SUMMER INTERNSHIP PROJECT REPORT ON

“A Study on Fundamental analysis of ARAMCO”

Submitted in Partial Fulfilment for the Award of the Degree of

Master of Management Studies (MMS)

(Under University of Mumbai)

BATCH 2021-23

SUBMITTED BY

Ishita Singh

ROLL NO: 211054

SPECIALISATION

Finance

UNDER THE GUIDANCE OF

Prof. Abhinav Chopra

PILLAI INSTITUTE OF MANAGEMENT STUDIES AND

RESEARCH, NEW PANVEL – 410206

1
 SUMMER INTERNSHIP PROJECT REPORT ON

“A Study on Fundamental analysis of ARAMCO”

Submitted in Partial Fulfilment for the Award of the Degree of

Master of Management Studies (MMS)

(Under University of Mumbai)

BATCH 2021-23

SUBMITTED BY

Ishita Singh

ROLL NO: 211054

SPECIALISATION

Finance

UNDER THE GUIDANCE OF

Prof. Abhinav Chopra

PILLAI INSTITUTE OF MANAGEMENT STUDIES AND

RESEARCH, NEW PANVEL – 410206

2
CERTIFICATE FROM THE COMPANY

3
 DECLARATION

I hereby declare that this Project Report titled “A Study on Fundamental and Technical
analysis of oil and Gas sector”, submitted by me to PILLAI INSTITUTE OF
MANAGEMENT STUDIES AND RESEARCH, NEW PANVEL – 410206 is a bonafide
work undertaken by me and it is not submitted to any other University or Institution for the
award of any degree diploma or Certificate or published any time before.

Name: Ishita Singh

Roll No: 211054 Signature of the Student

4
 CERTIFICATE

This is to certify that a project titled “A Study on Fundamental and Technical analysis of Oil
and Gas sector” is successfully completed by Miss. Ishita Singh during the 1st Semester, in
partial Fulfillment of the Master’s Degree in Management Studies recognized by the
University of Mumbai for the academic year 2021 – 23 through PILLAI INSTITUTE OF
MANAGEMENT STUDIES AND RESEARCH, NEW PANVEL – 410206.
This project work is original and not submitted earlier for the award of any degree / diploma
or associate ship of any other University / Institution.

Name of the Guide-

Prof. Abhinav Chopra

Date: _____________________ (Signature of the Guide)

5
 ACKNOWLEDGEMENT

I would like to express my deepest gratitude and sincere thanks to my faculty project mentor
Professor Abhinav Chopra and company mentor Aniket Chandanshive for giving helpful and
important instructions to all before and throughout the project.
I also thank the Director of Pillai Institute of Management Studies & Research, New Panvel
(Dr. R. Chandran) for providing me the opportunity to embark on this project. This project
has been great learning experience for me.
I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my parents and peers who supported me throughout my
project.

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 EXECUTIVE SUMMARY

Oil & Gas sector market size surpassed around USD 620 billion in 2021 and is projected to
grow at over 6% CAGR (Compound annual growth rate) from 2022 to 2030.
Oil and natural gas are major industries in the energy market and play an influential role in
the global economy as the world's primary fuel sources, it incorporates a stack of resources
including pipelines, refineries, drilling platforms, terminals, storage facilities, and processing
plants in oil & gas sector. The processes and systems also involve in producing and
distributing oil and gas are highly complex, capital-intensive, and require state-of-the-art
technology.  Rising demand of natural gas in line with growing exploration and production
activities will positively sway the business scenario.
Saudi Arabia holds 15% of the world’s proved oil reserves.1 It is the largest exporter of crude
oil in the world2 and maintains the world’s largest crude oil production capacity at nearly 12
million barrels per day. The Covid-19 crisis caused a historic decline in global oil demand,
the major projects saw delays due to forced lockdown limitations across major part of the
world. Thus saw the decline in oil & gas demand due to the travel restrictions from the end
user and industrial facilities affecting the oil & gas utilization across the world.

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 TABLE OF CONTENTS

Sr.no Particular Page No.

1 Chapter 1 - Introduction to project

 Objectives of the study

 Limitations of the study
 Research Methodology
 Scope

2 Chapter 2- Part A: Overview of Oil and Gas Industry 8

 PESTLE Analysis
 Porters 5 force analysis
 Summary of Oil and Gas Industry

3 Chapter 3-Part B: Company Analysis 9

 Overview of ARAMCO 12
 SWOT analysis
 7-S Framework
 Ansoff matrix analysis
 BCG Matrix
 Summary of Company Analysis

4 Chapter 4 – Part C: Management Concept 24

 Introduction to Management concept

 Literature Review
 Data Analysis
 Report on Summer Internship
 Conclusion
 Suggestions

5 Chapter 5: References 38

CHAPTER 1:
1.1INTRODUCTION TO PROJECT
Considered being the biggest sector in the world in terms of dollar value, the production,
distribution, refining, and retailing of petroleum taken as a whole represents the world's
largest industry in terms of dollar value.

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Oil is crucial to the global economic framework, impacting everything from transportation
to heating & electricity to industrial production & manufacturing.
It is formed from the accumulation of decomposition of plants and marine animals which
died million years ago and trapped beneath the ground under high pressure and temperatures.
Oil & gas compound consist of Carbon & Hydrogen Atom, that’s why it is called
HYDROCARBON. Crude Oil is liquid while Natural Gas is gaseous hydrocarbon at room
temperature. Dead organism gets trapped underground High Temperature & Pressure
transform buried dead organism into oil & gas Oil & gas is also called PETROLEUM which
means “Rock Oil” in Latin word.

THE DIFFERENT OIL AND GAS SECTORS

The sector has three key areas: Upstream, midstream and downstream.

1.What is upstream - Upstream is E&P (exploration and production). This involves the
search for underwater and underground natural gas fields or crude oil fields and the drilling
of exploration wells and drilling into established wells to recover oil and gas.
2.What is midstream - Midstream entails the transportation, storage, and processing of oil
and gas. Once resources are recovered, it has to be transported to a refinery, which is often in
a completely different geographic region compared to the oil and gas reserves. 
Transportation can include anything from tanker ships to pipelines and trucking fleets. 
3.What is downstream - Downstream refers to the filtering of the raw materials obtained
during the upstream phase. This means refining crude oil and purifying natural gas. The
marketing and commercial distribution of these products to consumers and end users in a
number of forms including natural gas, diesel oil, petrol, gasoline, lubricants, kerosene, jet
fuel, asphalt, heating oil, LPG (liquefied petroleum gas) as well as a number of other types of
petrochemicals.

Oil and Gas in Our Life

 Transportation fuel (gasoline, diesel fuel, jet/aviation fuel, marine fuel oil/MFO, natural gas
vehicle/NGV, high speed diesel/)
 Power plant fuel (natural gas, compressed natural gas/CNG, diesel fuel)
 Household fuel (heating oil, liquefied petroleum gas/LPG, kerosene)

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  Petrochemical products (plastic, fertilizer, synthetic fiber, synthetic rubber, insecticides,
pharmaceuticals, detergent, paints, creams, solvent, industrial chemicals, industrial gas, etc.)

 Oil is the major energy source throughout the world, when transformed into petroleum, it is a
key energy source used in vehicles, planes, heating, asphalt, and electricity. Outside of being
a crucial energy source, petroleum is used in plastics, paints, chemicals, tape, and so much
more. It's hard to imagine a world without oil.

 Oil and natural gas touch our lives in countless ways every day. Oil and natural gas combined
provide over half of the world's energy. They are necessary resources. A lack of oil and
natural gas would have the country (and the world) grinding to a halt.

 Though there have been “renewable” and “sustainable” energy initiatives, none of them have
been able to contribute a significant amount of energy to the world. They have either been
prohibitively expensive, difficult, or simply unreliable. Oil and natural gas run the world, and
without it many countries would not be able to sustain their daily operations. 

