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Financial Accounting Project by SANDEEP BHAT RAJESH DAS ATANU MANNA Rajiv Sakpal 10 25 30 07

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Oil and Natural Gas Corporation Limited

Oil and Natural Gas Corporation Limited (ONGC) (NSE: ONGC, BSE: 500312) is an Indian state-owned oil and gas company headquartered at Dehradun, the capital of Uttaranchal (aka Uttrakhand). It is a Fortune Global 500 company ranked 413, and contributes 77% of India's crude oil production and 81% of India's natural gas production. It is the highest profit making corporation in India, according to filings with the BSE of latest quarter results External Link. It was set up as a commission on 14 August 1956. Indian government holds 74.14% equity stake in this company. ONGC is one of the Asia's largest and most active company involved in exploration and production of oil. It is involved in exploring for and exploiting hydrocarbons in 26 sedimentary basins of India. It produces about 30% of India's crude oil requirement. It owns and operates more than 11,000 kilometers of pipelines in India. It is one of the highest profit making companies in India. In 2010, it stood at 18th position in the Platts Top 250 Global Energy Company Rankings. A turning point in the history of Indias oil sector was in 1994. While the oil sector was on the backburner of India's political realm for some time, is brought to the forefront by the privatization of India's leading oil E&P organization, the ONGC. Simultaneously, there were steps taken for the enhancement of production on the Bombay High oil fields as the result of a INR 150 billion development investment. One of Asia's largest oil E&P companies, ONGC became a publicly held company as of February 1994, following the Indian government's decision to privatize. This privatization was conceived and achieved (sweat equity) to a great extent by ONGCs influential Association of Scientific and
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Technical Officers (ASTO) spearheaded by the then Bombay top executives Ganesh P. Shahi and Amarjit S. Jowandha (DGM and Head Management Services Group too) who worked closely with the then ONGC CMDs S. K. Manglik and S.L. Khosla, IAS and with Dr. Vijay Kelkar, Secretary, Ministry of Petroleum & Natural Gas, Government of India, among others. Amarjit S. Jowandha was able to usher in change from his imbibed learnings, inter alia, from his Alma Mater University of Bombay [Jamnalal Bajaj Institute of Management Studies (also referred to as JBIMS or just Bajaj]. Eighty percent of ONGC assets were subsequently owned by the government, the other 20% were sold to the public. At this time, ONGC employed 48,000 people and had reserves and surpluses worth INR 104.34 billion, in addition to its intangible assets. The corporation's net worth of INR 107.77 billion was the largest of any Indian company. After its initial privatization, ONGC had authorized capital of INR 150 billion: it also met its need to raise INR 35 billion to invest in viable oil and gas projects. The Asian Development Bank (ADB) had also set a deadline for privatizing and restructuring at 30 June 1994, if loans were to be granted for development of two ONGC projects. As a consequence of the successful privatization, the loans were granted - US$267 million for development of Gandhar Field, and US$300 million for the gas flaring reduction project in the Bombay Basin. The successfully formulated and implemented privatization strategy put ONGC at par with other large multinational and domestic oil companies.

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Balance Sheet of Oil and Natural Gas Corporation

in Rs. Cr
Mar '11 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 4,277.76 4,277.76 0.00 0.00 2,138.89 2,138.89 0.00 0.00 Mar '10 12 mths

93,226.6 85,143.72 7 0.00 0.00 97,504.4 87,282.61 3 0.00 0.00 17,564.2 16,405.64 6 17,564.2 16,405.64 6 115,068. 103,688.2 69 5 Mar '11 12 mths Mar '10 12 mths

Application Of Funds Gross Block 124,514. 71,553.78 26

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Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

62,299.0 55,905.28 5 62,215.2 15,648.50 1 21,778.7 56,073.25 8 5,332.84 4,118.98 3,845.90 5,772.03 4,678.57 3,058.64

14,331.0 282.85 5 22,295.9 8,020.06 3 36,347.6 63,721.90 8 0.00 17,948.18 58,643.6 89,690.14 1 0.00 0.00 28,765.2 27,244.53 8 4,932.49 37,092.46 33,697.7 64,336.99 7 24,945.8 25,353.15 4 796.03 841.32 115,068. 103,688.2 70 5 35,241.8 39,178.54 7 113.97 408.08

Profit & Loss account of Oil and Natural Gas Corporation

In Rs. Cr.
Mar '11 Mar '10 12 mths 12 mths Income Sales Turnover 66,154.8 60,470.1 8 8
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Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

309.88 65,845.0 0 5,900.77 12.91 71,758.6 8 13.84 0.00 0.00 0.00 0.00

218.41 60,251.7 7 3,615.96 118.04 63,985.7 7 2,431.88 260.38 5,618.16 26,652.8 2 13,243.6 9

