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8/7/2019 Mail Report

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THE SCHOOL OF MANAGEMENT SUMANDEEP VIDYAPEETH

UNIVERSITY, AT+PO-PIPARIYA, WAGHODIA, VADODARA Declare that this

project report entitled, Liquidity, Efficiency, Solvency, & Profitability analysis of Essar Oil Limited It is the result of my own research and hard work of 2 Months of the

academic year 2010-2011 and has not been previously submitted to any university for any

other purpose .

Date: Signature

Place: Baroda (Yogesh Jethva)

PREFACE


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The objective of this study is to test the Liquidity, Efficiency, Solvency,

Profitability of Essar Oil Limited through the help of various ratios.

This report is the reflection of what I studied, and some things that I came to

know during my training. The knowledge I obtained will be helpful to my studies and in

future also.

ACKNOWLEDGEMENT


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Financial analysis is the process of identifying the financial strength and weaknesses of thefirm by properly establishing relationship between the items of the balance sheet and theprofit and loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz. owners, creditors, investors and others. The nature of analysiswill differ depending on the purpose of the analysis.

My objective and purpose of this study is to analysis of liquidity, efficiency, solvency andprofitability, to find out the degree of deviation from each standard related with liquidity,efficiency, solvency and profitability. And understand the Core function like Finance,Marketing, HR, and Production.

Now the methodology of the research is secondary data collection. The whole data wascollected through company financial report, balance sheet, and profit & loss account of thelast 5 years of the company.

Here current ratio is decrease because of high investment in inventory. Also the Acidtest ratio and Absolute test ratio is increase from in this year because of cashmanagement and debtors management. Here also cash management and debtorsmanagement are more efficient then the inventory management. Debt equity ratio isincreasing the last year because of increasing of secured loan as well as unsecuredloan. Net worth ( proprietary ) ratio is decrease and fixed assets to net worth ratio isincrease because of capitalized the company in 2008-09 so that it is increase and alsorelated to net profit and net profit is also increase which is good sign for the company.Net profit ratio and operating profit ratio is increase because they are maintaining their

solvency and efficiency of the company. And expenses ratio is also decrease andexpanses ratio is more decrease than company have also benefit of economic scale. Sothat it is good sign of the company.

Company must maintain their current assets and current liability so that current ratio isincrease in near future. Company decreases their debt so that company repaymenttheir loans as early as possible so that company can decrease their debt equity ratio. Insolvency currently they are maintain their inventory, fixed and current asset so that if they maintain same as in future so that is good sign for the company. In profitabilityratio, company decrease their expense as possible as they can so that it helpful of profit in future.

CONTENTNo. Title Page

No.

Ch 1. Topic:


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Why, Whom, Where, When and How.

Definition and Background information about the topic.

Identifying the variables and parameters for the particular study.

Ch 2.1 Company Profile:History

Benchmark & Milestone

Growth & Development

Vision, Mission, Spirit

Whos who

Ch 2.2 Industry Profile:

Competitive Scenario

Market Share

Industry Life Cycle

Govt. Rules & regulation

Ch 3. Overview of Functional Area :Finance

Marketing

Human Resource

Operations

Ch 4. Model Application:

Strategic Advantage Profile.

Porters Five Forces Model.

ETOP (Environmental Threat & Opportunity Profile).

BCG (Model).

Value Chain

Environmental Framework:

Economic

Political

Social

Technological

Legal


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Ch 5. Research Methodology:

Objectives and purpose of the studyScope of the study, Benefits of the study

Assumptions

Types of research design

Unit of Analysis

Methods of data Collection

Appropriate tools for data analysis

Limitations of the study.Ch 6. Data Collection & Analysis:

Ch 7. Findings:

Ch 8. Suggestions/Recommendations:

Ch 9. Bibliography/Annexure


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SELECTION OF TOPIC

Liquidity, efficiency, solvency and profitability

Analysis of Essar oil ltd

WHY:

To measure these four parameters of company. We know that companys past, present, futuredata analysis is one of the important factor. So that I have to analysis of Liquidity, Efficiency,Solvency, & Profitability Analysis of the Essar Oil Ltd.

WHOM:

The main purpose to choose this topic was to evaluate the financial position of the company.This topic was decided by me & consolation with finance department.

WHERE:

The Analysis of Companys Liquidity, efficiency, solvency and profitability analysis at Essar Oil Ltd.

WHEN:

The time period of this research is 1 May, 2010 to 30 June, 2010. Using the data of last Fiveyears.

HOW:

The Calculating of liquidity, efficiency, solvency and profitability from Balance sheet and

profit & loss a/c by using Last Five financial Year of the Company.


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Introduction of financial analysis and types of analysis

Types of financial analysisVertical analysis Financial analysis is the process of identifying the financial strength andweaknesses of the firm by properly establishing relationship between the items of the balancesheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz. owners, creditors, investors and others. Thenature of analysis will differ depending on the purpose of the analysis.

Technique for identifying relationship between items in the same financial statement byexpressing all amounts as the percentage of the total amount taken as 100. In a balance shit,for example, cash and other assets are shown as a percentage of the total assets and, in anincome statement, each expense is shown as a percentage of the sales revenue financialstatement. Using this technique are called financial statement

Horizontal analysis

Comparative study of a balance sheet or income statement for two or more accountingperiods, to compute both total and relative variances for each line item.

Cash Flow statement

A revenue or expense stream that changes a cash account over a given period. Cash inflowsusually arise from one of three activities - financing, operations or investing - although thisalso occurs as a result of donations or gifts in the case of personal finance. Cash outflowsresult from expenses or investments. This holds true for both business and personal finance

Fund flow statement

One of the quarterly financial reports a publicly traded company is required to disclose to theSEC and the public. It provides aggregate data regarding all cash inflows a company receivesfrom both its ongoing operations and its external investment sources as well as all cashoutflows that pay for business activities and investments during a specified quarter

Time series analysis

An analysis of the relationship between variables over a period of time. Time-series analysisis useful in assessing how an economics or other variable changes over time. For example,one may conduct a time-series analysis on stocks to help determine its volatility.
http://www.businessdictionary.com/definition/cash.htmlhttp://www.businessdictionary.com/definition/other-assets.htmlhttp://www.businessdictionary.com/definition/expense.htmlhttp://www.businessdictionary.com/definition/other-assets.htmlhttp://www.businessdictionary.com/definition/expense.htmlhttp://www.businessdictionary.com/definition/cash.html


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RATIO ANALYSIS

Introduction of ratio analysis

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as theindicated quotient of two mathematical expressions and as the relationship between two or

more things in financial analysis, a ratio is used as a benchmark for evaluating the financialposition and performance of a firm. The absolute accounting figures reported in the financial

statements do not provide a meaningful understanding or the performance and financialposition of the firm. An accounting figure conveys meaning when it is related to someanother relevant information. For example, an Rs 5 crores net may look impressive, but the

firms performance can be said to be good or bad only when the net profit figure is related tothe firms investment. The relationship between two accounting figures, expressed

mathematically, is known as a financial ratio. Ratio helps to summaries large quantities of financial data and to make qualitative judgment about the firms financial performance. For

example, consider current ratio. It is calculated by dividing current assets by currentliabilities, the ratio indicts the relationship a quantified relationship between current assetsand current liabilities. This relationship is an index or yardstick, which permits a qualitative

judgment to be formed about the firms ability to meet its current obligations. it measures thefirms liquidity. The greater the ratio, the greater the firms liquidity and vice versa. The point

to note is that a ratio reflecting a quantities relationship helps to form a qualitative judgment.

Standards of comparison

The ratio analysis involves comparison for a useful interpretation of the financial statement.

A single ratio in itself does not indicate favorable or unfavorable condition. It should becompared with some standard. Standard of comparison may consist of;

Past ratio: i.e., ratio calculated from the past financial statement of the same firm. Competitors ratios: ratio of some selected firms, especially the most progressive and

successful competitor, at the same point in time. Industry ratios: i.e., ratios of the industries to which the firm belongs and Projected ratio: i.e., ratio develop using the projected, or proforma, financial statement

of the same firm.