 The largest petroleum producer of the Organization of Petroleum Exporting

Countries (OPEC) and one of the leading oil exporters in the world, Saudi Arabia has
reserves that represent one-fourth of the world totals.

 OPEC is an acronym for the Organization of the Petroleum Exporting Countries, which is an
intergovernmental organization consisting of fifteen nations that was founded in 1960 by the
first five members (Iran, Iraq, Kuwait, Saudi Arabia and Venezuela) in Baghdad. The
headquarters of the organization has been in Vienna, Austria since 1965. Estimates, released
in September 2018, claim that 44% of global oil production and 81.5% of the world’s
‘proven’ oil reserves are accounted for by OPEC.

SAUDI ARABIA AND OIL

 The Middle East presently produces about a third of the world's oil. Oil production in the

Middle East amounted to roughly 28.2 million barrels per day in the year 2021. This
represents an increase of nearly two percent in comparison to the previous year. The
Middle East accounts for 31.3 percent of the global oil production.

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 Many of the largest oil producers are in the Middle East, including Saudi Arabia, UAE, and
Iraq
 Saudi Arabia is the world's largest oil producer and accounts for roughly 15% of global
output.

Oil was first struck in Saudi Arabia in March 1938, at a depth of 1,440 metres in the
Dammam oilfield.
Saudi Arabia possess around 17 percent of the worlds proven petroleum reserves and has the
second-largest proven oil reserves in the world. Apart from petroleum, the Kingdom’s other
natural resources include natural gas, iron ore, gold and copper.
Saudi Arabia is the largest crude oil producer in OPEC and the second-largest total petroleum
liquids producer in the world after the United States and also holds the keys to one of the
most abundant reserves of black gold globally. Now Saudi Aramco is kicking off what could
be the world's largest share sale.

1.2OBJECTIVE OF THE RESEARCH

 To study and analyze Aramco company using the company analysis.

 To study fundamental analysis with specific reference to oil and gas

industry.
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 To understand commercial performance of the company.

 Understanding the challenges and overcoming those through SWOT.

1.3 LIMITATION OF THE STUDY

 The analysis is done only on secondary data as collecting of primary data is

not feasible.

 Market dynamics are volatile considering eco-political scenario which

affects the company performance.

 Restudy of the implications of the fundamental and technical analysis might

be skewed due to volatile economic-political situation in ---country which is
the major market.

1.4 RESEARCH METHODOLOGY

The data for the company named ARAMCO was collected through secondary
data, from several reading materials and from several websites such as:

 Yahoo Finance

 Official website of ARAMCO

 Bloomberg

1.5 SCOPE

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 A single oil tanker may carry2 million barrels or more of crude oil worth
US$80 million. Using massive marine tankers, barges, and pipelines, midstream
and primary supply traders and schedulers move huge, bulkquantities of oil and
gas every day – crude oil and natural gasfrom production fields to refineries,
and refined products fromrefineries to storage terminals. Oil shipments can last
manyweeks and involve hundreds of thousands – even millions – of barrels of oil
products.

Saudi Aramco’s operations span the globe. The company isthe world leader in
crude oil production, with the capacity toproduce 10 million barrels a day
to satisfy 10% of world demand.Saudi Aramco owns and operates an extensive
network ofrefining and distribution facilities and is also responsible for
gasprocessing and transportation. An array of internationalsubsidiaries and joint
ventures, including one of the world’slargest fleets of supertankers, deliver
crude oil and refinedproducts to customers worldwide.For Saudi Aramco,
efficient operations go far beyond runninga large, successful, and profitable
business. The company has afar-reaching impact on the global economy as
a whole.

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CHAPTER 2

BRIEF ABOUT INDUSTRY

The oil and gas industry are one of the largest on the planet. It’s also one of the most crucial
for overall economic performance: energy and fuel costs are vital parameters for a wide
variety of other industries. At the same time, oil/gas outputs are key ingredients for a variety
of other products, like plastics, pharmaceuticals, and asphalt.
This industry needs massive infrastructure and complex equipment to accomplish the hard
work of extracting valuable media from the ground, transporting huge volumes of it over long
distances, and refining it into a variety of end-products and chemical intermediates.
Oil and gas are two of the most heavily traded commodities in the world, and transporting
them is always a critical business action because of their value.
Oil and gas provide the world's 7.7 billion people with 57 percent of their daily energy needs.
The other 43 percent comes from coal, nuclear and hydroelectric power, "renewables" like
wind, solar and tidal power, and biomass products such as firewood.  Oil and gas represent
global commerce on a massive scale. World energy markets are continually expanding, and
companies spend billions of dollars annually to maintain and increase their oil and gas
production. Over 200 countries have invited companies to negotiate for the right to explore
their lands or territorial waters, hoping that they will find and produce oil and gas, create
local jobs and provide billions of dollars in national revenues.

Oil and gas represent global commerce on a massive scale. World energy markets are
continually expanding, and companies spend billions of dollars annually to maintain and
increase their oil and gas production. Over 200 countries have invited companies to negotiate
for the right to explore their lands or territorial waters, hoping that they will find and produce
oil and gas, create local jobs and provide billions of dollars in national revenues.

From a health, safety and environmental (HSE) perspective, there is a continuous concern for
safety in oil and gas operations, the impact that new projects have on surface environments,
the possibility of oil spills and the effect of pollutants such as CO2 (carbon dioxide, a product
of hydrocarbon combustion) on global climate change and air quality

Nevertheless, the oil and gas business are clearly a multifaceted, global industry that impacts
all aspects of our lives.

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PESTLE ANALYSIS

This detailed ‘PESTEL analysis of the oil and gas (petroleum) highlights the different
extrinsic scenarios which impact the business of the
PESTLE analysis is a framework which is important for companies so as to understand
market dynamics & improve business continuously. PESTLE analysis is also referred to as
PESTEL analysis. A PESTLE analysis is centered around the political, economic, social and
technological, environmental, and legal factors of a business.
POLITICAL:

The threats for the business of oil and gas companies which are influenced by political factor
and decisions are many geopolitical conflicts, political instability making the oil and gas
industry heavily influenced by politics. This thus has a major effect on the overall global oil
price and supply, which the world heavily relies on as a fossil fuel burning planet.

Political environment of the country plays significant role for Saudi Aramco. the company is
backed by the state; therefore, the policies are often influenced by the governmental rules#
regulations and other socio-political needs. The policies of Saudi Aramco are dependent
on the governmental plans for the oil production in order to maintain the prices.
ECONOMIC:

The oil and gas industry are easily influenced by the economic segment as there are so many
dependent sectors in this industry. Thus, if the economy is in the recession/inflation, there
will be fewer oil and gas products manufactured as people will try to cut down on their
energy expense such as vacation or having an own car to drive to work

SOCIAL:

These factors express migration, culture, religion, demography, income and ideological views on
an issue. Some current social trends and beliefs that can affect significantly the oil and industry

15
are: Increasing awareness and focus on more friendly fuels and decreasing in the use of “dirty”
fossil fuels such as oil sands, coal, and shale gas.

Oil and gas business activities aim to be able to create jobs and be able to boost the welfare
and prosperity of the people

TECHNOLOGICAL:

Technology environment has a definition of how the latest technology can affect the existing
condition of the industry It can also influence the organization with the need to get modern
technology. Such latest technologies are used for the exploration of oil and gas and use roads,
pipelines, transport and oil tanks. The second technologies are used in giving protection to
environment, workers, and enhance the efficiency of management with the use of new
software and hardware.

The main barriers that oil and gas industry face in bringing a new technology or innovation to the
market are- Regulations too stringent, the cost of development, uncertainty over oil and gas prices.

