RAJIV GANDHI INSTITUTE OF PETROLEUM TECHNOLOGY, MBA DEPARTMENT

Analysis of Account Statements of ABAN OFFSHORE LTD

Submitted To: Ms. Monica Singhania

By

Puneet Bhardwaj MBA 1st Year

Analysis of Account Statements of Aban Offshore

ABAN OFFSHORE LTD

Breif Introduction:

Aban Offshore Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act,1956. Its shares are listed on three stock exchanges in India. The Company is engaged in the business of providing offshore drilling and production services to companies engaged in exploration, development and production of oil and gas both in domestic and international markets. The Company is also engaged in the ownership and operation of wind turbines for generation of wind power in India.

Puneet Bhardwaj MBA 1st Year

Analysis of Account Statements of Aban Offshore

Analysis of Balance Sheet(As on March 31st 2012)

1.) Equity & Liablities: The owners equity section of the balance sheet shows the amount the owners have invested in the entity. The owners equity section of balance sheet is usually labelled as Shareholders equity or stockholders equity. On the other hand liablities are obligations which exist as a result of past transactions or events. Liablities are claims against the entities assets. Liablities that are expected to be satisfied or extenguished during the normal operating cycle or within one year, whichever is longer, are called current liablities. Owners Equity: a.)Considering the owners equity section of the balance sheet of Aban Offshre Ltd it is found that total share capital in the year ended March 31st 2012 is Rs. 2,897.04 million which is 13.5% less as compared to previous year of Rs.3347.04 million. This implies that the company has reduced the number of shares available in the market. b.)In the Reserve & Surplus section of the balance sheet it is seen that reserve & surplus in the year ended March 31st 2012 is Rs. 17,849.59 million which is a 11.78% decrease over its previous value of Rs. 20,223.59 million. Decrease in reserve & surplus is one of the sign of bad financial condition of the company. c.) The Total owners equity amount to Rs. 20,746.63 million (Share Capital + Reserve & surplus). Total owners equity has gone down by 11.98% compared to previous year of Rs. 23,570.63 million. Decrease in owners equity signifies that company has made loss in the current financial year. Current Liablities: a.) In the Current Liablities section of the balance sheet of Aban Offshre Ltd it is found that the short-term borrowing liablities amount to Rs. 5570.69 million up by 47.65% from the previous years value of Rs. 3772.83 million b.) Trade payables have increased by 22.83% to Rs. 3,308.25 million from Rs. 2,693.18 million Puneet Bhardwaj MBA 1st Year 3

Analysis of Account Statements of Aban Offshore c.) Other current liablities amount to Rs. 2,438.25 million, a fall of 54.77% from its previous years value of Rs. 5,391.94 million d.) Short term provision amounts to Rs. 480.72 million, a fall of 52.75% from its previous years value of Rs. 1,016.43 million. e.) Total Current liabilities amount to Rs. 11,797.91 million, down by 8.36% from its previous years value of Rs. 12,874.38 million. Non-Current Liablities: a.) Long-term borrowings stood at Rs. 19,086.27 million, an increase of 4.43% from the previous year value of Rs. 19,973.40 million. This implies that long term debt of company has increase in the current financial year. b.) Deffered tax liablities amount to Rs. 268.56 million, down by 8.22% from the previous year value of Rs. 291.93 million. c.) Long-term provisions stood at Rs. 18.18 million, an increase of 44.76% from the previous year value of Rs. 12.70 million. d.) Total Non-current liabilities amount to Rs. 19,373.06 million, up by 14.66% from the previous year value of Rs. 20,278.08 million.

Total Liablities & Owners equity for Aban Offshore Ltd for the financial year ending March 31st 2012 amount to Rs. 51,917.60 million 2.) Assets: Assets are economic resources that are controlled by an entity & whose cost at the time of acquisition can be objectively measured. Assests can broadly be current or non-current assets. Current assets are those which can be realized in cash or sold or consumed during the normal operating cycle or within one year, whichever is longer. Current Assets: a.) Total value of inventories available as on March 31st 2012 is worth Rs. 814.92 million. Inventory are the aggregate of those items that are either held for sale in the ordinary course of business or soon to be consumed in the production of goods or services that will be available for sale. b.) Trade receivables amount to Rs. 2,209.62 million.

Puneet Bhardwaj MBA 1st Year

Analysis of Account Statements of Aban Offshore c.) Total cash & bank balance amounts to Rs. 279.28, down by 65.55% from the previous year value of Rs. 810.04 million. Reduction of Cash & Bank balance signifies that the company either has occoured losses or has made asset purchase. d.) Total value of Short - term loans and advances stood at Rs. 3,116.24 million, down by 60.5% from the previous year value of Rs. 7,890.22 million. e.) Other current assests amounts to Rs. 10.22 million. f.) Total Current Assets stood at Rs. 6,430.28 million, down by 46.96% from the previous year value of Rs.12123.14 million Non-current asset: a.) Tangible assets stood at Rs. 5,738.65 million, up by 19.51% from their previous value of Rs. 4,798.83 million. Tangible assets are those who have a physical form. Tangible assets include assets such as machinery, buildings, land etc. An increase in vale of tangible assets implies that the company has purchased assets in the financial year. b.) Capital work-in-progress increased from Rs. 175.09 million by 40% to Rs. 245.11 million. Capital work-in progress for Aban Offshore can be drilling activites, oil extraction, pipline commisioning etc. c.) Non - current investments amount to Rs. 39,471.29 million, down marginally by 0.3% from their previous value of Rs. 39590.69 million d.) Long - term loans and advances stood at Rs. 32.27 million. e.) Total Non-Current Assets amount to Rs. 45,487.32million. Total Assets(Current + Non-Current) for Aban Offshore Ltd for the financial year ending March 31st 2012 amount to Rs. 51,917.60 million

