Sip Iocl 0921411
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Transcript of Sip Iocl 0921411
“PROJECT FINANCE FOR PRRPL AND FINANCIAL ANALYSIS OF
IOCL AND ITS PIPELINE DIVISION”
By:
Parul Midha
PGD-FM/09/007
This Presentation Entails :
Research Methodology Industry Profile Company Profile Pipeline Division Project Finance-PRRPL Financial Analysis-IOCL Financial Analysis-Pipeline Division Contribution to IOCL-Pipeline Division Recommendations Learning
Research Methodology Systematic way to carry out activities to achieve objectives. Research-Type :
Analytical Fundamental Historical Objectives :
To determine the feasibility of the PRRPL To analyze the financials of IOCL and
Its pipeline division Scope :
Focus on Project finance Analysis of IOCL-Pipeline’s Financials.
Limitations : Limited Availability of Time. No Opportunity to visit Refinery.
Where’s Problem, Info, or
Knowledge ? Lets find out….
Stimulate Mind & Knowledge to achieve
Objectives.
Data Analysis
What to do? How to do?
Reservoir of Information, Data, Knowledge
Data Collection
Data Processing
Research Methodology
Working with proper
Consultation & Guidance, for
maximum Contribution
Leave the Footprints
Industry Profile
Petroleum : An oily liquid existing at various places in the Earth’s crust.
Technology-Intensive & High Capital Investment 2% of world market-business worth USD 30bn 13% yearly growth, one of the fastest growing sector Global oil majors benchmark their production costs
with OPEC Historically, Administered Pricing Mechanism (APM)
regulation was in place, but now dismantled with presence of private players.
Volatile Prices of Crude & Petro Products, dependency on international market
Industry Profile Downstream Sector
Public IOCL HPCL BPCL
Private Reliance Shell Essar
Company Profile 18th Largest petroleum company in the world. India’s largest Commercial Enterprise. Ranks 125th on the Fortune Global 500 listing (2010), & classified as A+
Grade PSU in India. 1959 : Began operation as Indian Oil Company Ltd. 1964 : IOCL was formed, with the merger of Indian Refineries Ltd. Golden Jubilee year 2009-10 :
48% Share in Petroleum Product Market 34% Share in Refining Capacity 71% Share in Downstream Sector Pipelines Capacity
IndianOil owns & operates 10 of India's 20 refineries with a combined refining capacity of 60.20 MMTPA .
Cross-country pipelines network spans more than 10,329 kms. It operates the largest & widest network of fuel stations in
India, numbering about 18,278. CMD: Mr. B M Bansal
CITP - Values1964>>125th-Fortune 2010
Rs.2,827.06 Cr - 2009
IOCL
Divisions
Pipelines
Marketing
Refinery
R&D
Pipeline Division Has a network of 10,329km which serves as
the backbone of refining and marketing operations
It has a throughput capacity of 74.41 MMTPA. 3 Crude and 18 product pipelines with 10
more under implementation.
Product 5963Km (33.41MMTPA)
Crude 4363Km
(41 MMTPA)
10329Km (74.41MMTPA)
Project Finance What is it all about?? Project finance-A ten stage process
I• Need for a new Pipeline
II• Cost Estimates are prepared
III• Detailed Feasibility Report (DFR)
IV• Board Approval
V• Purchase Requisitions
VI• Tenders are invited
VII
• Techno Bids and Commercial Bids are receivedVIII
• Project commences
IX• Insurance
X• Commissioning of the project
Project finance for PRRPL PRRPL – “Paradip-New Sambalpur-Raipur-
Ranchi Pipeline” Need-Railway Tariffs. Length of the pipeline -1108 Km Products- MS,SKO & HSD Throughput projections till 2027. Minimum 33% as common carrier. Construction Schedule – 36 months
Capital cost Rs1793 Cr (Inc Rs610 Cr FC) Annual Operating Cost Rs67 Cr Financing- Debt:Equity =1:1 Debt@11%p.a. (8instalments with 1yr
Moratorium period) Working capital(Internal sources) IRR 16.8% (w/o IDC) > Hurdle Rate FINANCIALLY VIABLE
Comparative Ratio Analysis of IOCL, HPCL and BPCL Profitability Ratios
IOCL leads among the state owned oil companies in all the Profitability ratios consistently.
Liquidity Ratios
Due to the massive scale of operations it is way below its competitors in this category.
Activity Ratios
DTR and FATR are all below that of competitors.
Financial Analysis of Pipeline Division Operating Profits Analysis
Cost of Transportation (COT) Analysis
2005-06 2006-07 2007-08 2008-09 2009-100
500
1000
1500
2000
2500
3000
295.229999999999
417.15 435.32
2514.37
2827.06
Operating Profit
(Rs in Crores)
(Rs in Crores)
Financial Analysis of Pipeline Division Variable Cost Per MT Analysis
Ratio Analysis- Specific to pipeline division
2006 2007 2008 2009 20100
10
20
30
40
50
60
70
80
39
4754
68
56
Variable Cost Per MT
(Rs per MT)
Particulars 2006 2007 2008 2009 2010
Total Variable Cost(Rs Crores) 173 242 308 403 356
Throughput (TMT) 44832 51222 56686 59171 63992
Variable Cost Per MT(Rs) 39 47 54 68 56
Contribution to IOCL-Pipelines Division E-Payment Analysis (April,May’10)
SAP related work- Cost Estimates checked for-
PRRPL Hot Crane Restoration of Sanganer CBR Trichy Pipeline
Tenders-Commercial & Price bid evaluation for “Hot Crane” Tender(Public) “Restoration of Sanganer plant” Tender(Limited)
Cntd..
Preparation of CapEx reports for April’10 and May’10 (MS Excel, Macros)
Preparation of Schedules X and Schedule V (Balance sheet) of 2009-10. (Analysis of payments to foreign parties using SAP)
Preparation of insurance Claim file(Sanganer plant Fire)
Recommendations
The controllable costs of Rs.76.88 Cr. in 2010 should be reduced, to increase profits.
Current Ratio of 0.67:1 is low, so is quick ratio & stock-to-working capital ratio; it should be improved to amend IOCL’s liquidity position.
Working Capital of IOCL is negative Rs207Cr, because of CL>CA, therefore steps should be taken to turn it into positive. Either it should work on ↑CA or ↓CL or both.
DTR of 48.15 is almost half that of competitors like BPCL. Measures should be taken by improving credit terms and standards.
The ratios of operating costs, establishment costs per employees, per tonne are very high; it is very pertinent to bring them down.
Learnings
SAP-POs, Asset management,E-Pay Analysis ,Cost estimates,
Petrochemical,
Pipelines Industry &
its Major Market
Players
IOCL Pipelines; & Transportation Process
IOCL-Pipelines Finance Dept. Hierarchy
Financial Ratio
Analysis & IOCL-
Pipelines’ Specific
Cost Ratios
Tenders-commercial bid-
price bid
Corporate Culture, Behavior & Values
Excel
Applications
In IndianOil Corporation
Ltd.-Pipelines Division
Thank You
Have a Nice Day