ASSIGNMENT # 1

OPERATIONS & SUPPLY CHAIN MANAGEMENT

Analytics Exercise

Section B , Group no: 09

Group Members:
Abhishek Pradhan 007
Gerij Sharma 052
Kshyanaprava Pati 067
Rennick Immanuel Rajagopal 110
Swapnil Agrawal 152

Q1: Which companies appears to have the most productive employees?

Figures in INR Cr.

Number Of
Employees

Cairn

Oil

Gail

India

India

India

1600

7813

3994

ONGC

Petronet
LNG

32923

430

Net Income

11829.2 11233.5 59378.3

90499.2

37831.3

Total Revenue

9927.5

83890.3

37747.6

Total Asset

38778.2 30490.9 36598.4 136725.0

7882.6

Total Receivables

1499.3

465.7

2812.0

8165.7

2015.7

Total Inventory

163.3

968.7

2254.8

5882.5

955.7

11154.8

6542.7

60289.1

91128.9

41059.2

7.4

1.4

14.9

2.7

88.0

6.2

1.2

14.4

2.5

87.8

Receivable Turnover

7.4

14.1

21.4

11.2

20.4

Inventory Turnover

60.8

9.9

25.5

14.3

39.5

Asset Turnover

0.3

0.4

1.7

0.6

4.8

Credit Sales

Income Per
Employee
Revenue Per
Employee

9612.7

57507.9

Productivity is simply the amount of units of a product or service that an employee handles in a
defined time frame. An employee who makes widgets might make 20 widgets per hour, or an
employee at a coffee shop might service 15 customers per hour. Simple productivity is neither
good nor bad, and in service industries, it might vary according to factors beyond the
employee's control, like the number of customers who present for service. Productivity is the
basic measure of employee work output.

In the companies analyzed here, Petronet LNG has the highest Income per employee and
Revenue per employee which displays how much a single employee contributes to the net
income and revenue of the company in the period of 12 months respectively this is because the
number of employees employed with Petronet LNG is very less as compared to the other 5
companies in the same industry. Next will be Gail India whose Income per employee and
revenue per employee is 14.9 and 14.4 respectively and followed by Cairn India, ONGC and Oil
India.

Q2: Which company has the best operations and supply chain process?
One of the strongest indicators of a good operations and supply chain process is the Inventory
turnover ratio. It is the ratio of cost of goods sold by the company to the average inventory
held by the company in that year.
Some of the factors that impact this ratio are:

Order lead times.

Purchasing practices.

Number of items stocked.

Production and order quantities.

Low inventory turnover may signal inefficiencies such as :

Poor sales.

Excess inventory.

Overstocking.

Obsolescence.

High inventory turnover may signify:

Strong sales.

Better liquidity.

Or in some cases, ineffective buying.

In the companies analyzed here, Cairn India has the highest inventory turnover ratio i.e. to say
that its inventory gets emptied more often that other companies. However, this can also signify
that the company is maintaining a small inventory and making frequent orders which could
increase costs(inventory size of Cairn India is just 163.26 while that of others are more than
1000). The second highest inventory turnover is recorded by Petronet LNG which has inventory
of about 955.69. Gail India has an inventory turnover of 25.51 but considering its inventory size
(2254.76) we can say that its operations and supply chain process could be the best among the
companies compared in this case.

Q3: Which company is more efficient in terms of credit?

Accounts receivable is a recording of revenue that is not collected immediately as cash.
Manufacturers and trade resellers often offer trade buyers credit accounts to encourage them
to buy more regularly and in higher volumes. A high accounts receivable turnover ratio means
that you have a strong credit collection policy and do well collecting cash quickly from accounts.
High accounts turnover is important for companies in generating cash flow to keep up with
short-term capital requirements such as current liabilities, expenses and investment in growth.

Among 5 Exploration companies Gail shows highest Receivable Turnover ratio of 21.4 followed
by Petronet LNG, Oil India, ONGC and Cairn India. Accounts receivable alone does not tell the
whole story about a company's account collections. Since the ratio provides an average glimpse
at receivables, it can hide several past due accounts that may never get collected and that are a
cash flow burden.

Having a high turnover ratio means that you are doing well getting payment on accounts. This
means that you have good cash flow. If your accounts payable has less restrictive terms, you
have a net cash flow gain on accounts.

Q4: Which company makes the most efficient use of its facilities?
Asset Turnover Ratio displays how many Rupees company generates in sales for one Rupee of
total assets. High number indicates that company operates efficiently (Company is able to
generate sales with less capital involved). Lower number indicates capital intensive Business,
company needs to invest more to generate Sales.
Among 5 Exploration companies Petronet LNG shows highest Asset turnover ratio of 4.79
followed by Gail, ONGC, Oil India and Cairn India. However given that the industry is highly
capital intensive and Crude/Gas extraction varies over the years and Asset turnover ratio may
vary from one year over another depending on the Investment in New assets its hard to Judge
an Exploration company solely on the basis of Asset Turnover Ratio. However from current
values Petronet LNG seems to be better in utilizing their assets as compared to peer companies
in generating sales.
Insights drawn from Analysis. :
Benchmarking as a practice helps an organization get a comparative view of various functions
across the organization as well as across industries and identify gaps in performance.
Benchmarking is important whether these activities are performed in house or outsourced to
service providers.
Operational benchmarking helps organizations achieve their slated business objectives using
the best in industry practices across verticals to optimize their operations. It drives process
optimization by comparing different activities of a company with the best practices of the
industry. Benchmarking is a dynamic process as the industry keeps evolving rapidly. By
benchmarking with the industry standards, the companies can stay abreast with the latest
trends and can fill in the gaps.
Petronet LNG seems to enjoy a better position for FY ended 2013-14 in the market in terms of
above mentioned ratios. Other companies viz. Cairn India, Oil India, Gail India and ONGC seems
to have high employee strength as compared to Petronet LNG which reduces there Income and
revenue per employee ratios and shows an area for these companies to work upon, they need
to look at their employee strength and analyze whether they are over-staffed.

However in terms of Assets they are much ahead of Petronet LNG. In Petroleum Exploration
industry assets are very important since they are in the form of Oil field discoveries which are
necessary for generating future cash flows and all these companies possess high assets which
equips them for generating future revenue, in this context Petronet LNG lags behind and need
to increase its Oil discoveries to sustain its current growth in the future.