SUMMER TRAINING REPORT

On
UNDERSTANDING THE FINANCIAL POSITION OF ONGC
(2018-19)

Submitted to the Uttaranchal University in partial fulfilment of the

Requirement for the award of the Degree of
BACHELOR OF BUSINESS ADMINISTRATION

Submitted by
KAPIL MAL

(Enroment No. UU17220900046 )

Under the Guidance of

College faculty- MR. J.K. MISHRA, G.M (F&A) ONGC, KDMIPE
Industrial guide- MR. SAKAR SAXENA (FINANCE)

(Batch 2017-2020)

UTTARANCHA INSTITUTE OF MANAGEMENT

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UTTARANCHAL UNIVERSITY, DEHRADUN

Uttaranchal institute of management

Uttaranchal University,
Dehradun

CANDIDATE’S DECARATION

I, Kapil Mal hereby declare that the Summer Training Report, entitled
“Understanding the financial position of ONGC”, Submitted to the Uttaranchal
University, Dehradun in partial fulfilment of the requirements for the award of
the degree of Bachelor of Business Administration is a record of original
training undergone by me under the supervision and guide of Mr. Shaar,
Uttaranchal university, and it has not formed the basis for the award of any
candidate of any university /Institution.

Date: Signature of the student

This is to certify that the statement made by the candidate is true to the best of
my knowledge and brief.

Date: Signature of Guide

Guide Name with Designation

Countersigned
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ACKNOWLEDGEMENT

The success of any task lies upon the efforts made by a person but it cannot be
achieved without co-operation and support of others. Words put on paper are mere
ink marks, but when they have a purpose there exist a thought behind them. I too have
a purpose to express my gratitude towards those individuals without their guidance
and help the project would not have been possible. This project has been a great
earning for me.

First of all, I would like to thank Oil and Natural Gas Corporation Limited in
general and ONGC Academy, Dehradun in particular for giving me an opportunity to
work with the organisation and gain first hand practical knowledge of the corporate
sector.

I express my heartfelt gratitude to Shri J.K. Mishra, GM(F&A) who has been
outstanding with regards to his invaluable advice and guidance on all aspects of the
project. I extend my thankfulness to Shri Balam Singh, Chief Manager(M&D), KDMIPE
who helped me to utilise reading materials and reaching ONGCians for the
questionnaire. I also put on record my sincere thanks to Shri Anil Kumar, Dy.Manager
(OL), ONGC Academy for his support for undertaking the project.

I would like to thank my Faculty and co-students of Uttaranchal University for

their guidance and support during the process.

It was a great pleasure to be associated with ONGC Dehradun during the course
of the project. The experience that I have garnered during the completion of the
project has a profound impact on my career choices and has helped me realize what is
requisite for success in the corporate world.

Last but not least I would like to thank my Faculty and friends for their guide
and support.

(Kapil Mal)
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Executive Summary

In six weeks of internship I was taught about how to measure the financial
performance of a company through understanding its financial statements for the year
of 2018-19. The Analysis is complete my internship program as a trainee in KDMIPE
Academy. During my internship program most importantly I realized how to work
under the pressure of responsibilities maintaining chain of commands and working in
a team. Mr. J.K. Mishra sir, taught me to work with rules and regulations, where I have
gained the understanding on how to reach a mutual understanding between different
people while working together. This practical orientation is necessary for the
development and preparation of a person before entering into the corporate world.
The things that I have learned at ONGC Academy KDMIPE, Dehradun are-

 Meaning of responsibility

 Responsibility to the profession

 Necessity of commitment

 Auditing and Reporting responsibilities

 Working with ethics

 Working Independently

 Working with Generally accepted accounting principles

 Punctuality and regularity is very important

 Ability to interact with different sorts of people

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CONTENTS

Company Certificate ........................................................................2

Certificate of originality ........................................................................3
Acknowledgement .........................................................................4
Executive Summary .........................................................................5
Table of Contents
i. Chapter 1, .........................................................................................7-27
Introduction to the Topic

ii. Chapter 2, .......................................................................................28-34

Company Profile (About ONGC) ...................................................................28
 History ...................................................................32
 SWOT Analysis ...................................................................35

iii. Chapter 3, ...........................................................................................36

Research Objectives and Methodology

iv. Chapter 4, .......................................................................................37-42

Data Analysis and Interpretation

v. Chapter 5, .....................................................................................43-45
Findings and Conclusion

vi. Annexure: ....................................................................................46-47

Balance sheet
Bibliography
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Chapter 1 – INTRODUCTION TO THE TOPIC

Financial position- is the current balances of the recorded assets, liabilities, and
equity of an organization. This information is recorded in the balance sheet which is
one the part of financial statements among others i.e. cash flow statement, income
statement etc.

How to Analyze a Company's Financial Position-

Financial position of a company is measured by the performance it takes in company
financial statements whether there is a positive and growing cash flow statement,
growing profits in the profit and loss statement and balance sheet. To understand and
value a company, investors have to look at its financial position. Fortunately, it is not as
difficult as it sounds to perform a financial analysis of a company by examining its
financial statements.

 Start with the Balance Sheet

Like your financial position, a company's financial situation is defined by its assets and
liabilities. A company's financial position also includes shareholder equity. All of this
information is presented to shareholders in the balance sheet.

Assets and Liabilities

Assets and liabilities are broken into current and non-current items. Current assets or current
liabilities are those with an expected life of fewer than 12 months. Current liabilities are the
obligations the company has to pay within the coming year, and include existing (or accrued)
obligations to suppliers, employees, the tax office and providers of short-term finance.

Non-current assets or liabilities are those with lives expected to extend beyond the next year.
For a company like The Outlet, its biggest non-current asset is likely to be the property, plant,
and equipment the company needs to run its business.

Long-term liabilities might be related to obligations under property, plant, and equipment
leasing contracts, along with other borrowings.

 Income Statement

One of the financial statements of a company shows the company’s revenues and expenses
during a particular period.
It indicates how the revenues are transformed into the net profit. The purpose of the
income statement is to show managers and investors whether the company made money
(profit) or lost money (loss) during the period being reported.

 Cash flow statement

Shows how changes in balance sheet and income account affect cash and cash equivalents,
and breaks analysis down to operating, investing, and financial activities. Essentially, the cash
flow statement is concerned with flow of cash in and out of the business.
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1.1) Introduction of Various Finance Sections

1) Budget sections
Under the guidance of Mr. J.K. Mishra sir. I came to realize the importance of
budgeting In ONGC, the budgeting section pays a very important and crucial role. The
reason is that whenever there is requirement of any kind of material or service,
proper arrangement of funds is required and for that purpose budgeting is done. Due
to restriction on number of pages for project report, every detail of budget is not
covered.
Budgetary controls- It is a technique whereby actual utilization is compared with
budget to make the budget an effective financial control tool. Any differences/
variances are the responsibility of ey individuals who can either exercise control
action or revise the original budget after providing necessary justification to the top
management, Budgetary control is defined by the institute of Cost and management
Accountants (CIMA) as; The establishment of budgets relating the responsibilities of
executives to the requirements of a policy, and the continuous comparison of actual
results with budget result, either to secure by individual action the objective of that
policy, or to provide a basis for its revision.

