CP Petroleum Industry

PETROLEUM INDUSTRY 2019
“PETROLEUM INDUSTRY”
A COMPREHENSIVE PROJECT REPORT
SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF
THE DEGREE
OF
MBA PROGRAMME
UNDER GUIDENCE
OF
DR. ASHISH MEHTA
SUBMITTED BY
HARSHAD GOHEL 18F63
PIYUSH MAKWANA 18F78
NIPUN MODHIYA 18F76
TEJAS MODHIYA 18F41
G.H PATEL POSTGRADUATE INSTITUTE OF BUSINESS

MANAGEMENT
MBA PROGRAMME
SARDAR PATEL UNIVERSITY
2018-2020
1 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

PREFACE
For the fulfillment of the requirement of the ‘comprehensive project’ course under M.B.A in
G.H. Patel Postgraduate Institute of Business Management, this report named
‘comprehensive project report on petroleum industry has been prepared.
The beginning part of the report gives brief glance of petroleum industry and the growth
perspective of this industry. The future prospect of petroleum industry is also been stated in the
report. This report includes the assessment of the petroleum industry as per marketing
perspective as well which include its market potential as well the competition aspect in sense of
organized and un-organized sector. This section gives detailed information about the industry,
future outlook and various other marketing aspects of petroleum industry. Fifth section of the
report contains financial analysis. The financial analysis in this report consists of profit & loss
statement & balance sheet, fund flow statement, which will be projecting the next ten years of
petroleum industry. Various financial ratios are also calculated to project out our financial status.
Last section of the reports consists of PESTEL, SWOT and five force model of petroleum
industry in India.
Report basically aims to provide an insight of information regarding petroleum industry of India,
its growth aspects, share of market between organized and unorganized sector, latest innovation
going on toy making industry and competition faced by foreign companies.

ACKNOWLEDGEMENT
We sincerely thank the college G.H. Patel postgraduate Institute of Business

Management S.P. University, for giving us this wonderful opportunity of
preparing the comprehensive project report on petroleum industry which helps us
to gain knowledge on new business field.
We are also thankful to Dr. Ashish Mehta to who helped us as a project guide in
completing our project. We also extend our sincere thanks to all the faculty
teachers and staff of the department that helped us and gave their valuable insight
regarding the project. It was a good experience for all of us to work together for
this project report.
Sincerely,
Harshad Gohel (18F63)
Piyush Makwana (18F78)
Nipun Modhiya (18M76)
Tejas Modhiya (18M41)

DECLARATION
This is declaration that ‘comprehensive project report on Petroleum Industry’ carried out by
Harshad Gohel (18F63), Piyush Makwana (18F78), Nipun Modhiya (18M76), Tejas Modhiya
(18M41) we, the students of 3rd semester M.B.A studying in G.H. Patel Post Graduate Institute
Of Business Management hereby declare that the presented in this report is our work and has
been accomplished under the kind supervision of Dr. Ashish Mehta(Associate professor).
This work has not previously submitted to any other university for any purpose and examination.
Date:
Place:
Harshad Gohel (18F63) ---------------------------------
Piyush Makwana (18F78) ------------------------------
Nipun Modhiya (18M76) -------------------------------
Tejas Modhiya (18M41) ------------------------------------
Academic Guide Name: - Dr. Ashish Mehta
(Associate professor)
Signature: ---------------------------

INDEX
CONTENT PAGE NO.
Preface 2
Acknowledgement 3
Declaration 4
CH.1 INTRODUCTION 8-11
1.1 About petroleum industry 9

1.1 Objectives 11
1.2 Scope 11
1.3 Methodology 11
1.4 Importance 11
CH.2 GROWTH AND EVOLUTION 12-16
2.1 Indian evolution in petroleum industry 13

2.2 Product Profile 14
CH.3 DEMAND ANALYSIS 17-27
3.1 Demand Determination Of The Industry 18

3.2 Oil supply and demand in India 19
3.3 Gas supply and demand in India 20
3.4 Exports of petroleum products from India 21
3.5 Factors are affecting price 21
3.6 Technology improvement by industry 22
3.7 The project life cycle 24
CH.4 MARKETING STRATEGY ANALYSIS 28-39
4.1 Key Issues of petroleum industry 29

4.2 Current trends of industry 30
4.3 Strategies adopted by industry 31
4.4 Distribution Channel 33
4.5 Major players in market 34

CH.5 FINANCIAL ANALYSIS 40-55
5.1 Financial Statement 41

5.2 Net Margin Analysis 45
5.3 Leverage Analysis 46
5.4 Profitability Analysis 49
5.4.1 Return On Equity 49
5.4.2 Return On Capital Employed 50
5.4.3 Return On Assets 51
5.5 EPS 52
5.6 DPS 53
5.7 P/E Analysis 54
CH.6 INDUSTRY ANALYSIS 55-65
6.1 PESTEL Analysis

6.1.1 Political factors that impact petroleum industry 55
6.1.2 Economic factors that impact petroleum industry 56
6.1.3 Social factors that impact petroleum industry 56
6.1.4 Technological factors that impact petroleum industry 57
6.1.5 Environmental factors that impact petroleum industry 57
6.1.6 Legal factors that impact petroleum industry 58
6.2 Industry Analysis By Using Five Forces Model Of Michael Porter

6.2.1 Threat Of New Entrants 60
6.2.2 Bargaining Power Of Buyers 60
6.2.3 Bargaining Power Of Suppliers 60
6.2.4 Threat Of Substitute products 60
6.2.5 Competitive Rivalry 61
6.3 SWOT ANALYSIS

6.3.1 Strengths 62
6.3.2 Weakness 63
6.3.3 Opportunities 63
6.3.4 Threats 64
CH.7 FUTURISTIC SCENARIO OF THE INDUSTRY 65
CH.8 CONCLUSION 66
CH.9 BIBLIOGRAPHY 67

TABLE INDEX
TABLE & FIGURE NO. PAGE NO.
CH.1 INTRODUCTION
Figure No: 1 The world Fact book. Crude Oil 9

CH.3 DEMAND ANALYSIS
Table: 3.1 Oil supply and demand in India 19

Table: 3.2 Gas supply and demand in India 20
Table: 3.3 Export of petroleum product 21
Table :3.4 The project life cycle 24
CH.5 FINANCIAL ANALYSIS
Table: 5.1 Income statement 41

Table: 5.2 Balance sheet 42
Table: 5.3 Cash flow statement 43
Table: 5.4 Net profit margin 45
Table: 5.5 operating leverage 46
Table: 5.6 Financial leverage 47
Table: 5.7 Combined leverage 48
Table: 5.8 Return on net worth/equity 49
Table: 5.9 Return on capital employed 50
Table: 5.10 Return on assets 51
Table: 5.11 Earnings per share 52
Table: 5.12 Dividend payout ratio 53
Table: 5.13 Price earnings ratio 54
CH. 6 INDUSTRY ANALYSIS
Figure No. 6.1 Porter’s five forces of oil industry 60

Figure No. 6.2 SWOT analysis 63


1. INTRODUCTION
Figure No: 1
T he petroleum industry, also known as the oil industry or the oil patch, includes the
global processes of exploration, extraction, refining, transporting (often
tankers and pipelines), and marketing of petroleum products. The largest volume
by oil
products of the industry are fuel oil and gasoline (petrol). Petroleum (oil) is also the raw material
for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, synthetic
fragrances, and plastics. The extreme monetary value of oil and its products has led to it being
known as "black gold". The industry is usually divided into three major
components: upstream, midstream, and downstream.
Petroleum is vital to many industries, and is necessary for the maintenance of

industrial civilization in its current configuration, making it a critical concern for many nations.
Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of
32% for Europe and Asia, to a high of 53% for the Middle East.
Other geographic regions' consumption patterns are as follows: south and Central

America (44%), Africa (41%), and North America (40%). The world consumes 30
billion barrels (4.8 km³) of oil per year [citation needed], with developed nations being the
largest consumers. The United States consumed 25% of the oil produced in 2007. The

production, distribution, refining, and retailing of petroleum taken as a whole represents the
world's largest industry in terms of dollar value.
Governments such as the United States government provide a heavy public subsidy to petroleum
companies, with major tax breaks at virtually every stage of oil exploration and extraction,
including the costs of oil field leases and drilling equipment.
In recent years, enhanced oil recovery techniques — most notably multi-stage drilling

and hydraulic fracturing ("fracking") — have moved to the forefront of the industry as this new
technology plays a crucial and controversial role in new methods of oil extraction.
 Structure
The American Petroleum Institute divides the petroleum industry into five sectors:
a. Upstream (exploration, development and production of crude oil or natural gas)

b. downstream (oil tankers, refiners, retailers and consumers)
c. pipeline
d. Marine
e. Service and supply
 Prehistory
Petroleum is a naturally occurring liquid found in rock formations. It consists of a complex
mixture of hydrocarbons of various molecular weights, plus other organic compounds. It is
generally accepted that oil is formed mostly from the carbon rich remains of ancient plankton
after exposure to heat and pressure in Earth's crust over hundreds of millions of years. Over time,
the decayed residue was covered by layers of mud and silt, sinking further down into Earth’s
crust and preserved there between hot and pressured layers, gradually transforming into oil
reservoirs.
 Early history
Petroleum in an unrefined state has been utilized by humans for over 5000 years. Oil in general
has been used since early human history to keep fires ablaze and in warfare.
Its importance to the world economy however, evolved slowly, with whale oil being used for
lighting in the 19th century and wood and coal used for heating and cooking well into the 20th
century. Even though the Industrial Revolution generated an increasing need for energy, this was
initially met mainly by coal, and from other sources including whale oil. However, when it was
discovered that kerosene could be extracted from crude oil and used as a lighting and heating
fuel, the demand for petroleum increased greatly and by the early twentieth century had become
the most valuable commodity traded on world markets.
1.1 Objectives
1. To study the structure of petroleum industry which includes demand and supply
dynamics, products, processes, costs, profitability, major domestic and global
players.
2. To determine the market leader in the Indian petroleum industry and to identify
its key success factors.
3. To evaluate the performance of the major companies on the basis

competitiveness.
4. To assess the impact of entry of foreign companies on the Indian petroleum

industry.
1.2 Methodology
The study is based on information provided by secondary sources including earlier
research, government publications and organization reports. The relevant data has
been obtained and analyzed.
1.3 Scope of the study

In this study, major companies under organized sector have been covered. The
study specifically examines the strengths, weaknesses, opportunities and threats
faced by the sample companies with respect to core competencies, competitive
advantages and supply chain management
1.4 Importance
The detailed SWOT analysis in terms of the key success factors which contribute
for over all successful performance. Hence if other companies want to acquire
competitiveness in the petroleum industry they must necessarily assess their
competitive position by making in depth analysis of the key success factors and
change their existing structures and strategies so that they could also become
successful companies of world repute.



