;;

PCTE Group of Institutes,

Ludhiana

MBA 2nd Semester

CORPORATE FINANCE AND INDIAN FINANCIAL

SYSTEM PROJECT

TOPIC: Comparison between IOC And HPCL

NAME: Ritu Rajput

UNIV.ROLL.NO: 2113775

OFFICIAL E-MAIL ADDRESS: ritupctemba2021c@gmail.com

TABLE OF CONTENT:

 Brief Introduction

 Shareholders pattern

 Capital structure

 Dividend policies

 Business model

 Future prospects
 Target price

INTRODUCTION

 INDIAN OIL CORPORATION LIMITED : It  is an Indian government owned oil

and gas explorer and producer. It is under the ownership of Ministry of Pe-
troleum and Natural Gas, Government of India, headquartered in New
Delhi. The government corporation is ranked 212th on the Fortune Global
500 list of the world's biggest corporations as of 2021. It is the largest gov-
ernment owned oil corporation in the country. Indian Oil's business inter-
ests overlap the entire hydrocarbon value-chain, including refining, pipeline
transportation, marketing of petroleum products, exploration and produc-
tion of crude oil, natural gas and petrochemicals. Indian Oil has ventured
into alternative energy and globalisation of downstream operations. It has
subsidiaries in Sri Lanka (Lanka IOC),[12] Mauritius (IndianOil (Mauritius)
Ltd) and the Middle East (IOC Middle East FZE).

Product mix
Natural gas
Petrol and diesel
Jet fuel
Industrial fuel
Kerosene
Crude oil
Lubricants and greases

 HINDUSTAN PETROLEUM CORPORATION LIMITED : It  is a subsidiary of Oil

and Natural Gas Corporation which is under the ownership of the Ministry
of Petroleum and Natural Gas of the Government of India with its head-
quarters in Mumbai, Maharashtra. It has a 25% market share in India
among public sector undertakings (PSUs) coupled with a strong marketing
infrastructure. Its parent company is ONGC which owns a majority stake in
the company. HPCL operates two major refineries[11] producing a wide va-
riety of petroleum fuels and specialties, one in Mumbai (West Coast) with
7.5 million tonnes per year capacity and the other in Visakhapatnam, (East
Coast) with a capacity of 8.3 million tonnes per year.[12] HPCL holds an eq-
uity stake of 16.95% in Mangalore Refinery and Petrochemicals Lim-
 ited (MRPL), a state-of-the-art refinery at Mangalore with a capacity of 9
million tonnes per year. 

Product mix
Fuel oil
naphtha
sulfur
lubricant
gasoline
diesel
polypropylene

SHAREHOLDERS PATTERN

INDIAN OIL CORPORATION LIMITED

HINDUSTAN PETROLEUM CORPORATION LIMITED

CAPITAL STRUCTURE

INDIAN OIL CORPORATION LIMITED IN CRS (RS)

RESERVES & SURPLUS 124354
EQUITY SHARE CAPITAL 9181
CURRENT LIABILITIES 192154
NON CURRENT LIABILITIES 84934
TOTAL 410623

DEBT TO EQUITY RATIO: 277088/133535=2.07.

HINDUSTAN OIL CORPORATION LIMITED IN CRS ( RS)

RESERVES & SURPLUS 39985

EQUITY SHARE CAPITAL 1418
CURRENT LIABILITIES 71439
NON CURRENT LIABILITIES 41784
TOTAL 154626

DEBT TO EQUITY RATIO: 113223/41403= 2.73

COMPARISON
COMPANY PRICE MCAP(IN ROE % NET DEBT TO
NAME CRS) PROFITS EQUITY
IOC 114.15 107462.62 18.79 6952 2.07
HPCL 229.58 32605.33 17.61 5836 2.73
CONCLUSION

Both the companies are following almost same capital structure but to be
more precise, HPCL is more leveraged (2.73) as compared to IOC (2.07).

DIVIDEND POLICIES

General factors

• The Board while considering payment of dividend for a financial year may,
interalia, consider the following factors:-
o Profit for the financial year as well as general reserves of the Company.
 o Projections of future profits and cash flows; o Borrowing levels and the
capacity to borrow;
o Present and future Capital expenditure plans of the Company including
organic/inorganic growth avenues;
o Applicable taxes including tax on dividend;
o Compliance with the provisions of the Companies Act or any other statutory
guidelines including guidelines issued by Govt. of India. Dividend Distribution
Policy;
o Past dividend trend for the Company and the industry of State of economy
and capital markets;
o Any other factor as may be deemed fit by the Board;

INDIAN OIL CORPORATION LIMITED

 The Company strives for maximisation of shareholders’ value and be-

lieves that this can be attained by driving growth. The policy endeavours
to strike an optimum balance between rewarding shareholders through
dividend and ensuring that sufficient profits are retained for growth of
the Company and other needs.

The Company would endeavor to pay minimum annual dividend of 30% of

Profit After Tax (PAT) or 5% of net worth, whichever is higher subject to the
maximum dividend permitted under the extant legal provisions.

 In case the Company declares a lower or no dividend for a particular

year due to inadequacy or absence of profits/reserves or otherwise, the
reasons and justification thereof shall be disclosed to the shareholders
through Annual Report of the Company.