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Types of ratio

Several ratios, calculated from the accounting data, can be groups into various classesaccording to financial activity or function to be evaluated. As stated earlier, the parties

interested in financial analyses are short and long term creditors, owners and management.Short term creditors, main interest is in the liquidity position or the short term solvency of the

firm. Long term creditors, on the other hand, are more interested in the long term solvencyand profitability of the firm. Similarly, owners concentrate on the firms profitability and

financial condition. Management is interested in evaluating every aspect of the firmsperformance. They have to protect the interest of all parties and see that firm growsprofitability. In view of the various users of ratios, we may classify them into the following

four important categories:

(1) Liquidity ratio (2) Leverage ratio

Current ratio Acid-test ratio Cash ratio Net working capital ratio Absolute liquidity ratio

Debt ratio Debt equity ratio Capital employed to

net worth ratio Other debt ratio

(1) Activity ratio (2) Profitability ratio

Inventory turnover ratio Debtor turnover ratio Assets turnover ratio Fixed and current

assets turnover ratioWorking capital turnover ratio

Gross profit marginratio

Net profit margin ratio Operating expenses

ratio Return on investment

ratio Return on equity ratio Earnings per share ratio Dividend per share

ratio Price earnings ratio


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Liquidity ratio measure the firms ability to meet current obligations; leverage ratio show theproportions of debt and equity in financial the firms assets; activity ratio reflect the firms

efficiency in utilizing its assets, and profitability ratio measured overall performance andeffectiveness of the firm.

THEORATICALE FRAME WORK

(1)Variables

Different ratios, actual and historical

Current ratio Quick ratio

Cash ratio Interval measure ratio

Net working capital ratio Debt ratio

Debt equity ratio capital employed to net worth ratio

Coverage ratio Inventory turnover ratio

Debtors term over ratio Assets turnover ratio

Total turnover ratio Fixed assets turnover ratio

Current turnover ratio Gross profit margin ratio

Net profit margin ratio Net profit after tax ratio

Operating expenses ratio Cost of goods sold ratio

Return on investment ratio Return on equity ratio

Earnings per share ratio Dividends per share ratio

Dividend pays out ratio Dividend and earning yield ratio

Price earnings ratio Market value to book value ratio

(Note: Here researcher may use the past data and find out any deviation in four functions likeLiquidity, efficiency, solvency and profitability and current that deviation.)


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The predominant aspect of this article is the approach of cooperative foundations of doctrineand the requirement of minimum capital to cover risks, and their influence, or not, theprofitability of credit cooperatives of Sicoob Central Crediminas. In this context, theactivities of credit cooperatives involve taking various types of risks such as credit, market,liquidity, operationa and reputation. Aware that non-identification and measurement of exposures taken can lead to imbalances of property and to cause a collapse in the creditcooperative, make the relevant empirical research that is proposed this paper, especiallyconsidering the events after August 2008. It is through a regression analysis; the knownassociation of these variables, with the intention of contributing to a better understanding of the current status of cooperative credit to the standards imposed on minimum capital and thusis able to suggest reasons that explain the results.

Role of Financial Variables in Explaining the Profitability of North Dakota FarmSupply and Grain Marketing Cooperatives

Gregory McKee, Assistant Professor, Department of Agribusiness and Applied Economics,North Dakota State University. Fargo, ND, 58108 USA. Phone: 701-231-8521. E-mail:[email protected] .

Summary:This paper examines the profitability of a balanced sample of 58 North Dakota farm supplyand grain marketing cooperatives over the period 2003-2007. Our findings reveal thatincreased liquidity tended to allow farm supply cooperatives to operate more efficiently, butreduced the efficiency of cooperatives which provide farm supply and grain marketingservices. These results suggest strategies for cooperatives during times of illiquidity and other

credit constraints for achieving profitability objectives.

Liquidity, solvency, and efficiency?

An empirical analysis of the Japanese banks distress

Marie-Joe Bou-Said 1

Philippe Saucier

Summary:

The long lasting banking crisis in Japan raised questions on the real origin of the persistentand even

Increasing fragility of Japanese financial institutions. Although the dominant view points outaccumulation of risky assets in the second half of the 1980s as the main cause for 1990sbank distress, after the assets bubble had collapsed, it is also argued that poor efficiency inbank management could explain difficulties to resume with sound operation.
mailto:[email protected]:[email protected]


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INSOLVENCY PREDICTION IN THE PORTUGUESE TEXTILE INDUSTRYCarmem Pereira Leal

UTAD University, Portugal.

E-mail: [email protected]

Summary:

This study explores the main characteristics of the business bankruptcy phenomenon. Somefinancial ratios are analysed in the context of bankruptcy prediction in Portuguese textileindustry, using statistical instruments of multivariate analysis, particularly the discriminateanalysis and the conditional analysis of probability (legit). Although these models have beenfrequently used, it must be underlined that the great popularity assigned to financial ratios asindicators of the firms financial health, is still evident in some of the most recent research.


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Company P rofile HistoryThe Ruia familys origins are in Rajasthan. Sometime in the 19th century, they moved toMumbai and set up their own business. In 1956, Mr. Nandkishore Ruia, father of Mr. ShashiRuia and Mr. Ravi Ruia, moved to Chennai, capital of the south Indian state of Tamil Nadu,to begin independent business activities. He mentored his two sons in the intricacies of business. When Mr. Nandkishore Ruia passed away in 1969, the brothers laid the foundationof the Group.

The Essar Group began its operations with the construction of an outer breakwater in Chennaiport. It quickly moved to capitalize on every emerging business opportunity, becomingIndias first private company to buy a tanker in 1976. The Group also invested in a diverse

shipping fleet and oilrigs, when the Government of India opened up the shipping and drillingbusinesses to private players in the 1980s.

Then, in the 1990s, Essar began its steelmaking business by setting up Indias first spongeiron plant in Hazira, a coastal town in the western Indian state of Gujarat. The Group went onto build a pellet plant in Visakhapatnam, and eventually a fully integrated steel plant inHazira.

Through the 1990s, with the gradual liberalization of the Indian economy, Essar seized everyopportunity that came its way. It diversified its shipping fleet, started oil & gas explorationand production, laid the foundation of its oil refinery at Vadinar, Gujarat, and set up a power

plant near the steel complex in Hazira. The construction business helped the Group buildmost of its business assets. Essar also entered the GSM telephony business, establishingIndias first mobile phone service in Delhi (branded Essar Cellphone) with Swiss PTT as thejoint venture partner.

The 21st century for the Essar Group has been all about consolidating and growing thebusinesses, with mergers and acquisitions, new revenue streams and strategic geographicalexpansion.

Benchmark & Milestone Benchmark

Expansion of existing 10.5-million tone refinery to 34 million tones


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Additional single point mooring system to handle crude

Milestone

The 1990s, with the gradual liberalization of the Indian economy, Essar seized everyopportunity that came its way. It diversified its shipping fleet, started oil & gas explorationand production, laid the foundation of its oil refinery at Vadinar, Gujarat.

Essar oil Ltd is the first private Ltd company of oil & gas refinery in India & Essar oil Ltd issecond largest Private sector company in India.

Q3 EBITDA jumps to Rs228 crore against a negative EBITDA of Rs740 crore in Q3of FY 2009

EBIDTA for the nine-month period ended December 2009 increases to Rs1,255 croreagainst Rs77 crore for the corresponding year-ago period Crude throughput increased 9.3% to 3.51 MMT in Q3 of FY 2010 from 3.21 MMT in

the corresponding quarter of FY 2009

Growth & Development

Today, the Group continues to expand its global footprint, focusing on markets in Asia,Africa, Europe, Americas and Australia. Essar invests significantly in the latest technology todrive forward and backward integration in its businesses, and on leveraging synergiesbetween these businesses. It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings.

Alongside its ambitious business pursuits, Essar has been committed to its socialresponsibility. The Group runs community outreach initiatives in all its plant locations, with afocus on education, healthcare, environmental and agricultural development, and self-employment.

Essar Oil Ltd (EOL, NSE: ESSAROIL) operates a fully integrated oil company. Its assetsinclude developmental rights in proven exploration blocks, a 10.5 MTPA refinery in the west


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coast of India and close to 1,500 oil retail stations across India. Plans are under way toincrease its exploration acreage in various parts of the globe, expand its refinery capacity to34 MMTPA and open 5,000 retail outlets.

