Financial Accounting

PGDM-1(2023-25) Section: D
Group no. D8
Submitted by:
1. Aurba Das P231D008
2. Rishi KanthaliyaP231D023
3. Shubham MishraP231D038
4. Swetchha PadwalP231D053
5. Varsha Jaiswal P231D06

Submitted to:
Dr. Kirti Sharma
 INDEX

Sr. NO TOPIC PAGE NO

1 Overview 2
2 Why BPCL? 3
3 Standalone Balance Sheet and Income Statement 4-5
4 Horizontal Analysis of Balance Sheet and Income statement 6-9
5 Vertical analysis of Balance sheet and Income statement 10-13
6 Liquidity ratios 14
· Current ratio
· Quick ratio
7 Efficiency Ratios 15-17
· Inventory Turnover ratio
· Debtor Turnover ratio
· Creditor Turnover ratio
8 Profitability Ratio 18
· Operating Profit ratio
· PBT Margin Ratio
· Net Profit Ratio
9 Solvency Ratio 19-20
· Interest Coverage Ratio
· Debt-to-equity ratio
· Asset to equity ratio
10 Investors Ratios 21-24
· Return on Equity
· Asset Turnover ratio
· EPS
· Dividend per share
· Dividend payout ratio
· Market price
· Dividend yield
· P.E. ratio
11 DuPont Analysis 25
12 Competitor Analysis 26
13 Conclusion 27

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 Overview
BPCL is one of the most integrated oil and gas corporations in India, it participates in every stage of the value chain
for hydrocarbons, from smelting to selling. A total of 37.6 million metric tonnes per annum (MMTPA) of refining
capacity are available from the three refineries that BPCL operates in Bina, Kochi, and Mumbai. Additionally, the
business operates a network of more than 19,000 retail locations in India where it sells a variety of petroleum products,
such as gasoline, diesel, LPG, lubricants, and aviation turbine fuel.

The market value of BPCL, a Fortune Global 500 firm and Maharatna PSU, is above 1 trillion rupees ($12.5 billion).
With more than 10,000 staff members, the business is among the biggest employers in India. In 2022–2023, BPCL paid
the government over 50,000 crore (US$6.25 billion) in taxes and charges, making it a significant contributor to the
Indian economy. The company is committed to social responsibility and invests significantly in a number of corporate
social responsibility programs, including those promoting environmental protection, healthcare and education. BPCL is
engaged in marketing activities in more than 20 countries and in addition to its local operations, it also operates overseas.
In addition, the company is engaged in downstream research and production activities in India as well as in other
countries.

BPCL is committed to sustainability and has taken several initiatives to reduce environmental impact. The company has
also made significant investments in R&D to create cutting-edge products and technologies. BPCL is a reputed company
with a proven track record of success in both growth and profitability. The company is committed to providing its
customers with advanced goods and services and is constantly looking for new opportunities to make its processes more
efficient and increase its competitiveness.

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 Why BPCL?
It is a significant integrated oil and gas company
in India, is involved in every stage of the
hydrocarbon value chain, from refining to
marketing. It is a well-known company with a
successful track record and a sizable presence in
the Indian economy. Furthermore, BPCL is a well-
rounded company with operations in a number of
sectors, such as petrochemicals, renewable energy,
marketing, and refining.

These characteristics make BPCL a fascinating

and challenging firm to research. By conducting a
financial analysis, one can have a thorough
understanding of BPCL's financial situation and
performance, which they can then use to make
informed investment decisions or assess the
creditworthiness of the company.

Here are certain questions that we could

identify in the financial analysis of BPCL:
• How has BPCL's financial position evolved
over time? This can be achieved by looking at
the financial statements of BPCL from a few
years back. We can evaluate the development of important indicators, including income, profit, debt, and cash flow.
• What main factors contribute to BPCL's profitability? To do this, it is necessary to determine the variables that have
the most influence on BPCL's profit margin. The cost of crude oil, refining margins, marketing margins, and
operating expenses are a few examples of these variables.
• What are the main dangers to BPCL? Risks that BPCL must contend with include shifts in the price of crude oil,
modifications to governmental rules, and competition from other oil and gas firms. We can recognize and evaluate
these risks to obtain a better understanding of overall risk scenario of the business.
• How does BPCL stack up against other oil and gas firms in India and abroad? To evaluate BPCL's performance in
terms of profitability, efficiency, and other important financial parameters, we can compare it to its competitors.

These inquiries can help us acquire a thorough knowledge of BPCL's financial situation and performance. Making
informed financial decisions is possible using this information.

Some facts about the company that made the headlines:

• BPCL and other oil and gas companies are diversifying into electric vehicle charging infrastructure and battery
maintenance services to adapt to the new EV market.
• The Government of India was intended to sell its 52.98% stake in BPCL as a divestment, but no bidders were
available because of the market conditions of global fuel sector in the last couple of years. But the federal
government has no plans to sell its holdings in the publicly traded BPCL as they are focusing on fuel shift.
• BPCL declares net profit of Rs. 10,644 crores for Q1 FY24: BPCL has reported a net profit of Rs. 10,644 crores
for Q1 FY24, up from a net loss of Rs. 6,148 crores for Q1 FY23. A decrease in crude oil prices and an increase in
refining margins are to blame for the increase in profitability.

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 Standalone Balance Sheet for the last 5 years

