OGDCL

COMPREHENSIVE CASES
ANALYSIS AND INTERPRETATIONS

Submitted by:
Khizer Asif
Mohammad Azeem

OGDCL
INCOME
STATEMENT
from year 2006 to
2010
CC-2
2010

2009

142,571,
863

130,829,
579

16,72
8,843
23,72
7,818
1,49
2,267
41,948
,928
100,622,
935
3,30
0,214

15,15
5,667
22,67
3,893
1,52
2,489
39,352
,049
91,477
,530
3,37
0,823

7,90
2,370
1,59
8,161
1,27
3,312
4,66
0,671
6
4,188

7,45
9,560
1,33
2,982
92
6,027
4,25
9,364
5
7,503

Profit for the Year

88,552
,753
29,37
5,628
59,177
,125

80,927
,923
25,38
8,282
55,539
,641

Earnings per share - basic (Rupees)

13.76

12.91

Sales - net

Royalty
Operating expenses
transportation charges
CGS
Gross Profit
Other Income

Exploration and Prospecting Expenditure

General and administration
Finance Cost
Worker's Profit Participation Fund
share of profit in associate - net of
taxation

Profit Before Taxation

Taxation

(Rupees '000)
2008

125,445,674

17,262,493
18,882,365
1,472,615
37,617,473
87,828,201
8,308,684

6,612,836
1,244,030
531,799
4,387,411
-

2007

2006

100,261,
191

96,755,
382

10,87
7,443
18,49
7,388
1,08
7,931
30,462,
762
69,798,
429
3,61
5,231

10,87
2,443
15,04
5,654
94
2,163
26,860,
260
69,895,
122
4,24
7,881

7,40
6,280
1,28
5,476
44
9,561
3,21
3,617

3,68
0,707
1,07
1,979

83,360,809
33,747,216
49,613,593

9,973
3,46
9,017
-

61,058,
726
15,42
8,762
45,629,
964

65,911,
327
19,94
3,604
45,967,
723

CC2

11.45

0.61

1
0.69

Analysis on Income statement:

Net sales of OGDCL have grown significantly over the last five years. This
growth in sales is due to increase in demand of oil and gas in Pakistan. Gross profit,
Operating profit, Net profit of the company are also high because of less general and
administration cost. Operating expenses have been increasing consistently because of
high inflation in Pakistan. Exploration and prospecting expenditure of the company as a
percentage of sales are also low. Ogdcl overhead costs are low and CGS is high. This is
because of high operating expenses and royalty payment to the government. Finance cost
has increased by a large amount in FY07.There ia a fluctuation in Profit before tax of the
company but there is an overall increasing trend. Earnings per share have been increasing
consistently with the exception of 2007.

OGDCL
BALANCE
SHEET
From Year
2006 to 2010

CC 3
2010
SHARE CAPITAL AND
RESERVES
Authorized Share Capital
Share capital
Capital reserve
Unappropriated profit
Total Shareholder's Equity

43,0
09,284
3,8
59,682
110,5
23,520
157,39
2,486

2009

43,0
09,284
3,6
58,318
79,5
03,794
126,17
1,396

(Rupees
'000)
2008

43,009
,284
2,667,
064
63,695
,077
109,371,4
25

2007

43,0
09,284
2,4
38,228
55,1
69,140
100,616
,652

2006

43,00
9,284
2,21
9,027
49,54
1,966
94,770,
277

NON CURRENT
LIABILITIES
Long term loans unsecured
Deferred liabilities
Taxation
Employee benefits
Provision for
decommissioning cost
Total Non-Current
Liabilities
CURRENT LIABILITIES
Trade and other payables
Provision for taxation
Proposed Dividends
Total Current liabilities
TOTAL LIABILITITES +
EQUITY

__
__

__
__

21,4
99,184
2,6
99,773
12,4
35,365
36,63
4,322

17,7
10,497
2,0
08,499
10,8
14,506
30,53
3,502

__
__
12,370
,448
1,528,
444
6,066,
716
19,965,6
08

__
__

28,6
24,204
6,2
16,639
__
34,8
40,843
228,86
7,651

18,7
47,328
2,5
40,170
__
21,2
87,498
177,99
2,396

17,088
,050
4,143,
304
__
21,231
,354
150,568,3
87

11,1
22,665

34,9
98,898
58,6
30,857
9,5
51,394

28,4
82,194
49,0
57,766
8,7
79,699

23,225
,763
36,808
,041
7,672,
444

21,6
00,201
28,7
49,993
6,3
65,706

__
103,18
1,149

__
86,31
9,659

__
67,706,2
48

__
56,715
,900

11,0
23,916
1,4
23,132
5,1
51,807
17,598
,855

__
__
11,1
22,665
129,338
,172

__
__
10,01
0,991
1,42
0,245
4,22
1,756
15,652,
992
7,17
4,483
3,71
6,958
__
10,89
1,441
121,314,
710

NON-CURRENT ASSETS
FIXED ASSETS
Property, plant and equipment
Development and production
assets
Exploration and evaluation
assets
Stores held for capital
expenditure
Total Fixed Assets
Investments in subsidiary and
associated companies
Investments held to maturity
Long term investments
Long term loans and
receivables
Long term prepayments
Total Non-Current Assets

__
__
3,2
31,435
1,9
02,330
1
18,937
108,43

__
__
2,9
03,133
1,8
49,707
85,357
91,15

__
__
3,175,
054
1,324,
059
108,
937
72,314,2

__
__
2,9
45,938
1,1
17,755
3
9,821
60,819

19,57
5,807
2,55
1,149
677
,441
21,65
3,562
44,457,
959
__
__
2,72
9,807
1,39
1,552
58
,021
48,637,

3,851

7,856

98

Deposits and prepayments

14,5
27,278
1
72,084
82,9
92,291
2,2
16,881
6
16,641

17,4
64,351
1
08,301
56,1
40,092
2,6
33,965
4
19,621

Interest accrued

17,031

27,156

,414

339

CURRENT ASSETS
Stores, spares and loose tools
Stock in trade
Trade debts
Loans and advances

9
Other receivables

26,951

79,319

Advance tax

__

__

Short term investments

__

__

Other financial assets

Cash and bank balances
Total Current Assets
TOTAL ASSETS

11,1
20,823
7,8
43,820
120,43
3,800
228,86
7,651

5,0
87,917
3,9
73,818
86,83
4,540
177,99
2,396

16,274
,079
151,
782
40,626
,931
2,339,
037
678,
789
158,
863
10,207
,516
1,102,
044
__
__
6,715,
048
78,254,0
89
150,568,3
87

13,1
78,295
9
3,788
27,8
73,515
1,5
38,657
29
2,928
25
3,222
1,0
63,389
13,5
53,959
5,9
50,713
__
4,7
20,292
68,518
,758
129,338
,172

12,82
9,747
65
,608
24,49
8,986
1,83
5,159
300
,260
494
,087
256
,722
__
31,20
9,932
__
1,18
6,870
72,677,
371
121,314,
710

CC3
Analysis on Balance Sheet:
Current assets are more than current liabilities from the year 2006-2010 and there
has been no long term debt in the company since FY06 which shows that the company
has been maintaining Reserve borrowing capacity in order to take advantage of good
investment opportunities in future.
The company has not issued any new shares in the market hence, the number of shares
outstanding have not changed. Apart from this, we can see that current and non-current
liabilities and assets have an increasing trend over the periods.

