GROUP MEMBERS PRITILATA BHOWMICK PRANJAL CHOPRA KETKI PRATIK KUMBLE MANISH MAYURI SHETIGAR URVASHI THAKKAR ANKITA

R ANKITA WARKAR 06 09 16 17 19 27 30 33

STD: - SYFM (4TH SEMISTER) ASSINGMENT NO.2 SUB: - EQUITY MARKET-2 TOPIC: - FUNDAMENTAL ANALYSIS OF OIL & REFINERIES INDUSTRIES (5 COMPANIES) 1. BHARAT PETROLEUM CORPORATION LTD. 2. ESSAR OIL & GAS 3. INDIAN OIL 4. ONGC 5. RELIANCE INDUSTRIES LTD. SUBMITTED TO: - MANOJ SIR SUBMISSION DATE: - 18TH FEB, 2012

Fundamental analysis
Fundamental analysis of a business involves analysing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and management. When analysing a stock, futures contract, or currency using fundamental analysis there are two basic approaches one can use; bottom up analysis and top down analysis.[1] The term is used to distinguish such analysis from other types of investment analysis, such as quantitative analysis and technical analysis. Fundamental analysis is performed on historical and present data, but with the goal of making financial forecasts. There are several possible objectives: to conduct a company stock valuation and predict its probable price evolution, to make a projection on its business performance, to evaluate its management and make internal business decisions, to calculate its credit risk. Two analytical models When the objective of the analysis is to determine what stock to buy and at what price, there are two basic methodologies 1. Fundamental analysis maintains that markets may misprice a security in the short run but that the "correct" price will eventually be reached. Profits can be made by trading the mispriced security and then waiting for the market to recognize its "mistake" and reprice the security. 2. Technical analysis maintains that all information is reflected already in the stock price. Trends 'are your friend' and sentiment changes predate and predict trend changes. Investors' emotional responses to price movements lead to recognizable price chart patterns. Technical analysis does not care what the 'value' of a stock is. Their price predictions are only extrapolations from historical price patterns. Investors can use any or all of these different but somewhat complementary methods for stock picking. For example many fundamental investors use technicals for deciding entry and exit points. Many technical investors use fundamentals to limit their universe of possible stock to 'good' companies. Fundamental analysis includes: 1. Economic analysis 2. Industry analysis 3. Company analysis

On the basis of these three analyses the intrinsic value of the shares are determined. This is considered as the true value of the share. If the intrinsic value is higher than the market price it is recommended to buy the share. If it is equal to market price hold the share and if it is less than the market price sell the shares. Use by different portfolio styles Investors may use fundamental analysis within different portfolio management styles. Buy and hold investors believe that latching onto good businesses allows the investor's asset to grow with the business. Fundamental analysis lets them find 'good' companies, so they lower their risk and probability of wipe-out. Managers may use fundamental analysis to correctly value 'good' and 'bad' companies. Eventually 'bad' companies' stock goes up and down, creating opportunities for profits. Managers may also consider the economic cycle in determining whether conditions are 'right' to buy fundamentally suitable companies. Contrarian investors distinguish "in the short run, the market is a voting machine, not a weighing machine".[2] Fundamental analysis allows you to make your own decision on value, and ignore the market. Value investors restrict their attention to under-valued companies, believing that 'it's hard to fall out of a ditch'. The value comes from fundamental analysis. Managers may use fundamental analysis to determine future growth rates for buying high priced growth stocks. Managers may also include fundamental factors along with technical factors into computer models (quantitative analysis). Top-down and bottom-up Investors can use either a top-down or bottom-up approach. The top-down investor starts his analysis with global economics, including both international and national economic indicators, such as GDP growth rates, inflation, interest rates, rates, productivity, and energy prices. He narrows his search down to regional/industry analysis of total sales, price levels, the effects of competing products, foreign competition, and entry or exit from the industry. Only then he narrows his search to the best business in that area. The bottom-up investor starts with specific businesses, regardless of their industry/region. Procedures The analysis of a business' health starts with financial statement analysis that includes ratios. It looks at dividends paid, operating cash flow, new equity issues and

