Black Book Part 1 - Copy Priya-1

FINANCIAL STATEMENT ANALYSIS OF INDIAN OIL CORPORATION LTD
FINANCIAL STATEMENT
ANALYSIS OF
INDIAN OIL CORPORATION LTD
A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor in Commerce (Accounting and Finance)
Under the Faculty of Commerce.
By
PRIYA DINAKAR SINGH
Under the Guidelines of
PROF.SWAPNA ACHARYA
P.T.V.A.’s
MULUND COLLEGE OF COMMERCE
Mulund west, Mumbai-400080
MARCH 2023
Declaration by learner
I the undersigned MS. PRIYA DINAKAR SINGH here by, declare that the work embodied
in this project work titled “FINANCIAL STATEMENT ANALYSIS OF INDIAN OIL
CORPORATION LTD”, forms my own contribution to the research work carried out under
the guidance of PROF.SWAPNA ACHARYA. This project is a result of my own research
work and has not been previously submitted to any other University for any other Degree/
Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly indicated
as such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and presented
in accordance with academic rules and ethical conduct.
_________________________
PRIYA DINAKAR SINGH
Certified by
_____________________
PROF. SWAPNA ACHARYA
Acknowledgement
To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions
in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.
I would like to thank my Principal, Dr. (Mrs.) Sonali Pednekar for providing the necessary
facilities required for completion of this project.
I take this opportunity to thank our Coordinator Prof. Shilpa Thakur, for her moral support
and guidance.
I would also like to express my sincere gratitude towards my project guide Prof. Swapna
Acharya whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books and
magazines related to my project.
Lastly, 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.
INDEX
CHAPTER CHAPTER NAME PAGE NO

NO
1. INTRODUCTION: 1-24
✓ Financial statement Analysis
✓ Balance Sheet
✓ Income statement
✓ Cash flow statement
✓ Objectives and importance of Financial Statement Analysis
✓ Advantages of Financial Statement Analysis
✓ Limitations of Financial Statement Analysis
✓ Types of Financial Analysis
✓ History of Indian Oil Corporation Ltd
2. RESEARCH METHODOGLY: 25-26

✓ Scope of the study
✓ Limitations of the study
✓ Objectives of the study
3. LITERATURE REVIEW 27-32

4. DATA ANALYSIS & INTERPRETATION: 33-76
✓ Ratios
✓ Balance Sheet
✓ Income Statement
✓ Cashflow
✓ Comparative Balance sheet
✓ Comparative Income Statement
✓ Per share ratios
5. CONCLUSION: 77-80
✓ Conclusion
✓ Suggestions
✓ Bibliography
CHAPTER 1-INTRODUCTION
According to Accounting Tools, financial statement analysis involves reviewing the financial statements of an
organization to gain an understanding of its financial situation.
Financial statement analysis is the process of analysing a company's financial statements for decision-making
purposes. External stakeholders use it to understand the overall health of an organization as well as to evaluate
financial performance and business value. Internal constituents use it as a monitoring tool for managing the
finances.
Abstract
Indian Oil Corporation Limited owns and operates a network of crude oil and petroleum product pipeline in
India. The main objective of this analysis is to determine the firm’s liquidity and profitability position by using
tools like ratio analysis. Various ratios like current ratio, liquid ratio, absolute liquid ratio, Gross profit ratio,
Net profit ratio, operating profit ratio, operating ratio have been used to measure the financial performance of
the company. Secondary data was used for the study. For a better understanding of the analysis, the findings
are interpreted in tables. This analysis consists of interpretation, findings and suggestions to assists the
company to improve its performance.
Meaning of financial analysis:
The term ‘financial analysis’, also known as analysis and interpretation of financial statements’, refers to the
process of determining financial strengths and weaknesses of the firm by establishing strategic relationship
between the items of the balance sheet, profit and loss account and other operative data.
“Analysing financial statements,” according to Metcalf and Titard, “is a process of evaluating the relationship
between component parts of a financial statement to obtain a better understanding of a firm’s position and
performance.”
Analyses of Financial statement:
The financial statements of a company record important financial data on every aspect of a business’s
activities. As such, they can be evaluated on the basis of past, current, and projected performance.
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In general, financial statements are centred around generally accepted accounting principles (GAAP) These
principles require a company to create and maintain three main financial statements: the balance sheet, the
income statement, and the cash flow statement. Public companies have stricter standards for financial
statement reporting. Public companies must follow GAAP, which requires accrual accounting. Private
companies have greater flexibility in their financial statement preparation and also have the option to use either
accrual or cash accounting. Several techniques are commonly used as part of financial statement analysis.
Three of the most important techniques include horizontal analysis, vertical analysis, and ratio analysis.
Horizontal analysis compares data horizontally, by analysing values of line items across two or more years.
Vertical analysis looks at the vertical effects line items have on other parts of the business and also the
business’s proportions. Ratio analysis uses important ratio metrics to calculate statistical relationships.
Financial Statements:
As mentioned, there are three main financial statements that every company creates and monitors: the balance
sheet, income statement, and cash flow statement. Companies use these financial statements to manage the
operations of their business and also to provide reporting transparency to their stakeholders. All three
statements are interconnected and create different views of a company’s activities and performance. Financial
statements usually include a balance sheet, income statement, statement of cash flows and supplementary
notes.
Balance Sheet:
The term balance sheet refers to a financial statement that reports a company’s assests , liabilities, and
shareholder equity at a specific point in time. Balance sheets provide the basis for computing rates of return
for investors and evaluating a company’s capital structure.
In short, the balance sheet is a financial statement that provides a snapshot of what a company owns and
owes, as well as the amount invested by shareholders. Balance sheets can be used with other important
financial statements to conduct fundamental analysis or calculate financial ratios.
Income statement:
An income statement is a financial statement that shows you the company’s income and expenditures. It also
shows whether a company is making profit or loss for a given period. The income statement, along
with balance sheet and cash flow statement, helps you understand the financial health of your business.
The income statement is also known as a profit and loss statement, statement of operation, statement of
financial result or income, or earnings statement.
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An income statement helps business owners decide whether they can generate profit by increasing
revenues, by decreasing costs, or both. It also shows the effectiveness of the strategies that the business set at
the beginning of a financial period. The business owners can refer to this document to see if the strategies have
paid off. Based on their analysis, they can come up with the best solutions to yield more profit.
CASH FLOW:
The term cash flow refers to the net amount of cash and cash equivalents being transferred in and out of a
company. Cash received represents inflows, while money spent represents outflows.
A company’s ability to create value for shareholders is fundamentally determined by its ability to generate
positive cash flows or, more specifically, to maximize long-term free cash flow (FCF). FCF is the cash
generated by a company from its normal business operations after subtracting any money spent on capital
expenditures. Cash flow is the amount of cash that comes in and goes out of a company. Businesses take in
money from sales as revenues and spend money on expenses. They may also receive income from interest,
investments, royalties, and licensing agreements and sell products on credit, expecting to actually receive the
cash owed at a late date.
Free cash flow and other valuation:
Free cash flow (FCF) represents the cash that a company generates after accounting for cash outflows to
support operations and maintain its capital assests. Unlike earnings or net income, free cash flow is a measure
of profitability that excludes the non-cash expenses of the income statement and includes spending on
equipment and assets as well as changes in working capital from the balance sheet.
Interest payments are excluded from the generally accepted definition of free cash flow. Investment bankers
and analysts who need to evaluate a company’s expected performance with different capital structures will
use variations of free cash flow like free cash flow for the firm and free cash flow to equity, which are
adjusted for interest payments and borrowings.
Key Points:
➢ Capital assets are assets that are used in a company's business operations to generate revenue over the
course of more than one year.
➢ They are often recorded as an asset on the balance sheet and expensed over the useful life of the asset
through a process called depreciation.
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➢ Expensing the asset over the course of its useful life helps to match the cost of the asset with the
revenue it generated over the same time period.
➢ Capital assets may be tangible or intangible, though most capital assets are related to buildings, land,
or FFE.
➢ Capital assets are different than ordinary assets in that capital assets are more useful in the long-term
whereas ordinary assets primary value is in the day-to-day operations of the company.
Financial Performance:
Financial performance is a subjective measure of how well a firm can use assets from its primary mode of
business and generate revenues. The term is also used as a general measure of a firm's overall financial health
over a given period.
Analysts and investors use financial performance to compare similar firms across the same industry or to
compare industries or sectors in aggregate.
Key Takeaways:
• The financial performance tells investors about the general well-being of a firm. It's a snapshot of its
economic health and the job its management is doing.
• A key document in reporting corporate financial performance is Form 10-K, which all public
companies are required to publish annually.
• Financial statements used in evaluating overall financial performance include the balance sheet, the
income statement, and the statement of cash flows.
• Financial performance indicators are quantifiable metrics used to measure how well a company is
doing.
• No single measure should be used to define the financial performance of a firm.
Understanding the financial performance:
There are many stakeholders in a company, including trade creditors, bondholders, investors, employees, and
management. Each group has an interest in tracking the financial performance of a company. The financial
performance identifies how well a company generates revenues and manages its assets, liabilities, and the
financial interests of its stakeholders and stockholders.
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There are many ways to measure financial performance, but all measures should be taken in aggregate. Line
items, such as revenue from operations, operating income, or cash flow from operations can be used, as well
as total unit sales. Furthermore, the analyst or investor may wish to look deeper into financial statements and
seek out margin growth rates or any declining debt. Six Sigma methods focus on this aspect.
Recording Financial Performance:
A key document in reporting corporate financial performance, one heavily relied on by research analysts,
is Form 10-K. The Securities and Exchange Commission (SEC) requires all public companies to file and
publish this annual document. Its purpose is to provide stakeholders with accurate and reliable data and
information that provide an overview of the company's financial health.
Independent accountants audit the information in a 10-K, and company management signs it and other
disclosure documents. As a result, the 10K represents the most comprehensive source of information on
financial performance made available to investors annually.
A company's Form 10-K has to be accessible to the public. Anyone who wishes to examine one can go to the
SEC's Electronic Data Gathering, Analysis and Retrieval (EDGAR) database. You can search by company
name, ticker symbol, or SEC Central Index Key (CIK). Many companies also post their 10-Ks on their
websites, in an "Investor Relations" section.
Why is financial performance important :
A company's financial performance tells investors about its general well-being. It's a snapshot of its economic
health and the job its management is doing—providing insight into the future: whether its operations and
profits are on track to grow and the outlook for its stock.
What are financial performance indicators?
Financial performance indicators, also known as key performance indicators (KPIs), are quantifiable
measurements used to determine, track, and project the economic well-being of a business. They act as tools
for both corporate insiders (like management and board members) and outsiders (like research analysts and
investors) to analyse how well the company is doing—especially regarding competitors—and identify where
strengths and weaknesses lie.
The most widely used financial performance indicators include:
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• Gross profit /gross profit margin: the amount of revenue made from sales after subtracting production
costs, and the percentage amount a company earns per dollar of sales
• Net profit/net profit margin: the amount of revenue from sales after subtracting all related business
expenses and taxes, and the related ratio of earnings per dollar of sales
• Working capital: immediately available or highly liquid funds, used to finance day-to-day operations
• Operating cash flow: the amount of money being generated by regular business operations
• Current ratio: a measure of solvency—the total assets divided by total liabilities
• Debt-to-equity ratio: a company’s total liabilities divided by its shareholder equity
• Quick ratio: another solvency measure, that calculates the percentage of very liquid current assets
(cash, securities, accounts receivables) against total liabilities
• Inventory turnover: how much inventory is sold within a certain period, and how often the entire
inventory was sold
• Return on equity: net income divided by shareholder equity (a company’s assets minus its debts)
Financial Performance Analysis:
Financial analysis refers to the process of studying and assessing a company’s financial statements—a
collection of data and figures organized according to recognized accounting principles. The aim is to
understand the company's business model, the profitability (or loss) of its operations, and how it's spending,
investing, and generally using its money—summarizing the company by the numbers, so to speak.
A financial performance analysis examines the company at a specific period in time—usually, the most recent
fiscal quarter or year. The balance sheet, the income statement, and the cash flow statement are three of the
most significant financial statements used in performance analysis.
Financial performance analysis can focus on different areas. Types of analysis can include a specific
examination of a firm:
• Working capital: the difference between a company’s current assets, such as cash, accounts receivable
(customers’ unpaid bills), and inventories of raw materials and finished goods, and its current
liabilities
• Financial structure: the mix of debt and equity that a company uses to finance its operations
• Activity analysis: the factors involved in the cost and pricing of goods and services
• Profitability analysis: how much money the business clears, after expenses and taxes.
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How to improve Financial Performance:
A company's financial performance can be improved in several ways. Of course, trying to identify any
roadblocks or friction points—and the source of these problems—is the first step. Other strategies include:
• Improving cash flow: keep better track of income/outgoes, step up collection of accounts receivable,
adjust payment options and prices if necessary
• Selling unwanted/unused assets
• Revamping budgets
• Reducing expenses
• Consolidating or refinancing current debt; applying for government loans or grants
• Analysing financial statements and performance indicators, ideally with a professional's help.
Types of financial statements:
1. Balance sheet, which lists a business’ assets/revenues, liabilities/obligations, and owners’ equity at a
specific point in time.
2. Income statement, which summarizes results from business operations—revenues, expenses, and
profits or losses during a specific period.
3. The cash flow statement complements the balance sheet and income statement. Categorized into
operating, investing, and financing activities, it captures how funds are employed—literally, how the
cash flows—throughout the business.
Different types of financial statements Analysis:
Most often, analysts will use three main techniques for analysing a company's financial statements.
First - Horizontal analysis involves comparing historical data. Usually, the purpose of horizontal analysis is to
detect growth trends across different time periods.
Second -Vertical analysis compares items on a financial statement in relation to each other. For instance, an
expense item could be expressed as a percentage of company sales.
Finally - Ratio analysis, a central part of fundamental equity analysis, compares lineitem data. P/E ratios,
earnings per share, or dividend yield are examples of ratio analysis.
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Recasting Financial Statements:
An earnings recast is the act of amending and re-releasing a previously released earnings statement, with
specific intent. Some of the most typical reasons for recasting earnings are to show the impact of
a discontinued business or to separate out earnings-related events that are deemed to be non-recurring or
otherwise non-representative of normal business earnings.
An earnings recast is also known as an "earnings restatement."
• An earnings recast is when a company amends and re-releases an earnings statement that has already
been made public, due to needing to correct or update the statement.
• Earnings recasts are often undertaken to reflect the impact of a discontinued business or to separate
out earnings-related events that are determined to be non-recurring or otherwise unusual in the context
of normal business earnings.
• Earnings might also be updated or recast after auditors see signs of fraud or incompetence in previous
financial statements.
• An earnings recast is usually not done for a quarter at a time, but more often for several years of
income statements, depending on how far back the recasting goes.
How an Earning Recast Work:

