. It reveals that use of less fixed assets made
possible higher generation of sales.
CHART-5.3
100.00
101.2
0
84.58
80.00
TOTAL ASSETS
2007-08 2008-09
44
5.4
firm. The proportion of total assets of a firm collected through proprietors fund can be
understood from this ratio.
SHAREHOLDERS FUND
PROPRIETARY/ NETWORTH RATIO=
TOTAL ASSETS
TABLE- 5.4
(Rs. In Crores)
YEAR
SHARE HOLDER'S
FUND ( )
TOTAL ASSETS ( )
RATIO
2007-08
78,086.62
80,175.90
0.97
2008-09
92,223.50
1,00,193.98
0.92
2009-10
1,01,406.64
1,26,775.78
0.80
2010-11
1,15,327.25
1,23,620.37
0.93
2011-12
1,36,439.13
1,53,870.74
0.89
45
INTERPRETATION:
The Ideal Norms is 1:3 (33%) of Total Assets collected through proprietary
capital. Here Proprietary Ratio was high ranging between 0.80 to 0.97. It
was adequate and above the standard norms.
A high proprietary ratio indicates more use of proprietors funds in acquiring
total assets of the firm.
This situation shows a favourable long-term solvency and a satisfactory
financial stability of the firm. So a high proprietary ratio is favourable to the
long-term creditors and investors.
CHART- 5.4
PROPRIETARY/NETWORTH RATIO
1.00
0.90
0.97
0.93
0.92
0.80
0.80
0.70
0.60
0.89
PROPRIETARY/NETWO
RTH
RATIO
0.50
0.40
0.30
0.20
0.10
0.00
46
5.5
Management in generating additional revenue over and above the total operating
costs.
It does not make any difference between operating and non operating expenses and
shows the relation between net profit and net sales.
NET PROFIT
--------------------X 100
NET SALES
TABLE 5.5
(Rs. In Crores)
YEAR
NET PROFIT ( )
NET SALES ( )
RATIO
2007-08
20,221.05
96,772.56
20.90
2008-09
20,170.88
1,04,634.68
19.28
2009-10
19,727.57
1,02,223.99
19.30
2010-11
22,824.97
1,18,002.86
19.34
2011-12
28,428.91
1,47,305.72
19.30
47
INTERPRETAION:
The Net Profit Ratio shows that the Net Contribution made by sales of rupee 1 to
the owners fund.
The study unit showed and average of 19.5%.
The table shows that the higher Net profit Ratio by the corporation, this
indicates better overall profitability and managerial efficiency.
It expresses how much the total revenue earned is more than the total
expenses incurred.
CHART 5.5
20.90
20.50
20.00
19.50
19.28 19.30
19.34
NET
PROFIT/GROSS
19.30
MARGIN RATIO
19.00
18.50
18.00
2007-08 2008-09
48
5.6
charges on profit earned. It explains the relation between earnings before interest and
tax and the interest paid on debt capital. From the lenders viewpoint it is used to
measure the safety of return on investment.
EBIT
INTEREST COVERAGE RATIO=
FIXED INTEREST CHARGES
TABLE 5.6
(Rs. In Crores)
FIXED INTEREST
CHARGE ( )
YEAR
EBIT ( )
2007-08
40,595.98
135.30
300.04
2008-09
42,861.48
238.51
179.71
2009-10
44,818.98
502.19
89.25
2010-11
48,299.16
457.15
105.65
2011-12
58,725.50
434.94
135.02
49
RATIO
INTERPRETAION:
The table show that the earnings before interest and tax and the operating profit
are same. So the interest coverage ratio measures as to how many times the
interest burden of the firm is covered by the operating profit of the firm.
The highest was 300.14 times in the year 2008 it indicates better debt servicing
capacity. It is beneficial from the viewpoints of both the firm and the lenders.
From the viewpoint of the firm it is beneficial because it indicates more shock
absorbing capacity in case of lower profit and the reduced risk of default in
interest payment.
The lowest was 4.17 in the year 2011 it reveals that the lenders have a low safety
of return on their investment, it is also unfavourable to the firm because in such
case the firms profitability in relation to its interest payment commitment is low
and it is not in a position to take recourse to further debt financing in case of any
need.