ENVIRONMENTAL:

The geographic position of the oil reserves and refinery has great influence on the activity of
the oil companies. environmental issues are the most curtail one for oil manufacturing
companies like Saudi Aramco because of the nature of Saudi Aramco’s business emission
and pollution are inevitable and hence they are bound to let into controversies, but
Saudi Aramco has done well by taking steps in emission reduction and pollution control. It
has taken initiatives to reduce harmful lead content in its products

When the investors make their investment in the oil and petroleum industry, they should
understand macro-environment. It is necessary to use oil and petroleum in the industry as the
use of oil and gas products remain necessary, so the government and concerned departments
should ensure strict regulations for the use of oil and gas to combat with the negative effects
of oil and gas industry. They should design the structure to utilize these resources in
preventive and safe manner.

LEGAL:

Legal aspects considered some law, regulation, and policies that will affect the industry or
company. Such as safety standards, labor laws, government policies. The legal factor
influences the exploration, exploitation, and the commercialization of oil products. This
industry has to face some legal positions like work regulation, work protection, social
protection, competition regulation, pollution, international trade and consumer protection.
The industry has to pay the subsidies, taxes for fuels and oil prices.

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PORTER’S FRAMEWORK

Porter's Five Forces of Competitive Position Analysis were developed in 1979 by Michael E
Porter of Harvard Business School as a simple framework for assessing and evaluating the
competitive strength and position of a business organisation. This theory is based on the
concept that there are five forces that determine the competitive intensity and attractiveness
of a market. Porter’s five forces help to identify where power lies in a business situation. This
is the thorough explanation of the Porter's design of 5 forces of Saudi Aramco Oil Company.

Competitiveness - Degree of rivalry- Medium

Competition in the domestic market is minimal for Saudi Aramco as it is the state-owned
player and hence will always let the preference during major deals in the field of expansion
and refining but for finished goods like hydrocarbon products# it has significant competition
from other domestic players such as SABIC. Also in theo overseas markets it must compete
with local giants such as Shell BP etc.
Threat of New Entrants- Low
A number of barriers are there for the brand-new entrants to take place in the consumer food
industry. Just a few entrants prosper in this industry as there is a need to understand the
customer need which requires time while current rivals are aware and has progressed with the
consumer commitment over their products with time. There is low danger of new entrants to
Saudi Aramco Oil Company as it has quite big network of circulation internationally
dominating with well-reputed image.
Bargaining Power of Suppliers- Low
In the food and beverage market, Saudi Aramco Oil Company owes the biggest share of
market requiring greater number of supply chains. In reaction, Saudi Aramco Oil Company
has likewise been worried for its suppliers as it believes in long-term relations.
Bargaining Power of Buyers- Low
Thus, Saudi Aramco Oil Company makes sure to keep its consumers satisfied. This has led
Saudi Aramco Oil Company to be one of the faithful businesses in eyes of its purchasers.
Threat of Substitutes- Very Low
Depletion of oil reserves has accelerated the hunt for substitutes such as fossil fuels, solar
power and nuclear power. But the technology is yet to develop to an extent where these
sources can be utilized to completely substitute petrol products. In the long run this
substitution will be inevitable.

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SUMMARY OF INDUSTRY ANALYSIS

Oil and natural gas are major industries in the energy market and play an influential role in
the global economy as the world’s primary fuel sources. Oil accounts for approximately 3%
of GDP and is one of the most important commodities in the world – petroleum products can
be found in everything from personal protective equipment, plastics, chemicals and fertilisers
through to aspirin, clothing, fuel for transportation and even solar panels.
Oil and gas business sector has really been showing its growth every day. It plays a very
important role in economic and political scenario of the world.
Demand for oil plunged in 2020 during the pandemic when lockdowns led the price to
fall below zero first time in history due to a major downturn in economic activity.
Oil prices have since risen sharply to nearly $100 per barrel following strong economic
recovery post-lockdowns. As the economy grows so does the demand for oil. Moreover,
rising geopolitical tensions between Russia and Ukraine and in the Middle East are stoking
supply fears. This is contributing to rising inflation and concerns about economic recovery.

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CHAPTER 3

3.1 COMPANY HISTORY IN BRIEF

The story of Saudi Aramco talks about the discovery and development of the greatest energy
reserves the world has ever known and the rapid transformation of Saudi Arabia from desert
kingdom to modern nation-state.
Saudi Aramco is the world's largest oil producer. Officially known as Saudi Arabian Oil
Company, the company is primarily state-owned and is based in Dhahran, Saudi Arabia. It is
the world's largest oil producer and the world's profitable company. The company was
established in 1933 and began drilling in 1938

Saudi Aramco is engaged in prospecting, exploring, drilling, extracting, processing,

manufacturing, refining and marketing hydrocarbon substances within the Kingdom and has
interests in refining, petrochemical, distribution, marketing and storage facilities outside the
Kingdom.

Saudi Arabian Oil Co. engages in the exploration, production, transportation, and sale of
crude oil and natural gas. It operates through the following segments: Upstream,
Downstream, and Corporate. The Upstream segment includes crude oil, natural gas and
natural gas liquids exploration, field development, and production. The Downstream segment
focuses on refining, logistics, power generation, and the marketing of crude oil, petroleum
and petrochemical products, and related services to international and domestic customers.
The Corporate segment offers supporting services including human resources, finance, and
information technology.

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HISTORY
Saudi Aramco was established following a concession agreement between the Saudi Arabian
government and the Standard Oil Company of California in 1933. The company began
primary drilling operations shortly after the agreement, commencing its first commercial oil
production in 1938.3

The company expanded rapidly across Saudi Arabia over the next decade, reaching crude
oil production of 500,000 barrels per day in 1949. In order to keep up with production, the
firm built out its distribution pipeline and built the Trans-Arabian Pipeline - the longest in the
world.

A major step in Saudi Aramco's move toward domination of the global oil markets came in
1960, with the foundation of OPEC. The Organization of Petroleum Exporting Countries
combined the world's major oil producers, excluding the USA and Russia, into a group
designed to coordinate oil production policy. OPEC is now seen as the most important
organization in the oil market, with huge influence over prices.

In 1973, the Saudi Arabian government purchased a 25% interest in the company, gradually
increasing its stake to 100% in the late 1970s. The Saudi Arabian Oil Company was officially
established in the 1980s. Throughout the 1990s, it built global alliances and partnership deals.

3.2 TOP MANAGEMENT

Amin H Nasser President and CEO Of Saudi Aramco

Yasir Othman Al-Rumayyan Chairman of Saudi Aramco’s
Board Of Directors
Khalid Al-Falih Board Chairman
Nabeel A. Al Mansour Senior Vice President, General Counsel
and Corporate Secretary
Nasir K. AI Naimi Senior Vice President
Mohammad M. AI Tuwaijri Director
Khalid H AI Dabbagh Director
Stuart T Gulliver Director

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 Amin H. Nasser is the president and chief executive officer of Saudi
Aramco, the world’s leading integrated energy and chemicals
enterprise, and the largest provider of crude oil to global markets.
Nasser is actively engaged in the advancement of people through
education and training, and advancing the company’s innovation and
technology strategy. 

President and CEO

Of Saudi Aramco

Yasir bin Othman Al-Rumayyan is a Governor of the Public

Investment Fund, the sovereign wealth fund of the Kingdom of Saudi
Arabia. He also serves as the Chairman of English football club
Newcastle United and the Chairman of state-owned petroleum
company Saudi Aramco.

Chairman of Saudi Aramco’s

Board of Directors

3.3.1 VISION
As per latest, Saudi Aramco is the world s leading integrated energy and chemicals company,
focused on maximizing income, facilitating the sustainable and diversified expansion of the
Kingdom s economy, and enabling a globally competitive and vibrant Saudi energy sector.

3.3.2 MISSION
“To achieve resilient value creation through crude oil cycles, capture value across
hydrocarbon chain and to become a leading integrated energy and chemicals company that
focuses on the maximization of income and facilitates sustainability and diversification of the
expansion of the kingdom’s economy.”