27,530.0 947.65 6 0.00 27,543.9 0 Mar '11 12 mths 38,314.0 1 44,214.7 8 0.00

22,667.2 0 Mar '10 12 mths 37,702.6 Operating Profit 1 41,318.5 PBDIT 7 11,276.8 Interest 25.11 9 44,189.6 30,041.6 PBDT 7 8 15,925.6 Depreciation 5,242.66 5 Other Written Off 611.43 0.00 27,652.5 24,799.0 Profit Before Tax 9 2 Extra-ordinary items 418.17 183.99 PBT (Post Extra-ord 28,070.7 24,983.0 Items) 6 1 Tax 9,146.76 8,258.73 18,924.0 16,767.5 Reported Net Profit 0 6 27,530.0 20,235.3 Total Value Addition 6 3 Preference Dividend 0.00 0.00 Equity Dividend 7,486.05 7,058.28
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Corporate Dividend Tax 1,215.65 1,161.56 Per share data (annualized) 85,554.9 21,388.7 Shares in issue (lakhs) 0 3

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Earnings Per Share (Rs) Equity Dividend (%) Book Value (Rs)

22.12 175.00 113.97

78.39 330.00 408.08

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Ratios for the following Balance Sheet and Profit & Loss account for 2011 and 2010

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S r .n o . 1 2 3 4 5 6 7 8 9 10

R A T IO S C u rr e n t R a t io

F o r m u la

2011

2010

C u r r e n t A s s e t s / C u r r e n t l a i b8 i0l i 4t y2 2 . 3 9 / 3 3 6 9 7 1. 72 77 8= 12 5. 3. 28 1: 1 6 4 3 3 6 . 9 9 = 1 . 9 9 /

R e t u r n o n I n v e s t m e n tP r o f i t ( b e f o r e t a x , i n t e r e s t ) / C2 a6 p 7 i t1 a8 l . E m / p1 l 1o 4y 2 d 29 3. x40 017 04 0. 19 01 0/ 1 =0 2 38 .43 67 . 9%3 x 1 0 0 = 3 5 . 0 8 % 97 e9 x O p e r a t in g P r o fit R a t io N e t P r o fit R a t io E x p e n s e R a t io O p e r a t i n g P r o f i t / N e t s a l e s3 8x 31 10 40 . 0 1 / 6 5 8 4 51 6x 71 60 70 . 5= 6 4/ 1 .08 23 5 % . 7 7 x 1 0 0 = 4 5 . 8 9 % 6 1 N e t P r o f i t ( b e f o r e t a x ) / N e t2 S7 a6 l 5e s2 .x5 1 /0 60 5 8 4 53 7x 71 00 20 . 6= 1 4/ 1 .09 29 5 % . 7 7 x 1 0 0 = 6 2 . 5 7 % 9 6 1 E x p e n d i t u r e / N e t s a l e s x 12 07 05 4 3 . 9 0 / 6 5 8 4 52 2x 61 60 70 . 2= 0 4/ 1 0 8 23 5%1 . 7 7 x 1 0 0 = 3 7 . 6 2 % 6. 4 1 1 8 . 9 8 / 2 4 9 4 5 . 84 46 7= 8 0. 5. 17 7/ :21 5 3 5 3 . 1 5 = 0 . 1 8 : 1

S t o c k W o r k i n g C a p i t a l R a t i oS nt o c k / W o r k i n g c a p i t a l

R e t u r n o n P r o p r i e t o r s FNu en t d P r o f i t A f t e r T a x / P r o p r i e1 t8o 9r 2 s 4 F/ u9 n7 d5 0X 41 . 04 031 6x 6 1 70 60 . 5 61 / 98 . 74 21 8% 2 . 6 1 x 1 0 0 = 1 7 . 2 0 % = P r o p r i e t a r y R a t i o P r o p r i e t o r s F u n d o r S h a r e H o l d e r 9 s7 f5u 0n 4d . /4 3T o/ 8t a9 l8 A4 s3 s8.e97t82s 8=F2 1..A6. 0.1 9+/ I2n 9v 4t +4 C0 ..A5 )9 = 2 . 9 6 ( R e t u r n o n E q u i t y C a p i tNa e t P r o f i t A f t e r T a x / E q u i t y S1 h8 a9 r 2e 4 C/ a9 p7 i 5t a0 l 4 X x 111060070 6 = .15 96 ./4 81 7%2 8 2 . 6 1 x 1 0 0 = 1 9 . 2 1 % l 7 S e l l i n g & D i s t r i b u t i o n E x S e Rl lai nt igo & D i s t r i b u t i o n E x p / N 0e .t0 S0 a/ l6e 5s 8 X 4 15 0 x 0 1( 10 30 2 =4 30 . 60 90 ) / 6 0 2 5 1 . 7 7 x 1 0 0 = ( 2 1 . 9 8 % ) p

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Auditors Report
To the members of Oil & Natural Gas Corporation Ltd We have audited the attached balanced sheet of Oil & Natural Gas Corporation Ltd as at 31/3/2011, the profit & loss A/c & also the cash flow statement for the year ended on that date. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit report. We have conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan & perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount of disclosures in the financial statements. An audit also includes assessing the accounting principles used & significant estimates made by management as well as evaluating the overall financial statements on the presentation. We believe that our audit provides a reasonable basis for our option. As required by the statement on the companies (Auditors Report) order, 2003 issued by the Central Government of India in terms of Sec 227(4A) of the companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said order. In our opinion, the profit & loss A/c, the balance sheet & the cash flow statement comply with the accounting standards referred to in sub-section (3C) of section 211 of the companies Act 1956. Based on the written representation made by all the Directors of the company which was taken on record by the BOD of the company is disqualified as 31st March,2011 from being appointed as a directors in terms of clause(g) of sub-section(1) of section 274 of the companies Act,1956. Attention invited to note No.10 regarding accounts pending reconciliations. We are unable to comment on the adjustments/Provision, if any/ required.

