Company profile
HOEC was incorporated in 1983 for taking up Exploration and Production (E&P) activities
by Late Shri. H T Parekh. HOEC was the first private company in India to enter into field of
oil and gas exploration. HOEC’s operational activities commenced in 1991 with the
Government of India announcing the fourth round of exploration bidding for private sector
participation.
The Company has been under professional management since inception consisting of
eminent industrialists, professionals and technocrats like Late Shri B.K Nehru, Late Dr. I. G.
Patel, Shri Deepak Parekh and the current Chairman Shri R. Vasudevan.
In 2005, Burren Shakti Ltd (BSL) and Burren Energy India Ltd (BEIL), wholly owned
subsidiary of Burren Energy plc (Burren), acquired 26% controlling stake in the Company
from Unocal. Burren is a London based exploration and production company, having core
producing assets in the Caspian state of Turkmenistan, the Republic of Congo and Egypt. In
February 2008, Burren was acquired by ENI UK Holdings plc which is a subsidiary of ENI
spa, Italy.
The Company has a 100% subsidiary, HOEC Bardahl India Ltd, engaged in marketing of
high performance fuel / engine additives.
The Company has participating interest in seven oil/gas fields in India (in Cambay basin,
Cauvery basin and Assam Arakan basin), which are in varying stages of E & P life cycle i.e.
exploration, development and production.
APGCCS, Rajampet 1
Hindustan Oil Exploration Co. Ltd.
HOEC and Bardahl have agreed to undertake the new project through HOEC Bardahl India
Limited (formerly Hindage Oilfield Services Limited) a wholly owned subsidiary of HOEC.
On account of focused marketing strategy, HBIL has been able to increase its presence in
the automotive segment through strategic alliance with OEMs like Maruti and Hyundai.
Further, HBIL is targeting industrial segment, more specifically power generation.
Basic information
INDUSTRY : petroleum oil
Website : www.hoec.com
Beta : 1.479
BOARD OF DIRECTORS
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Hindustan Oil Exploration Co. Ltd.
Mr. R. Vasudevan
Non-Executive Independent Director / Chairman
Mr. R. Vasudevan, 71 years, holds a B.A. (Hons.) (Economics) degree from the University
of Madras, a M.A. (Economic Statistics) degree from the University of Delhi and a M.P.A.
(Development Economics) from Harvard University, Boston, U.S.A.
He has held various senior level positions in the ministries of the Government of India
including the Prime Minister’s Office, Ministry of Steel and Ministry of Petroleum and
Natural Gas. He retired as Secretary to the Government of India, Ministry of Power. He was
a founder director of Small Industries Development Bank of India.
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Hindustan Oil Exploration Co. Ltd.
Bankers
Axis Bank Ltd.
Bank Of Baroda
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Hindustan Oil Exploration Co. Ltd.
Bank Of India
Canara Bank
Corporation Bank
Export-Import Bank Of India
H D F C Bank Ltd.
Indian Overseas Bank
State Bank Of India
Syndicate Bank
Federal Bank Ltd.
Hongkong & Shanghai Banking Corpn. Ltd.
Union Bank Of India
Contact information
Registered office
APGCCS, Rajampet 5
Hindustan Oil Exploration Co. Ltd.
Address
City : Vadodara
State : Gujarat
Website : www.hoec.com
Country code : 91
Study objectives
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Hindustan Oil Exploration Co. Ltd.
Assets
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Hindustan Oil Exploration Co. Ltd.
Market value of quoted investments 0.01 0.02 0.02 0.04 67.38 55.05
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Hindustan Oil Exploration Co. Ltd.