Latest events
Saudi Aramco overtakes Apple as world’s most valuable company.
Saudi Arabian Oil Company (“Aramco”) today signed a Memorandum of Understanding
(MoU) with China Petroleum & Chemical Corporation (Sinopec) covering multiple
areas of potential collaboration between the parties in Saudi Arabia
Valvoline Inc (VVV.N) is selling its unit that makes lubricants, coolants and other
automotive products to state-owned Saudi Aramco for $2.65 billion in cash to sharpen
focus on its retail services business

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SWOT ANALYSIS OF SAUDI ARAMCO

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is a

framework to help assess and understand the internal and external forces that may create
opportunities or risks for an organization.

Strengths and weaknesses are internal factors. They are characteristics of a business that give
it a relative advantage (or disadvantage, respectively) over its competition. Opportunities and
threats, on the other hand, are external factors. Opportunities are elements of the external
environment that management can seize upon to improve business performance (like revenue
growth or improved margins).

SWOT Analysis of one of the best methods that Saudi Aramco can use to find out its internal
Strengths and Weaknesses and external Opportunities and Threats. SWOT Analysis helps
Saudi Aramco to find out where it stands in the market by giving it an overview of its
business.

Strengths of Saudi Aramco

Strengths are the most important factor that helps Saudi Aramco to maintain its position in
the market. Following are some of the strengths of Saudi Aramco:
Large Production and Refining capacity – Saudi Aramco has a large capacity for production
and refining its materials. This helps the company to serve a large audience in the market
with its products.
 Advancement in Technology – Saudi Aramco uses the latest technology in the
production and management of its products. This helps it to be efficient in its process
and in return get more production.
 Low Price – the cost per production of a barrel of Aramco is one of the lowest in the
market all over the world. Thus, this helps it to enjoy the advantages of a low-cost
environment.
 

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Weaknesses of Saudi Aramco/Areas of Improvement
Weaknesses are the factors that act as a flaw in the growth of Saudi Aramco. It needs to find
these flaws in its company and try to fix them as soon as possible. Following are some of the
weaknesses of Saudi Aramco:
 High dependability on only one product – Saudi Aramco is more dependent on the
profitability of only one of its products which are crude oil. If this goes on them the
company may face trouble in the future if any changes occur in the profitability of
that product.
 Corporate Governance and Transparency – Saudi Aramco faces a large disadvantage
due to corporate governance and transparency.
 
Opportunities for Saudi Aramco
Opportunities are the factors that help Saudi Aramco grow exponentially in its industry. The
company needs to find such opportunities that can be helpful to it and make them their
strengths. Following are some of the opportunities for Saudi Aramco:

 Global economic growth – Due to the increase in the demand for energy and
increasing dependency on fuels it can be an opportunity for Saudi Aramco to grow in
its field.
 Saudi Aramco’s IPO – The release of the initial public offering of Saudi Aramco
will help in bringing out the real valuation of the company. This will ensure more
financial and operational transparency for the company.
 
Threats to Saudi Aramco/ Challenges
Threats are the external factors of Saudi Aramco that affect the growth of the company in a
negative way. It needs to be aware of such events in the future and be prepared with proper
precautionary measures. Following are some of the threats to Saudi Aramco:

 Exploration of new products – The global market share of Saudi Aramco can
decrease if other countries are successful in the exploration of new products. This will
result in a threat to Saudi Aramco.
 Eco-friendly fuel – If the dependability on renewable energy and non-conventional
sources of energy increases then the company may face a large drawback as their
products are not environment friendly.

With this, we come to an end of the SWOT Analysis of Saudi Aramco. This analysis helps
the company to grow in the market by analyzing its position in the market and giving a wide
idea.

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7-S FRAMEWORK
The McKinsey 7S Model refers to a tool that analyzes a company’s “organizational design.”
The goal of the model is to depict how effectiveness can be achieved in an organization
through the interactions of seven key elements – Structure, Strategy, Skill, System, Shared
Values, Style, and Staff.

1. Strategy
Competitive pressures Saudi Aramco’s strategy also takes into consideration the competitive
pressures and activities of competitors. The strategy addresses these competitive pressures
through suggestive measures and actions to address competition via strategic tactics and
activities that ensure sustainability to Saudi Aramco via adapting to market changes, and
evolving consumer trends and demands.
1.1. Clearly defined 
The strategic direction and the overall business strategy for Saudi Aramco are clearly defined
and communicated to all the employees and stakeholders. This helps the organization manage
performance, guide actions, and devise different tactics that are aligned with the business
strategy. Moreover, the business strategy’s definition and communication also make
operations for Saudi Aramco more transparent and aligns the responsibilities and actions of
the company.
2. Structure
2.1 Organizational hierarchy
Saudi Aramco has a flatter organizational hierarchy that is supported by learning and
progressive organizations. With lesser managerial levels in between and more access to the
senior management and leadership, the employees feel more secure and confident and also
have higher access to information. Moreover, the flatter hierarchy also allows quicker

24
decision-making processes for Saudi Aramco and increases organizational commitment in the
employees.

2.2 Communication 
Saudi Aramco has a developed and intricate system for ensuring communication between
employees, and different managerial levels. The communication systems at Saudi Aramco
enhance the overall organizational structure. The systematic, defined, and organized
communication allows an easy flow of information and ensures that no organizational tasks
and goals are compromised because of a lack of communication, or misunderstandings. 
3. Systems
3.1. Organizational systems in place
Saudi Aramco has defined and well-demarcated systems in place to ensure that the business
operations are managed effectively and that there are no conflicts or disputes. The systems at
Saudi Aramco are largely departmental in nature, and include, for example:

 Operations

 Sales
 Supply chain management
 Public Relation Management
 Human resource management
 Finance

 Marketing

 Operations

3.2. Defined controls for systems

Each of the defined and demarcated systems at Saudi Aramco has especially designed tools
and methods as controls for evaluating performance and goal attainment. These controls and
measures are designed specifically in different departments based on the nature of their tasks
and responsibilities. Moreover, each department also designs specific controls for members
for performance evaluation, as well as for inter-departmental tasks and responsibilities.

4. Shared values 
4.1. Core values
The core values at Saudi Aramco are defined and communicated to foster a creative and
supportive organizational structure that will allow employees to perform optimally, and
enhance their motivation and organizational commitment. The core values at Saudi Aramco
include, but are not limited to:

 Quality

25
  Trust
 Creativity
 Honesty
 Transparency
 Accountability
4.2 Corporate culture
Saudi Aramco encourages an inclusive culture that celebrates diversity. The company has an
international presence, and production units that are spread across different countries, as
such, Saudi Aramco ensure that its organizational culture is supportive of diversity, and has
internal policies to reduce incidences of discrimination.

The corporate culture at Saudi Aramco also encourages innovation and creativity by allowing
independence for growth to individuals and teams –thus helping them refine their careers as
well as personalities. Lastly, the corporate culture at Saudi Aramco also has a supportive
leadership which works towards increasing employee motivation and job satisfaction by
giving way to visibility and accessibility.

5. Style 
5.1. Effectiveness of leadership style
The participative leadership style is highly effective in achieving the business goals and
vision of the organization. Employees feel to be active members of the organization who are
valued for their suggestions, feedback, and input. Moreover, through participative leadership,
leaders and managers are able to identify current and potential conflicts within the Saudi
Aramco organization, and actively work to resolve them as soon as possible.

5.2. Management/leadership style

Saudi Aramco has a participative leadership style. Through a participative leadership style,
Saudi Aramco is able to engage and involve its employees in decision-making processes and
managerial decisions.

This also allows the leadership to regularly interact with the employees and different
managerial groups to identify any potential conflicts for resolution, as well as for feedback
regarding strategic tactics and operations.

Through its participative leadership, Saudi Aramco is able to enhance employee motivation,
and increase organizational commitment and ownership amongst employees as well as other
stakeholders.