FACE VALUE 10 RS
ANNOUNCEMENT DIVIDEND% DIVIDEND (RS)
DATE
30/01/2022 40 4
01/11/2021 50 5
19/05/2021 15 1.50
10/02/2021 30 3
29/01/2021 75 7.50

HINDUSTAN OIL CORPORATION LIMITED

  The objective of this Policy is to ensure a regular dividend income for the
members and long term capital appreciation for all stakeholders of the
Company. The Company would ensure to strike the right balance be-
tween the quantum of dividend paid and amount of profits retained in
the business for various purposes. The Board of Directors will refer to
the Policy while declaring/ recommending dividends on behalf of the
Company
 The company endeavors to declare the dividend as per the guidelines is-
sued by Department of Investment & Public Asset Management (DI-
PAM), Govt. of India from time to time.
 The Board while considering payment of dividend for a financial year
may, inter-alia, consider the following factors: -
 Profit for the financial year as well as general reserves of the Company;
 Projections of future profits and cash flows;
o Borrowing Levels and the Capacity to borrow;
o Present and Future Capital expenditure plans of the Company in-
cluding organic/inorganic growth avenues
o Applicable taxes including tax on dividend;

ANNOUNCEMENT DIVIDEND(%) DIVIDEND (RS)

DATE
20/05/2021 227.5 22.75
16/06/2020 97.5 9.75
20/05/2019 94 9.40
05/02/2019 65 6.50
22/05/2018 25 2.50

BUSINESS MODEL

INDIAN OIL CORPORATION LIMITED

 To thrive in a dynamic environment, they are consistently adopting an agile

and strategic approach to maximise value creation for stakeholders across
business verticals. Resting on their core competencies and years of experi-
ence, they are adequately prepared to carry forward a legacy of growth and
success.
 Indian Oil's business interests overlap the entire hydrocarbon value-chain,
including refining ,pipeline transportation, marketing of petroleum prod-
ucts, exploration and production of crude oil, natural gas and petrochemi-
 cals. Indian Oil has ventured into alternative energy and globalization of
downstream operations. It has subsidiaries in Sri Lanka (Lanka IOC), Mauri-
tius (IndianOil (Mauritius) Ltd)[13] and the Middle East (IOC Middle East
FZE)

HINDUSTAN OIL CORPORATION LIMITED

 The business model archetypes include many business personalities and

more than one business model linked to various goods or services. There is
a common foundation behind the scenes of each unit, but from a manage-
ment standpoint, each group may operate independently.
 Cross-selling:
Cross-selling is a business strategy in which additional services or goods are
offered to the primary offering to attract new consumers and retain existing
ones. Numerous businesses are increasingly diversifying their product lines
with items that have little resemblance to their primary offerings.
 Cross-subsidiary:
When products and goods and products and services are integrated, they
form a subsidiary side and a money side, maximizing the overall revenue
impact. A subsidiary is a firm owned entirely or in part by another business,
referred to as the parent company or holding company. 
FUTURE PROSPECTS

INDIAN OIL CORPORATION LIMITED

 IOC will expand its refining capacity to 104.55 million tonnes by 2022
from the current 80.7 million tonnes with an investment of about Rs
40,000 crore.
 Indian Oil has planned 2 lakh crore investments in the next five to seven
years to evolve into a future-ready corporate that provides
comprehensive energy solutions to diverse user groups.
  Indian Oil Corp. Ltd plans to invest ₹1 trillion over the next four to five
years, chairman Shrikant Madhav Vaidya said in his speech at the 62nd
annual general meeting of India’s largest refiner on Friday.
 Indian Oil Corporation (IOCL) is setting up a new crude oil pipeline
system with a nameplate capacity of 17.5 million tonnes per annum
(mmtpa) from Mundra (Gujarat) to Panipat.
 A company statement said IndianOil will also build 9 crude oil tanks of
60,000 kilo litres each at Mundra, which, apart from meeting operational
requirements, will also help in enhancing crude oil storage capacity in
the country. The total estimated cost of the project is Rs 9,028 crore.

TARGET PRICE

HDFC Securities has add call on Indian Oil Corporation with a target price of
Rs 140. The current market price of Indian Oil Corporation is Rs 124.6. Time
period given by analyst is one year when Indian Oil Corporation Ltd. price
can reach defined target.

HINDUSTAN OIL CORPORATION LIMITED

  State-run oil refiner Hindustan Petroleum Corporation Ltd (HPCL) is
seeking to double its profits by 2024 on the back of a Rs 74,200 crore
investment that focuses on earning higher margins in existing and new
business.
 Public sector oil refiner Hindustan Petroleum Corp. Ltd. (HPCL) is increas-
ing its crude oil refining capacity by 17.7 million metric tonnes per an-
num (MMTPA) and will have around 4.1 MMTPA of petrochemical ca-
pacity by 2024 to meet India’s growing energy demands.

 Hindustan Petroleum Corporation Ltd (HPCL) will set up its own chain of
multi-channel retail stores at its petrol pumps as the nation's third-
largest fuel retailer looks to give a push to non-fuel retailing. As part of
this, HPCL has opened two more convenio stores under the brand name
'HaPpyShop'.

TARGET PRICE

Emkay Global has buy call on Hindustan Petroleum Corporation with a target
price of Rs 330. The current market price of Hindustan Petroleum Corporation
is Rs 302. Time period given by analyst is one year when Hindustan Petroleum
Corporation Ltd. price can reach defined target.