capital financing. The earnings estimates and growth rate projections published widely by Thomson Reuters and others can be considered either 'fundamental' (they are facts) or 'technical' (they are investor sentiment) based on your perception of their validity. The determined growth rates (of income and cash) and risk levels (to determine the discount rate) are used in various valuation models. The foremost is the discounted cash flow model, which calculates the present value of the future dividends received by the investor, along with the eventual sale price. (Gordon model) earnings of the company, or cash flows of the company. The amount of debt is also a major consideration in determining a company's health. It can be quickly assessed using the debt to equity ratio and the current ratio (current assets/current liabilities). The simple model commonly used is the Price/Earnings ratio. Implicit in this model of a perpetual annuity (Time value of money) is that the 'flip' of the P/E is the discount rate appropriate to the risk of the business. The multiple accepted is adjusted for expected growth (that is not built into the model). Growth estimates are incorporated into the PEG ratio, but the math does not hold up to analysis.Its validity depends on the length of time you think the growth will continue. IGAR models can be used to impute expected changes in growth from current P/E and historical growth rates for the stocks relative to a comparison index. Computer modelling of stock prices has now replaced much of the subjective interpretation of fundamental data (along with technical data) in the industry. Since about year 2000,with the power of computers to crunch vast quantities of data, a new career has been invented. At some funds (called Quant Funds) the manager's decisions have been replaced by proprietary mathematical models

TRENDS IN THE OIL & GAS SECTOR

Although there was a gradual increase in international oil Prices in 2009-10, the record levels reached in 2008-09 were not breached. The year 2010-11 has seen prices being sustained at high levels and over the later part of the year, The prices have gone up further. At present, oil prices continue to remain beyond the USD 100 per barrel mark. The high prices can be attributed to the political situation in several countries of the Middle East and North Africa. Also, consequent to the nuclear plant crisis in Japan caused by the earthquake and tsunami, there are expectations of an increase in demand for oil and gas in that country to Replace nuclear power. The International Energy Agency (IEA) has, in its oil market Report of 12th April, 2011, estimated the global demand for Oil in the calendar year 2010 to be of the order of 87.9 Million Barrels per day (MBPD) representing an increase of 2.9 MBPD and 3.4% over the demand in 2009. At the same Time, the total supply of crude oil increased only by 1.5 MBPD in 2010 over 2009. The Asia Pacific region has accounted for a major portion of the growth in demand in 2010. The other regions have maintained their demand Levels, unlike the previous year, which had witnessed a Sharp fall in demand, especially in countries of Europe and North America. The average price in 2010-11 of the Benchmark Brent crude stood at USD 86.73 per barrel which was more than the highest level of USD 80.5 per barrel in? The previous year. While demand for crude oil will remain Strong from countries like India and China, prices are likely To be impacted by the crisis in the Middle East and North Africa, higher demand from Japan (if there is a switch from Nuclear power) and increased consumption in developed Countries, as the economies continue their recovery. The Reserve Bank of India had, therefore, in its Monetary Policy Annual Report 2010-2011 29 Statement for 2011-12, estimated the average cost of crude Oil in 2011-12 to be around USD 110 per barrel. The year 2011 is expected to see the global oil demand to reach a level of 89.4 MBPD, indicating a year on year growth of 1.6%. The IEA estimates the global oil demand to grow by 1.3% annually over the next five years and reach a level of 95.3 MBPD by 2016. However, the possibility of persistent High oil prices impacting this likely growth in demand remains. The increase in global demand will continue to be led by the Growth in countries of the Asia Pacific region. Towards the end of the financial year 2009-10, there was Hardly any differential between the prices of Brent and Dubai Crude. The trend of reducing differentials between the light And heavy crude oils had commenced in 2008-09. The year 2010-11 saw the differential make a comeback with the Brent Dubai differential averaging USD 2.6 per barrel. The Initial months of the financial year 2011-12 has seen the

Differential widen further and average around USD 7 per Barrel. The significant increase in the differentials, if sustained during the current year, can benefit refineries Capable of processing heavier crude, by enhancing the Refining margins. The sharp drop in the oil output of countries like Libya had an impact on crude oil availability in March 2011 and this has contributed to higher prices. Major oil exporting countries Like Saudi Arabia have ensured higher supply levels as Compared to the previous year. However, prices are likely to remain high owing to constraints on the supply side. The Pace of economic recovery in the developed countries, Impact of the debt crisis in Europe, coupled with inflationary Pressures in countries like India and China, could however moderate demand for crude oil in 2011-12. The trend of the average crude oil prices in 2010-11 being higher than the average prices in 2009-10 has also been witnessed in prices of key petroleum products. Although there has been some reduction in the current financial year, Product prices continue to rule at high levels. This will push up costs in countries that are largely dependent on imports for meeting their requirements of petroleum products. The Higher international prices are likely to impact the growth in demand. Barring Germany which has seen strong growth in demand for products like Naphtha and Diesel, on account Of a strong economic performance, growth remains flat in other major European countries. Asia continues to show Strong demand growth with India likely to see increased demand for products like Liquefied Petroleum Gas (LPG), Diesel and Petrol.