6. Staff
6.1. Number of employees
Saudi Aramco has employed a large number of employees. The number of employees varies
from country to country as per the requirements and needs of the business and operations.
The global team of Saudi Aramco is an inclusive one that accepts, and encourages diversity,

26
and works in synchronization with members to ensure attainment of business goals. The team
member sand employees are the most important part of business success for Saudi Aramco.

6.2. Employee skill level vs business goals

Saudi Aramco has a sufficient number of employees employed across its global operations.
Employees for different job roles and positions are hired internally as well as externally –
depending on the urgency and the skill levels required. Based on this, it is seen that Saudi
Aramco has employees who are skilled as per the requirements of their job roles and
positions. All employees are given in house training to familiarize themselves with the
company and its values. External training along with in-house training is provided for skill
level enhancement.
7. Skills
7.1 Skill management
Saudi Aramco pays particular attention to enhancing the skills and capacities of its
employees. It arranges regular training and workshops – internally as well as externally
managed- to provide growth and development opportunities for its employees. Saudi Aramco
focuses on personal as well as professional growth for its employees and works accordingly
with them.

7.2 Employee skills

Saudi Aramco has a commendable workforce, with high skills and capacities. All employees
are recruited based on their merit and qualifications. Saudi Aramco prides itself on hiring the
best professionals and grooming them further to facilitate growth and development.

27
ANSOFF MATRIX

The Ansoff Matrix, often called the Product/Market Expansion Grid, is a two-by-two
framework used by management teams and the analyst community to help plan and evaluate
growth initiatives. The Ansoff matrix offers four strategic choices to businesses to choose
from – market penetration, market development, product development and diversification. An
organization or a business is to choose any of these four strategies, or a combination –
deepening on various internal and external factors.

Market penetration

The market penetration strategy is used by businesses that seek growth for existing products
in markets where their brands are existing, and already operational.

 increased production capacity will allow The Oil and Gas Industry to reach more
customers within the same market.

 With higher marketing investment, the

 Oil and Gas Industry will be able to increase its market penetration within the
existing markets for existing products.
28
  The Oil and Gas Industry can also increase its investment in marketing and
advertising activities to increase market penetration.

Market development

Market development is the name given to a growth strategy where the business seeks to sell
its existing products into new markets. By this the Oil and Gas Industry can enhance its
business growth through introducing existing products in new markets by following
strategies-

It involves efforts on part of the Saudi Aramco's to create new markets and channels for the
current products. This may involve – entering international markets, entering new domestic
markets, tying up with complimentary companies to drive sales of current products etc. 

 The Oil and Gas Industry should invest in research and development to identify
possible new markets and consumer segments for its products.

 The Oil and Gas Industry can also explore new consumer segments in the same
market for its products.

 The Oil and Gas Industry should also educate consumers in new markets for its
products.

Product development

Product development is the name given to a growth strategy where a business aims to
introduce new products into existing markets. This strategy may require the development of
new competencies and requires the business to develop modify products which can appeal to
existing markets.

Product development involves Saudi Aramco's either adding new features to the current
product or developing new products for the existing market.

It can introduce modifications and improvements in existing products to offer consumers new
and enhanced offerings. This will lead to increased sales and consumption of the product.

Diversification

Diversification is the name given to the growth strategy where a business markets new
products in new market. This is an inherently more risk strategy because the business is
moving into markets in which it has little or no experience.

29
Saudi Aramco's can use diversification strategies when both the product and market is new to
the firm. Diversification strategy is used when an organization see an opportunity either in an
adjacent industry or in a completely different industry

Diversification is an important and allows businesses like the Oil and Gas Industry to remain
competent, innovative, and competitive. Henceforth any company under Oil and Gas sector
therefore requires coming up with ideas of expectations and assessing the potential risks that
are associated with the undertaking.

BCG MATRIX OF ARAMCO

The Boston Consulting group's product portfolio matrix (BCG matrix) is designed to help
with long-term strategic planning, to help a business consider growth opportunities by
reviewing its portfolio of products to decide where to invest, to discontinue, or develop
products. It's also known as the Growth or Share Matrix.

The matrix is a tool used internally by management to assess the current state of value of a
firm's units or product lines. The BCG growth-share matrix contains four distinct categories:
"dogs," "cash cows," "stars," and “question marks.”

30
COMPANY ANALYSIS

The Saudi Arabian Oil Company (also called Saudi Aramco) is one of the largest companies
in terms of profits and revenue. This state-owned organization or enterprise operates in the oil
and gas industry and has the biggest hydrocarbon network in the world by the name the
Master Gas System. The company’s topmost managers focus on evidence-based leadership
strategies that can make it successful and support the Saudi Vision 2030.

Saudi Aramco’s operations span the globe. The company is the world leader in crude oil
production, with the capacity to produce 10 million barrels a day to satisfy 10% of world
demand. Saudi Aramco owns and operates an extensive network of refining and distribution
facilities and is also responsible for gas processing and transportation. An array
of international subsidiaries and joint ventures, including one of the world’s largest fleets of
supertankers, deliver crude oil and refined products to customers worldwide. For Saudi
Aramco, efficient operations go far beyond running large, successful, and profitable business.
The company has a far-reaching impact on the global economy as a whole.

Saudi Aramco engages key stakeholders in the pursuit of continuous impact research and
technological developments that have the potential to enable business performance. This
initiative has resulted in cutting-edge innovations that have made it possible for this
corporation to achieve its objectives.

The president and chief executive officer (CEO) of Saudi Aramco are always keen to
formulate the appropriate mission and vision statements, business models, and objectives that
become the foundations of every strategy. They achieve this goal by collaborating with
different stakeholders, examining the changes experienced in the micro and macro
environments, monitoring emerging issues in the oil and gas industry, considering legal and
political attributes of the targeted markets, and taking new technological developments into
consideration.

31
Saudi Aramco is engaged in prospecting, exploring, drilling, extracting, processing,
manufacturing, refining and marketing hydrocarbon substances within the Kingdom and has
interests in refining, petrochemical, distribution, marketing and storage facilities outside the
Kingdom. Saudi Aramco’s operating segments are established on the basis of those
components that are evaluated regularly by the CEO, considered to be the Chief Operating
Decision Maker. The Chief Operating Decision Maker monitors the operating results of
Saudi Aramco’s operating segments separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on
revenues, costs and a broad range of key performance indicators in addition to segment
profitability. For management purposes, Saudi Aramco is organized into business units based
on the main types of activities. At December 31, 2019, Saudi Aramco had two reportable
segments, Upstream and Downstream, with all other supporting functions aggregated into a
Corporate segment. Upstream activities include crude oil, natural gas and natural gas liquids
exploration, field development and production. Downstream activities include the refining,
logistics, power generation, and marketing of crude oil, petroleum and petrochemical
products and related services to international and domestic customers. Corporate activities
include primarily supporting services including Human Resources, Finance and IT,
not allocated to Upstream and Downstream. Transfer prices between operating segments are
on an arm’s length basis in a manner similar to transactions with third parties.

32
CHAPTER 4
INTRODUCTION TO MANAGEMENT CONCEPT

FUNDAMENTAL & TECHNICAL ANALYSIS

INTRODUCTION TO FUNDAMENTAL ANALYSIS

Fundamental analysis is basically done for long term and mid-term investment which is also
called as delivery-based investment trading. The main important aim behind is to study and
understand the company in which you are planning to invest your earned money and get
excellent returns.
Fundamental analysis is the method of evaluating securities by attempting to measure the
intrinsic value of a particular stock. It is the study of everything from the overall economy
and industry condition, to the financial condition and management of specific companies that
is using real data to evaluate a stock’s value. The method utilizes items such as revenue,
earnings, return on equity and profit margins to determine a company’s underlying value and
potential for future growth.
Fundamental analysis is really a logical and systematic approach to estimating the future
dividends and share price. It is based on the basic premise that share price is determined by a
number of fundamental factors relating to the economy, industry and company. Hence, the
economy fundamentals, industry fundamentals, and company fundamentals have to be
considered while analyzing a security for investment purpose. Fundamental analysis is, in
other words, a detailed analysis of the fundamental factors affecting the performance of
companies.
Fundamental analysts consider a company’s financial positions and performance, the market
in which it operates, competitors and the economy. The most important source of data for

33
fundamental analysis is the company’s financial statements. These include the income
statement, balance sheet and cash flow statements.