Standalone Balance sheet of Bharat Petroleum Corporation

Balance Sheet of Bharat Petroleum Corporation (in Rs. Cr.) As on Mar 23 As on Mar 22 As on Mar 21 As on Mar 20 As on Mar 19
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 2,129.45 2,129.45 2,092.91 1,966.88 1,966.88
Reserves and Surplus 49,866.89 47,540.33 51,595.15 31,247.50 34,770.80
Total Shareholders Funds 51,996.34 49,669.78 54,544.55 33,214.38 36,737.68
NON-CURRENT LIABILITIES
Long Term Borrowings 19,441.60 15,481.97 17,032.84 20,481.83 23,628.57
Deferred Tax Liabilities [Net] 7,068.31 4,882.70 4,471.55 5,967.29 6,168.99
Other Long Term Liabilities 10,246.15 8,749.45 8,209.92 6,226.58 340.49
Long Term Provisions 178.53 186.59 1,600.51 1,574.12 1,509.86
Total Non-Current Liabilities 36,934.59 29,300.71 31,314.82 34,249.82 31,647.91
CURRENT LIABILITIES
Short Term Borrowings 16,413.20 8,641.12 4,232.81 17,721.37 3,580.75
Trade Payables 24,010.84 30,834.68 16,245.30 12,509.54 17,235.18
Other Current Liabilities 28,766.31 29,184.74 32,408.09 26,942.87 24,678.77
Short Term Provisions 2,682.70 2,881.53 1,858.92 1,831.00 1,746.96
Total Current Liabilities 71,873.05 71,542.07 54,745.12 59,004.78 47,241.66
Total Capital And Liabilities 160,803.98 150,512.56 140,604.49 126,468.98 115,627.25
ASSETS
NON-CURRENT ASSETS
Tangible Assets 92,269.61 68,751.37 63,526.50 56,687.98 46,259.18
Intangible Assets 0.00 743.25 409.70 262.93 228.70
Capital Work-In-Progress 0.00 3,312.69 7,094.78 9,108.09 6,702.63
Other Assets 0.00 0.03 0.05 0.21 0.24
Fixed Assets 92,269.61 72,824.61 71,388.63 66,455.83 53,553.85
Non-Current Investments 9,595.21 15,794.55 10,889.82 10,849.48 10,915.73
Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00
Long Term Loans And Advances 1,520.57 4,555.86 4,927.57 5,442.94 2,515.66
Other Non-Current Assets 2,020.58 2,641.40 2,436.17 2,657.50 2,004.76
Total Non-Current Assets 105,405.97 95,816.42 89,642.19 85,405.75 68,990.00
CURRENT ASSETS
Current Investments 4,277.14 4,442.27 6,794.27 5,208.54 5,075.89
Inventories 38,064.70 36,307.06 26,756.75 20,421.06 21,544.65
Trade Receivables 6,721.86 9,738.32 7,827.47 5,164.34 6,670.72
Cash And Cash Equivalents 2,120.44 834.49 7,053.49 115.78 95.41
Short Term Loans And Advances 142.62 135.99 137.90 590.58 1,628.88
OtherCurrentAssets 4,071.25 3,238.01 2,392.42 9,562.93 11,621.70
Total Current Assets 55,398.01 54,696.14 50,962.30 41,063.23 46,637.25
Total Assets 160,803.98 150,512.56 140,604.49 126,468.98 115,627.25

Fig: Balance Sheet

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 Standalone Income Statement

Income and Expenditure statement for BPCL

Profit & Loss account of Bharat Petroleum Corporation (in Rs. Cr.) As on Mar 23 As on Mar 22 AS on Mar 21 As on Mar 20 AS on Mar 19
INCOME
Revenue From Operations [Gross] 5,33,467.55 4,32,258.07 3,00,829.72 3,26,393.46 3,36,384.45
Other Income 2,183.99 2,412.42 4,344.45 3,081.31 2,983.60
Total Revenue 5,35,651.54 4,34,670.49 3,05,174.17 3,29,474.77 3,39,368.05
EXPENSES
Cost Of Materials Consumed 2,34,305.39 1,38,708.46 71,153.56 1,13,229.30 1,19,419.22
Purchase Of Stock-In Trade 1,99,884.14 1,89,085.80 1,27,800.87 1,43,164.25 1,46,974.06
Changes In Inventories Of FG,WIP And Stock-In Trade -975.21 -4,288.73 -3,633.57 -456.62 -1,703.06
Employee Benefit Expenses 2,763.97 3,314.45 4,477.17 3,691.45 3,664.18
Finance Costs 3,216.48 1,860.48 1,328.36 2,181.86 1,318.96
Depreciation And Amortisation Expenses 6,347.48 4,754.27 3,978.05 3,786.89 3,189.28
Excise Duty 60,342.88 71,129.00 69,317.00 43,197.00 40,347.48
Other Expenses 26,189.75 19,263.96 15,616.46 18,115.26 16,956.39
Total Expenses 5,32,074.88 4,23,827.69 2,90,037.90 3,26,909.39 3,30,166.51
Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax 3,576.66 11,990.50 16,168.67 3,751.87 10,439.62
Exceptional Items -1,359.96 -77.06 6,448.91 -1,080.83 0.00
Profit/Loss Before Tax (PBT) 2,216.70 11,913.44 22,617.58 2,671.04 10,439.62
Tax Expenses-Continued Operations
Current Tax 346.60 2,658.00 5,134.78 201.00 2,079.00
Deferred Tax 0.00 323.19 -402.98 400.68 1,316.48
Tax For Earlier Years 0.00 143.52 -1,155.89 -613.83 -87.88
Profit/Loss For The Period (PAT) 1,870.10 8,788.73 19,041.67 2,683.19 7,132.02

Fig: Income Statement

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 Horizontal Analysis
A financial analysis technique called horizontal analysis compares financial statement line items over time. It is
sometimes referred to as trend analysis or time series analysis. This makes it possible for analysts to spot patterns and
trends in a company's financial performance.
To execute a horizontal analysis, analysts often choose a base period, such the prior year or quarter, and compare the
financial statement line items for the current period to those from the base period. This can be accomplished by either
computing the absolute change for each line item or the percentage change.

Formula:
Absolute Change: Current Year – Previous Year
% Change: (Absolute Change / Previous year) * 100

Horizontal analysis of balance sheet

• The Equity Share capital of BPCL increased in 2021 by 6.4% and again in 2022 by 1.75% because the company
issued more share capital.
• Non-current liabilities increased in 2023 by 26% as compared to previous years due to increase in Deferred Tax
Liability by 44% and Long-term Borrowings by 25.5% as we know that company has utilized this debt to
invest in fixed assets.
• Short-term Borrowings increased in 2023 by 90% from the last year which means company has invested more
in working capital.
• Trade payables was increased in 2022 and a significant amount is paid in 2023 showing credit payment capacity
of BPCL.
• Growth in Non-current Assets by 34% in 2023 has been driven by increase in investments being done in
expansion of Plant, Property and Equipment by the company.
• Non-current investments and Long-term loans and advances decreased in 2023 by 39% and 66% respectively,
as the company received the cash back in certain investments and has received some loans and advances. Also,
31% of the Trade receivables was paid back to the company by the debtors.
• All this resulted in increase in Cash and Cash Equivalents of BPCL by 154% over the previous year.