1.1) Budgeting process in ONGC

Genera functioning or System or working F&A department (especially in respect of
budgeting)
Before moving forward it is important to know about Budget software now as Budget
Mutual which is used for the budget data entry prior uploading of final data into SAP.
The method use by ONGC is ACTIVITY BASE BUDGET. This budget done by the
various departments like drilling department, surface department, MM department,
logging department etc. According their future needs and at last the cub it in to the
actual budget.

2) Cash and Ban section

This section is responsible for the receipt and payments either in cash or cheque or
by any other form. This section is also responsible for the custody of cash,
documents in respect of investments of corporation money and other important
document s. Major activities performed by cash & ban section
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 Cash withdrawal from banks

 Cash payments and receipts
 Payments and receipts(other than cash)
 Cheque management
 Regular payments on behalf of employees
 Remittance of tax deducted at source
 Dispatch of released payments
 Liquidity forecast and fund management
 MIS activities.
 In ONGC the vendors’ payments are done by the Mumbai, and Employees
salaries are done by the Dehradun Headquarter.
 Various fees for issuing tender form to our suppliers are collected by cash
and ban section.
 Earnest money deposit(EMD)

3) Pre audit Section

This section is also known as accounts payable section. The section is divided into
two parts – one is pre audit supply cell and other is pre-audit contract cell.

Pre-audit is also known as voucher –audit or administrative audit and denotes

scrutiny & examination, before releasing the payments. Types of bills
 Supplier’s Bills
 Contract’s Bills
Miscellaneous payments the scope of pre-audit also includes scrutiny of receipt of
the corporation. Activities normally regarded as pre-audit receipt –accounting for
incomes cash, such as
 Initial public offering (IPO)
 Bans drafts/banker’s cheque
 Ban guarantees
 Receipt of FDR kept as security deposits with GEB, irrigation department.
Logistics invoice verification (IV) with the integrated network of SAP being
used during verification find out any error in the documents before
payments are made and deal with it.
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4) Persona Claim section

This section deals with policies, procedures, controls, roes and responsibilities
related to accounting for employees related payments, recoveries, corresponding
statutory payments & compliances. The process explained in this section covers
payments to/recoveries from
 Regular employees of ONGC
 Graduate engineering Trainees(GET)/Management Trainees(MT)
 Retired employees and
Term based employees, (for example employees on deputation) payments to
regular employees include monthly salary payments, off-cycle payments (for
example holiday home, briefcase payments etc), loans & advances. GET/MT is paid
as per their terms of employment. Retired employees are paid medical expenses
reimbursements as per HR policies. Recoveries from regular employees include
House Rent Recovery (HRR), Association of scientific and Technical Officers
(ASTO) union recoveries, recoveries of loans & advances etc.

4.1) Main Roe of PCS Section

 Updating employees’ payroll data at the time of joining.
 Accounting of various employees’ related payments.
 Accounting for fu & final statement on separation of employees
 Payment to retired employees.
 Inter unit transfers and deputation to/from the company.
 Tax Deduction at source deduction and deposits.
 Accounting for retirement benefits and related employees benefits.
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1.2) Financial information of the company

1) Accounting policies – The Company follow the accrual method of accounting. The
company has followed the entire applicable accounting standards mad mandatory by
institute of chartered accountant of India.

2) Equity capital – The fully paid up capital of the company was as. During the year
under review there was no change in the equity capital structure of there is no issued
preference capital in sterling ceramic ltd. There is no warrant is waiting to be covered
into equity. Nearly percent of company equity is comprised of bonus shares. The
company last made a bonus issue in issuing two bonus shares for one share held in the
company.

3) Loans – Oil and natural gas corporation ltd loan fund decreased form in the
previous year to during the years. During the current years the ratio of second long
term funds to tangible net worth increased to in the previous years.

4) Fixed assets – The gross net block of the company as on were and respectively.
Plant and machinery constituted of the gross block and net block respectively.

5) Depreciation – Depreciation accounts for in the current years compared to in the

previous year compared to in the previous years. There is no change in the accounting
policy for depreciation over the year.

6) Corporate tax – In view of loss during the years under review, the company has not
provided for any tax liability years also.

7) Debtors – During the year under the review the sundry debtors were compared to
in the previous year representing of sales compared to of sales in the previous years.
The sundry debtors are net of provision for doubtful debts of the increase in sundry
debtors are due to market conditions.
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8) Inventories – Inventories decreased from in the previous year to during the

current year to during the current years, of this finished goods, raw material and
spares inventory of stock in process however increased.

9) Working Capital – The working capital gap during the current year was low at
which is lower than in previous year. The working capital of is founded by bank
borrowing to the extent of and the balance is founded out of company’s own resource.
Each rupee of working capital generated of gross turnover in the current year
compared to in the previous years. Oil and natural gas corporation ltd shall continue to
make to further improve working capital management by stricter control inventories
and book debt.

10) Reserves – Oil and natural gas corporation ltd reserves stood at as on nearly per
cent of the company’s were earned. Per cent compromised capital reserves. There
were no revaluations as on. During the years under review a sum of representing
items.
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1.3) Introduction to Income Statement

Income statement define as a report the summaries the revenues and expenses of an
accounting period to reflect the changes in various critical areas of firm’s operations. It
is of greatest interest and import importance to end-user of accounting statements
because it enables them to ascertain whether the business operations have profitable
or not during that particular period.

The important differentiation between the balance sheet and income statement is for a
period of one year. The two broad categories of item shown in the income statement
are revenue and expenses. Revenues derived from a company’s operation say
manufacturing and selling products. During transaction business has also incurred
revenues other than main business operation. Expenses are occurred in day-to-day
transactions.

Here, expenses regarding manufacturing activities and administrative expenses are

considered. By deducting total expenses from total revenue we get profit and by
deducing total revenue from total expenses we get total loss. Income tax amount is also
decided by profit that incurred in business with help of this statement.

Advantages

i. Provides detailed information on revenues.

ii. Database for Investors Analysis
iii. Shows the profitability of the company over period of time.

Disadvantages

i. Misinterpretation of data.
ii. It didn’t give any indication on how the revenue generation happens.
iii. It is based on accrual accounting and it does not provide cash transaction.
iv. Free cash cannot be calculated through income statement.

Objectives

i. To provide the financial information to the internal and external users.

ii. To provide the information, useful in the decision making process.
iii. To reveal the profitability and solvency of the company.
iv. To help to evaluate the financial position and efficiency of the management.
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1.4) Introduction to balance sheet

A balance sheet is a list of assets and liabilities and claims of a business at some specifics
point of time and is prepared from an adjusted Trial balance. It shows the financial
position of a business the source of funds and utilization of these funds. Balance sheet
shows the assets and liabilities grouped, properly classified and arranged in a specifics
manner.

Uses of a balance sheet

 It enables us to ascertain in properly interest of a business organization.

 It enables us to calculate the actual capital employed in the business.
 The lender can ascertain the financial position of the business.
 Different ratio can be calculated from the balance sheet and these ratios can be
utilized for better management of the business.