Lastly we can see that the total assets of the company have been growing at a high rate
throughout the year. This is because of the expansion policy Ogdcl is pursuing in order to
meet the rising demand of consumers of oil and gas in Pakistan.

OGDCL
Statement
of Cash
Flows
From Year
2006 to
2010

CC4

(Rupees
'000)
2008

2010

2009

2007

2006

88,552,7
53

80,927,9
23

78,307,4
04

61,058,7
26

65,911,32
7

3,323,4
74
6,457,0
68
16,728,8
43

3,306,4
07
6,208,4
03
15,155,6
67

3,129,8
82
4,961,1
45
17,320,1
87

2,978,4
42
3,637,3
69
10,877,4
43

2,370,87
1
3,339,72
9
10,872,44
3

4,660,6
71
1,288,0
12
1,263,9
14
(1,560,8
48)

4,259,3
64
1,712,8
15
911,6
83
(1,775,6
71)

4,387,4
11
759,4
09
527,6
95
(2,653,8
59)

3,213,6
17
184,85
2
443,69
9
(3,064,60
7)

3,469,01
7
367,80
7
__
(3,389,61
6)

(5,99
3)
(14,75

115,7
78
(29,51

42,2
25
(28,15

(60,38
6)
(300,65

(21,52
3)
(398,97

C
ash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation
Amortization of development and
production assets
Royalty

Workers' Profit Participation Fund

Provision for employees' benefits
Unwinding of discount on provision
for decommissioning cost
Interest income
Un-realized gain/loss on
investments at fair value through
profit or loss
Dividend income

6)
Fixed assets reconciliation
adjustment
Profit on disposals of property, plant
and equipment
Interest income on long term
receivables
Share of profit in associated
company

2)

0)

3)

0)

94
(114,61
5)
(54,78
9)
(44,68
0)

__
(32,62
8)
(61,57
3)

__
(26,28
2)
(82,75
2)

__

__

__

__

__

__

__

__
47,45
2
__

59,0
__
(75,08
6)
(25,62
0)
(64,11
8)
8,20
6

Stores inventory written off

Provision for doubtful advances
reversed

__
414,6
69
1,05
0
82,80
8

__
251,8
68

__
(9,86
4)
1,44
5
319,2
83

__

__

73

__

__
(5,43
0)

__

__

__

__

__

__

__

__

__

__

__

Trade debts written off

Provision for obsolete and slow
moving inventory
provision for doubtful claims
Provision for doubtful trade debts
Write back of provision for stores,
spares and loose tools
Write Back of provision against
advances
Adjustment on account of fixed
assets reconciliation
Land reconcilitation adjustments

__
(160,7
37)
(36,86
1)
(57,50
3)
298,9
30
(2,41
6)

3,1

__

__

__
__
121,035,0
47

__
__
111,089,3
11

__
__
106,909,2
23

__
__
78,868,8
71

__
__
82,459,50
3

1,140,4
26
(63,78
3)
(26,935,0
07)
(197,02
0)
240,0
92

(1,400,0
54)
43,4
81
(15,437,9
66)
259,5
44
(120,1
65)

(3,010,0
44)
(57,99
4)
(12,688,5
99)
(386,03
5)
(435,00
9)

(2,145,54
1)
(28,18
0)
(3,374,52
9)
7,33
2
86,03
5

(5,332,25
0)

__
(1,018,1
59)
94,201,5

__
3,683,6
03
98,117,7

__
2,188,4
73
92,520,0

__
1,207,3
65
74,621,3

__
1,162,43
9
72,221,54

W
orking capital changes
(Increase)/ decrease in current assets
Stores, spares and loose tools
Stock in trade
Trade debts
Deposits and prepayments
Advances and other receivables
Increase/ (decrease) in current
liabilities
Trade and other payables
Cash generated from operations

__
(5,971,41
2)
(36,54
0)
(60,19
1)

96

Royalty paid
Employee benefits paid
Payments workers' profit
participation fund
Taxes paid

Net cash from operating activities

54

15

53

(5,019,8
32)
(1,305,7
43)
(4,459,3
64)
(21,910,4
72)
(32,695,4
11)
61,506,18
5

(17,510,0
87)
(1,232,7
60)
(4,902,9
92)
(21,492,5
95)
(45,138,4
34)
52,979,32
0

(13,112,3
99)
(906,17
9)
(3,910,1
17)
(22,992,4
22)
(40,921,1
17)
51,598,89
8

(9,768,79
3)
(327,30
2)
(3,469,01
7)
(24,083,50
8)
(37,648,62
0)

(10,297,74
4)
(1,349,93
1)
(3,380,01
1)
(14,231,43
1)
(29,259,11
7)

36,972,733

42,962,432

(24,211,3
39)
1,530,8
39
67,67
6
(276,97
0)

(25,072,0
50)
2,107,8
50
53,1
57
(188,1
83)

__
84,10
7
(33,58
0)
(22,839,267
)

__
165,9
46
23,5
81
(22,909,70
1)

(18,347,2
24)
2,962,8
31
52,0
81
(450,00
0)
50,0
61
214,5
35
(69,11
6)
(15,586,83
2)

(16,444,90
5)
3,466,0
00
300,65
3
(450,00
0)
73,34
1
35,13
0
18,20
0
(13,001,581
)

(10,244,80
0)
3,142,01
4
398,97
0
(463,00
0)
12,14
0
31,18
4
(16,18
2)

(28,770,0
03)
(28,770,0
03)
9,896,91
5
8,939,82
8
18,836,74
3

(39,406,1
71)
(39,406,1
71)
(9,336,55
2)
18,276,38
0
8,939,82
8

(41,473,4
22)
(41,473,4
22)
(1,309,46
2)
17,994,34
2
16,684,88
0

(38,154,08
9)
(38,154,08
9)
(14,182,937
)

(5,621,945)

32,177,279

37,799,224

17,994,342

32,177,279

C
ash flows from investing activities
Fixed capital expenditure
Interest received
Dividend received
Purchase of investments
Proceeds from sale of property,
plant and equipment
Proceeds from disposals of property,
plant and equipment
Long term prepayments
Net cash used in investing activities

(7,139,674)

C
ash flows from financing activities
Dividend paid
Net cash used in financing activities
Decrease/Increase in cash and
cash equivalents
Cash and cash equivalents at
beginning of the year
Cash and cash equivalents at end
of the year

CC4

(41,444,70
3)
(41,444,70
3)

Analysis on Cash Flow Statement:

Cash from operations show net cash inflows which represent that the company is
generating enough cash to finance its operating activities while the cash from investing
and financing activities show net cash outflow which is a sign of growth as more is being
invested in fixed assets.
Net cash used in payment of dividend was Rs.39.40 billion as against 41.47 billion in the
previous year. Increase in cash flow from operating activities and net cash utilized in
investing and financing activities resulted in a net cash decrease of Rs.9.89 billion to
ending cash and cash equivalents balance of Rs.18.83 billion compared with Rs.8.93
billion over the previous year.