CHART- 5.6
300.04
250.0
0
200.0
0
INTEREST
COVERAGE
RATIO
179.71
150.0
0
100.0
0
135.02
105.65
89.25
50.00
0.00
2007-08 2008-09 2009-10 2010-11
2011-12
50
5.7
OPERATING RATIO:
COST OF GOODS
SOLD+OPERATING
EXPENSES ( )
NET SALES ( )
RATIO
2007-08
56,286.67
96,772.56
58.16
2008-09
61,428.80
1,04,634.68
58.71
2009-10
57,777.89
1,02,223.99
56.52
2010-11
70,595.39
1,18,002.86
59.83
2011-12
89,044.34
1,47,305.72
60.45
51
INTERPRETATION:
Generally the range of 70% to 80% is accepted standard ratio. Here the
corporation has not reached the standards during the study period.
The highest was 60.45% during the year 2011-12 and the lowest was 56.52%
during the year 2009-10.
A low operating ratio indicates that the firm has more surpluses in its hand after
meeting operating costs. This surplus can be used for payment of tax, payment of
dividend, transfer to reserve, etc. Therefore, an indicator of high profitability and
good efficiency.
CHART -5.7
OPERATING RATIO
61.00
60.45
60.00
59.83
59.00
58.00
58.71
58.16
OPERATING RATIO
57.00
56.52
56.00
55.00
54.00
2007-082008-09
52
5.8
OPERATING
PROFIT ( )
NET SALES ( )
RATIO
2007-08
40,595.98
96,772.56
41.95
2008-09
42,861.48
1,04,634.68
40.96
2009-10
44,818.98
1,02,223.99
43.84
2010-11
48,299.16
1,18,002.86
40.93
2011-12
58,725.50
1,47,305.72
39.87
53
INTERPRETATION:
The table shows that operating profit ratio of ONGC had been ranging between
39.87% to 43.84%.
Generally an operating profit in the range of 20% to 25% is acceptable standard in
manufacturing firms.
Here it is seen that it was above the standards. This is the indicator of good
profitability and efficient managerial ability.
CHART- 5.8
44.00
43.00
42.00
41.00
41.95
40.96
40.00
40.93
OPERATING PROFIT
RATIO
39.87
39.00
38.00
37.00
2007-08 2008-09
54
5.9
DIVIDEND PER
SHARE ( )
EARNING PER
SHARE ( )
RATIO
2007-08
32.00
94.54
33.85
2008-09
32.00
94.31
33.93
2009-10
33.00
92.23
35.78
2010-11
17.50
26.68
65.59
2011-12
9.75
33.23
29.34
55
INTERPRETATION:
The table shows that how much percentage of dividends paid by the company
from the profit earned by the company.
The highest payout ratio was 65.59% during the year 2010-11 and lowest was
the 29.34% during the year 2011-12.
From the viewpoint of the financial health of the company a high dividend
payout ratio is never desirable because in such case retention of profit
becomes less.
A low dividend payout ratio indicates less distribution and more retention is
helpful for the sustained growth of the company.
70.00
65.59
60.00
50.00
40.00
33.85
30.00
20.00
10.00
33.93
35.78
29.34
CHART- 5.9
56
5.10
funds employed and to evaluate the efficiency of the management. This ratio explains
the Relationship between the operating profit i.e. net profit before interest and tax and
Proprietors fund.
Net Profit before Interest and Tax
Return on proprietors fund= x 100
Proprietors Funds or Equity
TABLE - 5.10
(Rs. In Crores)
YEAR
NET OPERATING
PROFIT AFTER TAX
( )
PROPRIETOR'S
FUND ( )
RATIO
2007-08
20,221.05
78,086.62
25.90
2008-09
20,170.88
92,223.50
21.87
2009-10
19,727.57
1,01,406.64
19.45
2010-11
22,824.97
1,15,327.25
19.79
2011-12
28,428.91
1,36,439.13
20.84
57
INTERPRETATION:
The table reveals that how much percentage of return from the Proprietors
fund. Here highest was 25.90% during the 2007-08 and lowest was the
19.45%.
This ratio is a real test of the profitability and managerial efficiency. The
higher the return on Proprietors fund the higher is the profitability and the
sound is the managerial ability.
From the viewpoint of shareholders and the management a high return on
capital employed is always favourable.
CHART 5.10
20.84
19.79
20.00
RETURN ON
PROPRIETOR'S
15.00
FUND
10.00
5.00
58
TREND ANALYSIS
Trend analysis is very helpful in making a comparative study of the
financial statements of several years. Under this technique, information for a number
of years is taken up and one year-usually the first year-is taken as the base year. Each
item of the base year is taken as 100 and on that basis the percentages for the other
years are calculated.