Limitation of Balance sheet

 Fixed assets are shown in the Balance sheet as historical costless depreciation up to-
date. A conventional Balance Sheet can not reflect the true value of these assets.
Again intangible assets are shown in the Balance Sheet at book values which may
bear no relationship to the market values.
 Sometimes, balance sheet contains some assets which command no market value
such as expense, debentures discount etc. The inclusions of these assets unduly
inflate the total value of assets.
 Balance sheet doesn’t reflect the value of certain such as skill and loyalty of staff.

Objectives
1. Principal objectives: The main purpose of preparing balance sheet is to now the
financial position of the business at a particular date.
2. Subsidiary Objectives:
i. It gives information about the actual and real owner’s equity.
ii. It hep firm to make provisions against possible future losses
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1.5) Statement of cash flows

Cash flows are reported using the indirect method, whereby profit for the year is
adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals
of past or future operating cash receipts or payments and item of income or expenses
associated with investing or financing cash flows. The cash flows are segregated into
operating, investing and financing activities.

Utility of cash flow

Cash Flow Statement is particularly useful in short-term planning. In order to meet the
various obligations, a firm needs sufficient amount of cash (e.g. payment for expenses,
purchase of fixed assets, payments for dividend and taxes, etc.).

 Helps to make Cash Forecast:

Cash Flow Statement, no doubt, helps the management to make a cash forecast for the
near future. A projected Cash Flow Statement helps the management about the cash
position which is the basis for all operations, how much cash is needed for a specific
purpose, sources of internal and external issues, etc.

 Helps the Internal Management:

It helps the internal management to determine the financial policy to be adopted in
future since it supplies information relating to funds, e.g. taking decision about the
replacement of fixed assets or repayment of long-term liabilities, etc.

 Reveals the Cash Position:

It is a significant pointer about the movement of cash, i.e. whether there is any increase
in cash or decrease in cash and the reasons thereof which helps the management.
Moreover, it explains the reasons for small cash balance even though there is sufficient
profit, or vice versa. Besides, the management can compare the original forecast with
the actual one in order to understand the trend of movement of cash and the variation
therefore
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1.5) Working Capital management

Meaning of working capital

In simple words working capital means which is issued to carry out the day to day
operations of a business. Capital required for the business can be classified in two
main categories

 Fixed capital
 Working capital

Every business needs funds for two purposes, for its establishment and to carry on its
day to day operations. Long term funds required to create production facilitates
through purchase of fixed assets such as plant and machinery, land, buildings,
furniture etc. Investment in these represents that part of firm capital, which is blocked
on a permanent or fixed basis called fixed capital. Funds are also needed for short term
purposes i.e. for the purchase of raw material, payment of wages and other day to day
operations of business. These funds are knows as working capital. In other words,
working capital refers to that firm’s capital, which required for short – term assets or
current assets, Funds thus invested in currents assets keep revolving last and being
constantly converted into cash and this cash flow is again converted into other current
assets. Hence it is known as circulating or short-term capital

1.5.1) Concept of working capital

Gross working Capital

It is simply called working capital refers to the firm’s investment in current assets to the total
current assets of the firm are known as gross working capital.

Net Working Capital

It represents the difference between current assets and current liabilities. Net working capital
may be positive or negative. Positive net working capital is that when current assets are more
than current liabilities. But when liabilities become more than current assets than it is
negative working capital.

In brief can say that working capital is too much necessary for the smooth functioning and
proper utilization of fixed assets.
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1.5.2) Types of working capital

Permanent Working Capital

As the operating cycle is a continuous process so the need for working capital also arises
continuously. But the magnitude of current assets needed is not always same; it increases and
decreases over time. However there is always a minimum eves of current assets. This level is
known as permanent or fixed working capital.

In ONGC maintain the permanent working capital of the raw material as a 1/3 of the raw
material and 10% work in progress and finished good of the total production. 20% cash
balance maintain as permanent in the profit.

Temporary Working Capital

The extra working capital needed to support the changing production and sales activities, is
called variables or functioning or temporary working capital.

For hear ONGC purchase raw material as a plastic for manufacturing pipes in particular
season and have to employ additional labour to purpose it. They must meet this requirement
for providing additional funds, another aspect of temporary working capital. Last year
suddenly increased the demand of final product so at time require extra funds it’s called
special working capital.

Temporary working capita differs from permanent working capital in the sense that is
required for short periods and cannot be permanently employed gainfully in the business.

Amount of working capital Temporary capital

Permanent capital

Time

Working capital
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1.5.3) Need for working capital

The need for working capital cannot be overemphasized. The need of working capital
arises due to the time gap between production and realization of cash saes. So the
working capital or investment in current assets becomes necessary need for working
capital. It arises due to following reasons.

1. Operating cycle

Operating cycle is the time duration required for converting saes into cash after the
conversion of resources into inventories.

First of a firm purchase Raw Material, then after some processing it is converter into
work-in-progress and after this further processing is done to convert work-in-
progress in finished goods. After the raw materials are converted into finished goods,
sales are made. Sales are not always full cash sales; there are credit sales also. There
credit saes after some period are converted into cash. So the whole process takes the
time, this time taken known as the length of operating cycle. So operating cycles
includes;

1. Raw materials conversion period (RMCP)

2. Work-in-process conversion period (WIPCP)
3. Finished goods conversion period (FPC)
4. Debtor conversion period (DCP)

Raw Materials

Cash collection Work in

from debtors Progress

Credit sale Finished goods

Cash Sales
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If the length of the operating cycle has short length period then less working capital is
required. So working capital requirement is directly related with operating cycle.

Operating cycle may be of two types

 Gross operating cycle

 Non operating cycle

 Gross operating cycle

Gross operating cycle is the total time period from the conversion of raw material into
finished goods and finished goods into saes and then saes into cash.

GOC =RMCP+WIPCP+DCP
 Net operating cycle
As we provide period to debtors for the payments, our creditors also provide to us for
payment to them. So this reduces our requirement of working capital. This also affects
the operating cycle. Operating cycle’s length reduces with so many days as provided by
the creditors to us. The difference between gross operating cycle and period cycle
allowed by the creditors for payment is known as net operating cycle.

NOC=GOC-CPP

2. Working capital require for the anticipating needs for future

These needs may be of raw material or finished goods, Sometimes because of non-
availability of raw materials or due to seasonal availability of raw material some
advances stock of raw material becomes necessary for the company. In the similar way
due to sudden arise of demand of finished goods in future more finished goods are
kept in stock. For both reasons more working capital is require because funds will be
involved in these safeties stocks.

1.5.4) Determinants of working capital

Foowings are the main determants of woring capita

1. Nature and size of Business

The working capital of a firm basically depends upon nature for e.g. Public utility
undertaking like electricity; water needs very less working capital because offer only
cash saes whereas trading & financial firms have a very less investment in fixed assets
but require a large sum of money invested in working capital.
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2. Manufacturing cycle
The manufacturing cycle also creates the needs of working capital. Manufacturing
cycle starts with the purchase and use of raw material and competes with the
production of finished goods. If the manufacturing cycle will be longer more working
capital will be required or vice versa.

In ONGC production cycle works better and manufacturing process works fast, so no
other costs are incurred in the time production.

3. Seasonal variation
In certain industries like ONGC raw material is not available through the year. They
have to buy raw material in bulk during the season to ensure an uninterrupted flow
and process them during the year. Generally, during the busy season, a firm requires
large working capita than in the slack season.