Reputed international agency, NSAI, has certified the in-place resource at the

companys Raniganj block in West Bengal to be at a level of 3.1 tcf and recoverablereserve of about 1 tcf with upside potential. Gas flow has already started and sales are likely to commence from Q4 FY2010. The company has been announced the winner of the Rajmahal CBM block in

Jharkhand at the closing of the CBM IV round of bidding. DGH estimates indicateRajmahal to be a very good CBM play with 3.2 TCF of in-place resource.

The refinery is currently operating at 14 MMTPA at a capacity utilization of 133%.Total crude processed in the 2nd quarter of FY 2010 has been 3.63 MMT, its highestever.

Production of higher margin light and middle distillates has jumped to 75% during Q2of FY 2010 from 65% of all products during Q2 of FY 2009

The company has finalized its agreement with Indian Oil for the sale of its productsand sourcing of products from IOCs supply locations.

Retail operations have been hit by surge in crude prices, with no correspondingadjustment in retail selling prices. The company is making significant efforts toincrease its non-fuel revenues to complement its retail sales.

Plans are afoot to expand retail outlets to 1500 during FY 2010

Vision Mission SpiritVision:

We will be a respected global entrepreneur, through the power of positive action.

Mission

We are committed to innovative growth, through our personal passion, reinforced by aprofessional mindset, creating value for all those we touch.

SpiritThe Essar Group has changed significantly in recent years and continues to evolve, to keeppace with the changing times. We have undertaken a sustainable journey of transformation byforaying into new international markets, and exploring new business areas in a bid to keepour entrepreneurial spirit alive, and to continue growing.

To mark the phenomenal growth witnessed over the last four decades, the Group recentlyunveiled its new brand identity marking a very important milestone in its journey andreflecting a new beginning for the Group. A new brand identity reinforces all the positives tofulfill our vision to be a global entrepreneur through the power of positive action.

We aim to have a robust value system comprising positive attitude, positive action andpositive achievement.


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Privately owned and professionally managed, the Group is judiciously invested in thecommodity, annuity and services businesses. Forward and backward integration, the use of state-of-the-art technology, in-house research and innovation have made Essar Global a forceto reckon with in each of its businesses.

Finally, the Essar way is all about keeping its entrepreneurial spirit alive, and to keepgrowing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment.

Whos WhoPromoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

Mr Anshuman RuiaPromoter Director

Essar Group

Ms Smiti KanodiaPromoter Director

Essar Group

Mr Rewant RuiaPromoter Director

Essar Group

Board of Directors

Mr Shashi Ruia ChairmanMr Prashant Ruia Director
http://www.essar.com/upload/pdf/Essar_Shashi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Shashi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Shashi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Ravi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Ravi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Ravi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Prashant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Prashant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Prashant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Anshuman_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Anshuman_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Anshuman_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Smiti_Kanodia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Smiti_Kanodia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Smiti_Kanodia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Rewant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Rewant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Rewant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Rewant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Smiti_Kanodia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Anshuman_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Prashant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Ravi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Shashi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Shashi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Shashi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Shashi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Ravi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Ravi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Ravi_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Prashant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Prashant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Prashant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Anshuman_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Anshuman_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Anshuman_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Smiti_Kanodia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Smiti_Kanodia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Smiti_Kanodia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Rewant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Rewant_Ruia_Profile.pdfhttp://www.essar.com/upload/pdf/Essar_Rewant_Ruia_Profile.pdf


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Mr Anshuman Ruia Director

Mr Naresh Nayyar Managing Director

Mr P Sampath Director, Finance

Mr Dilip J Thakkar Director

Mr KN Venkatsubramanian Director

Mr K V Krishnamurthy Director

Dr G Goswami IDBI Bank Limited, Nominee

Mr VK Sinha LIC of India, Nominee

Mr RP Singh IFCI Limited, Nominee

Oil & Gas executive committee membersPromoter Directors

Mr Naresh Nayyar MD and CEO, Essar Oil Ltd.

Mr Shishir Agrawal Director and CEO, Essar Exploration and Production (I) Ltd.

Mr Iftikhar Nasir Executive Director, Strategy and Business Development

Mr Naren Vachharajani CEO, Refinery Operations and International Trade

Mr P Sampath Director Finance, Essar Oil Ltd.

Mr S Thangapandian CEO, Marketing

Mr Shaffi Sheikh Company Secretary and Head, LegalMr C Manoharan Head, Refinery

Mr Raahil Burhaani Chief Information Officer

Mr DK Jha Sr VP and Head, EPS

Mr K Govindarajan CEO, Projects

Mr Kaustubh Sonalkar Head, Human Resources

Mr T Srinivas Head, International Supply and Trading


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Industry Profile

Competitive Scenario

Public Sector

ONGC- Oil & Natural Gas Corporation

IOC- Indian Oil Corporation

BPCL- Bharat Petroleum Corporation Ltd

HPCL- Hindustan Petroleum Corporation Ltd

GSPC- Gujarat State Petroleum Corporation

Private Sector

RIL- Reliance Industrial Ltd

CEI- Cairns Energy India

Market share

Essar oil ltd is one of the best organizations in India. Essar oil ltd is second largest refinery in

India. Market position of the Essar Oil Ltd is quite good as camper to other company. Market

share of Essar oil ltd is around 22% in India so the good contribution of product oil & gas by

the Essar oil ltd. So we can say that the Essar Oil Ltd is not leading company of oil & gas

product but his contribution is good & market position is also good.


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The market positioning is quite good then the other company.

Company provides good facilities to the customers.

Well formed & organized built company.

Continuous new technology adopt by the company.

Industry Life Cycle & Growth

The product life cycle concept describes the various stages in the life of a product from

introduction to decline. A product which is introduced will eventually die out but the number

of year in each stage, particularly the ones generating maximum yield.

Indian Petroleum Company is most important for the Indian market. Because of limited

sources of oil & gas product & also limited industry of oil & gas product in India. The

industrial life cycle of the petroleum industry is as better to the past. Now, the petroleum

industry continues growth & development in India.

So that we can say that the Indian petroleum industry is on the stage of growth in industriallife cycle.

Essar oil ltd was launched a new product then immediate aim would be to gain a foothold in

the market & gradually establish itself.

Essar oil ltd continues growth because 2008/09 Essar Oil Ltd have huge loss but in 2009/10

Essar have nearby his BEP level. So that continues growth of Essar oil ltd.

Essar oil revenue increase 19.7% in Q3 of FY 2009-2010 to Rs 11,421 crore fromRs 9541 crore in the corresponding quester of FY 2008-2009.

Essar oil is currently operating 1500 retail outlets with a pan- India footprint. This

has increased from the 983 active outlets the company had in Dec 2008.

Essar assets include development right in proven exploration blocks a 10.5 MMTPA

refinery in the west cost of Indian & close to1500 oil retail stations across India

plans are under way to increase its exploration in various parts of the globe, expand

its refinery capacity to 34 MMPTA & open 5000 retail outlets.


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Overview Functional Area MarketingEssar Oil serves retail customers through a modern, country-wide network of over 1,000

retail outlets . Essar was the first private, Indian company to enter petro retailing, looking

beyond urban marketers and reaching out to consumers deep in Indias heartland. Essar Oil

offers a wide range of products to bulk customers in the industrial and transport sectors. EOL

has product off take and infrastructure sharing agreements with oil PSUs, namely Bharat

Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and

Indian Oil Corporation (IOCL). It has received approvals to supply Aviation Turbine Fuel

(ATF) to the Indian Armed Forces.

To serve customers under the retail brand Essar Oil, we have built a modern, countrywide

distribution network of 2000 filling stations. These are designed as complete retail outlets,

offering value-added amenities and services in accordance with what customers want in

individual markets. Looking beyond the saturated urban markets, we are reaching out to

consumers deep in Indias heartland. In addition to petrol, diesel and lubricants, we will

market a full range of fuels including naphtha, kerosene and fuel oil.

Structure Of Marketing Department:

Marketing department

S&D MCO Marketing Accounts

MCO ROAD MCO RAIL MCO MARINE

Supply & D istribution:


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S&D department is a part of the marketing department; which is responsible for seeking of

availability of refinery products to customers and also seeks that all the refinery products are

being distributed properly in the domestic market.