2. GROWTH AND EVOLUTION

2.1 Indian evolution in petroleum industry
 World’s fastest-growing energy market

 India is the 3rd largest energy and oil consumer in the world after china and the us.
 India is the 4th largest importer of liquefied natural gas (LNG).
 India consumed 213.2 MMT petroleum products and 60,747 MMSCM natural gas. The
import dependency of crude oil and LNG during 2018 was 82.59% and 45.89%
respectively. During 2018, petroleum import bill was $ 112 bn, a growth of 27% over $
88 bn during 2017 - 18, and 23.42% of total gross import of the nation. India’s projected
oil demand is going to grow at CAGR of 4% during 2016 - 2030 against the world
average of 1%, though the projected oil demand will be much lower as compared to the
us and china.
 230 billion-barrel conventional hydrocarbons in over 3 MN sq.km area, spread over 26
sedimentary basins, is available for investors
 India aims to reduce oil and gas imports dependence from by 10% by 2022
 The demand for petroleum products is estimated to reach 244,960 MT by 2021-22 at a
CAGR of 10%
 The total number of fuel retail outlets increased from 18,848 (2002) to 64,624 (2019) at a
CAGR of 7.5%. State-owned marketing companies are planning to add 78,000 new fuel
retail outlets.
 Present share of natural gas in the energy mix of the country is 6%. The aim is to increase
it to 15% by 2030
 12 bio fuel refineries are planned to be opened with an investment of $1.5 bn
 100% FDI allowed in exploration activities of oil and natural gas fields under automatic
route
 49% FDI allowed in petroleum refining by the public sector undertakings (PSU), without
any disinvestment or dilution of domestic equity in the existing PSUs under automatic
route

2.2 Product profile
Petroleum products are organic compounds made in oil refineries. They result

from refining (changing) crude oil (also called petroleum) into more useful products.
Well-known petroleum products include:
 Fuels
A fuel is a substance that is changed in some way to produce heat, electricity, or other forms
of energy. This is usually by being burnt, although there are exceptions, such as nuclear fuel.
 Gasoline
Gasoline is a toxic, clear liquid that is mostly used as a fuel in internal combustion engines. It is
made by boiling petroleum, a fossil fuel. In a distillation process, petroleum is heated to a very
high temperature, then it separates into its components, one of them is gasoline. This is an
expensive process
 Diesel fuel
Diesel oil or diesel fuel is a type of fuel for cars. It is also an oil used for an energy source. It is
made from petroleum and from various other sources.
 Liquefied Petroleum Gas (LPG)

Liquefied petroleum gas (also known as LPG, LP gas or auto gas) is
a mixture of hydrocarbon gases. It is commonly used in the household,

for example for cooking, or as fuel for heating. LPG is replacing chlorofluorocarbons more and
more, also because it is less harmful to the ozone layer.
Very often, mixes of propane and butane are sold.
 Fuel oil
Fuel oil is a fraction obtained from petroleum distillation, either as a distillate or a residue at
the oil refinery. Fuel oil is any liquid petroleum product that is burned in a furnace or boiler for
the generation of heat or used in an engine for the generation of power, except oils having a flash
point of approximately +40 °c and oils burned in cotton or wool-wick burners. In this
sense, diesel is a type of fuel oil.
 Kerosene
Kerosene or paraffin oil is a colourless flammable liquid, usually used for fuel. Kerosene is made
by fractional distillation of petroleum. It may be used as fuel for lamps, in some kinds of
cooking stoves, and in heaters. Kerosene is also used in the fuel for jet engines. The most
common use for kerosene in Canada and the us is lighting camp lamps. Kerosene is used as
cooking fuel in India.
 Asphalt (mainly used in asphalt concrete)

Asphalt, or bitumen, is a sticky, black and highly viscous liquid or semi-solid, composed almost
entirely of petroleum. It is present in most crude petroleum and in some natural deposits. Its main
use is in road construction.

 Tar
Tar is a sticky black liquid made of thick oil. It is a natural substance; usually it is made by
heating coal inside a chemical apparatus.
It used to be one of the products of gasworks. Tar made from coal or petroleum is
considered toxic. It causes cancer because of its high benzene content. In low concentrations,
however, tar is used as a medicine on the skin. Tar is used in treatment of the skin
disease psoriasis.
 Petrochemicals
a) Petrochemicals are chemical products that are made from petroleum, natural gas or

other hydrocarbons.
b) Some petrochemicals include alcohol, antiseptics, artificial rubber, detergents, drugs,
explosives, food additives, insecticides, perfume, plastic, and textile fiber.
c) Plastics
d) In addition, oil-refineries also sell other things that come from the refining process, most
notably
e) propane and other gases
f) sulfur (and sulfuric acid)
g) Different kinds of lubricants for machines having mechanical parts.
h) Different kind of industrial waxes


3. DEMAND ANALYSIS
3.1 Demand determination of the Industry
Petroleum industry in the country has undergone major transformation in the past several years.
The country is now net exporter of petroleum products. Globalization of Indian economy along
with high international oil prices which are a pass-through in the bulk sector has induced
improvement in energy efficiency and shift of demand from liquid to natural gas (LNG).
Further, improvement in road infrastructure and better vehicles has had a sobering effect on the
demand for road transportation fuels. Low demand in transport fuels like HSD and MS are also
due to factors like expansion of city gas distribution networks i.e. CNG.
Demand determination factors:-

The Demand determination factors are based on mainly two approaches. Top-down Approach
and Bottom-up Approach.
Top-down Approach: – Overall energy requirements with share of different fuels in the primary
commercial energy basket by linking GDP with energy elasticity.
Bottom-up Approach: – End use approach considering the impact of different parameters. While
assessing the requirements factors like impact of Metro rail, CNG expansion, impact of high oil
prices, conservation/efficiency improvement issues, aviation policy of the Government, Railways
freight policy, growth of passenger and cargo traffic, fleet expansion plan of airlines, National
Highways Authority of India (NHAI) road construction projects, construction of freight corridor,
electrification plans of railway tracks vehicle population growth, impact of gas, technological
improvements in engine designs, improved fuel efficiency, impact of auto LPG etc. have been
measured.
The demand of gas is continues to be influenced by the cost economics vis-à-vis alternative fuels
pertaining to each of the end use sectors in India.
The power and fertilizer is also the dynamics of these sectors. Currently the consumption of
natural gas is shared by the fertilizer and power sector to the tune of 29% and 40% respectively.
The power sector is one of the continuous major consumers of natural gas. There has set target of
70,000 generation s forecasted by the ministry of power for the next 5 year period ending 2012.
The industry likes Petrochemicals/Refineries and Internal Consumption sectors are estimates that
the annual economic growth rate of about 7%.

Similarly, the iron/steel sector is also estimates same rate for economic growth.
Currently the demand for petroleum product is 131.8 MMT in 2011-12 which will increased by
160.2 in 2016-17.
The demand for petroleum product is also depend on the availability of the different products
like petrol diesel kerosene naphtha etc.
Their prices are the main factor of determining demand of these products.
The petroleum refineries must considered the price parity and export parity which considered the
change in price of petroleum products which depend on the past experience.
3.2 Oil supply and demand in India
 Oil consumption has expanded at a CAGR of 5.24 per cent during 2007–18 to reach 5.16
mopeds by 2019.
 Due to the expected strong growth in demand, India’s dependency on oil imports is likely to
increase further
 Rapid economic growth is leading to greater outputs, which in turn is increasing the demand
of oil for production and transportation
 India’s crude oil demand is expected to increase over 150 per cent to 10.1 million tons per
day by 2040. ^
 In fy19, total crude oil imports were valued at us$ 111.96 billion as compared to us$ 87.70
billion in fy18. In fy19, crude oil imports increased to 4.53 MBPD from 4.41 MBPD in fy18

3.3 Gas supply and demand in India
FY19
FY18
Table No. 3.1 Source: www.IBEF.org
 India’s gas consumption has increased at a CAGR of 3.40 per cent between 2007 and 2017^.
 Demand is not likely to simmer down anytime soon, given strong economic growth and
rising urbanization.
 Gas consumption is projected to reach 143.08 BCM by 2040. The government is planning to
invest us$ 2.86 billion in the upstream oil and gas production to double the natural gas
production to 60 BCM and drill more than 120 exploration wells by 2022.
 India’s natural gas imports increased at a CAGR of 10.53 per cent during fy10–fy18.