INDIAN PETROLEUM SECTOR

Even as the economies around the world continue the process of recovering from the financial crisis, the Indian economy remained one of the few to grow at a reasonable rate. While the GDP grew at around 8% in 2009-10, the growth is estimated to be around 8.5% in 2010-11. This can be attributed to a large extent on the good performance of the agriculture sector on account of the good monsoon. The industrial sector has started showing signs of slowing down since the beginning of the second half of the year. As per the provisional figures released by the Petroleum Planning & Analysis Cell in the Ministry of Petroleum & Natural Gas, consumption of petroleum products in the country in 2010-11 was of the order of 141.75 MMT as against 137.81 MMT in the previous year. This represents an increase of 2.86% over the previous year. The growth rate in the consumption of petroleum products has declined during the year, as compared to the previous year when consumption had grown by 3.15%. The retail segment of the market, comprising of transportation fuels like Motor Spirit (MS) and High Speed Diesel (HSD), has grown over the previous year by 7.4%. While the consumption of MS has gone up by 10.8% over the previous year, demand for HSD went up by 6.6%. However, when seen in the context of the growth in 2009-10, the rate of growth has been lower in both MS and HSD. Aviation Turbine Fuel (ATF) have also delivered strong growth in 2010-11.In the case of ATF, the growth at 9.7% is considerably higher than the previous year, clearly indicating that the recovery of the Aviation sector from the slowdown seen in 2008-09 was sustained. However, the growth in Bitumen demand seen in 2009-10 could not be sustained and consumption fell by 7.7% during the year. Demand for Naphtha remained flat and decline was also evident in Liquefied Natural Gas (LNG) sales, mainly on account of increased availability of domestic gas during the year. The higher prices in the international markets increase in domestic selling price of products like MS and HSD and lower production of domestic gas are likely to impact the demand for petroleum products in 2011-12. During the year under review, the average cost of the Indian basket of crude oil stood at around USD 85 per barrel as compared to an average cost of USD 70 per barrel in the previous year. The average cost in 2010-11 is even higher than the average cost in 2008-09 when prices had reached record levels, clearly indicating that the relief on account of lower prices in 2009-10 was short-lived. The prices have continued to remain firm in the initial months of the current financial year also. The higher prices have in turn, increased the burden on the public sector downstream marketing companies, as there was no revision in the selling prices of key products like HSD and Superior Kerosene Oil (SKO) after June 2010, in the financial year 2010-11. There has been a sharp increase in the under-recoveries on the sale of these products, which in turn has adversely affected the financial position of the public sector oil marketing companies.

Oil is the single most important commodity that holds the position of a key factor in each and every economy of the world. India is one of the largest consumers of oil in the world. US tops the list of largest consumer of oil. Indias demand for oil is expected to grow at an annual growth rate of 3.6% whereas domestic production is expected to grow at approximately 2.5%. Oil sector is mainly classified into exploration, refining & marketing segments. 1 bbl = 153 litre. New Exploration Licensing Policy (NELP) was launched by the Government for accelerating the pace of hydrocarbon exploration in the country. Oil blocks are awarded under this policy. HPCL, BPCL, IOC are the oil marketing companies eligible for oil subsidy provided by the government. The upstream oil sector refers to the searching for and the recovery and production of crude oil and natural gas. The upstream oil sector is also known as the exploration and production (E&P) sector. The downstream oil sector refers to the refining of crude oil, and the selling and distribution of natural gas and products derived from crude oil. The oil industry classifies crude oil in three different ways based on geographic location, gravity (or American Petrochemical Institute) & sulphur content. The byproducts of crude oil are lubricating oils, diesel fuel, jet fuel, petrol, chemicals, liquefied petroleum gas, waxes, polishes, bitumen for roads and roofing, fuel for ships and factories & others include plastics (Ethylene and propylene), rubbing alcohol, medicines (e. g. Aspirin), rubber, etc. Aviation fuel is a specialized type of petroleum-based fuel used to power aircraft. Oil marketing companies set the prices of ATF based on vis--vis movement of crud