To ensure proper distribution of refinery products, S&D on behalf of EOL has entered in topurchase and sales agreement with several oil marketing companies like IOC, HPCL and

BPCL. It has also entered in to similar contract with private players like RIL, SHELL etc.

MCO (Marketing Co-ordination Office)

MCO is also a part of marketing department which is basically responsible for operational

activities i.e. distribution of petroleum products (loading of petroleum product).

Presently Essar Oil distribute its products through three modes i.e. Rail, Road and marine. so

in order to carry out the distribution process smoothly MCO has been divided in to three

divisions namely MCO- Rail, MCO-Road and MCO- Marine.

Retail Busine ss

The retail business unit of Essar Oil is oriented towards delivering better and faster service to

its consumers. Essar pioneered the concept of setting up retail outlets using the franchisee-

owned, franchisee-operated model. We have more than 1,000 retail outlets across the country,

with plans to set up more than 5,000 outlets. Our retail outlets seek to redefine the way fuels

are retailed in India. Essar supplies its retail outlets with its branded petrol PUNCH and

high speed diesel. A host of other products are available that complement petrol (MS) and

diesel (HSD), and services that cater to customers requirements in different markets. Essar

has entered into tie-ups with leading companies like Castrol (for lubes), Pepsi and Coca Cola

(for beverages), Biostad and Rallis (for fertilizers), TATA Indicom (for PCO booths) and

HDFC.

Essar Retail S trategy:


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Primary supplylocationTerminalInlanddepotCustomer (retail/bulk)ROAD

RoadTanker/roadRoadRoad

Product Distribution Process:

Refinery


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(Product produced)

PIT

(Product Intermediate Tank)

Dispatch Tank

Gantry

Tank Truck/

Tank Wagon

Logistic Department

Logistic is the process of strategically managing the procurement, movement and storage

Of materials, parts and finished inventory (and the related information flows) through the

Organization and its marketing channels in such a way that current and future profitability

And maximized through the cost-effective fulfillment of orders.

The mission of logistics management is to plan and co-ordinate all those activities

Necessary to achieve desired levels of delivered service and quality at lowest possible

Cost.

The scope of logistics spans the organization, from the management to raw materials

Through to the delivery of the final product.

Materials Flow


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suppliers

procurement

operations

distribution

Customers

Requirements information flow

Logistics management, from this system viewpoint, is the means whereby the needs of

Customers are satisfied through the co-ordination of the materials and information flows

That extends from the marketplace, through the firm and its operations and beyond that to

Suppliers.

Distribution

The logistics chain includes the owners (wholesalers and retailers), manufacturers' agents,

and transportation channels that an item passes through between initial manufacture and final

purchase by a consumer . At each stage, goods belong (as assets) to the seller until the buyer

accepts them. Distribution includes four components:1. Manufacturers' agents : Distributors who hold and transport a consignment of

finished goods for manufacturers without ever owning it. Accountants refer to

manufacturers' agents' inventory as in order to differentiate it from goods for sale.

2. Transportation : The movement of goods between owners, or between locations of a given owner. The seller owns goods in transit until the buyer accepts them. Sellers

or buyers may transport goods but most transportation providers act as the agent of

the owner of the goods.
http://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Transithttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Transit


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3. Wholesaling : Distributors who buy goods from manufacturers and other suppliers(farmers, fishermen, etc.) for re-sale work in the wholesale industry. A wholesaler's

inventory consists of all the products in its warehouse that it has purchased from

manufacturers or other suppliers. A produce-wholesaler (or distributor) may buy from

distributors in other parts of the world or from local farmers. Food distributors wish to

sell their inventory to grocery stores, other distributors, or possibly to consumers.

4. Retailing : A retailer's inventory of goods for sale consists of all the products on itsshelves that it has purchased from manufacturers or wholesalers. The store attempts to

sell its inventory (soup, bolts, sweaters, or other goods) to consumers.

Finance

Financial management involves the application of general management principles to

particular finance operations. It is that part of management which is concerned mainly with

raising funds in the most economic and suitable manner, using these funds as profitability as

possible; planning future operations; and controlling current performances through financial

accounting, cost a/c, budgeting, statistics and other means.

Financial management provides the best guide for future resource allocation by a firm.

Financial management is important because it has an impact on all the activities of a firm.

Financial management is concerned with those managerial decisions which result in the

acquisition and financing of long term and short term assets of a firm.

Structure

Finance Manager.
http://en.wikipedia.org/wiki/Wholesalehttp://en.wikipedia.org/wiki/Wholesale


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The above organizational chart is an illustration as to how the authority and responsibility has

been delegated at Essar Oil Limited. EOL follows line organization structure as authority

depends from the top of hierarchy to its bottom level and responsibility runs from bottomlevel to the top of hierarchy.

Financial planning

One of the most important functions of finance manager is that of planning. Financial

planning is essentially concerned with the economical procurement and profitable use of

funds a use which is determined by realistic inventories decisions. Financial planning helps

management to avoid waste by providing policies and procedures which make possible a

closer coordination between various functions of the business enterprise. Financial planning

is responsibility of top level management.

BudgetBudget generally refers to a list of all planned expenses and revenues. A budget is an

important concept in microeconomics , which uses a budget line to illustrate the trade-offs

between two or more goods. In other terms, a budget is an organizational plan stated in

monetary terms.

The purpose of Budgeting is to:

Accounts Officer.

Accountant & Staff.
http://en.wikipedia.org/wiki/Microeconomicshttp://en.wikipedia.org/wiki/Budget_linehttp://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Microeconomicshttp://en.wikipedia.org/wiki/Budget_linehttp://en.wikipedia.org/wiki/Good_(economics)


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1. Provide a forecast of revenues and expenditures i.e. construct a model of how our

business might perform financially speaking if certain strategies, events and plans are

carried out.

2. Enable the actual financial operation of the business to be measured against theforecast.

In Essar, for the simplicity of work, the budget section is divided in two sub-sections:

Capital Expenditure Budget

Operating Expenditure Budget

Capital Expenditure Budget:

Capital expenditures (CAPEX) are expenditures creating future benefits. A capitalexpenditure is incurred when a business spends money either to buy fixed assets or to add to

the value of an existing fixed asset with a useful life that extends beyond the taxable year.

Capex are used by a company to acquire or upgrade physical assets such as equipment,

property , or industrial buildings . In accounting , a capital expenditure is added to an asset

account ("capitalized"), thus increasing the asset's basis (the cost or value of an asset as

adjusted for tax purposes). Capex is commonly found on the Cash Flow Statement as

"Investment in Plant Property and Equipment" or something similar in the Investing

subsection.

For tax purposes, capital expenditures are costs that cannot be deducted in the year in which

they are paid or incurred, and must be capitalized. The general rule is that if the property

acquired has a useful life longer than the taxable year, the cost must be capitalized. The

capital expenditure costs are then amortized or depreciated over the life of the asset in

question. As stated above, capital expenditures create or add basis to the asset or property,

which once adjusted, will determine tax liability in the event of sale or transfer.
http://en.wikipedia.org/wiki/Acquisitionhttp://en.wikipedia.org/wiki/Upgradehttp://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Equipmenthttp://en.wikipedia.org/wiki/Propertyhttp://en.wikipedia.org/w/index.php?title=Industrial_building&action=edit&redlink=1http://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Acquisitionhttp://en.wikipedia.org/wiki/Upgradehttp://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Equipmenthttp://en.wikipedia.org/wiki/Propertyhttp://en.wikipedia.org/w/index.php?title=Industrial_building&action=edit&redlink=1http://en.wikipedia.org/wiki/Accounting


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Included in capital expenditures are amounts spent on:

1. Acquiring fixed assets

2. Fixing problems with an asset that existed prior to acquisition

3. Preparing an asset to be used in business

4. Legal costs of establishing or maintaining one's right of ownership in a piece of

property

5. Restoring property or adapting it to a new or different use

6. Starting a new business

In Essar, for budget planning purpose, each and every department is assigned a cost center

code. Each department has to define its budget by estimating the assets they want to buy inthat year. According to that, budget is allocated to the various cost centers by the budget

department. Each department has to manage within the allocated budget. If at the end of the

year they found that their expenses are more than the budget allocated to them, than that

department has to give justification about the over expenditure to the budget department.