3.4 Export of petroleum product
 India is one of the largest exporters of refinery products due to the presence of various
refineries. The country had fourth largest oil refining capacity and forth largest refinery
through put globally in 2017.
 Exports of petroleum products from India increased from 51.15 MMT in fy10 to 62.53
MMT in fy19.
 The total value of petroleum products exported from the country increased to us$ 38.24
billion in fy19 from us$ 34.89 billion in fy18.
 HSD was the major export item among petroleum products, followed by MS, ATF and
naphtha.
3.5 price of petroleum products are depend on following factor
 .Cost of buying finished product in country

 Government tax and excise and tax rates
 Government subsidies for petroleum product
 Currency fluctuation
 Increasing oil demand
 Limits in reefing capacity

3.6 Technological improvement by industry
The Problem: Slow to Adopt Technology
Like many other industries, the oil and gas industry is undergoing a rapid digital transformation.
Unlike many other industries, however, oil and gas companies have been slow to adopt
technological innovations on the software front. Lloyd's Register accurately summarizes the
current state of the industry:
"Innovate or die. In today's Energy industry, the speed of adoption lags behind that of other
industries; industries that are subject to the same rash of safety, legal, commercial and financial
pressures faced by Energy companies, such as Aerospace."
Many of the reasons that the industry is slow to evolve are understandable; the capital that was
once plentiful has seen a rapid decline and the industry is stuck in the "old way" of doing things.
Discussing the current state of the industry, Shiva Rajagopalan, CEO of Seven Lakes
Technologies, a mobile field data capture platform working in the oil and gas industry, says:
"Ironically, the reason oil companies have been slow to invest in more efficient practices is due
to their wealth. High market prices and a steady influx of capital allowed them to hide
inefficiencies. The focus was growth and reserves exploration. If they are killing it in the market,
why should they change? There is an old-guard that doesn't necessarily understand how
technologies can drive bigger business value."
While this enormous undertaking may scare others, entrepreneurs should view this as a massive
opportunity.
The Opportunity: Digital Transformation
The oil and gas industry, combined, are multi-billion dollar industries; big oil is big money and
the time is now to bring the industry into the digital age.
The following are top technologies that have been adopted in other industries, yet have been
slow to integrate into the oil and gas industry.
Robotics: The industry was slow to adopt the use of robotics before 2014, but now companies
climbing out of the collapse are implementing them. For example, Iron Roughneck, which was
developed by a company called National Oil well Varco Inc., automates the dangerous and
repetitive tasks of connecting drill pipes on oil rigs.
While technologies like these do add value to the companies, there is potential for workers to
lose their jobs, which is a recurring fear that many have when it comes to robots.

Chris Blackford, the founder of Sky-Futures, a drone company for the oil and gas
industry, explained that "the inspection data we can collect in five days takes rope-access
technicians about eight weeks."
Artificial Intelligence: In the oil and gas industry, AI allows companies to uncover trends that
pinpoint and predict inefficiencies. Leveraging AI to improve performance operations from C-
level to field worker, automate processes, streamline manual business operations, and connect
with IOT devices, makes every arm of the company more efficient and profitable.
"To survive the current era of cheap oil, we will see the democratization of tools like AI,
automation, and IOT. The oil and gas sector must capitalize on such business intelligence,
otherwise, they will undoubtedly be left behind in a worldwide digital revolution," says
Rajagopalan.
Cloud Computing: As the oil and gas undergo this enormous transformation to a digital
infrastructure, cloud computing will prove to be a powerful engine. The sheer amount of data
companies can harness and further analyze through automation, will reduce operational
expenses, down well times, and lessen risk. As more oil and gas companies integrate cloud
computing, this will empower field workers to optimize production.
"To take effective action, the entire production chain, from COO right down to on-site well
engineers, need to see the very detailed cost and production data, narrowed down to the invoice
level. By leveraging cloud computing capabilities, accuracy and transparency are achieved in the
shortest amount of time to drastically improve well-cost management," explains Rajagopalan.
Even industries that aren't traditionally progressive can no longer afford to staunchly opposed
change and digital transformation. Luckily for organizations that may have been slow to adapt,
emerging technologies, including cloud computing, AI, and robotics can be easily implemented
and impactful almost immediately.

3.7 The project life cycle
Phase 1 – Entering a new market
The first step in the project lifecycle is a regional petroleum system analysis, during which
explorers identify under-explored basins or overlooked geological territories with hydrocarbon
potential. The oil and gas company (“operator”) also acquires any existing seismic surveys.
Using all of this information, the operator assesses the geopolitical, operational, and financial
viability of operating in the territory. The right to explore these areas is then secured through
licenses with host governments. This process can take up to a year.
Phase 2 – Exploring the block through site and seismic surveys
The next step in the process of hydrocarbon exploration is conducting 2D or 3D seismic surveys.
These surveys use sound waves to map rock formations on and below the ocean floor to establish
the potential presence of oil or gas. If the seismic surveys show that formations potentially
containing oil and gas may exist (“prospects”), then the operator will determine where to drill an

exploration well. Operators may consider bringing in – or farming-in – other oil and gas
companies at this stage. Typically, this stage of the project takes one to two years.
Phase 3 - undertaking exploration drilling
Before beginning exploration drilling, a company conducts Environmental and Social Impact
Assessments to understand and evaluate the social and environmental implications of drilling
operations. Prior to the actual drilling of an exploration well, an operator develops an oil
response plan that is then approved by the Government.
During the exploration drilling phase, at least one well is drilled into the seabed to test a
prospect. Additional information on seabed and subsea conditions is also gathered. One of three
scenarios can result from exploration drilling. The first scenario, a dry hole, means that no oil or
gas has been found and the well will then be plugged, sealed, and secured. The second scenario,
a non-commercial well, occurs when oil and gas is found, but the well is not commercial. If a
non-commercial well is discovered, further exploratory drilling may be undertaken. The third
scenario, a discovery, occurs when a well is found to be “hydrocarbon-bearing.” A hydrocarbon
bearing well is then further tested to determine viability. This phase of the process takes from
one to three years.
Optional action – exiting the block
In some circumstances, companies that don’t find oil and gas may look to relinquish their
license(s) or opt not to renew their license(s). This can happen at any point during phases two
and three. A licensee can give up acreage by either surrendering part of the licensed area while
the license continues over the remaining area, relinquishing the entire license, or deciding not to
renew the exploration license when the contract expires. Depending on the original license
agreement, the company may have certain obligations to complete, such as social investments,
before it is released from the agreement.
Phase 4 - appraisal drilling
If exploration drilling suggests that promising amounts of oil and/or gas exist, an operator will
proceed with appraisal drilling. This process may involve drilling multiple wells to assess the
size of the oil or gas discovery and whether it is commercially viable system. If a discovery is
deemed commercially viable, the operator can move on to development. Social and
environmental impact of appraisal drilling is comparable to exploration drilling. This phase of
the process takes from one to three years.

Phase 5 - development
The development phase begins when a development plan is submitted to relevant national
authorities for approval. Then, assessments must be carried out on all areas of potential risk,
including the long-term appraisal of environmental and social impact. Separately, materials,
services and equipment are procured and installed, and production wells are drilled. After
development drilling is complete, tests are run to verify that a stable production level can be
achieved and production begins. This phase of the process takes from one to three years.
Phase 6 – production
After production begins, it is slowly increased until the maximum production level is reached.
The maximum production level is maintained for as long as possible until it begins to decline.
Social and environmental performance is reviewed regularly throughout the duration of
production. This process can take between ten and thirty years.



4. MARKETING STRATEGY ANALYSIS

4.1 Key challenges in industry
 Declining domestic crude production: Most of the producing fields (in Cambay,

Assam-Abakan and Mumbai Offshore) are maturing or have already matured. Due to
inadequate new oil and gas discoveries and subsequent development, India is witnessing
a decline in crude production.
 Large crude import bills: In 2018-19, India imported more than 80% of its crude
consumption and spent in excess of $110 billion
 Inadequate transmission & distribution infrastructure: India needs to invest heavily
in midstream and downstream sector to overcome infrastructure constraints in LNG, gas
pipelines and CGD.
 Technology constraints: The country needs investment in exploring and developing
Category-2 and Category-3 basins. However, Indian operators do not have the requisite
technology and experience in this area.
 Low share of MNCs: Despite being one of the largest consumers of energy, India has a
low share of MNCs in the domestic market.
 Environmentally friendly fuels: India continues to rely heavily on coal and petroleum
products to meet its energy needs
Industry asks
 Reduce oil cess on nomination era blocks and rationalization of royalty rates to boost
domestic production.
 Provide impetus to renewable energy production to reduce crude import dependence
 Build road map for a gas-based economy in order to achieve the vision of increasing the
share of gas in the energy mix to 15% by 2030
 Development of pipeline infrastructure by the government for a gas trading hub to be
functional in India
 Bring gas, diesel and petrol under the GST
At a glance
 Crude imports rose to $111 billion in 2018-19 from $88 billion in 2017-18

 India retained its spot as the third largest consumer of crude in the world with
consumption of 227 MMT in 2018-19
 India was the fourth-largest Liquefied Natural Gas (LNG) importer in 2017 after Japan,
South Korea and China. LNG imports increased to 29 BCM in 2018-19 from 27 BCM in
2017-18
 Crude oil domestic production declined to 32.5 MMT in 2018-19 from 34.0 MMT in
2017-18, while production of natural gas increased to 32 BCM in 2018-19 from 31.7
BCM in 2017-18
 India refined 257 MMT of crude in 2018-19, compared to 252 MMT in 2017-18
 LPG coverage in the country increased to 90% in FY 2019 primarily on the back of
Pradhan Mantri Ujjwala Yojana scheme
 PNGRB auctioned 50 geographical areas in its 10th round of bidding for City Gas
Distribution (CGD)
4.2 Notable trends in oil and gas sector
1. Coal Bed Methane (CBM):- Government approved the CBM policy in 1997 to boost the
development of clean and renewable energy resources
The CBM policy was designed to be liberal and investor friendly; the 1st commercial production
of CBM was initiated in July 2007 at about 72,000 cubic meters per day. Production in 2018-19*
stood at 596.63 million cubic meters.
2. Underground Coal Gasification (UCG)
The technology was first widely used in the US in the 1800s and in India (Kolkata and Mumbai)
in the early 1900s
UCG is currently the only feasible technology available to harness energy from deep unlikeable
coal seams
Economically in an eco-friendly manner and it reduces capital outlay, operating costs and output
gas expenses by 25–50 per cent vis-à-vis surface gasification
3. Gas hydrates and bio- fuels
The government initiated the National Gas Hydrate Programmed (NGHP), a consortium of
national E and P companies and research institutions, to map gas hydrates for use as an alternate
source of energy