5.11
Year
Sales ( )
Trend %
2007-08
1,01,834.91
100.00
2008-09
1,09,412.94
107.44
2009-10
1,06,638.27
97.46
-3
2010-11
1,23,157.47
115.49
15
2011-12
1,51,121.10
122.71
23
59
Difference %
INTERPRETATION:
From the above table- 5.11, the sales have been raising year after year except
the year 2009-10.
It can be seen that there has been steep rise from 2007-2008 to 2008-2009
(i.e) Rs.1,01,834.91 to Rs.1,09,412.94.
There is a slight decrease in the year 2009-10 , increase of 15% in the year
2010-11 and increase of 23% in the year 2011-12.
CHART -5.11
122.71
115.49
107.44
100.0
0
100.00
97.46
80.00
TREND
PERCENTAGE OF
SALES
60.00
40.00
20.00
0.00
2007-08 2008-09 2009-10 2010-11 2011-12
60
NET PROFIT
( )
2007-08
20,221.05
100.00
2008-09
20,170.88
99.75
-0.25
2009-10
19,727.57
97.80
-2.20
2010-11
22,824.97
115.70
15.70
2011-12
28,428.91
124.55
24.55
Trend %
Difference %
61
TABLE 5.12
TREND PERCENTAGE OF
NET PROFIT
140.0
0
120.0
0
100.0
0
80.00
TREND
PERCENTAGE OF
60.00
NET PROFIT
40.00
20.00
0.00
2007-08 2008-09 2009-10 2010-11
201112
62
5.13
TOTAL
ASSETS ( )
Trend %
2007-08
80,175.90
100.00
2008-09
1,00,193.98
124.97
24.97
2009-10
1,26,775.78
126.53
26.53
2010-11
1,23,620.37
97.51
-2.49
2011-12
1,53,870.74
124.47
24.47
Difference %
INTERPRETATION:
The table 5.13 shows that there is a slight fluctuation in the Total Assets. If the
total assets of a firm increase without any corresponding increase in its
operating profit, the return on total assets will come down. It reveals that
the increase in investment has not resulted in the welfare of
the owners.
Here we can clearly understood that the operating profit adequate from
the
owners.
63
CHART -5.13
120.0
0
100.0
0
100.00
124.47
97.51
80.00
TREND
PERCENTAGE OF
TOTAL ASSETS
60.00
40.00
20.00
0.00
2007-08 2008-09 2009-10 2010-11 2011-12
64
TOTAL
LIABLITIES ( )
Trend %
2007-08
64,252.78
100.00
2008-09
87,930.19
136.85
36.85
2009-10
80,711.49
91.79
-8.21
2010-11
1,03,793.58
128.60
28.60
2011-12
77,778.95
74.94
-25.06
Difference %
65
TABLE 5.14
136.85
128.60
120.0
0
100.0
0
100.00
TREND
PERCENTAGE OF
91.79
80.00
74.94
60.00
40.00
20.00
0.00
2007-08 2008-09 2009-10 2010-11 2011-12
TOTAL LIABLITIES
66
5.15
EARNING PER
SHARE ( )
Trend %
2007-08
94.54
100.00
2008-09
94.31
99.76
-0.24
2009-10
92.23
97.79
-2.21
2010-11
26.68
28.93
-71.07
2011-12
33.23
124.55
24.55
Difference %
67
TABLE 5.15
TREND PERCENTAGE OF
EARNING PER
SHARE (EPS)
140.0
0
120.0
0
100.0
0
80.00
TREND
60.00
PERCENTAGE OF
EARNING PER SHARE
(EPS)
40.00
20.00
0.00
2007-082008-092009-102010-11
201112
68
PERCENTAGE
2138.89
2.67
2138.89
2.13
14.58
0.02
0.00
0.00
Reserves
75933.15
94.71
90084.61
89.91
Net worth
78086.62
97.39
92223.50
92.04
Secured Loans
697.97
0.87
680.92
0.68
Unsecured Loans
246.50
0.31
5878.21
5.87
Total Debt
944.47
1.18
6559.13
6.55
Minority Interest
Total Liabilities
1144.83
80175.92
1.43
100.00
1411.35
100193.98
1.41
100.00
APPLICATION OF
FUNDS
Gross Block
76216.22
95.06
89828.65
89.65
Less: Accum.