Operating Expenditure Budget:

An operating expense, operating expenditure, operational expense, operational expenditure or

OPEX is an on-going cost for running a product, business, or system. Its counterpart, a

capital expenditure (CAPEX), is the cost of developing or providing non-consumable parts

for the product or system. For example, the purchase of a photocopier is the CAPEX, and the

annual paper and toner cost is the OPEX. For larger systems like businesses, OPEX may also

include the cost of workers and facility expenses such as rent and utilities.

In business , an operating expense is a day-to-day expense such as sales and administration, or

research & development, as opposed to. In short Production, costs, and pricing, this is the

money the business spends in order to turn inventory into throughput. Operating expensesalso include depreciation of plants and machinery which are used in the production process.

On an income statement, "operating expenses" is the sum of a business's operating expenses

for a period of time, such as a month or year.

Accounting expenses

License fees

Maintenance and repairs

Advertising
http://en.wikipedia.org/wiki/Capital_expenditurehttp://en.wikipedia.org/wiki/Photocopierhttp://en.wikipedia.org/wiki/Tonerhttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Capital_expenditurehttp://en.wikipedia.org/wiki/Photocopierhttp://en.wikipedia.org/wiki/Tonerhttp://en.wikipedia.org/wiki/Business


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Furniture and fixtures : - Rs. 2,00 Crores

Office equipment : - Rs. 12.93 Crores

Vehicle : - Rs. 5.12 Crores

SOURCES OF FINANCE

When a firm wants to invest in long term or short term assets, it must find the means to

finance them. The firm can rely to some extent on funds generated internally. However, in

most cases internal resources are not enough to support investment plans. When that happens

the firm may have to curtail its investment plan or seek external sources of finance. Most

firms choose the later course of action. They supplement internal funding with external

funding rising from a variety of sources.

The following sources of long-term finance commonly employed by business firms: -

Retained Earnings. Equity Capital. Debentures. Term Loans.

The following sources of short term finance are commonly employed by business firms: -

Short Terms Loans. Commercial Banks. Finance Companies. Accrual Accounts. Indigenous Bankers. Advances from Customers.

Miscellaneous Sources.


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Essar Oil Ltd. has planned the sources of finance on the basis of their requirements. For long

term finances sources employed by the company are equity shares, debentures etc. For short

term finances the sources employed by the company are loans from banks, loans from

financial institution.

CAPITAL STRUCTURECapital structure is sometime known as the financial plan. It is the permanent financing of the

firm represented by long term share capital by equity shares and preference shares.

In capital structure the proportion of capital is to decide with regard to use of debt and equity.

The requisition of proportion arises because if company issues only ownership capital then it

cannot satisfy the main objective i.e. to maximize the shareholders return and if the company

issues more borrowed capital then it has to pay compulsory interest and thus it reduces

shareholders capital.

Thus the mixture of debt and equity is called capital structure. Capitalization is the sum total

of all kinds of long term securities as well as surplus which are not meant for distribution.

The amount of capital at any time should not exceed not should be less than the amount

required in both the situation company will be the loser.

Capitalization means the total amount of a company capital of total volume of its capitalstock. In other words, we can say that the capitalization means the total borrowed capital and

ownership capital of the firm. If the resource funds and retained profit increases with the

growth of company it means capitalization of the company is increasing.

WORKING CAPITAL MANAGEMENT

Working Capital may be regarded as the lifeblood of a business. Its effective provisions cando much to ensure success of a business, while its inefficient management can lead not only

to loss of profits but also to the ultimate downfall of what otherwise might be considered as a

promising concern.

The term working capital is commonly used for the requirement of capital for daily operation

of a business i.e. for purchase of raw material, payment of salaries and wages to the

employees, rent for the building, electric charges, etc. and working capital is concerned with

the problem that arrives to attempt to manage, current assets, relationship that exist betweenthem.


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Current assets means, Those assets which are easily converted into cash within one year.

Inventory: Inventories are being valued at the lower of cost and net realizable value. The

cost of inventory is determined using the weighted average cost formula.

Amount of Inventory is as follows:

Raw material = Rs.1137.05crore

Work-in-progress = Rs.614.22crore

Traded/finished goods = Rs.289.31crore

Store and spare parts = Rs.184.04crore

Other consumables = Rs.26.31crore

Total = Rs.2250.93crore.

Market Capital

During the year, pursuant to shareholders approval obtained at Extraordinary General

Meeting held on 18 th December, 2007, the company allotted 27,771,948 equity shares of Rs.10/- each of the overseas depositories for Global Depository Shares (GDSs) on issue of GDSs

aggregating to US$129.418 million to promoters on preferential issue basis.

Authorized share capital: Rs.5, 000.00crore

Issued share capital: Rs.1263.46crore

Paid up share capital: Rs.1201.53crore


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Human Resource

Human Resource Management

At the Essar Group , they believe that excellent individuals build excellent companies. And by

transforming each employee into a highly motivated, satisfied and productive team member,

they will create an outstanding organization. They also understand that each individual has

unique talents and expectations from the organization. Based on those principles, human

resources development at Essar is customized, flexible and well planned. Every Essar

employee is meticulously selected and given the freedom to be innovative, within a work

culture that is non-bureaucratic and result-oriented. They work with employees to develop

personalized and flexible individual plans for career growth, retention and compensation

within a carefully structured work framework. Through extensive career mapping, they offer

a choice of career paths that could include job rotations across functions and Group

Companies. Essar's wide range of businesses and exciting pace of growth presents a range of

opportunities and exposure that only a few others can match. The Group has a very serious

commitment to continuous training and development. Essar Learning Centre provides year-

round training. Thus, a career with Essar will offer a unique opportunity to unlock your ownpotential and realize excellence.


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Management Structure

Managing Director/ Executive Director/ CEO/Head of Corporate

functions

Senior Vice President

Vice President

General Manager

Joint General Manager

Deputy General Manager

Senior Manager

Manager

Deputy Manager

Senior Officer

Officer

General Information

Office timing

General shift: 7:30a.m. To 5:30p.m.

Shift A: 6a.m. to 2p.m.

Shift B: 2p.m. to 10p.m.

Shift C: 10p.m. to 6a.m.

The A, B and C shift is currently to operation department.


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Mobile Phone

The facility of mobile phones to the employees is totally need based and depends on the

nature of job responsibility entrust to the employee. This will be decided by the respected

HOD and approved by the Head.

Canteen facility

Three canteens functioning at site, where breakfast/ snacks are available in the morning hour

and lunch from 12:00p.m. To 2:30p.m. At fixed charges. Tea, coffee etc is served in the

office two times in the morning hour and once in the afternoon.

Mail Room

A full fledge mail office functions from Refinery Administration Building, Wing No. 2

courier service, postal stationary items etc are available on payment. The mail room person

can be contacted at extant 1118

Transportation Facility

The company provides free bus services to commute to and from all corners of Jamnagar,

Sikka and Khambhalia.

This facility is provided up to M6 (DGM) and M5 & above to made their own

arrangements.

Employee sitting beyond 7:30p.m. Can request for vehicle from transport department.

Attendance & leave rules

Attendance

All employees are expected to reach the place of work at least five minutes before the

commencement of working hours.


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All employees have to sign the attendance muster.

Leave rules

All confirmed employees will be entitled to 26 working day earned leave in a leave year from

the date of joining. An employee on probation can avail earned leave on completion of 3

months of probation.

All confirmed employee will be entitled to 12 working days as medical/ casual leave out of

which 5 working days may be avail of as a casual leave.

Salary Structure

EOL has flexi CTC concept, which offers employees to modify their CTC Components. CTC

include Basic, PF, Superannuation, Gratuity, Food Allowances, Conveyance Allowance

Certain special allowances, HRA, LTA, Medical, Variable allowances, etc .

Recruitment at EOL

For new position arising due to project expansion and for other higher positions EOL first

prefers departmental candidates if they are suitable to job. Then priority is given to relatives

of employees. If still suitable candidates are not found then it goes for other sources of

recruitment.