Data from these statements can be used to calculate ratios and metrics that reflect the
company’s performance, health and growth rates. Industry data and economic factors, like
interest rates and retail spending, are also used to forecast future growth rates. Ultimately, a
fair value is arrived at after comparing several models and ratios.

Advantages & Disadvantages of Fundamental Analysis:

Advantages of Fundamental Analysis:

 Fundamental Analysis is a good tool for long-term investments that try to achieve a
growth of capital as it will help to identify assets that represent a good value in longer-
term investment.

 One of the most notable but less obvious rewards of fundamental analysis is the
development of solid understanding of the business and industry due to the in-depth,
extensive research and analysis required to conduct fundamental analysis.

Disadvantages of Fundamental Analysis:

 There are also several drawbacks to fundamental analysis. It’s important to be realistic
about its limitations. Fundamental analysis is time consuming – each company must be
studied independently and in detail. Most of the information used in fundamental analysis
is widely available. To gain an edge with fundamentals, you need to find unique
datasets that aren’t available to most investors.
 Fundamental analysis tells you very little about what might happen in the short term.
Short term price movements and volatility cannot be forecast by looking at financial
statements. Fundamental analysis is a lot less precise than often perceived. Valuation
models like the discounted cash flow model are based on numerous assumptions which
are seldom very accurate. Target valuations can be useful on a relative basis but are
limited when it comes to valuing a company more than one or two years into the future.

34
LITERATURE REVIEW

A literature review is a comprehensive summary of previous research on a topic. The

literature review surveys scholarly articles, books, and other sources relevant to a particular
area of research. The review should enumerate, describe, summarize, objectively evaluate
and clarify this previous research.

(Muspratt, 2019) talked about the three key sectors in oil and gas, the current state of the
industry and future outlook.

(adamkasi, 2016) In analysis explore Saudi Aramco (SA) Company, which is one of the

world's most renowned and valuable oil companies.

Solare (2007) conducted a study on the future challenges of the Saudi company which is
known
as Aramco and very famous worldwide. It is projected that in the next 5 years, most
scientists,
engineers, and professionals will leave the petroleum business, putting the petroleum sector
in a precarious position.

IvyPanda. (2022, June 21). Market Study and Market Intelligence for Saudi Aramco. Saudi
Aramco is a knowledge-based organization. Its important assets are the human resource, and
the vast resources composed of thousands of oil wells which number has remained a secret to
the eyes of its competitors and the general public.

Noel Maurer (2018), "Filling the Empty Quarter: Saudi Aramco and the World Oil Market
Harvard Business Review Case Study. Published by HBR Publications.
The efficiency of Financial Ratios Analysis for Evaluating Companies’ Liquidity. (2018).
International Journal of Social Sciences & Educational Studies.

35
According to Datamonitor (2010, as cited by Hokroh, 2014), leading oil and gas companies
are similar in size, power and capabilities and also contributes to competitive intensity. Price
wars may be initiated if one competitor tries to manipulate prices. There may also be a
slowdown in production if there is a backlog in the liquid production and reserves that are
key to the process (Hokroh, 2014)

FINANCIAL RATIOS

Financial ratios and their importance:

Assessment of financial performance and soundness is critical to any company. This gives the
general direction of a firm in assessing its strength and weakness in comparison to other peers
in the industry. Information obtained from financial ratios analysis is important not only to a
firm's manager but also relevant to stakeholders in making informed decisions.

Ratio analysis or in other terms financial ratios are evidenced to be used in calculating the
profitability and financial position of an organization. During the process of ratio analysis,
the organization concerned usually involves some parties that include the customers, the
management, owners of the firm, suppliers, competitors, and other relevant parties these
individuals are included with a view of applying the company's financial statements
concerning their evaluations

The main reason for the use of ratio analysis has been to understand the power of financial
institutions and also the shift in the management of the organization. This means that ratio
analysis was useful in understanding the credit approach and the managerial approach of the
firm concerning how it pays its debts.

This study is an assessment of Aramco company, by adopting financial ratios analysis. The
data is obtained from the company’s financial statements during 3 years.

Methodology and data

In table 1, all data of Aramco was gathered through official website of Saudi-Aramco. The
data was used to determine the ratios by computing the formulas. The ratios were measured
only for the past three years in which the financial activity of the company is analyzed.

All amounts in millions of Saudi Riyals unless otherwise stated*

36
Consolidated balance sheet is given on next page

37
Particulars Table Dec
1 2021 Dec 2020 Dec 2019
611241 398,879 408,196
 Total Current Assets
Cash and Short-Term Investments 326652 214,033 223,173
Cash - -
Cash & Equivalents 299579 207,232 177,706
Short Term Investments 27703 6,801 45,467
Total Receivables, Net 181690 114,078 130,307
Accounts Receivables – Trade, Net 140373 85,183 93,526
Total Inventory 74703 51,999 42,607
Prepaid Expenses - -
Other Current Assets, Total 28196 18,769 12,109
2,161,690 1,914,261 1,494,126
 Total Assets
Property/Plant/Equipment, Total – Net 1244316 1,209,460 982,014
Property/Plant/Equipment, Total – 1963887 1,862,474 -
Gross
Accumulated Depreciation, Total -719571 -653,014 -
Goodwill, Net 100188 100,204 -
Intangibles, Net 60480 64,343 30,122
Long Term Investments 93720 88,837 39,694
Note Receivable – Long Term - -
Other Long-Term Assets, Total 52745 52,538 34,100
Other Assets, Total -
303828 243,211 215,571
 Total Current Liabilities
Accounts Payable - -
Payable/Accrued 124689 93,740 78,231
Accrued Expenses - -
Notes Payable/Short Term Debt 17617 60,316 0
Current Port. Of LT Debt/Capital 56933 38,841 24,895
Leases
Other Current liabilities, Total 104589 50,314 112,445
882,022 813,167 447,891
 Total Liabilities
Total Long-Term Debt 436371 436,920 150,690
Long Term Debt 398263 393,353 150,690
Capital Lease Obligations 38108 43,567 -
Deferred Income Tax 74850 53,621 44,471
Minority Interest 167411 110,246 11,170
Other Liabilities, Total 66973 79,415 37,159
1,280,668 1,101,094 1,046,235
 Total Equity
Redeemable Preferred Stock, Total - - -
Preferred Stock – Non-Redeemable, - - -
Net
Common Stock, Total 60000 60,000 60,000
Additional Paid-In Capital 26981 26,981 26,981
Retained Earnings (Accumulated 1024582 901,330 951,834
Deficit)
Treasury Stock - Common -2828 -3,264 -3,750
ESOP Debt Guarantee - -
Unrealized Gain (Loss) 5769 5,356 -
Other Equity, Total -1247 445 -
2162690 1,914,261 1,494,126
 Total Liabilities & 38
Shareholders' Equity
219817 199,882.8 199,882.8
 Total Common Shares
0 0
Outstanding
Following are the financial ratios that will be analysed in this report:

 Ratios that are used to find the liquidity of ARAMCO

 Ratios that are used to find the leverage of ARAMCO
 Ratios that are used to derive the profitability of the company ARAMCO
 Measures to value the market status for the ARAMCO
 Ratios that determine the financial performance of ARAMCO

Current ratio

The current ratio measures a company's short-term debt paying ability. The ratio measures
a company's ability to meet obligations without having to liquidate inventory.