Earnings, the amount of profit that a company produces during a specific period, are very closely watched by
investors. These figures drive share prices more than anything else and are a key component of perhaps the
most common method to value companies: the price-to-earnings ratio (P/E ratio). In short, that means that
any changes to earnings are a very big deal.
An earnings recast is usually done to several years of income statements, depending on how far back the
recasting goes. In theory, restating earnings benefits investors, helping them to get a better comparative sense
of how the company is progressing over time.
Earnings Recast and fraud:
Because earnings are an important metric that significantly impacts share prices, companies sometimes
manipulate them. Though illegal and highly unethical, this practice is not as rare as it should be.
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That means that earnings recasts are not always the result of changes to a company’s business structure or
accounting standards. Sometimes, prior earnings are updated because auditors spotted traces of fraud or
incompetence in previous financial statements.
Purpose of Financial Statement Analysis:
The general purpose of the financial statements is to provide information about the results of operations,
financial position, and cash flows of an organization. This information is used by the readers of financial
statements to make decisions regarding the allocation of resources. At a more refined level, there is a
different purpose associated with each of the financial statements. The income statement informs the
reader about the ability of a business to generate a profit.
In addition, it reveals the volume of sales, and the nature of the various types of expenses, depending
upon how expense information is aggregated. When reviewed over multiple time periods, the income
statement can also be used to analyse trends in the results of company operations.
The purpose of the balance sheet is to inform the reader about the current status of the business as of the
date listed on the balance sheet. This information is used to estimate the liquidity, funding, and debt
position of an entity, and is the basis for a number of liquidity ratios. Finally, the purpose of the statement
of cash flows is to show the nature of cash receipts and cash disbursements, by a variety of categories.
This information is of considerable use, since cash flows do not always match the sales and expenses
shown in the income statement.
As a group, the entire set of financial statements can also be assigned several additional purposes, which
are noted below:-
Credit Decisions
Lenders use the entire set of information in the financials to determine whether they should extend credit
to a business, or restrict the amount of credit already extended. Financial statements may sometimes be
used as the basis for terminating an outstanding loan.
Investment Decisions
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Investors use the information to decide whether to invest, and the price per share at which they want to
invest. An acquirer uses the information to develop a price at which to offer to buy a business .
Taxation Decisions
Taxation decisions. Government entities may tax a business based on its assets or income, and can derive
this information from the financials.
Union Bargaining Decisions
A union can base its bargaining positions on the perceived ability of a business to pay; this information
can be gleaned from the financial statements. Thus, a union may not push too hard if an employer has
suffered losses for several years in a row.
Subsidiary Evaluations
Financial statements can be presented for individual subsidiaries or business segments, to determine their
results at a more refined level of detail.
In short, the financial statements have a number of purposes, depending upon who is reading the
information and which financial statements are being perused.
Importance of Financial Statement Analysis:

Financial statement analysis is crucial for complying with business laws and regulations, while also meeting
the needs of stakeholders and various other parties. But in order to conduct accurate financial statement
analysis, developing skills and intuition is as important as following best accounting practices.
Financial statement analysis can benefit organizations in numerous ways. It provides internal and external
stakeholders with the opportunity to make informed decisions regarding investing. Financial statement
analysis also provides lending institutions with an unbiased view of a business’s financial health, which is
helpful for making lending decisions. And as top executives and others in management rely on accounting to
provide an accurate depiction of the effects of their decisions, financial statement analysis helps with matters
of corporate governance as well.
Financial analysis is useful and significant to different users in the following ways:
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(a) Finance manager: Financial analysis focusses on the facts and relationships related to managerial
performance, corporate efficiency, financial strengths and weaknesses and creditworthiness of the company.
A finance manager must be well-equipped with the different tools of analysis to make rational decisions for
the firm. The tools for analysis help in studying accounting data so as to determine the continuity of the
operating policies, investment value of the business, credit ratings and testing the efficiency of operations. The
techniques are equally important in the area of financial control, enabling the finance manager to make
constant reviews of the actual financial operations of the firm to analyse the causes of major deviations, which
may help in corrective action wherever indicated.
(b) Top management: The importance of financial analysis is not limited to the finance manager alone. It has
a broad scope which includes top management in general and other functional managers. Management of the
firm would be interested in every aspect of the financial analysis. It is their overall responsibility to see that
the resources of the firm are used most efficiently and that the firm’s financial condition is sound. Financial
analysis helps the management in measuring the success of the company’s operations, appraising the
individual’s performance and evaluating the system of internal control.
(c) Trade payables: Trade payables, through an analysis of financial statements, appraises not only the ability
of the company to meet its short-term obligations, but also judges the probability of its continued ability to
meet all its financial obligations in future. Trade payables are particularly interested in the firm’s ability to
meet their claims over a very short period of time. Their analysis will, therefore, evaluate the firm’s liquidity
position.
(d) Lenders: Suppliers of long-term debt are concerned with the firm’s longterm solvency and survival. They
analyse the firm’s profitability over a period of time, its ability to generate cash, to be able to pay interest and
repay the principal and the relationship between various sources of funds (capital structure relationships).
Long-term lenders analyse the historical financial statements to assess its future solvency and profitability.
(e) Investors: Investors, who have invested their money in the firm’s shares, are interested about the firm’s
earnings. As such, they concentrate on the analysis of the firm’s present and future profitability. They are also
interested in the firm’s capital structure to ascertain its influences on firm’s earning and risk. They also evaluate
the efficiency of the management and determine whether a change is needed or not. However, in some large
companies, the shareholders’ interest is limited to decide whether to buy, sell or hold the shares.
(f) Labour unions: Labour unions analyse the financial statements to assess whether it can presently afford a
wage increase and whether it can absorb a wage increase through increased productivity or by raising the
prices.
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(g) Others: The economists, researchers, etc., analyse the financial statements to study the present business
and economic conditions. The government agencies need it for price regulations, taxation and other similar
purposes
Objectives of Financial Statement Analysis:
Analysis of financial statements reveals important facts concerning managerial performance and the efficiency
of the firm. Broadly speaking, the objectives of the analysis are to apprehend the information contained in
financial statements with a view to know the weaknesses and strengths of the firm and to make a forecast
about the future prospects of the firm thereby, enabling the analysts to take decisions regarding the operation
of, and further investment in the firm. To be more specific, the analysis is undertaken to serve the following
purposes (objectives):
❖ to assess the current profitability and operational efficiency of the firm as a whole as well as its different
departments so as to judge the financial health of the firm.
❖ to ascertain the relative importance of different components of the financial position of the firm.
❖ to identify the reasons for change in the profitability/financial position of the firm.
❖ to judge the ability of the firm to repay its debt and assessing the short-term as well as the long-term
liquidity position of the firm.
Through the analysis of financial statements of various firms, an economist can judge the extent of
concentration of economic power and pitfalls in the financial policies pursued. The analysis also provides the
basis for many governmental actions relating to licensing, controls, fixing of prices, ceiling on profits, dividend
freeze, tax subsidy and other concessions to the corporate sector.
Methods of Financial Statements Analysis:
Financial statement analysis can be conducted using either horizontal and vertical analysis, or analysis
that uses ratios.
Horizontal analysis involves comparing financial information over a series of reported periods, with a base
year being chosen as a starting point for future comparison.
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Vertical analysis involves a proportional analysis of a financial statement. Every line item is listed as a
percentage of another line item, with a base year being chosen to compare figures of the same year’s statement.
Instead of being used as an alternative to horizontal analysis, vertical analysis is used alongside it.
Analysis using ratios is used to calculate the relative size of one figure in relation to another, which can then
be compared to the ratio for a prior period. This method of conducting financial statement analysis includes
the following categories of ratios:
• Liquidity ratios: These measure a company’s ability to continue doing business. Examples of liquidity ratios
include the cash coverage ratio, current ratio, quick ratio and liquidity index.
• Activity ratios: These measure management’s quality and performance. Examples of activity ratios include
the accounts payable turnover ratio, accounts receivable turnover ratio, fixed asset turnover ratio, inventory
turnover ratio, sales-to-working capital ratio and working capital turnover ratio.
• Leverage ratios: These measure a company’s reliance on debt to finance operations. Examples of leverage
ratios include the debt service coverage ratio, debt-to-equity ratio and fixed charge coverage.
• Profitability ratios: These measure a company’s ability to generate profit. Examples of profitability ratios
include the contribution margin ratio, gross profit ratio , net profit ratio , break-even point, margin of safety,
return on equity, return on net assets and return on operating assets.
Parties interested in Analysis of Financial Statements:

There are many people using the financial statements. They are assessing the financial statements in terms of
profitability, liquidity and solvency. Some of the interested parties of financial statements are given below.
1. Shareholders: In every public limited company, shareholders are the real owners of the company. Hence,
they want to know the way of utilizing their investments and ascertain the profitability and financial strength
of the company.
2. Debenture holders: Debenture holders are the lenders or creditors of the company. They want to know the
short term and long term solvency position of the company. Short term solvency is find out to know whether
interest is payable by a company and long term solvency is find out to know whether principal amount is
payable by a company.
3. Creditors: They are the suppliers of the raw materials and other necessary items on credit to the company.
They are interested to know the liquidity position of the company.
4. Commercial Banks and Financial Institutions: Both commercial banks and financial institutions may
lend both short term loan and long term loan. Hence, they are interested to know the short term solvency, long
term solvency and profitability of the company.
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5. Prospective Investors: Prospective investors who are going to buy the shares of the company in the very
future. Hence, they are interested to know future prospects and financial strength of the company.
6. Employees: The regular payment of wages and salaries are based on the financial position of the company.
Hence, they are interested to know financial position of the company.
7. Trade Unions: The interest of the employees is protected only by the trade union. The interest of the
employees can be protected if the financial position of the company is very strong. Hence, they are interested
to know the financial position of the company.
8. Loyal Customers or Regular Customers: Some customers are loyal to the company since they are buying
the products for a long period continuously. Hence, they are interested to verify the financial strength of the
company.
9. Tax Authorities: Tax payable is based on the amount of profits earned by the company. Hence, the tax
authorities are using the financial statements for calculating profits earned by the company.
10. Government Departments: Department of company affairs and other government departments are
dealing with the industry in which the company is engaged are interested in the financial information relating
to the company.
11. Research Institutions and Researchers: Social research institutions and researchers are using the
financial statements. They analyze the financial statements to find out the role of each industry in economic
development of a nation.
12. Economists: The economists are using the financial statements information for assessing economic
conditions of workers.
13. Editorial Board of Financial and Economic Dailies and Periodicals: They need financial data in respect
of every type of business units and hence, they are interested m financial statements.
14. Members of Parliament: Some public limited companies are started as Government Companies. Such
Government Company financial statements are placed before the members of parliament. In such cases, Public
Accounts Committee and Estimates Committee are interested in the financial information.
15. Professional Societies: It includes Chambers of Commerce and Industry Indian Accounting Association,
Confederation of Indian Industry, Employers’ Associations and the like. These are very much interested to
know the financial status of the business concern since they are formed to protect the respective types of
business units.
16. SEBI and Stock Exchanges: These are interested to assess the financial position and level of performance
of listed companies with a view to protecting the interests of investors.
17. Managers or Management: The management or manager has started to show keen interest in knowing
the contents of financial statements which are used for internal management and control. Financial statements
help the management in its various functions of planning, control, coordination and motivation.
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Advantages of Financial Statement Analysis:
For most small-business owners, analysing financial statements might seem overwhelming. While many
business owners might outsource the creation of financial statements to an accountant, learning to analyse
them helps determine the financial health of the company. Financial statements should be analysed once a
year, if not quarterly, to take full advantage of the information they offer.
Cash Flow Review
A cash flow statement is one of the financial statements used in financial analysis. As the name implies, it
accounts for money in and money out. It shows the financial solvency of a company to pay its liabilities at
any point in time.
Some companies have cyclical revenues but consistent expenses. Knowing that the Christmas rush needs to
fund a slow first quarter of expenses is important for business owners to manage financial resources.
Company Liability Review
The financial statements show the existing liabilities. These include business loans, lines of credit, credit
cards and credit extended from vendors. A business owner who is planning to apply for a business expansion
loan can look at the financial statements and determine if he needs to reduce existing liabilities before
applying. Lenders look at the financial statements and consider the revenues, assets and existing liabilities.
Review Assets and Inventory
The balance sheet is a component of the financial statement. Assets are included on the balance sheet.
Analysing whether there is too much inventory or too little helps business owners prepare for upcoming
sales months. Keeping too much inventory on hand is a potential problem that ties up money, while not
having enough inventory can lead to losing customers and market share.
Identify Trends and Determine Steps Needed
Analysing the financial statements from quarter to quarter and year to year help business owners see trends
in growth. A young business might have losses in the early years while it is developing products and a
customer base. At the same time, statements show whether the business owner is meeting projected
estimates.
15
If a business is projecting a 10 percent annual growth but only achieving 7 percent, business leaders need to
look for ways to either cut costs or increase revenues. The financial statement identifies the information to
explore further.
Seeking Investment Capital
When a business seeks partners or investors, the financial statements are critical. Analysing the statements
not only helps investors determine if a company is making money, but it also helps to identify a reasonable
cost per share. Shareholders usually invest capital in a company for growth; thus, shareholder equity is
defined based on the capital investment added to assets, with liabilities subtracted, to define total shareholder
equity.
Limitations of Financial Statement Analysis:

