PROJECT REPORT IN bpcl Bharat Petroleum Corporation Ltd.

ACKNOWLEDGEMENT

Every project requires a great deal of creativity and co-operation on the part of the group members in order to achieve the desired objectives. This Financial Management project gave us an opportunity to work as a team and also helped us to gain insights into various financial tools and techniques that are used by managers which help them to make effective and efficient decisions. It also helped us to put into practice the concept learnt in class and in learning their applicability. We would like to take this opportunity to thank Dr. Ravi Kumar Jain, for providing us with his valuable advice and guidance at every step of this project. We would also like to thank our classmates for their co-operation and support.

Serial no. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Introduction Capital Structure Theory Trend Analysis Fund Flow Analysis Dividend Policy Leverage Du-Pont Analysis External Fund Requirement Comparative Statements Common Size Statements

CONTENTS

Page no. 4 8 14 31 34 37 39 42 46 47 52 57

Working Capital Management Anexures & Bibliography

3

INTRODUCTION
As a part of our curriculum, we are doing a project which is basically an Analysis of Bharat Petroleum Corporation Ltd. (BPCL). The Analysis has been done on the front of financial concepts. We have taken into consideration the data of last 5 years (2006-07 to 2010-11) from the financial statements of the companies. Industry Overview: Oil and gas sector is one of the key catalysts in fuelling the growth of Indian economy. With a 1.2 billion population and an economy that has consistently at approximately 8 per cent annually, India's energy needs are increasing fast, warranting a robust demand for oil and natural gas in the country. India has emerged as the 5th largest refining country in the world, accounting for 4 per cent of the world's refining capacity. India exported 50 million tonnes (MT) of refined petroleum products during 2010-11. With our refining capacity increasing further, this figure is likely to touch about 70 MT by 2014, making India one of the world's major exporters of petroleum products. The share of oil and natural gas in India's total primary energy demand is 40 percent. The planned investments span across the oil and gas. India will account for 12.4 per cent of Asia Pacific regional oil demand by 2015, while satisfying 11.2 per cent of the supply. In addition, India is also the world's fourth largest importer of oil. The petroleum and natural gas industry in India has attracted foreign direct investment (FDI) worth US$ 3.280.72 million from April 2000 to September 2011, according to the data provided by Department of Industrial Policy and Promotion (DIPP). The Department further recorded US$ 144 million during AprilSeptember 2011-12, in the industry.
4

BPCL:
Vision

We are a leading energy company with global presence through sustained aggressive growth and high profitability We are the first choice of customers, always We exploit profitability growth opportunity outside energy We are the most environment friendly company We are a great organisation to work for We are a learning organisation We are a model corporate entity with social responsibility

Early History - Dawn of a New Era Do take some time off for a brief interlude with the past, as we take you back in time to the evolution of Bharat Petroleum Corporation Limited. A new chapter in the history of Indian industry. Petroleum (derived from Latin Petra - rock and oleum - oil) first came up in wells drilled for salt. People found it useful as illuminating oil and the demand for it steadily increased. Samuel Kier, a Pittsburgh druggist, bottled and marketed Petroleum as medicinal cure. To market a deodorised variant, he designed the first primitive refinery in 1852, which was a huge improvised kettle, connected to a metal tank. 'Colonel' Edwin Drake and 'Uncle' Billy Smith drilled a well with the specific objective of finding oil, and on 27th August 1859, they 'struck oil' at Titusvale, in North Western Pennsylvania, USA, at a depth of 69.5 ft.

From Nothing to Gold The 1860s saw vast industrial development. A lot of petroleum refineries also came up.

An important player in the South Asian market then was the Burmah Oil Company. Though incorporated in Scotland in 1886, the company grew out of the enterprises of the Rangoon Oil Company, which had been formed in 1871 to refine crude oil produced from primitive hand dug wells in Upper Burma. The search for oil in India began in 1886, when Mr. Goodenough of McKillop Stewart Company drilled a well near Jaypore in upper Assam and struck oil. In 1889, the Assam Railway and Trading Company (ARTC) struck oil at Digboi marking the beginning of oil production in India. While discoveries were made and industries expanded, John D Rockefeller together with his business associates acquired control over numerous refineries and pipelines to later form the giant Standard Oil Trust. The largest rivals of Standard Oil - Royal Dutch, Shell, Rothschilds - came together to form a single organisation: Asiatic Petroleum to market petroleum products in South Asia. In 1928, Asiatic Petroleum (India) joined hands with Burmah Oil Company - an active producer, refiner and distributor of petroleum products, particularly in Indian and Burmese markets. This alliance led to the formation of Burmah-Shell Oil Storage and Distributing Company of India Limited.

The Pioneering Spirit - Burmah Shell Marketing A pioneer in more ways than one, Burmah Shell began its operations with import and marketing of Kerosene. This was imported in bulk and transported in 4 gallon and 1 gallon tins through rail, road and country craft all over India. The company took up the challenge of reaching out to the people even in the remote villages to ensure every home had its supply of kerosene. The development and promotion of efficient kerosene-burning appliances for lighting and cooking was an important part of kerosene selling activity. With motor cars, came canned Petrol, followed by service stations. In the 1930s, retail sales points were built with driveways set back from the road; service stations began to appear and became accepted as a part of road development. After the war Burmah Shell established efficient and up-to-date service and filling stations to give the customers the highest possible standard of service facilities. On 15th October 1932, when civil aviation arrived in India, the company had the honour of fuelling J.R.D. Tata's historic solo flight in a single engined de Havillian Puss Moth from Karachi to Bombay (Juhu) via Ahmedabad. Thirty years later, i.e. in 1962, Burmah Shell again had the privilege to fuel JRD Tata's re-enactment of the original flight. Burmah Shell also fuelled flying boats, which carried airmail at slightly higher rates than sea transport, at several locations.

As a true pioneer would, the company introduced LPG as a cooking fuel to the Indian home in the mid-1950s. And all along, it went beyond selling petroleum, to educate the customer. Besides selling Bitumen, the company pioneered desert road construction, training road engineers. It provided free technical services to industrial customers - big and small - and it became a part of the company's culture.

On Stream - The Burmah Shell Refinery An agreement to build a modern refinery at Trombay, Bombay was signed between the Burmah Shell group of companies and the Government of India on 15th December 1951. Burmah Shell Refineries Limited was incorporated as a private limited company under the Indian Companies Act on 3rd November 1952, and work began on the marshland of Trombay at Bombay. Man and machine worked relentlessly, and soon the swamps gave way to towers and tanks of steel, and miles of pipeline. The refinery on 454 acres of land at village Mahul went on-stream on 30th January 1955, one year ahead of schedule. Dr. S. Radakrishnan, Vice President of India, declared the 2.2 MMTPA (Million Metric Tonnes Per Annum) Refinery open on 17th March 1955. It was then the largest refinery in India then. With this infrastructure, free India moved one step closer to self-reliance.

From Burmah Shell to Bharat Petroleum On 24th January 1976, the Burmah Shell Group of Companies was taken over by the Government of India to form Bharat Refineries Limited. On 1st August 1977, it was renamed Bharat Petroleum Corporation Limited. It was also the first refinery to process newly found indigenous crude (Bombay High), in the country.
27

Capital Structure Theory

The value of a firm depends upon its expected earnings stream and the rate used to discount the stream. The capital structure of a firm can affect this value by changing either expected earnings or cost of capital or both. But the effect of leverage on the value of the firm is not very clear.

NET INCOME APPROACH: (Kd < Ko < Ke) According to this approach, the cost of equity (Ke) and the cost of Debt (Kd) are assumed to remain unchanged and they are independent of the Capital Structure. But the Average Cost of Capital (Ko) changes with the change in the leverage (Debt-Equity ratio).

Actual (In Crs.) 2011 Net Operating Income Interest on Debt Equity Earnings Cost Of Equity (Ke) Cost Of Debt (Kd) Market Value Of Equity (E) Market Value Of Debt (D) Total Value Of Firm (V) 28516.18 32054.38 12695.69 29035.58 27103.15 18971.87 22195.2 21171.41 15022.38 10829.24 9544.31 9859.18 -8475.72 14013.20 16273.91 2411.15 1,100.78 1310.37 13.73% 6% 2010 2364.55 1,010.95 1353.60 13.73% 5% 2009 1002.71 2,166.37 -1163.66 13.73% 10% 2008 2596.39 672.47 1923.92 13.73% 4% 2007 2766.99 532.69 2234.30 13.73% 5%

Cost Of Capital (Ko)

8.46%

7.38%

7.90%

8.94%

10.21%

Total Debt

18971.87

22195.20

21171.41

15022.38

10829.24

If no Debt had been used 2011 Net Operating Income Interest on Debt Equity Earnings Cost Of Equity (Ke) Cost Of Debt (Kd) Market Value Of Equity (E) Market Value Of Debt (D) Total Value Of Firm (V) 17562.03 17222.61 7303.41 18911.25 20153.85 0 0 0 0 0 17562.03 17222.61 7303.41 18911.25 20153.85 2,411.15 0.00 2411.15 13.73% 6% 2010 2,364.55 0.00 2364.55 13.73% 5% 2009 1,002.71 0.00 1002.71 13.73% 10% 2008 2,596.39 0.00 2596.39 13.73% 4% 2007 2,766.99 0.00 2766.99 13.73% 5%

10

Cost Of Capital (Ko)

13.73%

13.73%

13.73%

13.73%

13.73%

Total Debt

0.00

0.00

0.00

0.00

0.00

Analysis: BPCL have Debt in their Capital structure. So, keeping other things constant, we will now consider a hypothetical situation in which the company has all equity financed. This is done to show that the company having no debt in their capital structure will have a higher average cost of capital in contrast to the firm having some amount of debt. Now, from our calculations, we can analyze that if BPCL does not use debt then its Ko (for 2011) is 13.73% , whereas if it had used debt (like the actual scenario) then its Ko is 8.46%,. So, it had used a very small portion of debt but the effect was that the companys Ko was reduced, which is the ultimate objective of any company. Same thing is seen for the earlier years also. Conclusion: So, we can conclude that NI approach holds true for all three our companies and given the companys policies, they should try to minimize their cost of capital.

NET OPERATING INCOME APPROACH: According to this approach, the overall capitalization rate (Ko) and the cost of debt (Kd) remain constant for all degree of leverage. The rationale behind this theory is that if the companies increase the debt proportion in their capital structure, then this risk will be compensated by the increase in the required rate of return of the equity shareholders (Ke).

11

Actual (In Crs.) 2011 Net Operating Income Overall Capitalization Rate (Ko) Total Value Of Firm (V) Interest on Debt Cost Of Debt (Kd) Market Value Of Debt (D) Market Value Of Equity (E) Equity Earnings 9544.31 1310.37 9859.18 1353.60 -8475.72 -1163.66
12

2010 2364.55

2009 1002.71

2008 2596.39

2007 2766.99

2411.15

8.46% 28516.18 1,100.78 6% 18971.87

7.38% 32054.38 1,010.95 5% 22195.20

7.90% 12695.69 2,166.37 10% 21171.41

8.94% 29035.58 672.47 4% 15022.38

10.21% 27103.15 532.69 5% 10829.24

14013.20 1923.92

16273.91 2234.30

Cost Of Equity (Ke)

13.73%

13.73%

13.73%

13.73%

13.73%

Total Debt

18971.87

22195.20

21171.41

15022.38

10829.24

Suppose debt interest increase 2011 Net Operating Income Overall Capitalization Rate (Ko) Total Value Of Firm (V) Interest on Debt Cost Of Debt (Kd) Market Value Of Debt (D) Market Value Of Equity 8.46% 28516.18 1200.00 6% 20681.92 7834.26 7.38% 32054.38 1100.00 5% 24150.27 7904.10 7.90% 12695.69 2100 10.23% 20522.79 -7827.10
13

2010 2364.55

2009 1002.71

2008 2596.39

2007 2766.99

2411.15

8.94% 29035.58 700 4.48% 15637.38 13398.21

10.21% 27103.15 600 4.92% 12197.61 14905.54

(E) Equity Earnings 1211.15 1264.55 -1097.29 1896.39 2166.99

Cost Of Equity (Ke)

15.46%

16.00%

14.02%

14.15%

14.54%

Analysis: Keeping other things constant, we have our actual company data and we have taken a hypothetical situation wherein the amount of debt used by the company has increased. This will show us how the Ke increases, if we go on increasing the debt portion. Now, from our calculations, we can interest amount increase from 110.76 remaining constant, the Ke of the (for 2011). Mar '11 Current Ratio Mar '10 Mar '09 Mar '08 Mar '07 analyze that if BPCL uses more debt i.e., the crores to 1200.00 crores, then Ko, Kd

1.257192 1.376669 1.191493 1.351636 1.209076

company increases from 13.73% to 15.46%

Conclusion: So we can conclude that NOI approach holds true for our companies and the risk will be adjusted by increase in Ke.

TREND ANALYSIS

1. Current Ratio: - A current ratio greater than 1 indicates company is in a good position to get rid of its short-term liabilities immediately. BPCL- Here over the last 5 years we see that current ratio is more than 1, which is considered as healthy for business. However the highest ratio was obtained in the year 2010 (1.37) and in 2011 it declined to 1.25.

14

1.4 1.35 1.3 1.25 1.2 1.15 1.1 1.05 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 BPCL

2. Quick Ratio: - Quick ratio does not involve available inventories and hence a more appropriate measure of companys ability to meet its curr ent liability. It uses the immediate liquid assets available to the company. A ratio greater than 1 shows the ability of the company to immediately meet the current liabilities when required. BPCL- Clearly for all the 5 years the quick ratio is less than 1. There has been a decline in ratio from 0.67 in 2010 to 0.55 in 2011.

Quick Ratio 2011 2010 2009 2008 2007

0.556998 0.674506 0.659675 0.624368 0.44081

15

0.8 0.7 0.6 0.5 0.4 0.3

BPCL

0.2
0.1 0 2011 2010 2009 2008 2007

3. Absolute Quick Ratio: - An absolute quick ratio greater than 0.5(50%) is considered good enough because it even eliminates accounts receivables. BPCL- Here for all the 5 years we see that the ratio is less than 0.5 thus it shows that less availability of cash, bank and marketable securities.

16

Absolute Ratio 2011 2010 2009 2008 2007

0.017304 0.019985 0.034412 0.065951 0.076635

0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0 2011 2010 2009 2008 2007 BPCL

4. Debt-equity ratio: - It shows what proportion of debt and equity the company is using to finance its assets. BPCL- It clearly shows that ratio is greater in 2009(1.74) than 2010(1.69) and 2011(1.34). It shows the company relied heavily in financing its fund through debt in 2009 compared to that in 2010 and 2011.

17

Debt-Equity Ratio 2011 1.349579 2010 1.696011 2009 1.745648 2008 1.286512 2007 1.05409

2 1.8 1.6 1.4 1.2 1 0.8 0.6 BPCL

0.4
0.2 0 2011 2010 2009 2008 2007

18

5. Proprietary Ratio: - Proprietary ratio highlights the financial position of the company and therefore Proprietary ratio can be interpreted as good if it is high because a higher proprietary ratio would imply that company has enough capital to repay its creditors whenever the creditors make any such demand. BPCL- Highest ratio was obtained in the year 2007(0.30). . 2011 Proprietory Ratio 2010 2009 2008 2007

0.25105 0.245657 0.256029 0.273072 0.304319

0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2011 2010 2009 2008 2007 BPCL

19

6. Interest Coverage Ratio: - it shows how easily a company can pay interest on outstanding debt. When a company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses. BPCl- Here except for 2009(1.46) in all other years the ratio is more than 3. Interest Coverage Ratio 2011 2010 2009 2008 2007

3.190401 3.338939 1.462853 4.860975 6.194372

7 6 5 4 3 2 1 0 2011 2010 2009 2008 2007 BPCL

20

7. Inventory Ratio: - A ratio showing how many times a company's inventory is sold and replaced over a period. BPCL- Here we see a high ratio in the year 2007(21.03) compared to other years.

Inventory Ratio 2011 2010 2009 2008 2007

10.67464 12.74447 14.57726 10.85444 21.0349

25

20

15 BPCL 10

0 2011 2010 2009 2008 2007

21

8. Debtor Turnover Ratio: - Debtors turnover ratio indicates the number of times the debtors are turned over a year. The higher the value of debtors turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turn over ratio implies inefficient management of debtors or less liquid debtors. BPCL- Here in the year 2007(127.15) the highest ratio has been obtained as compared to other years. Debtor Turnover Ratio 2011 2010 2009 2008 2007

56.65403 59.56668 88.36557 70.48043 127.1547

140 120 100 80 60 40 20 0 2011 2010 2009 2008 2007 BPCL

9. Creditor Turnover Ratio: - It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include both sundry creditors and bills payable. A high creditors turnover ratio or a lower credit period ratio signifies that the creditors are being paid promptly. This situation
22

enhances the credit worthiness of the company. BPCL- Here in 2007(15.71) we observe a high ratio than other years.

Creditor Turnover Ratio 2011 2010 2009 2008 2007

7.205802 7.676383 8.887069 7.858434 15.71678

18 16 14 12 10 8 6 4 2 0 2011 2010 2009 2008 2007 BPCL

10. Fixed Asset Turnover Ratio: - Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit
23

earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets. BPCL- Comparatively to the other years 2009() has a high ratio thus denoting intensive utilization than other years.

Fixed Assets Turnover Ratio 2011 2010 2009 2008 2007

8.870489 7.52233 9.573688 8.653698 8.159695

12
10 8 6 4 2

BPCL

0
2011 2010 2009 2008 2007

11. Gross Profit Ratio: - A higher gross profit ratio represents higher gross profit to net sales.
24

BPCL- Clearly it states that in 2007(0.038) the ratio is highest and then it gradually declines over the next 4 years. As compared to 2010(0.029) there is a decline in ratio in 2011(0.026).

Gross Profit Ratio 2011 2010 2009 2008 2007

0.026948 0.029622 0.015502 0.033524 0.03802

0.04 0.035 0.03 0.025 0.02 BPCl

0.015 0.01
0.005 0 2011 2010 2009 2008 2007

12. Net Profit Ratio: - If the net profit is high, the firm will be able to achieve a satisfactory return on its investment. BPCL- Higher the ratio higher is the profitability. Clearly it states that in 2007(0.018) is the highest and the lowest in 5 years has been observed in the year 2009(0.005).
25

Net Profit Ratio 2011 2010 2009 2008 2007

0.01025 0.012628 0.005489 0.014342 0.018699

0.02 0.018 0.016 0.014 0.012 0.01 0.008 0.006 0.004 0.002 0 2011 2010 2009 2008 2007 BPCl

26

13. Operating Profit Ratio: - Operating ratio shows the operational efficiency of the business. Lower operating ratio shows higher operating profit and vice versa. An operating ratio ranging between 75% and 80% is generally considered as standard for manufacturing concerns.

Operating Profit Ratio 2011 2010 2009 2008 2007

0.034243 0.037924 0.031661 0.039626 0.043537

0.05 0.045 0.04 0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 2011 2010 2009 2008 2007 BPCL

27

14. Return on Capital Employed: - OCE should always be higher than the rate at which the company borrows; otherwise any increase in borrowing will reduce shareholders' earnings. BPCL- Here highest ROCE has been observed in the year 2007(0.155) amongst all the years.

Return on Capital Employed 2011 2010 2009 2008 2007

0.106327 0.095672 0.095169 0.122433 0.156362

0.18 0.16

0.14 0.12
0.1 0.08 0.06 0.04 0.02 0 2011 2010 2009 2008 2007 BPCL

28

15. Return on Net worth Capital: - A measure of how effectively a company uses the money (borrowed or owned) invested in its operations. BPCL- Here we see that almost a steady return with less fluctuation has been observed except the year 2009(2.03)

Return on Net Worth Capital 2011 2010 2009 2008 2007

4.278033 4.252973 2.035459 4.371743 4.993832

6 5 4 3 2

BPCL

1
0 2011 2010 2009 2008 2007

29

16. Return On Equity: - Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Returns between 15-20 % are considered satisfactory. BPCL- It is obtained in the year 2007(17%) where as a dissatisfactory result has been viewed in the year 2009(6%)

Return on Equity 2011 2010 2009 2008 2007

0.110024 0.117495 0.060677 0.135359 0.17574

P/E Ratio 2011 2010 2009 2008 2007

14.28936 12.14922 18.50453 9.407058 6.052502

30

0.2 0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2011 2010 2009 2008 2007 BPCl

17. P/E Ratio: - A valuation ratio of a company's current share price compared to its per-share earnings. In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E ratio. BPCL- Here we see highest ratio has been obtained in the year 2009(18.504) which means people were expecting a greater return in the future.

31

20 18 16 14 12 10 8 6 4 2 0 2011 2010 2009 2008 2007

BPCL

ANALYSIS OF FUNDS FLOW STATEMENT

Funds flow statement is useful for long term analysis. Such an analysis is of great help to management, shareholders, creditors, brokers etc. 1. The fund flow statement helps in answering the following question: a. Where have the profit gone? b. Why there is an imbalance existing between liquidity position and profitability position of the company? c. Why is the concern financially solid in spite of losses?

32

2. A projected funds flow statement can be prepared and resources can be properly allocated after an analysis of the present state of affairs. The optimal utilization of available funds is necessary for the overall growth of the company. The funds flow statement prepared in advance gives a clear cut direction to the management in this regard.

3. The funds flow statement analysis helps the management to test whether the working capital has been effectively used or not and whether the working capital has been effectively used or not and whether the working capital level is adequate or inadequate for the requirement of business. In case of BPCL we can observe that there is an increase in the current assets from 2010 to 2011 and this led to an increase in the working capital. But, there has been a greater proportion of increase in the current liabilities .Therefore, there is a net decrease in the working capital from 2010 to 2011. The net decrease in the working capital means i.e. when changes in working capital is negative, the company is investing heavily in its current assets, or else drastically reducing its current liabilities. 4. The funds flow statement analysis helps the investors to decide whether the company has managed funds properly. It also indicates the credit worthiness of a company which helps the lenders to decide whether to lend money to the company or not. It helps management to take policy decisions and to decide about the financing policies and capital expenditure programmed for future.

33

Statement of change in working Capital Particulars Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Current Liabilities 15,375.08 12,028.86 2,664.42 379.97 9,186.36 27,605.83 2,662.68 342.36 8,550.03 23583.93 3346.22 1.74 37.61 636.33 4021.9 2011 2010 change

Current Liabilities Provisions Total Current Liabilities

18,788.29 14,550.56 3,170.03 21958.32 2,580.59 17131.15

-4237.73 -589.44 -4827.17 0

Increase/Decrease in working capital -805.27

34

Funds from Operations Particulars Amount

Reserves total add:depreciation div paid deferred tax Extraordinary item TOTAL

970.91 1591.73 506.16 148.24 131.8 3348.84

Fund flows Application of Sources of funds Amount funds secured loans Investments Funds from operations Unsecued loans Capital WIP change in working cap 2123.37 3348.84 Dividend paid 3187.44 1505.52 gross block 805.27 Extraordinary item 3921.71 131.8 Amount 6410.77 Column1 506.16

TOTAL

10970.44 TOTAL

10970.44 35

DIVIDEND POLICY
Essence of Dividend Policy:

If the company is confident of generating more than market returns then only it should retain higher profits and pay less as dividends (or pay no dividends at all), as the shareholders can expect higher share prices based on higher RoI of the company. However, if the company is not confident of generating more than market returns, it should pay out more dividends (or 100% dividends). This is done for two reasons. One, the shareholders prefer early receipt of cash (liquidity preference theory) and second, the shareholders can invest this cash to generate more returns (since market returns are expected to be higher than returns generated by the company). Over the years, various models have been developed that establish the relationship between dividends and stock prices.

ANALYSIS OF THE WALTER MODEL Every firm faces a situation where it has to decide whether to plough back profits and re-invest or distribute them to shareholders in the form of dividends. The optimal payout ratio of BPCL is increasing because as the rate of return is lesser than the cost of capital, it implies that the company does not have good investments and opportunities are not there to earn higher returns than available in the market. It is not beneficial for the company as well as its shareholders to invest in new projects. The shareholders, instead, can invest their money somewhere else. Same thing is seen for previous years also.

36

ANALYSIS OF THE GORDON MODEL

This model supports the view that the dividend policy of a company has a bearing on its share valuation. It assumes that the investors are rational and risk-averse. Based on the models assumptions, we can see that ,BPCL(r<k i.e., 8.19% < 13.73%) is a Declining Firm. The optimal payout ratio of BPCL is increasing. The reason being that the price of the share is arrived at by discounting the dividend income and if the future dividends are at stake for the investors as r<k, then it makes sense to have a low retention ratio. Thus the investors will discount the income with a large factor and they will opt for the time value of money. So, the share price will be low but the investors are getting compensated through current income.

Conclusion: From our calculations and analysis, it can be observed that when the return on investment is greater than the cost of capital, then there is an inverse relation between the value of a share and the pay-out ratio.

37

Walter Model Year 2011 Dividend Per Share 140.00 2010 140.00 2009 70.00 2008 40.00 2007 160.00

EPS Internal rate of return (r ) Cost Of equity(Ke)

42.78008 42.52948 20.35447 43.71717 49.93803

8.19% 13.73%

6.55% 13.73%

8.91% 13.73%

9.95% 13.73%

11.26% 13.73%

Market Price of share

597.55

681.12

275.15

310.98

507.79

38

GORDAN MODEL Year 2011 Dividend Per Share dividend pay out ratio Retention Ratio 33% 67% 33% 67% 34% 66% 9.15% 91% 32.04% 68% 140.00 140.00 70.00 40.00 160.00 2010 2009 2008 2007

EPS Internal rate of return (r ) Cost Of equity(Ke)

42.7800773 42.52948 20.35447 43.71717 49.93803

8.19%

6.55%

8.91%

9.95%

11.26%

13.73%

13.73%

13.73%

13.73%

13.73%

Market Price of share 126.69 120.96 65.64 31.21 158.09

39

Year

11-Mar

10-Mar

09-Mar

08-Mar

07-Mar

Sales Turnover Excise Duty

163218.21 12317.36

131499.72 9735.01

145392.07 11329.13

121684.07 11475.94

107452.27 10895.42

Profit Before Tax Tax Interest Internal rate of return ( r

2,411.15 716.23 1,100.78

2,364.55 1,130.18 1,010.95

1,002.71 495.69 2,166.37

2,596.39 889.73 672.47

2,766.99 923.04 532.69

0.081852 0.065479 0.089115 0.099541 0.112622

Leverages

40

Net Sales

150900.85

121764.71

134062.94

110208.13

96556.85

Net Profit Interest Tax Fringe Benefit tax Deferred Tax

1546.68 1100.78 716.23 0.00 148.24

1537.62 1010.95 1130.18 0.00 -303.25

735.90 2166.37 495.69 13.25 -242.13

1580.56 672.47 889.73 15.30 110.80

1805.47 532.69 923.04 11.73 26.75

EBIT EPS

3511.93 42.78

3375.50 42.53

3169.08 20.35

3268.86 43.72

3299.68 49.94

% change in EBIT % change in sales % change in EPS

4% 24% 1%

7% -9% 109%

-3% 22% -53%

-1% 14% -12%

N.A. N.A. N.A.

Degree of Operating Leverage Degree of Financial Leverage Degree of Total Leverage 0.17 0.15 0.02 -0.71 16.73 -11.88 -0.14 17.51 -2.47 -0.07 13.34 -0.88 N.A. N.A. N.A.

41

DOL A type of leverage ratio summarizing the effect a particular amount of operating leverage has on a company's earnings before interest and taxes (EBIT). Operating leverage involves using a large proportion of fixed costs to variable costs in the operations of the firm. The higher the degree of operating leverage, the more volatile the EBIT figure will be relative to a given change in sales, all other things remaining the same. For BPCL, after measuring DOL at various levels of output, where theoretically DOL is undefined at operating breakeven point. DOL is negative from 2008 to 2010; this means that it is less than its operating breakeven point.. (This does not imply that an increase in Q (sales) will lead to a decrease in EBIT). However, DOL is positive in rest of the years i.e. is greater than operating breakeven point. A large or positive DOL means increase in level of output will increase the level of operating income; means small fluctuations in output will produce large fluctuations in operating income. DFL A leverage ratio summarizing the affect a particular amount of financial leverage has on a company's earnings per share (EPS). Financial leverage involves using fixed costs to finance the firm, and will include higher expenses before interest and taxes (EBIT). The higher the degree of financial leverage, the more volatile EPS will be, all other things remaining the same. Each level of EBIT has a different DFL. DFL is undefined at financial breakeven point. BPCL is in good position. DTL By combining the degree of operating leverage with the degree of financial leverage we obtain the degree of total leverage (DTL). If a firm has a high amount of operating leverage and financial leverage, a small change in sales will lead to a large variability in EPS or we can say that it is the percentage change in net income that is associated with a given percentage change in sales.

Investing in BPCL is a good option

42

Du Pont Analysis
The system identifies profitability as being impacted by three different levels:

1. Earnings & efficiency in earnings- EARNINGS 2. Ability of your assets to be turned into profits- TURNINGS 3. Financial leverage- LEVERAGE

This analysis technique is called the "DuPont Formula". The DuPont Formula shows the interrelationship between key financial ratios.

Profit After Tax / Profit Before Tax (tax burden) Profit Before Tax / Profit Before Interest Tax (interest burden) Profit Before Interest Tax / Sales (operating efficiency) Sales Assets / Assets (Asset t/o) / Equity (leverage)

By using the DuPont equation, an analyst can easily determine what processes the company does well and what processes can be improved. Interest burden is high than we have to check the Debt is proper utilized in a company. Operating efficiency says that efficiency of the company controlling the cost and expenses associated with the business. Asset turnover ratio measures the efficiency with which a company deploys its assets to generate the sales. Furthermore, ROE represents the profitability of funds invested by the owners of the firm.

43

Particulars \ Year

2011

2010

2009

2008

2007

Net Sales PBDIT Other Written Off Depreciation PBIT Interest PBT Reported Net Profit Average Assets Equity

150900.85 5,167.33 0 1,655.40 3,511.93 1100.78 2411.15 1,546.68 17011.56 14057.62

121764.71 4,617.82 0 1,242.32 3,375.50 1010.95 2364.55 1,537.62 16187.1 13086.71

134062.94 4,244.61 0 1,075.53 3,169.08 2166.37 1002.71 735.90 14003.27 12128.11

110208.13 96556.85 4,367.07 0 1,098.21 3,268.86 672.47 2596.39 1,580.56 4,203.79 0 904.11 3,299.68 532.69 2766.99 1,805.47

12735.38 11833.39 11676.83 10273.54

PAT/PBT(taxburden) PBT/PBIT(int burden) PBIT/Sales(ope eff) Sales/Assets(aseet t/o) Assets/Equity(leverage) Return On Equity (ROE)

0.641469838

0.65028018

0.733911101 0.31640413 0.023638748 9.573688146 1.154612714

0.608752922 0.652503 0.794279963 0.838563 0.029660788 0.034173 8.653697809 8.159695 1.090653885 1.151832

0.686559812 0.700503629 0.023273096 0.027721497 8.870488656 7.522330127 1.210130876 1.23691134

0.110024314 0.117494771

0.06067722

0.135358655

0.17574

44

PAT/PBT 2011 0.64146984 2010 0.65028018 2009 2008 2007 0.652503262

0.733911101 0.608752922

PBT/PBIT 2011 0.68655981 2010 0.70050363 2009 0.31640413 2008 0.794279963 2007 0.838563133

45

External Fund Requirement

Balance Sheet (Rs in Crs)

Year SOURCES OF FUNDS : Share Capital Reserves Total Equity Share Warrants Equity Application Money Total Shareholders Funds Minority Interest Secured Loans Unsecured Loans Total Debt

Mar 07

Mar 08

Mar 09

Mar 10

Mar 11

Mar 12

361.54

361.54

361.54

361.54

361.54 13,696.08 0 0

361.54 15339.61

9,912.00 11,315.30 11,766.57 12,725.17 0 0 0 0 0 0 0 0

10,273.54 11,676.84 12,128.11 13,086.71 14,057.62 0 0 0 0 0 4,033.10 14,938.77

15701.15

2,593.96 2,730.21 3,661.60 10,443.87 8,235.28 12,292.17 17,509.81 11,751.33

10,829.24 15,022.38 21,171.41 22,195.20 18,971.87

21248.49

46

Total Liabilities APPLICATION OF FUNDS : Gross Block Less : Accumulated Depreciation Less:Impairment of Assets Net Block Lease Adjustment Capital Work in Progress Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances

21,102.78 26,699.22 33,299.52 35,281.91

33,029.49

36949.64

19,457.58 21,500.93 22,522.33 25,412.52 8,476.53 9,532.26 10,556.54 11,743.17 0 371.82 0 852.34 0 420.91 0 0 499.83 0 0 646.64 0

29,334.23 13,334.90 0 1,498.70 0 1,012.23 11,377.96 0.4546

32854.34 14935.09

17919.25

766.71 2,037.48 2,517.75

2024.58 12743.32

8,294.90 10,318.21 18,078.38 13,501.33

8,661.26 10,603.84 6,823.92 12,028.86 15,375.08 1,518.73 1,608.61 1,425.67 2,662.68 863.97 961.59 441.55 342.36 2,664.42 379.97 9,186.36

17220.09 2984.15 425.57 10288.72

2,586.90 6,533.32 6,597.28 8,550.03

47

Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Total Assets Contingent Liabilities ToatlAssets Total Liabilities EFR

13,630.86 19,707.36 15,288.42 23,583.93 27,605.83

30918.53

11,273.78 14,580.37 12,831.31 17,131.15 1,073.16 986.26 1,712.44 2,580.59

21,958.32 3,170.03

24593.32 3550.43 28143.75 2774.78

12,346.94 15,566.63 14,543.75 19,711.74 25,128.35 5,647.51 6,452.78 2,457.11 6,452.78 5,647.51

298.16

303.87

623.57 1,044.18

1,052.66 2,060.20 -1,007.54 33,029.49 9,138.96 -1128.44

1,680.75 1,785.24 1,862.81 1,903.48 -1,382.59 -1,481.37 -1,239.24 -859.3

21,102.78 26,699.21 33,299.52 35,281.91 2,810.81 3,075.10 3,775.80 8,082.44 63605.67 63964.95 -359.28
48

Total EFR for BPCL is approx. Rs -359.28cr. In forecasting the next year sales, the share capital is kept constant. As the total sales expectation for the year 2012 is resulting it to be negative, therefore, a growth of 12% is considered here. The company should go for the equity route as further debt would increase the companys liability and would need more cash in order to serve that debts interest. JSW Steel reputation is high in the market and can draw cash at low cost (ke). One of the reason that company should go for the equity route because the company have 16474.64cr of debt and further debt would increase the cost of raising it. If the company continues with its present debt with interest rate of 14.30%. As the company is already having high debt and raising the further debt would cost more i.e. kd would be high because investor loses confidence in the company.

49

COMPARATIVE STATEMENTS
Comparative Balance Sheet

2011 Liabilities and Capital Current Liabilities Long-term liabilities Share Capital Reserves Total 18788.29 18971.87 361.54 13696.08 51817.78

2010 Change

Per Cent Change

2010

2009 Change

PerCent Change

14550.56 22195.2 361.54 12725.17 49832.47

4237.73 -3223.33 0 970.91 1985.31

29.12417117 -14.52264454 0 7.62983913 3.983968685

14550.56 22195.2 361.54 12725.17 49832.47

11118.87 21171.41 361.54 11766.57 44418.39

3431.69 1023.79 0 958.6 5414.08

30.86365791 4.835719492 0 8.146809138 12.18882539

Assets Current Assets Net Fixed Assets Other Assets Total 27605.83 15999.33 0 43605.16 23583.93 13669.35 0 37253.28 4021.9 2329.98 0 6351.88 17.05356147 17.04528745 0 17.05052548 23583.93 13669.35 0 37253.28 15288.42 11965.79 0 27254.21 8295.51 1703.56 0 9999.07 54.26008705 14.23692042 0 36.68816671

Comparative Financial Statement analysis provides information to assess the direction of change in the business. Financial statements are presented as on a particular date for a particular period. The financial statement Balance Sheet indicates the financial position as at the end of an accounting period . But financial managers and top management are also interested in knowing whether the business is moving in a favourable or an unfavourable direction. For this purpose, figures of current year have to be compared with those of the previous years. In analyzing this way, comparative financial statements are prepared.

50

Comparative Financial Statement Analysis is also called as Horizontal analysis. The Comparative Financial Statement provides information about two or more years' figures as well as any increase or decrease from the previous year's figure and it's percentage of increase or decrease. This kind of analysis helps in identifying the major improvements and weaknesses. In this we can see that there has been a negative change in long term liabilities in year 2010-11 whereas, it was positive in year 2009-10, which implies that company has taken less debt and hence is less leveraged. Also reserves are less in current year which shows that the reserves have been used either in paying off more dividend or other financing options available for the company. Also current assets are reduced drastically from 54% to 17%, which means that accounts receivables are collected more and the company is more liquid in the current situation.

COMMON-SIZE STATEMENT
Profit & Loss Account

Mar '11 12 mths

% as sales turnover

Mar '10 12 mths

% as sales turnover

(in crores)
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost 163218.21 12317 150900.85 1754.97 1993.38 154649.2 140835.5 475.89 2800.49 100% 7.55% 92.45% 1.08% 1.22% 94.75% 0.00% 86.29% 0.29% 1.72%

(in crores)
131499.72 9735.01 121764.71 2240.24 3772.45 127777.4 115001.66 237.12 2139.63 100% 7.40% 92.60% 1.70% 2.87% 97.17% 0.00% 87.45% 0.18% 1.63%

51

Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Mar '11 12 mths Operating Profit Interest PBDT Depreciation Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Dividend Preference Dividend Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

870.31 3218.33 1281.35 0 149481.87

0.53% 1.97% 0.79% 0.00% 91.58% Mar '10 12 mths

838.11 3025.23 1917.83 0 123159.58

0.64% 2.30% 1.46% 0.00% 93.66%

5167.33 1100.78 4066.55 1655.4 2411.15 -131.8 2542.95 716.23 1546.68 506.16 0 40.81 140 388.83

0.00% 3.17% 0.67% 2.49% 1.01% 1.48% -0.08% 1.56% 0.44% 0.95% 0.31% 0.00% 0.03% 0.09% 0.24%

4617.82 1010.95 3606.87 1242.32 2364.55 -113.71 2478.26 1130.18 1537.62 506.16 0 40.52 140 361.97

0.00% 3.51% 0.77% 2.74% 0.94% 1.80% -0.09% 1.88% 0.86% 1.17% 0.38% 0.00% 0.03% 0.11% 0.28%

52

Balance Sheet Mar '11 12 mths

as % of total liabilities

Mar '10 12 mths

as % of total liabilities

(in crores)
Sources Of Funds Equity Share Capital Share Application Money Preference Share Capital Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Mar '11 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets 361.54 0 0 13696.08 14057.62 4033.1 14938.77 18971.87 33029.49 1.09% 0.00% 0.00% 41.47% 42.56% 12.21% 45.23% 57.44% 100%

(in crores)
361.54 0 0 12725.17 13086.71 10443.87 11751.33 22195.2 35281.91 Mar '10 12 mths 1.02% 0.00% 0.00% 36.07% 37.09% 29.60% 33.31% 62.91% 100%

29334.23 13334.9 15999.33 1012.23 11377.96 15375.08 2664.42 379.97 27605.83

88.81% 40.37% 48.44% 3.06% 34.45% 46.55% 8.07% 1.15% 83.58%

25412.52 11743.17 13669.35 2517.75 13501.33 12028.86 2662.68 242.36 23583.93

72.03% 33.28% 38.74% 7.14% 38.27% 34.09% 7.55% 0.69% 66.84%

53

Loans and Advances Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets

9186.36 36792.19 2060.2 18788.29 3170.03 21958.32 5647.51 0 33029.49

27.81% 111.39% 6.24% 56.88% 9.60% 66.48% 17.10% 0.00% 100.00% 0.00% 27.67%

8550.03 32133.96 1903.48 14550.56 2580.59 17131.15 6452.78 0 35281.91

24.23% 91.08% 5.40% 41.24% 7.31% 48.56% 18.29% 0.00% 100.00% 0.00% 22.91%

Contingent Liabilities

9138.96

8082.44

Common Size Income Statement: In common size statements the sales figure is taken as 100 and all other figures of cost & expenses are expressed as percentage to sales. when other costs & expenses are reduced from sales figure of 100, the balance in figure is taken as net profit. This reveals the efficiency of the firm in generating revenue which leads to profitability. Thus from our common size income statement we can interpret that although our operating profit has been increased from 4617.82 to 5167.33 but the profit profit margin has decreased from 3.51% to 3.17%. This reveals that the firm is not efficient in generation the revenues.

54

Common size Balance Sheet: Common size balance sheet reveals the proportion of fixed assets to current assets, composition of fixed assets and current assets, proportion of long term funds to current liabilities and provisions , composition of current liabilities etc. It highlights the long term health and solvency , ability to meet short term obligation and liquidity position of the enterprise. Production has increased because of increase in investment in fixed Assets and Raw material which has increased the overall productivity thus increases the overall profit from 4617.82 to 5167.33 Company has improved its financial position since it has maintained the same equity level and reduced the total debt. The company return on equity has decreased from 0.117 to 0.110.

55

WORKING CAPITAL
2011 1 Raw material conversion period Raw material consumption Raw material consumption per day Raw material inventory Raw material inventory holding days 139572.16 113775.3 388 316 124043 99286.15 89147.96 345 276 248 2010 2009 2008 2007

4009.33 2745.99 1519.63 3757.88 1457.47 10 9 4 14 6

2 Work-in-process conversion period Cost of production Cost of production per day Work-in-process inventory 145066.18 116747.5 126849.4 101166.2 90788.44 403 1031.25 324 728.18 352 485.52
56

281 565.92

252 479

work in process inventory holding days

3 Finished Goods conversion period Cost of goods sold Cost of goods sold per day Finished goods inventory Finished goods inventory holding day 143318.2 112995.3 128344.9 101645.6 90598.58 398 314 357 282 252

10131.47 8383.49 25 27

4631.3 6126.78 6606.19 13 22 26

4 Collection Period Credit sales Sales per day Debtors Debtors outstanding days 1,47,817.88 117938.4 133605.8 105061.4 93659.74 411 328 371 292 260

2664.42 2662.68 1425.67 1608.61 1518.73 6 8 4 6 6

5 Creditors Deferral Period Credit purchases 140835.5 115001.7 121804.7 101586.6 88593.77

57

Purchases per day Creditors Creditors outstanding days

391

319

338

282

246

10939.47 8359.97 6214.58 8651.35 5958.71 28 26 18 31 24

Gross Operating Cycle 1 Inventory Conversion Period raw material work-in -process finished goods 38 2 Debtors collection period 3 Gross Operating Cycle 4 Creditors Payment Period 5 Net Operating cycle 6 44 28 16 38 8 46 26 20 19 4 23 18 5 37 6 43 31 12 34 6 40 24 16

Raw material Conversion

58

Raw material conversion period was lowest in the year 2009, i.e. of 4 days as compared to other years. Whereas in 2008, it was of 14 days, this means that the company was able to manage its total cost in maintaining the inventory, which includes carrying cost, ordering cost, and the cost occurred due to obscolecense and we can easily say that, the company could easily manage ita raw material conversion period.

Work-in-process The least work-in-process period was in year 2009 this means that the company ws very efficient in utilising its raw material in the manufacturing process. Since, the highest no.of days are in the year 2011, so the company needs to look after the following issues like techonological revamping increase investment ,adding in capacity, etc. Finished goods The conversion period was lowest in the year 2009, i.e. 13 days and maximum in the year 2010, i.e.27 days it means 2009 was best as Fixed Goods were easily converted into sales which shows that the company was efficient in forecasting its projected demand and to have adequate inventory with them so as not to loose customers to competitors. This also shows that the inventory conversion period was also as company could easily generate sales. One reason could be a conscious policy decision to avoid stock out situation and carrying more finished good inventory to expand sales. Debtor collection In 2009, the debtor collection period was of 4 days, which is lowest as compared to the other 4 years. From this we can conclude that that the company have enough liquidity with it as it will easily receive its account receivables and can use it somewhere else. In 2010, it was maximum of 8 days, i.e. cash was reliased a little later which can cause a problem in the working capital management of the company. Creditors Collection Period
59

It was minimum in 2009, i.e. 18 days and max. In 2008 , i.e. of 31 days. For a company, large collection period is preferable as we have to pay after long period of time and we can have the liquidity for larger period. Inventory Conversion period The lesser the inventory conversion period, the more its good for the company as it saves costs on number of factors and we can see that in 2009, it was minimum of 19 days as compared to 31 days in 2011. This shows that company could easily manage its operation in 2010.

Net Operating cycle Net Operating cycle was lowest in the year 2009 which means that the company was doing fairly well even by locking up of less inventory which is a good cost cutting measure. Thus improvising their operations reducing cost of production and ultimately having a competitive edge.

60

ANNEXURS
Balance Sheet of Bharat Petroleum Corporation Mar '11 12 months 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 361.54 361.54 0.00 0.00 13,696.08 0.00 14,057.62 4,033.10 14,938.77 18,971.87 33,029.49 Mar '11 12 mths 361.54 361.54 0.00 0.00 12,725.17 0.00 13,086.71 10,443.87 11,751.33 22,195.20 35,281.91 Mar '10 12 mths 361.54 361.54 0.00 0.00 11,766.57 0.00 12,128.11 3,661.60 17,509.81 21,171.41 33,299.52 Mar '09 12 mths
61

------------------- in Rs. Cr. ------------------Mar '08 Mar '07 12 months

Mar '10 12 months

Mar '09 12 months

12 months

361.54 361.54 0.00 0.00 11,315.30 0.00 11,676.84 2,730.21 12,292.17 15,022.38 26,699.22 Mar '08 12 mths

361.54 361.54 0.00 0.00 9,912.00 0.00 10,273.54 2,593.96 8,235.28 10,829.24 21,102.78 Mar '07 12 mths

Application Of Funds Gross Block 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 Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 29,334.23 13,334.90 15,999.33 1,012.23 11,377.96 15,375.08 2,664.42 379.03 18,418.53 10,239.02 0.94 28,658.49 0.00 20,848.49 3,170.03 24,018.52 4,639.97 0.00 33,029.49 9,943.94 388.82 25,412.52 11,743.17 13,669.35 2,517.75 12,201.32 12,028.86 2,662.68 341.43 15,032.97 10,894.22 0.93 25,928.12 0.00 16,454.04 2,580.59 19,034.63 6,893.49 0.00 35,281.91 9,382.97 361.97 22,522.33 10,556.54 11,965.79 2,037.48 16,715.19 6,823.92 1,425.67 440.62 8,690.21 8,584.04 0.93 17,275.18 0.00 12,981.68 1,712.44 14,694.12 2,581.06 0.00 33,299.52 5,862.61 335.45 21,500.93 9,532.26 11,968.67 766.71 9,358.01 10,603.84 1,608.61 960.67 13,173.12 7,797.30 0.92 20,971.34 0.00 15,379.36 986.15 16,365.51 4,605.83 0.00 26,699.22 5,083.23 322.97 19,457.58 8,476.53 10,981.05 852.34 7,385.42 8,661.26 1,518.73 863.05 11,043.04 3,797.44 0.91 14,841.39 0.00 11,881.37 1,076.07 12,957.44 1,883.95 0.00 21,102.76 3,590.62 284.16

62

Profit & Loss account of Bharat Petroleum Corporation Mar '11 12 months Income Sales Turnover 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 141,028.03 475.89 2,802.85 410.13 3,331.54 1,335.33 0.00
63

------------------- in Rs. Cr. ------------------Mar '10 12 months Mar '09 12 months Mar '08 12 months Mar '07 12 months

163,218.36 12,380.03 150,838.33 1,321.04 2,056.05 154,215.42

131,499.81 11,282.73 120,217.08 1,190.10 3,989.85 125,397.03

145,392.07 11,318.64 134,073.43 -298.74 -1,575.88 132,198.81

121,684.07 11,475.94 110,208.13 1,091.63 -392.50 110,907.26

107,452.27 10,895.42 96,556.85 550.99 205.45 97,313.29

113,884.03 237.12 2,141.12 384.72 3,186.95 888.34 0.00

121,991.29 67.17 1,884.88 347.09 2,870.03 796.46 0.00

101,743.99 61.75 1,297.21 229.54 2,508.57 823.61 0.00

88,745.19 66.64 1,003.70 243.43 2,365.31 620.23 0.00

Total Expenses

149,383.77 Mar '11 12 mths

120,722.28 Mar '10 12 mths 3,484.65 4,674.75 1,010.95 3,663.80 1,242.32 0.00 2,421.48 -60.11 2,361.37 823.75 1,537.62 6,838.25 0.00 506.16 72.77

127,956.92 Mar '09 12 mths 4,540.63 4,241.89 2,166.37 2,075.52 1,075.53 0.00 999.99 -2.97 997.02 261.12 735.90 5,965.63 0.00 253.08 31.45

106,664.67 Mar '08 12 mths 3,150.96 4,242.59 672.47 3,570.12 1,098.21 0.00 2,471.91 118.65 2,590.56 1,010.00 1,580.56 4,920.68 0.00 144.62 9.16

93,044.50 Mar '07 12 mths 3,717.80 4,268.79 477.35 3,791.44 904.11 0.00 2,887.33 -126.50 2,760.83 955.33 1,805.48 4,299.32 0.00 578.47 91.87

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

3,510.61 4,831.65 1,100.78 3,730.87 1,655.40 0.00 2,075.47 247.45 2,322.92 776.24 1,546.68 8,355.74 0.00 506.16 71.08

3,615.42 42.78 140.00 388.82

64

3,615.42 42.53 140.00 361.97

3,615.42 20.35 70.00 335.45

3,615.42 43.72 40.00 322.97

3,615.42 49.94 160.00 284.16

Cash Flow of Bharat Petroleum Corporation

------------------- in Rs. Cr. ------------------Mar '11 12 mths Mar '10 12 mths 2421.48 -1515.15 1538.43 652.09 675.37 -17121.40 -16446.03 Mar '09 12 mths 1017.57 6212.34 -9908.75 -2285.32 -5981.73 -11139.67 -17121.40 Mar '08 12 mths 2471.91 417.13 -3553.95 -197.74 -3334.56 -7805.11 -11139.67 Mar '07 12 mths 2887.95 4646.65 -5899.60 -323.65 -1576.59 -6228.52 -7805.11

Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents

2422.74 4206.31 627.00 -1817.00 3016.31 -16446.03 -13429.72

65

66

67

BIBLIOGRAPHY
Annual Report of BPCL

www.Moneycontrol.com

www.Wikipedia.com

http://www.oilrefiniries.com

www.capitaline.com

Corporate Finance by Ross Westerfield Jess

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