1. BHARAT PETROLEUM CORPORATION LTD

Burmah-Shell Refineries Limited (BSR) was incorporated on 03rd Nov 1952 as a Company under the Indian Companies Act, 1913, at Mumbai, with the Authorized Capital of Rs. 25 crore. A refinery was set up by this Company at Mahul, Mumbai. Secondly, the Burmah-Shell Oil Storage & Distributing Company of India Ltd (BSM), a foreign Company, established in England in 1928, was carrying on in India the business of Distributing & Marketing petroleum products & for that purpose established places of business at Mumbai & other places in India. Pursuant to the agreement dated 23rd Dec 1975 between the Government of India (GOI), the Burmah-Shell Oil Storage and Distributing Company of India Ltd. (BSM) and the Burmah Shell Refineries Ltd. (BSR), the GOI acquired 100 per cent equity share holding. The name of BSR was changed to Bharat Refineries Limited (BRL) and subsequently to Bharat Petroleum Corporation Limited. The GOI disinvested its holding by selling stake to Financial Institutions/Mutual Funds etc. during 1991-92 and 1992-93 and pursuant to the merger of Kochi Refineries Ltd with BPCL, in 2006 the shareholding of GOI has changed to 54.93%. Bharat Petroleum Corporation Limited (BPCL) is one of India largest PSU companies, with global fortune 500 rank of 307 (2010). Its corporate office is located at Ballard Estate, Mumbai. As the name suggests, its interests are in petroleum sector. It is involved in then refining and retailing of petroleum products. Bharat Petroleum produces a diverse range of products, from petrochemicals and solvents to aircraft fuel and speciality lubricants and markets them through its wide network of Petrol Stations, Kerosene Dealers, LPG Distributors, Lube Shoppes, besides supplying fuel directly to hundreds of industries, and several international and domestic airlines.

MANAGEMENT Board of Directors Name R K Singh S K Joshi Haresh M Jagtiani N Venkiteswaran P. K. Sinha S Varadarajan K K Gupta I P S Anand Alkesh Kumar Sharma S P Gathoo S. V. Kulkarni B. K. Khare & Co.

Designation Chairman and Managing director Director (Finance) Director Director Director Director (Finance) Director (Marketing) Director Director Director (Human Resources) Company Secretary AUDITORS

RATIOS ANALYSIS

Intrinsic Value of the Stock The intrinsic value of the stock is calculated by relative P/E method. YEAR P/E FY 2010 15.8 FY 2009 12.8 FY 2008 19.3 FY 2007 9.5 FY 2006 6.4

Avg. P/E = (15.8+12.8+19.3+9.5+6.4) 5 Current EPS = 38.34 Intrinsic value of the stock = 12.76 X 38.34 Current Market Price = (as on 01/3/2012)

= 12.76

= Rs 489.22

Since the Intrinsic value > current value, the stock is undervalued & it should be hold.

2.
Essar Oil Limited was incorporated as a Public Limited Company under the Companies Act, 1956 on 12th September, with the main objective to provide Development, Exploration, and Production and related Services in the oil & gas sector. The main promoters of Essar Oil Limited are Essar Investments Limited, Essar Shipping Limited, South India Shipping Company Limited, Essar Gujarat Limited and a foreign copromoter, Prime Finance Company Limited, and other NRI's associates and friends. EOL was engaged in preliminary activities relating to bidding for Oil & gas fields as well as advising the Energy and Offshore divisions of Essar Gujarat Limited on technical matters relating to their operations. EOL is the first drilling Company in India to secure international drilling contracts against international competitive bidding. Essar Oil is the first and only Indian company to enter the international market for contract drilling services through its energy division. - The Company has India's largest private sector fleet of drilling rigs. The Energy Division has drilled the deepest well in Asia to the depth of 6700 Mtrs. in Himachal Pradesh. The Company is a member of Essar group. The company became a wholly owned subsidiary of Essar Gujarat Limited. EOL proposes to enter into an MOU for operation and maintenance services for the Refinery with an affiliate company, Essar Refineries Limited which in turn will enter into a tie-up with an international refining company providing technical back-up services and key personnel required for successful operation and maintenance of the Refinery. In June, the Board of Essar Gujarat Limited proposed to transfer The entire shareholding of Essar Oil Limited to Essar Investments Limited.EOL proposes to import crude oil by Tankers and VLCCs of capacities 240,000 - 300,000 DWT. EOL shall develop dedicated marine and shore facilities at Vadinar port for receipt of crude oil, storage and transportation to Refinery site. In 1996 the energy division has made entry into Qatar with a three year contract from Qatar General Petroleum Corporation for our deep Rig. It is proposed to produce 87 million barrels of oil and about 1 billion cubic metres of associated gas.