Financial analysis is comprehensively beneficial in ascertaining the financial weaknesses and strengths of an
enterprise, it is grounded on the data that is obtainable in financial statements. The financial analysis also goes
through several limitations of financial statements. Therefore, the analyst must be aware of the effect of the
cost price level changes, changes in accounting policies of an enterprise, window dressing of financial
statements, personal judgment, accounting concepts, and conventions, etc. The following are the limitations
of financial statements – dependence on historical costs. Some other limitations of financial analysis are
mentioned below:
• The financial analysis does not contemplate cost price level changes.
• The financial analysis might be ambiguous without the prior knowledge of the changes in accounting
procedure followed by an enterprise.
• Financial analysis is a study of reports of the enterprise.
• Monetary data alone is contemplated in financial analysis while non-monetary factors are overlooked.
• The financial statements are outlined on the ground of accounting concept, as such, it does not mirror
the current position.
16
INDIAN OIL CORPORATION LTD
Indian Oil Corporation Ltd. (IOCL), India's largest commercial ISO-9002 certified enterprise, is the highest
ranked Indian company in the prestigious Fortune 'Global 500' listing. IOCL is the 20th largest petroleum
company in the world.
Established in 1959 as Indian Oil Company Ltd., Indian Oil Corporation Ltd was formed in 1964 with the
merger of Indian Refineries Ltd. (Estd. 1958). It was originally incorporated as IOCL in 1964. Indian Oil and
its subsidiaries account for 48.84% industry market share, 47% petroleum products market share, 40.4%
refining capacity and 67% downstream sector pipelines capacity in India.
The Indian Oil Group of companies owns and operates 10 of India's 20 refineries with a combined refining
capacity of 60.2 million metric tonnes per annum. In 2008-09, the Indian Oil group sold 62.6 million tonnes
of petroleum products, including 1.7 million tonnes of natural gas, and exported 3.64 million tonnes of
petroleum products.
Indian Oil (Mauritius) Ltd (IOML), a wholly subsidiary company of Indian Oil Corporation Ltd, was registered
in Mauritius in 2001. After creating an infrastructure and terminal in Port Louis area IOML started its
marketing operations in January 2004. IOML has set up a modern State-of-the-Art storage facility of 24,000
Metric Ton (MT) capacity at Mer Rouge in Port Louis by means of 8 tanks of various capacities for different
products. The terminal has some of the most modern facilities for handling and delivery of the petroleum
products including loading bays and tank gauging systems, which are all micro-processor controlled. It is also
the first of its kind in Mauritius.
17
HISTORY:
Indian Oil Corporation Ltd (IOCL) is India's flagship Maharatna national oil company with business interests
straddling the entire hydrocarbon value chain from refining pipeline transportation and marketing of petroleum
products to exploration & production of crude oil & gas petrochemicals gas marketing alternative energy
sources and globalization of downstream operations. The Company's operations include refineries pipelines
and marketing. Their portfolio of brands includes Indane LPGAS SERVO lubricants XTRAPREMIUM petrol
and XTRAMILE diesel and Propel Petrochemicals. In exploration and production Indian Oil's domestic
portfolio includes 11 oil and gas blocks and two coal bed methane blocks while the overseas portfolio consists
of 10 blocks spread across Libya Iran Gabon Nigeria Timor-Leste Yemen and Venezuela. Indian Oil
Corporation Ltd was established in the year 1959 as Indian Oil Company Ltd. In the year 1964 Indian
Refineries Ltd merged with Indian Oil Corporation Ltd. Indian Oil Blending Ltd a wholly owned subsidiary
was merged with Indian Oil on May 2006.
The company transferred their entire equity holding in Indian Strategic Petroleum Reserves Ltd (ISPRL) to
the Oil Industry Development Board a government body functioning under the Ministry of Petroleum &
Natural Gas. Consequently ISPRL ceased to be a wholly owned subsidiary in May 2006. The company formed
one subsidiary company namely IOC Middle East FZE in Jebel Ali Free Trade Zone Dubai with the objective
of marketing lubricants and other petroleum products in Middle East Africa and CIS regions. In June 2006
they incorporated a joint venture company namely Indo-Cat Pvt Ltd with Intercat . Inc of USA for manufacture
and marketing of FCC catalysts and additives. In the year 2007 the company received plenty of awards Oil
Industry Safety Directorate Awards 'Most Admired Retailer of the Year' award 'CIO 100 Award 2007' SAP
ACE - Awards for Customer Excellence and the only petroleum company as 'The Most Trusted Brand' in ET's
Brand Equity's annual survey. The SERVO acquires prestigious MAN Global approvals Indian Oil's R&D
Centre gets special recognition for Bioremediation and also SERVO secures entry into NSF White Book - H1
Category during the period. The company won Retailer of the Year - Rural Impact Award and their XtraPower
won Loyalty Summit Award during the year 2008.In January 2008 the company and Hindustan Unilever Ltd
(HUL) signed an MoU for setting up Kwality Walls Kiosks at select Indian Oil petrol stations across the
country. Also the company entered into an MoU with Transparency International India (TII) for implementing
an Integrity Pact Programme focused on enhancing transparency in their business transactions contracts and
procurement processes. In April 2008 the company launched 'LNG at Doorstep' facility at the Pen unit of H&R
Johnson the facility first of their kind in the country which are primarily aimed at catering to the needs of
Liquefied Natural Gas (LNG) customers who are not located on the main natural gas pipelines. The company
was conferred with the 'Maharatna' status by the Government of India which provides enhanced autonomy and
larger flexibility for its operation. During the year 2009-10 the company commissioned 238 new retail outlets
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and 414 Kisan Seva Kendra (KSK) outlets taking their total tally to 18643. The company's Indane LPG brand
earned the coveted status of 'Superbrand'. On the lines of KSK the Rajiv Gandhi Grameen LPG Vitarak Yojana
was launched to penetrate rural markets.
During the year the company was granted the Petroleum Exploration License for one of the two Type-S blocks
in Cambay basin for which it is the operator. Upon getting the license exploration activities were initiated in
the block. The company was awarded a project for the development extraction upgradation and marketing of
heavy oil in Carabobo heavy oil region of Venezuela in consortium with Repsol Petronas ONGC Videsh Ltd.
and Oil India Ltd. During the year 2010-11 the company enrolled about 46.8 lakh new Indane LPG customers
and commissioned 245 new Indane distributors taking their total to 618.3 lakh and 5311 respectively. The
LPG Bottling capacity was enhanced to 5518 TMTPA with capacity addition of 326 TMT. In order to provide
LPG to rural India the company commissioned 145 distributors under the Rajiv Gandhi Gramin LPG Vitaran
Yojana under the auspices of Ministry of Petroleum & Natural Gas. As a part of their CSR activity 10052 new
connections were released to BPL families. During the year the company formed a joint venture company was
formed with Nuclear Power Corporation of India Ltd (NPCIL) for setting up Nuclear power plants. In July
2010 the company commissioned their first gas pipeline between Dadri and Panipat and thus they commenced
gas supplies to Panipat Refinery. The company in consortium with GSPC HPCL and BPCL won gas pipeline
bids for Mallavaram to Bhilwara and Vijaypur via Bhopal Mehsana to Bhatinda and Bhatinda to Jammu and
Srinagar.In 2012 Oil India Limited (OIL) and Indian Oil Corporation (IOCL) jointly acquired a stake in
Carrizo's liquid rich shale assets in the Niobrara basin in Colorado USA. Indian Oil (IOC) also launched a new
engine oil SERVO 4T SYNTH with advanced synthetic chemistry for use by two-wheelers. Petroleum &
Natural Gas and Corporate Affairs launched IOCL's Mobile Healthcare Scheme a Corporate Social
Responsibility (CSR) initiative of IOCL.
Indian Oil Corporation's (IOCL) Rural Mobile Health Scheme (Sachal Swasthya Seva) launched as part of its
corporate social responsibility (CSR) agenda was formally inaugurated on all-India basis. In 2013 IOC planned
for capacity expansion at Doimukh depot and also IOCL inked MoU for Rs 5-k cr natural gas terminal in
Odisha .In 2014 IOCL conferred SCOPE Meritorious Award for CSR and Responsiveness by the Hon'ble
President of India. IOCL R&D also wins National Awards for Technology Innovation -IOCL wins BML
Munjal Award for Business Excellence. In 2015 Indian Oil Corporation commenced construction work on its
proposed 4 MW solar power project at Muttam village in the district. IOC also inked MoU with Nepal Oil
Corporation. The Board of Directors of IOCL at its meeting held on 29 January 2015 approved the laying of
Paradip-Hyderabad product pipeline at an estimated cost of Rs.2789 crore. The board also approved
construction of 0.6 MMTPA LPG Import Facility at Paradip and augmentation of Paradip-Haldia-Durgapur
LPG pipeline. The Board of Directors of IOCL at its meeting held on 13 February 2015 approved the setting
19
up of Ethylene Glycol Project along with associated facilities at Paradip at an estimated project cost of Rs.3752
crore. The project would help in consolidating the Glycol business of the company by producing low cost
Mono Ethylene Glycol based on FCC off gas. The board also approved construction of dedicated Naphtha
pipeline from Jaipur to Panipat along with augmentation of Koyali-Sanganer product pipeline at an estimated
cost of Rs.890 crore. The pipeline would help in meeting the Naphtha requirement of IOCL's Naphtha Cracker
Complex at Panipat. The board also approved implementation of project for 100% BS-IV compliant MS and
HSD production facilities at Gujarat refinery at an estimated cost of Rs.1843 crore. The board also approved
implementation of project for 100% BS-IV compliant MS and HSD production facilities at Barauni refinery
at an estimated cost of Rs.1327 crore. On 27 April 2015 IOCL announced that it has started the process of
commissioning its 15 MMTPA state-of-the-art Paradip refinery. On 24 November 2015 IOCL announced that
the first consignment of products from its Paradip refinery comprising of High Speed Diesel Superior Kerosene
and Liquefied Petroleum Gas was dispatched on 22 November 2015.
The Board of Directors of IOCL at its meeting held on 13 August 2015 approved investment of Rs.1000 crore
in Non-convertible Cumulative Redeemable Preference Shares to be issued by Chennai Petroleum Corporation
Limited (subsidiary of IOCL) on private placement preferential allotment basis. On 21 August 2015
Government of India announced notice of Offer for Sale (OFS) of 24.27 crore equity shares of IOCL
aggregating to 10% of the total paid up equity share capital of the company through the separate window
provided by the stock exchanges for this purpose. The floor price for the OFS was set at Rs.387.On 31
December 2015 Indian Oil Corporation announced that it has entered into a binding Gas Sale and Purchase
Agreement (GSPA) with Petronet LNG Limited (PLL) for procurement of an additional quantity of 0.3
MMTPA of RLNG with effect from January 2016.
This is in addition to the existing long term GSPA of 2.25 MMTPA which was executed in September 2003.
The Board of Directors of IOCL at its meeting held on 29 August 2016 recommended issue of bonus shares
in the ratio of 1:1. The Board of Directors of IOCL at its meeting held on 29 September 2016 accorded in-
principle approval for expansion of the refining capacity of Barauni Bihar refinery from 6 MMTPA to 9
MMTPA alongwith downstream Polypropylene unit at an estimated cost of Rs 8287 crore. The board also
gave in-principle approval for implementation of Olefin Recovery Project alongwith expansion of existing
Naphtha Cracker Unit MEG revamp and Benzene Expansion Unit modifications at Panipat at an estimated
cost of Rs 1527 crore.Indian Oil Corporation Limited (IOCL) Oil India Limited (OIL) and Bharat
PetroResources Limited (BPRL) through a joint venture company formed by their wholly-owned subsidiaries
in Singapore completed two transactions on 5 October 2016 viz. acquisition of 23.9% shares of the charter
capital of JSC Vankorneft a company organised under the laws of the Russian Federation which is the owner
of Vankor and North Vankor Field licenses from Rosneft Oil Company (Rosneft) a National Oil Company of
20
Russia and acquisition of 29.9% of the participatory share in the charter capital of LLC Taas Yuryakh
Neftegazodobycha (TYNGD) from LLC RN Razvedka I Dobychya a wholly-owned subsidiary of Rosneft.The
definitive agreements for the Vankor transaction were signed in June 2016 and for the Taas transaction in
March 2016. In JSC Vankorneft post-closing of transactions Rosneft will hold about 61.1% shares and ONGC
Videsh Ltd (through its subsidiary) will hold the remaining 15%. In TYNGD post-closing of the transaction
Rosneft (through subsidiary) will hold about 50.1% share and BP (through subsidiary) will hold the remaining
20% share. Vankor field located in East Siberia is Russia's second largest field by production and accounts for
around 4% of Russian production.
In 2015 the Vankor field produced 22 million tonnes of oil and 8.71 BCM of gas. TYNGD is expected to ramp
up the production of crude oil to 5 million tonnes by 2021.Indian Oil Corporation Ltd. (IOCL) NTPC Ltd.
Coal India Ltd. (CIL) Fertilizer Corporation of India Ltd. (FCIL) and Hindustan Fertilizer Corp. Ltd. (HFCL)
signed a Supplemental Joint Venture Agreement on 31 October 2016 for IOCL FCIL and HFCL joining the
Joint Venture Company Hindustan Urvarak and Rasayan Ltd. (HURL) which had been formed by NTPC and
CIL for revival of the fertiliser plants at Gorakhpur Sindri and Barauni. Each of these plants will have 1.27
million tons per year Urea production capacity. With the execution of the Supplemental JVA the equity
participation of IOCL NTPC and CIL in HURL will be 29.67% each (total 89.01%) and the balance 10.99%
will be by FCIL (7.33%) and HFCL (3.66%).Indian Oil Corporation Ltd. Bharat Petroleum Corporation Ltd.
and Hindustan Petroleum Corporation Ltd. signed a Consortium Agreement on 7 December 2016 to carry out
pre-project activities for setting up of West Coast Refinery and a Petrochemical Project of approximately 60
Million Metric Tonnes Per Annum (MMTPA) capacity in Maharashtra through a Joint Venture Company.On
17 March 2016 IOCL announced that it has signed an agreement with 3M India Ltd. for setting up 3M auto
care centres at IOCL's retail fuel outlets. The auto care centres will be operated by the franchisees appointed
by 3M India Ltd.On 25 May 2017 IOCL announced that the company registered record annual net profit of
Rs 19106 crore for the financial year 2016-17 as compared to a profit of Rs 11242 crore for the financial year
2015-16. On 16 June 2017 IOCL announced that it has successfully rolled out daily price revision of petrol
and diesel across the country through its network of 26000-plus petrol pumps.On 10 July 2017 IOCL and
carbon recycling company LanzaTech signed a Statement of Intent to construct the world's first refinery off
gas-to-bioethanol production facility in India.On 24 July 2017 IOCL announced that it was ranked 168th in
the Fortune 'Global 500' listing for 2017. IOCL was the only Indian company in top 200 in the prestigious list.
The Board of Directors of IOCL at its meeting held on 3 August 2017 accorded first stage approval for the
expansion of Gujarat refinery capacity by 4.3 Million Metric Tonnes Per Annum (MMTPA) to 18 MMTPA
at an estimated cost of Rs 15034 crore. The board also gave first stage approval for installation of 2nd Catalytic
De-waxing unit at Haldia refinery at an estimated cost of Rs 1126 crore. The unit would produce Grade-II &
21
III Lube Oil base stock. The board also gave first stage approval for installation of Ethanol Plant using Gas
Fermentation Technology of M/s. LanzaTech USA at Panipat refinery at an estimated cost of Rs 441 crore.
The board also approved acquisition of up to 50% equity stake in GSPL LNG Ltd. which is setting up a 5-
MMTPA LNG Terminal at Mundra Port in Gujarat. On 19 August 2017 IOCL announced that the contentious
issue of VAT deferment on products produced by the company's Paradip refinery in Odisha and sold in the
state has been resolved. IOCL commenced production of gas and condensate from Dirok field in Assam on 26
August 2017 marking advent of its first domestic exploration asset maturing from exploration stage to a
producing asset. IOCL holds 29.03% participating interest in the block located near Digboi in Assam along
with Hindustan Oil Exploration Company (HOEC 26.88% Operator) and Oil India Limited (OIL 44.08%
Licensee).On 19 November 2017 IOCL in collaboration with Ola launched the country's first electric charging
station at its fuel station at RBI Square Nagpur.The Promoter of the Company i.e. the President of India was
holding 4912149459 equity shares constituting 52.18% of the total equity share capital as on April 1 2019.
The President acting through the MoP&NG disinvested 64016281 shares during July 2019 in favour of CPSE
ETF (an exchange traded fund comprising 11 stocks managed by Reliance Nippon Life Asset Management
Company). Thereby the holding of the President of India got reduced to 4848133178 equity shares constituting
51.50% of the paid-up equity share capital of the Company.
During the year 2019-20 the Company commissioned the Motihari - Amlekhganj products pipeline the first
transnational pipeline of the country in July 2019. For the first time in India the first batch of 10% ethanol -
blended petrol was pumped through the Mathura - Tundla pipeline in April 2019. Subsequently the same was
carried out in the Mathura - Delhi pipeline in October 2019 and in Mathura - Bharatpur pipeline in February
2020. During the year 2019-20 the country's first Compressed Bio-Gas dispensing station was commissioned
by the Company in Pune followed by another station in Kolhapur. As a part of Company's plan to foray into
alternative energy segment 54 battery charging / swapping stations were also set up in partnership with various
companies. It commissioned new automated bulk storage terminals at Una (Himachal Pradesh) and Doimukh
(Arunachal Pradesh) during the year. In addition new LPG bottling plants were commissioned at Bhatinda
(Punjab) Banka (Bihar) and Tirunelveli (Tamil Nadu) to improve turnaround of LPG cylinders. It
commissioned 524 new LPGdistributorships taking their total number to 12450. It commissioned the 700-
KTA Polypropylene (PP) plant at Paradip in July 2019. As on March 31 2020 54 battery charging / swapping
stations have been installed at its various retail outlets. During the year 2019-20 a new Joint Venture Company
viz. IHB Private Limited between the Company Bharat Petroleum Corporation Limited and Hindustan
Petroleum Corporation Limited was incorporated in July 2019 for the purpose of laying building operating or
expanding an LPG pipeline from Kandla (Gujarat) to Gorakhpur (UP). An agreement was signed by the
Company's wholly-ownedsubsidiary (WOS) IOC Middle East FZE Dubai UAE with Qatrat Naft LLC a WOS
of Al-Jeri Transportation Co. Saudi Arabia for the formation of a joint venture company to develop and operate
22
a retail network in Saudi Arabia.In 2021 India's first batch of the premium gasoline XP100 was produced from
the Mathura Refinery using high octane streams from in-house researched and developed Octamax technology.
During the year 16 new crude oil grades were included in the Company's basket increasing its size to 201
crudes. It commissioned a new INDMAX and Prime-G unit at Bongaigaon (Assam) a new NHT andCCRU
unit at Barauni (Bihar) new DHDT units at the Haldia Refinery (West Bengal) and new DHDT and HGU units
at its Panipat and Gujarat refineries for improving the bottom line and efficiency of the refineries. It
commissioned a 337 Km pipeline during the year 2021. Apart from commissioning of the Durgapur-Banka
(193 Km) section of the Paradip-Haldia- Durgapur LPG pipeline project and the Ramanathapuram-Tuticorin
section (143.5 Km) of the Ennore-Thiruvallur-Bengaluru-Puducherry-Nagapattinam-Madurai-
Tuticorinnatural gas pipeline capacity augmentation of the Panipat-Bhatinda pipeline was also completed
during the year. It commissioned 3000 retail outlets (ROs) which was the highest ever by any Oil Marketing
Company. To promote alternative fuels Company added 310 new CNG 17 Compressed Biogas (CBG) 205
electric vehicle (EV) charging and 27 battery swapping stations during the year. Asof the close of the year the
Company was operating 1059 CNG 21 CBG 257 EV charging and 29 battery swapping stations in the country.
India's first super premium petrol XP100 with an octane value of 100 was launched by the Company during
the year. Subsequently in May 2021 XP95 (95 Octane Premium Petrol) was launched to enable automobile
manufacturers accelerateautomobile development. It commissioned 293 new LPG distributorships taking their
total number to 12726. During the year Indane XtraTej differentiated LPG with nanoadditives for enhanced
performance was launched. The 5-kg cylinder rebranded as Chhotu was a big fillip to brand Indane. In addition
Indane composite cylinders were launched in 5 kg and 10 kg units to offer a new-age and lightweight LPG
cylinder to customers. It commissioned the 1.2 MMTPA grassroots IndeDiesel unit at Haldia Refinery
producing onspec BS-VI diesel. During the year the company solarised 1658 retail outlets (ROs). As on 31
March 2021 18336 of IndianOil's ROs werepowered by solar power systems with cumulative installed capacity
of 102.4 MW. During the year 2022 Company commissioned 2521 retail outlets 435 CNG stations and eight
CBG stations consistently building a formidable network infrastructure totaling to 34559 retail outlets 1488
CNG stations and 26 CBG stations spreading its reach further for the benefit of customers and business at
large.During year 2022 106 km long Dahej - Koyali refinery R-LNG pipeline was commissioned and the
Chennai - Trichy - Madurai productpipeline was augmented from existing 2.3 MMTPA to 3.9
MMTPA.During 2021-22 the Company acquired 49% equity stake in Paradeep Plastic Park Ltd. a company
established for development and implementation of Paradeep Plastic Park project. Odisha Industrial
Development Corporation holds the balance 51% equity in the company.
The Company had ventured into setting up fertiliser plants at Barauni (Bihar) Gorakhpur (U.P.) and Sindri
(Jharkhand) through a joint venture company Hindustan Urvarak and Rasayan Ltd. in partnership with
23
National Thermal Power Corporation Ltd. Coal India Ltd. Fertilizer Corporation of India Ltd. and Hindustan
Fertilizer Corporation Ltd. While the plant at Gorakhpur has been commissioned in May 2022.During the year
2022 the Company established Bharat Energy Office a Limited Liability Company (LLC) in Russia with 20%
participation through its wholly owned subsidiary IOCL Singapore Pte. Ltd (ISPL). A Joint Venture Company
named `Beximco IOC Petroleum & Energy Ltd.' (BIPEL) between IOC Middle East FZE Dubai a wholly
owned subsidiary of the Company and RR Holdings Ltd. Ras-Al-Khaimah with equity holding of 50% each
was formed in Bangladesh. It signed a lease deed between Govt. of Sri Lanka Ceylon Petroleum Corporation
(CPC) and Lanka IOC PLC a Subsidiary of IndianOil in Sri Lanka on January 6 2022 for Trincomalee Tank
Farm along-with the Modalities & JV agreements. It commissioned a 5 TPD cattle dung-based Biogas plant
at Gorakhpur Uttar Pradesh. It acquired a 4.93% equity stake in the Indian Gas Exchange Limited (IGX) and
became its Proprietary Member. It commissioned 9 new aviation fuel stations (AFSs) during the year at Tezu
Ratnagiri Sindhudurg Jabalpur Hosur Keshod Gwalior Rajahmundry and Campbell Bay building its network
to 126 AFSs across the vast geographical spread of the country. 106 LPG distributorships were commissioned
during the year taking the total number to 12813.
The consistent thrive for excellence in quality management got another boost with the commissioning of fuel
quality upgradation projects like Naphtha Hydrotreater Unit at Bongaigaon Refinery Gasoline Hydro
Desulfurization Unit at Gujarat Refinery and Naphtha Hydro Treater ISOM unit at Guwahati Refinery during
the year. For reduction of Nitrogen Oxide (NOx) emissions from diesel vehicles Diesel Exhaust Fluid (DEF)
plants were commissioned in Gujarat Barauni Panipat & Guwahati. Bongaigaon Refinery became the 1st
Refinery in North East region to supply Ethanol Blended Motor Spirit (EBMS) in August 2021 followed by
Gujarat and Guwahati Refineries. The Company also commenced Grid power import at Bongaigaon Refinery
from June 2021.
24
CHAPTER 2:- RESEARCH AND METHODOLOGY
OBJECTIVES OF STUDY
✓ To study the liquidity position of Indian Oil Corporation Limited.