Refer to the next page for Horizontal analysis of the balance sheet

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 Standalone Balance sheet of Bharat Petroleum Corporation HORIZONTAL ANALYSIS
Balance Sheet of Bharat Petroleum Corporation (in Rs. Cr.) As on Mar 23 As on Mar 22 As on Mar 21 As on Mar 20 As on Mar 19 2022-2023 2021-2022 2020-2021 2019-2020
EQUITIES AND LIABILITIES Movement Movement (%) Movement Movement (%) Movement Movement (%) Movement Movement (%)
SHAREHOLDER'S FUNDS
Equity Share Capital 2,129.45 2,129.45 2,092.91 1,966.88 1,966.88 0 0.00% 36.54 1.75% 126.03 6.41% 0 0.00%
Reserves and Surplus 49,866.89 47,540.33 51,595.15 31,247.50 34,770.80 2326.56 4.89% -4054.82 -7.86% 20347.65 65.12% -3523.3 -10.13%
Total Shareholders Funds 51,996.34 49,669.78 54,544.55 33,214.38 36,737.68 2326.56 4.68% -4874.77 -8.94% 21330.17 64.22% -3523.3 -9.59%
NON-CURRENT LIABILITIES
Long Term Borrowings 19,441.60 15,481.97 17,032.84 20,481.83 23,628.57 3959.63 25.58% -1550.87 -9.11% -3448.99 -16.84% -3146.74 -13.32%
Deferred Tax Liabilities [Net] 7,068.31 4,882.70 4,471.55 5,967.29 6,168.99 2185.61 44.76% 411.15 9.19% -1495.74 -25.07% -201.7 -3.27%
Other Long Term Liabilities 10,246.15 8,749.45 8,209.92 6,226.58 340.49 1496.7 17.11% 539.53 6.57% 1983.34 31.85% 5886.09 1728.71%
Long Term Provisions 178.53 186.59 1,600.51 1,574.12 1,509.86 -8.06 -4.32% -1413.92 -88.34% 26.39 1.68% 64.26 4.26%
Total Non-Current Liabilities 36,934.59 29,300.71 31,314.82 34,249.82 31,647.91 7633.88 26.05% -2014.11 -6.43% -2935 -8.57% 2601.91 8.22%
CURRENT LIABILITIES
Short Term Borrowings 16,413.20 8,641.12 4,232.81 17,721.37 3,580.75 7772.08 89.94% 4408.31 104.15% -13488.56 -76.11% 14140.62 394.91%
Trade Payables 24,010.84 30,834.68 16,245.30 12,509.54 17,235.18 -6823.84 -22.13% 14589.38 89.81% 3735.76 29.86% -4725.64 -27.42%
Other Current Liabilities 28,766.31 29,184.74 32,408.09 26,942.87 24,678.77 -418.43 -1.43% -3223.35 -9.95% 5465.22 20.28% 2264.1 9.17%
Short Term Provisions 2,682.70 2,881.53 1,858.92 1,831.00 1,746.96 -198.83 -6.90% 1022.61 55.01% 27.92 1.52% 84.04 4.81%
Total Current Liabilities 71,873.05 71,542.07 54,745.12 59,004.78 47,241.66 330.98 0.46% 16796.95 30.68% -4259.66 -7.22% 11763.12 24.90%
Total Capital And Liabilities 160,803.98 150,512.56 140,604.49 126,468.98 115,627.25 10291.42 6.84% 9908.07 7.05% 14135.51 11.18% 10841.73 9.38%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 92,269.61 68,751.37 63,526.50 56,687.98 46,259.18 23518.24 34.21% 5224.87 8.22% 6838.52 12.06% 10428.8 22.54%
Balance Sheet

Intangible Assets 0.00 743.25 409.70 262.93 228.70 -743.25 -100.00% 333.55 81.41% 146.77 55.82% 34.23 14.97%
Capital Work-In-Progress 0.00 3,312.69 7,094.78 9,108.09 6,702.63 -3312.69 -100.00% -3782.09 -53.31% -2013.31 -22.10% 2405.46 35.89%
Other Assets 0.00 0.03 0.05 0.21 0.24 -0.03 -100.00% -0.02 -40.00% -0.16 -76.19% -0.03 -12.50%
Fixed Assets 92,269.61 72,824.61 71,388.63 66,455.83 53,553.85 19445 26.70% 1435.98 2.01% 4932.8 7.42% 12901.98 24.09%
Non-Current Investments 9,595.21 15,794.55 10,889.82 10,849.48 10,915.73 -6199.34 -39.25% 4904.73 45.04% 40.34 0.37% -66.25 -0.61%
Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00
Long Term Loans And Advances 1,520.57 4,555.86 4,927.57 5,442.94 2,515.66 -3035.29 -66.62% -371.71 -7.54% -515.37 -9.47% 2927.28 116.36%
Other Non-Current Assets 2,020.58 2,641.40 2,436.17 2,657.50 2,004.76 -620.82 -23.50% 205.23 8.42% -221.33 -8.33% 652.74 32.56%
Total Non-Current Assets 105,405.97 95,816.42 89,642.19 85,405.75 68,990.00 9589.55 10.01% 6174.23 6.89% 4236.44 4.96% 16415.75 23.79%
CURRENT ASSETS
Current Investments 4,277.14 4,442.27 6,794.27 5,208.54 5,075.89 -165.13 -3.72% -2352 -34.62% 1585.73 30.44% 132.65 2.61%
Inventories 38,064.70 36,307.06 26,756.75 20,421.06 21,544.65 1757.64 4.84% 9550.31 35.69% 6335.69 31.03% -1123.59 -5.22%
Trade Receivables 6,721.86 9,738.32 7,827.47 5,164.34 6,670.72 -3016.46 -30.98% 1910.85 24.41% 2663.13 51.57% -1506.38 -22.58%
Cash And Cash Equivalents 2,120.44 834.49 7,053.49 115.78 95.41 1285.95 154.10% -6219 -88.17% 6937.71 5992.15% 20.37 21.35%
Short Term Loans And Advances 142.62 135.99 137.90 590.58 1,628.88 6.63 4.88% -1.91 -1.39% -452.68 -76.65% -1038.3 -63.74%
OtherCurrentAssets 4,071.25 3,238.01 2,392.42 9,562.93 11,621.70 833.24 25.73% 845.59 35.34% -7170.51 -74.98% -2058.77 -17.71%
Total Current Assets 55,398.01 54,696.14 50,962.30 41,063.23 46,637.25 701.87 1.28% 3733.84 7.33% 9899.07 24.11% -5574.02 -11.95%
Total Assets 160,803.98 150,512.56 140,604.49 126,468.98 115,627.25 10291.42 6.84% 9908.07 7.05% 14135.51 11.18% 10841.73 9.38%

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 Horizontal analysis of income statement
• Total Revenue of the company increased by 23% in 2023 as compared to the previous year which shows strong
sales of BPCL.
• Depreciation increased by 33% due to increase in fixed assets of the company. Finance Cost also increased by
72% in the year 2023 due to increase in long-term borrowings.
• Increase in Cost of Materials Consumed, Purchase of Stock-in-trade, and Other Expenses by 68%, 5.7% and
36% respectively and decrease in Changes in Inventories of FG, WIP and Stock-In Trade by 77% of the year
ended 2023 resulted in increase of Total expense of the year by 25.3%.
• The Profit After Tax (PAT) for the year declines in by 79% as compared to previous year.