CC-6
Sales - net
Royalty
Operating expenses
transportation charges
CGS
Gross Profit
Other Income
Exploration and Prospecting
Expenditure
General and administration
Finance Cost
Worker's Profit Participation Fund
share of profit in associate - net of
taxation

2010

2009

2008

2007

2006

100.00%

100.00%

100.00%

100.00
%

100.00%

11.73%
16.64%
1.05%
29.42%
70.58%
2.31%

11.58%
17.33%
1.16%
30.08%
69.92%
2.58%

13.76%
15.05%
1.17%
29.99%
70.01%
6.62%

10.85%
18.45%
1.09%
30.38%
69.62%
3.61%

11.24%
15.55%
0.97%
27.76%
72.24%
4.39%

5.54%
1.12%
0.89%
3.27%

5.70%
1.02%
0.71%
3.26%

5.27%
0.99%
0.42%
3.50%

7.39%
1.28%
0.45%
3.21%

3.80%
1.11%
0.01%
3.59%

0.05%

0.04%

__

__

__

Profit Before Taxation

Taxation
Profit for the Year

62.11%
20.60%
41.51%

61.86%
19.41%
42.45%

66.45%
26.90%
39.55%

60.90%
15.39%
45.51%

68.12%
20.61%
47.51%

CC6
Analysis on Common Size Income Statement:
As we can see in the common size income statement Gross profit margin has
been fluctuating over the years. In 2010 CGS was 29.42% of sales where as GP was
70.58% of sales. other incomes as percentage of sales was highest in 2007, however it has
been falling since then and in 2010 other income was 2.31% of sales. Another thing that
we can see in the common size income statement is the low general and administration
expense as percentage of sales. Finance cost significantly increased over the years. Profit
before taxation has been fluctuating over the years. Profit before taxation as a percentage
of sales was highest in 2006. in 2010 profit for the year was 41.51% of sales.

OGDCL
Common Size Balance Sheet
From Year 2006 to 2010
CC 7
SHARE CAPITAL AND
RESERVES
Authorized Share Capital

2010

2009

2008

2007

2006

Share capital
Capital reserve
Unappropriated profit
Total Shareholder's Equity
NON CURRENT LIABILITIES
Long term loans unsecured
Deferred liabilities
Taxation
Employee benefits
Provision for decommissioning cost
Total Non-Current Liabilities
CURRENT LIABILITIES
Trade and other payables
Provision for taxation
Proposed Dividends
Total Current liabilities
TOTAL LIABILITITES + EQUITY
NON-CURRENT ASSETS
FIXED ASSETS
Property, plant and equipment
Development and production assets
Exploration and evaluation assets
Stores held for capital expenditure
Total Fixed Assets
Investments in subsidiary and
associated companies
Investments held to maturity
Long term investments
Long term loans and receivables
Long term prepayments
Total Non-Current Assets
CURRENT ASSETS
Stores, spares and loose tools
Stock in trade
Trade debts
Loans and advances

18.79%
1.69%
48.29%
68.77%

24.16%
2.06%
44.67%
70.89%

28.56%
1.77%
42.30%
72.64%

33.25%
1.89%
42.65%
77.79%

35.45%
1.83%
40.84%
78.12%

9.39%
1.18%
5.43%
16.01%

9.95%
1.13%
6.08%
17.15%

8.22%
1.02%
4.03%
13.26%

8.52%
1.10%
3.98%
13.61%

8.25%
1.17%
3.48%
12.90%

12.51%
2.72%

10.53%
1.43%

11.35%
2.75%

8.60%
__

5.91%
3.06%

15.22%

11.96%

14.10%

8.98%

100.00%

100.00%

100.00%

8.60%
100.00
%

100.00%

15.29%
25.62%
4.17%
__
45.08%

16.00%
27.56%
4.93%
__
48.50%

15.43%
24.45%
5.10%
__
44.97%

16.70%
22.23%
4.92%
__
43.85%

16.14%
2.10%
0.56%
17.85%
36.65%

1.41%
0.83%
0.05%
47.38%

1.63%
1.04%
0.05%
51.21%

2.11%
0.88%
0.07%
48.03%

2.28%
0.86%
0.03%
47.02%

2.25%
1.15%
0.05%
40.09%

6.35%
0.08%
36.26%
0.97%

9.81%
0.06%
31.54%
1.48%

10.81%
0.10%
26.98%
1.55%

10.19%
0.07%
21.55%
1.19%

10.58%
0.05%
20.19%
1.51%

Deposits and prepayments

Interest accrued
Other receivables
Advance tax
Short term investments
Other financial assets
Cash and bank balances
Total Current Assets
TOTAL ASSETS

0.27%
0.01%
0.41%
__
__
4.86%
3.43%
52.62%

0.24%
0.02%
0.55%
__
__
2.86%
2.23%
48.79%

0.45%
0.11%
6.78%
0.73%
__
__
4.46%
51.97%

100.00%

100.00%

100.00%

0.23%
0.20%
0.82%
10.48%
4.60%
__
3.65%
52.98%
100.00
%

0.25%
0.41%
0.21%
__
25.73%
__
0.98%
59.91%
100.00%

CC7
Analysis on Common size Balance Sheets:
From the common size analysis of balance sheets we can conclude that in balance
sheet the items especially current assets of the company are very high in all fiscal years.
However, there has been increase in current assets as compared to current liabilities; thus,
we can say that companys working capital is very high. Owners equity has been
decreasing over the five year period and there has been no long term debt in the company
since 2006. Presently the highest percent of total assets is represented by trade debts.
Fixed assets as percentage of total assets has increased throughout the year with the
exception of 2010 in which it fell and are currently at 47.38 % of total assets.

OGDCL
Per Share Results
From Year 2006 to 2010
CC- 9

2010

2009

2008

2007

2006

Sales

33.15

30.42

29.17

23.31

22.50

Net Income
Dividends
Book Value
Average Shares
Outstanding

13.76

12.91

11.54

10.61

10.69

6.69

9.16

9.64

8.87

9.64

36.60
4,300,928,4
00

29.34
4,300,928,4
00

25.43
4,300,928,40
0

23.39
4,300,928,40
0

22.03
4,300,928,40
0

CC9
Per Share results:
EPS for the current year is 13.76 while for the previous year it was 12.91, which
shows a rise in net income, having an increase of 6.58%. Again this year, the rise was
minimal, although the sales were high, but the royalty, operational and tax costs took up a
major chunk of the sales revenue, leaving the company with net profits not much higher
than last year. It is hoped that the EPS will improve in future as the exploration and
development activities will start bearing fruit in the form of enhanced production.
Rise in EPS means the rise in income as the total number of share of OGDCL are
same. While Sales and book value also show an increasing trend as a percentage of
average number of shares outstanding.

OGDCL
Short Term
Liquidity
Analysis
From Year
2006 to 2010

CC-10

(Rupees
'000)

