SUCCESS STORY OF OIL AND NATURAL GAS CORPORATION OF INDIA

A report submitted to IIMT, Greater Noida as a part fulfillment of full time postgraduate diploma in management

SUBMITTED TO: SUBMITTED BY:

Dr. D. K. GARG LAVKUSH SHUKLA

CHAIRMAN ENR. – 15073

IIMT, GREATER NOIDA

ISHAN INSTITUTE OF MANAGEMENT & TECHNOLOGY

2, KNOWLEDGE PARK 1, GREATER NOIDA

GAUTAM BUDH NAGAR (UP)

Website – www.ishanfamily.com, E-mail – ishan_corporate@yahoo.com

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Logo of the company

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TABLE ON CONTAINT

Sr.no. Particulars Page no.1 INTRODUCTION

VISION&MISSION ADDERESS OF CORPORATE

OFFICE

4-11

2 BUSINESS PORTFOLIO 12

3 PRODUCT,MARKET PROMOTIONAL ACTIVITY

13-17

4 EXPANSION PLANS 17-18

5 CORPORATE GOVERNANCE 19-24

6 FINANCIAL STATUS 25-28

7 SHARE PRICE ANALYSIS 29-33

8 ACHIEVEMENTS OF BUSINESS 34-39

9 COMPETITORS 40

10 BIBLIOGRAPHY 41

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Introduction of the company

Type State-owned enterprise

Public (BSE: 500312)

Industry Oil and Gas

Founded 14 August 1956

Headquarters Dehradun, Uttaranchal, India

Key people R.S.Sharma

(Chairman & MD)

Products Petroleum Natural gas

Petrochemicals

Revenue ▼ US$ 21.447 billion (2010)[1]

Net income ▲ US$ 4.089 billion (2010)[1]

Total assets ▲ US$ 37.264 billion (2010)[1]

Total equity ▲ US$ 22.590 billion (2010)[1]

Employees 33,924 (2010)

Website www.ongcindia.com

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Oil and Natural Gas Corporation Limited (ONGC) (incorporated on 23 June 1993) is a state-

owned oil and gas company in India. It is a Fortune Global 500 company ranked 152nd, and

contributes 77% of India's crude oil production and 81% of India's natural gas production. It is

the highest profit making corporation in India. It was set up as a commission on 14 August 1956.

Indian government holds 74.14% equity stake in this company.

ONGC is one of Asia's largest and most active companies involved in exploration and

production of oil. It is involved in exploring for and exploiting hydrocarbons in 26 sedimentary

basins of India. It produces about 30% of India's crude oil requirement. It owns and operates

more than 11,000 kilometres of pipelines in India.

historty

1947 - 1960

During the pre-independence period, the Assam Oil Company in the northeastern and Attock Oil company in northwestern part of the undivided India were the only oil companies producing oil in the country, with minimal exploration input. The major part of Indian sedimentary basins was deemed to be unfit for development of oil and gas resources.

After independence, the national Government realized the importance oil and gas for rapid industrial development and its strategic role in defense. Consequently, while framing the Industrial Policy Statement of 1948, the development of petroleum industry in the country was considered to be of utmost necessity.

Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of India. In Assam, the Assam Oil Company was producing oil at Digboi (discovered in 1889) and the Oil India Ltd. (a 50% joint venture between Government of India and Burmah Oil Company) was engaged in developing two newly discovered large fields Naharkatiya and Moran in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a joint venture between Government of India and Standard Vacuum Oil Company of USA) was engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining offshore remained largely unexplored.

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In 1955, Government of India decided to develop the oil and natural gas resources in the various regions of the country as part of the Public Sector development. With this objective, an Oil and Natural Gas Directorate was set up towards the end of 1955, as a subordinate office under the then Ministry of Natural Resources and Scientific Research. The department was constituted with a nucleus of geoscientists from the Geological survey of India.

