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INTRODUCTION
Ranked 357 for Yr 2012 CMD of ONGC
Sudhir Vasudeva (2011- )
Products: Petroleum,
Natural gas & other petrochemicals Subsidiaries: MRPL, ONGC Videsh
These players have been pursuing exploration & production activities both within and outside the country in collaboration with consortium partners.
No. of Refineries Annual Turnover IOCL HPCL BPCL 10 2 2 $ 51 billion $ 19.56 billion $ 18.21 billion
Downside of the State-controlled refiners was that it Did not have the ability to handle complex crude
Major challenges
1. Expand Capacity 2. Explore New Horizons in Upstream and Downstream operations
Government Intervention
Indian Governments APM( Administered Price mechanism) : to insulate local prices from the vagaries of the international market fluctuations resulted in upstream exploration In 2002, the APM approach was dismantled In 2004, the government intervened to keep prices low, when the crude prices started to move upward quickly. For Example, 5% custom duty for imported crude 10% duty was charged for refined product imports
By 2006, ONGC alone was subsidizing consumers to the tune of $ 1 billion annually, and marketing companies were losing $ 51 million a day.
Winds of change
Challenges (1999) Crippling systems of governmental Initiatives
control over strategy Low employee motivation due to sense of entitlement rather than performance based mentality Overstaffing Skewed production portfolio of assets Highly bureaucratic decision making mechanism Lagging on technology front
New Vision : To ensure Indias energy security by locating reserves worldwide Voluntary retirement plan to reduce 10% workforce Revamp of decision-making structure by eliminating bureaucratic layers of staff approvals Revamp of organizational structure ensuring flatter structure Performance oriented appraisal mechanism Maximise use of idle cash IPO to infuse more capital for expansion
International Foray
Reasons for internationalization 15% world population but only 0.5% of energy reserves Role of ONGC Videsh Ltd Given greater power as Indias nodal agency to negotiate energy related issues Given flexibility to recruit quality talent By 2006, $4 billion investment acquiring 25 properties in 18 countries Able to develop relationship with global industry leaders like Exxon Mobil, Petronas and BP for various projects worldwide Challenges Stiff competition from Chinese national oil companies
Foreign Market entry strategy Joint Venture route Strategic alliance with Mittal group to use their business relationship built over time Bilateral relationship agreement with Chinese oil companies (CNPC & Sinopec) for joint bidding of global projects Managed to win bids jointly with Chinese companies in Syria and Columbia
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International Strategy
Import oriented rather than Export oriented: Sourcing to meet local country energy requirements Shift from confrontational attitude to mutually beneficial Strategic alliance
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Internal analysis
Operations: ONGCs core business is E&R. The company produces more than 1 Million barrels a day, contributing to 80% of all India gas and oil production. It also engages in exploiting .The acquisition of MRPL,ONGC became a truly integrated oil and gas corporation. MRPL was undergoing loss when it was acquired it but was turned around to make a profit making company within a year. Through OVL, ONGC has equity participation of 26 E&P companies across 15 companies which is beneficial in 2 ways: 1. Diversification will keep financial portfolio profitable 2. A global presence makes the company known and gives the company alternatives in terms of growth
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Marketing and Sales: Lacks in this field, does not have much of presence in marketing and fuel retail, dependent on companies to distribute its refined products. To be truly integrated global actor, it must develop this section in future
Human resource management Problem: Lost more than 200 engineers, geologists and geoscientists to Reliance and is the attrition rate is expected to increase Improve productivity and financial performance, ONGC should concentrate on human resources development
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Core Competencies
Experience in technology with the awareness about importance of technology Experience in oil exploration and available assets MRPL : a subsidiary of ONGC has the most efficient refineries Diversification on international platform
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Thank You
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