Indian Oil Corporation is India's largest state-owned oil and gas company. It accounts for 30.54% of India's refining capacity and is ranked as the 96th largest company globally. The document analyzes Indian Oil's financial ratios from 2009-2014. Many ratios declined from 2009-2011 due to increasing crude oil prices and currency exchange rates, which increased costs and decreased profits. However, ratios improved after 2011 as exchange rates stabilized and costs declined. Overall, the analysis finds that Indian Oil generally uses its assets efficiently with an asset turnover ratio close to 2 but could improve its profitability.

1. FINANCIAL ANALYSIS OF
INDIAN OIL CORPORATION
LTD.
Section: B Group: 3

2. Company Overview
 Indian Oil Corporation is an Indian state-owned oil
and gas corporation.
 According to Fortune 500 Global list, it is the world’s
96th largest corporation and the largest public
corporation when ranked by revenue.
 Indian Oil and its subsidiary company accounts for
30.54 percent of country’s refining capacity.

3. Why do we do Ratio Analysis?
 A means of evaluating and diagnosing performance
 Ratios standardize numbers and facilitate comparisons
 Comparing performance to competitors or industry standards (horizontal
comparison)
 Comparing performance to prior history (vertical comparison)
 Examine a variety of areas
 Liquidity
 Solvency
 Efficiency
 Profitability
 Remember that ratios are meaningless unless you have something to

4. Profit After Tax & Total Revenue
27775.61
33152.69
43770.66 45061.1
47662.74
15525.63
7445.48
3954.62 5005.17
7019.09
60000
50000
40000
30000
20000
10000
0
2009-10 2010-11 2011-12 2012-13 2013-14
Total Revenue
Profit After Tax
Total Revenue*10

5. Crude Oil Price Variation

6. Net Profit Ratio
5.59
2.25
0.9
1.11
1.47
6
5
4
3
2
1
0
2009-10 2010-11 2011-12 2012-13 2013-14
 There had been continuous decrease in net
profit ratio from 2009-10 to 2011-12. This
may be attributed to fact that there had been
constant increase in crude oil prices and
USD to INR currency exchange rate. As a
result of it, the cost increases and hence the
profit decreased. In 2011-12, price of $1
increases from Rs 44 to Rs 52. As a result,
there was decrease in profits and hence net
profit ratio. After that the exchange rates
remains same and but due to decrease in
employee benefits and low closing stock
results in increase in sales, hence revenue
and therefore net profit margin. It is to be
noted that the net profit margin didn’t
increase by a large margin

7. Gross Profit & Revenue From
Operations
15192.56
24492.18
29152.46
33949.95
48807.93
27775.61
32809.23
42511.21
44709.62
47321.01
55000
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
2009-10 2010-11 2011-12 2012-13 2013-14
Revenue from Operations*10
Gross Profit
Revenue from Operations

8. Gross Profit Margin
5.47
7.47
6.86
7.59
10.31
12
10
8
6
4
2
0
2009-10 2010-11 2011-12 2012-13 2013-14
 Since crude oil prices had
increased and exchanges rate
increasing at a very high rate. In
2010-11, the raw material
consumed and purchases
increased. As a result, gross margin
decreases and hence gross margin
ratio. There were high increase in
purchases in 2011-12, as a result
percentage increase in gross
margin decline and hence growth in
gross margin ratio declined. There
was huge changes in revenues and
decrease in closing stock in 2013-
14 as revenues from new refineries
(launched in 2013).

9. Operating Profit & Revenue from
Operations
15716.14
8407.52
4179.39
8561.96 9942.14
27775.61
32809.23
42511.21
44709.62
47321.01
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2009-10 2010-11 2011-12 2012-13 2013-14
Revenue from Operations*10
Operating Profit
Revenue from Operations

10. Operating Profit Margin
5.66
2.56
0.98
1.92 2.1
6
5
4
3
2
1
0
2009-10 2010-11 2011-12 2012-13 2013-14
 In 2010-11, high expenses resulted
in the decline of operating profit.
There had been huge decline in
operating profit in 2011-12 due to
increase in cost prices and as a
consequence, the operating cost
increases. There were high
expenses as exceptional and other
expenses. The company invested in
refineries in Orissa in 2013 resulting
in low operating cost. The
miscellaneous and other expenses
were decreased and hence
operating cost. In 2013-14,
employee benefits also declined
thereby increasing operating profit