Puneet Bhardwaj MBA 1st Year

Analysis of Account Statements of Aban Offshore

Analysis of P&L(Profit & Loss) Statement For the year ended 31st March 2012
1.) Revenue/Income: The inflows of assets cash or account receivable that results from the sale of goods & services to customers; these amounts are called revenues. a.) Revenue from operations stood at Rs. 6,385.28 million, down by 46.37% from their previous value of Rs. 11,907.43. a reduction of revenue from operations directly signifes the reduction in business of Aban offshore in the financial year ending March 31st 2012 b.) Other income stood at Rs. 758.85 million

Total Revenue for Aban Offshore Ltd for the financial year ending March 31st 2012 amount to Rs. 7,144.13 million

2.) Expenses: The consumption of of resources that were required in order to generate the revenues are expenses. Following is the description of expenses of Aban offshore for the financial year ending March 31st 2012. a.) Consumption of stores, spares, power and fuel = Rs. 474.33 million b.) Employee benefits expense = Rs. 739.18 million c.) Finance costs = Rs. 3,662.53 million d.) Depreciation and amortization expense = Rs. 986.10 million e.) Other Expenses = Rs. 2,512.68 million

Total Expenditure for Aban Offshore Ltd for the financial year ending March 31st 2012 is Rs. 8,374.82

3.) Profit/Loss before tax (PBT):

Puneet Bhardwaj MBA 1st Year

Analysis of Account Statements of Aban Offshore Profit / (loss) before tax = Income Expenses = 7,144.13 - 8,374.82 = (1,230.69)

PBT of Aban Offshore = Rs. (1230.69) million 4.) Profit/Loss for the year: Profit/(loss) for the year = PBT Tax expenses In the P&L statement of Aban Offshore Ltd there are no current taxes paid in financial year ending March 31st 2012. Although, there are Deferred taxes amounting Rs. 23.38 million. Therefore, Profit/(loss) for the year = (1230.69) + 23.38 = Rs. (1,207.31) million For the financial year ending March 31st 2012, Aban Offshore Ltd has incurred a loss of Rs. 1,207.31 million

Puneet Bhardwaj MBA 1st Year

Analysis of Account Statements of Aban Offshore

Analysis of Cash Flow Statement For the year ended 31st March 2012
1.) Cash Flow: As per the data available in annual report of Aban Offshore Ltd for the financial year 2011-12 ended March 31st 2012, the componets of Cash flow statement are as follows: a.) Net cash flow from / (used in) operating activities(A) = Rs.2,583.93 million b.) Net cash flow from / (used in) Investing activities(B) = Rs. (1,575.93) million c.) Net cash flow from (used in) financing activities(C) = Rs. (1539.77) million

Net Increase/Decrease in Cash = A + B + C = Rs. (531.77) million

Cash and cash equivalents at the end of the year = Net increase / decrease in cash + Effect of exchange differences on cash and cash equivalents held in foreign currency + Cash and cash equivalents at the beginning of the year

Net increase / decrease in cash = Rs. (531.77) million Effect of exchange differences on cash and cash equivalents held in foreign currency = Rs.1.01 million Cash and cash equivalents at the beginning of the year = Rs. 810.04 million

Cash and cash equivalents of Aban Offshore Ltd at the end of the year = (531.77) + 1.01 + 810.04 = Rs.279.28 million

Puneet Bhardwaj MBA 1st Year

Analysis of Account Statements of Aban Offshore

Inference
Following Infrences can be made about the financial condition of Aban Offshore Ltd from the analysis of the account statements: From the profit & loss statement, it is clear that Aban Offshore has incurred a net loss of Rs. 1207.31 million in the financial year ending March 31 st 2012. Losses incurred this year has negatively impacted the cash and cash equivalents of Aban Offshore Ltd at the end of the year. Total cash & bank balance at the end of year amounts to Rs. 279.28, down by 65.55% from the previous year value of Rs. 810.04 million. Effect of losses can also be observed in Reserve & Surplus section of the balance sheet. It is seen that reserve & surplus in the year ended March 31 st 2012 is Rs. 17,849.59 million which is a 11.78% decrease over its previous value of Rs. 20,223.59 million. Total owners equity has gone down by 11.98% compared to previous year of Rs. 23,570.63 million & it now stands at Rs.20,746.63 million. Decrease in owners equity can be attributed to the financial losses that company incurred in the financial year ending March 31st 2012. Current Ratio for the financial year ending March 31st 2012 = Current assets/Current Liablity = 6,430.28/ 11,797.91 = 0.54 . The current ratio shows poor financial condition of the Aban Offshore Ltd. They must take measure for a prompt recovery from the current finacial status.

Puneet Bhardwaj MBA 1st Year