2010

Current Asset
Current
Liabilities
Ratio

2009

2008

2007

2006

78,254,0
89
21,231,3
54
3.6
9

68,518,7
58
11,122,6
65
6.1
6

72,677,3
71
10,891,4
41

3.46

86,834,5
40
21,287,4
98
4.0
8

120,433,80
0
172,08
4
616,64
1
34,840,84
3
3.43

86,834,5
40
108,3
01
419,6
21
21,287,4
98
4.05

78,254,0
89
151,7
82
678,7
89
21,231,3
54
3.65

68,518,7
58
93,7
88
292,9
28
11,122,6
65
6.13

72,677,3
71
65,60
8
300,26
0
10,891,4
41
6.64

142,571,86
3
69,566,191.
50

130,829,5
79
48,383,511.
50

125,445,6
74
34,250,223.
00

100,261,1
91
26,186,250.
50

96,755,3
82
21,513,280.
00

120,433,80
0
34,840,84
3

Current Ratio

Current Asset
Inventory

Ratio

Prepaid Expense
Current
Liabilities
Acid-test Ratio

Times

Sales
Average
Receivables
Accounts
Receivable
Turnover

Times

Cost of Goods
Sold
Average
Inventory
Inventory
Turnover

Days

2.05
41,948,92
8

6.67

2.70

3.66

3.83

4.50

39,352,0
49

37,617,4
73

30,462,7
62

26,860,2
60

140192.5

130041.5

122785

79698

49006

299.22

302.61

306.37

382.23

548.10

Days' Sales in
Receivables

175.66

133.14

98.29

94.02

80.04

Days

Days' Sales in
Inventory

1.20

1.19

1.18

0.94

0.66

Days

Approximate
Conversion
Period

176.86

134.33

99.47

94.97

80.70

Cash
Current Assets

7,843,82
0
120,433,80

3,973,8
18
86,834,5

6,715,0
48
78,254,0

4,720,2
92
68,518,7

1,186,8
70
72,677,3

Cash to Current
Percent Assets

Cash
Current
Liabilities
Cash to Current
Percent Liabilities

40

89

58

71

6.51%

4.58%

8.58%

6.89%

1.63%

7,843,82
0
34,840,84
3

3,973,8
18
21,287,4
98

6,715,0
48
21,231,3
54

4,720,2
92
11,122,6
65

1,186,8
70
10,891,4
41

22.51%

18.67%

31.63%

42.44%

Current Asset
Current
Liabilities

120,433,80
0
34,840,84
3

MS's

Working Capital

85,592,957

86,834,5
40
21,287,4
98
65,547,04
2

78,254,0
89
21,231,3
54
57,022,73
5

68,518,7
58
11,122,6
65
57,396,09
3

61,785,930

6.5

5.6

3.9

8.6

6.1

Days

Days' Purchases
in Accounts
Payable

Days

Average net
trade cycle

Cash generated
from operations
Total Current
Liabillities
Cash Provided
by operations to
average current
Percent liabillities

10.90%
72,677,3
71
10,891,4
41

1.20

1.19

1.18

0.94

0.66

52,979,3
20
21,287,4
98

51,598,8
98
21,231,3
54

36,972,7
33
11,122,6
65

42,962,4
32
10,891,4
41

61,506,18
5
34,840,84
3

177%

249%

243%

332%

394%

CC10
Short term Liquidity Analysis:
A liquidity ratio measures the firm ability to meet its current obligation, or
liquidity of short-term assets; related debt-paying ability. Several comparisons can be
made to determine this ability.

Current ratio Of OGDCL shows decreasing trend. However, in 2010 it is 3.46

which is quite appropriate for the liquidity position of the company. Although
current ratio has decreased yet it shows an improvement since keeping a high
value of ratio represents cash keep as idle in the company.

Current liabilities in 2010 have shown a heavy increase due to a significant

increase in trade and other payables. Current assets also rose in the year, primarily
due to massive increase in trade debts from Rs. 56140092 billion from the last
year to Rs. 82992291 billion this year. Still as the increase in liabilities was much
higher compared to previous years, the ratio fell from 2009. Yet the major
liabilities, like royalties were part of the companys expansion plan, which will
yield greater returns in the future. However, the liquidity of the company may
decline in future if the management continues to opt for liquidating in short term
investments to finance future exploration and drilling activities.

Similarly, acid test ratio shows the same trend and currently it is 3.43 which show
that OGDCL has still enough current assets available excluding inventories to pay
off its liabilities. Thus, internally liquidity position of the company shows
deteriorating trend yet it is still very high and acceptable.

In terms of assets management, OGDC hasnt done well in past years. Inventory
turnover days have been decreasing. This measure indicates that OGDCL has
more funds invested in inventory. In 2010 it is 299.22 times which is quite an

acceptable figure, yet it shows a deteriorating trend and may cause difficulty for
the company.

Days purchases in payables has fluctuated over the periods and has increase from
last year which was 5.65 days in 2009 to 6.59 in 2010which represents that now
OGDCL is taking more time to pay off its accounts payables which is good for
liquidity.

Receivables turnover ratio has decreased due to comparatively less increase in

sales as compared to trade debts receivables showing managerial inefficiency.

While, Days Sales Outstanding has been on a slightly increasing trend since
FY06, due to rises in trade debts. Presently it is 175.66 days which shows that
now it is taking more days than last year to collect its receivables.

As a result, we see that the operating cycle of the company has been increasing
since the end of 2006, caused by the increases in DSO. This implies that OGDCL
requires larger working capital which can be lowered by increase in days
purchases on credit.

. The companys credit policy seems to be less strict. This has led the company to
a negative image in terms of stock and debt management and the company needs
to turn this around as soon as possible, as the effects are getting bigger every
passing year. Hence, this is suggestive of a more aggressive credit policy.

Apart from this working capital has also declined from 2006-2008 but increased
in 2009-2010. this is because current assets are more than current liabilities.
However, it still shows a surplus which provides safety cushion to prospective
creditors of OGDCL.

---Cash ratio is quite low which represents that current assets are less liquid. Cash to
current liabilities has decreased considerably from 2007-2009 which represent
availability of less cash.

OGDCL
Common-Size Analysis of Current Assets and Current Liabilities (in%)
From year 2006 to 2010
CC 11

2010

2009

2008

2007

2006

12.06%
0.14%
68.91%
1.84%
0.51%
0.01%
0.77%
__
__
9.23%
6.51%
100.00%

20.11%
0.12%
64.65%
3.03%
0.48%
0.03%
1.13%
__
__
5.86%
4.58%
100.00

20.80%
0.19%
51.92%
2.99%
0.87%
0.20%
13.04%
1.41%
__

19.23%
0.14%
40.68%
2.25%
0.43%
0.37%
1.55%
19.78%
8.68%
__
6.89%
100.00

17.65%
0.09%
33.71%
2.53%
0.41%
0.68%
0.35%
__
42.94%
__
1.63%
100.00%

CURRENT ASSETS
Stores, spares and loose tools
Stock in trade
Trade debts
Loans and advances
Deposits and prepayments
Interest accrued
Other receivables
Advance tax
Short term investments
Other financial assets
Cash and bank balances

Total Current Assets

8.58%
100.00%

CURRENT LIABILITIES
Trade and other payables
Provision for taxation
Proposed Dividends

Total Current liabilities

82.16%
17.84%

88.07%
11.93%

80.48%
19.52%

100.00%
__

65.87%
34.13%

100.00%

100.00
%

100.00%

100.00
%

100.00%

CC11
Comments on Common size analysis of current assets and current liabilities:
Above Common size analysis shows that trade debts represent the highest
percentage of total current assets while interest accrued represents the lowest percentage.
And from the current liabilities we can observe that trade and other payables show the
high percentage of current liabilities but it has decreased in 2010 from the previous year
of 88.07%..