In 1997 Essar Oil has joined the National Securities Depository Limited (NSDL).and also decided to hike its petroleum refinery capacity at Vadinar in Gujarat from nine million tonnes to 10.5 million tonnes.

Kandla Port Trust (KPT) has entered into an agreement with Essar Oil Limited for setting up major facilities for handling POL, under the existing schemes of private participation. In 1998 Essar Oil Ltd and Reliance Petroleum Ltd have sought 13 per cent equity each in a proposed pipeline joint venture. The Ruias-owned Essar Oil (EOL) has forged alliances with three foreign oil companies and Hindustan Oil Exploration Company (HOEC) for joint exploration activities in the country.

In 1999 Essar Oil has unveiled plans to raise the capacity of its refinery to over 21 million tonnes a year. The refinery will produce aviation turbine fuel (ATF), high speed diesel, superior kerosene oil, naphtha and liquefied petroleum gas (LPG). In 2001 ONGC, Essar and Reliance receives authorisation from government to sell petrol and diesel. In 2003 Sets up its first retail outlet at Devrukh in Ratnagiri District of Maharashtra. The company also has bagged a tender for diesel supplies to the Bangalore Metropolitan Transport Corporation (BMTC), which runs a fleet of 2,959 buses in the garden city. Essar Oil Ltd and Castrol India Ltd on December 11, 2004, signed an agreement for sale of Castrol lubricants through Essar Oil fuel outlets throughout the country and in the same year Essar Oil inks deal with Myanmar for exploration. Essar Oil inked a Product Sale, Purchase and Infrastructure Sharing MoU with Indian Oil Corporation. MANAGEMENT

Board of Directors Name Shashi Ruia Designation Chairman / Chair Person

Prashant Ruia P Sampath K N Venkatasubramanian Melwyn Rego Manju Jain Naresh K Nayyar Anshuman Ruia Dilip J Thakkar K V Krishnamurthy V K Sinha Lalit Kumar Gupta Sheikh S. Shaffi M/s. Deloitte Haskins & Sells

Director Director Director Nominee Director Nominee Director Deputy Chairman Director Director Director Nominee Director Managing Director & CEO COMPANY SECRETARY AUDITORS

RATIOS ANALYSIS

Intrinsic Value of the Stock The intrinsic value of the stock is calculated by relative P/E method.
YEAR P/E FY 2010 26.8 FY 2009 576.5 FY 2008 0.0 FY 2007 0.0 FY 2006 0.0

Avg. P/E = (26.8+576.5+0.0+0.0+0.0) 5 Current EPS = 0.98

= 120.66

Intrinsic value of the stock = 120.66 X 0.98 = Rs 118.24 Current Market Price = (as on 01/3/2012) Since the Intrinsic value > current value, the stock is undervalued & it should be hold.

3. INDIAN OIL CORPORATION

Indian Oil Corporation Limited, or IndianOil, (BSE: 530965, NSE: IOC) is an Indian state-owned oil and gas corporation with its headquarters are inMumbai, Maharashtra, India. The company is the world's 98th largest public corporation, according to the Fortune Global 500 list, and the largest public corporation in India when ranked by revenue.[2] Indian Oil and its subsidiaries account for a 47% share in the petroleum products market, 34% share in refining capacity and 67% downstream sector pipelines capacity in India. The Indian Oil Group of Companies owns and operates 10 of India's 21 refineries with a combined refining capacity of 65.7 million metric tons per year. President of India owns 78.92% (191.62 Crore shares)in the company. in FY'11 IOCL sold 64.1 million tonnes of petroleum products and reported a PBT of Rs.9096 Crore, & Govt of india earned an excise duty of Rs.25789.90 crore and tax of Rs.1650 Crore. It is one of the five Maharatna status companies of India,apart from Coal India Limited, NTPC Limited, Oil and Natural Gas Corporation andSteel Authority of India Limited[3] Indian Oil operates the largest and the widest network of fuel stations in the country, numbering about 19,463 (15,946 regular ROs & 3,517 Kissan Sewa Kendra). It has also started Auto LPG Dispensing Stations (ALDS). It supplies Indane cooking gas to over 62.4 million households through a network of 5,456 Indian distributors. In addition, Indian Oils Research and Development Center (R&D) at Faridabad supports, develops and provides the necessary technology solutions to the operating divisions of the corporation and its customers within the country and abroad. IndianOil began operation in 1959 as Indian Oil Company Ltd. The Indian Oil Corporation was formed in 1964, with the merger of Indian Refineries Ltd.

