Analysis of HPCL

HPCL- Growth, Scarcity and Global Imbalance of Oil Industry

Group 1

Vijayshri Sharma Prajakta

Tambekar Debanjan Bose

Princy Bhandhari Souvik Dey

Objectives To study the financial analysis of HPCL To analyse the impact of oil crisis on HPCL To understand and explore the strategies

undertaken by HPCL for capital investment over oi crisis.

Current Indian

Scenario

Contributes 15% to India’s GDP Ranked 5th in the category of refining The industry constitutes 7.64% of women

employees Currently HPCL employs 11226 employees Various Govt. initiatives and investment like

CNG,HSSC and HELP are few examples of it. By 2025 it’s assumed that India would

become 3rd largest oil consumer.

Global Imbalance

of Oil Industry

Saudi Arabia has cut production by 0.5 million barrels

Russia has cut by 0.1 million barrels Iran, Sudan, Libya have been granted by OPEC

to increase production. US Shale Production will contribute more to

supply.

Price Fluctuation

s

Decrease in Oil Price

Oil prices have come down significantly in the past 6 months

High- 58 USD/bbl Low- 42 USD/bbl Countries like Saudi Arabia, Russia, Riyadh ,

Qatar and other OPEC countries majorly impacted

More Supply

over Demand

High Level of Oil Inventory Excessive supply in compare to demand

resulting decrease in Price. Iran increasing it’s production. USA with high shale production lowering the

dependency on OPEC. Positive impact on Oil importing countries

like China, India, Japan etc.

Observation

OPEC cutting down production Russia cutting down production by 300,000

barrels a day An effort towards Inventory Normalization OPEC and Non OPEC producers to join in

output cuts since 2001

Financial Analysis of

HPCL

Ratio Analysis from the year 2011-2015 Return on Equity Return on Capital employed Return on Total Assets Fixed Asset Turnover Working Capital Turnover

Graphical Approach

2011-12 2012-13 2013-14 2014-15 2015-16-5

0

5

10

15

20

25

30

35

Ratios

ROE ROCROTA Fixed asset turnoverWorking Capital Turnover

Capital investment worth rs. 31,570-crore

New projects cost of around Rs 31,500 crore

Capacity expansion at the Visakhapatnam

Maintained uninterrupted fuel supplies with net profit 3,000 crore

Cutting down on imports of petrol and diesel

Strategies of HPCL over oil crisis

Overview ROE of HPCL has an increasing trend It is efficient in generating income from new

investment Effective equity financing to run operations ROTA is also in an increasing trend Company’s assets are profitable and has

invested more in capital assets Upward trend in ROCE Generating good returns to the shareholder

• Performance is even in negative economic condition.

• Oil exporting countries benefited from the higher oil prices.

• Oil exporting countries recorded current account surplus.

• HPCL implemented two strategies Central Procurement and Integrated Margin Management.

Conclusion