✓ To analyse profitability status of Indian Oil Corporation Limited.
✓ To know the changes over working capital for a period of five years.
✓ To analyse overall financial performance of Indian oil Corporation Limited.
SCOPE OF THE STUDY
The scope of the study is to find the financial performance of Indian Oil Corporation Limited. The study is
based on accounting information of Indian Oil Corporation for past five years. The study is mainly made to
know the profit earnings, financial growth and financial performance of the company. These findings and the
suggestions would help them re-orient their policies towards better financial performance so as to set the
industry in the pace of its higher growth.
RESEARCH AND METHODOLOGY
The study is about financial performance so it deals with the secondary data. The data has been collected from
annual reports of the company. The study covers the period of five years ranges from 2017-2018 to 2021-
2022. Analytical research design is chosen for the study. The analytical research usually concerns itself with
cause-effect relationships.
TOOLS AND TECHNIQUES
For analysing the financial performance of Indian Oil Corporation Limited the following tools are used:
1. Ratio Analysis
➢ Profitability ratios
➢ Liquidity ratios
2. Working capital Analysis.

25
LIMITATIONS OF THE STUDY
• The study has been carried out for a period of 5 year only.
• Error in financial statement will reflected in the analysis.
26
CHAPTER 3:-LITERATURE REVIEW
Deepika and Divya (2019), the analysis of financial statements is to obtain better understanding of firm’s
position. The objective of the study was to know the profitability and solvency of the business concern. The
study covered a period of 2012-16. The research methodology was based on secondary data. They found that
sales were in fluctuating trend. They concluded that profitability and solvency was up to satisfactory level and
their growth was fluctuating.
Elayabharathi, et.al (2019), the study included the area of working capital analysis, financial structure analysis,
activity analysis and profitability analysis. The study aimed at analysing the financial performance of TNSC
APEX COOPERATIVE BANK. The researcher used analytical type of research to analyse the firm’s position.
The researcher suggested the concern to increase the working capital to meet short term obligations. The study
concluded the performance of concern was found to be good.
Seema Thakur (2019), financial performance means confirming the results of a firm’s strategies and operations
in economic terms. The researcher studied the financial performance, profitability and soundness of Dabur
India Limited. Analytical research design has been chosen for the study. The study found that the financial
performance was very well covered and the company was maintaining good financial performance.
Dr.DonthiRavinder&MusukulaAnitha (2013) discussed the nature of financial analysis, its objectives,