Refer to the next page for Horizontal analysis of the income statement

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 Income and Expenditure statement for BPCL HORIZONTAL ANALYSIS
Absolute Variance
Profit & Loss account of Bharat Petroleum Corporation (in Rs. Cr.) As on Mar 23 As on Mar 22 AS on Mar 21 As on Mar 20 AS on Mar 19 2022-2023 2021-2022 2020-2021 2019-2020
INCOME Movement Movement (%) Movement Movement (%) Movement Movement (%) Movement Movement (%)
Revenue From Operations [Gross] 5,33,467.55 4,32,258.07 3,00,829.72 3,26,393.46 3,36,384.45 1,01,209.48 23.41% 1,31,428.35 43.69% -25,563.74 -7.83% -9,990.99 -2.97%
Other Income 2,183.99 2,412.42 4,344.45 3,081.31 2,983.60 -228.43 -9.47% -1,932.03 -44.47% 1,263.14 40.99% 97.71 3.27%
Total Revenue 5,35,651.54 4,34,670.49 3,05,174.17 3,29,474.77 3,39,368.05 1,00,981.05 23.23% 1,29,496.32 42.43% -24,300.60 -7.38% -9,893.28 -2.92%
EXPENSES
Cost Of Materials Consumed 2,34,305.39 1,38,708.46 71,153.56 1,13,229.30 1,19,419.22 95,596.93 68.92% 67,554.90 94.94% -42,075.74 -37.16% -6,189.92 -5.18%
Purchase Of Stock-In Trade 1,99,884.14 1,89,085.80 1,27,800.87 1,43,164.25 1,46,974.06 10,798.34 5.71% 61,284.93 47.95% -15,363.38 -10.73% -3,809.81 -2.59%
Changes In Inventories Of FG,WIP And Stock-In Trade -975.21 -4,288.73 -3,633.57 -456.62 -1,703.06 3,313.52 -77.26% -655.16 18.03% -3,176.95 695.75% 1,246.44 -73.19%
Employee Benefit Expenses 2,763.97 3,314.45 4,477.17 3,691.45 3,664.18 -550.48 -16.61% -1,162.72 -25.97% 785.72 21.28% 27.27 0.74%
Finance Costs 3,216.48 1,860.48 1,328.36 2,181.86 1,318.96 1,356.00 72.88% 532.12 40.06% -853.50 -39.12% 862.90 65.42%
Depreciation And Amortisation Expenses 6,347.48 4,754.27 3,978.05 3,786.89 3,189.28 1,593.21 33.51% 776.22 19.51% 191.16 5.05% 597.61 18.74%
Excise Duty 60,342.88 71,129.00 69,317.00 43,197.00 40,347.48 -10,786.12 -15.16% 1,812.00 2.61% 26,120.00 60.47% 2,849.52 7.06%
Income Statement

Other Expenses 26,189.75 19,263.96 15,616.46 18,115.26 16,956.39 6,925.79 35.95% 3,647.50 23.36% -2,498.80 -13.79% 1,158.87 6.83%
Total Expenses 5,32,074.88 4,23,827.69 2,90,037.90 3,26,909.39 3,30,166.51 1,08,247.19 25.54% 1,33,789.79 46.13% -36,871.49 -11.28% -3,257.12 -0.99%
Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax 3,576.66 11,990.50 16,168.67 3,751.87 10,439.62 -8,413.84 -70.17% -4,178.17 -25.84% 12,416.80 330.95% -6,687.75 -64.06%
Exceptional Items -1,359.96 -77.06 6,448.91 -1,080.83 0.00 -1,282.90 1664.81% -6,525.97 -101.19% 7,529.74 -696.66% -1,080.83 -
Profit/Loss Before Tax (PBT) 2,216.70 11,913.44 22,617.58 2,671.04 10,439.62 -9,696.74 -81.39% -10,704.14 -47.33% 19,946.54 746.77% -7,768.58 -74.41%
Tax Expenses-Continued Operations
Current Tax 346.60 2,658.00 5,134.78 201.00 2,079.00 -2,311.40 -86.96% -2,476.78 -48.24% 4,933.78 2454.62% -1,878.00 -90.33%
Deferred Tax 0.00 323.19 -402.98 400.68 1,316.48 -323.19 -100.00% 726.17 -180.20% -803.66 -200.57% -915.80 -69.56%
Tax For Earlier Years 0.00 143.52 -1,155.89 -613.83 -87.88 -143.52 -100.00% 1,299.41 -112.42% -542.06 88.31% -525.95 598.49%
Profit/Loss For The Period (PAT) 1,870.10 8,788.73 19,041.67 2,683.19 7,132.02 -6,918.63 -78.72% -10,252.94 -53.84% 16,358.48 609.67% -4,448.83 -62.38%

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 Vertical Analysis
A type of financial analysis called vertical analysis expresses each line item on a balance sheet as a percentage of a
base amount. The entire assets are usually the starting point, although it is also possible to use the total liabilities or
equity.

Vertical analysis can be used to compare a company's financial structure over time and to other businesses in the same
sector. Additionally, it can be utilized to spot trends and modifications in the company's financial situation.

Simply divide each line item on the balance sheet by the base amount to perform vertical analysis, then multiply the
result by 100 to express it as a percentage. For instance, to determine the proportion of total assets that are comprised
of cash and divide the cash and cash equivalents line item by the total assets, then multiply the result by 100.

Formula: % Change: (Statement line item / Total base figure) x 100

Vertical Analysis for Balance Sheet

• When analysing the given data of balance sheet, we can see that Reserve & Surplus revolves mostly around 30-
35 percent across all the years which shows that it has enough of its reserve in order to cope up efficiently in their
foreseen and unforeseen operations of business.
• The Non-current liability revolves at around 20-27% approximately and the current liability revolves around 40-
46% approximately, cumulated together the liability share a percent of 60-73% most of which comes from current
liability, thus showing that it incurs a lot of finance for day-to-day operations
• The Non-current assets have a share of approximate 60-65% which gives a picture of how predominately their
finances are invested for long term security and investment but this has its own share of problems that is the
depreciative nature of fixed assets
• The Current asset has approximately 35-40% of total assets this shows that the liquidity of BPCL is not very high
in general it maintains a decent amount for proper functioning of operations