4. Production policy
Production policy also determines the working capital level of a firm. If the firm has
steady production policy, it may be require need of continuous working capital. But if
the firms adopt a fluctuating production policy means to produce more during the lead
demand season then the more working capita require that time but not in other period
during a financial year. So the different production policy arise different type of need
of working capital.

5. Firm’s Credit policy

The firm’s credit policy directly affects the working capital requirement. If the firm has
liberal credit policy, hence the more credit period will be provided to the debtors so
this will lead to more working capital requirement. With the liberal credit policy
operating cycle length increased and vice versa.

6. Sale growth
Working capital requirement is directly related with sales growth. If the sales are
growing more working capital will be needed due to raise of need more raw materials,
finished goods and credit sales. ONGC sales growth is increased in year by year so
require more working capital.

7. Business cycle
Working cycle refers to alternate expansion and contraction in general business. In a
period of boom, larger amount of working capital is required where as in a period of
depression lesser amount of working capital is required. ONGC position is growth
stage. So require working capital is high.
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1.6) Ratio Analysis

Ratio analysis is a widely used for financial analysis. It is defined as the systematic
used of ratio to interpret the financial statement, so that the strength and weakness Of
a firm as we as its historical performance and current financial condition can be
determined. The term ration refers to the numerical and quantitative relationship
between two items/variables. The relationship can be expressed as

1. Percentage
2. Fraction
3. Proposition of numbers

The rational of ratio analysis lies in the fact that makes related information
comparable. A single figure by itself has no meaning but when expressed in terms of a
related figure, it yields significant inferences.

Ratio analysis thus, a quantitative tool enables analysis to draw quantitative answers
such as:

 Is the net profit adequate?

 Are the assets being used efficiently?
 Is the firm solvent?
 Can the firm meet its current obligation and so on?

1.6.1) Utility of Ratio Analysis

The use of ratio was started by banks for ascertaining the liquidity and profitability of
the company’s business for the purpose of advancing loan to them. It gradually
becomes popular and other creditors began tousle them profitably. Now even the
investor calculates ratio from the published useful information to management, which
would help them in taking important policy decision. Diverse group of people may use
of ratios, to determine the particular aspect of the financial position of the company, in
which they are interested.

1) Profitability

Useful information about the trend of profitability in available from the profitability
ratios. The gross profit ratio, net ratio and ratio of return on investment give a good
idea of profitability of business.
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2) Liquidity

In fact, the use of this ratio is to ascertain the liquidity of the business. The current
ratio and liquid ratio will tell whether the business will be able to meet its current
liabilities as and when they mature.

3) Efficiency

The turnover ratio are excellent guides to measure the efficiency of manage. For e.g.
the stock turnover will indicate how efficiency the sae are being made, the debtors
turnover shows the efficiency of collection department and assets are used in business.

4) Inter-firm comparison

The absolute ratio of the firm are not much use, unless they are compared with similar
ratio of other firm belongs to the same industries.

5) Indicate Trends

The ratio of the last three to five years will indicate the trend in the respective fields.

6) Useful for budgetary control

Regular budgetary reports are prepared in the business where the system of
budgetary control in use. If various ratios are prepared in these reports, it will give a
fairy good idea about various aspect of financial position.

7) Useful for decision making

Ratios guide the management in making some of the importance decision.

1.6.2) Classification of Ratio

Ratio can be classified into four broad groups-

1. Liquidity Ratio
2. Capitalisation Ratio
3. Profitability Ratio
4. Activity/Efficiency Ratio
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1) Liquidity Ratios
Liquidity is the most important factor in successful financial management. A firm
should have enough money to meet its short-term liabilities, as and when they become
due for payment. If affirm fails to meet its short term liabilities frequently, its prestige
and credit worthiness would be adversely affected. A very high degree of liquidity is
also bad idle assets earn nothing. Therefore it is necessary to strike a proper balance
between high liquidity and lack of liquidity.

1.1) Current Ratios

This most widely used ratio shows the proportion of current assets to current
liabilities. It is also known as ‘Working Capital Ratio’. It is measure of short term
financial strength of business and shows whether the business will able to meet its
current liabilities. Generally, it is believed that ratio 2:1 is good and shows a
comfortable working capital position. But this ratio is differing company by company.
The formula for calculating these ratio as under-

Current Ratio = Current Assets

Current Liabilities

Current Ratio 2018,

Current Ratio = 21,516.65

49,338.19

=0.44

Current Ratio 2019,

Current Ratio = 28,390.35

46,716.88

=0.61
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Detail of significant change in ratio.

Particular 2018-19 2017-18

i. Current Ratio 0.61 0.44

i. Return of Net worth 13.16 10.31

2) Capitalisation Ratio

The capitalization ratio, often called the Cap ratio, is a financial metric that
measures a company’s solvency by calculating the total debt component of the
company’s capital structure of the balance sheet. In other words, it calculates the
financial leverage of the company by comparing the total debt with total equity or a
section of equity. The most common capitalization ratio:

 Debt to equity ratio

Debt and equity are the two main components of the capital structure of a company
and are the main sources to finance its operations.

The company uses this ratio to manage its capital structure and determine the debt
capacity. Investors use it to gauge the riskiness of investment and form an important
component of asset valuation (higher risk implies higher expected return). Lenders
use it to determine if the company is within the predetermined limits and if there is
more headroom to lend more money.

Capitalization ratio = Total Debt

(Total Debt + Shareholder’s equity)

Total Debt to Capitalization = Total Debt / (Total Debt + Shareholders’ Equity)

Capitalization ratio = 143,959.14 = 0.414

(143,959.14 + 202,992.55)
 P a g e | 25

3) Profitability Ratio

Profitability ratios compare income statement accounts and categories to show a

company’s ability to generate profits from its operations. Profitability ratios focus on
a company’s return on investment in inventory and other assets. These ratios
basically show how well companies can achieve profits from their operations.

Investors and creditors can use profitability ratios to judge a company’s return on
investment based on its relative level of resources and assets. In other words,
profitability ratios can be used to judge whether companies are making enough
operational profit from their assets. In this sense, profitability ratios relate to
efficiency ratios because they show how well companies are using their assets to
generate profits. Profitability is also important to the concept of solvency and going
concern.

Here are some of the key ratios that investors and creditors consider when judging
how profitable a company should be:

1. Profit margin Ratio

2. Return on Assets Return
3. Return on capital Employed
4. Return on Equity

3.1) Profit margin Ratio – is used to measure the profitability, it is also called net
profit margin or net profit ratio.

= Net Income
Net sales

Profit margin Ratio (in crore) = 267,158 = 0.24

1,096,546

3.2) Return on Assets – It shows the percentage of how profitable a company’s

assets are in generating revenue. ROA is a financial ratio that shows the percentage
of profit of a company earns in relation to its overall resources.
 P a g e | 26

= Net total income

Average total assets

Return on Assets (in crore) = 267,158 = 0.90

296,431

3.3) Return on capital Employed –is a financial ratio that measures a company’s
profitability and the efficiency with which its capita is used. In other words, the
ratio measures how we a company generating profits from its Capital.