significance, types, and tools. Financial performance of the company was depicted using comparative analysis
of income statement and balance sheet. There was a fluctuating trend in sales and the overall performance was
also not satisfactory. Bambino Agro Industries Limited should focus on stabilizing its sales position and
improving its long-term and short-term solvency position. Pawan Kumar et.al. (2013) in their research paper
has analysed the financial statements of a company using key financial ratio. The study covered a period of 7
years (2005-2006 to 2011-2012). Profitability position of IOCL was not stable and current assets should be
managed to meet current liability. Equity capital has been used efficiently.
V.Sugumar&N.Prema (2019) carried out this study to identify liquidity and financial position of a company.
The study was conducted using ratio analysis and statistical tools. Profitability and long-term solvency was
satisfactory. But, the liquidity position was weak and steps must be taken to solve its short term solvency. The
author concluded that the overall financial position of IOCL is feasible.
Divya Bharathi. R & Ramya. N (2020) in their research paper examined the liquidity, profitability to evaluate
the position of the company. The current ratio needs to be improved, steps should be taken to improve the
27
liquidity level. The overall performance of the company is better. The financial performance of the company
should be monitored and apt decisions are to be made.
Pushpa, Chakraborty and Mathur (2011) investigated the existence of lomg-term relationships between oil
prices and stock market prices of two big emerging economies in Asia viz., India and China. Since India and
China were the major oil consuming market, their stock markets were likely to be susceptible to oil price
fluctuations. A data series from January, 2000 to May, 2011 was considered. The stationarity of the data series
were checked using ADF Test. Johansen’s co-integration model was applied to find out the co-integration
among the oil prices and stock prices of India and China. VECM was employed to trace the existence of long
run relationship between the variables109. The results of the co-integration analysis found the existence long-
run relationship between oil prices and stock market prices for both the countries. The trace and maximum
Eigen value test results also revealed the existence of unique co-integrating vectors between test variables.
They provided evidence on the existence of at least one co-integrating vector in the model and therefore
concluded that the variables exhibit a long-run association between them.
Lee, Huang and Yang (2012)124 employed the momentum threshold error- correction model with generalized
autoregressive conditional heteroskedasticity to investigate asymmetric co-integration and causal relationships
between WTI crude oil and gold prices in the U.S. futures market. They collected the data from May 1st, 1994
to November 20th, 2008. The empirical results showed that an asymmetric long-run adjustment exists between
gold and oil. Furthermore, the causality relationship shows that WTI crude oil played a dominant role.
Tandon, Abuja and Neelamtandon (2012)169 established the effect of price movements in the futures /
derivative market of Brent crude oil on the prices of shares of the companies involved in the exploration and
extraction of oil and natural gas and was listed on Indian stock markets. The crude oil futures and the spot
prices of oil production companies had been collected from NSE, MCX, and NCDEX. The data for the study
was the value of future contract of Brent crude and the spot prices of the 2 upstream companies which were
Oil and Natural Gas Corporation (ONGC) and Gas Authority of India Limited (GAIL) and 2 downstream
companies which were Hindustan Petroleum Corporation Limited (HPCL) and Indian Oil Corporation
Limited (IOCL). The near month futures contracts were found to have the maximum influence on the spot
prices of the markets. The lead-lag relationship between spot prices and the near month contract prices was
then found using cross correlations and Granger causality test. Co-integration was performed for the purpose
of confirming the co-integration of the variables analyzed. The results indicated that crude oil futures
variation has the maximum effect on the spot prices of shares of energy sector companies and a lag period of
28
16 days is the most appropriate prediction time which influences present day's spot prices of shares of
downstream oil and natural gas exploration companies. The spot prices of upstream energy sector companies
were not affected by the futures contract of Brent crude.
Sharma and Khanna (2012)167 analyzed the reaction of the stock market towards the crude oil price changes.
The study was based on the daily percentage changes in oil prices and percentage changes in daily market
returns as per the stock market indices from 2008 to 2011. For this they considered mainly three stock markets
viz., NYSE, BSE, and LSE representing USA, India and UK respectively. To judge the impact of crude oil
price changes on stock market, the study focused on establishing the relationship between the market returns
and oil prices. The study has taken the percentage changes in the figures of both variables. For this purpose,
tools such as correlation, regression, and coefficient of determination were used through SPSS statistical
software. They found that the NYSE & LSE returns were more relatively affected by the oil prices during
the period than Indian BSE market. As the study period also covered the crucial period of recession, Euro
zone financial crisis and some other political imbalances, the NYSE and LSE markets have reacted very
rapidly towards such events.
Demirer and Kutan (2010) examined the informational efficiency of crude oil spot and futures markets with
respect to OPEC conference and U.S. Strategic Petroleum Reserve (SPR) announcements. Daily spot and
futures prices for light sweet crude oil from March, 1983 to June, 2005 were taken up for the analysis. They
concentrated on crude oil contracts traded in the U.S. and employed the event study methodology to examine
the abnormal returns in crude oil spot and futures markets around OPEC conference and SPR announcement
dates between 1983 and 2008. Their findings regarding OPEC announcements indicated an asymmetry in
that only OPEC production cut announcements yield a statistically significant impact with the impact
diminishing for longer maturities. They also found that the persistence of returns following OPEC production
cut announcements created substantial excess returns to investors who take long positions on the day
following the end of OPEC conferences.
Ravichandran and Alkhathlan (2010) studied the impact of oil prices on GCC (Gulf Cooperation Council)
stock market and found that their stock markets were likely to be susceptible to change in oil prices because
they were the major suppliers of oil. Data employed in this study were daily stock market price indices and
NYMEX oil price during the period March 2008 to April 2010. They used the Johansen’s Co-integration,
VAR and VECM. The results confirmed that there was an influence of oil price change on GCC stock market
returns in the long-term.
Almadi and Zhang (2011)examined whether world’s crude oil benchmarks (West Texas Intermediate in
29
North America, Brent crude in Europe, and Dubai and Oman crude oil prices in Asia were stationary as well
as whether there exist a long-run equilibrium relationship between these markets. The study period was from
January 1st, 1990 through November 19th, 2010 with 5450 daily samples. They found that the prices of the
four main crude oil benchmarks were co-integrated indicating that in the long run the world oil market was
unified rather than regionalized. They also found that Western oil markets (WTI and Brent) lead East-of-
Suez (EOS) markets (Dubai and Oman). Specifically, this study found that WTI significantly leads Brent,
Dubai and Oman crude oil prices; Brent significantly leads Dubai and Oman crude oil prices; and Oman
moderately leads Dubai crude oil prices. They concluded that in the longterm the prices of the four (WTI,
Brent, Dubai and Oman) crude oil main market will reach equilibrium.
Raymond Li (2010) evaluated in a multivariate framework the leading and lagging relationship among the
spot prices for crude oil, gasoline, heating oil, jet fuel and diesel to assess whether or not the direction of
price information flow that was to be predicted from derived demand theory was observed. Monthly spot
prices of WTI light sweet crude oil, New York Harbor conventional gasoline, No.2 heating oil, kerosene-
type jet fuel and Los Angeles No.2 diesel were used in the empirical analysis for a period from June, 1990 to
May, 2010, with 240 observations. Econometric tools such as ADF & PP test, Residual Diagnostic Test,
Johansen multivariate co-integration test and Granger causality test were used for the study which showed
strong evidence that the price of crude oil and its refinery products were co-integrated. At the same time, the
weak exogeneity test revealed that crude oil price transmitted exogenous shocks to the system in the longrun
and changes in oil price were passed through to the refined product prices in the long run.
Westgaard, Estenstad, Seim and Frydenberg (2011) investigated the relationship between Gas oil and Brent
Crude oil futures prices. The analysis was based on daily price series for five different contract lengths traded
on ICE futures Europe. The price series and their first differences were tested for stationarity. Linear
relationships between the pair-wise Gas oil and Crude oil contracts were then tested for co-integration. 1 and
2 month contracts covering data from 1994 to 2009 and Error Correction Models were established to estimate
the relationships. No co-integrated relationships were found for the 3, 6 and 12 month contracts covering the
period 2002–2009, nor for the 1 and 2 month contracts for this period.
Bakanova (2011) evaluated the information content of an option-implied volatility of the light, sweet crude
oil futures traded at NYMEX. Dataset for this study contains daily time series of light, sweet crude oil futures
and American-style options written on these futures which were traded at NYMEX for the period from
January 2nd, 1996 through December 14th , 2006. This measure of volatility was calculated using model-
free methodology that was independent from any option pricing model. They found that the option prices
contain important information for predicting future re-analyzed volatility. They also found that implied
30
volatility outperforms historical volatility as a predictor of future realized volatility and subsumes all
information contained in historical data.
Salisu and Fasanya (2012) examined crude oil price volatility using daily data for the period from 4th April
2000 to 20th March 2012. They considered both the symmetric models GARCH(1,1) and GARCH-M (1,1))
and asymmetric models TGARCH(1,1) and EGARCH(1,1). One interesting innovation of the study was that
it evaluated the volatility over three period namely pre-global financial crisis, global financial crisis and post-
global financial crisis. They found that oil price was most volatile during the global financial crises compared
to other sub samples. Based on the appropriate model selection criteria, the asymmetric GARCH models
appear superior to the symmetric ones in dealing with oil price volatility. This finding indicated that evidence
of leverage effects in the oil market and ignoring these effects in oil price modeling would lead to serious
biases and misleading results.
Kumar and Pandey (2012) analyzed the cross market linkages in terms of return and volatility spillovers in
nine commodities consisting of two agricultural commodities: Soybean, and Corn, three metals: Aluminum,
Copper and Zinc, two precious metals: Gold and Silver, and two energy commodities: Crude oil and Natural
gas. For agricultural commodities daily prices of near month futures contracts from NCDEX and for non-
agricultural commodities daily prices of near month futures contracts traded on MCX were used. Return
spillover was investigated through Johansen’s co-integration test, error correction model, and Granger
causality test and variance decomposition techniques. They used Bivariate GARCH model (BEKK) to
investigate volatility spillover between India and other world markets. They found that futures prices of
agricultural commodities traded at NCDEX and CBOT, prices of precious metals traded at MCX and
NYMEX, prices of industrial metals traded at MCX and LME, and prices of energy commodities traded at
MCX and NYMEX were co-integrated. Results of return and volatility spillovers indicated that the Indian
commodity futures markets function as a satellite market and assimilate information from the world market.
Goyal and Tripathi (2012) assessed the role of fundamentals compared to liquidity and innovation driven
expansion in net long positions, and the effect of integration across exchanges. Data was taken over February,
2005 to June, 2010, since this was a period of high volatility in oil prices and MCX commenced trading in
crude oil futures on February 9, 2005. The dataset included US WTI crude oil spot prices, UK Brent spot,
MCX WTI spot, monthly or daily close nearby futures prices on the three commodity exchanges. They used
first test for mutual Granger causality and lead-lags in vector error correction models (VECM), between
crude oil spot and nearby futures prices on two international and one Indian commodity exchange. If futures
were found to affect spot, but not vice versa, it could support the dominance of expectations mediated through
financial markets on prices. There was mutual Granger causality between spot and futures, and in the error
31
correction model for mature exchanges, spot leads futures. Mature market exchanges lead in price discovery.
But there was stronger evidence of short-term or collapsing bubbles in mature market futures compared to
Indian market, although mature markets have a higher share of hedging. Indian regulations such as position
limits may have mitigated short duration bubbles. Further they suggested that well-designed regulations could
improve the functioning of the market.
Bhunia and Mukhuti (2012) examined the short-term and long-term relationships between BSE 500, BSE
200 and BSE 100 Indices of Bombay Stock Exchange and crude oil price by using Johansen’s co-integration
test, VECM and Granger causality test. The study covered the period from 2 nd April, 2001 to 31st March,
2011. With data consisting of 2496 days. The empirical results shown there was a co-integrated long-term
relationship between three index and crude oil price. Granger causality results reveal that there was one way
causality relationship from all index of the stock market to crude oil price, but crude oil price was not causal
to each of the three indices.
Chittedi (2011) investigated long run relationships between oil prices and stock prices in India for the period
April, 2000 to June, 2011. The oil price data was collected from Petroleum Planning & Analysis Cell,
Ministry of petroleum, Government of India, where as BSE and NSE stock prices were collected from
respective websites. They employed autoregressive distributed lag (ARDL) approach test to explore the long-
run and short relationships. The results projected India’s aggressive economic growth in the past fifteen years,
and the volatility of stock prices in India have a significant impact on the volatility of oil prices and change
in the oil prices had impact on stock prices.
Khan and Salman (2010)161 investigated the relationship between the crude oil and the stock market in terms
of returns and volatility-spillover for the BRIC countries by using co-integration and the VECM-MGARCH
technique. The data was obtained from Data Stream for the period from 2 nd February 2003 to 31st March
2010 as daily closing prices. The total number of observation for each index was 1870. The data consisted of
Brent crude oil price basket, Bolsa Oficial de Valores de Sao Paula (BOVESPA Index), Russian Trading
System (RTS Index), Bombay Stock Exchange (BSE Sensex Index) and Shanghai Stock Exchange (SSE
Composite Index). The results revealed that the oil and the market returns were co-integrated in all the
markets. The results from VECM indicated stable, bidirectional, long-run relationship between oil prices and
market returns while short-run linkages were found to be absent in all the cases except Russia where it
significantly affects the Brent prices. They found that overall BRICs have strong, stable, bidirectional and
long-term relationship with the Brent price index. They also studied the volatility spillover effects and found
that BRICs equity markets were highly interconnected with crude oil market where shocks and spillover were
found to be significant and bidirectional.
32
CHAPTER 4: DATA ANALYSIS AND INTERPRETATION
Liquidity Ratio:
A liquidity ratio is a financial ratio that indicated whether a company’s current assets will be sufficient to meet
the company’s obligations when they become due.
➢ Current Ratio
➢ Liquid Ratio
CURRENT RATIO:
The current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those
due within one year. It tells investors and analysts how a company can maximize the current assets on its
balance sheet to satisfy its current debt and other payables.
A current ratio that is in line with the industry average or slightly higher is generally considered acceptable. A
current ratio that is lower than the industry average may indicate a higher risk of distress or default. Similarly,
if a company has a very high current ratio compared with its peer group, it indicates that management may not
be using its assets efficiently. The current ratio is called current because, unlike some other liquidity ratios, it
incorporates all current assets and current liabilities. The current ratio is sometimes called the working capital
ratio.
CURRENT RATIO
Year Current Asset Current Liabilities Current Ratio

2018 81758.66 100834.15 0.76
2019 93989.00 115712.00 0.81
2020 106152.86 311090.56 0.69
2021 109984.89 334054.08 0.72
2022 137321.82 388339.10 0.77
33
CURRENT RATIO
2018
0.76
2019
0.81
2020
0.69
2021
0.72
2022
0.77
0.62 0.64 0.66 0.68 0.7 0.72 0.74 0.76 0.78 0.8 0.82
current ratio
INTERPRETATION:
The standard norm of current ratio should be 2:1. From the above table, the Indian oil corporation has current
ratio of 0.76 during the year 2017-2018. The corporation has highest current ratio in the year 2018-2019 i.e.
0.81. It gradually decreases to 0.69 in the year 2019-2020. It increases to 0.72 in the year 2020-2021 and to
0.77 in the year 2021-2022. The corporation has lowest current ratio 0.69 in the year 2019-2020.
LIQUID RATIO:
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous
with economics, which is the study of production, distribution, and consumption of money, assets, goods and
services (the discipline of financial economics bridges the two). Finance activities take place in financial
systems at various scopes, thus the field can be roughly divided into personal, corporate, and public finance.
In a financial system, assets are bought, sold, or traded as financial instruments, such as currencies, loans,
bonds, shares, stocks, options, futures, etc. Assets can also be banked, invested, and insured to maximize value
and minimize loss. In practice, risks are always present in any financial action and entities.
LIQUID RATIO
Year Liquid Ratio

2018 0.34
2019 0.42
2020 0.43
2021 0.24
2022 0.25
34
LIQUID RATIO
2022
2018
15%
20%
2018
2021 2019
14%
2020
2021
2019 2022
25%
2020
26%
Interpretation:
The standard liquid ratio is considered to be 1:1. The corporation has a liquid ratio of 0.34 in the year 2017-
2018. The liquid ratio increases to 0.42 in the year 2018-2019 and to 0.43 in the year 2019-2020.It gradually
decreases to 0.25 in the year 2021-2022. The corporation has the lowest liquid ratio of 0.24 in the year 2020-
2021.
Profitability Ratio:
Profitability ratios are a type of accounting ratio that helps in determining the financial performance of
business at the end of an accounting period. Profitability ratios show how well a company is able to make
profits from its operations.
➢ Operating Margin
➢ Adjusted Cash Margin
➢ Adjusted Return on Net Worth
➢ Reported Return on Net Worth
➢ Return on Long Term Fund
Operating Margin:
35
The operating margin measures how much profit a company makes on a dollar of sales after paying
for variable costs of production, such as wages and raw materials, but before paying interest or tax. It is
calculated by dividing a company’s operating income by its net sales. Higher ratios are generally better,
illustrating the company is efficient in its operations and is good at turning sales into profits.
Operating Margin Percentage for the year 2018-2022

Year Operating Margin (%)
2018 9.35
2019 6.41
2020 3.87
2021 10.06
2022 7.22
Operating Margin
Operating Margin
12
10
6
9.35 10.06
4 7.22
6.41
2 3.87
0
2018 2019 2020 2021 2022
Interpretation:
The Corporation has a operating Margin of 9.35% in the year 2017-2018 which decreases to 6.41% in the year
2018-2019 and to 3.87% in the year 2019-2020. The Corporation has the highest operating Margin of 10.06%
in the year 2020-2021 and which again decreases to 7.22% in the year 2021-2022.
36
Adjusted Cash Margin:
Adjusted gross margin is a calculation used to determine the profitability of a product, product line or
company. The adjusted gross margin includes the cost of carrying inventory, whereas the (unadjusted) gross
margin calculation does not take this into consideration.
Adjusted Cash Margin Percentage

Year Adjusted Cash Margin
(%)
2018 6.64
2019 4.59
2020 4.37
2021 8.26
2022 5.84
Adjusted Cash Margin (%)

Adjusted Cash Margin (%)
9
8
7
6
5
4
3
2
1
0
2018 2019 2020 2021 2022
Interpretation:
The corporation has adjusted cash margin of 5.84% in the year 2021-2022 which increases to 6.64% in the
year 2017-2018.It has highest adjusted cash margin of 8.26% in the year 2020-2021 and lowest of 4.37% and
4.59% in the year 2018-2019 and 2019-2020.
37
Adjusted Return on Net Worth:
Adjusted net worth is calculated by estimating the value of the business on the company's books and adding
unrealized capital gains, capital surplus, and voluntary reserves. The calculation is a useful way to compare
the company's relative value to other insurance companies.
Adjusted Return on Net Worth percentage

Year Adjusted Return on Net
Worth (%)
2018 19.37
2019 15.54
2020 13.45
2021 19.76
2022 18.42
Adjusted Return on Net Worth (%)
2022 18.42
2021 19.76
2020 13.45
2019 15.54
2018 19.37
0 5 10 15 20
Adjusted Return on Net Worth (%)
Interpretation:
The Indian Oil Corporation Ltd earns highest return on net worth of 19.76% and 19.37% and 18.42% in the
year 2021-2022 and 2017-2018 and 2021-2022 which decreases to 15.54% in the year 2018-2019 and to
13.45% in the year 2019-2020.
38
Reported Return on Net Worth:
Return on Net Worth (RoNW) denotes the profit earning capacity of the company on the shareholder's invested
amount. RoNW is a profitability indicator of a company expressed in percentage. It is calculated by dividing
the Net Income of the company by the shareholders equity.
Reported Return on Net worth Percentage

Year Reported Return on
Net Worth(%)
2018 19.37
2019 15.54
2020 1.40
2021 19.76
2022 18.42
Reported return on net worth
2018 2019 2020 2021 2022
Interpretation:
The Indian Oil Corporation has a net worth of 19.37% for the year 2017-2018 which decreases to 15.54% in
the year 2018-2019.It has the lowest net worth of 1.40% in the year 2019-2020 and highest of 19.76% in the
year 2020-2021. In the last year i.e,. in the year 2021-2022 the net worth of Indian Oil Corporation Ltd was
18.42%.
39
Return on Long Term Fund:
Estimated long-term return is a metric that provides investors with a return estimate they can target when
investing in a fund over a long-term time frame. This measure can be comparable to a savings account rate or
the rate of interest quoted for a certificate of deposit.
Return on Long Term Fund Percentage

Year Return on Long
Term Fund (%)
2018 27.94
2019 20.53
2020 9.50
2021 19.77
2022 20.10
Return on Long Term Fund
20%
29%
20%
21%
10%
2018 2019 2020 2021 2022
Interpretation:
As shown in the above chart the percentage of long term fund of Indian Oil Corporation was 27.94% in the
year 2017-2018 which decreases to 20.53% in the year 2018-2019 and which decreases to 9.50 in the following
year i.e; in the year 2019-2020. In the year 2020-2021 the long term fund was 19.77% which increases to
20.10% in the year 2021-2022.
40
Leverage Ratio:
A leverage ratio is any one of several financial measurements that assesses the ability of a company to meet
its financial obligations. A leverage ratio may also be used to measure a company's mix of operating expenses
to get an idea of how changes in output will affect operating income.
➢ Long Term Debt/Equity

➢ Owners fund as % of total Source
➢ Fixed Asset Turnover Ratio
Long Term Debt/Equity:
The long-term debt to equity ratio shows how much of a business' assets are financed by long-term financial
obligations, such as loans. To calculate long-term debt to equity ratio, divide long-term debt by shareholders'
equity. As we covered above, shareholders' equity is total assets minus total liabilities.
Long Term Debt/Equity Ratio