Refer to the next page for Vertical analysis of the balance sheet

Page | 10
 Standalone Balance sheet of Bharat Petroleum Corporation VERTICAL ANALYSIS
Balance Sheet of Bharat Petroleum Corporation (in Rs. Cr.) As on Mar 23 As on Mar 22 As on Mar 21 As on Mar 20 As on Mar 19 March 23' March 22' March 21' March 20' March 19'
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 2,129.45 2,129.45 2,092.91 1,966.88 1,966.88 1.32% 1.41% 1.49% 1.56% 1.70%
Reserves and Surplus 49,866.89 47,540.33 51,595.15 31,247.50 34,770.80 31.01% 31.59% 36.70% 24.71% 30.07%
Total Shareholders Funds 51,996.34 49,669.78 54,544.55 33,214.38 36,737.68 32.34% 33.00% 38.79% 26.26% 31.77%
NON-CURRENT LIABILITIES
Long Term Borrowings 19,441.60 15,481.97 17,032.84 20,481.83 23,628.57 12.09% 10.29% 12.11% 16.20% 20.44%
Deferred Tax Liabilities [Net] 7,068.31 4,882.70 4,471.55 5,967.29 6,168.99 4.40% 3.24% 3.18% 4.72% 5.34%
Other Long Term Liabilities 10,246.15 8,749.45 8,209.92 6,226.58 340.49 6.37% 5.81% 5.84% 4.92% 0.29%
Long Term Provisions 178.53 186.59 1,600.51 1,574.12 1,509.86 0.11% 0.12% 1.14% 1.24% 1.31%
Total Non-Current Liabilities 36,934.59 29,300.71 31,314.82 34,249.82 31,647.91 22.97% 19.47% 22.27% 27.08% 27.37%
CURRENT LIABILITIES
Short Term Borrowings 16,413.20 8,641.12 4,232.81 17,721.37 3,580.75 10.21% 5.74% 3.01% 14.01% 3.10%
Trade Payables 24,010.84 30,834.68 16,245.30 12,509.54 17,235.18 14.93% 20.49% 11.55% 9.89% 14.91%
Other Current Liabilities 28,766.31 29,184.74 32,408.09 26,942.87 24,678.77 17.89% 19.39% 23.05% 21.30% 21.34%
Short Term Provisions 2,682.70 2,881.53 1,858.92 1,831.00 1,746.96 1.67% 1.91% 1.32% 1.45% 1.51%
Total Current Liabilities 71,873.05 71,542.07 54,745.12 59,004.78 47,241.66 44.70% 47.53% 38.94% 46.66% 40.86%
Total Capital And Liabilities 160,803.98 150,512.56 140,604.49 126,468.98 115,627.25 100.00% 100.00% 100.00% 100.00% 100.00%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 92,269.61 68,751.37 63,526.50 56,687.98 46,259.18 57.38% 45.68% 45.18% 44.82% 40.01%
Balance Sheet

Intangible Assets 0.00 743.25 409.70 262.93 228.70 0.00% 0.49% 0.29% 0.21% 0.20%
Capital Work-In-Progress 0.00 3,312.69 7,094.78 9,108.09 6,702.63 0.00% 2.20% 5.05% 7.20% 5.80%
Other Assets 0.00 0.03 0.05 0.21 0.24 0.00% 0.00% 0.00% 0.00% 0.00%
Fixed Assets 92,269.61 72,824.61 71,388.63 66,455.83 53,553.85 57.38% 48.38% 50.77% 52.55% 46.32%
Non-Current Investments 9,595.21 15,794.55 10,889.82 10,849.48 10,915.73 5.97% 10.49% 7.75% 8.58% 9.44%
Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00
Long Term Loans And Advances 1,520.57 4,555.86 4,927.57 5,442.94 2,515.66 0.95% 3.03% 3.50% 4.30% 2.18%
Other Non-Current Assets 2,020.58 2,641.40 2,436.17 2,657.50 2,004.76 1.26% 1.75% 1.73% 2.10% 1.73%
Total Non-Current Assets 105,405.97 95,816.42 89,642.19 85,405.75 68,990.00 65.55% 63.66% 63.75% 67.53% 59.67%
CURRENT ASSETS
Current Investments 4,277.14 4,442.27 6,794.27 5,208.54 5,075.89 2.66% 2.95% 4.83% 4.12% 4.39%
Inventories 38,064.70 36,307.06 26,756.75 20,421.06 21,544.65 23.67% 24.12% 19.03% 16.15% 18.63%
Trade Receivables 6,721.86 9,738.32 7,827.47 5,164.34 6,670.72 4.18% 6.47% 5.57% 4.08% 5.77%
Cash And Cash Equivalents 2,120.44 834.49 7,053.49 115.78 95.41 1.32% 0.55% 5.02% 0.09% 0.08%
Short Term Loans And Advances 142.62 135.99 137.90 590.58 1,628.88 0.09% 0.09% 0.10% 0.47% 1.41%
OtherCurrentAssets 4,071.25 3,238.01 2,392.42 9,562.93 11,621.70 2.53% 2.15% 1.70% 7.56% 10.05%
Total Current Assets 55,398.01 54,696.14 50,962.30 41,063.23 46,637.25 34.45% 36.34% 36.25% 32.47% 40.33%
Total Assets 160,803.98 150,512.56 140,604.49 126,468.98 115,627.25 100.00% 100.00% 100.00% 100.00% 100.00%

Page | 11
Vertical Analysis for Income Statement

• Cost of materials consumed and Purchase of Stock in trade accounted for around 75%, in the year the COMS
percentage point increased by 11.83% its due to the increase in demand for oil and gas due to which they had to
increase their supply and storage of raw materials
• The reduction in profit that is the difference between the PBT and PAT is minimal, showing that the tax liability
isn’t very high for a company like BPCL. The PAT revolves around 0.3 to 2 % approximately hence showing that
BPCL company is slowly making lesser profits with each passing year
• Other expenses accounted less than 1 percent for total revenue (Last 5 years)

Refer to the next page for Vertical analysis of the income statement

Page | 12
 Income and Expenditure statement for BPCL VERTICAL ANALYSIS
Profit & Loss account of Bharat Petroleum Corporation (in Rs. Cr.) As on Mar 23 As on Mar 22 AS on Mar 21 As on Mar 20 AS on Mar 19 March '23 March '22 March '21 March '20 March '19
INCOME
Revenue From Operations [Gross] 5,33,467.55 4,32,258.07 3,00,829.72 3,26,393.46 3,36,384.45 99.59% 99.45% 98.58% 99.06% 99.12%
Other Income 2,183.99 2,412.42 4,344.45 3,081.31 2,983.60 0.41% 0.55% 1.42% 0.94% 0.88%
Total Revenue 5,35,651.54 4,34,670.49 3,05,174.17 3,29,474.77 3,39,368.05 100.00% 100.00% 100.00% 100.00% 100.00%
EXPENSES
Cost Of Materials Consumed 2,34,305.39 1,38,708.46 71,153.56 1,13,229.30 1,19,419.22 43.74% 31.91% 23.32% 34.37% 35.19%
Purchase Of Stock-In Trade 1,99,884.14 1,89,085.80 1,27,800.87 1,43,164.25 1,46,974.06 37.32% 43.50% 41.88% 43.45% 43.31%
Changes In Inventories Of FG,WIP And Stock-In Trade -975.21 -4,288.73 -3,633.57 -456.62 -1,703.06 -0.18% -0.99% -1.19% -0.14% -0.50%
Employee Benefit Expenses 2,763.97 3,314.45 4,477.17 3,691.45 3,664.18 0.52% 0.76% 1.47% 1.12% 1.08%
Finance Costs 3,216.48 1,860.48 1,328.36 2,181.86 1,318.96 0.60% 0.43% 0.44% 0.66% 0.39%
Depreciation And Amortisation Expenses 6,347.48 4,754.27 3,978.05 3,786.89 3,189.28 1.19% 1.09% 1.30% 1.15% 0.94%
Income Statement