Bio-fuels (bio-ethanol and bio-diesel) are alternate sources of energy from domestic renewable
resources;
These have lower emissions compared to petroleum or diesel
4. Open Acreage Licensing Policy
The Open Acreage Licensing Policy (OALP), which allows an explorer to study the data
available and bid for blocks of his choice, has been initiated to increase foreign participation by
global E & P companies like Shell, BP, Conoco Phillips etc
As of January 2019, the Government of India has put 14 blocks up for auction in the second
round of OALP and investments worth Rs 40,000 crore (US$ 5.54 billion) are expected. As of
February 2019, the Government of India put up 23 blocks for bidding in the third round of OALP
which would generate work commitment of US$ 600-700 million.
4.3 Strategies Adopted by industry for Growth
I. Expansion
 In September 2018, the Government of Gujarat selected Energy Infrastructure Limited (EIL),
a subsidiary of the Netherlands-based Energy Infrastructure Butano (Asia) BV, to set up a
Liquefied Petroleum Gas (LPG) terminal at Okha with an investment of Rs 700 crore (US$
104.42 million).
 H-Energy is planning to invest Rs 3,500 crore (US$ 540.62 million) to build Liquefied
Natural Gas (LNG) terminals and lay down a 60 km pipeline.
 As per Union Budget 2019-20, Indian Scheme ‘Kayakave Kailasa’, The Ministry of
Petroleum & Natural Gas has enabled SC/ST entrepreneurs in providing Bulk LPG
Transportation. State run energy firms Bharat Petroleum, Hindustan Petroleum and Indian Oil
Corp plan to spend US$ 20 billion on refinery expansions to add units, by 2022
 Indian Oil Corp plans to make an investment of US$22.91 billion, including US$ 7.64 billion
for expanding its existing Brownfield refineries, in the next 5 to 7 years. Moreover, the
company plans to lay the nation's longest LPG pipeline of 1987 km, from Gujarat coast to
Gorakhpur in eastern Uttar Pradesh, to cater to growing demand for cooking gas in the
country.
 India targets US$ 100 billion worth investments in gas infrastructure by 2022, including an
addition of another 228 cities to city gas distribution (CGD) network. This would include
setting up of RLNG terminals, pipeline projects, completion of the gas grid and setting up of
CGD network in more cities.

 Reliance Industries Ltd is planning to expand its Jamnagar oil refining capacity by about 50
per cent. After the expansion, the plant will then be able to process about 30 million tones
crude oil per year.
 As of January 2019, H-Energy is going to invest Rs 3,700 crore (US$ 512 million) for
construction of an LNG project in West Bengal.
II. Diversification
 Oil companies are focusing on vertical integration for next stage of growth. For instance, oil
producer Oil India Ltd is planning to build and operate refineries, while Indian Oil is
planning to enter oil and gas exploration
As of March 2017, Bharat Petroleum Corp. Ltd. (BPCL), an Indian state-controlled oil and gas
company, plans to enter the country’s travel business with the launch of its start-up named as
“Happy Roads”. The application, which is available on Android Play Store, documents
itineraries and assists the users in planning a fun-filled trip
Investments to enhance Production
 Indian companies are enhancing production through redevelopment plans to increase

recovery rates of hydrocarbon from oil wells; ONGC in Mumbai High achieved success in
implementing this.
 Indian Oil Company (IOC) is planning to invest Rs 1.43 lakh crore (US$ 22.19 billion) to
nearly double its oil refining capacity to 150 million tons by 2030.
 Reliance Industries is planning to enter into a Joint Venture with the world’s largest oil
exporter Saudi Arabia in petrochemicals and refinery projects.
 To boost hydrocarbon production and to improve oil recovery from offshore fields, ONGC
plans to invest more than US$ 500 million in Mumbai High.
 India’s rising oil demand is expected to underpin investments in refining capacity
expansions and upstream production. ^
III. Move to non- conventional energy resources

 Companies are looking forward to developing JVs and technical partnership with foreign
companies to improve capabilities to develop shale reserves
The Government of India is planning to set up around 5,000 compressed biogas (CBG) plants by
2023.
More focus upon small companies
Private sector units like Adani, Sun Petrochemicals and few new entrants have bagged 1/3rd of
small oil and gas fields

4.4 Distribution channel of the industry
The petroleum distribution segment is rapidly adopting different kinds of supply chain solution.
From crude oil selection to petroleum product distribution at the retail outlet it is chain with
many links. The refining margins, the lead time associated with fundamental functions like
product trading and crude buying unpredictability in oil prices make the entire process
challenging. Implementation of these solution on a wide spread installations, however, is what
the world is watching, as vast petroleum companies fight to “chain” the business. The petroleum
industry has a vital need for both integration and implementation skills for taking the best value
out of the differ distribution channel available.
Underground, the gas station is quite modern. The tanks for super unleaded and for regular (the
midgrade fuel) are larger than the normal tanks. Each tank is equipped with an electronic level
check that conveys real time information about its status through a cable to the station’s
management system and then to the main inventory management system for the oil company
whose products the gas station markets.
The travels from the distribution channel push to demand pull is taking place in the section,
where once the challenge was in getting the best deals on buying crude, the focus is shifting to
give customer what he wants.
The petroleum business is separated into refining and distribution segments. The focuses more
on the distribution segment.
There is a specific change to focus in the industry toward the distribution segment. The big oil
companies have started monitoring the inventories of crude oil or any other petroleum products.
The issues at the refining level are: which products to make in what quantity? Which crude to
use? Which units to run? While the issues at the customer facing end or at the gas station are
basic, namely run outs & refines.
The important functions within the distribution channel are optimization across alternative means
of transportation, demand forecasting, replenishment method to avoid retains/run outs & finally
scheduling, which sequences the dispatch.
Marketing and Distribution of Petroleum Products in India:-
The public sector oil marketing companies (OMCs) which include Hindustan Petroleum
Corporation Ltd. (HPCL), Indian Oil Corporation Ltd. (IOCL) and Bharat Petroleum
Corporation Ltd. (BPCL) are primarily responsible for the marketing and distribution of
petroleum products in India.

With the opening of retail sector for the private players, Shell, ESSAR and Reliance Industries
Ltd. (RIL) have also entered the retail marketing related to petroleum products.
The marketing and distribution infrastructure in the petroleum sector include – liquefied
petroleum gas (LPG) distributorships, petrol/diesel stations, lubricants and greases outlets
IOCL is the market leader in terms of marketing and distribution of petroleum products
4.5 Major players in India
 Indian Oil Corporation Limited

Indian Oil Corporation Limited (IOCL), commonly known as Indian Oil is an Indian state
government owned oil and gas company
headquartered in Delhi. It is the largest
commercial oil company in the country, with a
net profit of INR 19,106 crore (USD 2,848
million) for the financial year 2016–17. It is
ranked 1st in Fortune India 500 list for year
2016 and 117th in Fortune Global 500 list of
world's largest companies in the year 2019. As of 31 March 2017 Indian Oil's employee strength
is 33,135, out of which 16,545 are in the officer cadre. It is India's largest downstream oil

company, with a work force of more than 33,000 employees, a turnover of Rs. 506,428 crore and
a net profit of Rs. 21,346 crore in 2017-18.
Indian Oil's business interests overlap the entire hydrocarbon value-chain, including refining,

pipeline transportation, marketing of petroleum products, exploration and production of crude
oil, natural gas and petrochemicals.
Indian Oil has ventured into alternative energy and globalization of downstream operations. It

has subsidiaries in Sri Lanka (Lanka IOC), Mauritius (Indian Oil (Mauritius) Ltd) and
the Middle East (IOC Middle East FZE).
In May 2018, IOCL become India's most profitable state-owned company for the second
consecutive year, with a record profit of ₹21,346 crore in 2017-18, followed by Oil and Natural
Gas Corporation, whose profit stood at ₹19,945 crore.
 Reliance Industries
The Reliance Petroleum Limited Company rules
the domain of oil and gas production since many
decades with its headquarters located in
Ahmadabad. The company holds the title of
being the most versatile and customer-based
company in the country and also in the world. It
also helps clients by sharing possibilities of
finding the most practical oil and gas capitals for
business. Apart from supplying oil and other
LPG products, it carries out discourses to an
extensive platform of audience all over the world. It belongs to a Government-owned sector,
having employed more than 10,000 employees. A subsidiary to the Reliance Company Limited
was founded in the year 2008.
The company’s head office is located in Ahmadabad, Gujarat and has a turnover of 670 Million
Dollar. It has more than 10000 employees. Mukesh Ambani is the key person of this company.
Reliance Petroleum Limited has its benefits from an alliance with Chevron India Holdings Pte
Limited, Singapore. The Jamnagar refinery is the source for the company’s oil and is the biggest
refinery of the country.

 Bharat Petroleum Corporation Limited (BPCL

Bharat Petroleum Corporation Limited (BPCL) is a Government of
India controlled Maharashtra oil and gas company headquartered
in Mumbai, Maharashtra. The Corporation operates two large
refineries of the country located in Kochi and Mumbai. The company
is India's 2nd largest downstream oil company and is ranked 275th on
the Fortune list of the world's biggest corporations as of 2019. BPCL
ranked 672 in the Forbes 2018 list.
 Hindustan petroleum corporation Ltd.

Hindustan Petroleum Corporation Limited (HPCL) is an
Indian oil and natural gas company with its headquarters at Mumbai,
Maharashtra. It has about 25% market-share in India among public-sector
companies (PSUs) and a strong marketing infrastructure. Oil and Natural
Gas Corporation, also second promoter of the company (first pro motor is
The President of India) , owns 51.11% shares in HPCL and others are
distributed amongst financial institutes, public and other investors. The
company is ranked 367th on the Fortune Global 500 list of the world's
biggest corporations as of 2016. HPCL got removed from NIFTY 50
INDEX in March 2019 [5]Recently on 24 October 2019 the company has conferred with
Maharashtra status.
 Oil and Natural Gas Corporation

Oil and Natural Gas
Corporation (ONGC) is an
Indian Multinational Crude
Oil and Gas Corporation. Its registered
office is now at New Delhi, India. It is
a state-owned enterprise of
the Government of India, under the
administrative control of the Ministry of Petroleum and Natural Gas. It is the largest oil and gas
exploration and production company in the country. It produces around 70% of India's crude
oil (equivalent to around 57% of the country's total demand) and around 84% of its natural gas.