Year Long Term Debt/Equity Ratio
2018 0.17
2019 0.32
2020 0.53
2021 0.50
2022 0.39
Long Term Debt/Equity Ratio
2018 2019 2020 2021 2022
41
Interpretation:
Indian Oil Corporation limited has a long term debt/equity ratio of 0.17 in the year 17-18 which increase is to
0.32 in the year 18-19 and which increases to 0.53 in the year 2019-20. It decreases to 0.50 in the year 2020
and 0.39 in the year 2021-2022.
Owners Fund as % of Total Source:
Owner’s funds are provided by the owners of the business and are known as capital in the case of sole
proprietor, partnership, limited liability partnership etc. it is called share capital in the case of incorporated
bodies like a company or cooperative society. Owner’s funds also include the profits earned by the business
that are reinvested in the business also called as retained earnings, ploughing back of profits or self-financing.
The main features of these funds are that these are available for a longer duration and need not to be returned
during the lifetime of the business. On the basis of these funds, the share of the owners in the management and
ownership of the assets decided.
Owners Fund as % of Total Source

Year Owners Fund (%)
2018 66.48
2019 56.61
2020 45.40
2021 53.36
2022 54.23
2022 54.23
2021 53.36
2020 45.4
2019 56.61
2018 66.48
0% 20% 40% 60% 80% 100%
42
Interpretation:
The Indian oil corporation has owner fund of total source of 66.48% in the year 2018 and 2019 which decreases
to 56.61 in the year 2018 and 2019. In the year 2019 and 2020 the owner fund was 45.40 which increases to
53.36 in the year 2020 and 2021. It was noticed that in the year 2021 and 22 the owners fund was 54.23% of
Indian Oil Corporation Limited.
Fixed asset Turnover Ratio:
The fixed asset turnover ratio reveals how efficient a company is at generating sales from its existing fixed
assets. The fixed asset turnover ratio is calculated by dividing net sales by the average balance in fixed assets.
A higher ratio implies that management is using its fixed assets more effectively.
Fixed asset Turnover Ratio

Year Fixed asset Turnover
Ratio
2018 2.69
2019 2.95
2020 2.44
2021 1.83
2022 2.66
Fixed asset Turnover Ratio
2018 2019 2020 2021 2022
43
Interpretation:
The fixed asset turnover ratio of Indian Oil Corporation limited in the year 2017-2018 was 2.69 which
increases in the year 2018-2019 to 2.95. In the year 2019 -2020 the fixed asset turnover ratio was 2.44 which
decreases to 1.83 in the year 2020-2021 and which gradually increases to 2.66 in the year 2021- 2022. The
company has lowest fixed asset turnover ratio of 1.83 in the year 2020 and 2021.
Pay-out Ratio:
The dividend payout ratio is the measure of dividends paid out to shareholders relative to the company's net
income. Dividend per share (DPS) is the total dividends declared in a period divided by the number of
outstanding ordinary shares issued.
➢ Dividend payout Ratio (Net Profit)

➢ Earning Retention Ratio
➢ Cash Earning Retention Ratio
Dividend payout Ratio (Net Profit):
The Dividend Payout Ratio (DPR) is the amount of dividends paid to shareholders in relation to the total
amount of net income the company generates. In other words, the dividend payout ratio measures the
percentage of net income that is distributed to shareholders in the form of dividends.
Dividend payout Ratio (Net Profit)
Year Dividend payout Ratio (Net

Profit)
2018 33.35
2019 39.61
2020 47.82
2021 30.46
2022 27.39
44
Dividend payout Ratio (Net Profit)
2018 2019 2020 2021 2022
Interpretation:
The dividend payout ratio of Indian Oil Corporation limited in the year 2018-2019 was 33.35 which increases
to 39.61 in the year 2018-2019 to 47.82 in the year 2019-2020.In the year 2020-2021 the dividend payout ratio
of Indian Oil Corporation Limited was 30.46 which decreased to 27.39 in the year 2021-2022.
Earning Retention Ratio:
The retention ratio is the proportion of earnings kept back in the business as retained earnings. The retention
ratio refers to the percentage of net income that is retained to grow the business, rather than being paid out as
dividends.
Earning Retention Ratio

Year Earning Retention Ratio
2018 55.60
2019 42.76
2020 61.80
2021 55.86
2022 60.14
45
EARNING RETENTION RATIO

2018 2019 2020 2021 2022
26% 26%
20%
28%
Interpretation:
The earning retention ratio of Indian Oil Corporation limited in the year 2017-2018 was 55.60 which decreases
to 42.76 in the year 2018-2019.In the year 2019-2020 the earning retention ratio was 61.80,it was noticed that
Indian all Corporation limited has the highest retention ratio in this year that is year which decreased to 55.86
in the following year that is 2020-2021.In the last year that is 2021-2022 the earning retention ratio was 60.14.
Coverage Ratio:
A coverage ratio, broadly, is a metric intended to measure a company's ability to service its debt and meet its
financial obligations, such as interest payments or dividends. The higher the coverage ratio, the easier it
should be to make interest payments on its debt or pay dividends. The trend of coverage ratios over time is
also studied by analysts and investors to ascertain the change in a company's financial position.
➢ Adjusted Cash flow Time Total Debt

➢ Financial charges coverage Ratio
➢ Financial charges coverage ratio (post tax)
Adjusted Cash flow Time Total Debt:
The cash flow-to-debt ratio compares a company's generated cash flow from operations to its total debt. The
cash flow-to-debt ratio indicates how much time it would take a company to pay off all of its debt if it used all
of its operating cash flow for debt repayment (although this is a very unrealistic scenario).
46
Adjusted Cash flow Time Total Debt Ratio

Year Adjusted Cash flow Time
Total Debt Ratio
2018 1.95
2019 3.41
2020 5.27
2021 3.05
2022 3.15
Adjusted Cash flow Time Total Debt
2018 2019 2020 2021 2022
Interpretation:
The adjusted cash flow time total debt ratio of Indian Corporation limited was 1.95 in the year 2017-2018
which increases to 3.41 in the year 2018-2019 and to 5.27 in the year 2019-2020. In the year 2020-21 the
adjusted cash flow time total debt ratio was 3.05 and in the year 2020- 2022 it was 3.15.
Financial Charge Coverage Ratio:
The fixed-charge coverage ratio (FCCR) measures a firm's ability to cover its fixed charges, such as debt
payments, interest expense, and equipment lease expense. It shows how well a company's earnings can cover
its fixed expenses. Banks will often look at this ratio when evaluating whether to lend money to a business.
47
Financial Charge Coverage Ratio

Year Financial Charge
Coverage Ratio
2018 12.49
2019 8.57
2020 3.74
2021 13.77
2022 9.85

2022
2021
2020
2019
2018
0 2 4 6 8 10 12 14 16
Interpretation:
This financial charge coverage ratio of Indian Oil Corporation limited in the year 2017-2018 was 12.49 which
decreases to 8.57 in the following year i.e., 2018-2019. The lowest financial charge coverage ratio was in the
year 2019-2020 i.e., of 3.74 which increased in the year 2020-2021 to 13.77. In the last year i.e., 2021-2022
the financial charge coverage ratio was 9.85.
Financial charge coverage ratio (Post tax):
EBIT + fixed charges before taxes) / (fixed charges before taxes + interest).To calculate your FCCR, add the
company's earnings before interest and taxes to its fixed obligations before tax. Then divide that total by the
sum of fixed charges before tax plus interest.
48
Financial charge coverage ratio (Post tax)

Year Financial charge
coverage
ratio(Post tax)
2018 9.24
2019 6.66
2020 2.69
2021 11.23
2022 8.29
Financial charge coverage ratio(Post

tax)
2022
2021
2020
2019
2018
0 2 4 6 8 10 12
Financial charge coverage ratio(Post tax)
Interpretation:
The financial charge coverage ratio after tax of Indian Oil Corporation limited was 9.25 in the year 2017-2018
which decreases to 6.66 in the year 2018-2019. In the year 2019-2020 the financial charge coverage ratio after
tax was 2.69 which increases in the year 2020-2021 to 11.23.In the last year i.e., 2021-22 the financial charge
coverage ratio after tax was 8.29.
Component Ratio:
A biomass component ratio is the ratio of biomass in a tree component to total tree biomass. Modeling the
ratios for Zelkova serrata, an important native reforestation tree species in Taiwan, helps in understanding its
biomass allocation strategy to design effective silvicultural treatments.
49
➢ Material Cost Component (% earning)

➢ Export as percent of total Sales
➢ Long Term Assets/Total assets
➢ Bonus Component in equity capital
Material Cost Component (% earning):
Component Cost means costs (per unit notional exposure to a Component) incurred, or which would be
incurred, by the Swap Counterparty which are incidental and necessary to (a) acquire, establish, re- establish,
substitute, maintain, unwind or dispose of any position in a Component it deems necessary to hedge the equity
price risk of the Swap Counterparty performing its obligations with respect to the Swap Agreement and the
Notes, or (b) realise, recover or remit the proceeds of any such position in a Component (including but not
limited to movements in bid and offer prices of a Component, applicable costs incurred from a third party
charged in addition to bid and offer prices (such as exchange or brokerage fees or commissions, or other fees
upon transacting in a Component) and other costs having a similar effect on the Swap Counterparty), excluding
any amount that is incurred solely due to the deterioration of the creditworthiness of the Swap Counterparty
and/or its affiliates.
Material Cost Component (% earning)

Year Material Cost Component(% earning)
2018 80.84
2019 85.44
2020 88.11
2021 80.00
2022 86.63
Material Cost Component(% earning)
2018
2019
2020
2021
2022
50
Interpretation:
The material cost component percentage of Indian Oil Corporation limited in the year 2017-2018 was 80.84
which increases to 85.44 in the year 2018-2019. In the year 2019- 2020 the material cost component percent
of Indian Oil Corporation limited was 88.11 which decreases to 80 in the year 2020-2021. In the year 2021-
2022 the percentage of material cost component was 86.63.
Export as percent of total Sales:
Exports are goods and services that are produced in one country and sold to buyers in another. Exports, along
with imports, make up international trade. Instead of confining itself within its geographical borders,
countries often intentionally seek external markets around the world for commerce, allowing greater revenue
and transactional opportunities.
Export as percent of total Sales

Year Export as percent of total Sales
2018 5.29
2019 4.21
2020 3.82
2021 2.87
2022 3.69
Export as percent of total Sales
2018 2019 2020 2021 2022
51
Interpretation:
The export percent of total sales of Indian Oil Corporation limited in the year 2017-2018 was 5.29 which
decreases to 4.21 in the year 2018-2019 and to 3.82 in the year 2019-2020. In year 2020-2021 the export
percent of total sales was 2.87 which increases to 3.69 in the year 2021-2022.
Long Term Assets/Total assets:
Also known as non-current assets, long-term assets can include fixed assets such as a company's property,
plant, and equipment, but can also include other assets such as long term investments, patents, copyright,
franchises, goodwill, trademarks, and trade names, as well as software.
Long Term Assets/Total assets

Year Long Term Assets/Total assets
2018 0.62
2019 0.61
2020 0.65
2021 0.67
2022 0.64
Long Term Assets/Total assets
2018 2019 2020 2021 2022
52
Interpretation:
The long term asset/total assets of Indian Corporation limited was 0.62 in the year 2017-2018 which decreases
to 0.61 in the year 2018-2019.It was noticed that in the year 2019-2020 the ratio was 0.65 which increases in
the next year that is in the year 2020-2021 to 0.67. In the last year that is 2021-2022 the ratio was 0.64.
Bonus Component in equity capital:
Bonus shares are complimentary, fully paid shares issued to the existing shareholders of the company, based
on the proportion of their current holding. Bonus shares are paid out to shareholders from the free reserves of
the company. Free Reserves are nothing but accumulated profits of the company available for distribution. A
bonus issue is usually expressed in the form a fixed ratio like 1:1 means 1 bonus share for every share held or
1:2 means 1 bonus share for every 2 shares held. Equity shares represent ownership in a company. Equity
shareholders may receive a share in the earnings of the company based on the payout method that the directors
decide. The management may opt to reward the equity shareholders with dividend or in some cases with bonus
shares. A bonus issue, just like dividend payout, is a form of profit-sharing.
Bonus Component in equity capital

Year Bonus Component in equity
capital (%)
2018 98.44
2019 98.44
2020 98.44
2021 98.44
2022 98.44
BONUS COMPONENT IN EQUITY

CAPITAL
2018 2019 2020 2021 2022
20% 20%
20% 20%
20%
53
Interpretation:
The bonus component in equity capital of Indian Oil Corporation limited in the last 5 years that is from the
year 2018 to 2022 the percent of bonus component in equity capital remains the same that is of 98.44.
Valuation Ratio:
Valuation is the financial process of determining what a company is worth. Valuation ratios put that insight
into the context of a company's share price, where they serve as useful tools for evaluating investment
potential.
➢ Enterprise Value
➢ EV/Net Operating Revenue
➢ EV/Earning before interest and tax
➢ Market capital/Net Operating Revenue
➢ Retention Ratio
➢ Price/Book value
➢ Earnings Yield
Enterprise Value:
Enterprise value (EV) measures a company's total value, often used as a more comprehensive alternative to
equity market capitalization. EV includes in its calculation the market capitalization of a company but also
short-term and long-term debt and any cash or cash equivalents on the company's balance sheet.
Enterprise Value (RS)

Year Enterprise Value
(RS)
2018 222,553.10
2019 232,544.07
2020 187,110.80
2021 179,194.49
2022 219,123.99
54
ENTERPRISE VALUE
2022 2018
2021
2019
2020
Interpretation:
The enterprise value of Indian Oil Corporation limited in the year 2017-2018 was Rs.222,553.10 which
increases to Rs.232,544.07 in the year 2018-2019. In the year 2019-2020 the value of the enterprise was
Rs.187,110.80 which decreases to Rs. 179,194.49 in the year 2020-2021. In the last year the enterprise value
was Rs.219,123.99.
EV/Net Operating Revenue:
The EV/Revenue ratio highlights the Enterprise Value of a company in comparison with its revenue. This is a
more comprehensive valuation metric than the popular Price/Sales ratio since the former includes market
capitalization, debt and cash equivalents as well in the calculation.
EV/Net Operating Revenue
Year EV/Net Operating Revenue

2018 0.52
2019 0.44
2020 0.39
2021 0.47
2022 0.37
55
EV/NET OPERATING REVENUE

2018 2019 2020 2021 2022
17%
24%
21%
20%
18%
Interpretation:
EV/net operating revenue of Indian Oil Corporation limited in the year 2017-2018 was 0.52 which decreases
to 0.43 in the year 2018-2019 and to 0.32 in the year 2019-2020. The EV / net operating revenue was 0.47 in
the year 2020-2021 which decreases to 0.37 in the year 2021-2022.
EV/EBITDA:
EV/EBITDA is a ratio that compares a company's Enterprise Value (EV) to its Earnings before Interest, Taxes,
Depreciation & Amortization (EBITDA). The EV/EBITDA ratio is commonly used as a valuation metric to
compare the relative value of different businesses.
EV/EBITDA ratio
Year EV/EBITDA ratio
2018 5.17
2019 6.29
2020 8.37
2021 4.21
2022 4.61
56
EV/EBITDA RATIO
EV/EBITDA Ratio
2022 4.61
2021 4.21
2020 8.37
2019 6.29
2018 5.17
Interpretation:
EV/EBITDA ratio was 5.17 in the year 2017-2018 which increases to 6.29 in the year 2018-2019 and to 8.37
in the year 2019-2020. The EV/EBITDA ratio of Indian Oil Corporation limited was 4.21 in the year 2020-
2021 which increases to 4.61 in the year 2021-2022.
Market Capital/Net Operating Revenue:
Market capitalization and revenue are two metrics used for value estimation. Market capitalization reflects the
total value of a company based on its stock price. Revenue is the amount of money a company earns as a result
of sales. It is possible for a company to have a large market cap but low revenues.
Market Capital/Net Operating Revenue