A delegation under the leadership of Mr. K D Malviya, the then Minister of Natural Resources, visited several European countries to study the status of oil industry in those countries and to facilitate the training of Indian professionals for exploring potential oil and gas reserves. Foreign experts from USA, West Germany, Romania and erstwhile U.S.S.R visited India and helped the government with their expertise. Finally, the visiting Soviet experts drew up a detailed plan for geological and geophysical surveys and drilling operations to be carried out in the 2nd Five Year Plan (1956-57 to 1960-61).

In April 1956, the Government of India adopted the Industrial Policy Resolution, which placed mineral oil industry among the schedule 'A' industries, the future development of which was to be the sole and exclusive responsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it became apparent that it would not be possible for the Directorate with its limited financial and administrative powers as subordinate office of the Government, to function efficiently. So in August, 1956, the Directorate was raised to the status of a commission with enhanced powers, although it continued to be under the government. In October 1959, the Commission was converted into a statutory body by an act of the Indian Parliament, which enhanced powers of the commission further. The main functions of the Oil and Natural Gas Commission subject to the provisions of the Act, were "to plan, promote, organize and implement programmes for development of Petroleum Resources and the production and sale of petroleum and petroleum products produced by it, and to perform such other functions as the Central Government may, from time to time, assign to it ". The act further outlined the activities and steps to be taken by ONGC in fulfilling its mandate.

1961 - 1990

Since its inception, ONGC has been instrumental in transforming the country's limited upstream sector into a large viable playing field, with its activities spread throughout India and significantly in overseas territories. In the inland areas, ONGC not only found new resources in Assam but also established new oil province in Cambay basin (Gujarat), while adding new petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both inland and offshore).

ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay High, now known as Mumbai High. This discovery, along with subsequent discoveries of huge oil and

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gas fields in Western offshore changed the oil scenario of the country. Subsequently, over 5 billion tonnes of hydrocarbons, which were present in the country, were discovered. The most important contribution of ONGC, however, is its self-reliance and development of core competence in E&P activities at a globally competitive level.

After 1990

The liberalized economic policy, adopted by the Government of India in July 1991, sought to deregulate and de-license the core sectors (including petroleum sector) with partial disinvestments of government equity in Public Sector Undertakings and other measures. As a consequence thereof, ONGC was re-organized as a limited Company under the Company's Act, 1956 in February 1994.

After the conversion of business of the erstwhile Oil & Natural Gas Commission to that of Oil & Natural Gas Corporation Limited in 1993, the Government disinvested 2 per cent of its shares through competitive bidding. Subsequently, ONGC expanded its equity by another 2 per cent by offering shares to its employees.

During March 1999, ONGC, Indian Oil Corporation (IOC) - a downstream giant and Gas Authority of India Limited (GAIL) - the only gas marketing company, agreed to have cross holding in each other's stock. This paved the way for long-term strategic alliances both for the domestic and overseas business opportunities in the energy value chain, amongst themselves. Consequent to this the Government sold off 10 per cent of its share holding in ONGC to IOC and 2.5 per cent to GAIL. With this, the Government holding in ONGC came down to 84.11 per cent.

In the year 2002-03, after taking over MRPL from the A V Birla Group, ONGC diversified into the downstream sector. ONGC will soon be entering into the retailing business. ONGC has also entered the global field through its subsidiary, ONGC Videsh Ltd. (OVL). ONGC has made major investments in Vietnam, Sakhalin and Sudan and earned its first hydrocarbon revenue from its investment in Vietnam.

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Mission& vision-

To be a world-class Oil and Gas Company integrated in energy business with dominant Indian leadership and global presence.

World Class

Dedicated to excellence by leveraging competitive advantages in R&D and technology with involved people.

Imbibe high standards of business ethics and organizational values. Abiding commitment to safety, health and environment to enrich quality of community

life. Foster a culture of trust, openness and mutual concern to make working a stimulating and challenging experience for our people.

Strive for customer delight through quality products and services.