Refineries
In Assam

Digboi Refinery, in Upper Assam, is India's oldest refinery and was commissioned in 1901. Originally a part of Assam Oil Company, it became part of IndianOil in 1981. Its original refining capacity had been 0.5 MMTPA since 1901. Modernisation project of this refinery was completed by 1996 and the refinery now has an enhanced capacity of 0.65 MMTPA.

Guwahati Refinery, the first public sector refinery of the country, was built with Romanian collaboration and was inaugurated by Late Pt. Jawaharlal Nehru, the first Prime Minister of India, on 1 January 1962. Its capacity is 1 MMTPA. Bongaigaon Refinery became the eighth refinery of IndianOil after merger of Bongaigaon Refinery & Petrochemicals Limited w.e.f. 25 March 2009. It is located at Dhaligaon in Chirang district of Assam, 200 km west of Guwahati.

In Bihar

Barauni Refinery, in Bihar, was built in collaboration with Russia and Romania. It was commissioned in 1964 with a capacity of 1 MMTPA. Its capacity today is 6 MMTPA.

In Gujarat

Gujarat Refinery, at Koyali (near Vadodara) in Gujarat in Western India, is IndianOils second largest refinery. The refinery was commissioned in 1965. It also houses the first hydrocracking unit of the country. Its present capacity is 13.70 MMTPA.

In West Bengal

Haldia Refinery is the only coastal refinery of the Corporation, situated 136 km downstream of Kolkata in the Purba Medinipur (East Midnapore) district. It was commissioned in 1975 with a capacity of 2.5 MMTPA, which has since been increased to 7.5 MMTPA

In Uttar Pradesh

Mathura Refinery was commissioned in 1982 as the sixth refinery in the fold of IndianOil and with an original capacity of 6.0 MMTPA. Located strategically between the historic cities of Delhi and Agra, the capacity of Mathura refinery was increased to 8.8 MMTPA.

In Haryana

Panipat Refinery is the seventh and largest refinery of IndianOil. The original refinery with 6 MMTPA capacity was built and commissioned in 1998. Panipat Refinery has since expanded its refining capacity to 15 MMTPA.

It is believed that the future IOCL refinery Will be Paradeep Refinery. It is expected to be handover at 2012. Subsidiary refineries Chennai Petroleum (10.5 MMTPA)

Group companies and joint ventures

Indian Oil Bhavan, New Delhi.

IndianOil (Mauritius) Ltd. Lanka IOC PLC Group company for retail and storage operations in Sri Lanka. It is listed in the Colombo Stock Exchange. It was locked into a bitter subsidy payment dispute with Sri Lanka's Government which has since been resolved. IOC Middle East FZE Chennai Petroleum Corporation Limited Green Gas Ltd. a joint venture with Gas Authority of India Ltd. for city-wide gas distribution networks. Indo Cat Pvt. Ltd., with Intercat, USA, for manufacturing 15,000 tonnes per annum of FCC (fluidised catalytic cracking) catalysts & additives in India. IndianOil CREDA Biofuels Ltd., a joint venture with Chattisgarh government for production and marketing of Bio-fuels. Numerous exploration and production ventures with Oil India Ltd., Oil and Natural Gas Corporation

IndianOil is the highest ranked Indian company in the Fortune 'Global 500' listing, 98th position in 2011. It is also the 18th largest petroleum company in the world and the No. 1 petroleum trading company among the National Oil Companies in the AsiaPacific region. MANAGEMENT

Board of Directors Name

Shri R. S. Butola Shri P. K. Goyal Shri Michael Bastian Shri G. C. Daga Shri P. K. Sinha Shri Nirmal Kumar Poddar Shri B. N. Bankapur Shri Sudhir Bhargava Dr. Sudhakar Rao Shri K. K. Jha

Designation
Chairman Director (Finance) Independent Director Director (Marketing) Government Director Independent Director Director (Refineries) Government Director Independent Director Director (Pipelines)