OGDCL
Common-Size Statements of Cash
Flows
From Year 2006 to 2010
CC 15

2010

2009

2008

2007

2006

143.97%

152.75%

151.76%

165.15%

153.42%

5.40%

6.24%

6.07%

8.06%

5.52%

10.50%
27.20%

11.72%
28.61%

9.61%
33.57%

9.84%
29.42%

7.77%
25.31%

7.58%
2.09%
2.05%

8.04%
3.23%
1.72%

8.50%
1.47%
1.02%

8.69%
0.50%
1.20%

8.07%
0.86%
__

C
ash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation
Amortization of development and
production assets
Royalty
Workers' Profit Participation Fund
Provision for employees' benefits
Unwinding of discount on provision

for decommissioning cost

Interest income
Un-realized gain/loss on investments
at fair value through profit or loss
Dividend income
Fixed assets reconciliation adjustment
Profit on disposals of property, plant
and equipment
Interest income on long term
receivables
Share of profit in associated company
Stores inventory written off
Provision for doubtful advances
reversed
Trade debts written off
Provision for obsolete and slow
moving inventory
provision for doubtful claims
Provision for doubtful trade debts
Write back of provision for stores,
spares and loose tools
Write Back of provision against
advances
Adjustment on account of fixed assets
reconciliation
Land reconcilitation adjustments
W
orking capital changes
(Increase)/ decrease in current assets
Stores, spares and loose tools
Stock in trade
Trade debts
Deposits and prepayments
Advances and other receivables
Increase/ (decrease) in current
liabilities
Trade and other payables
Cash generated from operations
Royalty paid
Employee benefits paid
Payments workers' profit participation
fund

-2.54%

-3.35%

-5.14%

-8.29%

-7.89%

-0.01%
-0.02%
__

0.22%
-0.06%
__

0.08%
-0.05%
0.11%

-0.16%
-0.81%
__

-0.05%
-0.93%
__

-0.12%

-0.30%

-0.22%

-0.09%

-0.06%

-0.04%
-0.10%
0.01%

-0.07%
-0.11%
0.56%

-0.11%
-0.09%
__

-0.17%
__
__

-0.19%
__
__

__
__

0.00%
__

-0.02%
0.00%

__
__

__
__

0.67%
0.00%
0.13%

0.48%
__
0.01%

0.62%
__
__

__
__
-0.01%

0.11%
__
__

__

__

__

__

__

__

__

__

__

__

__
__
196.79%

__
__
209.68%

__
__
207.19%

__
__
213.32%

__
__
191.93%

1.85%
-0.10%
-43.79%
-0.32%
0.39%

-2.64%
0.08%
-29.14%
0.49%
-0.23%

-5.83%
-0.11%
-24.59%
-0.75%
-0.84%

-5.80%
-0.08%
-9.13%
0.02%
0.23%

-12.41%
__
-13.90%
-0.09%
-0.14%

__
-1.66%
153.16%

__
6.95%
185.20%

__
4.24%
179.31%

__
3.27%
201.83%

__
2.71%
168.10%

-8.16%
-2.12%

-33.05%
-2.33%

-25.41%
-1.76%

-26.42%
-0.89%

-23.97%
-3.14%

-7.25%

-9.25%

-7.58%

-9.38%

-7.87%

Taxes paid

-35.62%

-40.57%

-44.56%

-85.20%

Net cash from operating activities

-53.16%
100.00
%

100.00%

-79.31%
100.00
%

-65.14%
101.83%
100.00
%

-33.13%

100.00%

-39.36%
2.49%
0.11%
-0.45%

-47.32%
3.98%
0.10%
-0.36%

-35.56%
5.74%
0.10%
-0.87%

-44.48%
9.37%
0.81%
-1.22%

-23.85%
7.31%
0.93%
-1.08%

__

__

0.10%

0.20%

0.03%

0.14%
-0.05%
-37.13%

0.31%
0.04%
-43.24%

0.42%
-0.13%
-30.21%

0.10%
0.05%
-35.17%

0.07%
-0.04%
-16.62%

Dividend paid

-46.78%

-74.38%

-80.38%

Net cash used in financing activities

Decrease/Increase in cash and cash
equivalents

-46.78%

-74.38%

16.09%

-17.62%

-68.10%

C
ash flows from investing activities
Fixed capital expenditure
Interest received
Dividend received
Purchase of investments
Proceeds from sale of property, plant
and equipment
Proceeds from disposals of property,
plant and equipment
Long term prepayments
Net cash used in investing activities
C
ash flows from financing activities

-80.38%

103.20%
103.20
%

-96.47%

-2.54%

-38.36%

-13.09%

-96.47%

CC15
Common Size Statement of Cash flow
We can see that net cash used in investing activities is 37.13% of net cash from operating
activities whereas net cash used in financing activities is 46.78% of net cash from
operating activities. Thus, there is an increase in cash and cash equivalents in the current
year which is 16.09% of net cash from operating activities.

OGDCL
Analysis of Cash Flow Ratios
From year 2006 to 2010
(Rupees
'000)
CC - 17

2010

2009

2008

Net Cash Flows from

operating activities

61,506,1
85
24,211,3
39
63,78
3
28,770,0
03

52,979,3
20
25,072,0
50
39,406,1
71

51,598,8
98
18,347,2
24
57,99
4
41,473,4
22

36,972,73
3
16,444,90
5
28,18
0
38,154,08
9

42,962,43
2
10,244,80
0
33,20
4
41,444,70
3

61,506,1
85
28,770,0
03

52,979,3
20
39,406,1
71

51,598,8
98
41,473,4
22

36,972,73
3
38,154,08
9

42,962,43
2
41,444,70
3

32,736,18
2
78,951,8
97
3,231,4
35
11,120,8
23
85,592,9
57

13,573,149
68,637,6
32
2,903,13
3
5,087,91
7
65,547,0
42

10,125,476
56,980,7
95
3,175,05
4

(1,181,356)
52,673,79
7
2,945,93
8

1,517,729
47,531,02
2
2,729,80
7

__
57,022,7
35

__
57,396,09
3

__
61,785,93
0

178,897,1
12

142,175,7
24

117,178,5
84

113,015,82
8

112,046,75
9

18.3%

9.5%

8.6%

-1.0%

1.4%

Capital Expenditure
Increase in Inventory
Dividends Paid
Adequacy Ratio

Net Cash Flows from

operating activities
Dividends Paid
Cash Flow from
Operating activities Dividends Paid (A)
Gross PPE

Long term
investments
Other financial assets
Working Capital
Gross PPE + W.C +
Investments + Other
Assets (B)
Cash Reinvestement
Ratio ( %)

2007

2006

Total
246,019,56
8
94,320,31
8
183,161
189,248,38
8
0.867

CC17
Analysis of Cash Flow Ratios:
Cash flow adequacy ratio for the five years period is 0.867, implying that funds
generated from operations are insufficient to cover the expenses for capital expenditures,
inventory additions and cash dividends and there is a need for external financing.
OGDCLs cash reinvestment ratio is 18.3% for year 2010 which is satisfactory. Cash
reinvestment ratio has been increasing over the years with the exception of year 2007. it
increased significantly in year 2008 and 2010.

OGDCL
Analysis of
Capital
Structure
(Rupees '000)
CC - 18
NON CURRENT
LIABILITIES
Long term loans
unsecured
Deferred liabilities
Taxation
Employee benefits
Provision for
decommissioning
cost
Total NonCurrent Liabilities
CURRENT
LIABILITIES

2010

2009

__
__
21,499,
184
2,699,
773

__
__
17,710,
497
2,008,
499

12,435,
365
36,634,3
22

10,814,
506
30,533,5
02

2008

__
__
12,370,448
1,528,444

6,066,716
19,965,608

2007

2006

__
__
11,023,
916
1,423,1
32

__
__
10,010,
991
1,420,
245

5,151,8
07
17,598,85
5

4,221,
756
15,652,9
92

Trade and other

payables
Provision for
taxation
Proposed
Dividends
Total Current
liabilities
Total Liabilities
SHARE
CAPITAL AND
RESERVES
Authorized Share
Capital
Share capital
Capital reserve
Unappropriated
profit
Total
Shareholder's
Equity
TOTAL
LIABILITITES +
EQUITY