= Net operating profit

Capital Employed

Return on capital Employed = 267,158 = 1.0

255,517

3.4) Return on Equity – is measure of the profitability of business in relation to the

equity, also known as net assets or assets minus iabiities.ROE is a measure of how
we a company uses investments to generate earnings growth.

= Net income
Shareholder’s Equity

Return on Equity = 267,158 = 1.31

202,992
 P a g e | 27

4) Activity/Efficiency Ratio

Activity ratio is defined as a set of a financial ratio that measures how effectively
company uses its operation assets and convert them into saes or cash. Activity ratios
hep evaluating a business’s operating efficient by analyzing fixed assets, inventories,
and accounts receivables. It not just expressed a business’s financial heath but also
indicates the utilization of the balance sheet components.

 Activity ratios do not give the desired output when comparing businesses across
different industries.
 The more common term used for activity ratios is efficiency ratios.
 Activity ratio formula also helps analyze the business’s current or short term
performance.
 An improvement in the ratios depicts improved profitability.

 Advantages of Activity Ratios

 Activity Ratios help in comparison to businesses in the same line of operation.
 Problem identification can be done using the right Activity Ratios and necessary
corrections in the functioning of the business can be made.
 Simplifies an analysis by providing the financial data in a simple format which
eventually helps in decision making.
 Investors can rely on the information that Activity Ratios provide since it is based on
numbers and is accurate.

Most common activity ratio is -

 Return on Assets Return

Return on Assets Return = Net total income

Average total assets

Return on Assets (in crore) = 267,158 = 0.90

296,431
 P a g e | 28

Chapter – 2 COMPANY PROFILE

ABOUT ONGC

ONGC HEAD OFFICE, DEHRADUN

Oil and Natural Gas Corporation limited (ONGC) , formerly known as Oil and Natural
Gas Commission (ONGC), was set up by an Act of Parliament on 14th Aug 1956. It is
Indian multinational oil and Gas Company headquartered in Dehradun and registered
office in New Delhi, India. It is a public sector undertaking (PSU) of the government of
India, under the administration control of the ministry of petroleum and Natural Gas
(MoPNG). Maharatna ONGC is the largest crude oil and natural gas Company in India,
contributing around 70 per cent to Indian domestic production. Crude oil is the raw
material used to produce petroleum products like Petrol, Diesel, Kerosene, Naphtha, and
LPG.

Crude oil production of ONGC in 2017-18 remained at 22.31 Million Metric Ton (MMT).
It is the largest natural gas company in India and ranked 11th among global energy
majors (Platts, 2017). It is the only Indian public sector company to feature in Fortune’s
‘Most Admired Energy Companies’ list. ONGC ranks 18th in ‘Oil and Gas Operations’ and
183rd overall in Forbes Global 2000. Acclaimed for its Corporate Governance practices,
Transparency International has ranked ONGC 26th among the biggest publicly traded
global giants. It is most valued and largest E&P Company in the world, and one of the
highest profit-making and dividend-paying enterprises.
 P a g e | 29

Global Ranking

 ONGC received Dun & Bradstreet Award 2018 in the 'Oil and Gas Exploration' category
 ONGC received 4 PSE Excellence Awards from Indian Chamber of Commerce in 2016
 This Top Energy Company in India, ranked 11th globally as per Platts Top 250 Global
Energy Rankings, 2017
 Ranked 464 in the Newsweek Green Rankings World's Greenest Companies 2016
 Ranked 14th among global Oil and Gas Operations industry in Forbes Global 2000 list,
2017 of the World's biggest companies for 2017; Ranked 443 in the overall list, 2017 -
based on Sales (US$ 19.89 billion), 288 on Profits, 470 in Assets and 300 Market Value.

Best in Class Infrastructure and Facilities

 This public sector enterprise operates with 14 seismic crews, manages 262 onshore
production installations, 268 offshore installations, 69 drilling (plus 37 hired) and 54
work-over rigs (plus 25 hired), owns and operates more than 25,500 kilometers of
pipeline in India, including 4,500 kilometers of sub-sea pipelines.
 ONGC has adopted Best-in-class business practices for modernization, expansion and
integration of all Infocom systems

Subsidiaries of ONGC
 MRPL- Manglore Refinery and Petrochemical Limited
 OMP- ONGC Manglore petrochemical Limited
 HPCL- Hindustan Petroleum Corporation Limited
 OVL-ONGC Videsh Limited

ONGC Registered Office

in New Delhi
 P a g e | 30

Exploration

 Discovered six out of seven producing Basins in India. Located 8.78 billion
tonnes of Oil & Oil Equivalent in Indian Basins with over 400 discoveries.
 ONGC is the largest exploration acreage and mining lease holder in India
 83% of established reserves (out of 10.9 BT) in the country have been
discovered by ONGC.
 22 new discoveries - 10 new prospects, 12 new pools in FY’15
 Reserve Replenishment Ratio (RRR) for the last ten years has been more than
one (3P Reserves).

Production

 ONGC has been able to arrest decline in majority of its matured fields (of vintage
30-50 years) that contribute 72% of the company’s O+OEG production through
its majorly successful technology-intensive IOR and EOR.
 1184 oil wells and 151 gas wells in offshore and 4735 oil wells and 606 gas
wells in onshore as on April 1, 2015.
 Western Offshore production up by 7.5% (16.20 MMT in FY’15 against 15.54
MMT in FY’14).
 Produces 1.2 million barrels of oil equivalent per day.
 ONGC accounts 69% of Crude oil & 70% of Natural Gas production.
 Produced 1,743 Million Metric Tonnes of Oil Equivalent so far.
 Arrested decline in 14 major fields producing for over 30 years, vis-a-vis global
decline rate of 7% from matured fields.

Products

 Petroleum, Diesel, Kerosene, Naphtha

 Natural gas
 LNG
 Lubricants
 Petrochemicals
 P a g e | 31

Any good company need to have its Vision, Mission and Objectives depending on its
core area of business & activities to use it as guiding stars for its growth and
sustainability. So also, ONGC has its own which is as under-

Vision
To be global leader in Integrated energy business through sustainable growth,
knowledge excellence and exemplary governance practices.

Mission
World class

 Dedicated to excellence by leveraging competitive advantages in R&D and technology

with involved people.
 Imbibe high standards of business ethics and organizational values.
 Abiding commitment to safety, health and environment to enrich quality of
community life.
 Foster a culture of trust, openness and mutual concern to make working a stimulating
and changing experience for the people.
 Strive for customer delight through quality products and services.

Integrated in Energy Business

 Focus on domestic and international oil and gas exploration and production
business opportunities.
 Provide value linkages in other sectors of maximize shareholder value.
 Create growth opportunities and maximize shareholder value.

Dominant Indian Leadership

 Retain dominant position in Indian petroleum sector and enhance India’s energy
availability.
 P a g e | 32

2.1) History of ONGC

1947 – 1960

During pre-independence, the Assam Oil Company in the North-Eastern and Attock Oil
company in North-Western part of undivided India were the only oil companies producing oil
in the country. The major part of Indian sedimentary basins was deemed to be unfit for
development of oil and gas resources.
After independence, the Government realized the importance
of oil and gas for rapid industrial development and its
strategic role in defence. Consequently, while framing the
Industrial Policy Statement of 1948, the development of the
hydrocarbon industry in the country was considered to be of
utmost necessity.
Until 1955, private oil companies mainly carried out
exploration of hydrocarbon resources of India. Assam Oil Company was producing oil at
Digboi, Assam (discovered in 1889) and the Oil India Ltd. (a 50% joint venture between
Government of India and Burmah Oil Company) was engaged in developing two fields
Naharkatiya and Moran in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a joint
venture between Government of India and Standard Vacuum Oil Company of USA) was
engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining
offshore remained largely unexplored.