RECRUITMENT PROCESS

Interviews at EOL

At Essar, usually semi-structured interviews are conducted so as to know the inside out of

candidates.

Interviewers often make observations and take notes of candidates response given during the

interview, body language, subject knowledge, way of reply and behavior, nervousness,

aggression, overall impression created by the candidate, check leadership qualities, analytical

skills, communication skills, personality and attitude, etc.


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Due weight age is given to the habits and actual facts noticed during the interview for the

final selection. Past work experience is also assessed so as to predict the future performance.

Types of Appointments

Permanent Appointment

All the regular roll employees are permanent employees and are employed in different levels

i.e. M-11 to M-01 (lower to higher). Services of such employees are transferable to any part

of India as per requirement of the company.

Contractual Appointment

Such employees are appointed for a particular project. As soon as the project gets complete,

they are released or the company may extend their services for another project if they are

suitable to job. They are known as project roll employees. Their services are non transferable.

Consultants/Advisers

Certain highly experience personnel, usually above the age of 50 are appointed on contractual

bases for specific project or assignment in different functional areas for specific time duration

to guide existing employees and share their experience and impart knowledge of respective

field.

Trainees

Fresh graduate/Post graduate Engineers, Diploma Engineers and fresher from management

field are appointed as trainees by campus interviews. If they succeed in training which last

usually for one year they will be absorbed in the management cadre as per their qualification.

DET are put at M-11, MT and GET at M-10 level.

Induction & Orientation

The objective of induction and orientation programmed is to introduce the new employee and

the organization with each other, to help them become acquainted and explain upcoming one

what is expected from him on the job. New employee is introduced with various department


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personals, he is made familiar with the work culture so that he can adopt and adjust himself in

the same as early as possible.

Sometimes few materials like handbook etc. may be provided which contain information

related to business group, ongoing projects, employee compensation benefits, personnelpolicies, sources of information, employee daily routine and inside out of the company.

Checklist for induction programmed at EOL:

1. Briefing about company objectives, policies, practices and regulations.

2. Introduce new employee to his colleagues.

3. Provide assistance for any query like accommodation etc.

4. Explain working condition.

Method and mode of reporting

Safety and accident preventions

Holidays and leaves

Transportation facility

Working hours and break time

Security formalities for entry and exit

Communication system

Overtime policy

5. Explain company standard as to the following:

Handling confidential information

Attendance and punctuality

Performance norms

Wearing uniform

Discipline and behavior, safety rules


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Welfare Activities and Facilities

Welfare activities are carried on at Essar, not as a social or legal liability but as a parental

care. Essar is commuted to take a due care of its employees personal life including their

family members.

Following are the glimpse of the same

Bachelor Colony

ECL provides a bachelor colony at Vadinar site that includes around 200 employees of all levels. Colony also provides very good facilities like cricket ground, volleyball

ground, and recreation hall with carom board, table tennis, television etc.

Labor Colonies GOMTI, YAMNOTRY, PRAYAG and MYTHOI are four labor colonies with best

infrastructure that includes around 13,000 workers.

Employee entitlements Various events, Programmers, get to gather, parties, festival celebration, sports activities,

etc. are arranged on frequent basis.

Bank AccountAll the employees have their salary account with banks designated by Essar Oil Limited

under the corporate arrangement.

Leave RulesAll the confirmed employees are entitled to get 26 working days leave in a year and 12

working days leave as a medical/casual leaves Accident Insurance Medical facilities Free transportation facilities Canteen facility


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STATUTORY FACILITIES

Shelters, Rest rooms and Lunch room First-aid facilities Storing facilities Washing facilities Urinal and Toilet facilities Sitting Facilities Canteen facilities

Labor Welfare, as define in a resolution in 1947 by ILO is such services, facilities andamenities as adequate canteen, ret and recreation facilities, arrangement of travel to & from

work, and for the accommodation of workers employed at a distance from their houses and

such other services, amenities and facilities which contribute to improve the conditions under

which workers are employed.

NON STATUTORY FACILITIES

Following are the non statutory facilities provided by the company on volunteer basis so as to

motivate and facilitate the employees.

Education help Sports activities Uniform Cultural events on Establishment Day Snacks and tea Medical reimbursement Winter wear Long service award


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Operation

REFINERY DIVISIONEssar Oil Refinery at Vadinar in Jamnagar, Gujarat is ideally located in India's West Coast in

close place to the crude rich Gulf States. Vadinar is an all-weather deep-draft natural port.

More than 60% of India's crude imports land in and around this region.

The company has already embarked up gradation of the expanding the refining capacity at

Vadinar from the present capacity 10.5 MMTPA to 34 MMTPA with an investment of close

to Rs.10 Billion (USD 2.2 billion).

The refinery is fully integrated with its own dedicated 120 MW co-generation power plant,

port and terminal facilities. It includes a Single Point Mooring (SPM) capable of handlingvessels up to 350, 000 DWT with a capacity; marine product dispatch capacity of 14

MMTPA; rail -car and truck loading facilities.

OIL EXPLORATION & PRODUCTION

Essar Oil was among the first private sector company in India who had participated in 1993s

bidding round for exploration blocks. It currently has participation interest in several blocks

in India and overseas for exploration, production and development of oil, gas and coal bedmethane.

In order to strike a right balance between E xploration as well as Production , Essar Oil has

constantly looked out for new opportunities. Companys current Geo-graphical areas of focus

are Indian sub-continent, the Middle East, Saharan Africa, Australia, Russia etc.

Companys current E&P portfolio comprises Nine Onshore and Three Offshore blocks for

oil, gas and CBM in India, Madagascar, Myanmar and Nigeria with total acreage of about

46,000 sq. km. in onshore and 4,600 sq. km. in offshore, held under Essar Exploration &

Production Limited.

In the early 1990's and undertake drilling, hydro-fracturing and de-watering of 3 CBM wells,

in the Cambay Basin, near Mehsana, Gujarat, India.

EEPL was setup and is also currently augmenting, a highly enriched technical team and

highly motivated management team, consisting of specialists in finance, business

development, logistics, human resources, and project consultancy.


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PLANT LOCATION

ESSAR REFINERY AT VADINAR

The refinery at Vadinar, India of Essar Oil Limited was commissioned on November 28,

2006. The refinery has the most advanced configuration with following major process units:

Crude Distillation Unit (CDU)

This is a mother unit in which crude oil is fractionated into different products like light

naphtha, heavy naphtha, Lkero, Hkero, LGO and HGO by distillation process.

The unit has major equipments like world's tallest crude distillation column, fired heater,

network of heat exchangers, coolers and air coolers, pumps, compressors and vessels.

The unit operation is fully automatic with the most advanced instrumentation and control

system to ensure safe and the most energy efficient operation.

Vacuum Distillation Unit (VDU)

This is a basic unit to upgrade the atmospheric residual oil received from CDU through

distillation process carried out under vacuum and to derive the products like vacuum

distillate, LVGO, HVGO and HHVGO.

The unit has major equipments like vacuum distillation column, ejector system, fired heater,pumps, vessels and the integrated network of heat exchangers, coolers and air coolers with

CDU.

Vis Reaker Unit (VBU)

The vacuum residue received from VDU is further upgraded to derive more distillates by

thermal cracking process in this unit.

The thermal cracking takes place in the furnace and distillates are obtained through two stagedistillation in atmospheric and vacuum distillation columns.

Fluid Catalytic Cracking Unit (FCCU)

The LVGO and HVGO (received from VDU) as well as gas oils obtained from VBU are

further upgraded into useful products like LPG, gasoline, diesel components, etc. throughcatalytic cracking process carried out in the specially designed reactor in this unit.


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The catalyst is also continuously regenerated and reused in the unit to reduce production cost

drastically

Saturated Gas Unit (SGU)

Refinery gases and light naphtha steams are processed in this unit to recover LPG

components and reduce gaseous losses such as to maximize LPG production.

Naphtha Hydrotreater and Catalytic Reformer Unit (NHT-CCR)

Naphtha produced in the refinery is processed in this unit to produce high octane blending

component to boost octane of the gasoline pool.