Income from financial services 8.71 7.69 6.74 5.44 13.05 20.42
Interest 7.09 6.06 5.44 4.62 7.15 4.32
Dividends 0.79 1.63 0.47 0.27 4.29 12.77
Treasury operations 0.83 0 0.83 0.55 1.61 3.33
Other income 2.89 1.7 4.06 7.36 10.5 10.66
Prior period income & extraordinary income 0.64 0.2 1.29 0 1.31 0.01
Change in stock -3.25 3.52 0.29 2.79 -3.38 2.33
Other operational exp. of indl. enterprises 1.25 1.48 2.81 2.81 2.66 2.14
Other oper. exp. of non-fin. service enterprises 0 0 0 0 0 0
Share of loss in subsidiaries/JVs,etc. 0 0 0 0 0 0
Lease equalisation adjustment 0 0 0 0 0 0
Loss on securitisation of assets/loans 0 0 0 0 0 0
Fee based financial service expenses 0.14 0.17 0.12 0.33 0.73 0.54
Treasury operations expenses 0.12 0.01 0.33 0 0 0
Total provisions 1.21 1.91 0 0 0 0.04
Write-offs 16.24 0.25 0.02 41.84 94.36 16.65
Less: Expenses capitalised 0 0 0 1.25 2.78 4.71
Less: Expenses transferred to DRE 0 0 0 0 0 0
Prior period & extraordinary expenses 0 0.55 0.01 0.03 0.02 0.01
Interest paid 0 0 1.63 3.07 7.66 11.76
Financial charges on instruments 0 0 0 0 0 0
Expenses incurred on raising deposits/debts 0 0 0 0 0 0
Depreciation 14.43 4.57 8.82 7.82 7.7 5.31
Amortisation 0.03 0.05 0.05 0.03 0.03 0
Provision for direct taxes -6.43 -0.77 22.92 9.27 -1.15 15.79
PAT 11.52 22.08 38.66 18.71 2.59 25.78
Minority interest 0 0 0 0 0 0
Share in profit/loss in associate/jv 0 0 0 0 0 0
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Hindustan Oil Exploration Co. Ltd.
Profits
Mar Mar Mar Mar Mar Mar
Hindustan Oil Exploration Co. Ltd. 2003 2004 2005 2006 2007 2008
Rs. Crore (Non-Annualised) 12 mths 12 mths 12 mths 12 mths 12 mths 12 mths
-
PBDITA 27.99 28.34 71.49 36.96 15.49 56.13
Depreciation 14.42 4.56 8.8 7.79 7.64 5.26
Amortisation 0.05 0.05 0.05 0.03 0.03 0
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Hindustan Oil Exploration Co. Ltd.
Non--provisions 0 0 0 0 0 0
Diminution in investement 0 0 0 0 0 0
Sundry debtors 0 0 0 0 0 0
Loans & advances including NPAs 0 0 0 0 0 0
Loans & advances to group cos. 0 0 0 0 0 0
Interest expenses 0 0 0 0 0 0
Power expenses 0 0 0 0 0 0
Gratuity 0 0 0 0 0 0
Others 0 0 0 0 0 0
Liabilities
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Hindustan Oil Exploration Co. Ltd.
Current liabilities & provisions 28.46 44.57 74.89 145.37 179.5 223.95
Sundry creditors 7.63 20.99 28.32 22.82 73.02 98.36
Acceptances 0 0 0 0 0 0
Deposits & advances from customers & employees 0 0 0 0 0 0
Interest accrued 0 0 0 0 0 0
Share application money 0 0 0 0 0.07 0.41
Other current liabilities 0.42 0.64 0.74 2.97 1.37 2.03
Provisions 20.41 22.94 45.83 119.58 105.04 123.15
Net worth (net of reval & DRE) 182.93 198.45 230.46 242.49 385.21 1004.06
Contingent liabilities 0 0 0 0 0 0
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Hindustan Oil Exploration Co. Ltd.
TOOLS OF ANALYSIS
RATIO ANALYSIS:
INTRODUCTION
Analysis and interpretation financial statements with the help of ratios are termed as
‘Ratio Analysis’. Ratio analysis involves the process of computing, determining, and
presenting the relationship of items or groups of financial statements.
MEANING OF RATIO
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Hindustan Oil Exploration Co. Ltd.
Accounting ratios are designed to show how one number is related to another and the
meaning of such relationship ratios is worked out by dividing one number by another
number. Accounting ratios measure and indicates efficiency of an enterprise in all aspects.
CLASSIFICATION OF RATIOS
Turnover Ratios
Profitability Ratios
Statistical Tools
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Hindustan Oil Exploration Co. Ltd.