Excise Duty 60,342.88 71,129.00 69,317.00 43,197.00 40,347.48 11.27% 16.36% 22.71% 13.11% 11.89%
Other Expenses 26,189.75 19,263.96 15,616.46 18,115.26 16,956.39 4.89% 4.43% 5.12% 5.50% 5.00%
Total Expenses 5,32,074.88 4,23,827.69 2,90,037.90 3,26,909.39 3,30,166.51 99.33% 97.51% 95.04% 99.22% 97.29%
Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax 3,576.66 11,990.50 16,168.67 3,751.87 10,439.62 0.67% 2.76% 5.30% 1.14% 3.08%
Exceptional Items -1,359.96 -77.06 6,448.91 -1,080.83 0.00 -0.25% -0.02% 2.11% -0.33% 0.00%
Profit/Loss Before Tax (PBT) 2,216.70 11,913.44 22,617.58 2,671.04 10,439.62 0.41% 2.74% 7.41% 0.81% 3.08%
Tax Expenses-Continued Operations
Current Tax 346.60 2,658.00 5,134.78 201.00 2,079.00 0.06% 0.61% 1.68% 0.06% 0.61%
Deferred Tax 0.00 323.19 -402.98 400.68 1,316.48 0.00% 0.07% -0.13% 0.12% 0.39%
Tax For Earlier Years 0.00 143.52 -1,155.89 -613.83 -87.88 0.00% 0.03% -0.38% -0.19% -0.03%
Profit/Loss For The Period (PAT) 1,870.10 8,788.73 19,041.67 2,683.19 7,132.02 0.35% 2.02% 6.24% 0.81% 2.10%

Page | 13
 Liquidity Ratios:
An organization's capacity to pay its short-term debts is gauged by a financial ratio known as the liquidity ratio. Investors
and creditors use liquidity ratios to determine a company's financial stability and default risk.

Liquidity Ratios 2019 2020 2021 2022 2023

Current Ratio 0.99 0.70 0.93 0.76 0.77

Quick Ratio 0.53 0.35 0.44 0.26 0.24

Current Ratio:

Current Ratio
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2019 2020 2021 2022 2023

Formula: Current Ratio: Current Assets / Current Liability

Analysis: The ability of a corporation to pay down short-term creditors using current assets is measured by its current
ratio. The current ratio of BPCL is 0.77 which is low as compared to the industry average of 2 because of high current
liabilities to meet the working capital requirements.

Quick Ratio:

Acid Test Ratio/ Quick Ratio

0.60
0.50
0.40
0.30
0.20
0.10
0.00
2019 2020 2021 2022 2023

Formula: Quick Ratio: Quick Assets / Current Liability

Analysis: The ability of a business to cover short-term commitments with fast assets is measured by the quick ratio.
Ideal quick ratio is 1:1 and quick ratio of BPCL 0.24 which is very low because of the same reason as mentioned above,
that is, high current liabilities. BPCL is using its cash for the working capital more from previous years as the quick
ratio decreased y-o-y from 2021.

Page | 14
 Efficiency Ratio:

Efficiency ratios gauge a company's capacity to effectively employ its resources and control its obligations in the short
or current term. The efficiency ratios include inventory turnover ratio, creditor turnover ratio, and receivables turnover
ratio. These ratios measure a company's capacity to manage its assets and how effectively it uses them to produce
revenue.

Efficiency Ratios 2019 2020 2021 2022 2023

Debtors Turnover Ratio 50.43 55.16 46.31 49.22 64.82
Creditors Turnover Ratio 6.93 7.61 4.95 5.89 8.54
Inventory Turnover Ratio 5.54 5.40 3.02 4.40 6.30

Average Debtors 6,670.72 5917.53 6495.91 8782.90 8230.09

Average Creditors 17,235.18 14872.36 14377.42 23539.99 27422.76

Average Inventory 21,544.65 20982.86 23588.91 31531.91 37185.88

Debtors collection period 7.24 6.62 7.88 7.42 5.63

Creditors Payment period 52.68 47.94 73.75 61.94 42.72

Inventory holding period 65.85 67.64 121.01 82.97 57.93

Inventory turnover ratio:

Inventory Turnover Ratio

7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
2019 2020 2021 2022 2023

Formula: Inventory turnover Ratio: Cost of goods sold / Average inventory

Page | 15
Inventory Holding Period:

Inventory holding period

140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
2019 2020 2021 2022 2023

Formula: 365 / ITR (days)

Analysis: Inventory Turnover Ratio of BPCL is 6.3 which has grown in last couple of years and is in the range of ideal
ITR. This means that BPCL is effectively maintaining its inventory.
Inventory Holding Period of BPCL is 57.93 days which is less as compared to the year 2021 and as compared to the
ideal holding period of 60 days. Company is efficient in utilising its inventory for sales.

Debtor turnover ratio:

Debtors turnover Ratio

70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2019 2020 2021 2022 2023

Formula: Revenue from operations / Average debtors

Debtor collection Period:

Debtors collection period

10.00

8.00

6.00

4.00

2.00

0.00
2019 2020 2021 2022 2023

Page | 16
Formula: 365 / DTR (days)
Analysis: Debtor turnover ratio of BPCL is 64.82 which is quite high for any company but it is justified that the
maximum revenue of BPCL is from cash sales because of the petroleum business. Presence of debtors is from the other
businesses in which BPCL operates.
Likewise, DCP of BPCL is very low whereas other companies ideally have a DCP of 30-60 days.

Creditor turnover ratio:

Creditors Turnover Ratio

10.00

8.00

6.00

4.00

2.00

0.00
2019 2020 2021 2022 2023

Formula: Cost of goods sold / Average creditors

Creditor payment Period:

Creditors payment period

80.00

60.00

40.00

20.00

0.00
2019 2020 2021 2022 2023

Formula: 365 / CTR (days)

Analysis: The Creditor Turnover ratio of BPCL is 8.5 which is in the ideal range of 8-10. CTR of the company was low
in 2021 but it improved its paying capacity in 2023. The ideal CTR indicates high credit worthiness of BPCL. BPCL’s
trade payables also decreased in the current year which shows the paying capacity of the company. Creditor Payment
period of the company is 42.7 days which is good as compared to the industry average of 50 days.

Page | 17
 Profitability Ratios:
Operation ratios are financial statistics that gauge a business's performance and operational effectiveness. They are
determined by comparing several financial statement elements, such as operating costs, revenue, and assets. An
organization's profitability, efficiency, and financial health can be evaluated using operation ratios.

Profitability Ratios 2019 2020 2021 2022 2023

Operating Profit Ratio 0.031 0.011 0.054 0.028 0.007

PBT Margin Ratio 0.031 0.008 0.075 0.028 0.004

Net Profit Ratio 0.021 0.008 0.063 0.020 0.004

Operating Profit Ratio:

Operating Profit Ratio

0.060
0.050
0.040
0.030
0.020
0.010
0.000
2019 2020 2021 2022 2023

Formula: (Profit before Interest and Taxes / Net Sales) * 100

Analysis: The operating profit ratio of BPCL is 0.7% which is declining y-o-y from 2021 because of increase in
expenses like Cost of materials consumed, Finance cost, and other expenses.