Prof. (Dr.) Indira J. Parikh Shri B. M. Bansal Dr. R. K. Malhotra Development) Shri Anees Noorani Shri V. C. Agrawal Shri Sudhir Bhalla Dr. (Smt.) Indu R. Shahani Shri S. V. Narasimhan Shri A. M. K. Sinha Prof. Gautam Barua Shri Raju Ranganathan

Independent Director Chairman & Director(P&BD) Director(Research Independent Director Director (Human Resources) Director (Human Resources) Independent Director Chairman & Director (Finance) Director(Business Development) Independent Director Company Secretary

&

RATIOS ANALYSIS

Intrinsic Value of the Stock The intrinsic value of the stock is calculated by relative P/E method.
YEAR P/E FY 2010 11.5 FY 2009 7.4 FY 2008 16.5 FY 2007 7.7 FY 2006 6.5

Avg. P/E = (11.5+7.4+16.5+7.7+6.5) 5 Current EPS = 42.3

= 9.92

Intrinsic value of the stock = 42.3 x 9.92 = Rs 419.62 Current Market Price = (as on 01/3/2012) Since the Intrinsic value > current value, the stock is undervalued & it should be hold.

4. Mangalore Refinery and Petrochemicals

Mangalore Refinery and Petrochemicals Limited (MRPL) (BSE: 500109 , NSE: MRPL ) is an oil refinery at Mangalore and is a subsidiary ofONGC, set up in 1998. The refinery is located at Katipalla, north from centre of Mangalore city. The refinery was established after displacing five villages of Bala, Kalavar, Kuthetoor, Katipalla, and Adyapadi. The refinery has a versatile design with high flexibility to process crudes of various API gravity and with high degree of automation. MRPL has a design capacity to process 9.69 million metric tonnes per annum and is the only refinery in India to have two hydrocrackers producing premium diesel (high cetane). It is also the only refinery in India to have two CCRs producing unleaded petrol of high octane. Currently, the refinery is processing about 12.5 million tonnes of crude per year and had a turnover of US$ 8 billion during last year. MRPL, which was a joint sector company, become a PSU subsequent on acquisition of its majority shares by ONGC. As on 1 April 2007, 71.62% shares are held by ONGC, 16.95% shares are held by HPCL, and remaining shares are with public and financial institutions. MRPL has also been declared asMiniratna, a mini jewel, by Government of India in 2007. Before acquisition by ONGC in March 2003, MRPL was a joint venture oil refinery promoted by M/s Hindustan Petroleum Corporation Limited (HPCL), a public sector company and M/s IRIL & associates (AV Birla Group). MRPL was set up in 1988 with the initial processing capacity of 3.0 million metric tonnes per annum that was later expanded to the present capacity of 9.69 million metric tonnes per annum. The refinery was conceived to maximise middle distillates, with capability to process light to heavy and sour to sweet crudes with 24 to 46 API gravity. On 28 March 2003, ONGC acquired the total shareholding of A.V. Birla Group and further infused equity capital of Rs.600 crores thus making MRPL a majority-held subsidiary of ONGC. The lenders also agreed to the debt restructuring package (DRP) proposed by ONGC, which included, inter alia, conversion up to Rs 365 core of their loans into equity. Subsequently, ONGC has acquired equity allotted to the lenders pursuant to DRP raising ONGCs holding in MRPL to 71.62 percent. Name Sudhir Vasudeva Designation Chairman / Chair Person

P P Upadhya Vivek Kumar A K Rath D Chandrasekharam K S Jamestin U K Basu Vishnu Agrawal K Murali B Ravindranath Usha Thorat

Director (Technical) Director Independent Director Independent Director Director (Human Resources) Managing Director Director (Finance) Director Independent Director Independent Director

RATIOS ANALYSIS

Intrinsic Value of the Stock The intrinsic value of the stock is calculated by relative P/E method.
YEAR P/E FY 2010 9.9 FY 2009 12.4 FY 2008 6.2 FY 2007 11.0 FY 2006 11.8

Avg. P/E = (9.9+12.4+6.2+11.0+11.8) = 10.26 5 Current EPS = 5.86 Intrinsic value of the stock = 10.26 x 5.86 = Rs 63.64 Current Market Price = (as on 01/3/2012) Since the Intrinsic value > current value, the stock is undervalued & it should be hold.