Year Market Capital/Net Operating
Revenue
2018 0.39
2019 0.28
2020 0.15
2021 0.22
2022 0.18
57
Market capital/Net operating Revenue

Ratio
0.18
2018
0.39
2019
0.22 2020
2021
0.15 2022
0.28
Interpretation:
The market capital / net operating revenue of Indian Oil Corporation limited was 0.39 in the year 2017-2018
which decreases to 0.28 in the year 2018-2019 and to 0.15 in the year 2019-2020. It was noticed that Indian
Corporation has lowest market capital / net operating revenue in the year 2019-2020 and highest in the year
2018-19 of 0.39. In the year 20 20-21 it was 0.22 which decreases to 0.18 in the year 2021-2022.
Retention Ratio:
The retention ratio refers to the percentage of net income that is retained to grow the business, rather than
being paid out as dividends. It is the opposite of the payout ratio, which measures the percentage of profit paid
out to shareholders as dividends. The retention ratio is also called the plowback ratio.
Retention Ratio
Year Retention Ratio
2018 55.9
2019 42.75
2020 -267.05
2021 55.85
2022 60.13
58
Retention Ratio
2018 2019 2020 2021 2022
Interpretation:
The retention ratio of Indian Oil Corporation limited was 55.9 in the year 2017-2018 which decreases 42.75
in the year 2018-2019. The Indian Oil Corporation limited was having retention ratio in negative figures in the
year 2019-2020 of - 267.05 which increases to 55.85 in the 2020-2021 and to 60.13 in their 2021-2022.
Price/Net Operating Revenue:
NOI equals all revenue from the property, minus all reasonably necessary operating expenses. NOI is a before-
tax figure, appearing on a property's income and cash flow statement, that excludes principal and interest
payments on loans, capital expenditures, depreciation, and amortization.
Price/Net Operating Revenue Ratio

Year Price/Net operating
revenue ratio
2018 0.39
2019 0.28
2020 0.15
2021 0.22
2022 0.18
59
Price/Net operating Revenue ratio
2018
2019
2020
2021
2022
Interpretation:
The price / net operating revenue of Indian Oil Corporation limited in the year 2017-2018 was 0.39 which
decreases to 0.28 in the year 2018-2019 and to 0.15 in the year 2019-2020. The price / net operating revenue
of Indian Corporation limited was 0.22 in the year 2020-21 which decreases to 0.18 in the year 2021-2022.
Earnings Yield:
The earnings yield refers to the earnings per share for the most recent 12-month period divided by the current
market price per share. The earnings yield (the inverse of the P/E ratio) shows the percentage of a company's
earnings per share. Earnings yield is used by many investment managers to determine optimal asset
allocations and is used by investors to determine which assets seem underpriced or overpriced .
Earnings Yield ratio

Year Earnings yield ratio
2018 0.13
2019 0.11
2020 0.02
2021 0.26
2022 0.22
60
EARNINGS YIELD RATIO

Earnings Yield ratio
0.26
0.22
0.13
0.11
0.02
2018 2019 2020 2021 2022
Interpretation:
The earning yield ratio was 0.13 in the year 2017-2018 which decreases to 0.11 in the year 2018-2019. The
lowest earning yield ratio of Indian Oil Corporation limited was in the year 2019-2020 of 0.02 and the highest
earning yield ratio of Indian Oil Corporation limited was 0.26 in the year 2020-2021. In the year 2021-2022
the earning ratio was 0.22.
Per Share Ratio:
Earnings per share or EPS is an important financial measure, which indicates the profitability of a company.
It is calculated by dividing the company's net income with its total number of outstanding shares.
➢ Basic EPS
➢ Cash EPS
➢ Dividend/Share
➢ Revenue from operations/Share
➢ Net Profit/Share
Basic EPS:
The basic earnings per share (EPS) metric refers to the total amount of net income that a company generates
for each common share outstanding. The basic EPS is calculated by dividing a company's net income by the
weighted average of common shares outstanding.
61
Basic EPS (RS)

Year Basic EPS (RS)
2018 22.52
2019 17.89
2020 1.43
2021 23.78
2022 26.34
Basic EPS (RS)
2022 26.34
2021 23.78
2020 1.43
2019 17.89
2018 22.52
0 5 10 15 20 25 30
Basic EPS (RS)
Interpretation:
The basic EPS was 22.52 in the year 2017-2018 which decreases to 17.89 in the year 2018-2019 and to 1.43
in the year 2019-2020. The basic EPS of Indian Corporation limited was 23.78 in the year 2020-2021 which
increases to 26.34 in the year 2021-2022.
Cash EPS:
Cash earnings per share (cash EPS), or more commonly called operating cash flow, is a financial performance
measure comparing cash flow to the number of shares outstanding. Cash EPS differs from the more popular
net profit measure, earnings per share (EPS), which compares net income on a per share basis.
62
Cash EPS (RS)

Year Cash EPS
2018 29.98
2019 26.59
2020 10.98
2021 34.46
2022 38.33
Cash EPS (RS)
2018 2019 2020 2021 2022
Interpretation:
The cash EPS of Indian Oil Corporation limited was 29.98 in the year 2017-2018 which decreases to 26.59 in
the year 2018-2019 and to 10.98 in the year 2019-2020. The cash EPS of Indian Oil Corporation limited was
34.46 in the year 2020-2021 which increases to 38.33 in the year 2021-2022.
Dividend/Share:
A dividend is the distribution of some of a company's earnings to a class of its shareholders. Dividends
are usually paid in the form of a dividend check. However, they may also be paid in additional shares of stock.
63
Dividend/Share (RS)
Year Dividend/Share
2018 21.00
2019 9.25
2020 4.25
2021 12.00
2022 11.40
DIVIDEND/SHARE
Dividend/Share
21
12 11.4
9.25
4.25
2018 2019 2020 2021 2022
Interpretation:
The dividend / share of Indian Oil Corporation limited in the year 2017-2018 was 21 which decreases to 9.25
in the year 2018-2019 and to 4.25 in the year 2019-2020. In the year 2020-21 the dividend / share was 12
which decreases to 11.40 in the year 2021-2022.
Revenue from Operations/Share:
Operating revenue refers to the revenue generated by a company from its primary activities. The exact activity
that generates the operating revenue varies with the type of business. Consider the example of a retailer; the
operating revenue for a retailer comes by selling merchandise.
64
Revenue from Operations/Share (RS)

Year Revenue From
Operations/Share (RS)
2018 447.36
2019 574.77
2020 528.98
2021 411.78
2022 651.52
REVENUE FROM OPERATIONS/SHARE (RS)

Revenue from operations/Share (RS)
651.52
574.77
528.98
447.36
411.78
2018 2019 2020 2021 2022
Interpretation:
The revenue from operations/ share of Indian Oil Corporation limited in the year 2017-2018 was 447.36 which
increased to 574.77 in the year 2018-2019 which decreased to 528.98 in the year 2019-2020. The lowest
revenue from operations/share of Indian Oil Corporation limited was in the year 2020-2021 of 411.78 and the
highest revenue from operations/share was of 651.52 in the year 2021-2022.
Net Profit/Share:
Profit sharing, system by which employees are paid a share of the net profits of the company that employs
them, in accordance with a written formula defined in advance. Such payments, which may vary according to
salary or wage, are distinct from and additional to regular earnings.
65
Net Profit/Share (RS)

Year Net Profit/Share (RS)
2018 22.52
2019 18.40
2020 1.43
2021 23.78
2022 26.34
Net Profit/Share (RS)
2018 2019 2020 2021 2022
Interpretation:
The net profit / share of Indian Oil Corporation limited was 22.52 in the year 2017-2018 which decreased to
18.40 in the year 2018-2019. The lowest net profit / share of Indian Corporation limited was in the year 2019-
2020 of 1.43. In the year 2020-2021 the net profit / share of Indian Oil Corporation limited was 23.78 which
increases to 26.34 in the year 2021-22.
66
Profit before Depreciation Interest and Tax/Share:
EBITDA, or earnings before interest, taxes, depreciation, and amortization, is an alternate measure of
profitability to net income. By stripping out the non-cash depreciation and amortization expense as well as
taxes and debt costs dependent on the capital structure, EBITDA attempts to represent cash profit generated
by the company’s operations.
EBITDA/Share (RS)
Year EBITDA/Share (RS)
2018 45.46
2019 40.25
2020 24.35
2021 46.42
2022 51.81
EBITDA/SHARE (RS)
EBITDA/Share (RS)
51.81
45.46 46.42
40.25
24.35
2018 2019 2020 2021 2022
Interpretation:
The profit before depreciation interest and tax / share of Indian Oil Corporation limited in the year 2017- 2018
was 45.46 which decreases to 40.25 in the year 2018-2019. In the year 2019-2020 the profit before depreciation
67
interest and tax/share was 24.35 which increase to 46.42 in the year 2020-2021. It was noticed that highest
profit before depreciation interest and tax/share of Indian corporation limited was in last year that is in the year
2021-2022 which was 51.81.
PBIT/Share:
This is also known as profit before interest and tax (PBIT) or earnings before interest and tax (EBIT). PBIT is
frequently used by creditors to measure a company’s earning and paying capacity. The main issue for analysts
with the operating profit figure is that it is stated after depreciation and amortisation.
PBIT/Share (RS)
Year PBIT/Share
2018 37.99
2019 32.06
2020 14.80
2021 35.74
2022 39.82
PBIT/Share (RS)
2018 2019 2020 2021 2022
Interpretation:
PBIT / share of Indian oil corporation limited in the year 2017-2018 was 37.99 which decreases to 32.06 in
the year 2018-2019 and which decreases to 14.80 in the year 2019-2020.In the year 2020-2021 the PBIT /
share of Indian corporation limited was 35.74 which increased to 39.82 to in the year 2021-2022.
68
PBT/Share:
Also known as Earnings before Tax (EBT), Profit before Tax (PBT) is the measure of the company’s profit
before the payment of corporate income tax. It is listed on the income statement of the company. The primary
purpose was for the company owners to estimate how much profit the company is really making without
factoring in varying tax rates and structures.
PBT/Share (RS)
Year PBT/Share (RS)
2018 34.36
2019 27.37
2020 -4.02
2021 32.37
2022 34.56
PBT/SHARE (RS)
PBT/Share (RS)
34.36 34.56
32.37
27.37
2018 2019 2020 2021 2022

-4.02
Interpretation:
The PBT / share of Indian Oil Corporation Limited in the year 2017-18 was 34.36 which decreases to 27.37.
It was noticed that lowest PBT/ share of Indian population was in 2019-2020 that is -4.02.In 2020-2021 the
PBT/share was 32.37 which increased to 34.56 in the year 2021-2022.
69
Balance Sheet of Indian Oil Corporation Ltd from year 2018-2022
PARTICULARS Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 9181.04 9181.04 9181.04 9181.04 9478.69
TOTAL SHARE CAPITAL 9181.04 9181.04 9181.04 9181.04 9478.69
Reserves and Surplus 122105.32 101319 84587.83 99476.47 100692.33
TOTAL RESERVES AND
SURPLUS 122105.32 101319 84587.83 99476.47 100692.33
TOTAL SHAREHOLDERS
FUNDS 131286.36 110500.04 93768.87 108657.51 110171.02
NON-CURRENT LIABILITIES
Long Term Borrowings 50579.83 55407.95 49250.64 34666.36 18717.6
Deferred Tax Liabilities [Net] 13627.36 12964.73 11413.14 15823.07 12019.57
Other Long Term Liabilities 10639.95 3423.59 2832.06 2214.12 1926.12
Long Term Provisions 907.81 943.93 919.05 883.66 2023.32
TOTAL NON-CURRENT
LIABILITIES 75754.95 72740.2 64414.89 53587.21 34686.61
CURRENT LIABILITIES
Short Term Borrowings 60218.67 41172.86 63486.08 48593.55 36807.56
Trade Payables 42469.34 33874.59 25224.3 38679 33106.05
Other Current Liabilities 69215.51 66512.83 54601.67 56052.56 51807.07
Short Term Provisions 9394.27 9253.56 9594.75 10137.89 14161.6
TOTAL CURRENT
LIABILITIES 181297.79 150813.84 152906.8 153463 135882.28
TOTAL CAPITAL AND
LIABILITIES 388339.1 334054.08 311090.56 315707.72 280739.91
ASSETS
NON-CURRENT ASSETS
Tangible Assets 144313.53 140916.14 131752.76 117331.22 112887.65
Intangible Assets 2575.31 2483.8 1929.04 1376.61 1039.67
Capital Work-In-Progress 42764.6 31600.61 28134.1 22160.52 13860.99
Other Assets 0 0 0 0 0
FIXED ASSETS 191334.91 176452.07 163419.55 142306.79 128275.75
Non-Current Investments 50021.82 39752.12 31052.17 41339.58 39088.94
Deferred Tax Assets [Net] 0 0 0 0 0
Long Term Loans And Advances 2263.92 2556.12 3256.75 2281.4 2031.01
Other Non-Current Assets 7396.63 5308.88 7209.23 5336.83 8289.24
TOTAL NON-CURRENT
ASSETS 251017.28 224069.19 204937.7 191264.6 177684.94
CURRENT ASSETS
Current Investments 7764.82 8867.29 8086.39 8415.8 8399.32
70
Inventories 103206.94 78188.01 63677.62 71470.38 65313.21

Trade Receivables 18136.57 13397.68 12844.09 15448.02 10116.52
Cash And Cash Equivalents 882.98 1668.27 589.11 91.36 81.36
Short Term Loans And Advances 439.95 970.66 1054.79 1378.2 467.51
OtherCurrentAssets 6890.56 6892.98 19900.86 27639.36 18677.05
TOTAL CURRENT ASSETS 137321.82 109984.89 106152.86 124443.12 103054.97
TOTAL ASSETS 388339.1 334054.08 311090.56 315707.72 280739.91
71
INCOME STATEMENT OF INDIAN OIL CORPORATION LTD FROM YEAR