In a government survey for fiscal year
2019-20, it was ranked as the largest profit making PSU in India. It is ranked 7th among the Top
250 Global Energy Companies by Plats.
ONGC was founded on 14 August 1956 by Government of India. It is involved in exploring for
and exploiting hydrocarbons in 26 sedimentary basins of India, and owns and operates over
11,000 kilometers of pipelines in the country. Its international subsidiary ONGC Videsh
currently has projects in 17 countries. ONGC has discovered 6 of the 7 commercially producing
Indian Basins, in the last 50 years, adding over 7.1 billion tonnes of In-place Oil & Gas volume
of hydrocarbons in Indian basins. Against a global decline of production from matured fields,
ONGC has maintained production from its brown fields like Mumbai High, with the help of
aggressive investments in various IOR (Improved Oil Recovery) and EOR (Enhanced Oil
Recovery) schemes. ONGC has many matured fields with a current recovery factor of 25–
33%. Its Reserve Replacement Ratio for between 2005 and 2013, has been more than one.
During FY 2012–13, ONGC had to share the highest ever under-recovery of INR 89765.78
billion (an increase of INR 17889.89 million over the previous financial year) towards the under-
recoveries of Oil Marketing Companies (IOC, BPCL and HPCL). On 1 November 2017, the
Union Cabinet approved ONGC for acquiring majority 51.11% stake in HPCL (Hindustan
Petroleum Corporation Limited). On Jan 30th 2018, Oil & Natural Gas Corporation acquired the
entire 51.11% stake of Hindustan Petroleum Corporation.
 Gas Authority of India Limited
Gail (India) Limited (GAIL) (formerly known as Gas Authority of

India Limited) is Government of India undertaking company. Gail is
the largest state-owned natural gas processing and distribution
company in India. It is headquartered in New Delhi. It is a state-
owned enterprise of the Government of India, under the
administrative control of the Ministry of Petroleum and Natural Gas.
It has the following business segments: natural gas, liquid
hydrocarbon, liquefied petroleum gas transmission, petrochemical,
city gas distribution, exploration and production, GAILTEL and electricity generation. GAIL
was conferred with the Maharatna status on 1 Feb 2013, by the Government of India. Only eight
other Public Sector Enterprises (PSEs) enjoy this coveted status amongst all central
CPSEs. GAIL was listed in the 131st position among India's most trusted brands according to
the Brand Trust Report 2014, a study conducted by the Trust Research Advisory. 7.indian oil
Corporation

 Oil India Limited
Oil India Limited (OIL) is the second largest hydrocarbon

exploration and production Indian public sector company with its
operational headquarters in Duliajan, Assam, India. The company
is a state-owned Navratna under the administrative control of
India's Ministry of Petroleum and Natural Gas with its corporate
offices in Noida in the New Delhi-NCR region.
OIL is engaged in the business of exploration, development and production of crude oil and
natural gas, transportation of crude oil and production of liquid petroleum gas. The company's
history spans 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.
 Cairn
Founded in the year 2007 this company has its head office in
Gurgaon, Haryana . The company’s turnover is 3400 Million
Dollar. With more than 2000 employees this is one of the
emerging names in the oil and natural gas sector of the
company. The Cairn India Company highlights in the fifth
position in the list of the topmost oil and gas companies with
turnover approximately 3,400 Million Dollars and higher. This Oil and Gas Company stands out
from others because of its exceptionally massive business coverage. It is involved in
manufacturing the best Oil, Gas and Petroleum Products for different agencies in India and
overseas and it is incorporated as a public sector company. It employs large number of
employees with number crossing 2000 and it’s headquarter is situated in Gurgaon, Haryana.
The CEO of the company is Mayank Ashar and the chairman Navin Agarwal. The company
serves in India and has its holdings in Sri Lanka and also South Africa. It is one among the
India’s Top 10 Largest Oil And Gas Companies 2017.
 Tata Petrodyne
Tata Petrodyne is measured as one of the leading Oil and Gas
Companies with yearly turnover of around 200 Billion Dollars.
Basically it is a subsidiary company of the great TATA
companies. It is recognized for its implausible customer services

apart from its main Gas, Oil, and Petroleum Products business. This is a privately-owned
company with great employee configuration and has headquartered in Mumbai. This company
has interest in two offshore blocks in UK and Australia respectively as well as seven offshore
and onshore blocks in different states of India.In the tenth position we have Tata Petrodyne. It is
one of the leading groups of the company in the oil and gas sector. Its head office is located in
Mumbai, Maharashtra.
The company’s turnover is 100 Billion Dollar. It is the subsidiary of the TATA group of
companies founded by J.R.N. Tata. The company has joint ventures with various other
international companies and has ties with countries like Amsterdam, Perth, and Jakarta



5. FINANCIAL ANALYSIS
Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-
related transactions to determine their performance and suitability. Typically, financial analysis
is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a
monetary investment.
5.1 FINANCIAL RECORDS OF THE INDUSTRY (CLUSTERED DATA OF

ONGC, GAIL, IOCL, AND BPCL) [SOURCE: SCREENER. IN]
We weren’t able to obtain the financial data of the petroleum industry so we decided to cluster
data of five of the top companies of the industry to do our analysis.
Particular Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
Sales 637256 725712 785996 731544 574187 734989 853190 1101914
Expenses 7,25,333 8,45,242 9,04,787 8,45,299 6,29,960 7,80,981 9,12,930 11,89,046
Operating 79,970 71,676 83,865 68,286 79,989 1,06,707 1,21,660 1,34,904

profit
Other income 5,739 11,189 14,714 14,890 7,620 21,062 18,641 18,831
Interest 9,008 10,603 9,223 8,897 8,755 8,539 10,355 12,685
Depreciation 21,948 21,237 26,877 27,712 25,650 30,674 35,188 37,617
Profit before 54,753 51,024 62,479 46,566 53,205 88,557 94,760 1,03,430
tax
Net profit 37,595 34,924 42,290 31,213 34,855 56,357 58,103 62,220
. INCOME STATEMENT
PARTICULAR Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

Share Capital 8,336 8,697 8,697 8,697 8,572 14,158 20,118 19,693
Equity Capital 8335.73 8697.27 8697.27 8697.27 8571.53 14158.52 20117.27 19693.14
Reserves 2,29,270 2,52,436 2,83,250 2,97,160 3,43,419 3,52,973 3,76,529 3,96,143
Borrowings 1,37,647 1,59,986 1,95,718 1,62,620 1,36,492 1,85,578 2,13,735 2,52,813
Other Liabilities 2,09,702 2,31,051 2,63,698 2,82,585 2,42,376 3,49,099 3,39,776 3,77,939
Trade Payables 70818.13 71258.53 93697.84 83822.11 72257.21 76633.8 90327.96 102935.31
Total Liabilities 5,84,955 6,52,170 7,51,364 7,51,065 7,30,857 9,01,808 9,50,158 10,46,588
Fixed Assets 1,47,979 1,64,835 1,87,954 2,23,024 1,97,450 2,55,527 2,77,306 2,94,287
Gross Block 301521.4 334995.7 380027.6 433797.6 219987.3 296587.5 335211.8 374148.77
Accumulated 153331.1 167999.3 189908.8 208605.7 22535.96 41016.96 57823.03 79760.62

Depreciation
CWIP 84,387 1,06,464 1,37,957 1,33,364 1,05,034 96,780 96,455 1,20,729
Investments 20,509 19,479 20,641 20,818 64,572 1,14,433 1,12,141 1,10,839
Other Assets 2,67,211 2,92,453 3,25,860 3,03,616 2,92,354 3,48,200 3,70,029 4,17,500
Inventories 98651.19 100153.2 111226.3 78859.99 67822.2 117633.9 124536.7 136263.04
Trade 30745.55 35019.95 36563.04 32575.96 20956.56 29119.01 33234.49 42463.46

receivables
Cash 31485.92 26753.3 33707.1 22326.32 31787.5 16927.89 9771.55 8255.72

Equivalents
Loans n 63649.31 82073.55 73680.27 78899.62 48536.82 52517.9 55168.89 82779.51

Advances
Other Assets etc 96722.8 106747.5 138758.5 149831.9 173808.3 185687.4 205417 212916.95
Total Assets 5,84,955 6,52,170 7,51,364 7,51,065 7,30,857 9,01,808 9,50,158 10,46,588
BALANCESHEET
CASH FLOW STATEMENT

Cash flow Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

Cash from 52,384 61,743 91,668 1,04,998 86,995 89,061 1,05,744 93,522
Operating
Activity
Profit from 93473.17 89568.94 94020.11 84795.59 91332.24 122923.6 130833.1 148584.25
operations
Working -25726.8 -11598.5 7955.68 35263 10520.34 -11978.4 -2195.18 -29046.63

Capital
Changes
Taxes paid -15361.8 -16227.4 -10307.2 -15060.3 -14856.5 -21882.5 -22898.2 -26014.77
Cash from -63,150 -62,744 -93,574 -53,618 -62,003 -77,107 -93,643 -74,074
Investing
Activity
Fixed Assets -36,287 -36,290 -35,507 -34,441 -31,473 -35,859 -48,754 -52,243
Purchased
Fixed Assets 1699.07 595.19 429.49 200.78 338.84 1208.4 4518.03 497.44
Sold
Investments -171.68 32.74 -188.9 -191.77 -3351.06 -9897.73 -2674.46 -1150.2

purchased
Investments 2010.46 2808.49 1808.27 701.3 1344.42 15199.54 37966.01 81497.94

sold
Cash from 12,020 -3,779 8,370 -61,774 -25,222 -13,275 -11,568 -18,717
Financing
Activity
Proceeds 38,631 17,576 27,985 10,025 12,415 47,126 49,176 1,48,192

from Shares
Repayment -4089.21 0 -11738.8 -47568.4 -6629.93 -14449.6 -19736.1 -114091.38

of
Borrowings
Interest -9903.3 -12058.4 -10802.5 -10911.2 -8098.51 -6550.21 -7499.36 -9996.21

Paid

Dividends -4616.7 -3352.86 -4171.88 -5213.18 -7047.57 -20031.8 -17152.4 -17773.42
Paid
Net Cash 1,254 -4,781 6,464 -10,394 -227 -1,320 535 732
Flow

RATIO ANALYSIS
Ratio analysis is the comparison of line items in the financial statements of a business. Ratio
analysis is used to evaluate a number of issues with an entity, such as its liquidity, efficiency of
operations, and profitability.
5.2 NET PROFIT MARGIN

