OIL & NATURAL

GAS SECTOR

Presented by :-

Abhishek Jain (75102)

Kritika Taneja(75127)
Lakshay Kalra(75128)

Class : BFIA 2A
 ACKNOWLEDGEMENT

Our deep sense of gratitude to Dr Kumar Bijoy

the Guide of the project for supporting,
mentoring and helping us in the various stages
of project .
CONTENTS

 INTRODUCTION
 SECTOR OVERVIEW

 SWOT ANALYSIS

 BCG MATRIX

 MICHAEL PORTER 5 FORCES MODEL

 RATIOS

 BIBLIOGRAPHY
INTRODUCTION
 The petroleum industy includes the global
process of exploration, extraction, refining,
transporting (often by oil tankers and pipelines)
and marketing petroleum products.

 After the Indian Independence, the Oil Industry

in India was a very small one in size and Oil was
produced mainly from Assam and the total
amount of Oil production was not more than
250,000 tonnes per year.
 HISTORY
 The Oil Industry started off more than five
thousand years back. Oil sipping up from the
ground were used to make the boats waterproof
in the Middle East and also used as medicating
as well as for painting different things.
 The demand for Oil was much higher than what
it actually produced and this brought forward the
concept of making oil production companies
which is collectively known as the Oil Industry.
 ORIGIN IN INDIA
The origin of oil & gas industry in India can be traced back to
1867 when oil was struck at Makum near Margherita in Assam.
At the time of Independence in 1947, the Oil & Gas industry
was controlled by international companies. India's domestic oil
production was just 250,000 tonnes per annum and the entire
production was from one state - Assam.

The foundation of the Oil & Gas Industry in India was laid
by the Industrial Policy Resolution, 1954, when the
government announced that petroleum would be the core
sector industry. In pursuance of the Industrial Policy
Resolution, 1954, Government-owned National Oil
Companies ONGC (Oil & Natural Gas Commission), IOC
(Indian Oil Corporation), and OIL (Oil India Ltd.) were
formed.
 Why we have chosen Oil & Gas
sector?
 Petroleum is vital to many industries, and is of
importance to the maintenance of industrial
civilization itself, and thus is a critical concern for
many nations. Oil accounts for a large percentage
of the world’s energy consumption, ranging from as
low of 32% for Europe and Asia, up to a high of
53% for the Middle East.

 Government of India declared the Oil industry in

India as the core sector industry under the
Industrial Policy Resolution bill in the year 1954,
which helped the Oil Industry in India vastly.
COMPANIES ANALYSED
SWOT ANALYSIS
 INDIAN OIL CORPORATION
STRENGTHS WEAKNESSES

1.India's largest commercial enrise with a strong 1.Legal issues

brand name 2.Employee management
2.Has around 50% petroleum products 3.Bureaucracy
3.Operates 10 refineries in India 4.Volatility in the crude market & subsidy burden
4.Huge distribution network through retailing
5.Accounts for a 47% share in the petroleum
products market, 34.8% share in refining capacity
and 67% downstream sector pipelines capacity in
India
6.Has over 35,000 employees
7. Loyalty programs like XTRAPOWER Fleet Card
Program is aimed at Large Fleet Operators
OPPORTUNITIES THREATS

1.Increasing fuel/oil prices 1.Government regulations

2.Increasing natural gas market 2.High Competition
3.More oil well discoveries Competition :
4.Expand export market 1.Bharat Petroleum
2.Hindustan Petroleum
3.Reliance Industries
 RELIANCE INDIA LIMITED
STRENGTHS WEAKNESSES

1.India's one of the biggest players 1.Long term debt

2.Strong brand name 2.Legal issues
3.Excellent financial position 3.KG D6 gas controversy
4.One of the few Indian companies to be 4.Accusations of being favored by the
featured in Forbes government
5.Employs over 25,000 people

OPPORTUNITIES THREATS

1.Growing demand for petroleum products 1.Government regulations

2.Buyout of competition 2.High Competition
3.Environmental laws
4.Economic instability
 ONGC
STRENGTHS WEAKNESSES

1.Indias largest crude oil and natural gas 1.Legal issues

producer
2.Employee management
2.Strong brand name
3.Bureaucracy
3.High profit making
4.Has over 40,000 employees 4.Human rights and rehabilitation issues
5.It produces about 30% of India's crude oil
requirement
6.Contributes 77% of India's crude oil
production and 81% of India's natural gas
production
7.Commemorative Coin set was released to
mark 50 Years of ONGC
OPPORTUNITIES THREATS

1.Increasing fuel/oil prices 1.Government regulations

2.Increasing natural gas market 2.HighCompetition
3.More oil well discoveries 3.Alternative Energy Sources
 HPCL
STRENGTHS WEAKNESSES

1.India's major oil and gas company 1.Legalissues

2.Operates largest Lube refiniery in India 2.Employeemanagement
3.Large product portfolio 3.Human right issues, rehabilitation issues
4.Owns and operates the largest Lube 4.Environmental hazards from wastes
Refinery in India producing Lube Base Oils of
international standards
5.Produces over 300+ grades of Lubes,
Specialities and Greases