Treating Units

The products like LPG, gasoline, kerosene, ATF, diesel, etc. obtained from various units in

the refinery undergo finishing treatments to meet the highest quality standards for these

products mainly w.r.t. sulfur and olefins contents.

The refinery has following treating units:

a) Diesel Hydro Desulfurization Unit( Under construction)

b) Kerosene Treating Unit

c) Gasoline Treating Unit

d) LPG Treating Unit

Automation of Refinery Operation

The operation of the entire refinery involving all the process units and all the facilities is

made fully automatic with the most advanced instrumentation and control system to ensure

safe and the most energy efficient operation.

Organizational & group structure

Essar Group

Essar Steel Ltd


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Essar Oil Ltd

Essar Power Ltd

Essar Construction Ltd

Essar Shipping & Logistic Ltd

Essar Telecom Ltd

Essar Bpo (Agies Ind ) Ltd

Essar Agro Ltd

Model ApplicationA. Strategic Advantage Profile:


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The Strategic Advantage Profile analysis is nothing but the strength and the weaknessof the company. It includes every aspect which connects to the betterment of thecompany and also to know at which place the company is lacking.

So, this is the reason why the company makes up to the SAP analysis. And, thestrength and the weakness of the company is treated to be one of the important factor to get to know about the companys future courses, the improvement sessions, thecollectivism, and also the improvising part.

Let us see the strength and the weakness of the company as per the departments in atabular measurement way:

Areas Performance Importance

Strength Weakness RatingMajor Minor Neutral Minor Major High Medium LowMARKETING1. CompanyReputation

3

2. Market Share 33. Customer Satisfaction

2

4. Customer Retention

3

5. Product

Quality

3

6. ServiceQuality

2

7. Pricing 18. DistributionEffectiveness

3

FINANCE1. Cost of Capital

2

2. Cash Flow 2

3. FinancialStability 2

4. FinancialGrowth

1

Human Resource1. Recruitment 22. Traineeprogrammed

2

3. Welfareactivities &

facilities

3


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Symbols Rating System RATING

3 GOOD

2 SATISFACTORY

1 BAD

This is the rating which I took into consideration in the study of the company. And, bythis you can easily judge the companys strengths and weaknesses.

Still, the company is lacking in some course of actions but the stages of theimprovements are going high.

A. Porters 5 Forces Model:

The Porter's 5 Forces tool is a simple but powerful tool for understanding wherepower lies in a business situation. This is useful, because it helps you understand boththe strength of your current competitive position, and the strength of a position you'relooking to move into.The tool is used to identify whether new products, services or businesses have the

potential to be profitable. However it can be very illuminating when used tounderstand the balance of power in other situations too.


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Under stated is the Porters 5 Forces Model:

1) Supplier Power:Here you assess how easy it is for suppliers to drive up prices. This is driven by thenumber of suppliers of each key input, the uniqueness of their product or service,their strength and control over you, the cost of switching from one to another, and soon. The fewer the supplier choices you have, and the more you need suppliers' help,the more powerful your suppliers are.

Suppliers largeSimilar productsDifferentiation of inputsImpact of inputs

2) Barriers to Entry:

Power is also affected by the ability of people to enter your market. If it costs little intime or money to enter your market and compete effectively, if there are feweconomies of scale in place, or if you have little protection for your key technologies,then new competitors can quickly enter your market and weaken your position.

No technology protectionBrand IdentityGovernment PolicyCapital requirementsNew product launch

3) Buyer Power:

Supplier Power

Buyer Power

Threats of Substitutes

Barriers toEntry RIVALRY


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Here you ask yourself how easy it is for buyers to drive prices down. Again, this isdriven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on.

Price sensitivityBrand identityHigh buyer power Product differentiation

4) Threats of substitution:This is affected by the ability of your customers to find a different way of doing whatyou do

Price PerformanceCompetitors

Relationship ManagementSwitching costs

5) Rivalry:What is important here is the number and capability of your competitors if you havemany competitors, and they offer equally attractive products and services, then youllmost likely have little power in the situation. If suppliers and buyers dont get a gooddeal from you, theyll go elsewhere. On the other hand, if no-one else can do whatyou do, then you can often have tremendous strength.

B. ETOP:

ETOP is commonly used to report the external environment situation. It is used to relateto external business environment. It considers with the external factors of the company.And, also deals with the Opportunities and Threats.

ETOP includes some environment factors like economic, social, technological, political,legal affect by the organization. The economic factors like the employment, income,inflation, recession, productivity and wealth of the consumers & firm. So that economicfactors is also affected to the orgnization.The income of the people is also affected likethe income increases of the people they purchase more product but their income is lowthen people purchase less product. The inflation is at the least base of the economic

factors which could be affected but it also has a bit of play in market. The pricing factor isalso affect, internal & external factor affect to the organization.


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Environment Threats:

1. The main threats are Adverse Macroeconomic Factors in the organization.

2. The Essar oil ltd some Stringent Regulations in the organization.

3. The Essar oil ltd Intense Domestic Competition to the organization

4. The Essar oil ltd main threats are income of the people & inflation rate. .

Opportunity Profile:

1. The Essar oil ltd considering New Assets Acquisition in the organization.

2. The Essar oil ltd is the Coalbed Methane Operations in the organization.

3. The Essar oil ltd is the Expansion Plans for the refinery of the organization.

4. The progressive report shows the company is getting into and taking improvementssteps in the field itself by the help of the technology, by the time in this movingtechnological world.

5. The Essar oil ltd provides employment to the people.

A. BCG Matrix:BCG Matrix is basically based on the study of the review note. It is a study of relationbetween market share and market growth. And, the level of high and low rating scale is

classified.BCG Matrix Model:


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Now, here it says like the rating scale relation between Market Share and Market Growth.

The Market share serves the measure of strength in the market. The Market growth rate provides a measure of market attractiveness.

Let us see it in detail in further:

1. Stars:Stars are high growth businesses or products competing in markets where they arerelatively strong compared with the competition. Need of the heavy investment isnecessary to sustain growth.So, in here, the company relates to heavy investment and in return the heavy returnsfor their customers.So, majorly the STARS Stage is not in the suitable position to be called to be thecompanys motive for long term periods. They relate this activity in the initial stagesas to get into market and held their position.

2. Cash Cows:Cash cows are low-growth businesses or products with a relatively high market share.These are mature, successful businesses with relatively little need for investment.They need to be managed for continued profit - so that they continue to generate thestrong cash flows that the company needs for its Stars.


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The investments are made to give the best out of the company. There is a stagnantappeal growth in the company which lead the company to this level where it issuccessful and mature in flowing of funds and profits.

3. Question Marks:Question marks are businesses or products with low market share but which operatein higher growth markets. This suggests that they have potential, but may requiresubstantial investment in order to grow market share at the expense of more powerfulcompetitors.

It is never in the stage like this where they need potential to be grown up. From theinitial stage only the company is in the pathway of growth and development. And,there grow up into the market share in the market; they had been successful ingenerating funds for their expenses at the vital intervals.

4. Dogs:The term "dogs" refers to businesses or products that have low relative share inunattractive, low-growth markets. Dogs may generate enough cash to break-even, butthey are rarely, if ever, worth investing in.

Our company situation has never been into such practices to be into such stages. Inhere, it says that the company can get into such low practices. Finding

Now, we can say that Essar Oil Ltd is in the cash cows stage in present. As, from theestablishment in year 1990, the investments are made to give the best out of thecompany. There is a stagnant appeal growth in the company which lead the companyto this level where it is successful and mature in flowing of funds and profits.

A. VALUE CHAIN:

The value chain as a tool for identifying ways to create more customer value. Every firmis a synthesis of activities that are performed to design, produce, and market, deliver, andsupport its product. Value chain identifies nine value creating activities consist of fiveprimary activities and four support activities.

The primary activity includes the following points:


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Inbound Logistics Operations Outbound Logistics Marketing & Sales Service

Now let us see the above points into the companys terms:

1. Inbound Logistics:Bringing new material into the business is the purpose of the inbound logistics.The Essar oil ltd is purchase 40% of crude for the oil & gas product by nearest place& More than 60% of India's crude imports land in and around different region. Thisrow material goes to the operation for the further process.