28,624,
204
6,216,
639

18,747,
328
2,540,
170

__
34,840,8
43
71,475,1
65

__
21,287,4
98
51,821,0
00

43,009,
284
3,859,
682
110,523,
520

43,009,
284
3,658,
318
79,503,
794

157,392,4
86

126,171,3
96

228,867,6
51

177,992,3
96

11,122,
665

17,088,050
4,143,304

__

__

__
11,122,66
5
28,721,52

21,231,354
41,196,962

7,174,
483
3,716,
958

__
10,891,4
41
26,544,4
33

43,009,
284
2,438,2
28
55,169,
140

43,009,
284
2,219,
027
49,541,
966

109,371,425

100,616,65
2

94,770,2
77

150,568,387

129,338,17
2

121,314,7
10

43,009,284
2,667,064
63,695,077

CC18
Analysis of Capital Structure
As we have already seen in the balance sheet that the overall value of the company has
increased over the years. Total shareholders equity has increased over the years. Major
part of this increase is represented by the increase in un-appropriated profit which has
consistently increased throughout the years. Share capital has remained same throughout
the five year period as no new shares have been issued. Total liabilities have also
increased throughout the five year period showing that company is using more credit.

OGDCL
Common-Sized Analysis of Capital Structure(in
%)
From years 2006 to 2010
CC - 19
SHARE CAPITAL AND RESERVES
Authorized Share Capital
Share capital
Capital reserve
Unappropriated profit
Total Shareholder's Equity
NON CURRENT LIABILITIES
Long term loans unsecured
Deferred liabilities
Taxation
Employee benefits
Provision for decommissioning cost
Total Non-Current Liabilities
CURRENT LIABILITIES
Trade and other payables
Provision for taxation
Proposed Dividends
Total Current liabilities
TOTAL LIABILITITES + EQUITY

2010

2009

2008

2007

2006

18.79%
1.69%
48.29%
68.77%

24.16%
2.06%
44.67%
70.89%

28.56%
1.77%
42.30%
72.64%

33.25%
1.89%
42.65%
77.79%

35.45%
1.83%
40.84%
78.12%

9.39%
1.18%
5.43%
16.01%

9.95%
1.13%
6.08%
17.15%

8.22%
1.02%
4.03%
13.26%

8.52%
1.10%
3.98%
13.61%

8.25%
1.17%
3.48%
12.90%

12.51%
2.72%

10.53%
1.43%

11.35%
2.75%

8.60%
__

5.91%
3.06%

15.22%
100.00
%

11.96%
100.00
%

14.10%

8.60%
100.00
%

8.98%

100.00%

100.00%

CC19
Comments on Common size analysis of Capital Structure:
From the common size capital structure, it can be seen that the share capital
has decreased as a percentage of total assets The increase in trade and payables in 2010
compared to previous years has caused the current liabilities or short term debts to
increase. The companys liability is increasing not showing a good sign as it is not paying
off the short term debts properly.

OGDCL
Capital Structure and Solvency
Ratios
For years 2006 to 2010
(Rupees
'000)
CC20

Total Debt
Total Equity
Total Debt to Equity
Total Debt
Total Debt and Equity
Total Debt Ratio
Long Term Debt
Owner's Equity
Long Term Debt to Equity
Total Equity
Total Debt
Equity to Total Debt
Fixed Assets
Owner's Equity
Fixed Assets to Equity
Current Liabilities
Total Liabilites

2010

2009

2008

2007

2006

71,475,16
5
157,392,48
6
0.45

51,821,0
00
126,171,3
96
0.41

41,196,9
62
109,371,4
25
0.38

28,721,5
20
100,616,6
52
0.29

26,544,43
3
94,770,27
7
0.28

71,475,16
5
228,867,65
1
0.31

51,821,0
00
177,992,3
96
0.29

41,196,9
62
150,568,3
87
0.27

28,721,5
20
129,338,1
72
0.22

26,544,43
3
121,314,71
0
0.22

36,634,32
2
157,392,48
6
0.23

30,533,5
02
126,171,3
96
0.24

19,965,6
08
109,371,4
25
0.18

17,598,8
55
100,616,6
52
0.17

15,652,99
2
94,770,27
7
0.17

157,392,48
6
71,475,16
5
2.20

126,171,3
96
51,821,0
00
2.43

109,371,4
25
41,196,9
62
2.65

100,616,6
52
28,721,5
20
3.50

94,770,27
7
26,544,43
3
3.57

103,181,14
9
157,392,48
6
0.66

86,319,6
59
126,171,3
96
0.68

67,706,2
48
109,371,4
25
0.62

56,715,9
00
100,616,6
52
0.56

44,457,95
9
94,770,27
7
0.47

34,840,84
3
71,475,16

21,287,4
98
51,821,0

21,231,3
54
41,196,9

11,122,6
65
28,721,5

10,891,44
1
26,544,43

Current Liabilities to Total

Liabilities

00

62

20

0.49

0.41

0.52

0.39

0.41

Earnings to Fixed Charges

Cash Flow from operation
Fixed Charges
Cash flow to Fixed Charges

61,506,18
5
1,273,31
2
48.30

52,979,3
20
926,02
7
57.21

51,598,8
98
531,79
9
97.03

36,972,7
33
449,56
1
82.24

42,962,43
2
9,973
4307.87

CC20
Capital Structure and Solvency Ratios:

OGDCL is 100% equity financed company; hence, it does not have any long term
debt or borrowings. However, OGDCL has been facing increasing debts over the
past years, especially in the sector of current liabilities in the form of royalties and
as in the case of last year in the form of taxes provision incurred as well. The rises
have been high in the royalties section as a part of the companys strategy to
expand and acquire new fields. This may lead the debt to equity ratios to rise
since 2006.

From the perspective of long term debt paying ability, the lower this ratio, the
better the companys debt position. Either ratios debt ratio or debt to equity ratio
which are used in this analysis show the same situation that the lower these ratios
the better the position of the company. Actually the debt ratio indicates the
percentage of assets financed by creditors and it helps to determine how well
creditors are protected in case of insolvency.

In case of debt ratio we can say that the companys position to pay its debts is
strong because the ratio is less than one. Hence, from this we can conclude that
the company is in a position to issue additional long term debt since its creditors
are protected.

If we talk about the companys debt paying ability from its shareholders equity
then it is also same as that of debt ratio because it also shows that the company
can pay its debts bitterly and easily.

This implies that although overall debt is rising, yet long term debts are steady,
reflecting Companys policy to avoid the performing of investment and other
activities through long term debt. But still, the below average debt ratios of
OGDCL suggest a slightly lower level of leverage for the company, compared to
the average industry.

If we observe balance sheets we will see that the company does not have any long
term loans. Thus, there exists no interest element in financial charges. Hence, TIE
ratio could not be calculated.

Fixed assets to equity ratio is represents that 62% fixed assets are financed by
equity and not by any debt. This is also a positive sign for the solvency of the
company.

Current liabilities to total liabilities is less than 1 which implies that current
liabilities are less than long term liabilities as a percent of total liabilities and this
ratio is increasing due to rise in current liabilities in 2010. While cash flow to
fixed charges is about 48.30 presently this is also quite acceptable.

