OIL & NATURAL GAS SECTOR

Presented by :Abhishek Jain (75102) Kritika Taneja(75127) Lakshay Kalra(75128) Class : BFIA 2A

ACKNOWLEDGEMENT
Our deep sense of gratitude to Dr Kumar Bijoy the Guide of the project for supporting, mentoring and helping us in the various stages of project .

CONTENTS
INTRODUCTION SECTOR OVERVIEW SWOT ANALYSIS BCG MATRIX MICHAEL PORTER 5 FORCES MODEL RATIOS BIBLIOGRAPHY

INTRODUCTION

The petroleum industy includes the global process of exploration, extraction, refining, transporting (often by oil tankers and pipelines) and marketing petroleum products.
After the Indian Independence, the Oil Industry in India was a very small one in size and Oil was produced mainly from Assam and the total amount of Oil production was not more than 250,000 tonnes per year.

HISTORY
The Oil Industry started off more than five thousand years back. Oil sipping up from the ground were used to make the boats waterproof in the Middle East and also used as medicating as well as for painting different things. The demand for Oil was much higher than what it actually produced and this brought forward the concept of making oil production companies which is collectively known as the Oil Industry.

ORIGIN IN INDIA
The origin of oil & gas industry in India can be traced back to 1867 when oil was struck at Makum near Margherita in Assam. At the time of Independence in 1947, the Oil & Gas industry was controlled by international companies. India's domestic oil production was just 250,000 tonnes per annum and the entire production was from one state - Assam.

The foundation of the Oil & Gas Industry in India was laid by the Industrial Policy Resolution, 1954, when the government announced that petroleum would be the core sector industry. In pursuance of the Industrial Policy Resolution, 1954, Government-owned National Oil Companies ONGC (Oil & Natural Gas Commission), IOC (Indian Oil Corporation), and OIL (Oil India Ltd.) were formed.

Why we have chosen Oil & Gas sector?

Petroleum is vital to many industries, and is of importance to the maintenance of industrial civilization itself, and thus is a critical concern for many nations. Oil accounts for a large percentage of the worlds energy consumption, ranging from as low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Government of India declared the Oil industry in India as the core sector industry under the Industrial Policy Resolution bill in the year 1954, which helped the Oil Industry in India vastly.

COMPANIES ANALYSED

SWOT ANALYSIS

INDIAN OIL CORPORATION

STRENGTHS 1.India's largest commercial enrise with a strong brand name 2.Has around 50% petroleum products 3.Operates 10 refineries in India 4.Huge distribution network through retailing 5.Accounts for a 47% share in the petroleum products market, 34.8% share in refining capacity and 67% downstream sector pipelines capacity in India 6.Has over 35,000 employees 7. Loyalty programs like XTRAPOWER Fleet Card Program is aimed at Large Fleet Operators OPPORTUNITIES 1.Increasing fuel/oil prices 2.Increasing natural gas market 3.More oil well discoveries 4.Expand export market WEAKNESSES 1.Legal issues 2.Employee management 3.Bureaucracy 4.Volatility in the crude market & subsidy burden

THREATS 1.Government regulations 2.High Competition Competition : 1.Bharat Petroleum 2.Hindustan Petroleum 3.Reliance Industries

RELIANCE INDIA LIMITED

STRENGTHS 1.India's one of the biggest players 2.Strong brand name 3.Excellent financial position 4.One of the few Indian companies to be featured in Forbes 5.Employs over 25,000 people WEAKNESSES 1.Long term debt 2.Legal issues 3.KG D6 gas controversy 4.Accusations of being favored by the government

OPPORTUNITIES 1.Growing demand for petroleum products 2.Buyout of competition

THREATS

1.Government regulations 2.High Competition 3.Environmental laws 4.Economic instability

ONGC
STRENGTHS

WEAKNESSES

1.Indias largest crude oil and natural gas producer 2.Strong brand name 3.High profit making 4.Has over 40,000 employees 5.It produces about 30% of India's crude oil requirement 6.Contributes 77% of India's crude oil production and 81% of India's natural gas production 7.Commemorative Coin set was released to mark 50 Years of ONGC OPPORTUNITIES
1.Increasing fuel/oil prices 2.Increasing natural gas market 3.More oil well discoveries

1.Legal issues 2.Employee management 3.Bureaucracy 4.Human rights and rehabilitation issues