2. Operations:

Operation relates with the motive, goal and subject. A specific goal for the inputsmade in the inbound stage. So, we have to define a goal for the inputs made.The Essar oil ltd the row material of the further processing in to the refinery &different product produces by the company like Naphtha, Heavy Naphtha, Lkero,Hkero, LPG, Gas, Diesel, Oil etc

3. Outbound Logistics:It relates to the finished goods. The product now are been manufactured and are readyto be launched into the market for their sales and stacks.The product is produces then the product sales in to the market. Different productsales in different market. The Essar oil ltd is also sales the product in different state of India & also export the product in different country.

4. Marketing & Sales:The marketing and sales plays a vital role in the part of the oil manufacturing for thecompany because if marketing is done in a proper way then it is obvious that the salesof the oil would take place.

And, if sales are made in the proper channel then the marketing could be carried outas well. So, sales and marketing are inter related. And, it also includes the channel of distribution.

5. Services:It leads the after sales services and the in - stock services given by the company. Theservices provided to the customers of the company also plays major role in success of product launch. Because, customers if are in trouble using it then there should besomeone who can guide them at the trouble shoot.


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Envir onmental F ramework

Economic

E conomic factors, such as employment, income , inflation , interest rates, exchange rate,

recession productivity , and wealth , that influence the buying behavior of consumers and

firms. The economical environment affects the company in many ways.

As, it relates to the factors like employment, and employment plays in the affectingfactors because if the recruits are not placed properly then it do affect. Because it islike the right person at right place.

The income factor plays like the income redemption to the employees of thecompany. And, with it the payments should be made unbiased and towards hiscapability.

The inflation is at the least base of the economic factor which could be affected but italso has a bit of play in market.

The most important is the pricing factor in which the people are most interested. The recession is also important factor affect to the company & market.

Social

Social environment affects people live and behave as they do.

The social environment affects the Company in the greater way because the Companyis serving to the societal benefits.

The prevention facilities are concern to the social living only. The company proved different type of facilities like Education, social welfare activity

& so on The company is affected by social environment are:
http://www.investorwords.com/1639/economic.htmlhttp://www.investorwords.com/1639/economic.htmlhttp://www.investorwords.com/1639/economic.htmlhttp://www.investorwords.com/1639/economic.htmlhttp://www.businessdictionary.com/definition/factor.htmlhttp://www.businessdictionary.com/definition/employment.htmlhttp://www.businessdictionary.com/definition/income.htmlhttp://www.businessdictionary.com/definition/inflation.htmlhttp://www.businessdictionary.com/definition/interest-rate.htmlhttp://www.businessdictionary.com/definition/productivity.htmlhttp://www.businessdictionary.com/definition/wealth.htmlhttp://www.businessdictionary.com/definition/influence.htmlhttp://www.businessdictionary.com/definition/buying-behavior.htmlhttp://www.businessdictionary.com/definition/consumer.htmlhttp://www.investorwords.com/1639/economic.htmlhttp://www.businessdictionary.com/definition/factor.htmlhttp://www.businessdictionary.com/definition/employment.htmlhttp://www.businessdictionary.com/definition/income.htmlhttp://www.businessdictionary.com/definition/inflation.htmlhttp://www.businessdictionary.com/definition/interest-rate.htmlhttp://www.businessdictionary.com/definition/productivity.htmlhttp://www.businessdictionary.com/definition/wealth.htmlhttp://www.businessdictionary.com/definition/influence.htmlhttp://www.businessdictionary.com/definition/buying-behavior.htmlhttp://www.businessdictionary.com/definition/consumer.html


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External Factors

Relationship

Customerization

Preventive measures

Well Being facilities

Satisfaction level

Internal Factor

Employees stagnancy

Benefits to the employees

Payment benefits

Delegation of work force

Technological

The technology is the most important of the company. The technological factor plays an important role in the companys positional scenario. They are totally measured as the development of the company. The technical factors are affected in the internal courses only. The present scenario of the company can be measured through the technical aspects

which takes place in the company at the time of the activist of the company. The wayof treating, operating, analyzing, etc can be included in the technological factors of the company.

The present scenario of the company as per the technological factor is concerned areas under

Operating facilities Analyzing Billing

Filling Payment Operating facilities Billing Filling Payment Conferencing Training

The progressive report shows the company is getting into and taking improvementssteps in the field itself by the help of the technology, by the time in this moving

technological world.


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Political

The basic understanding of the political legal environment is when the governmentimplement's laws and regulations which affect the way a business operate.

The political factors are affecting in the way of the government rules and regulations.

The format of the start the business, the form filling, the prescribed relativedocumentaries, the sanction planning of the company.

These all are factors which are the affecting the company in the current scenario butstill the political issue in the profession of the oil industry is at its least possession.

Legal

Sets the basic rules for how a business can operate in society. Without legalization the company cannot make its place on the market. The legal aspect also includes the government. Because the highest authority is the

government. So, for that the basic rules are to be followed to reunite any of the company. So, legal environment also play a part to be followed into the company and it does

affect vigorously. There are various steps to be carried out for the legalization and that is included in the

legal environment.

RESEARCH METHODOLOGY

Obj ective and purpose of the study To analysis of liquidity, efficiency, solvency and profitability To find out the degree of deviation from each standard related with liquidity,

efficiency, solvency and profitability. To do detail inquiry to fill gap of deviation To understand the Core function like Finance, Marketing, HR, Production.

Scope of the study

The time period of this research is within two month at Essar Oil Ltd. Basicallyquantitative data collection of the last Five year. This analysis is just for the Essar oilltd at Jamnagar.


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Benefits of the study

For company

Company is able to know existing position of a four function like Liquidity,

efficiency, solvency and profitability Company is also able to know the deviation in the Liquidity, efficiency, solvency and

profitability And how to improve this deviation of liquidity, efficiency, solvency and profitability.

For reader

It can be useful to those who want to do further research on this topic as guidance.

Assumption Researcher may assume that the primary and secondary data is fair. Primary data collected by the researcher is true to the extent possible. No adjustment has been done in the data collect for secondary sources.

Types of research design

Here researcher take a descriptive research design because of the variable is well known andwell define and existing theory of analysis of financial statement for module liquidity,efficiency, solvency, and profitability is going to be check in Essar Oil Ltd. Also well awareabout the problem and subject of the research and also we know the various techniques tosolving particular problem.

Unit of analysis

The unit of analysis is as under:

Current ratio Quick ratio

Cash ratio Interval measure ratio

Net working capital ratio Debt ratio

Debt equity ratio capital employed to net worth ratio


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Coverage ratio Inventory turnover ratio

Debtors term over ratio Assets turnover ratio

Total turnover ratio Fixed assets turnover ratio

Current turnover ratio Gross profit margin ratio

Net profit margin ratio Net profit after tax ratio

Operating expenses ratio Cost of goods sold ratio

Return on investment ratio Return on equity ratio

Earnings per share ratio Dividends per share ratio

Dividend pays out ratio Dividend and earning yield ratio

Price earnings ratio Market value to book value ratio

Methods of data collection

Secondary methods:

Researcher is use primary methods as well as secondary methods because they may use theprofit and loss account and balance sheet of the company for the last five year analysis so it issecondary methods.

Primary methods:

I have relied on the facts and figures as published in the Financials of Essar Oil Limited andalso conducted interviews on test basis to modify/change any assumption that I have made inthe analysis of data of Essar Oil Limited

Appropriate tools for data analysis

We may use statically tools like central tendency measure of variation and mathematical toolslike ratio analysis

Limitation of the study

The main limitation of this research is short period of time and other factor is cost


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Data is closed so there is a chance of deviation in actual situation Researcher has retied on primary & secondary data as available from time to time.

DATA COLLECTIONThe data are collocated from publish financial report and also from the balance sheet andprofit and loss account of company.

Note:The company has commenced commercial production of Refinery on May 1, 2008. AllExpenditure pertaining to the completed Refinery being advances on capital account, capitalwork in progress & expenditure during construction have been capitalized during the year 2008-09. Hence it will not be possible to compare effectively the financial results of theorganization over a period of time due to the capitalized effect.


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Data analysisLiquidity

1. Current Ratio

Ratio 2008-09 2007-0

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