5. RELIANCE INDUSTRIES LTD

The Company was incorporated under the Companies Act, 1956 on October 24, 2005 as Reliance Petroleum Limited and obtained its certificate of commencement of business on November 7, 2005. The Company formed to set up a Greenfield petroleum refinery and polypropylene plant to be located in a Special Economic Zone in Jamnagar in the state of Gujarat in western India. The proposed refinery and polypropylene plant will be located adjacent to the existing refinery and petrochemical complex of the Promoter, Reliance Industries Limited (RIL), the largest private sector company in India with assets of over Rs.806 billion (approximately US$ 18 billion) as of March 31, 2005. RIL is the only private sector company from India to feature in the Fortune Global 500. In 2007 Reliance Petroleum Ltd has informed that Mr. Michael Seymour Warwick has been appointed as an Additional Director of the Company. In 2008 Reliance Petroleum Ltd has appointed Mr. Joffery Reney Pryor, Vice President Business Development- Chevron Corporation, as a nominee director of Chevron in place of Mr. Jagjeet Singh Bindra. Reliance Petroleum Ltd has informed that Mr. Pawan Kumar Kapil has been appointed as an Additional Director of the Company with effect from December 15, 2008.

MANAGEMENT
Board of Directors Name Mukesh D Ambani Hital R Meswani Pawan Kumar Kapil Mansingh L Bhakta Dharam Vir Kapur Ashok Misra Raghunath A Mashelkar Designation Chairman and Managing director Executive Director Executive Director Non Executive Director Non Executive Director Non Executive Director Non Executive Director

Nikhil R Meswani P M S Prasad Ramniklal H Ambani Yogendra P Trivedi Mahesh P Modi Dipak C Jain Vinod M. Ambani Chaturvedi & Shah Deloitte Haskins & Sells Rajendra & Co.

Executive Director Executive Director Non Executive Director Non Executive Director Non Executive Director Non Executive Director Company Secretary Auditors

RATIOS ANALYSIS

Intrinsic Value of the Stock The intrinsic value of the stock is calculated by relative P/E method.
YEAR P/E FY 2010 17.2 FY 2009 22.1 FY 2008 16.0 FY 2007 17.2 FY 2006 16.2

Avg. P/E = (17.2+22.1+16.0+17.2+16.2) 5 Current EPS = 84.18

= 17.74

Intrinsic value of the stock = 84.18 x 17.74 = Rs 1493.35 Current Market Price = (as on 01/3/2012) Since the Intrinsic value > current value, the stock is undervalued & it should be hold.

CONCLUSION
Increasing oil demand 2010 proved to be the second strongest year for global oil demand growth in the past 30 years, with absolute demand levels expected to surpass pre-recession highs. During 2010 the total liquid supply grew by 2.4% (from 82.96 mb/d in 2009 to 84.96 mb/d in 2010). It is projected that the demand may rise to 86.37 mb/d in 2011 and 87.83 mb/d in 2012. Rising prosperity fuelled by economic growth in the emerging economies and also strong demand in Middle East are driving strong demand for oil and other energy sources. The WEO, 2011, expects that the difference between supply and demand would be made up from rising production of natural gas liquids and unconventional oil, notably Canadian oil sands and biofuels. During 2010, the liquid supply from non-OPEC countries averaged 41.77 mb/d; 49.2% of the total supplies against OPEC average supplies of 29.21 mb/d (34.4%). Natural Gas Liquid (NGL) and condensate supply has been around 13.98 mb/d (16.4% of the total liquid supply). Gains in non-OPEC supplies and NGL are good news for the industry. However, the political unrest in Middle East and North African (MENA) region is likely to have adverse impact on crude oil supplies. Gulf States currently remain stable; however, sentiments may dampen in case MENA unrest intensifies. This Delicate balance may be worrisome for supply side and in turn consequently may upset oil market dynamic. Strengthening of India as a Refined Products Exporter With international oil demand rising during the year, the export market for Indian POL exports expanded further. POL exports from the country grew rapidly and have emerged as the highest foreign exchange earner for the country. The Refining sector in the country has been growing at a fast pace and Indian refineries clocked a capacity utilization of over 100 per cent to meet the rising domestic and export demand. While, quite a few capacity expansions in the refinery sector came on stream during the year, other major expansions are underway. During the year, a landmark achievement was the successful countrywide launch of upgraded BS-IV (13 cities) and BS-III Petrol and Diesel (in rest of the country) in line with the Auto Fuel Policy road map.