In 1955, Government of India decided to develop the oil and

natural gas resources in the various regions of the country
as part of Public Sector development. With this objective, an
Oil and Natural Gas Directorate was set up in 1955 under
the then Ministry of Natural Resources and Scientific
Research. The department was constituted with a nucleus
of geoscientists from the Geological survey of India.

Year Plan (1956-57 to 1960-61)

Since its inception, ONGC has been instrumental in transforming the country's limited
upstream sector into a large viable playing field, with its activities spread throughout India
and significantly in overseas territories. In the inland areas, ONGC not only found new
resources in Assam but also established new oil province in Cambay basin (Gujarat), while
adding new petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both
inland and offshore).
ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay High,
now known as Mumbai High. This discovery, along with subsequent discoveries of huge oil
and gas fields in Western offshore changed the oil scenario of the country. Subsequently, over
5 billion tonnes of hydrocarbons, which were present in the country, were discovered. The
 P a g e | 33

most important contribution of ONGC, however, is its self-reliance and development of core
competence in E&P activities at a globally competitive level.

After 1990

The liberalized economic policy, adopted by the Government of India in July 1991, sought to
deregulate and de-license the core sectors (including petroleum sector) with partial
disinvestments of government equity in Public Sector Undertakings and other measures. As a
consequence thereof, ONGC was re-organized as a limited Company under the Company's Act,
1956 in February 1994.

After the conversion of business of the erstwhile Oil &

Natural Gas Commission to that of Oil & Natural Gas
Corporation Limited in 1993, the Government
disinvested 2 per cent of its shares through
competitive bidding. Subsequently, ONGC expanded its
equity by another 2 per cent by offering shares to its
employees.
During March 1999, ONGC, Indian Oil Corporation (IOC) - a downstream giant and Gas
Authority of India Limited (GAIL) - the only gas marketing company, agreed to have cross
holding in each other's stock. This paved the way for long-term strategic alliances both for the
domestic and overseas business opportunities in the energy value chain, amongst themselves.
Consequent to this the Government sold off 10 per cent of its share holding in ONGC to IOC
and 2.5 per cent to GAIL. With this, the Government holding in ONGC came down to 84.11 per
cent.

In the year 2002-03

After taking over MRPL from the A V Birla Group, ONGC diversified into the downstream
sector. ONGC has also entered the global field through its subsidiary, ONGC Videsh Ltd. (OVL).
ONGC has made major investments in
Vietnam, Sakhalin, Columbia, Venezuela,
Sudan, etc. and earned its first hydrocarbon
overseas revenue from its investment in
Vietnam.
Today, Oil and Natural Gas Corporation Ltd.
(ONGC) is, the leader in Exploration &
Production (E&P) activities in India
contributing 72 percent to India’s total production of crude oil and 48 per cent of natural gas.
 P a g e | 34

ONGC’s quest for energy goes deeper than setting new benchmarks in deep-water drilling in
the Krishna Godavari Basin or finding new frontiers of energy. Global decline in crude prices
notwithstanding, we have taken significant investment decisions diligently and aggressively,
reversing the production trend in offshore. And now we are venturing into deeper offshore
plays in our quest for energy security. It is this journey that has placed us among Fortune
“World’s Most Admired Companies” and ranked us 3rd in the E&P industry globally on the
Platts Top 250 Rankings 2014.

ONGC offices all over India

 P a g e | 35

2.2) SWOT Analysis

 ONGC Ltd is perceived to be the leader in oil production

industry.
Strength
 It has a very efficient and professional management team.

 Being a international company has a sufficient resources

and capital to invest.

weakness  ONGC is facing difficulties to produce oil from aging

reservoirs.

Opportunity  Energy utilization of buried coal resource (700-1700M),

estimated 63TB – equivalent 15000 BCM.

Threats  Security of personnel & property especially crude oil

continues to be a cause of concern in certain area.

 Some exploration campaign company involves high

technology, high investment and high risk.
 P a g e | 36

Chapter-3

RESEARCH METHODOLOGY

3.1) Objective of the Study

In order to efficiently manage its finance every company needs to develop a systematic
approach to the analysis of its financial statements. The motivation for applying
the financial statement analysis to the annual report of a company is -

 To analyze the current financial performance of ONGC, Analyzing Company’s

current balance sheet and income statement is the most effective way to estimate the
condition of a company here and now. Reviewing firm’s assets and liabilities, checking
the profitability margins for the current period is necessary for all the users in terms of
operative and long-term decision-making.

 To examine the operating performance and efficiency of various business activities

of a company.

 To compare the overall performance of a company for different periods (2017-18

and 2018-19).

 To examine the impact of past balances on financial aspect, for determining the
debt capacity of the firm.

Methodology
In order to prepare the assigned project paper I have collected necessary information from
Secondary sources as follows:

Secondary sources information

1. I have collected secondary information like annual report 2019, accounting system.

2. The information was obtained from various corresponding files of the firm.

Data Collection- The financial statements are Income Statement, Balance sheet and
cash flow statement and other data i.e. working capital, Ratios etc. have been collected
from the ONGC annual report 2018-19

Period – 2 years period is used for analysis, i.e. 2017-18 and 2018-19.
 P a g e | 37

Chapter-4

DATA ANALYSIS & INTERPRETATION

4.1) Balance Sheet

OIL AND NATURAL GAS CORPORATION LIMITED (in Crores)
Particular As on 31st March 2019 As on March 31st 2018

ASSETS
Non-Current Assets 273,844.46 269,711.63
Current Assets 28,390.35 21,516.55

Total Assets 302,234.81 291,228.18

EQUITY & LIABILITIES

LIABILITIES
Equity 202,992.55 193,384.68
Current Liabilities 46,716.88 49,338.19
Total Liabilities 99,242.26 97,843.50

Total Equity & Liabilities 302,234.81 291,228.18

 Overall, the total assets and liabilities for FY19 stood at Rs 302,234 crore as
against Rs 291,228 crore during FY18 thereby witnessing a growth of Rs 11,006
crore.
 The Current liabilities of FY19 are Rs 46,716 crore is lower as compared to
Current liabilities of FY18 Rs 49,338 crore.
 The Current assets FY19 Rs 28,390 crore higher than Current assets FY18 are Rs
21,516 crore with a difference of Rs 6,874 crore.
 Share holder capita/Equity of FY19 Rs 202,992 crore shown growth as compared
to FY18 Rs 193,384 crore with a Rs of 9,608 crore.
 P a g e | 38

4.2) Income Statement

STATEMENT OF STANDLONE FINANCIAL RESULTS FOR THE YEAR ENDED 31ST MARCH, 2019
(Rs. In Core unless otherwise stated)
Year ended Year ended
Sl. No. Particulars 31.03.2019 31.03.2019

1. Revenue from operations 109,654.55 85,004.10

2. Other income 7,519.01 7,883.55
3. Total income (1+2) 117,173.56 92,887.65

4. Expenses
Cost of materials consumed 2,223.83 1,209.22
Purchase of stock-in-trade - -
Changes in inventories of finished goods, stock-in-trade and (166.27) (63.02)
Work in progress
Employee benefits expense 2,706.12 2,503.02
Statutory levies 26,500.42 20,098.34
Exploration costs written off
a. Survey Cost 1,851.39 1,408.07
b. Exploratory well Costs 6,905.48 5,551.73
Finance costs 2,492.14 1,508.47
Depreciation, depletion, amortisation and impairment 15,778.62 14,470.17
Other expenses 18,9227.80 17,237.18
Total expenses (4.) 77,219.53 63,955.18

5. Profit before exceptional items and tax (3. - 4.) 39,954.03 28,892.47
6. Exceptional items - -

7. Profit before tax (5. +6.) 39,954.03 28,892.47

8. Tax expense:
a) Current tax relating to:
- Current year 1,1142.00 6,354.92
- Earlier years 0.23 (221.80)
b) Deferred tax 2,096.01 2,814.09
Total tax expenses (8.) 13,238.24 8,947.21

9. Profit for the period (7. -8.) 26,715.79 19,945.26

10. Other comprehensive income (OCI)

(a) Item that will not be reclassified to profit or loss
i. Re-measurement of the defined benefit obligations (452.88) (136.82)
- Deferred Tax 158.25 49.50
ii. Equity instruments through other comprehensive income (1,630.66) (1,764.04)
- Deferred Tax 126.53 (1,331.35)
Total other comprehensive income (10.) (1,798.76) (3,182.71)

11. Total comprehensive income for the period (9. +10.) 24,917.15 16,762.63

12. Paid-up Equity Share Capital(Face value of rs.5/- each) 6,290.15 6,416.63
13. Other equity 196,702.40 186,968.05
14. Earnings per share (Face value of rs.5/- each)- not annualised #
a) Basic (Rs.) 20.86 15.54
b) Diluted (Rs.) 20.86 15.54
 P a g e | 39

 The company’s profit (PAT) has increased during FY19 as compared to previous
FY18 with a margin of Rs 67,705 crore.
 Operating income during the FY19 is greater than previous FY18 of Rs 246,505
crore.
 There is a decrement in the Other income of FY19 as compared to FY18 with a
margin of Rs 3,646 crore.

FY’19 (in Rs core) FY’18 (in Rs core)

Particulars

Particulars

Revenue:
Crude oil 77,572 60,389
Natural Gas 18,838 13,737
Value Added product 12,888 10,453
Other Operating Revenue 354 423
Total Revenue from Operations: 1,096,54 850,04

Other income 75,19 78,83

EBITA 58,224 44,871
PBT (Profit Before Tax) 39,954 28,892
PAT (Profit After Tax) 26,715 19,945
EPS (Earning per share) 20.86 15.54
Dividend per share 7.00 6.60
Net Worth 2,02,992 1,93,384
 P a g e | 40

4.4) Standalone Statement of Cash Flow for the year ended March 31, 2019
(Rs. in crore)
Particulars Year ended March 31st, Year ended March 31st,
2019 2018
1) CASH FLOW FROM OPERATING ACTIVITIES:
Net Profit after tax 267,157.89 199,452.60
Adjustment For
- Income tax expense 132,282.36 89,482.14
- Depreciation, Depletion, Amortisation and Impairment 157,7869.22 144,701.72
- Exploratory Well Cost Written off 69,054.82 55,517.29
- Finance Cost 24,921.36 15,084.70
- Unrealized Foreign Exchange loss/Gain 4,792.31 854.98
- Other impairment and write offs 7,362.12 2891.31
- Excess provision written back (9,167.05) (4,333.13)
- Interest income (15,943.20) (20,565.83)
- Fair value loss/gain 953.19 700.44
- Amortization of Financial Guarantee (480.32) (329.48)
- Re-measured of Defined benefit plans (4,528.78) (1,368.22)
- liabilities no longer requires written Back (3,678.83) (1,309.95)
- Amortization of Govt. Grant 828.74 0.26
- Profit On sale of investment - (0.10)
- Profit on sale of non-current assets (83.44) -
- Dividend Income (31,054.41) 333,145.09 (37,810.26) 243,505.87
Operating Profit before Working Capital Changes 600,302.98 442,958.47
Adjustments for
- Receivables (6,561.94) (12,829.93)
- Loans and advances 975.82 (777.68)
- Other assets (68,187.33) (18,992.49)
- Inventories (11,553.07) (5,695.94)
- Trade payables and other Liabilities 19,619.96 (65,706.56) 43,503.35 5027.31
Cash generated from Operations 543,596.42 448,165.78

Income Taxes Paid (Net of tax refund) (112,076.36) (72,797.27)

Net cash generated by operating activities “A” 422,520.06 375,368.51

2) CASH FOW FROM INVESTING ACTIVITIES

Payments for property, Plant and Equipment (112,958.04) (182,649.71)
proceeds from disposal of property, Plant and Equipment 1183.55 284.63
Exploratory and development Drilling (150,739.53) (156,386.52)
Investment in term deposits with maturity 3 to 12 months 8,233.86 84,914.09
Investment in mutual funds - 36,343.39
Advance/Investment in joint Controlled entities (6,251.25) 1,839.31
Investment – Associates - (1,528.16)
Investment – Subsidiaries (1,469.94) (370,989.31)
Loans- Subsidiaries 18,788.73 7,002.97
Investments – others (75.01) (9.98)
Deposits in Site Restoration fund (21,014.12) (14,525.06)
Dividends received from subsidiaries, Associates & joint ventures 16,433.46 22,436.93
Dividends received from other investments 14,620.95 15,373.33
Interest received 13,048.82 20,590.29
Net cash(used in)/generated by Investing Activities “B” (220,198.52) (537,303.80)

3) CASH FLOW FROM FINANCIAL ACTIVITIES:

Proceeds from short term Borrowings 972,294.90 549,168.75
Repayment of short Term Borrowings (1,016,902.66) (294,950.92)
Buyback of equity shares (40,220.00) -
Expenses for buyback of equity shares (75.11) -
Dividends paid on equity shares (92,750.55) (77,625.92)
Tax paid on Dividends (16,844.63) (11,521.24)
Interest paid (7,958.07) (3,265.95)
Net cash used in Financing Activities “C” (202,456.12) 161,804.72
Net increase/(decrease) in cash and cash equivalents(A+B+C) (134.58) (130.57)
 P a g e | 41

 ONGC's cash flow from operating activities (CFO) during FY19 stood at Rs 6,
00,302.98 crore, as compared to FY18 4, 42,958.47 an improvement of 7.8% Rs
1, 57,344.51 on a YoY basis.

 Cash flow from investing activities (CFI) during FY19 (2, 20,198.52) crore is got
lower than previous FY18 (5, 37,303.80) crore and stood at Rs -3, 17,105.28
Crore.

 Cash flow from financial activities (CFF) during FY19 stood at Rs (202,456.12)
crore as compared during FY18 (161,804.72) having a difference of -40,651.4
on a YoY basis.