Intergrated In Energy Business

Focus on domestic and international oil and gas exploration and production business opportunities.

Provide value linkages in other sectors of energy business. Create growth opportunities and maximize shareholder value.

Dominant Indian Leadership

Retain dominant position in Indian petroleum sector and enhance India's energy availability.

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Corporate&registered office-

ONGC Head Office Tel Bhavan, Dehradun - 248 003 Uttarakhand, IndiaTel: 0135-2759561-67, 2752161-65Website: http://www.ongcindia.com

Registered office-New Delhi

Jeevan Bharti, Tower-2,124

Indira chowk, new Delhi 110001

Tel-011-23310156

Regional offices-

1)Nazira

Po-Nazira, dist. Sivasagar, assam 785685

Tel-0376-2252356

2)varodara

Makarpura road, varodara-390009

Tel-0265 2641266

3)mumbai

Tel-022-26562000,26563000

4)southern reginal office,chennai

No-1, gandhi-irwin road ,egmere,chennai-600008

4)kolkata regional office

41, JL Nehru road Kolkata-700071

Tel-033-22887476

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Business portfolio-

ONGC today, is repositioning itself to foster the principle of relational enterprise through partnerships/ strategic alliances / joint ventures with preferred partners and adopt a business strategy which relies on company skills and positional assets with focus on core business areas and opportunity specific diversification.

The Corporation, both in medium and long term, will: Continue to access E&P business both in

the domestic and international sectors Strive to reach out to opportunities specific related business of downstream sector, core competence services business, energy and other sectors in

general Joint Venture Group.

ONGC has recognized the need to expand its business through profitable ventures related to petroleum and energy sectors by entering into joint ventures with other Indian and foreign companies. ONGC-Joint venture group (ONGC-JVG) has been formed to give impetus to joint venture activities in areas other than E&P.

ONGC-JVG is responsible for identification and developing new business opportunities with Indian and foreign companies in following areas:

Participation in downstream projects like refining/ gas processing /LNG/ power projects etc.

Participation in construction projects, pipelines, process plants etc.

LNG Import & Marketing

A joint venture company, PETRONET LNG LIMITED is in place with ONGC having 12.5% equity interest for import and marketing of LNG in India. Other partners in this venture are IOC, GAIL and BPCL each with 12.5% equity. The remaining 50% equity will be offered to strategic partners, financial institutions and public. The Company is planning to install two LNG terminals (Dahej in Gujarat and Cochin in Kerala) on western coast of India with total capacity of 7.5 MMTPA.

EXCOM Group

The EXPLORATION CONTRACT MONITORING (EXCOM) Group is the exclusive business face of ONGC for jointly operated oil & gas exploration and production ventures within India. It is the nodal agency of ONGC for single window E&P business communication with companies and the government. It's functions include: Evaluation and negotiations of bids pertaining to exploration acreages and development of discovered fields under joint venture Negotiations, of production sharing contracts (PCS) and joint operation agreements (JOA) with parties to the contract Monitoring and co-ordination Providing opportunities to companies for assessment of prospectively of Indian basins and investment decisions through its New Delhi office.

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Product,market and promotional activities-

ONGC - Oil and Natural Gas Corp Ltd, leading National Oil GAS exploration Company of India

Oil and Natural Gas Corporation, ONGC, was set up in 1956 with significant contribution in industrial and economic growth of the country, ONGC is a leading National Oil Company of India engaged mainly in exploration, development and production of crude oil, natural gas and some value added products. ONGC was subsequnely converted into a public limited company in Jun.'93 following new liberalized economic policy adopted by the Government of India in July, 1991 sought to deregulate and delicense the core sector (including petroleum sector) with partial disinvestment of Govt. Equity in Public Sector Undertakings and other measures. ONGC is India's largest producers of Crude Oil, Natural Gas and LPG. ONGC India also produce other value added petroleum products such as NGL, C2-C3, Aromatic Rich Naptha and Kerosene. Internationally, its wholly owned subsidiary ONGC Videsh Limited has a number of existing and upcoming interests in selected oil patches ONGC including development of a large gas field discovered by it in Vietnam offshore. During March, 1999, ONGC, Indian Oil Corporation (IOC) a downstream giant and Gas Authority of India Limited (GAIL) the only gas marketing company, agreed to have cross holding in each other's stock to pave the way for long-term strategic alliance amongst themselves, both for the domestic and overseas business opportunities, in the energy value chain.