Co-efficient of correlation:-
The Correlation matrix is a powerful tool for degree of relationship among
predictors. To examine the correlation among various variables, Pearson product movement
correlation (r) was computed. Thus, the growth is outcome number of strategic decisions
taken by a firm in the every-changing business environment.
N ∑ XY − ( ∑ X )( ∑Y )
r=
Co-efficient of correlation
N ∑ X 2 − ( ∑ X 2 ) N ∑Y 2 − ( ∑Y ) 2
LIQUIDITY RATIOS:
(1) SHORT TERM SOLVANCY RATIOS
(a) CURRENT RATIO (CR):
The ratio of current assets to current liabilities is called “current ratio”.
The term current assets includes debtors, stock, bills receivable, bank and cash balance,
prepaid expenses, income due and short term investments. The term current liabilities
includes creditors, bank overdraft, bills payable, out standing expenses, income received in
advances,etc. standard expected current ratio internationally accepted current ratio is 2:1 i.e.
current assets shall be 2 times to current liabilities.
Current assets
Current ratio =--------------------------------
Current liability
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Hindustan Oil Exploration Co. Ltd.
GRAPH NO: 1
CURRENT RATIO
600 544.61
500
434.37
400
Ratio 300
200 176.11
100
5.02 1.77 1.35
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From the above table it is observed that the current ratio is fluctuating the period of
2003-08. When compare to standard norm 2:1 current ratio is very high during the study
period. In the year 2008 (544.61:1).
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Hindustan Oil Exploration Co. Ltd.
Quick assets
Quick ratio = -------------------------------
Current liabilities
GRAPH NO: 2
QUICK RATIO
5 4.24
4
3 2.45
Ratio
2 1.34
0.93 0.99
0.68
1
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From the above table it is observed that the Quick ratio is decreasing during the
study period 2003-08. when compare to standard norm in the year 2003 the Quick Ratio is
high (4.24) when compare to the standard norm (1:1).
Absolute assets are cash, bank balance &marketable securities. This ratio reveals the
relationship between absolute quick assets and quick liability.
GRAPH NO: 3
2
1.61
1.5
1.08
0.9
Ratio
1 0.7
0.5 0.61
0.5
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From the above table is observed that the Absolute Quick ratio is fluctuating from
the period 2003-08. In the year 2004 (1.61%) in the year 2004 the absolute quick ratio is
high (1.64) due to increase in Absolute liquid assets and increase in current liabilities and it
is low in the year 2006 (0.5) due to decreased in the Absolute liquid assets and increase in
current liabilities.
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Hindustan Oil Exploration Co. Ltd.
The ratio compares the shareholder’s fund or owners fund and total tangible
assets. In other words this ratio expresses the relationship between the proprietors
fund and the total tangible assets.
Shareholders fund (Net worth)
Proprietary ratio =----------------------------------------------
Tangible assets
GRAPH NO: 4
PROPRIETORS RATIO
1 0.83 0.8
0.8 0.67 0.72
0.58 0.55
0.6
Ratio
0.4
0.2
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From the above table it is observed that the proprietary ratio is fluctuating from the
period 2003-08. In the year 2003 it is high (0.83%) because of decreasing of shareholder
funds & decreasing the tangible assets & in the year 2007 it is low (0.55%) because
increasing of shareholders funds & increasing of tangible assets.
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Hindustan Oil Exploration Co. Ltd.
TABLE NO: 5 Calculation of DER during the year 2003-08 (Rs in crores)
Years Debt Equity Ratio Trend
2003 0 183.1 0 -
2004 0 198.59 0 -
2005 27.5 230.38 0.19 Increase
2006 1.63 241.17 6.75 Increase
2007 13.09 390.34 0.03 Decrease
2008 14.72 1008.15 0.06 Increase
GRAPH NO: 5
DEBT-EQUITY RATIO
8 6.75
6
Ratio
2
0 0 0.19 0.03 0.06
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From the above table it is observed that the Debt-equity ratio is fluctuating from the
period of 2003-08. The debt-equity ratio is low when compared to the standard norm 1:1.In
2006 it is increased to (6.75%) due to decreased in debt and equity.
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Hindustan Oil Exploration Co. Ltd.