THREATS 1.Government regulations 2.HighCompetition 3.Alternative Energy Sources

HPCL
STRENGTHS WEAKNESSES

1.India's major oil and gas company 2.Operates largest Lube refiniery in India 3.Large product portfolio 4.Owns and operates the largest Lube Refinery in India producing Lube Base Oils of international standards 5.Produces over 300+ grades of Lubes, Specialities and Greases

1.Legalissues 2.Employeemanagement 3.Human right issues, rehabilitation issues 4.Environmental hazards from wastes

OPPORTUNITIES 1.Increasing fuel/oil prices 2.Increasing natural gas market 3.More oil well discoveries 4.Expand export market

THREATS 1.Governmentregulations 2.High Competition from other players

BPCL
STRENGTHS WEAKNESSES

1.One of India's largest state owned oil and gas company 2.Has brand presence 3.Refining and retailing of petroleum

1.Legalissues 2.Employee management

OPPORTUNITIES 1.Increasing fuel/oil prices 2.Increasing natural gas market 3.More oil well discoveries 4.Expand export market

THREATS 1.Governmentregulations 2.High Competition

EXXON
STRENGTHS 1.One of the strongest brands , in operations for over 100 years . 2.R&D and diverse operations 3.Growing financial performance 4.Has over 83,000 employees 5.37 oil refineries in 21 countries 6.Better Cash flows in terms of Revenue and profit. OPPORTUNITIES WEAKNESSES 1.Employee management across the world 2.Negative Publicity from Exxon Valdes Spill 3.Environmental hazards and oil spills 4.Involved in illegal Trade with few countries.

THREATS

1.Increasing demand for LPG and CNG 2.High investments 3.Increasing prices of fuels across the world 4. Market Development in oil demanding markets like Indonesia , korea .

1.Government regulations and policies. 2.High Competition 3. Slowdown in economy due to recession. 4.Alternative energy sources 5. Increasing resistance from environment and social groups.

BCG MATRIX

ONGC BPCL EXXON HPCL

STAR

CASH COW
IOC

DOG

MICHAEL PORTER 5 FORCES MODEL

THREAT OF NEW ENTRANTS LOW Requires high capital investment Economies of scale is vital Access to distribution channel critical THREAT OF SUBSTITUTES MEDIUM Threat of substitutes is very small for now Renewable energy may pose a threat over the years BARGAINING POWER OF SUPPLIERS LOW Oil industry has small subsuppliers from various industries, so the bargaining power of suppliers is low

COMPETITIVE RIVALRY MEDIUM Limited number of companies owing to the nature of the industry Foreign and private players beginning to enter the scene

BARGAINING POWER OF CUSTOMERS LOW Traded at global prices, so customers have no bargaining powers.

RATIOS
Debt-equity ratio Total asset to debt ratio Current Ratio Quick Ratio Interest coverage ratio

DEBT EQUITY RATIO

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.
Debt Equity Ratio = Debt Equity

DEBT EQUITY RATIO

2.5

1.5

BPCL HPCL

IOC
EXXON 1 ONGC RIL

0.5

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source:capitaline

TOTAL ASSET TO DEBT RATIO

A metric used to measure a company's financial risk by determining how much of the company's assets have been financed by debt =

Total Asset To Debt Ratio

5 4.5

3.5

3 BPCL

2.5
HPCL 2 IOC RIL

1.5

0.5

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source:capitaline

EXXON

45

40

35

30

25

20

EXXON
15

10

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

ONGC
40

35

30

25

20

ONGC

15

10

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

INTEREST COVERAGE RATIO

A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period.
Interest Coverage Ratio =

EBIT Interest Expense

INTEREST COVERAGE RATIO

30

25

20

BPCL
15

HPCL IOC RIL

10

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

EXXON
250

200

150

EXXON
100

50

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

ONGC
300

250

200

150

ONGC

100

50

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CURRENT RATIO
The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. It is expressed as follows:

2.5

1.5

BPCL HPCL

IOC
1

EXXON ONGC RIL

0.5

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source:www.capitaline.co

QUICK RATIO
The Acid-test or quick ratio or liquid ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. Quick assets include those current assets that presumably can be quickly converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities.

1.8

1.6

1.4

1.2

BPCL
1

HPCL IOC EXXON ONGC RIL

0.8

0.6

0.4

0.2

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

BIBLIOGRAPHY
Capitaline Investopedia Wikipedia Yahoo Finance Money control

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