Depreciation
54242.39
67.65
59929.17
59.81
Net Block
21973.83
27.41
29899.48
29.84
Capital Work in
Progress
50694.15
63.23
70056.07
69.92
Investments
4482.14
5.59
3480.35
3.47
Inventories
7298.48
9.10
6542.39
6.53
Sundry Debtors
7046.94
8.79
7181.35
7.17
703.10
0.88
1725.80
1.72
15048.52
18.77
15449.54
15.42
27203.37
33.93
47718.36
47.63
Fixed Deposits
24352.75
30.37
20869.75
20.83
66604.64
83.07
84037.65
83.87
Current Liabilities
38391.38
47.88
53574.13
53.47
Provisions
25861.40
32.26
34356.06
34.29
64252.78
80.14
87930.19
87.76
2351.86
2.93
-3892.54
-3.89
673.92
0.84
650.62
0.65
80175.92
100.00
100193.98
100.00
PARTICULARS
2009 ( )
PERCENTAGE
SOURCES OF FUND
Equity Share Capital
Share Application Money
69
INTERPRETATION:
The above statement shows the percentage of various assets and
liabilities on the total.
During the year 2008, Net worth is 97.39%, total debt was 1.18% and
Minority interest was 1.43% of the Total Liabilities. It is clear from the above
statement that the majority 97.39% of Total Liabilities constitute Net Worth.
During the year 2008 Net Block is 27.41%, Capital Work in progress was
63.23%, investments is 5.59%, Net current assets was 2.93% and
Miscellaneous expenses 0.84% of the total assets. It was clear from the above
statement that the majority 63.23% of Total Assets constitute to Capital Work
in progress.
During the year 2009, Net worth is 92.04%, total debt is 6.55% and Minority
interest was 1.41% of the Total Liabilities. It is clear from the above statement
that the majority 92.04% of Total Liabilities constitute Net Worth.
During the year 2009 Net Block is 29.84%, Capital Work in progress was
69.92%, investments is 3.47%, Net current assets was -3.89% and
Miscellaneous expenses 0.65% of the total assets. It was clear from the above
statement that the majority 69.92% of Total Assets constitute to Capital Work
in progress.
70
PARTICULARS
2009 ( )
PERCENTAGE
2010 ( )
PERCENTAGE
SOURCES OF FUND
Equity Share Capital
2138.89
2.13
2138.89
1.69
Reserves
90084.61
89.91
99267.75
78.30
Networth
92223.50
92.04
101406.64
79.99
680.92
0.68
789.35
0.62
Unsecured Loans
5878.21
5.87
22936.61
18.09
Total Debt
6559.13
6.55
23725.96
18.71
Minority Interest
1411.35
1.41
1643.16
1.30
100193.98
100.00
126775.76
100.00
Gross Block
89828.65
89.65
99731.19
78.67
Less: Accum.
Depreciation
59929.17
59.81
65816.45
51.92
Net Block
29899.48
29.84
33914.74
26.75
Capital Work in
Progress
70056.07
69.92
76782.91
60.57
Investments
3480.35
3.47
5159.31
4.07
Inventories
6542.39
6.53
8240.01
6.50
Sundry Debtors
7181.35
7.17
7142.35
5.63
1725.80
1.72
1427.22
1.13
15449.54
15.42
16809.58
13.26
47718.36
47.63
53022.40
41.82
Fixed Deposits
20869.75
20.83
20957.01
16.53
84037.65
83.87
90788.99
71.61
Current Liabilities
53574.13
53.47
40417.59
31.88
Provisions
34356.06
34.29
40293.90
31.78
87930.19
87.76
80711.49
63.66
-3892.54
-3.89
10077.50
7.95
650.62
0.65
841.32
0.66
100193.98
100.00
126775.78
100.00
Secured Loans
Total Liabilities
APPLICATION OF
FUNDS
Miscellaneous
Expenses
Total Assets
INTERPRETATION:
The above statement shows the percentage of various assets and
liabilities on the total.
During the year 2009, Net worth is 92.04%, total debt was 6.55% and
Minority interest was 1.41% of the Total Liabilities. It is clear from the above
statement that the majority 92.04% of Total Liabilities constitute Net Worth.