11. Return on Total Assets
9.75
ROTA
4.29
1.88 2.19
2.78
12
10
8
6
4
2
0
2009-10 2010-11 2011-12 2012-13 2013-14
 There had been continuous decrease in net
profit ratio from 2009-10 to 2011-12. This
may be attributed to fact that there had been
constant increase in crude oil prices and
USD to INR currency exchange rate. As a
result of it, the cost increases and hence the
profit decreased. In 2011-12, price of $1
increases from Rs 44 to Rs 52. As a result,
there was decrease in profits and hence net
profit ratio. After that the exchange rates
remains same and but due to decrease in
employee benefits and low closing stock
results in increase in sales, hence revenue
and therefore net profit margin. It increased
but not by much. Since profit after tax
declined till 2011-12 and then increases and
the total assets continues to increases year
by year, it resulted in the download of ROTA
and then increases. The purchases and raw
material consumed increased drastically and

12. Total Assets & Assets Under
Development
259483.2
173679.7
209859.8
228019.3
252413.8
300000
250000
200000
150000
100000
50000
0
Total Assets
Assets Under Development
21226.85
8939.3
13415.36
25646.21
33150.64
35000
30000
25000
20000
15000
10000
5000
0

13. Return on Earning Assets
Return on Earning Assets  There has not been any
11.23
4.52
2.01
2.47
3.2
12
10
8
6
4
2
0
2009-10 2010-11 2011-12 2012-13 2013-14
major changes as
compared to return on
total assets. It indicates
the fact that the company
had been not much
changes in the capital
work in progress over the
years. The capital work in
progress increases
continuously from 2010-

14. Return on Operating Assets
Return on Operating
13.06
Assets
5.79
2.35
12.95 13.1
14
12
10
8
6
4
2
0
2009-10 2010-11 2011-12 2012-13 2013-14
 There had been huge decline in
operating profit in 2011-12 due to
increase in cost prices and as a
consequences of oil and exchange
rates, the operating cost increases. In
2012-13, there was a huge increase in
the operating assets and operating
assets declined drastically in 2012-13.
The current investments of the
company in 2012-13 increases by over
10 times and hence a result the return
on operating assets increases approx.
by 6 times. Due to high non-current
investments in 2012-13 and 2013-14,
the operating assets increases and
thereby returns.

15. Borrowings (Long Term & Short Term)
43420.12
50308.96
70323.93
78325.2 80599.12
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
2009-10 2010-11 2011-12 2012-13 2013-14

16. Debt Equity Ratio
Debt Equity Ratio  Initially, the ratio was less than 1
0.83
0.91
1.22
1.28
1.22
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2009-102010-112011-122012-132013-14
indicating the fact the company
believed in risk free game and tried
to protect the investors’ money.
There had been substantial
increase in the ratio and now it is
more than 1 indicating that the
portion of assets provided by
creditors is greater than the portion
of assets provided by stockholders.
The company is now started
investing in higher risk firms. Since
the ratio is still close to 1, it indicate
that creditors and stockholders
almost equally contribute to the
assets of the business.

17. Asset Turnover Ratio
1.74
1.89
2.03
1.96
1.87
2.1
2.05
2
1.95
1.9
1.85
1.8
1.75
1.7
1.65
1.6
1.55
Asset Turnover Ratio
 The asset turnover ratio is an efficiency ratio
that measures a company's ability to generate
sales from its assets by comparing net sales
with average total assets i.e. this ratio shows
how efficiently a company can use its assets
to generate sales. Higher turnover ratio
means the company is using its assets more
efficiently. Lower ratios mean that the
company isn't using its assets efficiently and
most likely have management or production
problems.
 The asset turnover ratio remains almost same
over the 5 years. Since the ratio is close to 2,
it implies that the company is able to generate
sales from its assets by comparing net sales
with average total assets. The ratio reaches
its peak in 2011-12 due to drastic increase in
the revenues.

18. Than
k You
16x9
4x3