OGDCL
Return on Invested
Capital

(Rupees
'000)
CC - 21

2010

2009

2008

2007

2006

55,539,64
1
177,992,39
6
31.20%

49,613,59
3
150,568,38
7
32.95%

45,629,96
4
129,338,17
2
35.28%

45,967,72
3
121,314,71
0
37.89%

55,539,64
1
126,171,39
6
44.02%

49,613,59
3
109,371,42
5
45.36%

45,629,96
4
100,616,65
2
45.35%

45,967,72
3
94,770,27
7
48.50%

194,026,808
30.50%

55,539,64
1
156,704,89
8
35.44%

49,613,59
3
129,337,03
3
38.36%

45,629,96
4
118,215,50
7
38.60%

45,967,72
3
110,423,26
9
41.63%

1.45

1.41

1.38

1.29

1.28

55,539,64
1
(39,406,17
1)
126,171,39
6

49,613,59
3
(41,473,42
2)
109,371,42
5

45,629,96
4
(38,154,08
9)
100,616,65
2

45,967,72
3
(41,444,70
3)
94,770,27
7

Net Income

59,177,125

Total Asset
ROA

228,867,651
25.86%

Net Income

59,177,125

Equity
ROCE
Net Income
Long-term Debt +
Owner's Equity
NI/(LTL+OE)
Finacial Leverage Index
Net Income

157,392,486
37.60%

59,177,125

59,177,125

Dividends

(28,770,003)

Owner's Equity

157,392,486

(NI-Div)/OE

55.88%

75.25%

83.28%

83.27%

92.24%

0.423
0.735
1.41
43.84%

0.4
0.83
1.38
45.82%

0.46
0.78
1.29
46.29%

0.48
0.8
1.28
49.15%

Disintegration
of ROCE
NI/Sales
Sales/Total Asset
Total Asset/Owners Equity
ROE=NI/SxS/TAxTA/OE

0.415
0.623
1.45
37.49%

CC21
Return on invested Capital Ratios:

We can see that both ROCE and Return on long term debt to equity are the same
as there is no debt involved. There has been a decreasing trend in ROCE
throughout the years. In 2010 ROCE fell significantly compared to previous
years. This was because equity rose drastically in 2010 whereas increase in net
income was not enough to sustain the ROCE of previous years.

Similarly, ROA shows an decreasing trend due to a higher increase in total assets
compared to net income.

ROA is a measure of operating efficiency for OGDCL. ROA has been decreasing
since 2006. Currently the ROA of 25.86% shows OGDCLs return on all its assets
entrusted to it has decreased in 2010.

Disintegration of OGDCLs ROE shows that changes in the net income margin
are primarily responsible for fluctuations in ROE during recent years. The other
two components are reasonably stable. Companys leverage ratio increases
gradually since 2006 due to increasingly leveraged capital structure.

OGDCLs financial leverage index is positive and reasonably stable which

represent that OGDCL utilizes its debt profitability well.

OGDCL
Asset Utilization Ratios

CC22

Sales
Cash and Bank balances
Sales to Cash
Sales
Trade Debts
Sales to recievables
Sales
Stores and spares
Stock-in-Trade
Total Inventory
Sales to inventory

2010

2009

(Rupees
'000)
2008

142,571,86
3
7,843,82
0
18.18

130,829,57
9
3,973,81
8
32.92

125,445,67
4
6,715,04
8
18.68

100,261,1
91
4,720,29
2
21.24

96,755,38
2
1,186,87
0
81.52

142,571,86
3
82,992,29
1
1.72

130,829,57
9
56,140,09
2
2.33

125,445,67
4
40,626,93
1
3.09

100,261,1
91
27,873,51
5
3.60

96,755,38
2
24,498,98
6
3.95

142,571,86
3
14,527,27
8
172,08
4
14,699,36
2
9.70

130,829,57
9
17,464,35
1
108,30
1
17,572,65
2
7.45

125,445,67
4
16,274,07
9

100,261,1
91
13,178,29
5
93,78
8
13,272,08
3
7.55

96,755,38
2
12,829,74
7

151,782
16,425,86
1
7.64

2007

2006

65,608
12,895,35
5
7.50

Sales
Working Capital
Sales to working capital
Sales
Total Fixed assets
Sales to fixed assets
Sales
Current Liabillites
Sales to current libillites
Sales
Total Assets
Sales to total assets

142,571,86
3
85,592,95
7
1.67

130,829,57
9
65,547,04
2
2.00

125,445,67
4
57,022,73
5
2.20

100,261,1
91
57,396,09
3
1.75

96,755,38
2
61,785,93
0
1.57

142,571,86
3
103,181,14
9
1.38

130,829,57
9
86,319,65
9
1.52

125,445,67
4
67,706,24
8
1.85

100,261,1
91
56,715,90
0
1.77

96,755,38
2
44,457,95
9
2.18

142,571,86
3
34,840,84
3
4.09

130,829,57
9
21,287,49
8
6.15

125,445,67
4
21,231,35
4
5.91

100,261,1
91
11,122,66
5
9.01

142,571,86
3
228,867,65
1
0.62

130,829,57
9
177,992,39
6
0.74

125,445,67
4
150,568,38
7
0.83

100,261,1
91
129,338,1
72
0.78

96,755,38
2
10,891,44
1
8.88
96,755,38
2
121,314,71
0
0.80

CC22
Assets Utilization Ratios:
The above assets utilization ratios measure OGDCLs effectiveness in generating sales
from assets.

Cash and bank balances of ogdcl have consistently been increasing over the past
five year period with the exception of 2009. companys sales to cash ratio has
been fluctuating with the highest cash to sales ration in year 2009. currently sales
to cash ratio is 18.18. this means that net sales of 2010 were 18.18 times of that
years cash and bank balance.

Cash and cash equivalents turnover evidence the most significant variability in the
2006 where it is very high i.e. 81.52 which represents cash shortage that might
signal a liquidity crisis if a company has no ready sources of cash. Currently it is
18.18 which is lower than that of 2009 which may represent idle or excess cash
with the company for probably contingencies purposes.

Sales to inventories turnover has now increased compared to 2006 which shows
decrease in inventory held by the company and show efficiency of inventories
held to generate increase in sales. If this ratio is low then it represents over
stocked or slow moving inventories or overestimation of sales. It might have
decreased due to slow downs with important customers. However, working
capital turnover represents an increasing trend till 2008 then from 2009-2010, it
fell.

The sale to fixed assets ratio has a decreasing trend over the five year period
which is likely due to a larger increase in fixed assets because of the companys
expansion policy. Although sales have also increased but percentage increase in
Fixed Assets is greater than percentage increase in sales.

Sales to short term liabilities turnover show fluctuating trend over the periods like
sales to receivables and other assets. Sales to short term liabilities turnover has
been decreased primarily due to rise in current liabilities in 2010.

OGDCL
Analysis Of Profit Margin

CC23

Sales
Gross Profit
Gross Profit Margin
EBIT
Sales
Operating Profit Margin
Net Income
Sales
Net Profit Margin
Net Income
Shares Outstanding
EPS

2010

2009

(Rupees
'000)
2008

142,571,8
63
100,622,9
35
70.58%

130,829,57
9
91,477,53
0
69.92%

125,445,67
4
87,828,20
1
70.01%

100,261,19
1
69,798,42
9
69.62%

96,755,38
2
69,895,12
2
72.24%

88,552,75
3
142,571,8
63
62.11%

80,927,92
3
130,829,57
9
61.86%

83,360,80
9
125,445,67
4
66.45%

61,058,72
6
100,261,19
1
60.90%

65,911,32
7
96,755,38
2
68.12%

59,177,12
5
142,571,8
63
41.51%

55,539,64
1
130,829,57
9
42.45%

49,613,59
3
125,445,67
4
39.55%

45,629,96
4
100,261,19
1
45.51%

45,967,72
3
96,755,38
2
47.51%

59,177,12
5
4,300,92
8
13.76

55,539,64
1
4,300,92
8
12.91

49,613,59
3
4,300,92
8
11.54

45,629,96
4
4,300,92
8
10.61

45,967,72
3
4,300,92
8
10.69

2007

2006

CC23
Analysis of Profit Margin Ratios:
Profitability analysis is critically important for equity investors and creditors. Profitability
ratio shows the earning ability of the firm that how much the company earn. Here it is

found in three ratios i.e. Net profit margin and Gross profit margin and operating profit
margin. All these ratios indicate that companys earning ability is too much strong.