The net profit margin is equal to how much net income or profit is generated as a percentage of
revenue. Net profit margin is the ratio of net profits to revenues for a company or business
segment. Net profit margin is typically expressed as a percentage but can also be represented in

decimal form. The net profit margin illustrates how much of each dollar in revenue collected by
a company translates into profit.
Net income is also called the bottom line for a company or the net profit. Net profit margin is
also called net margin. The term net profits is equivalent to net income on the income statement,
and one can use the terms interchangeably.
YEAR 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
BPCL 2.39 3.37 3.97 3.92 2.13 1.56 1.1 0.61 1.01 1.27
ONGC 24.37 23.47 23.03 20.81 21.39 26.33 25.21 32.83 27.69 27.82
GAIL 8.02 8.6 7.27 4.42 5.35 7.6 8.46 9.04 10.94 12.56
IOCL 3.2 5.03 5.3 3.23 1.2 1.48 1.11 0.99 2.26 3.79
AVG. 9.495 10.1175 9.8925 8.095 7.5175 9.2425 8.97 10.8675 10.475 11.36
Table: 5.4 Source: primary
NET PROFIT MARGIN (%)

12
10
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
 The net profit margin of the industry peaked in 2010 while it observed that in 2015 lowest net profit margin
was registered.
 The heavy drop in the 2015 in NPM indicates a slowdown in industry. Compare to 2010 in 2019
net profit margin is less.
5.3 LEVERAGE ANALYSIS

In financial management leverage analysis means arranging fixed assets in such a way that fixed
return is ensured. The types of leverage analysis are:
Operating leverage: firm generally purchases the assets, that its operation will produce revenue.
When sale increases the fixed cost remains the same and operating revenue will increases. As

fixed cost is constant, the % change in operating revenue is more than % change in sale. Hence
there is a positive relation between operating leverage and breakeven point.
Operating leverage= % change in operating profit/ % change in sales
Year Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

Sales 637256 725712 785996 731544 574187 734989 853190 1101914
% change in sales 29.0564 13.8807 8.306877 - - 28.00516 16.08201 29.1522404
6 6.92777 21.5103
Operat0ing 79,970 71,676 83,865 68,286 79,989 1,06,707 1,21,660 1,34,904
Profit
%change in EBIT 33.79 -10.37 17.00 -18.57 17.14 33.40 14.01 10.89
Operating leverage 1.16 -0.74 2.04 2.68 -0.79 1.19 0.87 0.37
Operating Leverage
3
2.5
2
1.5
1
0.5
0
2012 2013 2014 2015 2016 2017 2018 2019
-0.5
-1
operating leverage
Table No. 5.5 Source: Primary
 The operating leverage was the lowest in 2013 and has been increasing for two years.
 Although it tumbled to the negative in the year 2016. It has recovered really well after that.
2.) Financial leverage: it is also called trading on equity. Financial leverage means the use of
preference share capital, equity share capital along with fixed interest bearing securities or
debentures.
Financial leverage= % change in earning per share/ % change in earnings before interest
and tax
Year Mar-12 Mar- Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

13
EPS in Rs 9.43 9.84 13.405 11.23 16.6025 21.3525 24.27 24.34
%change in EPS -5.35 4.35 36.23 -16.23 47.84 28.61 13.66 0.29
%change in EBIT 33.80 -10.37 17.00 -18.58 17.14 33.40 14.01 10.89
financial leverage -0.16 -0.42 2.13 0.87 2.79 0.86 0.85 0.03
financial leverage
3
2.5
1.5
0.5
0
2012 2013 2014 2015 2016 2017 2018 2019
-0.5
-1
financial leverage
3.) Combined leverage: it measures the total leverage due to the both operating and financial
leverage.
Combined leverage= % change in earning per share/ % change in sales

%change in EPS -5.35 4.35 36.23 -16.23 47.84 28.61 13.66 0.29
% change in sales 29.06 13.88 8.31 -6.93 -21.51 28.01 16.08 29.15
combine leverage -0.18 0.31 4.36 2.34 -2.22 1.02 0.85 0.01

Combined Leverage
5
0
2012 2013 2014 2015 2016 2017 2018 2019
-1
-2
-3
combined leverage
 Thus, to conclude we can say that in operating leverage change in sale have effect on
EBIT; in financial leverage change in EBIT have effect on EPS.
 So the firm uses proper amount of both operating leverage and financial leverage as even
a small change in sale changes EPS
5.4 PROFITABILITY ANALYSIS
Profitability ratios are financial metrics used by analysts and d investors to measure and evaluate
the ability of a company to generate income during specific period of the time. A higher ratio or
value is commonly sought after by most companies, as this usually means the business is
performing well by generating revenue, profit and cash flow. The most comely used profitability
ratios are mention below

5.4.1 Return on Net worth / Equity (%)
Return on equity (ROE) is a measure of financial performance calculated by dividing net

income by shareholders' equity. Because shareholders' equity is equal to a company’s assets
minus its debt, ROE could be thought of as the return on net assets.
Return on Networth / Equity (%)

20
15
10
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Return on Networth / Equity (%)
ROE is considered a measure of how effectively management is using a company’s assets to

create profits.
YEAR 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
BPCL 19.41 23.36 27.09 27.36 22.63 20.86 15.88 8.79 11 11.74
ONGC 13.16 10.31 9.64 9.73 12.26 16.16 16.81 22.24 19.4 19.21
GAIL 13.66 11.45 9.18 7.51 10.43 16.16 16.6 16.89 18.49 18.69
IOCL 15.54 19.37 19.15 12.75 7.76 10.64 8.19 6.83 13.45 20.21
AVG. 15.4425 16.122 16.265 14.3375 13.27 15.955 14.37 13.687 15.585 17.4625
5 5
 The return on net worth has steadily decreased through the years 2010-2012.
 After that the curve is slightly fluctuate every year
5.4.2 RETURN ON CAPITAL EMPLOYED (%)
YEAR 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
BPCL 17.19 21.87 23.79 16.77 13.7 11.99 10.87 6.92 8.36 5.65
ONGC 16.61 12.56 11.59 7.91 9.38 12.26 13.02 17.2 14.68 14.1
GAIL 17.34 14.95 13.17 5.45 7.08 10.84 11.26 12.64 15.37 15.81
IOCL 18.14 24.86 22.73 8 4.28 5.99 5.01 4.39 9.48 13.21

AVG. 17.32 18.56 17.82 9.5325 8.61 10.27 10.04 10.2875 11.9725 12.1925
Return on Capital Employed (%)

20
18
16
14
12
10
8
6
4
2
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Return on Capital Employed (%)
 The return on capital employed is steadily decreased through the year 2010-2015.
 After 2015 there is drastic change in 2017 , it was 8.61 in 2015 it increases by 17.82 it almost
doubled
5.4.3 RETURN ON ASSETS (%)
Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
ROA gives a manager, investor, or analyst an idea as to how efficient a company's management
is at using its assets to generate earnings. Return on assets is displayed as a percentage.

YEAR 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
BPCL 6.16 7.96 8.73 9.78 7.29 5.6 3.94 1.99 2.76 2.83
ONGC 8.83 6.84 7.23 7.27 8.52 11.08 11.74 14.62 12.78 9.97
GAIL 9.35 7.95 6.33 4.33 5.74 8.78 9 9.34 11.12 10.38
IOCL 5.35 7.6 7.37 5.09 2.39 2.79 2.23 1.88 4.28 6.99
AVG. 7.4225 7.5875 7.415 6.6175 5.985 7.0625 6.7275 6.9575 7.735 7.5425
Return on Assets (%)

9
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Return on Assets (%)
 The return on assets has been continuous increased from the year 2015-2018.
 The heavy drop in the year 2015 indicates a slowdown in the industry.
5.5 EARNINGS PER SHARE
Earnings per share (EPS) are calculated as a company's profit divided by the outstanding shares
of its common stock. The resulting number serves as an indicator of a company's profitability. I
am common for a company to report EPS that is adjusted for extraordinary items and potential
share dilution. The higher a company's EPS, the more profitable it is considered.

ONGC 20.87 17.85 19.57 13.01 10.03 19.03 17.23 24.24
BPCL 3.26 7.96 17.03 20.53 39.83 39.83 45.8 39.67
GAIL 9.46 9.25 10.11 6.67 4.15 7.47 10.64 14.52
IOCL 4.13 4.3 6.91 4.71 12.4 19.08 23.41 18.93
AVG. 9.43 9.84 13.405 11.23 16.6025 21.3525 24.27 24.34
EPS
30
25
20
15
10
0
2012 2013 2014 2015 2016 2017 2018 2019
EPS
 The EPS ratio of the industry had steady growth through the period of 2015-2019.
 In the 2015 is the only year it shows decline.
 The EPS of the industry peaked in 2019 with 24.34.
5.6 DIVIDEND PER SHARE
Dividend per share (DPS) is the sum of declared dividends issued by a company for every
ordinary share outstanding. The figure is calculated by dividing the total dividends paid out by a
business, including interim dividends, over a period of time by the number of

outstanding ordinary shares issued. A company’s DPS is often derived using the dividend paid in
the most recent quarter, which is also used to calculate the dividend yield.
YEAR 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
BPCL 49.64 36.16 70.15 30.16 31.99 30.27 30.09 30.32 32.72 32.91
ONGC 35.91 38.92 53.17 30.47 45.83 36.78 38.84 33.2 39.55 42.09
GAIL 28.77 37.9 41.64 30.34 25.04 30.15 30.27 30.2 26.71 30.29
IOCL 57.24 44.4 55.19 25.5 30.38 30.09 30.07 30.69 30.97 30.88
AVG. 42.89 39.345 55.037 29.1175 33.31 31.822 32.3175 31.102 32.4875 34.0425
5 5 5
Dividend Payout Ratio (%)

60
50
40
30
20
10
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Dividend Payout Ratio (NP) (%)
 The dividend payout ratio was stable through the year of 2009-2015.
 In 2015 there was massive change 29.175 to in 2016 55.0375.
 After that in 2017 it decline to 39.345 in 2016 DPR is highest with 55.0375
5.7 P/E RATIO
The price earnings ratio, often called the P/E ratio or price to earnings ratio, is a market prospect
ratio that calculates the market value of a stock relative to its earnings by comparing the market

price per share by the earnings per share. In other words, the price earnings ratio shows what the
market is willing to pay for a stock based on its current earnings.
Investors often use this ratio to evaluate what a stock’s fair market value should be by predicting
future earnings per share. Companies with higher future earnings are usually expected to issue
higher dividends or have appreciating stock in the future.
2019 2018 2017 2016 2015