TABLE NO: 6 Calculation of ICR during the year 2003-08 (Rs in crores)
Years PBIT Interest Ratio Trend
2003 13.52 0 0 -
2004 23.73 0 0 -
2005 62.64 1.63 38.42 Increase
2006 29.14 2.37 12.29 Decrease
2007 7.84 7.63 1.02 Decrease
2008 50.87 11.77 4.32 Increase
GRAPH NO: 6
INTEREST COVERAGE RATIO
50
38.42
40
30
RAtio
20 12.29
10 4.32
0 0 1.02
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From the above table it is observed that the interest coverage ratio is fluctuating from
the period of 2003-08. In the year 2005 it is high (38.42%) because of increasing of PBIT &
decreasing of financial changes and in the year 2007 it is low (1.02%) because of decreasing
of PBIT & decreasing in interest.
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Hindustan Oil Exploration Co. Ltd.
It establishes the relation between fixed assets and capital employed. This ratio enables to
know how fixed assets are financed i.e., by use of long-term funds or by short-term funds.
The ideal ratio is 0.67. It should not be more than one.
Fixed assets
Fixed assets ratio= -----------------------------
Capital employed
GRAPH NO: 7
1
0.76 0.81
0.8
0.59
0.6
Ratio
0.4 0.39
0.4 0.29
0.2
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From the above table it is observed that the fixed asset net worth ratio is increasing
from the period of 2003-07. In the year 2003 it is low (0.29%) because of decreasing of
fixed assets & increasing the capital employed & in the year 2007 it is high (0.81%) because
of decreasing of fixed assets & decreasing the capital employed.
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Hindustan Oil Exploration Co. Ltd.
PROFITABULITY RATIOS:
Ability to make maximum profit from optimum utilization of resources by a business
concern is termed as “profitability”.
(1)RETURN ON INVESTMENT (ROI):
This ratio is called “overall profitability ratio” or “Return on capital employed”. It
measures the sufficiency or otherwise of profit in relation in capital employed.
Operating profit
ROI =------------------------------------ *100
Capital employed
TABLE NO: 8 Calculation of ICR during the year 2003-08 (Rs in crores)
Years Operating profit Capital employed Ratio Trend
2003 11.61 183.31 6 -
2004 22.12 198.59 11 Increase
2005 38.98 257.88 15 Increase
2006 17.49 242.8 7 Decrease
2007 2.47 403.43 612 Increase
2008 24.1 1002.87 2 Decrease
GRAPH NO: 8
ROI
700 612
600
500
400
300
200
100 6 11 15 7 2
0
2003 2004 2005 2006 2007 2008
INTERPRETATION:
From the above table it is observed that the Return on investment ratio is increased in
the year 2007.and it is decreased during 2003-2006.and again increased continuously up to
2007. in the year 2007 the return investment is high (612%) because of increasing of
operating profit & increasing of the capital employed and in the year 2008.because of
increasing of operating profit & increasing of capital employed.
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Hindustan Oil Exploration Co. Ltd.
GRAPH NO: 9
ROSF
700 632
600
500
400
Ratio
300
200
100 6 11 16 7 2
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From the above table it is observed that the Return on shareholders funds ratio is
fluctuating from the period of 2003-08. In the year 2007 the return on shareholders funds is
high (632%) because of decreasing of PAT & increasing of shareholder funds and in the
year 2008 it is low (2%) because of increasing of pat & shareholders funds.
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Hindustan Oil Exploration Co. Ltd.
GRAPH NO: 10
Return on capital employed Ratio
0.25 0.24
0.2
0.15
Ratio 0.11 0.12
0.1
0.07
0.05
0.05
0.01
0
2003 2004 2005 2006 2007 2008
years
INTERPRETATION:
From the above table it is observed that the Return on capital employed ratio is
fluctuating during the study period 2003-08. In the year 2005 (0.24)it is increased operating
profit is increased & capital employed increased and in the year 2007 (0.01) it is decreased
because of operating profit is decreased & capital employed increased.
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Hindustan Oil Exploration Co. Ltd.
Graph:11
GPR
80 73.14
65.95
60 49.34 46.9
Ratio
40 30.51
20 10.17
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:
From above table is observed that the gross profit ratio is fluctuating from the period
of 2003-2008. in the year 2005 it is high (73.14) when compared to the standard norm (1:1).