Net Profit Margin ratio shows profitability in 2007 which is 45.51% but in 2008 it
has decreased to 39.55% mainly due to rise in tax expense and finance cost in that
year. In current year the ratio drops down to 41.51%.

There have been fluctuations in gross profit margin ratio over the five year period.
Although the fluctuation has not been sharp in any year, but it has lead to a steady
effect over the time. The primary reason for these minor fluctuations is that there
is a minor increase in cost of sales. Therefore we can say that the trend is also
stable and companys profitability is increasing stepwise. So company earning
ability is too much strong.

Operating profit margin has also improved in 2010 mainly due to control in
operating expenses. In other words, sales and gross profit are growing at a faster
rate than costs and expenses. Thus, the overall profitability position of OGDCL
seems to be satisfactory.

OGDCL

Analysis of
Depriciation

CC-24

2010

2009

(Rupees
'000)
2008

2007

2006

Accumulated Depreciation
Gross PPE
Depreciation as %age of
Gross PPE(%)

Net Sales

40,155,43
8
68,637,63
2

55.67%

58.50%

33,755,032
56,980,795
59.24%

3,981,68
6

3,807,89
8

3,354,064

5.04%

5.55%

5.89%

3,981,68
6
142,571,86
3

3,807,89
8
130,829,57
9

125,445,674

2.79%

2.91%

2.67%

Annual Depreciation
Annual Depreciation as
%age of Gross Ppe ( %)

Annual Depreciation

43,952,94
9
78,951,89
7

Annual Depreciation as
%age of Sales ( %)

3,354,064

31,073,
596
52,673,
797
58.99%
3,234,
509
6.14%
3,234,
509
100,261,
191
3.23%

27,955,21
5
47,531,02
2
58.81%
2,615,44
5
5.50%
2,615,44
5
96,755,38
2
2.70%

CC24
Analysis of Depriaciation
Depreciation as %age of Gross PPE( property , plant and equipment) fell from 58.50% in
2009 to 55.67% in 2010 because of the high increase in PPE. Although accumulated
depreciation also increased, this increase was lower than the increase gross PPE. Hence
the ratio fell. Overall gross PPE has been increasing over the five year period. This shows
that the company is investing in expansion.

Annual depreciation as a %age of gross PPE fell from 5.55% in 2009 to 5.04% in 2010.
again indicating the increase in PPE.

Annual depreciation as a %age of sales has been varying over the years. It fell in 2010
compared to 2009 because of high sales in 2010.

OGDCL
Analysis of Discretionary Expenditures

CC25

net sales
Property, plant and equipment
maintenance and repairs
advertising
maintenance and repairs/ sales
maintenance and repairs/ property, plant
and equipment
advertising/sales

2010

2009

(Rupees
'000)
2008

142,571,86
3
34,998,89
8
691,62
9
48,30
4
0.49%

130,829,57
9
28,482,19
4
1,026,09
8
36,87
6
0.78%

125,445,67
4
23,225,76
3
956,32
2
33,24
8
0.76%

100,261,19
1
21,600,20
1
940,70
1
26,22
0
0.94%

96,755,38
2
19,575,80
7
594,93
2

1.98%
0.03%

3.60%
0.03%

4.12%
0.03%

4.36%
0.03%

3.04%
0.06%

2007

2006

CC25
Analysis of Discretionary Expenditures

Maintenance and repairs as a percentage of sales fluctuated throughout the years with
reaching the highest in the year 2007 at 0.94%. It fell considerably from 2009 to 2010
due to drastic increase in the amount of net sales. Another factor that contributed in this
decline was decrease in maintenance and repairs cost in 2010.
Advertising expense has been fluctuating over the five year period. Advertising expense
as a percentage of sales has been increasing since 2007. this shows that the company is
spending more on advertising.
Maintenance and repairs as a %age of PPE rose from 2006 to 2007 but fell drastically to
1.98% in 2010. this is because of increase in gross PPE in 2010.

55,781
0.61%

OGDCL

Market
Measures
CC - 26

2010

2009

2008

2007

2006

142
80.71
111.355
13.76

125.49
40.56
83.025
12.91

140.8
104.9
122.85
11.45

156
113.2
134.6
10.61

168.8
98.55
133.675
10.69

8.09

6.43

10.73

12.69

12.50

Average Price
Eps
Earning Yield

111.355
13.76
12.36%

83.025
12.91
15.55%

122.85
11.45
9.32%

134.6
10.61
7.88%

133.675
10.69
8.00%

Dividends per share

Average Price
Dividends Yield

6.69
111.355
6.01%

9.16
83.025
11.04%

9.64
122.85
7.85%

8.87
134.6
6.59%

9.64
133.675
7.21%

Dividends per share

6.69

9.16

9.64

13.76
48.61%

12.91
70.97%

11.45
84.22%

8.87
10.6
1
83.61%

9.64
10.6
9
90.14%

Price high
Price low
Average price
Eps
Price to earning

Eps
Dividends Payout Ratio

CC26
Market Measures:
The first four measures reflect the markets valuation of OGDCLs equity
securities, while the dividend payout reflects more management discretion.

P/E ratio increases whenever the level of current earnings decreases. It measures
the multiple at which the market is capitalizing the earnings per share of a
company. This ratio has increased in 2010 although there have been fluctuations
throughout the five year period.

The earnings per share of OGDC rose this year from 12.91 to 13.76, having an
increase of 6.58%. Again this year, the rise was minimal, although the sales were
high, but the royalty, operational and tax costs took up all the profits, leaving the
company with net profits not much higher than last year. It is hoped that the EPS
will improve in future as the exploration and development activities will start
bearing fruit in the form of enhanced production.

The earnings yield has decreased from last year. Overall, there are fluctuations in
this ratio over the five year period. This is mainly due to weak equity markets.
Increasing earning yield of OGDCL represents the income producing power of a
share of common stock at the current price.

Similarly while dividends per share decreased from 9.16 to 6.69 and the dividend
yield has increased from 11.04% to 6.01% over the same period. Decreasing
dividend yield represents the decreasing cash return accruing to an investor on a
share of stock based on the current dividend rate and current price. Decrease in
earnings yield and dividend yield are attributable mainly to steady increases in
price to earnings and price to book ratios. Both ratios reflect the markets
disapproval and confidence in OGDCLs prior and expected performance. This
also represents OGDCLs inability to raise a given amount of equity capital by
issuing shares and the inability to use common stock as a means of payment for
acquisitions.

While there was an increase in EPS, OGDCs DPS decreased by Rs. 2.47 per
share, bringing it down to Rs.6.69 per share.

We know that dividend payout ratio measures the proportion of earnings currently paid
out as common stock dividends. Here dividend payout ratio has decreased from 70.97%
to 48.61% which shows that proportion of earnings paid out as common stock dividends
has decreased in 2010.