PBT Margin Ratio:

Formula: (Profit before tax / Net Sales) * 100
Analysis: The trend line of PBT margin is same as that of Operating profit, it is declining y-o-y because of high expenses.

Net Profit Ratio:

Net Profit Ratio

0.070
0.060
0.050
0.040
0.030
0.020
0.010
0.000
2019 2020 2021 2022 2023

Formula: PAT / Revenue from operations

Analysis: Net profit of BPCL has decreased by 78.72% from last year due high crude oil cost in 2022 and 2023, and
increased finance cost due to high borrowings. BPCL reported a higher profit margin in the 1st quarter of 2023-24 which
is a positive sign.

Page | 18
 Solvency Ratio:
For assessing a company's long-term financial stability, the solvency ratio is a crucial financial metric. It evaluates the
organization's ability to handle long-term financial obligations and potential insolvency risks.
Three often used solvency ratios are the Debt-to-Equity Ratio, Interest Coverage Ratio and Asset to equity ratio.
Lower values imply lower financial risk for Debt-to-equity and asset to equity ratio. The more the merrier for interest
coverage ratio

Solvency Ratios 2019 2020 2021 2022 2023

Interest coverage ratio 7.92 1.72 12.17 6.44 1.11

Debt to equity ratio 0.86 1.03 0.57 0.59 0.71

Assets to Equity ratio 3.15 3.81 2.58 3.03 3.09

Debt to equity ratio:

The debt-to-equity ratio compares a company's total debt to its shareholders' equity. The Interest Coverage Ratio, on
the other hand, evaluates a company's capacity to pay its interest expenses out of earnings before interest and taxes
(EBIT), with higher ratios suggesting a better capacity to do so, and asset to equity ratio illustrates the financial ratio
that assesses financial leverage and aids investors and other stakeholders in identifying a company's leverage status,
which defines its capacity to service debt.

Debt to equity Ratio

1.20

1.00

0.80

0.60

0.40

0.20

0.00
2019 2020 2021 2022 2023

Formula:
Debt to Equity Ratio: Total Debt / Shareholders Fund
Analysis: Preferrable is less than 2, we can see that in 2021 the debt-to-equity ratio was 0.57 which was very good as
it had less obligations to pay to its creditors but after that it has only increased due to the stagnancy in shareholder’s
funds and slight increase in debts, still the DOE isn’t very bad in general but it’s better if DOE doesn’t exceed 1:1
ratio.

Page | 19
Interest coverage ratio

Interest coverage Ratio

14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2019 2020 2021 2022 2023

Formula:
Interest coverage ratio: EBIT/Interest Expenses
Analysis: Preferrable is 2 or more, we can see that in 2020 and the current year 2023 the ICR is below even the
accepted zone that is 1.5 times this is due to the massive decrease in the earnings before interest and tax amount for
those respective years. The sole reason was that even after the revenue the expenses that were incurred during those
two years were very high which led to low profitability.

Asset to equity ratio

Assets to Equity Ratio

4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2019 2020 2021 2022 2023

Formula:
Asset to Equity: Total Asset / Total Equity
Analysis: A good asset-to-equity ratio is one that is less than 2. By issuing debt rather than shares, a high value may
demonstrate that a corporation has assets and are incapable of raising more debts. The year 2021 was the best as the
asset-to-equity was ratio 2.58:1 and this was possible only because the total asset was a bit low and the equity valued
was high

Page | 20
 Investors Ratio

Investor's Ratio 2019 2020 2021 2022 2023

Return on equity 19.41 8.08 34.91 17.69 3.60

Asset Turnover ratio 2.91 2.58 2.14 2.87 3.32

Earning per share 36.26 13.64 96.44 41.31 8.78

Dividend per share 19.00 16.50 79.00 16.00 4.00

Dividend payout ratio 52.40 120.97 81.92 38.73 45.56

Market price 335.32 393.28 358.39 436.78 328.43

Dividend Yield 5.67 4.20 22.04 3.66 1.22

P.E Ratio 9.25 28.83 3.72 10.57 37.41

DuPont Analysis 19.41 8.08 34.91 17.69 3.60

Return on Equity (DuPont analysis)

Return on Equity (%)

40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2019 2020 2021 2022 2023

Formula:
Return on Equity: Net income/Shareholder’s Equity
Analysis: The higher the ratio, the bigger the investors' return on investment will be. For business owners and
financial professionals, this ratio aids in determining how financially stable a company is.
We can clearly see that in 2023 it has dropped to only 3.6% which isn’t good the reason being low PAT and high
equity in that year.

Page | 21
Asset turnover ratio

Asset turnover ratio

3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2019 2020 2021 2022 2023

Formula:
Revenue/Total sales
Analysis:
A greater ratio is typically preferred since it suggests that the business is effective at producing sales or revenues from
its asset base. A lower ratio suggests that a business is not utilising its resources effectively and may be experiencing
internal issues.
In the recent year 2023 the ratio seems to look healthy as BPCL as the revenue is high 5,33,437 compared to other
years

Earning per share (EPS)

EPS
40.00

30.00

20.00

10.00

0.00
2019 2020 2021 2022 2023

Formula:
Net Profit/No of Equity shares
Analysis:
The EPS measures a company's profitability, and the PE ratio of stocks indicates whether they are overvalued or
undervalued. Whether you intend to invest in domestic or foreign markets, these measures are crucial.
In the current year it has crashed as the net profit for the year 2023 was only 8,788.

Page | 22
Dividend per share

DPS
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2019 2020 2021 2022 2023

Formula:
Dividend/No. of Share
Analysis:
A high dividend payout ratio is viewed as undesirable since it can suggest that a company won't be able to sustain
dividend payments in the long run.
In the current year that is 2023 it is desirable for BPCL as in this rate they can sustain the dividend that is to be paid to
their shareholder

Dividend payout ratio

Dividend payout ratio

140.00

120.00

100.00

80.00

60.00

40.00

20.00

0.00
2019 2020 2021 2022 2023

Formula: Dividend per share/EPS*100

Analysis:
A high dividend payout ratio is viewed as undesirable since it can suggest that a company won't be able to sustain
dividend payments in the long run.
In 2023 BPCL is better than it was doing in 2020 and 2021 but it saw a slight increase to be desirable for stakeholder’s
preference they need to control it

Page | 23
Dividend yield ratio

Dividend yield
25.00

20.00

15.00

10.00

5.00

0.00
2019 2020 2021 2022 2023

Formula:
Market price/Dividend Per share
Analysis:
Dividend stocks with higher yields offer more income, but higher yield is also accompanied with more risk. Less
income is generated by equities with lower dividend yields, but they are frequently supplied by more reliable
businesses with a track record of steady growth and payments.
Less dividend is desirable hence in 2023 the dividend yield is desirable with a ratio of 1.22:1.

