Essar Oil

FUNDAMENTAL ANALYSIS

Oil Industry
Oil makes up for more than 40% of Indias Energy needs Oil Industry got deregulated from 2010 11 Major Players

Indian Oil Corporation Limited Bharat Petroleum Corporation Limited Hindustan Petroleum Corporation Limited Reliance

Genesis and evolution

The Essar Group was founded in 1969, by brothers Mr

Shashi Ruia and Mr Ravi Ruia. The 21st century for the Group has been all about consolidating and growing the businesses. Essar Oil's assets include developmental rights in proven exploration blocks, a 14 MTPA refinery on the west coast of India and over 1,376 Essar-branded oil retail outlets across India. Plans are under way to increase its exploration acreage in various parts of the globe, expand its refinery capacity to 18 MTPA, and open 1,700 outlets countrywide by March 2011.

Balance Sheet
Particular CA, Loans, Advances Inventories Sundry debt Cash in hand and bank

5,749.14 3,969.44 2,250.93

2,367.30 1,957.42 1,165.35 2,958.66 1,350.75 1,174.63 737.88 497.84 12,310.82 728.37 406.54 908.85 419.92

4,890.92
803.36 1,002.84 800.96 54.54 7,552.62

Loans,advan
Other current asset Total

8412.52 5,919.68

Balance Sheet
Particular CL, Provisions Creditors 31March11 31March10 31March09 31March08

11,287.69 10,160.57 6,903.98 7,915.59

Provisions

196.98

56.24

25.34

12.95

Total current Liabilities

11,484.67 10216.81

6929.32 7,928.54

Time series analysis

Particular Net Sales CA, Loans, Advances Inventories Sundry debt Cash in hand and bank Loans,advan Other current asset

Total

Time Series Analysis

Particular Net Sales

CL, Provisions
Creditors Other CL Provisions

Total current Liabilities

Quantum of Liquid Assets vis--vis with Current Liabilities

Liquidity Ratios Net Working Capital

Current Ratio
Quick Ratio

Net Working Capital to sales Cash to current liabilities

Particular CA, Loans, Advances

Structural Analysis

Inventories
Sundry debt Cash in hand and bank Loans,advan Other current asset Total

Details of Inventory
Inventory Packaging material,stor es and chemical Raw material Stock in Process

Finished goods

Total

Loans and advances Loans to subsidiary company

Details of Loans and advances

Advance recoverable in cash

Considered doubtful Advance Tax Deposits Balance with custom excise authority

Ratio Analysis Working Capital Management

RATIO ANALYSIS of ESSAR OIL. 31-Mar- 31-Mar- 31-MarLIQUIDITY RATIOS 31-Mar-10 07 08 09 NET WORKING CAPITAL (IN CRORES OF RUPEES) CURRENT RATIO QUICK RATIO DEBTORS TO SALES (%) INVENTORY TO SALES (%) INVENTORY CONVERSION PERIOD (in days)

31-Mar-11

Basic Data of Essar Oil

Mar 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

Mar 10

Mar 09

Mar 08

Graphical Analysis of Basic Data

Liquidity Ratios of Essar Oil

Mar '07
Operating profit Cash flow from operating activities Cash flow from operating activity to current liabilities Net working capital to sales Current ratio Quick ratio Cash to current liabilities Rsserves -49.78

Mar '08
-49.97

Mar '09
2319.96

Mar '10
1065.89

Mar '11
2425.49

-93.72

-98.69

1920.43

688.65

1218.63

-2.33729

-1.27174

22.68631

6.291972

10.60036

-1.32347
1.156443 0.304032 2.859266 1839Cr

0.368369
0.973309 0.343057 1.839887 2258.69Cr

0.02648
0.880797 0.614892 1.836234 2272.85Cr

0.048337
0.8352 0.472525 1.069813 2302.39Cr

-0.01701
1.070867 0.570773 25.73616 5155.63Cr

Du Point Analysis of Essar Oil

Mar '07 ROE -5.83758

Mar '08 -3.45946

Mar '09 -42.1556

Mar '10 2.418461

Mar '11 47.3048

Margin
Turnover Leverage

-14.239
4.097844 10.00456

-7.32362
4.129533 11.43882

-1.34757
279.9114 11.17592

0.078949
248.3161 12.33643

1.365311
227.1414 15.25377

Graphical Representation of Du Point

300 250 200 150 100 50 0 ROE Margin Turnover Leverage

Mar '07
-50 -100

Mar '08

Mar '09

Mar '10

Mar '11

Standard Deviation In Profit Margin

Profit Margin (%)

4

2
0 -2 -4 -6 Mar '07 Mar '08 Mar '09 Mar '10 Mar '11

Margin

-8
-10 -12 -14 -16

Standard Deviation Profit Margin 2007-11 - 6.479 %

Liquidity Ratios Inferences' of Essar Oil

Cash was at constant level till 2010 but suddenly went up

significantly.Possibly company is expanding establishing new refineries and increasing its capacity. Current ratio of the company is floating around unity, which is slightly less than industry average, hence liquidity of the company is lower than its competition. Quick ratio is increasing, while current ratio is constant which shows improvement in inventory management.

Off Balance Sheet Information

Total debt is about Rs 14000 crore, against an equity

of Rs 7000 crore Expect the debt to peak to Rs 18000 crore. As new refinery and unit start generating cash flows when internal accruals become very strong, they gradually come down to reach to a debt-equity ratio of almost 1:1. The Company is planning for a shutdown of 35 days starting from September 18, 2011 for routine maintenance and for tie-in of new units to expand the refining capacity to 18 MMTPA. The start up of new units will commence in phases during Q3/Q4 CY2011