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Hindustan Oil Exploration Co. Ltd.
Graph:12
NPR
60 51.47
50
39.38
40
Ratio
30 20.46 20.13
20 14.44
10 1.62
0
2003 2004 2005 2006 2007 2008
Years
INTERPRETATION:11
From the above table it is observed that the net profit ratio is fluctuating from the period of
2003-2008. In the year 2007 it is low (1.62) when compared to the standard norm (1:1)
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Hindustan Oil Exploration Co. Ltd.
TREND ANALYSIS
* = ESTIMATED VALUES
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Hindustan Oil Exploration Co. Ltd.
correlation
INTERPRETATION:
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Hindustan Oil Exploration Co. Ltd.
The coefficient of correlation between selected ratios and ROI are presented
in the table:
It is evident from the table that the coefficient of correlation between debt equity ratio and
interest coverage ratio is 0.0053 It indicates that 1% decreasing in ICR Ratio will leads to
0.0053.Which shows that there is a lower degree of positive association between the
profitability of the company.
It is evident from the table that the coefficient of correlation between DER and return on
Capital employed Ratio is 0.045. It indicates that 1% decreasing ROCE Ratio will leads to
0.045. Which shows that there is a lower degree of positive association between the
Profitability of the company.
FINDINGS
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Hindustan Oil Exploration Co. Ltd.
• Current ratio is fluctuating the period of 2003-08. when compare to standard norm
2:1 current ratio is very high during the study period. In the year 2008 (544.61:1).
• Quick ratio is decreasing during the study period 2003-08. when compare to standard
norm in the year 2003 the Quick Ratio is high (4.24) when compare to the standard
norm (1:1).
• Absolute Quick ratio is fluctuating from the period 2003-08. In the year 2004
(1.61%) in the year 2004 the absolute quick ratio is high (1.64) due to increase in
Absolute liquid assets and increase in current liabilities and it is low in the year 2006
(0.5) due to decreased in the Absolute liquid assets and increase in current liabilities.
• Proprietary ratio is fluctuating from the period 2003-08. In the year 2003 it is high
(0.83%) because of decreasing of shareholder funds & decreasing the tangible assets
& in the year 2007 it is low (0.55%) because increasing of shareholders funds &
increasing of tangible assets.
• Debt-equity ratio is fluctuating from the period of 2003-08. The debt-equity ratio is
low when compared to the standard norm 1:1.In 2006 it is increased to (6.75%) due
to decreased in debt and equity.
• Interest coverage ratio is fluctuating from the period of 2003-08. In the year 2005 it
is high (38.42%) because of increasing of PBIT & decreasing of financial changes
and in the year 2007 it is low (1.02%) because of decreasing of PBIT & decreasing
in interest.
• Fixed asset net worth ratio is increasing from the period of 2003-07. In the year 2003
it is low (0.29%) because of decreasing of fixed assets & increasing the capital
employed & in the year 2007 it is high (0.81%) because of decreasing of fixed assets
& decreasing the capital employed.
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Hindustan Oil Exploration Co. Ltd.
• Return on shareholders funds ratio is fluctuating from the period of 2003-08. In the
year 2007 the return on shareholders funds is high (632%) because of decreasing of
PAT & increasing of shareholder funds and in the year 2008 it is low (2%) because
of increasing of pat & shareholders funds.
• Gross profit ratio is fluctuating from the period of 2003-2008. in the year 2005 it is
high (73.14) when compared to the standard norm (1:1).
• Net profit ratio is fluctuating from the period of 2003-2008. In the year 2007 it is low
(1.62) when compared to the standard norm (1:1).
• Return on capital employed ratio is fluctuating during the study period 2003-08. In
the year 2005 (0.24) it is increased operating profit is increased & capital employed
increased and in the year 2007 (0.01) it is decreased because of operating profit is
decreased & capital employed increased.
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Hindustan Oil Exploration Co. Ltd.
CONCLUSION
The study reveals that the liquidity of the position of HOECL is not
maintaining the study norm and there is a positive collection between the
DER and ROCE and in the near future the low is in a position to maintain
the liquid assets.
The ROCE estimated value is negative that is -0.0016 it indicates that the
company overall profitability position is not good.
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