P.E ratio

PE Ratio
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2019 2020 2021 2022 2023

Formula: Market price/EPS

Analysis: You pay more for every dollar of earnings the greater the P/E ratio. Therefore, technically speaking from a
price to earnings viewpoint, a high PE ratio is undesirable for investors.
In 2023 the current ratio of Price to earning is 37.41 which isn’t very desirable for investors hence they won’t be
investing much in BPCL if this trend

Page | 24
Bharat Petroleum Corporation Limited (BPCL) 2023 DuPont Analysis
ROE, or return on equity.
A company's ROE is a gauge of how well it is turning its equity into earnings. It is computed by subtracting equity from
net income.
2023 ROE for BPCL: 8%

Detailed DuPont Analysis

Using the DuPont formula, ROE may be divided into these three parts:
The percentage of sales that are converted to net income is measured by the net profit margin, or NPM.
Asset Turnover Ratio (ATO): These gauges how effectively a business utilizes its assets to drive revenue.
Equity Multiplier (EM): This gauges the extent to which a business is borrowing money to pay for its assets.
2BPCL DuPont Analysis
Component - Equity Multiplier (EM), Net Profit Margin (NPM) 3.5%, Asset Turnover Ratio (ATO)Analysis insights
from DuPont
The ROE of 8% for BPCL is lower than the industry average for its competitors in the oil and gas sector. A reduced net
profit margin and asset turnover ratio are to blame for this. The fact that BPCL's equity multiplier is smaller than that of
its competitors helps to partially offset the negative effects of its lower NPM and ATO.
By lowering expenses or boosting revenues, BPCL could concentrate on raising its net profit margin in order to increase
ROE. It might also concentrate on increasing its asset turnover ratio by making better use of its resources.

Conclusion
Finding the factors that affect a company's ROE can be done with the help of a DuPont analysis. Although BPCL's ROE
is less than the average of its competitors, but by raising its net profit margin and asset turnover ratio, it may become
better.

Page | 25
 Competitor analysis
Balance Sheet ------------------- in Rs. Cr. -------------------
BPCL IOC HPCL
Mar '23 Mar '23 Mar '23
Sources Of Funds
Total Share Capital 2129.45 13771.56 1418.94
Equity Share Capital 2129.45 13771.56 1418.94
Reserves 49866.89 120985.98 26294.49
Net worth 51996.34 134757.54 27713.43
Secured Loans 35854.8 132495.45 64517.22
Total Debt 35854.8 132495.45 64517.22
Total Liabilities 87851.14 267252.99 92230.65

BPCL has a moderate net worth and a decent equity-to-debt ratio in its capital structure It falls between HPCL, which
has the highest net worth but also the biggest debt, and IOC, which has a lower net worth but higher debt levels. Each
company's individual financial health and performance would necessitate a more thorough examination, taking into
account other financial ratios, profitability measurements, and industry benchmarks. So, let’s look at the ratios:

Ratios BPCL HPCL IOC

Basic EPS (Rs.) 8.78 -63.26 5.98
PBT Margin (%) 0.46 -2.7 1.15
Net Profit Margin (%) 0.39 -2.03 0.98
Return on Net worth / Equity (%) 3.59 -32.38 6.11
Return on Capital Employed (%) 7.63 -12.07 7.59
Return on Assets (%) 1.16 -5.8 1.96
Total Debt/Equity 0.69 2.33 0.98
Current Ratio 0.77 0.59 0.75
Quick Ratio 0.24 0.19 0.18
Inventory Turnover Ratio 6.3 3.81 4.06
Earnings Yield 0.03 -0.27 0.08

• BPCL has highest EPS thus it is providing max return to shareholders out of all the competitors and its financial
performance is also good.
• PBT margin ratio of BPCL specifies profitability of the company’s operations after all costs, which is better than
HPCL.
• Highest Return on capital employed ratio shows that the company is utilizing its resources efficiently.
• Debt to equity ratio is less than 1 indicating that it has financed a smaller portion of its operations through debt
relative to its equity, that implies lower financial risk.
• BPCL has a better position to cover its short-term liabilities with its short-term assets compared to its competitors,
implied by the highest current ratio and quick ratio.
• Highest inventory turnover ratio signifies that BPCL is more efficient in inventory management.
BPCL outperforms HPCL in most important financial variables, with positive profitability, return, and liquidity
ratios. However, BPCL trails IOC in several areas, such as EPS and return on assets.

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 Conclusion

The Ministry of Petroleum and Natural Gas, Government of India, owns the public sector enterprise known as Bharat
Petroleum Corporation Limited (BPCL). With a refining capacity of 38.3 million metric tonnes per annum (MMTPA),
it is one of the major oil refining and marketing firms in India. Three refineries are run by BPCL in Mumbai, Kochi, and
Bina.
Petroleum-based goods like fuels, lubricants, and petrochemicals are all sold by BPCL. The primary retail brand of the
corporation is Bharat Petroleum. In addition, BPCL has a major position in the industrial and aviation industries.
BPCL is a major player in the Indian energy industry and is essential to the growth of the economy in that nation. The
business is invested in renewable energy and devoted to sustainable development.

Current financial problems

Due to its substantial debt, rising oil costs, and meddling from the government, BPCL, a major refiner and marketer of
oil in India, is experiencing financial difficulties. These issues are straining cash flow and making it challenging to invest
in expansion potential.
In order to overcome these difficulties, BPCL is making moves like selling its NRL stock and obtaining money through
an FPO. The largest shareholder, the Indian government, may not always behave in the minority shareholders' best
interests.
Overall, BPCL is experiencing some financial difficulties, but the corporation is working to find solutions. Investors
should keep a close eye on the situation and control their own investments.

Improvement Strategies
Reduce debt: To lower its debt levels, BPCL may sell its shares in Numaligarh Refinery Limited (NRL). BPCL has
another option for financing: an FPO.
Margin improvement: By making its refineries more effective and by cutting expenses, BPCL may increase its margins.
Subject to government clearance, BPCL may also charge consumers the full cost of rising oil prices.
Reduce government intrusion: BPCL can advocate for more independence from the government by cultivating closer
ties with decision-makers. Additionally, BPCL can collaborate with the government to create laws that are helpful to the
oil and gas sector. BPCL can grow its business by entering new areas like petrochemicals and renewable energy. BPCL
can achieve this through making investments in fresh ventures or by buying out existing businesses.
BPCL can spend money on technology to increase the effectiveness of its operations, cut costs, and create new goods
and services. For instance, BPCL can spend money on machine learning (ML) and artificial intelligence (AI) to increase
the effectiveness of its refineries. To lessen its carbon footprint and diversify its revenue sources, BPCL can potentially
invest in renewable energy technologies.
By putting these tactics into practice, BPCL can boost its financial results and increase its competitiveness in the world's
oil and gas market.

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 Sources

https://www.moneycontrol.com/india/stockpricequote/refineries/bharatpetroleumcorporation/BPC
BPCL Annual Reports available at: https://www.bharatpetroleum.in/

Plagiarism Report

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