Current Ratio=   Current Assets / Current Liabilities.

Current ratio of ARAMCO for year 3 years

2019 2020 2021

Current assets 408196 398879 611241

Current liabilities 215571 243211 303828

Current ratio 1.89 1.64 2.01 39

A good current ratio is between 1.2 to 2, which means that the business has 2 times more
current assets than liabilities to covers its debts. A current ratio below 1 means that the
company doesn’t have enough liquid assets to cover its short-term liabilities.

From the 4-year report, the

company has managed a
strong current ratio, which
implies its strong position
to meet
unpredicted demands of cash.
The highest figure was
achieved in 2018, which
represented that
Nestle Company was able to
meet 95% of its short-term
obligations
From the 4-year report, the
40
company has managed a
strong current ratio, which
implies its strong position
to meet
unpredicted demands of cash.
The highest figure was
achieved in 2018, which
represented that
Nestle Company was able to
meet 95% of its short-term
obligations
From the 3-year report, the company has managed a strong current ratio, which implies its
strong position to meet unpredicted demands of cash. The highest figure was achieved in
2021, which represented that ARAMCO was able to meet 95% of its short-term obligations.

Debt-To-Equity Ratio
The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders’
equity and debt used to finance a company’s assets.
The debt-equity ratio is a measure of the relative contribution of the creditors and
shareholders or owners in the capital employed in business. Simply stated, ratio of the total
long term debt and equity capital in the business is called the debt-equity ratio.

The ratio is used to evaluate ARAMCO’s equity in its financial statements by examining the
company’s overall debt figures.

41
Formula for calculating Debt to Equity Ratio
Debt-to-equity ratio = company’s total liabilities / total shareholders’ equity.

2019 2020 2021

Debt -equity 0.43 0.73 0.69
ratio %

Although it varies from industry to industry, a debt-to-equity ratio of around 2 or 2.5 is

generally considered good. This ratio tells us that for every dollar invested in the company,
about 66 cents come from debt, while the other 33 cents come from the company’s equity.
What constitutes a “good” debt-to-equity ratio depends on the company and the industry.
Typically, it’s best to have a debt-to-equity ratio below 1.0, though, you should at least aim
for below 2.0. As expected, the lower your debt-to-equity ratio, the better. When you have a
low debt-to-equity ratio, your company has lower liabilities compared to its assets.

Profitability ratio
Profitability ratio is used to evaluate the company’s ability to generate income as compared to
its expenses and other cost associated with the generation of income during a particular
period. This ratio represents the final result of the company.
ARAMCO’s profitability is measured by net profit margin. The profit margin compares a
company’s performance to that of its competitors in the market.

Net Profit Margin is calculated using the formula =>

Net Profit Margin = (Net Income / revenue) * 100.
Return on asset =Net income/total assets
Return on equity = Net income/total equity
2019 2020 2021
Net income 330,693 183763 412396
Total revenue 1,105,696 768,109 1,346,930
146859

42
 Net Profit 29.9 23.9 30.6
margin %
Total assets 1,494,126 1,914,261 2,162,690
Total equity 1,046,235 1,101,094 1,280,668
ROE% 0.316= (32) 0.166 =(17) 0.32
ROA% 0.22 0.095 =(10) 0.19

The net profit margin, or simply net margin, measures how much net income or profit is
generated as a percentage of revenue. It is the ratio of net profits to revenues for a company
or business segment.
Return on equity is measured by dividing net income over equity to analyze how efficiently a
company is making money from the equity investments. One cannot declare a particular
range of ROE as a good return on equity. For some industries, an ROE of more than 25% is
desirable, while for others more than 15% maybe considered exceptional.
Besides, the return on asset ratio measures the company’s net income to its total assets. As for
ARAMCO, their return on asset ratio increased the most in 2021.
In 2021, ARAMCO had increased their net profit margin.
Liquidity Ratio
A liquidity ratio is a type of financial ratio used to determine a company's ability to pay its
short-term debt obligations.
The quick liquidity ratio is the total amount of a company's quick assets divided by the sum
of its net liabilities and reinsurance liabilities.

43
Under this subsection, we shall
analyse three components-
Current ratio,
Cash ratio, and Quick ratio and
evaluate the position of Nestle
Company
Under this subsection, we shall
analyse three components-
Current ratio,
Cash ratio, and Quick ratio and
evaluate the position of Nestle
Company
Under this subsection, we shall
analyse three components-
Current ratio,

44
Cash ratio, and Quick ratio and
evaluate the position of Nestle
Company
Under this subsection, we shall
analyse three components-
Current ratio,
Cash ratio, and Quick ratio and
evaluate the position of Nestle
Company
Under this subsection, we shall
analyse three components-
Current ratio,
Cash ratio, and Quick ratio and
evaluate the position of Nestle
Company
Under this subsection, we shall analyze 3 components – Current ratio, Cash ratio, Quick ratio
and evaluate the position of the company.
Current Ratio = Current Assets / Current Liabilities
Cash Ratio = Cash + Cash Equivalent/Total Current Liabilities

45
Quick Ratio = Current Assets – Inventories /Current Liabilities

2019 2020 2021

Current assets 408,196 398,879 611,241
Inventories 42,607 51,999 74,703
Current liabilities 215,571 243,211 303,828
Cash & cash 177,706 207,232 299,579
equivalent
Current ratio 1.89 1.64 2.011
Cash ratio 0.824 0.85 0.98
Quick ratio 1.69 1.42 1.76

A good liquidity ratio is anything greater than 1. It indicates that the company is in good
financial health and is less likely to face financial hardships. The higher ratio, the higher is
the safety margin that the business possesses to meet its current liabilities.
Cash ratio
Cash ratio is another important aspect of evaluating a firm position concerning meeting its
short-term obligations. In this aspect, the cash ratio evaluates the capability of a firm to offset
the short-term obligations with its cash and cash equivalents. This is a stricter parameter
because it emphasizes the firm's meeting short term demands with its most liquid assets- cash
and cash equivalents
Aramco has reported fluctuations in its cash ratio structure over the 3 years. In 2021, it had a
better position as compared to the other two years. A higher value implies the company is
better off. 2019 and 2020 recorded the least cash ratio of 82 & 85 %. However, in 2021, the
company adopted a more focused approach and increased its efficiency.
Quick ratio
Quick ratio assesses the extent to which cash and other currents assets can be readily
converted into cash and meet a company’s short-term obligations.
In year in 2020, ARAMCO reported the lowest ratio, which implies that it could only 1.42 of
its short-term obligations using cash and current assets. in 2021, the company was at the
highest position to convert its cash and current assets into cash and pay off its cash demands.
This shows a positive trend of ARAMCO, meaning that it can manage its liquidity at any
given point in the four years, as well as using the other cash in meeting other company’s
obligations efficiently.
Conclusion –

To conclude the overall analysis of the ARAMCO. First, the company values were discussed,
then the financial analysis was done with the help of financial ratios. ARAMCO has
performed almost every year by maintaining high ratios and high-profit margins. The
company has competitors operating in the same market as Saudi Arabia. Besides these, the

46
investments and earning of the company is also used for military, and social purposes as well
as princes living is also expenses by the company. Therefore, the company has a bright future
in the country by having more than average revenues

INTRODUCTION TO TECHNICAL ANALYSIS

Technical analysis is a method of evaluating securities by analyzing the statistics generated

by market activity, such as past prices and volume. Technical analysts do not attempt to
measure a security’s intrinsic value, but instead use charts and other tools to identify patterns
that can suggest future activity.
Despite all the exotic tools it includes, technical analysis really just studies supply and
demand in a market in an attempt to determine what direction, or trend, will continue in the
future. It attempts to understand the emotions in the market by studying the market itself, as
opposed to its components.