ONGC market price per share 161.36 150.69 144.58 193.76 169
IOCL 118.35 116.23 210.43 371.93 279.87
GAIL 195.53 178.83 225.56 241.11 229.56
BPCL 186.78 173.53 226.26 375.6 310.72
AVG. MP 165.505 154.82 201.7075 295.6 247.2875
EPS 24.34 24.27 21.3525 16.6025 11.23
P/E RATIO 6.799712 6.379069 9.446552 17.80455 22.02026
P/E RATIO
25
20
15
10
0
2015 2016 2017 2018 2019
P/E RATIO
 The p/e ratio of the industry had continuous decline through the 2015-2019
 The P/E ratio is peaked in 2015 with 24.34.
 And lowest in 2019 with 11.23.
6. INDUSTRY ANALYSIS

6.1 PESTEL ANALYSIS
6.1.1 Political factors that impact petroleum industry
Political factors play a significant role in determining the factors that can impact petroleum
industry’s long term profitability in a certain country or market. Petroleum industry is operating
in oil & gas in more than dozen countries and exposes itself to different types of political
environment and political system risks. The achieve success in such a dynamic oil & gas industry
across various countries is to diversify the systematic risks of political environment. Petroleum
industry can closely analyze the following factors before entering or investing in a certain
market-
a. Political stability and importance of oil & gas sector in the country's economy.
b. Risk of military invasion
c. Level of corruption - especially levels of regulation in oil & gas sector.
d. Bureaucracy and interference in oil & gas industry by government.
e. Legal framework for contract enforcement
f. Intellectual property protection
g. Trade regulations & tariffs related to oil & gas
h. Favored trading partners
i. Anti-trust laws related to oil & gas
j. Pricing regulations – are there any pricing regulatory mechanism for oil & gas
k. Taxation - tax rates and incentives
l. Wage legislation - minimum wage and overtime
m. Work week regulations in oil & gas
n. Mandatory employee benefits
o. Industrial safety regulations in the oil & gas sector.
p. Product labeling and other requirements in oil & gas
6.1.2 Economic factors that impact petroleum industry
The macro environment factors such as – inflation rate, savings rate, interest rate, foreign
exchange rate and economic cycle determine the aggregate demand and aggregate investment in

an economy. While micro environment factors such as competition norms impact the
competitive advantage of the firm. Petroleum industry can use country’s economic factor such as
growth rate, inflation & industry’s economic indicators such as oil & gas industry growth rate,
consumer spending etc to forecast the growth trajectory of not only sector but also that of the
organization. Economic factors that petroleum industry should consider while conducting
PESTEL analysis are -
a) Type of economic system in countries of operation – what type of economic system there
is and how stable it is.
b) Government intervention in the free market and related oil & gas
c) Exchange rates & stability of host country currency.
d) Efficiency of financial markets – does petroleum industry needs to raise capital in local
market?
e) Infrastructure quality in oil & gas industry
f) Comparative advantages of host country and oil & gas sector in the particular country.
g) Skill level of workforce in oil & gas industry.
h) Education level in the economy
i) Labor costs and productivity in the economy
j) Business cycle stage (e.g. Prosperity, recession, recovery)
k) Economic growth rate
l) Discretionary income
m) Unemployment rate
n) Inflation rate
o) Interest rates
6.1.3 Social factors that impact petroleum industry
Society’s culture and way of doing things impact the culture of an organization in an
environment. Shared beliefs and attitudes of the population play a great role in how marketers at
petroleum industry will understand the customers of a given market and how they design the
marketing message for oil & gas industry consumers. Social factors that leadership of petroleum
industry should analyze for PESTEL analysis are -
a) Demographics and skill level of the population

b) Class structure, hierarchy and power structure in the society.
c) Education level as well as education standard in the petroleum industry ’s industry
d) Culture (gender roles, social conventions etc.)

e) Entrepreneurial spirit and broader nature of the society. Some societies encourage
entrepreneurship while some don’t.
f) Attitudes (health, environmental consciousness, etc.)
g) Leisure interests
6.1.4 Technological factors that impact petroleum industry
Technology is fast disrupting various industries across the board. Transportation industry is a
good case to illustrate this point. Over the last 5 years the industry has been transforming really
fast, not even giving chance to the established players to cope with the changes. Taxi industry is
now dominated by players like UBER and LYFT. Car industry is fast moving toward automation
led by technology firm such as Google & manufacturing is disrupted by teals, which has stated
an electronic car revolution.
A firm should not only do technological analysis of the industry but also the speed at which
technology disrupts that industry. Slow speed will give more time while fast speed of
technological disruption may give a firm little time to cope and be profitable. Technology
analysis involves understanding the following impacts -
a) Recent technological developments by petroleum industry competitors

b) Technology's impact on product offering
c) Impact on cost structure in oil & gas industry
d) Impact on value chain structure in oil & gas sector
e) Rate of technological diffusion
f) Article continues after ad
6.1.5 Environmental factors that impact petroleum industry
Different markets have different norms or environmental standards which can impact the
profitability of an organization in those markets. Even within a country often states can have
different environmental laws and liability laws. For example in United States – Texas and
Florida have different liability clauses in case of mishaps or environmental disaster. Similarly a
lot of European countries give healthy tax breaks to companies that operate in the renewable
sector.
Before entering new markets or starting a new business in existing market the firm should
carefully evaluate the environmental standards that are required to operate in those markets.
Some of the environmental factors that a firm should consider beforehand are -

a) Weather
b) Climate change
c) Laws regulating environment pollution
d) Air and water pollution regulations in oil & gas industry
e) Recycling
f) Waste management in oil & gas sector
g) Attitudes toward “green” or ecological products
h) Endangered species
i) Attitudes toward and support for renewable energy
6.1.6 Legal factors that impact petroleum industry
In number of countries, the legal framework and institutions are not robust enough to protect the
intellectual property rights of an organization. A firm should carefully evaluate before entering
such markets as it can lead to theft of organization’s secret sauce thus the overall competitive
edge. Some of the legal factors that petroleum industry leadership should consider while entering
a new market are -
a) Anti-trust law in oil & gas industry and overall in the country.
b) Discrimination law
c) Copyright, patents / intellectual property law
d) Consumer protection and e-commerce
e) Employment law
f) Health and safety law
g) Data protection
6.2 Michael porter five force analysis

Table No. 6.1 Source: www.researchgate.net
Porter’s Five Forces of Oil Industry
Oil industry includes corporations which are involved in the process of extracting, processing
and supplying fuel to the customers. The dynamics of oil industry have been analyzed through
porter’s five forces model in the following section:
6.2.1 Threat Of New Entrants

The oil industry is viewed as having low thereat of new entrants. The reason behind this
perspective is that setting up a petroleum company is a region needs massive capital investment.
Setting up extraction units and developing global supply chain mechanisms requires a great deal
of investment. Therefore, new entrants find it difficult to establish business in the oil industry.
Apart from the financial barrier, the new entrants also have to deal with the presence of
previously existing large scale petroleum companies, along with the public oil corporation.
Regions which are categorized as dependent on oil based on economy serve as the target area for
carrying out oil extraction and processing operations. One of the challenges that the new comers
can face is the volatile international politics and geopolitical tension in the oil rich regions. The
fluctuating oil prices pose another risk to the business in petroleum sector, making the industry
more difficult to enter for new companies.
6.2.2 Bargaining Power Of Buyers

The buyers in the case of oil industry include the people purchasing, fuel, petrol and other
derivatives from the petroleum sector. The pricing of fuel and petroleum products is in the
control of the oil producers, leaving little bargaining power to the consumers. A change in the oil
prices necessitates altering the price of petrol and fuel globally (clement, 2018). An increase in
the price structure of crude oil results in an increase in the price of gasoline on a global scale,
affecting the consumers at an international scale. The consumers have to pay the price the oil
suppliers are charging having no authority to influence them to lower the prices. Therefore, it can
be seen that the buyers in the oil industry have low bargaining power, while the oil producers
maintain a great deal of control on pricing decisions.
6.2.3 Bargaining Power of Suppliers

The suppliers of the oil industry have moderate bargaining power. The suppliers in the oil
industry are companies who are extracting the natural resources of oil fields. These companies
hold a significant amount of power on the industry dynamics. In addition, the contracts which are
formed with the government of the regions where the oil id being extracted influence the
bargaining power of the oil suppliers. The government can exert some influence on the corporate
decisions. However, the oil based economics are dependent on the operations of these
corporations so they can only exert control to some extent.
6.2.4 Threat of Substitute products

The substitute product in the domain of oil industry is alternate means of energy that can be used
to run a vehicle. There have been some changes in the transportation industry, owing to the
introduction of electric vehicles that are not dependent on oil based source of energy. However,
the introduction of such vehicles has not indicated a major shift in the demand and consumption
of oil based fuel (clement, 2018). The transportation industry continues to be largely dependent
on gasoline as the key source of fuel for running the vehicles. As far as switching costs are

concerned, price conscious consumers are hesitant in moving from gasoline to other sources of
fuel (clement, 2015). Therefore, the oil industry can be viewed as having low threat of substitute
products as people are likely to continue to use gasoline as a prime means of fuel
6.2.5 Competitive Rivalry

There are some major oil corporations that have a stronghold on the international oil industry. A
Few of these companies are shell, ConocoPhillips, chevron, Exxon Mobil etc, who have
significant stakes involved in the oil producing regions on a global scale. According to chandler
(2018) the presence of these few large scale entities make the oil industry show high level of
competitive rivalry. Due to this intense rivalry, the profit margin is difficult to maintain as the
companies have to match their price according to the competitors pricing as well as
government’s regulations. Gaining access to oil deposits is another area which shows significant
competition among oil companies (Flesher & Bensoussan, 2015), resulting in high competitive
rivalry.
6.3 SWOT analysis