OPPORTUNITIES THREATS

1.Increasing fuel/oil prices 1.Governmentregulations

2.Increasing natural gas market 2.High Competition from other players
3.More oil well discoveries
4.Expand export market
 BPCL
STRENGTHS WEAKNESSES

1.One of India's largest state owned oil 1.Legalissues

and gas company 2.Employee management
2.Has brand presence
3.Refining and retailing of petroleum

OPPORTUNITIES THREATS

1.Increasing fuel/oil prices 1.Governmentregulations

2.Increasing natural gas market 2.High Competition
3.More oil well discoveries
4.Expand export market
 EXXON
STRENGTHS
1.One of the strongest brands , in operations
for over 100 years .
2.R&D and diverse operations
3.Growing financial performance
4.Has over 83,000 employees
5.37 oil refineries in 21 countries
6.Better Cash flows in terms of Revenue and
profit.
OPPORTUNITIES
1.Increasing demand for LPG and CNG
2.High investments
3.Increasing prices of fuels across the world
4. Market Development in oil demanding
markets like Indonesia , korea .
WEAKNESSES
1.Employee management across the world
2.Negative Publicity from Exxon Valdes Spill
3.Environmental hazards and oil spills
4.Involved in illegal Trade with few countries.
THREATS
1.Government regulations and policies.
2.High Competition
3. Slowdown in economy due to recession.
4.Alternative energy sources
5. Increasing resistance from environment and
social groups.
BCG MATRIX
• ONGC
• BPCL
• EXXON
• HPCL

STAR ?

CASH
DOG
COW
• IOC
 MICHAEL PORTER 5 FORCES MODEL
THREAT OF NEW ENTRANTS –
LOW
Requires high capital investment
Economies of scale is vital
Access to distribution channel
critical
THREAT OF SUBSTITUTES –
MEDIUM
Threat of substitutes is very small
for now
Renewable energy may pose a
threat over the years

COMPETITIVE RIVALRY –
MEDIUM
Limited number of companies
owing to the nature of the
industry
Foreign and private players
beginning to enter the scene
BARGAINING POWER OF
SUPPLIERS – LOW
Oil industry has small sub-
suppliers from various industries,
so the bargaining power of
suppliers is low

BARGAINING POWER OF
CUSTOMERS – LOW
Traded at global prices, so
customers have no bargaining
powers.
RATIOS
 Debt-equity ratio
 Total asset to debt ratio

 Current Ratio

 Quick Ratio

 Interest coverage ratio

DEBT EQUITY RATIO

A measure of a company's financial leverage

calculated by dividing its total liabilities by
stockholders' equity. It indicates what
proportion of equity and debt the company is
using to finance its assets.
Debt
Debt Equity Ratio =
Equity
DEBT EQUITY RATIO
2.5

1.5 BPCL
HPCL
IOC
EXXON
1 ONGC
RIL

0.5

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source:capitaline
TOTAL ASSET TO DEBT RATIO

 A metric used to measure a company's

financial risk by determining how much of the
company's assets have been financed by
debt

𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡 𝑡𝑜 𝑑𝑒𝑏𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝑡𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
 Total Asset To Debt Ratio
5

4.5

3.5

BPCL
2.5
HPCL

2
IOC

1.5 RIL

0.5

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source:capitaline
 EXXON 45

40

35

30

25

20

EXXON
15

10

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
 ONGC
40

35

30

25

20 ONGC

15

10

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
INTEREST COVERAGE RATIO

A ratio used to determine how easily a

company can pay interest on outstanding debt.
The interest coverage ratio is calculated by
dividing a company's earnings before interest
and taxes (EBIT) of one period by the
company's interest expenses of the same
period.
EBIT
Interest Coverage
= Interest
Ratio
Expense
 INTEREST COVERAGE
RATIO
30

25

20

BPCL
15 HPCL
IOC
RIL
10

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
 EXXON
250

200

150

EXXON

100

50

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
 ONGC
300

250

200

150
ONGC

100

50

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
CURRENT RATIO

The current ratio is a financial ratio that

measures whether or not a firm has enough
resources to pay its debts over the next 12
months. It compares a firm's current
assets to its current liabilities. It is
expressed as follows:
 2.5

1.5 BPCL
HPCL
IOC

1
EXXON
ONGC
RIL

0.5

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source:www.capitaline.co
QUICK RATIO
The Acid-test or quick ratio or liquid
ratio measures the ability of a company to
use its near cash or quick assets to
extinguish or retire its current liabilities
immediately. Quick assets include
those current assets that presumably can
be quickly converted to cash at close to
their book values. A company with a Quick
Ratio of less than 1 cannot currently pay
back its current liabilities.
 1.8

1.6

1.4

1.2
BPCL
1 HPCL
IOC
0.8 EXXON
ONGC
0.6 RIL

0.4

0.2

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
 BIBLIOGRAPHY

 Capitaline
 Investopedia

 Wikipedia

 Yahoo Finance

 Money control

 Professor Google