Technical analysis looks at the price movement of a security and uses this data to predict its
future price movements.
Technical analysis can be used on any security with historical trading data. This includes
Forex, stocks, futures and commodities, fixed-income securities, etc. In this part of the
tutorial, well emphasize analyzing Forex in our examples, but keep in mind that these

47
concepts can be applied to any type of instrument. In fact, technical analysis is more
frequently associated with commodities and Forex.
Unlike fundamental analysis, which tries to determine the underlying value of a trading
instrument, technical analysis looks for when the market actually begins to spot mispricing.
Once the mispricing is identified, the market will tend to correct the situation. This event
however requires some time to occur and takes place gradually, forming a trend on the chart.
A technical traders aim will be to enter the market as the adjustment process is under way and
leave once it has come to an end.

Technical Analysis

Technical analysis of the following company is done on the following parameters as given
below:

1. Relative Strength Index (RSI)

2. Moving Average Convergence Divergence (MACD)

RSI

What Is the Relative Strength Index (RSI)?

The relative strength index (RSI) is a momentum indicator used in technical analysis. RSI
measures the speed and magnitude of a security's recent price changes to
evaluate overvalued or undervalued conditions in the price of that security.

The primary trend of the stock or asset is used to ensure that the indicator's readings are
properly understood. Well-known market technician Constance Brown widely promoted the
idea that an oversold reading on the RSI that occurs in an uptrend is likely much higher than
30% while an overbought reading on the RSI that occurs during a downtrend is much lower
than 70%.

Traditional interpretations and usage of the RSI dictate that values of 70 or above suggest
that a security becomes overbought or overvalued and may be primed for a trend reversal or
corrective price pullback. An RSI reading of 30 or below indicates an oversold or
undervalued condition.

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RSI FOR SAUDI ARAMCO

RSI indicator is a momentum indicator, which measures over bought and over sold conditions
in the market. The indicator oscillates between 0 and 100, with the values below 30
traditionally showing oversold conditions in the market, which in this case doesn’t go below
30.

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A BRIEF REPORT ON PROJECT WORK DONE AT THE SUMMER
INTERNSHIP:

During my summer internship program, I was associated with Bajaj Allianz which is one of
the leading private life insurance companies in India for the period of 2 months i.e.; from 5th
May 2022 to 16th July 2022 and was selected by the company through the interview process.

On the first day, our mentor taught us about the work ethics, work timings and how to behave
at a workplace. We also explored the Share khan app which is used for trading. The company
also gave us a task to find out the highlighted news about the stock market and watch two
motivational videos on a daily basis.

On the very next day, we were given a brief idea about the stock market, NSE and BSE. We
were also instructed about selling and buying of the stocks on the app.

We were also directed to open our demat account and further we started doing intra-day
trading through Sharekhan app. Trading was carried out on the daily basis for 15-20 days. We
were asked to find potential for insurance policy of Bajaj Allianz.

Another task which was given to us was about to show our creative side by introducing
products with innovative ideas in the market or by bringing innovation to existing products.

We were given another task which is to convince five people to open their demat ac on share
khan app. Lastly, we were taught about the RSI (relative strength index).

The summer internship encouraged me to improve and boost my confidence level and received
a fruitful experience.

CONCLUSION

50
The world is running out of oil and gas but Oil and Natural gas will continue to be the
primary energy sources for years to come. Unconventional oil and gas will become
increasingly more important.

Saudi Aramco operates in Saudi Arabia with the largest portfolio of any crude oil company.
The company has more than 10 million barrels/day of incredibly low cost crude production.
It’s high per-barrel margins are impacted by high taxes from Saudi Arabia, meaning that the
company’s current FCF is in the 4-5% range.

The company is affected by the whims of the Saudi Arabian state. It’s also influenced by the
policies of OPEC and mandatory supply cuts.

Saudi Aramco has established itself as a leader in its industry and it has the potential to
remain just that. If Saudi Aramco can adopt the recommendation of this report, then it will
solidify its position and have an edge over its competitors.

RECOMMENDATION

 The following recommendations can be draw for the further development of the Saudi
Aramco -
 Saudi Aramco should always provide emphasis on customer demand. It should always
satisfy the dealers demand and arrange product availability.
 It should always pay heed to the dealers’ growth rate, take initiatives to recover gap
and always monitor their activities.
 Saudi Aramco should restructure its sales system. It can restructure through
employing more SOs, day to day sales and delivery system, enrich end-user activists
activities, frequent market visit, better communication with distribution.
 Its general sales procedures like taking order, preparing invoice, categorization of
invoice, preparing rout plan, lining products for loading, final check and loading of
vehicles should be fast customer oriented.
 It should also organize distribution system through increase space for store systematic
way, frequently update its database systems which shows products, pack size and
increase the number of delivery van.
 Always get in touch with what the customers want, and allow everyone to give
probable suggestions for the betterment of the company.
Another recommendation to Saudi Aramco is that it should maximize on its strengths and
take hold of its opportunities as they are captured in SWOT matrix. Another recommendation
to Saudi Aramco, is for it to eliminate its weaknesses and be mindful of its threats, as they are
captured in SWOT matrix

The world is running out of oil and gas. But: Oil and Natural gas will continue to be the
primary energy sources for years to come. Unconventional oil and gas will become
increasingly more important.

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One recommendation to Saudi Aramco is for the company to couple its
research and development activities with knowledge integration. By doing this,
Saudi Aramco will ensure that available knowledge is not discarded but put to
optimal use in formulating solutions to the challenges the company is facing in
its growth.

Another recommendation that this report makes to Saudi Aramco is for the
company to maintain a high code of ethics coupled together with an ethical
decision-making model. A high code of ethics is instrumental in maintaining a
highly motivated staff and strong public relations.

Another recommendation this report makes to Saudi Aramco is for the

company to integrate within itself a critical thinking culture, which will ensure
that there is objectivity and rationality in the company. Eventually, this will
safeguard the company’s already good public relations and maintain customer
loyalty.

Another recommendation this report makes to Saudi Aramco is for the

company to maintain (or if possible, improve) its current organizational culture
that has enabled it maintain a highly motivated staff.

Another recommendation to Saudi Aramco is that it should maximize on its

strengths and take hold of its opportunities as they are captured in SWOT
matrix. Another recommendation to Saudi Aramco, is for it to eliminate its
weaknesses and be mindful of its threats, as they are captured in SWOT
matrix.

Conclusion
Saudi Aramco has established itself as a leader in its industry and it has the
potential to remain just that. If Saudi Aramco can adopt the recommendation
of this report, then it will solidify its position and have an edge over its
competitors.

REFERENCES / BIBLIOGRAPHY

52
http://economictimes.indiatimes.com/configspace/ads/defaultinterstitial.html2.

http://www.worldoil.com/magazine/2015/july-20153.

www.wikipedia.com4.

www.investopedia.com/university5.

www.diffen.com

www.moneycontrol.com ›

http://www.ft.com/companies/oil-gas9.

www.stockcharts.com

https://www.ukessays.com/essays/economics/pestel-analysis-on-petroleum-industry-
economics-essay.php

https://energyroutes.eu/2016/05/08/pest-analysis-for-global-oil-and-gas-companies-
operations/

www.mindtools.com

https://business-essay.com/saudi-aramco-oil-company-analysis/

Fuller, Matthew Rhodes-Kropf, Nathaniel Burbank (2018), "Saudi Aramco and Corporate
Venture Capital Harvard Business Review Case Study. Published by HBR Publications.

Al Ghanem, K., Al Qubaisi, N., Al Zaabi, H., Al Dhahmani, L., Al Naqbi, A., Al Dhanhani,
H., Al Shamisi, F., & Nobanee, H. (2021). Financial Analysis of Aramco. SSRN
Electronic Journal. Published.
Corporate Finance Institute. (2020, September 16). Financial Ratios.
https://corporatefinanceinstitute.com/resources/knowledge/finance/financial-ratios/

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