Table: 6.2 sources: www.researchgate.net

6.3.1 Strengths
 Developing economy: historically, demand for petroleum products has traced the economic
growth of the country. With GDP expected to grow at near 7% in the long-term, the energy
sector would benefit from the same, going forward.
To put things in perspective, diesel sales grew by nearly 12% (which constitutes 40% of the
entire petro-products basket), petrol sales by 9% and a double-digit growth in LPG (liquefied
petroleum gas) in 1qfy05. While this rate is not likely to sustain, we expect the industry to
witness a 4% growth in the entire product basket in fy 05 and beyond.
 Government decisions: the recent price increases and also the decision to allow oil companies
to increase prices within a band of 10% augur well for the industry.
This step is likely to reduce government interference and provide some autonomy to oil
companies when it comes to increasing petrol and diesel prices in order to protect margins.
Further, the duty cuts are also likely to result in reduced under-recoveries by way of subsidies on
LPG and kerosene.
6.3.2 Weakness

Crude prices: nearly 70% of India’s crude requirements are fulfilled by imports and this figure is
likely to increase going forward. Crude prices have breached the $45 barrier again and are likely
to remain at around $40 per barrel range.
As per IEA, India is one of the most inefficient countries among developing nations as far as
energy usage is concerned. Such high crude prices are likely to impact margins of oil marketing
companies. Given the political implications, retail prices may continue to lag the rise in input
cost.
Lack of freedom: although the government has decided to provide autonomy to oil companies to
increase petrol and diesel prices within a 10% band, other products such as LPG and kerosene
continue to remain under the government controlled price mechanism.
As per the current estimates, the subsidies on LPG amount to RS 90 per cylinder after factoring
in duty cuts and that on kerosene is over RS 6 per liter.
While the government has managed to reduce its share in subsidies, select oil companies are
being forced to absorb the losses.
6.3.3 Opportunities:
Equity oil: major oil marketing companies are now venturing into upstream exploration and
production activities so as to secure crude supply.
To put things in perspective, IOC and oil India are likely to jointly bid for oil fields aboard. At
the same time, ONGC'S wholly owned subsidiary, ONGC vides (oval) has acquired stakes in
over 9 countries in its quest to attain the 20 MMT (million metric tons) by 2020. This backward
integration is an opportunity for IOC to secure at least 25% of its crude oil requirements for the
refineries.
Natural gas: natural gas has the potential to be the fuel of the future with demand outpacing
supply by more than two times. Such high scarcity of natural gas provides a big opportunity for
oil companies. The below mentioned table indicates the allocation to the various core sectors and
the shortage faced by them, thereby giving an idea of the potential for growth.
Although petro net LNG has now started importing natural gas, the future holds promise as
reliance industries' Krishna Godavari basin goes into commercial production in fy06 and shell
commences its terminal at hazira. More exploration activities are in the pipeline and this could
reduce the country's dependence on crude in the long term.
6.4.4 Threats

Competition: until fy 04, oil-marketing companies had complete control over the downstream
marketing business while private sector players were restricted to only refining.
However, with entry of private players such as reliance, ESSAR oil and shell (in the waiting), the
sector is likely to witness increased competition going forward. The oil PSUs had hitherto
developed a fortnightly pricing mechanism, which is likely to discontinue.
The price of petrol and diesel is artificially kept high so as to cross-subsidize LPG and kerosene.
Since private players will not be bound to provide for these subsidies, PSU marketing players are
likely to suffer from lower throughput per outlet.
Continuing government interference: during the first six months of the current fiscal year, the oil
marketing companies were refrained from increasing product prices due to political reasons.
This affected margins of downstream players. Going forward, if the government interference
continues, oil-marketing companies will be at a disadvantage.
Although we believe the industry is likely to witness increased competition, the initial retail rush
by private sector players has slowed down. PSU marketing companies have already stepped up
their expansion plans and to that extent, have created significant entry barriers for private
players.
Although throughput per outlet (sales per outlet) is likely to decline in the future, we believe that
any substantial entry of the private players would indirectly benefit the PSUs, as the
government's pricing policy will not hold much water and the market forces would determine
pricing.

7. The future of petroleum industry of

India
The Indian petroleum industry is booming and has a good potential, but the sector still needs to
be strengthened. There are a lot of changes being made on a global level. The petroleum industry
of India is one of the major contributors of the economic growth.
Since the industry has become more global, there is a tremendous potential for this sector to
grow in India. Presently, there are a lot of developments taking place in India, generating a lot of
opportunities. India aims to become one of the major players in the export of petrochemical
intermediaries.
Today, 70 percent of the oil requirements are fulfilled with the help of imports. India to examine
through the international markets comprising of the emerging energy-trading nations – China,
Russia and Iran. India collaborated with Venezuela, Burma, Middle East nations, and Pakistan.
India’s long term strategies are to emphasize on using energy efficient methods and enhance
energy self-sufficiency. India has to compete for conventional energy sources. These can be
achieved by developing energy efficient buildings and vehicles.
The main problem with the Petroleum Industry in India is related to infrastructure developments.
The lack of proper storage facilities, enhancements in refining capacities, and fluctuating import
prices plays important role in hampering the petroleum industry.
India should target for improving the petrochemical sector for better economic growth. The need
for intermediary products for producing end use products should be considered with utmost
importance. India’s per capita consumption of petrochemical products is low, whereas the
production is high. There is a great potential for India to become the leading exporters of
intermediary products.
The future of Indian petroleum industry
 Demand for petroleum is growing rapidly

 Shifting focus to more production of Olefin – ethylene, propylene, butadiene,
 Price and availability of crude oil and gas as feedstock would still be crucial factors
 The demand of the end products would affect the demand of the intermediary products

8. CONCLUSION
It takes oil to create ethanol (a corn based fuel), it takes oil to make plastic, to make computers,
to build economies and nations - oil is needed.
As we progress into the future, supplies will

tighten and oil prices will increase further. We've
already felt the ripples from the recent rises of
commodity pricing. And as demand from
developing nations combines with an ever
dwindling supply - the global economy will soon
begin to feel the squeeze. So what does the future
hold, no one knows. Obviously we must find
renewable energy solutions, but for them to
become our major energy supply is a long time
away and thus oil will remain an intricate part of
our society.
 The petroleum industries of India has seen a lot of good old days
 Even though it may not be a everlasting source of energy or revenue for India , it still going
to sustain and help the Indian economy to sustain in its time of need
 The value addition done by petrol and gas industries is very important for the country
 India soon need to find an alternative mode of power generations as fossil fuel is not going to
be there forever.
 Until the world finds any alternative way to use the internal combustion engine the demand
for petrol will prevail and grow a steady growth
 The price and the availability of petrol may or may not have any huge change in the
petroleum industry
 In conclusion we would like to say that Indian petrol industry is one of the most powerful
and dominating sector of Indian business houses

9. Bibliography
https://www.bharatpetroleum.com/
https://www.ongcindia.com/wps/wcm/connect/en/home/
https://gailonline.com/home.html
https://www.iocl.com/
https://iipe.ac.in/blog-the-future-of-petroleum-industry-of-india/
https://www.ukessays.com/essays/commerce/growth-and-evolution-of-petroleum-industry-in-
india-commerce-essay.php
https://corporatefinanceinstitute.com/resources/knowledge/finance/financial-ratios/
https://www.researchgate.net/publication/274373471_AN_ANALYSIS_OF_THE_OIL_AND_G
AS_INDUSTRY'S_COMPETITIVENESS_USING_PORTER'S_FIVE_FORCES_FRAMEWO
RK
https://www.rediff.com/money/2004/sep/18oil.htm
http://fernfortuniversity.com/term-papers/pestel/nyse4/8132-independent-oil---gas-plc.php
https://en.wikipedia.org/wiki/Oil_and_gas_industry_in_India
https://www.westernsaharaoil.com/current-operations/project-lifecycle

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PETROLEUM INDUSTRY 2019

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF

HARSHAD GOHEL 18F63

PIYUSH MAKWANA 18F78

NIPUN MODHIYA 18F76

TEJAS MODHIYA 18F41

G.H PATEL POSTGRADUATE INSTITUTE OF BUSINESS

1 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

2 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

We sincerely thank the college G.H. Patel postgraduate Institute of Business

Harshad Gohel (18F63)

Piyush Makwana (18F78)

Nipun Modhiya (18M76)

Tejas Modhiya (18M41)

3 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

Harshad Gohel (18F63) ---------------------------------

Piyush Makwana (18F78) ------------------------------

Nipun Modhiya (18M76) -------------------------------

Tejas Modhiya (18M41) ------------------------------------

Academic Guide Name: - Dr. Ashish Mehta

4 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

CH.1 INTRODUCTION 8-11

1.1 About petroleum industry 9

CH.2 GROWTH AND EVOLUTION 12-16

2.1 Indian evolution in petroleum industry 13

CH.3 DEMAND ANALYSIS 17-27

3.1 Demand Determination Of The Industry 18

CH.4 MARKETING STRATEGY ANALYSIS 28-39

4.1 Key Issues of petroleum industry 29

5 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

CH.5 FINANCIAL ANALYSIS 40-55

5.1 Financial Statement 41

CH.6 INDUSTRY ANALYSIS 55-65

6.1 PESTEL Analysis

6.2 Industry Analysis By Using Five Forces Model Of Michael Porter

6.3 SWOT ANALYSIS

CH.7 FUTURISTIC SCENARIO OF THE INDUSTRY 65

6 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

Figure No: 1 The world Fact book. Crude Oil 9

Table: 3.1 Oil supply and demand in India 19

Table: 5.1 Income statement 41

Figure No. 6.1 Porter’s five forces of oil industry 60

7 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

8 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

Petroleum is vital to many industries, and is necessary for the maintenance of

Other geographic regions' consumption patterns are as follows: south and Central

9 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

In recent years, enhanced oil recovery techniques — most notably multi-stage drilling

a. Upstream (exploration, development and production of crude oil or natural gas)

3. To evaluate the performance of the major companies on the basis

4. To assess the impact of entry of foreign companies on the Indian petroleum

1.3 Scope of the study

11 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

12 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

13 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

2. GROWTH AND EVOLUTION

 World’s fastest-growing energy market

14 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

2.2 Product profile

Petroleum products are organic compounds made in oil refineries. They result

Well-known petroleum products include:

 Liquefied Petroleum Gas (LPG)

15 G.H PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT