PREFACE:

Action is the language of commitment, it speaks louder than words. “Leading by doing”is
the hidden condition of management courses. While classroom discussions and
theoretical knowledge have their place, they also have their limits. This project is all
about diving deep into four main financial decisions taken in business. We use data from
annual reports and other sources, tailored to our project's needs, to keep things practical
and engaging. The Mini Project report is a key part of this journey, helping students gain
practical insights and a better understanding of the real-world challenges and
opportunities in the business world."

PLACE : AMARAVATI PRESENTED BY :

DATE : 10 OCTOBER 2023 VISHWAGNA MITTA
 ACKNOWLEDGEMENT

This report is based on my initial ideas and the knowledge I gained during my classroom
study of Financial Management . The foundation laid during this study helped me delve
deeper into the analysis and application of various techniques in this project and I am
thankful to Prof. Shantha Kumari for giving me the opportunity to work on this Mini
Project.
 FMCG INDUSTRY:

INTRODUCTION:

The oil, gas, and consumable fuels industry is essential for powering the
global economy, providing the energy needed for transportation, heating,
electricity generation, and various industrial processes. This industry is vast and
involves a multitude of activities, ranging from the exploration and extraction of
resources to the refining, distribution, and marketing of the final products. At its
core, this industry revolves around finding and processing fossil fuels,
predominantly crude oil and natural gas. These resources are then refined into a
diverse array of products, including gasoline, diesel, jet fuel, heating oil, and
various petrochemicals. These products are crucial drivers of economic growth
and are indispensable for sustaining modern lifestyles worldwide. However, the
industry is not without its challenges. Geopolitical factors often lead to
fluctuations in oil prices, driven by tensions between oil-producing nations, shifts
in supply and demand, and geopolitical conflicts. Additionally, there are growing
concerns about the environmental impact of fossil fuel consumption, particularly
in terms of greenhouse gas emissions and climate change.
In response to these challenges, there has been a notable shift towards
cleaner and more sustainable practices within the industry. This includes increased
investment in renewable energy sources such as solar, wind, and hydroelectric
power, as well as the development of alternative fuels like biofuels and hydrogen.
Despite these challenges, the oil, gas, and consumable fuels industry remains a
cornerstone of the global economy. Companies within the industry are
continuously innovating to meet the world's growing energy needs while also
addressing environmental and social responsibilities. Understanding the trends and
dynamics within this industry is essential for policymakers, investors, and
stakeholders as they navigate the complexities of the energy landscape in the 21st
century.
 MARKET SIZE:

1. India Oil and Gas Industry:

 The India oil and gas market is segmented into three sectors: upstream, midstream,
and downstream.
 As of 2024, the market size is estimated to be 38.12 billion cubic meters and is
expected to reach 49.12 billion cubic meters by 2029, growing at a CAGR of
5.20% during the forecast period.
 Factors driving growth include increasing natural gas pipeline capacity and rising
demand for petroleum products.
 However, challenges such as dependence on crude oil and natural gas imports and
volatile crude oil prices may hinder growth.
2. Global Oil & Gas Storage Market:
 The worldwide oil and gas storage market was valued at $2.97 billion in 2019.
 It is projected to increase by over 19% by 2026, reaching $3.54 billion.
3. Big Data in the Oil and Gas Sector:
 The adoption of big data solutions in the oil and gas sector is growing.
 This market is expected to witness significant growth, especially in North America
and Europe.
4. Oil & Gas Infrastructure Market:
 The oil and gas infrastructure market reached a valuation of approximately USD
620 billion in 2021.
 It is anticipated to maintain a robust growth rate, with a projected CAGR of over
6% from 2022 to 2030.
5. Fuel Oil Market:
 The global fuel oil market reached a volume of 4.8 million barrels per day
(MBPD) in 2023.
 Growing industrialization is expected to drive further growth in the forecast period
(2024-2032).
 In summary, the oil and gas industry continues to play a crucial role in the global
economy, with various factors influencing its growth and development.
 INTRODUCTION ABOUT COMPANY:
Indian Oil Corporation Limited (IOCL) isn't just another company; it's an integral
part of India's journey towards progress and development. Established in 1964, Indian Oil
has grown into a powerhouse in the oil and gas industry, touching the lives of millions
across the nation. Indian Oil can be considered as the backbone of India's energy sector. It
operates like a well-oiled machine, with a wide-reaching network of refineries, pipelines,
and marketing infrastructure that spans every corner of the country. These facilities aren't
just buildings; they're hubs of activity, bustling with engineers, technicians, and workers
who ensure that our energy needs are met, day in and day out.
What makes Indian Oil special is its ability to take crude oil and turn it into the
fuels and products that drive our economy. From the petrol that fuels our vehicles to the
cooking gas that heats our meals, Indian Oil is behind it all. And it's not just about making
products; it's about making sure they reach every corner of the nation. Indian Oil's
network of retail outlets, depots, and terminals ensures that no matter where you are, you
have access to the energy you need. But Indian Oil isn't just about making profits; it's
about making a difference. The company is deeply committed to innovation and
sustainability. It's constantly exploring ways to make cleaner fuels, improve energy
efficiency, and invest in renewable energy projects. This isn't just about business; it's
about ensuring a better, greener future for all of us. And let's not forget Indian Oil's
human side. The company is actively involved in social responsibility initiatives, making
a real difference in the lives of people. Whether it's providing education, healthcare, or
supporting environmental conservation efforts, Indian Oil is there, making a positive
impact in the communities it serves.
In essence, Indian Oil isn't just a company; it's a lifeline for India. It fuels our
progress, cares for our environment, and uplifts our communities. It's a shining example
of how business can be a force for good in the world.
 SWOT ANALYSIS:

Strengths:

 Large Refining Capacity: Indian Oil has one of the largest refining capacities
in the world, with refineries capable of processing over 80 million metric
tonnes per annum (MMTPA). This ensures a consistent and reliable supply of
petroleum products.
 Extensive Distribution Network: IOCL has an extensive network of retail
outlets, depots, and terminals across India, ensuring widespread availability
of its products to consumers.
 Diversified Product Portfolio: The company produces a wide range of
petroleum products, including petrol, diesel, LPG, aviation fuel, lubricants,
and petrochemicals, catering to various sectors of the economy.
 Strong Government Support: As a state-owned enterprise, Indian Oil enjoys
government support, which provides stability and access to resources for
expansion and growth.

Weaknesses:

 Dependence on Oil Prices: Indian Oil's profitability is highly sensitive to

fluctuations in global oil prices. A sudden increase in oil prices can impact
margins and profitability.
 Environmental Concerns: The company faces challenges related to
environmental sustainability, particularly concerning carbon emissions and
pollution from its refining operations.
 Regulatory Challenges: Being a government-owned entity, Indian Oil is
subject to regulatory constraints and bureaucratic processes, which may
hinder agility and innovation.

Opportunities:

 Investment in Renewable Energy: There is a growing opportunity for Indian

Oil to invest in renewable energy sources such as solar, wind, and biofuels to
diversify its energy portfolio and address environmental concerns.
 Expansion into New Markets: IOCL can explore opportunities for expansion
into new geographic markets both domestically and internationally,
leveraging its existing infrastructure and expertise.
 Technological Advancements: Technological advancements present
opportunities for Indian Oil to improve efficiency, reduce costs, and develop
innovative products and processes.
 Threats:

 Competition: Indian Oil faces stiff competition from both domestic and
international oil and gas companies, which could impact market share and
profitability.
 Volatility in Oil Prices: Fluctuations in global oil prices due to geopolitical
tensions, supply-demand imbalances, and economic uncertainties pose a
significant threat to Indian Oil's financial stability.
 Environmental Regulations: Increasing environmental regulations and
policies aimed at reducing carbon emissions and promoting clean energy
could require significant investments and impact profitability.
Overall, Indian Oil Corporation Limited has a strong foundation with its
extensive infrastructure, diversified product portfolio, and government support.
However, it needs to address weaknesses and capitalize on opportunities while
navigating threats to maintain its leadership position in the industry.

 HIGHLIGHTS ON BUDGET IMPACT ON THE INDUSTRY:

Indian Oil, being a major player in the Oil, Gas and consumable fuels industry, is
undoubtedly impacted by budget decisions and policies. Here are some highlights of how
budgetary decisions can influence Nestle and the broader Oil, Gas and consumable Fuels
sector, both positively and negatively:
Positive Budget Impacts:
 Subsidy Support: Budget allocations for subsidies on cooking gas (LPG) and kerosene
help Indian Oil Company maintain affordable prices for these essential fuels. This
support ensures that these fuels remain accessible to lower-income households,
promoting social welfare and reducing the financial burden on consumers.
 Infrastructure Investment: Budget allocations for infrastructure development,
including the expansion of pipelines and storage facilities, benefit Indian Oil by
enhancing its distribution network's efficiency and capacity. This allows for smoother
transportation of crude oil and petroleum products, reducing logistical costs and
improving supply chain reliability.
 Research and Development Incentives: The budget may offer incentives for research
and development (R&D) in clean energy technologies. This benefits Indian Oil by
encouraging innovation in areas such as renewable energy, biofuels, and emission
reduction technologies, aligning with the company's sustainability goals and
promoting long-term growth.
Negative Budget Impacts:
 Subsidy Reductions: Budget cuts or reductions in subsidies on petroleum products
like diesel and petrol can negatively impact Indian Oil's profitability. Reduced
subsidies may lead to higher fuel prices, which could lower consumer demand and
affect the company's revenue and margins.
 Taxation Changes: Changes in taxation policies, such as increases in excise duties or
the introduction of new taxes, can directly affect Indian Oil's financial performance.
Higher taxes on petroleum products can lead to increased costs for the company and,
in turn, higher prices for consumers, potentially dampening demand.
 Environmental Regulations: Budgetary measures aimed at environmental protection,
such as carbon taxes or stricter emission standards, can pose challenges for Indian Oil.
Compliance with these regulations may require substantial investments in technology
upgrades and emission reduction measures, impacting the company's bottom line.
 Import Duties: Changes in import duties on crude oil or refined petroleum products
can affect Indian Oil's competitiveness in the global market. Higher import duties may
increase the cost of imported crude oil or finished products, impacting the company's
import-dependent operations.
In summary, while certain budget measures can provide positive support to Indian
Oil, such as subsidies and infrastructure investments, others, like subsidy reductions and
taxation changes, may pose challenges. It's crucial for Indian Oil to adapt its strategies
and operations to navigate both the positive and negative impacts of budgetary decisions
effectively.

 MARKET EXPECTATIONS (DEMAND):

Market expectations for the demand of Indian Oil Corporation Limited (IOCL)
can be influenced by various factors including:
 Economic Growth: As the Indian economy expands, there's typically an increased
need for various goods and services, leading to higher demand for energy. Industries
require more energy to produce goods, transportation needs rise, and consumers have
more disposable income to spend on fuel for vehicles and other energy needs.
Therefore, IOCL's demand is closely tied to the pace of economic growth.
 Fuel Prices: Fluctuations in fuel prices play a crucial role in determining consumer
behavior and industrial activities. When fuel prices are low, consumers and businesses
tend to use more fuel for transportation, heating, and manufacturing processes.
Conversely, when prices rise, people and industries may cut back on fuel consumption
or seek alternatives, impacting IOCL's demand.
 Government Policies: Government regulations and policies significantly influence
IOCL's demand. For instance, policies promoting the use of cleaner fuels or imposing
taxes on certain types of fuels can impact the consumption patterns. Additionally,
subsidies on certain fuels can artificially inflate demand, while regulations regarding
emissions standards can influence the type and quantity of fuels used.
 Infrastructure Development: Investments in infrastructure projects, such as building
new roads, highways, airports, and ports, directly impact demand for petroleum
products. More infrastructure means increased transportation activity, requiring more
fuel consumption for vehicles and machinery.
 Industrial Activity: The level of industrial production and manufacturing activities
affect the demand for various petroleum products. Industries consume fuels for
powering machinery, generating electricity, and as raw materials for production
processes. During periods of high industrial activity, IOCL typically experiences
higher demand for fuels like diesel and industrial oils.
By considering these factors comprehensively, stakeholders can better
understand and anticipate market expectations for IOCL's demand, helping them make
informed decisions regarding investments, production planning, and market positioning.

 MARKET SHARE OF INDIAN OIL CORP.:

Indian Oil Corporation Limited (IOCL) is one of the largest oil companies in India
and typically holds a significant market share in various segments of the petroleum
industry. Here's a breakdown of its market share across different areas:
 Fuel Retailing: IOCL is a major player in the retail fuel market in India. It operates a
vast network of petrol pumps across the country, making it one of the largest fuel
retailers. Its market share in the retail fuel segment fluctuates but generally hovers
around 45-50% of the total market.
 Refining Capacity: IOCL owns and operates several refineries in India with a total
refining capacity of over 80 million metric tonnes per annum (MMTPA). This
accounts for a significant portion of India's total refining capacity, giving IOCL a
substantial market share in the refining segment.
 LPG Distribution: IOCL is also a dominant player in the distribution of liquefied
petroleum gas (LPG) for domestic and commercial use. It holds a considerable market
share in this segment, with estimates ranging from 45% to 50%.
 Aviation Fuel: In the aviation fuel segment, IOCL is a major supplier to airlines
operating in India. Its market share in aviation fuel sales varies but typically ranges
between 30% to 40%, making it one of the leading suppliers in the country.
 Petrochemicals: IOCL has a significant presence in the petrochemical industry,
manufacturing a wide range of petrochemical products. While its market share in
specific petrochemical products may vary, IOCL is considered one of the major
players in the Indian petrochemical market.
STANDALONE BALANCE SHEET OF INDIAN OIL CORP. :
STANDALONE STATEMENT OF CASH FLOWS:
 ANALYSIS OF FINANCIAL DECISION:

INVESTMENT DECISIONS:
Cash flow from investing activities is a section of the cash flow statement that
shows the cash generated or spent relating to investment activities like purchasing and
selling investments, as well as earnings from investments. In this analysis I will also
consider the cash flow from operating activities as the cash flows from operating
activities and cash flows from investing activities are interconnected and provide a
comprehensive view of a company's cash management, profitability, and growth
strategies.

The net cash generating from investing activities in the financial year 2021-2022 and
2022-2023 are 25,805 and 34,637 respectively. The net cash used in investing activities in
the financial year 2021-2022 and 2023-2024 are 4,511 and 6,598 respectively.
For Financial year 2022-2023
Cash flow = 4511-25805
= -21,294
For Financial year 2021-22
Cash flow = 34637-6598
= 28,039
Cash flows from investing is positive and negative for both financial years 2021-
22 and 2022-23 respectively.
In 2021-2022, the company had a positive cash flow from investing activities, generating
₹28,039 crore. However, in 2022-2023, the situation reversed, resulting in a negative
cash flow of -₹21,294 crore. This fluctuation could be due to various factors, such as
acquisitions or changes in investment strategies. Further analysis is needed to understand
the impact on the company’s long-term prospects.
 In conclusion, this type of fluctuations in the cash flow of investment decision
maybe caused due to frequent changes in investment strategies. The above analysis
supports my conclusion on investment decision.
STANDALONE STATEMENT OF PROFITS AND LOSSES:
FOR FINANCIAL YEAR 2021-22:

EBITDA = Revenue from Operations + Other Income - Cost of Material Consumed -

Excise Duty - Purchase of Stock-in-Trade - Changes in Inventories of Finished Goods,
Stock-in-Trade and Work-in-Process - Employee Benefits Expense - Finance Costs

= 736,796.32 + 3,096.78 - 336,672.34 - 14,292.03 - 78,519.29 - (13,719.04) - 11,542.72 -

5,423.24

= 307,162.52 million

Total Revenue = Revenue from Operations + Other Income

= 736,796.32 + 3,096.78

= 739,893.10 million

EBITDA Margin = (307,162.52 / 739,893.10) * 100

= 41.52%

FOR FINANCIAL YEAR 2022-23:

EBITDA = 921,409.54 + 4,194.52 - 543,732.19 - 124,654.53 - 79,442.76 - 8,329.71 -

9,350.4 - 2,541.36

= 157,553.11 million

Total Revenue = 921,409.54 + 4,194.52

= 925,604.06 million

EBITDA Margin = (157,553.11 / 925,604.06) * 100

= 17.02%

The EBITDA margin decreased from approximately 41.52% in Financial Year

2021-22 to approximately 17.02% in Financial Year 2022-23, indicating a decline in
profitability and operational efficiency.
 EARNINGS PER SHARE (EPS):

10

Loss per Share (Face value of ₹10 each) is at the loss of 18.23 and 7.11 for the
financial year 2021-22 and financial year 2022-23 respectively. We can observe that the
loss per share improved, moving from a larger loss per share in the previous year to a
smaller loss per share in 2023.
In conclusion , the company significantly improved its financial performance in
financial year 2022-23 compared to the financial year 2021-22. It achieved higher
revenue, reduced its losses, and improved profitability. This improvement is also reflected
in the reduction in the loss per share.

LIQUIDITY DECISION:

FOR FINANCIAL YEAR 2022-23:

1. Current Ratio = Current Assets / Current Liabilities

= 157,832.06 / 208,648.33 = 0.7567

2. Quick Ratio = (Current Assets - Inventories) / Current Liabilities

= (157,832.06 - 123,107.58) / 208,648.33 = 0.1660

3. Liquidity Ratio = (Cash and Cash Equivalents + Marketable Securities) / Current

Liabilities

= (998.39 + 11,434.54) / 208,648.33 = 0.0595

4. Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities

= 29,841.72 / 208,648.33 = 0.1431

FOR THE FINANCIAL YEAR 2021-22:

1. Current Ratio = Current Assets / Current Liabilities

= 144,072.44 / 122,864.82 = 1.1727

2. Quick Ratio = (Current Assets - Inventories) / Current Liabilities

= (144,072.44 - 111,536.83) / 122,864.82 = 0.2659

3. Liquidity Ratio = (Cash and Cash Equivalents + Marketable Securities) / Current

Liabilities

= (1,178.99 + 8,013.20) / 122,864.82 = 0.0750

4. Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities

= 23,746.87 / 122,864.82 = 0.1932

For the financial year 2022-23, the current ratio of 0.7567 indicates a relatively
moderate ability to cover short-term liabilities with current assets. The quick ratio of
0.1660 suggests a lower ability to cover short-term liabilities with highly liquid assets.
The liquidity ratio of 0.0595 is quite low, indicating that the company's most liquid assets
may not be sufficient to cover its current liabilities. The operating cash flow ratio of
0.1431 means that the operating cash flow covers approximately 14.31% of current
liabilities. Compared to the previous year 2021-22, the current ratio, quick ratio, and
liquidity ratio have decreased, while the operating cash flow ratio has also decreased
slightly. This could be an indication of a potential decline in the company's overall
liquidity and ability to meet short-term obligations during the financial year 2022-23.
 DIVIDEND DECISION:

The table shows the Final Dividend paid for the previous financial year 2021-22 was
Rs. 3,305.17 million (after restatement for bonus shares, the per share dividend was Rs. 2.4).
For the current financial year 2022-23, no Interim Dividend was paid. The Total Dividend is
also shown as Rs. 3,305.17 million. However, the company has proposed a higher Final
Dividend of Rs. 3 per share for 2022-23, compared to Rs. 2.4 per share for 2021-22.
Therefore, the proposed Final Dividend amount for 2022-23, while having a higher dividend
rate of Rs. 3 per share, seems to be Rs. 4,431.47 million based on the table. This is higher
than the Total Dividend of Rs. 3,305.17 million declared and paid for 2021-22.

In conclusion, the company has not increased its total dividend payout for 2022-23
compared to 2021-22, but has proposed a higher per share dividend rate, indicating an intent
to increase dividends for shareholders in the current year if approved.
 CONCLUSION:

After a comprehensive analysis of Indian Oil Company's financial decisions, it is

evident that the company has strategically navigated its operations to achieve sustainable
growth and stability in the volatile energy sector. Through prudent financial management,
Indian Oil Company has demonstrated resilience in facing various challenges and has
capitalized on opportunities for expansion and diversification. One of the key strengths of
Indian Oil Company lies in its ability to make strategic investments in refining,
marketing, and distribution infrastructure. By continuously modernizing and expanding
its refining capacity, the company has positioned itself as a leader in the Indian petroleum
industry, catering to both domestic and international markets. Additionally, its focus on
marketing and distribution channels has enabled it to reach a wide consumer base,
ensuring consistent revenue streams. Furthermore, Indian Oil Company's emphasis on
research and development, particularly in alternative energy sources and environmental
sustainability, showcases its commitment to innovation and long-term viability. By
investing in renewable energy projects and adopting cleaner technologies, the company is
not only aligning itself with global trends but also future-proofing its business against
environmental regulations and market shifts. Moreover, the company's financial decisions
reflect a balanced approach between leveraging debt and optimizing equity. Through
prudent debt management, Indian Oil Company has maintained a healthy balance sheet
while funding its growth initiatives. Additionally, its dividend policy demonstrates a
commitment to shareholder value, providing investors with consistent returns even in
challenging economic environments.

In conclusion, Indian Oil Company's financial decisions underscore its strategic

vision and ability to adapt to changing market dynamics. By focusing on operational
efficiency, innovation, and responsible financial management, the company is well-
positioned to continue its growth trajectory while navigating the complexities of the
energy sector. As a cornerstone of India's economic landscape, Indian Oil Company
remains a formidable player, poised for sustained success in the years to come.

*****