During the year 2009 Net Block was 29.84%, Capital Work in progress was
69.92%, investments was 3.47%, Net current assets was -3.89% and
Miscellaneous expenses 0.65% of the total assets. It is clear from the above
statement that the majority 69.92% of Total Assets constitute to Capital Work
in progress.
During the year 2010, Net worth is 79.99%, total debt was 18.71% and
Minority interest was 1.30% of the Total Liabilities. It was clear from the
above statement that the majority 79.99% of Total Liabilities constitute Net
Worth.
During the year 2010 Net Block was 26.75%, Capital Work in progress is
60.57%, investments is 4.07%, Net current assets was 7.95% and
Miscellaneous expenses 0.66% of the total assets. It is clear from the above
statement that the majority 60.57% of Total Assets constitute to Capital Work
in progress.
72
2010 ( )
PERCENTAGE
2011 ( )
PERCENTAGE
SOURCES OF FUND
Equity Share Capital
2138.89
1.69
4277.76
3.46
0.00
0.00
0.00
0.00
Reserves
99267.75
78.30
111049.49
89.83
Networth
101406.64
79.99
115327.25
93.29
789.35
0.62
778.27
0.63
Unsecured Loans
22936.61
18.09
5512.96
4.46
Total Debt
23725.96
18.71
6291.23
5.09
1643.16
1.30
2001.88
1.62
126775.76
100.00
123620.36
100.00
Gross Block
99731.19
78.67
108941.27
88.13
Less: Accum.
Depreciation
65816.45
51.92
73083.35
59.12
Net Block
33914.74
26.75
35857.92
29.01
Capital Work in
Progress
76782.91
60.57
94807.31
76.69
Investments
5159.31
4.07
3356.10
2.71
Inventories
8240.01
6.50
8567.57
6.93
Sundry Debtors
7142.35
5.63
9772.39
7.91
1427.22
1.13
10067.53
8.14
16809.58
13.26
28407.49
22.98
53022.40
41.82
45568.34
36.86
Fixed Deposits
20957.01
16.53
18620.73
15.06
90788.99
71.61
92596.56
74.90
Current Liabilities
40417.59
31.88
65063.43
52.63
Provisions
40293.90
31.78
38730.15
31.33
80711.49
63.66
103793.58
83.96
10077.50
7.95
-11197.02
-9.06
841.32
0.66
796.06
0.64
126775.78
100.00
123620.37
100.00
Secured Loans
Minority Interest
Total Liabilities
APPLICATION OF
FUNDS
Miscellaneous
Expenses
Total Assets
INTERPRETATION:
The above statement
of various assets
and
During the year 2010 Net Block is 26.75%, Capital Work in progress is
60.57%, investments was 4.07%, Net current assets is 7.95% and
Miscellaneous expenses 0.66% of the total assets. It was clear from the above
statement that the majority 60.57% of Total Assets constitute to Capital Work
in progress.
During the year 2011, Net worth was 93.29%, total debt is 5.09% and Minority
interest was 1.62% of the Total Liabilities. It was clear from the above
statement that the majority 93.29% of Total Liabilities constitute Net Worth.
During the year 2011 Net Block was 29.01%, Capital Work in progress is
76.69%, investments is 2.71%, Net current assets was -9.06% and
Miscellaneous expenses 0.64% of the total assets. It was clear from the above
statement that the majority 76.69% of Total Assets constitute to Capital Work
in progress.
74
2011 ( )
PERCENTAGE
2012 ( )
PERCENTAGE
SOURCES OF FUND
Equity Share Capital
4277.76
3.46
4277.76
2.78
0.00
0.00
0.00
0.00
Reserves
111049.49
89.83
132161.37
85.89
Networth
115327.25
93.29
136439.13
88.67
778.27
0.63
5958.75
3.87
Unsecured Loans
5512.96
4.46
9264.44
6.02
Total Debt
6291.23
5.09
15223.19
9.89
Minority Interest
2001.88
1.62
2208.43
1.44
123620.36
100.00
153870.75
100.00
Gross Block
108941.27
88.13
180143.61
117.07
Less: Accum.