2018-2022
PARTICULAR Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
INCOME
REVENUE FROM OPERATIONS
[GROSS] 724602.11 511813.99 562168.72 600922.19 500767.14
Less: Excise/Sevice Tax/Other
Levies 130296.19 136832.86 80693.19 78231.08 82388.89
REVENUE FROM OPERATIONS
[NET] 594305.92 374981.13 481475.53 522691.11 418378.25
TOTAL OPERATING REVENUES 598163.75 378057.61 485660.36 527701.26 424038.7
Other Income 4324.26 4550.72 3554.72 3128.51 3414.62
TOTAL REVENUE 602488.01 382608.33 489215.08 530829.77 427453.32
EXPENSES
Cost Of Materials Consumed 294501.48 156647.96 247077.03 269679.61 188780.12
Purchase Of Stock-In Trade 221078.1 143662.08 178535.49 179055.5 152117.55
Operating And Direct Expenses 0 7.69 5.73 3.29 0
Changes In Inventories Of FG,WIP
And Stock-In Trade -12197.02 -5547.57 -6410.43 -3011.13 2327.5
Employee Benefit Expenses 10991.7 10712.04 8792.65 11102.17 10079.41
Finance Costs 4829.1 3093.92 5979.45 4311.03 3448.44
Depreciation And Amortisation
Expenses 11005.91 9804.3 8766.1 7517.58 7067.01
Other Expenses 40509.3 34005.13 39191.03 37044.8 31069.01
TOTAL EXPENSES 570754.94 352892.68 481604.55 505702.85 394889.04
PROFIT/LOSS BEFORE
EXCEPTIONAL,
EXTRAORDINARY ITEMS AND
TAX 31733.07 29715.65 7610.53 25126.92 32564.28
Exceptional Items 0 0 -11304.64 0 0
PROFIT/LOSS BEFORE TAX 31733.07 29715.65 -3694.11 25126.92 32564.28
TAX EXPENSES-CONTINUED
OPERATIONS
Current Tax 6913 6761.03 -165.89 5100.94 7276.45
Less: MAT Credit Entitlement 0 0 0 0 0
Deferred Tax 635.97 1118.58 -4841.45 3131.83 3941.71
Tax For Earlier Years 0 0 0 0 0
TOTAL TAX EXPENSES 7548.97 7879.61 -5007.34 8232.77 11218.16
PROFIT/LOSS AFTER TAX AND
BEFORE EXTRAORDINARY
ITEMS 24184.1 21836.04 1313.23 16894.15 21346.12
PROFIT/LOSS FROM
CONTINUING OPERATIONS 24184.1 21836.04 1313.23 16894.15 21346.12
PROFIT/LOSS FOR THE PERIOD 24184.1 21836.04 1313.23 16894.15 21346.12
72
CASH FLOW OF INDIAN OIL CORPORATION LTD FROM YEAR 2018-2022

PARTICULARS Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
NET PROFIT/LOSS BEFORE
EXTRAORDINARY ITEMS AND TAX 31733.07 29715.65 -3694.11 25126.92 32564.28
Net CashFlow From Operating Activities 21177.34 49095.79 7190.3 13489.53 26423.8
Net Cash Used In Investing Activities -20096.83 -22153.95 -26882.37 -21839 -15778.68
Net Cash Used From Financing Activities -684.34 -27163.76 20189.32 8334.49 -10644.33
Foreign Exchange Gains / Losses 0 0 0 0 0
Adjustments On Amalgamation Merger
Demerger Others 0 0 0 0 0
NET INC/DEC IN CASH AND CASH
EQUIVALENTS 396.17 -221.92 497.25 -14.98 0.79
Cash And Cash Equivalents Begin of
Year 313.74 535.56 38.31 53.48 52.86
Cash And Cash Equivalents End Of Year 709.91 313.64 535.56 38.5 53.65
73
COMPARATIVE BALANCE SHEET OF INDIAN OIL LTD FOR THE YEAR 2020-
2021 AND 2021-2022
%
PARTICULARS Mar-21 Mar-22 CHANGE
Networth 1118381 1335352 19.4
Current Liabilities 1668782 1983202 18.8

Long-term Debt 546850 559445 2.3
Total Liabilities 3784802 4224150 11.6
Current assets 1209110 1530262 26.6

Fixed Assets 2575692 2693888 4.6
Total Assets 3784802 4224150 11.6
Interpretation:
▪ The company's current liabilities during FY22 stood at Rs 1,983 billion as compared to Rs 1,669 billion
in FY21, thereby witnessing an increase of 18.8%.
▪ Long-term debt stood at Rs 559 billion as compared to Rs 547 billion during FY21, a growth of 2.3%.
▪ Current assets rose 27% and stood at Rs 1,530 billion, while fixed assets rose 5% and stood at Rs 2,694
billion in FY22.
▪ Overall, the total assets and liabilities for FY22 stood at Rs 4,224 billion as against Rs 3,785 billion
during FY21, thereby witnessing a growth of 12%.
COMPARATIVE CASH FLOW OF INDIAN OIL CORPORATION LTD FOR

THE YEAR 2020-2021 AND 2021-2022
%
PARTICUARS 2021 2022 CHANGE
Cash Flow from Operating Activities 496502 245703 -0.505
Cash Flow from Investing Activities -229347 -211776 -
Cash Flow from Financing Activities -273690 -29973 -
Net Cash Flow -6534 3954 -
74
Interpretation:
▪ IOC's cash flow from operating activities (CFO) during FY22 stood at Rs 246 billion on a YoY basis.
▪ Cash flow from investing activities (CFI) during FY22 stood at Rs -212 billion on a YoY basis.
▪ Cash flow from financial activities (CFF) during FY22 stood at Rs -30 billion, an improvement of 89%
on a YoY basis.
▪ Overall, net cash flows for the company during FY22 stood at Rs 4 billion from the Rs -7 billion net
cash flows seen during FY21.
COMPARATIVE INCOME STATEMENT OF INDIAN OIL CORPORATION LTD

FOR THE YEAR 2020-2021 AND 2021-2022
%
PARTICULARS MARCH-21 MARCH-22 CHANGE
Net Sales 2213757 4419406 0.996
Other income 35272 -0.18
Total Revenues 2256787 4454678 0.974
Gross profit 406176 473275 0.165
Depreciation 109415 123476 0.129
Interest 44252 54541 0.233
Profit before tax 295540 330531 0.118
Tax 89885 85620 -0.047
Profit after tax 205655 244910 0.191
Gross profit margin 18.3 10.7
Effective tax rate 30.4 25.9
Net profit margin 9.3 5.5
Interpretation:
▪ Operating income during the year rose 99.6% on a year-on-year (YoY) basis.
▪ The company's operating profit increased by 16.5% YoY during the fiscal. Operating profit margins
witnessed a fall and stood at 10.7% in FY22 as against 18.3% in FY21.
▪ Depreciation charges increased by 12.9% and finance costs increased by 23.3% YoY, respectively.
▪ Other income declined by 18.0% YoY.
▪ Net profit for the year grew by 19.1% YoY.
▪ Net profit margins during the year declined from 9.3% in FY21 to 5.5% in FY22.
75
PER SHARE DATA/VALUATIONS OF INDIAN CORPORATION LTD FOR THE

YEAR 2020-21 AND 2021-2022
PARTICULARS Mar-21 Mar-22

Sales per share (Unadjusted) 235.2 469.4
TTM Earnings per share 21.8 26
Diluted earnings per share 14.6 17.3
Price to Cash Flow 2.7 1.9
TTM P/E ratio 4.2 5.2
Price / Book Value ratio 0.7 0.5
Market Cap 829152 717366
Dividends per share (Unadjusted) 12 12.6
Interpretation:
▪ The trailing twelve-month earnings per share (EPS) of the company stands at Rs 26.0, an improvement
from the EPS of Rs 21.8 recorded last year.
▪ The price to earnings (P/E) ratio, at the current price of Rs 71.3, stands at 5.2 times its trailing twelve
months earnings.
▪ The price to book value (P/BV) ratio at current price levels stands at 0.8 times, while the price to sales
ratio stands at 0.2 times.
▪ The company's price to cash flow (P/CF) ratio stood at 1.9 times its end-of-year operating cash flow
earnings.
76
CHAPTER 5: CONCLUSION & SUGGESTIONS
CONCLUSION:
Based on the financial statements analysis, Indian Oil Corporation Limited has shown steady revenue growth,
profitability, and financial stability over the years.
In recent years, the company has invested significantly in expanding its refining capacity, improving its
product quality, and diversifying its product portfolio. As a result, it has been able to increase its market share
and maintain its leadership position in the Indian oil and gas industry.
That said, Indian Oil Corporation Limited operates in a highly regulated industry and is subject to risks such
as fluctuations in crude oil prices, geopolitical risks, and government policies. These risks can impact the
company's financial performance and profitability.
In conclusion, while the company has shown strong financial performance in the past, investors should
carefully consider the risks associated with investing in the oil and gas industry before making any investment
decisions.
There are several strategies that Indian Oil Corporation Ltd can adopt to improve its profits. Here are some
possible conclusions based on available information and analysis:
1. Diversify the product portfolio: Indian Oil Corporation Ltd can look at diversifying its product
portfolio to reduce dependence on traditional fuels like gasoline, diesel, and LPG. The company can
explore opportunities in areas such as electric vehicles, biofuels, and hydrogen fuel cells.
2. Enhance operational efficiency: Indian Oil Corporation Ltd can invest in modernizing its refineries and
improving its supply chain management to reduce costs and increase efficiency. The company can also
focus on developing a robust digital infrastructure to optimize operations and enhance customer
experience.
3. Increase focus on exports: Indian Oil Corporation Ltd can explore opportunities to increase its exports
to international markets. The company can leverage its expertise in refining and marketing to expand
its presence in countries where demand for petroleum products is growing.
4. Invest in research and development: Indian Oil Corporation Ltd can invest in research and development
to develop new products and processes that are more cost-effective and eco-friendly. The company can
collaborate with academic institutions and industry partners to leverage cutting-edge technologies and
stay ahead of the curve.
77
5. Adopt sustainable practices: Indian Oil Corporation Ltd can focus on adopting sustainable practices
across its operations, including reducing greenhouse gas emissions, minimizing waste generation, and
conserving resources. This will not only help the company reduce its environmental impact but also
improve its brand image and reputation among customers and investors.
6. IOCL is one of the largest oil refining and marketing companies in India, and its financial performance
is closely linked to the global oil prices and demand for petroleum products.
7. In the fiscal year 2020-21, IOCL reported a consolidated revenue of INR 5,05,739 crore, which was a
decrease of 15.8% compared to the previous year. This decline was mainly due to the lower sales
volume and realizations of petroleum products, which was impacted by the COVID-19 pandemic.
8. IOCL's net profit for the year 2020-21 was INR 7,832 crore, which was a significant improvement
from the previous year's net loss of INR 1,962 crore. This was mainly due to the lower inventory losses
and higher other income.
9. IOCL's financial ratios indicate a mixed performance. Its current ratio, which measures its ability to
meet short-term obligations, was at 1.1x, which is lower than the ideal level of 1.5x. However, its debt-
to-equity ratio of 0.9x was within a reasonable range, indicating a moderate level of leverage.
10. IOCL has been investing in expanding its refining and petrochemicals capacity, as well as diversifying
into newer business segments such as renewable energy, electric vehicle charging, and hydrogen fuel.
These initiatives could help the company mitigate the risks of being too reliant on traditional petroleum
products and position it for long-term growth.
11. Overall, IOCL's financial performance in the past year was impacted by the COVID-19 pandemic, but
the company showed resilience by reducing costs and improving profitability. Its future growth
prospects would depend on several factors such as global oil prices, government policies, and the
success of its diversification initiatives. Investors and stakeholders should monitor the company's
financial statements and performance indicators closely to make informed decisions.
78
SUGGESTIONS:
Indian Oil Corporation Ltd (IOCL) could consider to increase its profits, but it is important to note that specific
recommendations would depend on the company's current financial and operational situation, market
conditions, and regulatory environment. Here are some potential suggestions:
➢ Cost optimization: IOCL could focus on optimizing its costs across all functions, including
procurement, operations, and marketing. This could involve reducing wastage, improving supply chain
efficiency, and renegotiating contracts with suppliers and customers. Implementing process
improvements and adopting newer technologies could also help reduce costs and increase productivity.
➢ Diversification: IOCL could consider diversifying its product and service offerings to reduce its
reliance on traditional petroleum products. For example, the company has already ventured into
renewable energy, electric vehicle charging, and hydrogen fuel segments, which could provide new
revenue streams and help meet the changing demand patterns.
➢ Geographic expansion: IOCL could explore expanding its operations in other geographies, both within
India and overseas. This could involve setting up new refineries or retail outlets, acquiring or partnering
with other companies, or exploring joint ventures with other players in the industry.
➢ Innovation: IOCL could focus on innovation to create new products, services, and business models.
For example, the company could invest in research and development of new fuels or lubricants that
offer better performance and environmental sustainability. It could also explore the use of digital
technologies to improve customer engagement, optimize operations, and enhance safety.
➢ Government support: IOCL could leverage government support and incentives for the development of
the energy sector. For example, the company could explore opportunities for participation in
government schemes such as the National Biofuel Policy or the National Electric Mobility Mission
Plan.
➢ These are some general suggestions that IOCL could consider to increase its profits. However, the
company would need to evaluate these options based on its financial and operational capabilities, risk
appetite, and long-term strategic goals.
79
BIBLIOGRAPHY
1. https://www.moneycontrol.com/financials/indianoilcorporation/ratiosVI/IOC
2. Financial Statement Analysis: How It’s Done, by Statement Type (investopedia.com)
3. Analysis of Financial Statements - Free Financial Analysis Guide (corporatefinanceinstitute.com)
4. Financial Statement Analysis| FSA | Ratios| Process |Tools| Uses |Users |Limitation |Types
(aafmindia.co.in)
5. Introduction to Financial Statement Analysis (cfainstitute.org)
6. Financial statement analysis — AccountingTools
7. IndianOil | The Energy of India | Indian Oil Corporation Ltd. (iocl.com)
8. Indian Oil Corporation - Wikipedia
9. Website of Indian Oil Corporation Limited (IOCL)| National Portal of India
10. Indian Oil Corp Limited: Overview | LinkedIn
80

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FINANCIAL STATEMENT ANALYSIS OF INDIAN OIL CORPORATION LTD

CHAPTER CHAPTER NAME PAGE NO

2. RESEARCH METHODOGLY: 25-26

3. LITERATURE REVIEW 27-32

Meaning of financial analysis:

Analyses of Financial statement:

Free cash flow and other valuation:

Understanding the financial performance:

Recording Financial Performance:

Why is financial performance important :

What are financial performance indicators?

The most widely used financial performance indicators include:

Financial Performance Analysis:

How to improve Financial Performance:

Types of financial statements:

Different types of financial statements Analysis:

Recasting Financial Statements:

An earnings recast is also known as an "earnings restatement."

How an Earning Recast Work:

Earnings Recast and fraud:

Purpose of Financial Statement Analysis:

Union Bargaining Decisions

Importance of Financial Statement Analysis:

Objectives of Financial Statement Analysis:

Methods of Financial Statements Analysis:

Parties interested in Analysis of Financial Statements:

Advantages of Financial Statement Analysis:

Cash Flow Review

Company Liability Review

Review Assets and Inventory

Identify Trends and Determine Steps Needed

Seeking Investment Capital

Limitations of Financial Statement Analysis:

• Financial analysis is a study of reports of the enterprise.

INDIAN OIL CORPORATION LTD

CHAPTER 2:- RESEARCH AND METHODOLOGY

✓ To study the liquidity position of Indian Oil Corporation Limited.

SCOPE OF THE STUDY

RESEARCH AND METHODOLOGY

TOOLS AND TECHNIQUES

2. Working capital Analysis.

LIMITATIONS OF THE STUDY

CHAPTER 3:-LITERATURE REVIEW

Dr.DonthiRavinder&MusukulaAnitha (2013) discussed the nature of financial analysis, its objectives,

CHAPTER 4: DATA ANALYSIS AND INTERPRETATION

Year Current Asset Current Liabilities Current Ratio

Year Liquid Ratio

Operating Margin Percentage for the year 2018-2022

Adjusted Cash Margin:

Adjusted Cash Margin Percentage

Adjusted Cash Margin (%)

Adjusted Return on Net Worth:

Adjusted Return on Net Worth percentage

Adjusted Return on Net Worth (%)

Adjusted Return on Net Worth (%)

Reported Return on Net Worth:

Reported Return on Net worth Percentage

Reported return on net worth

2018 2019 2020 2021 2022

Return on Long Term Fund:

Return on Long Term Fund Percentage

Return on Long Term Fund

2018 2019 2020 2021 2022