 Overall, net cash flows for the company during FY19 stood at Rs -134 million
from the Rs -130 million net cash flows seen during FY18.

Particulars As on 31st March 2019 As on 31st March 2018

(in Rs crore) (in Rs crore)

Net cash generated by operating activities “A” 422,520.06 375,368.51

Net cash generated by Investing Activities “B” (220,198.52) (537,303.80)
Net cash generated by Financing Activities “C” (202,456.12) 161,804.72

Net cash increase/ (decrease) (134.58) (130.57)

in cash and cash equivalents (A+B+C)
 P a g e | 42

4.5) WORKING CAPITAL of ONGC

As at March 31st, As at March 31st,

WORKING CAPITAL 2019 2018

A) Current Assets
1. Inventories 7,749.17 6,688.91
2. Financial assets
a)trade receivables 8,439.96 7,772.64
b)Cash and cash equivalents 17.98 29.60
c)Other bans balances 486.08 983.10
d)Loans 633.93 1402.11
e)Others 4,617.48 3041.81
3. Other current assets 6,330.31 1,598.38
Sub-total current assets 28,274.91 21,516.65
Assets classified as held for sale 115.44 -
Total Current Assets 28,390.35 21,516.55

B) Current Liabilities
1. Financial Liabilities
a)Borrowings 21,593.57 25,592.21
b) trade payables
- to micro 9.85 11.97
- to other than micro 8,815.15 7322.58
c) Finance ease obligation 3.50 3.50
d) Others 12,243.72 12,247.76
2. Other current liabilities 2,415.49 2,265.65
3. Provisions 1,585.66 1,258.19
4. Current tax liabilities (net) 49.94 636.33
Total current Liabilities 46,716.88 49,338.19

NET WORKING CAPITAL (18,326.53) (27,821.64)

 P a g e | 43

 Overall, The Net Working Capital is seen Negative in both FY18 and FY19 but
the there is decrement shown in the FY19 compare of FY18 of Rs 27,821 crore.

 The Change in the Current Assets is positive, increase in the Current Assets of
FY19 as compared to FY18 with a margin of Rs 6,874 crore.

 The change in the Current Liabilities seen decrease in the FY19 as compared to
FY18 with a difference of Rs 2,662 crore.

60,000.00
50,000.00
40,000.00
30,000.00
20,000.00 Assets

10,000.00 Liabilities
0.00 working Capital
-10,000.00 2019 2018

-20,000.00
-30,000.00
-40,000.00
 P a g e | 44

Conclusion

It was a great experience to work as an intern in ONGC Academy Keshva Deva

Malavia. I got useful insights regarding financial analysis of this organisation. The
internship helps me to grasp and digest the knowledge of financial aspects.

Overall, the Financial Position of company in the year 2018-19 compared to the
previous Financial Year 2017-18 shown the positive and growing results. ONGC is
has a strong balance sheet which states that ONGC is in good financial health and
the majority of the company’s profitability ratios show an increasing trend as
compared to previous data. Analyzing the financial report of the company is a
mandatory activity for each party, currently or potentially involved in its activity.
Company’s statements indicate facts and trends, which should cause awareness of
the business’ management, as well as of its creditors and investors.

After studying about the various financial statements of ONGC Ltd, I reached at a
conclusion that ONGC achieved its entire desire goals with its hard work and
unique idea the performance of the company can be considered as satisfactory. As
per my opinion ONGC has a wide scope to develop more in upcoming years.
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Findings

 The profit for the FY2019 is higher than previous FY18 with a margin of Rs
67,705 crore. This is good thing for all the investors and owner itself.

 The working capital of ONGC for FY 2019 is better than previous year but
negative which can make a bad impression to the company.

 The cash flow Statement shows the Activities performing in the

organisation has huge operation but the monetary value shown negative
monetary values.

 The total assets and liabilities in the Balance sheet of FY 2019 have
increased as compared to previous FY 2018.
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Annexure

Balance Sheet
OIL AND NATURAL GAS CORPORATION LIMITED
Statement of standalone audited Assets & Liabilities as at 31st March, 2019
(Rs. in crore)
As at As at
Particulars March 31st, 2019 March 31st, 2018
(Audited) (Audited)
(A) ASSETS
(1) Non-currents assets
(a) Property, Plant and Equipment
I. Oil and Gas Assets 114,338.54 110,264.83
II. Other Property, Plant, Equipment 9,906.13 9,250.71
(b) Capital work in progress
I. Oil and Gas Assets
1) Development wells in progress 3,996.11 2,245.18
2) Oil and gas facilities in progress 9,749.80 9,136.71
a) Others 1777.63 2,136.18
(c) Intangible assets 174.46 112.86
(d) Intangible assets under development
I. Exploratory wells in progress 19,526.69 21,838.53
(e) Financial assets
I. Investments 84,881.53 85,730.80
II. Loans 1,046.12 2,133.47
III. Deposits under site restoration fund 18,092.61 15,991.20
IV. Others 264.84 164.66
(f) Non-current tax assets (net) 945.38 9,946.37
(g) Other non-current assets 664.60 733.13
Total non-current assets 273,844.46 269,711.63
(2) Current assets
(a) Inventories 7,749.17 66,88.91
(b) Financial assets
I. Trade receivables 8439.96 7,772.64
II. Cash & cash equivalents 17.98 29.60
III. Other bank balances 486.08 983.10
IV. Loans 633.93 1,402.11
V. Others 4,617.48 3,041.81
(c) other current assets 6,330.31 1,598.38
Sub-total current assets 28,274.91 21,516.55
Assets classified as held for sale 115.44 -
Total current assets 28,390.35 21,516.55
Total Assets 302,234.81 291,228.18

(B) EQUITY & LIABILITIES

EQUITY
(a) Equity share capital 6,290.15 6,416.63
(b) Other equity 19,6702.40 186,968.05
Total equity 202,992.55 193,384.68

LIABILITIES
(1) Non-current liabilities
(a) Financial liabilities
I. Borrowings 21,593.57 25,592.21
II. Trade payables
-to micro and small enterprises 9.85 11.97
-to other than micro and small enterprises 8,815.15 7,322.58
III. Finance lease obligation 3.50 3.50
IV. Others 12,243.72 12,247.76
(b) Other current liabilities 2,415.49 2,265.65
(c) Provision 1,585.66 1,258.19
(d) Current liabilities (net) 49.94 636.33
Total current Liabilities 46,716.88 49,338.19
Total Liabilities 99,242.26 97,843.50
Total Equity and Liabilities 302,234.81 291,228.18
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Bibliography

For the project report on “Understanding the financial position of ONGC

2018-19”, I have consulted the following books, periodicals and
websites:-

 “Financial Statements: Through Maze of Coporate Annual Report”

by- Aileen Ormiston and Lyn M. Fraser
 “Financial statement Analysis” by- Fernando & Martin
 “Financial Analysis Tools & Techniques”- by Erich A. Helfert
 “Financial Reporting & Analysis”- by G. Thomas Friedlob
 http://www.ongcindia.com
 http://www.goolge.com
 http://www.wikipidia.com
 http://www.equitymaster-com.com
 http://www.tofler.in
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