Depreciation
73083.35
59.12
80801.20
52.51
Net Block
35857.92
29.01
99342.41
64.56
Capital Work in
Progress
94807.31
76.69
49698.13
32.30
Investments
3356.10
2.71
2920.71
1.90
Inventories
8567.57
6.93
13168.01
8.56
Sundry Debtors
9772.39
7.91
11714.33
7.61
10067.53
8.14
27889.55
18.13
28407.49
22.98
52771.89
34.30
45568.34
36.86
26916.55
17.49
Fixed Deposits
18620.73
15.06
0.00
0.00
92596.56
74.90
79688.44
51.79
Current Liabilities
65063.43
52.63
51233.68
33.30
Provisions
38730.15
31.33
26545.27
17.25
103793.58
83.96
77778.95
50.55
-11197.02
-9.06
1909.49
1.24
796.06
0.64
0.00
0.00
123620.37
100.00
153870.74
100.00
Secured Loans
Total Liabilities
APPLICATION OF
FUNDS
Miscellaneous
Expenses
Total Assets
75
INTERPRETATION:
The above statement
of various assets
and
76
2008 ( )
2009 ( )
INCREASE/
DECREASE
PERCENTAGE
SOURCES OF FUND
Equity Share Capital
2138.89
2138.89
0.00
0.00
14.58
0.00
-14.58
-100.00
Reserves
75933.15
90084.61
14151.46
18.64
Networth
78086.62
92223.50
14136.88
18.10
Secured Loans
697.97
680.92
-17.05
-2.44
Unsecured Loans
246.50
5878.21
5631.71
2284.67
Total Debt
944.47
6559.13
5614.66
594.48
1144.83
1411.35
266.52
23.28
80175.92
100193.98
20018.06
24.97
Gross Block
76216.22
89828.65
13612.43
17.86
54242.39
59929.17
5686.78
10.48
Net Block
21973.83
29899.48
7925.65
36.07
50694.15
70056.07
19361.92
38.19
Investments
4482.14
3480.35
-1001.79
-22.35
Inventories
7298.48
6542.39
-756.09
-10.36
Sundry Debtors
7046.94
7181.35
134.41
1.91
703.10
1725.80
1022.70
145.46
15048.52
15449.54
401.02
2.66
27203.37
47718.36
20514.99
75.41
Fixed Deposits
24352.75
20869.75
-3483.00
-14.30
66604.64
84037.65
17433.01
26.17
Current Liabilities
38391.38
53574.13
15182.75
39.55
Provisions
25861.40
34356.06
8494.66
32.85
64252.78
87930.19
23677.41
36.85
2351.86
-3892.54
-6244.40
-265.51
673.92
650.62
-23.30
-3.46
80175.92
100193.98
20018.06
24.97
Minority Interest
Total Liabilities
APPLICATION OF FUNDS
77
INTERPRETATION:
Form the above Comparative Balance sheet as on 31.3.2009 Net worth has
increase 18.10% Secured Loan has decreased by -2.44% and Minority interest
increased by 23.28%.
Here Net block has increase 36.07% capital work in progress has increased by
38.19% Investments has decreased by -22.35%, Net current assets has
decreased by -265.51% and Miscellaneous expenses decreased by -3.46%
78
PARTICULARS
2009 ( )
2010 ( )
INCREACE/
DECREASE
PERCENTAGE
SOURCES OF FUND
Equity Share Capital
2138.89
2138.89
0.00
0.00
Reserves
90084.61
99267.75
9183.14
10.19
Networth
92223.50
101406.64
9183.14
9.96
680.92
789.35
108.43
15.92
Unsecured Loans
5878.21
22936.61
17058.40
290.20
Total Debt
6559.13
23725.96
17166.83
261.72
Minority Interest
1411.35
1643.16
231.81
16.42
100193.98
126775.76
26581.78
26.53
Gross Block
89828.65
99731.19
9902.54
11.02
59929.17
65816.45
5887.28
9.82
Net Block
29899.48
33914.74
4015.26
13.43
70056.07
76782.91
6726.84
9.60
Investments
3480.35
5159.31
1678.96
48.24
Inventories
6542.39
8240.01
1697.62
25.95
Sundry Debtors
7181.35
7142.35
-39.00
-0.54
1725.80
1427.22
-298.58
-17.30
15449.54
16809.58
1360.04
8.80
47718.36
53022.40
5304.04
11.12
Fixed Deposits
20869.75
20957.01
87.26
0.42
84037.65
90788.99
6751.34
8.03
Current Liabilities
53574.13
40417.59
-13156.54
-24.56
Provisions
34356.06
40293.90
5937.84
17.28
87930.19
80711.49
-7218.70
-8.21
-3892.54
10077.50
13970.04
-358.89
650.62
841.32
190.70
29.31
100193.98
126775.78
26581.80
26.53
Secured Loans
Total Liabilities
APPLICATION OF FUNDS
Miscellaneous Expenses
Total Assets
79
INTERPRETATION:
Form the above Comparative Balance sheet as on 31.3.2010 Net worth has
increase 9.96% Secured Loan has increased by 15.92%, Total Debt has
increased by 261.72% and Minority interest increased by 16.42%.
Here Net block has increase 13.43% capital work in progress has
increased by 9.60%, Investments has increased by 48.24%, Net current assets
has decreased by -358.89% and Miscellaneous expenses increased by 29.31%
80
PARTICULARS
2010 ( )
2011 ( )
INCREACE/
DECREASE
PERCENTAGE
SOURCES OF FUND
Equity Share Capital
2138.89
4277.76
2138.87
100.00
Reserves
99267.75
111049.49
11781.74
11.87
Networth
101406.64
115327.25
13920.61
13.73
789.35
778.27
-11.08
-1.40
Unsecured Loans
22936.61
5512.96
-17423.65
-75.96
Total Debt
23725.96
6291.23
-17434.73
-73.48
1643.16
126775.76
2001.88
123620.36
358.72
-3155.40
21.83
-2.49
Secured Loans
Minority Interest
Total Liabilities
APPLICATION OF FUNDS
0.00
Gross Block
99731.19
108941.27
9210.08
9.23
65816.45
73083.35
7266.90
11.04
Net Block
33914.74
35857.92
1943.18
5.73
76782.91
94807.31
18024.40
23.47
Investments
5159.31
3356.10
-1803.21
-34.95
Inventories
8240.01
8567.57
327.56
3.98
Sundry Debtors
7142.35
9772.39
2630.04
36.82
1427.22
10067.53
8640.31
605.39
16809.58
28407.49
11597.91
69.00
53022.40
45568.34
-7454.06
-14.06
Fixed Deposits
20957.01
18620.73
-2336.28
-11.15
90788.99
92596.56
1807.57
1.99
Current Liabilities
40417.59
65063.43
24645.84
60.98
Provisions
40293.90
38730.15
-1563.75
-3.88
80711.49
103793.58
23082.09
28.60
10077.50
-11197.02
-21274.52
-211.11
841.32
796.06
-45.26
-5.38
126775.78
123620.37
-3155.41
-2.49
Miscellaneous Expenses
Total Assets
81
INTERPRETATION:
Form the above Comparative Balance sheet as on 31.3.2011 Net worth has
increase 13.73% Secured Loan has decreased by -75.96%, Total Debt has
decreased by 73.48% and Minority interest increased by 21.83%.
Here Net block has increase 5.73% capital work in progress has increased by
23.47%, Investments has decreased by -34.95%, Net current assets has decreased
by -211.11% and Miscellaneous expenses decreased by -5.38%.
82
2011 ( )
2012 ( )
INCREACE/
DECREASE
PERCENTAGE
SOURCES OF FUND
Equity Share Capital
4277.76
4277.76
0.00
0.00
Reserves
111049.49
132161.37
21111.88
19.01
Networth
115327.25
136439.13
21111.88
18.31
778.27
5958.75
5180.48
665.64
Unsecured Loans
5512.96
9264.44
3751.48
68.05
Total Debt
6291.23
15223.19
8931.96
141.97
Minority Interest
2001.88
2208.43
206.55
10.32
123620.36
153870.75
30250.39
24.47
108941.27
180143.61
71202.34
65.36
73083.35
80801.20
7717.85
10.56
Net Block
35857.92
99342.41
63484.49
177.04
94807.31
49698.13
-45109.18
-47.58
Investments
3356.10
2920.71
-435.39
-12.97
Inventories
8567.57
13168.01
4600.44
53.70
Sundry Debtors
9772.39
11714.33
1941.94
19.87
10067.53
27889.55
17822.02
177.02
28407.49
52771.89
24364.40
85.77
45568.34
26916.55
-18651.79
-40.93
Fixed Deposits
Total CA, Loans &
Advances
18620.73
0.00
-18620.73
-100.00
92596.56
79688.44
-12908.12
-13.94
Current Liabilities
65063.43
51233.68
-13829.75
-21.26
Provisions
38730.15
26545.27
-12184.88
-31.46
103793.58
77778.95
-26014.63
-25.06
-11197.02
1909.49
13106.51
-117.05
796.06
0.00
-796.06
-100.00
123620.37
153870.74
30250.37
24.47
Secured Loans
Total Liabilities
APPLICATION OF FUNDS
Gross Block
Miscellaneous Expenses
Total Assets
83
INTERPRETATION:
Form the above Comparative Balance sheet as on 31.3.2012 Net worth has
increase 18.31% Secured Loan has increased by 68.05%, Total Debt has
increased by 141.97% and Minority interest increased by 10.32%.
Here Net block has increase 177.04% capital work in progress has decreased
by -47.58%, Investments has decreased by -12.97% and Net current assets has
decreased by -117.05%.
84
CHAPTER VI
6.1
INTRODUCTION:
From the foregoing chapters the following inferences have been made:
6.2
INFERENCES
During 2011-12, the turnover of ONGC (on standalone basis) has been Rs.
76,887 Crore with net profit of Rs.25,123 Crore; the highest-ever despite
sharing under-recovery of Rs.44,466 Crore to the Oil Marketing Companies
(OMCs) as per the instructions of the Government of India. Net worth of
ONGC (on standalone basis) has been Rs.1,11,784 Crore.
Short term Solvency Ratio had been fluctuating during the study period. It
ranged between 0.89 to 1.12. Investment of creditors in the corporation might
not be too safe. Because the Current Ratio was low (i.e) below 2.
Liquid Ratio was below the standard (i.e) 1 through out the period from 2008 to
2011, it was very low ranging from 0.10 to 0.19 and in 2012, it increased to
just 0.53 but not atleast 1.
Total Assets Turnover Ratio was ranged between 0.85 to 1.26. It decreased in
the first three years (2008-10) and increased in the recent two years (2011-12).
Proprietory Ratio was ranging between 0.80 to .97. It is adequate and above
the standard norms (0.33). It indicates the better overall profitability and
managerial efficiency of the corporation.
Operating Ratio prevailed between 56.52 to 60.45 ,which was low (70% to
80%) that the corporation had less surpluses in its hand after meeting operating
cost. Therefore it affects the profitability of the corporation.
85
Operating Profit Ratio of ONGC had been ranging between 38.87% to 43.84%.
This is the indicator of good profitability and efficient managerial ability of the
corporation.
In the year 2010-11, the Dividend Payout Ration of 65.59% was highest during
the study period. From the view point of financial health of the company a high
Dividend Payout Ratio is never desirable because in such case the retention of
profit become less.
Return on Proprietors fund was ranging between 19.45% to 25.90%. The higher
return on profitability and the sound is the managerial ability.
During the year 2008, Networth was 97.39%. Total Debt was 1.18% and
Minority interest was 1.43% of Total Liabilities. It is clear from the above result
that the majority (97.39%) of total liabilities constitutes Networth.
During the year 2012, Net Block was 64.56%, Capital Work in Progress was
32.30%, investment was 1.90% and Net Current Asset was 1.24% of Total
Assets. It is clear from the above statement the majority (64.56%) of Total
Liability constitute to Net Block.
6.3
SUGGESTIONS
The Corporation has to increase the Current Assets to meet out Current
Liabilities and to maintain Standard norms of 2:1.
The Corporation should maintain the Quick Assets properly to face the
emergency needs of cash.
The corporation should have less Dividend Payout Ratio (i.e) less distribution
and more retention is helpful for the substained growth of the company.
The Fixed Assets of Corporation should be used more effectively to reduce the
cost of production and maintain their sales.
6.4
CONCLUSION
The Growth and Development of the organisation is highly depending on
financial position. From the above study it is concluded that the companys fund
position is good in terms of key financial indicators of the performance. ONGC one of
the largest Asia based Oil and Gas exploration and Production Companies. But in
recent years there is a slow downs in the business activities due to recession and more
subsidies. Proper steps to be taken by the company to overcome its adverse economic
condition and make better profit with its sound Financial Recourses experienced
technically skilled Human Resource and with help of continuous research the
company can restore its reputation and efficiently in near future.
87
BIBLIOGRAPHY
Books:
Ghosh T.P. Accounting & Finance for Managers, Taxman Allied Services
(P) Ltd., 2004.
Economic Times
Websites:
www.wikipedia.org
www.mckinsey.com
www.ongcindia.com
www.moneycontrol.com
89