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For the Year March 2011 Balance Sheet of an Oil and Natural Gas Corporation Particulars Share holders funds (A) Share capital Equity share capital Preference share capital Share application money (Add) B] Reserves and Surplus (Less) C] Miscellaneous expenses Net Worth II] Loan funds A] Secured loan B] Unsecured loan Total sources of fund (I + II) Application of funds I] Fixed assets Gross block (-) Depreciation II] Investments A] Current Assets Investories Capital work in progress Cash and bank balance Sundry debtors Loans and Advances B] Current liabilities Provisions Total application of funds (I+II+III) Nil 17564.26 Amount Rs Amount Rs

(in Rs crores) Amount Rs

4277.76 Nil Nil 4277.76 93226.67 -796.03 96708.4 96708.4

17564.26 114272.66

124514.26 -62299.05

62215.21 5332.84

4118.98 21778.78 14331.05 3845.9 36347.68 28765.28 4932.49

80422.39

33697.77

46724.62 114272.7

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Cash flo w o f o il and natural gas co rpo ratio n as o n 31 M arch 2011 ( in cro res)
Particulars
N e t p ro f it b e f o re tax N e t cash f ro m o p e ratin g activite s

A m ount (Rs)
26718.97 32756.85

N e t cash (u se d in )/ f ro m in ve sti n g activite s - 16818.7 N e t (d e cre ase )/ in cre ase in cash an d cash e4215.52 n ts q u ivale N e t cash (u se d in )/ f ro m f in an cin g acti vite s - 11722.63 O p e n in g cash & Cash e q u ivale n ts 18231.04 Clo sin g cash & Cash e q u ivale n ts 22446.55

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Summary of assets and liabilities as on 31 March 2011 (rs in crores) Particulars 31/ 3/ 2010 31/ 3/ 2011
I] Shareholders Fund A] Capital B] Reserses & Surplus M inority interest Loan funds Deffered Tax Liability (Net) 2138.89 99267.75 1643.16 6266.93 10291.22 4277.76 111049.48 2001.88 6291.24 11152.64 19850.37 154623.37

Liability for abandonment cost 17459.04 Total 137066.99

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Poi &osac u to ola d auagsc r oai n r ft l s co n f i n nt r l a op r to f rt ey a 3 Mr h 0 1 r i coe) o h e r 1 ac 2 1 ( s n r r s

P r ic las at u r
S le as ( E c ed t -) xis uy N ts le e as Oh rin o e t e cm so ka ju t e t t c d smns T t l in o e oa c m L s E p n it r e s x e d ue R wmt r ls a aeia P w r&fu l c s o e e ot E p y ec s mlo e o t Oh rmn fa t rin e p n e t e a u cu g x e s s S llin &a m israiv e p n s e g d in t t e x e e M c lle e u e p n s is a n o s x e e P o e t ee p n s re p raiv x e e Po r fit A d O eain p fit d p r t g ro PD B IT Ine s t re t PD BT D pe iaio er c t n Oh rwit e o t e r t n ff P fitb fo t x ro e re a A D Et o d ayit m D xra r in r e s P T( o tE t ao in r it m o c ma ie ) B p s xr rd ay e s f o p n s L s Tx es a R p rt dn tp fit e o e e ro T t l v lu a d io oa a e d it n P e r n ed id n r fee c iv e d E u yd id n q it iv e d C rp r t d id n t x o o ae iv e d a P rs aed t ( n u lis d e h r aa a n a e ) S aeinis u ( k s hr s e la h ) E r in p rs a ( s an g e h re R) E u yd id n ( ) q it iv e d % B o v lu ( s o k a e R) 854 5 5 .9 2 .1 2 2 15 7 13 7 1 .9 1 .8 3 4 N il N il N il N il 250 6 7 3 .0 N il -2 5 3 7 4 .9 424 8 4 1 .7 334 1 8 1 .0 858 9 2 2 .7 424 8 4 1 .7 2 .1 5 1 195 5 5 2 .6 419 7 4 8 .6 61 3 1 .4 262 9 7 5 .5 48 7 1 .1 200 6 8 7 .7 -9 4 .7 16 6 194 82 250 6 7 3 .0 N il 7 4 .0 86 5 1 1 .6 25 5

A on( s mu t R)
614 8 6 5 .8 -3 9 8 0 .8

A on( s mu t R)

685 54 5 0 .7 90 7 1 .1 2 9 778 8 1 5 .6

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THANK YOU

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