Market and promotional strategies-

The companies have not only been able to curb unplanned advertisements, but have also been able to monitor their corporate promotions through a mixed integrated marketing approach and increased below the line activities.

A senior ONGC official said, "We have optimised on advertisements and also saved almost Rs 1 crore by restricting unplanned advertisements."

Indian Oil Corporation Ltd, on the other hand, has adopted a two-pronged promotion — thematic and schematic.

A senior IOC official said, "There are two aspects to our promotion - to promote brands which need support by way of print and television ads, and through brand building strategies."

The schematic approach involves dealer incentives and on ground activities such as sales promotion, customer incentives and local communication.

Analysts view

According to TAM Media Research spokesperson, it is essential for oil companies to advertise to grow their market share in the urban and semi-urban markets and build their image as most of them are listed on the stock markets. They also need to push other profitable bi-products such as

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lubricants. Towards this, companies are now focusing on creating more touch points and increasing below the line activities. Analysts also point out that apart from traditional mass media, the oil companies are now opting for other communication avenues.

Expenses incurred

As on March 1 this year, upstream major ONGC's expenses on advertising for 2006-07 stood at Rs 29.94 crore, as against Rs 36.33 crore for full year of 2005-06. The brand driven oil-marketing company IOC's expenditure on advertising was Rs 87.98 crore, as against Rs 139.18 crore in 2005-06. However, with cricket sponsorships included, IOC is likely to incur expenses close to Rs 110 crore for the year, sources said.

In 2005, the axe had fallen on the advertising expenses of oil companies mainly due to the huge losses suffered and a directive from the Prime Minister's Office (PMO) to cut costs on corporate promotions. The launch of premium grade petrol, diesel and lubricants had seen the retailing companies furiously advertising. "As the industry becomes more competitive and customer-driven, companies need to focus like never before on marketing strategies," they had argued.

While GAIL has incurred expenses of Rs 4.96 crore on advertising as on March 1 (down from Rs 14.99 crore in 2005-06), Oil India has incurred Rs 1.17 crore (Rs 1.77 crore). The ad expenses of Bharat Petroleum Corporation stood at Rs 31.16 crore (Rs 45.96 crore). However, Hindustan Petroleum Corporation incurred a slightly higher expense on promotions Rs 49.18 crore (Rs 44.95 crore).

Direct Marketing

Direct marketing sales of MRPL registered an overall growth of 3% covering products Bitumen, Furnace Oil, Naphtha, Mixed Xylene, LSHS and Sulphur, with sales of 800 TMT in 2009-10. MRPL Shell Aviation Fuel Services Private Limited (a Joint Venture Company of MRPL and Shell Global) has made good progress in marketing of ATF to domestic airlines at Bangalore and Hyderabad airports and is likely to commence operation at Mangalore airport shortly.

Implementation of the Phase III Refinery Project with a project cost of Rs. 121,600 million, was on schedule during the year 2009-10. With a view to add value to the propylene, implementation of Polypropylene unit at a cost of Rs. 18,030 million has been approved. A contract for construction of ISBL facility has been placed on EIL for execution under open book execution method. Your Company has approved to extend a loan facility of Rs. 50,000 million for part financing the projects.

OIDB has also sanctioned a loan of Rs. 2,000 million for the projects.

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Joint Ventures/ Associates

(i) ONGC Tripura Power Company Limited (OTPC)

ONGC has promoted OTPC with envisaged equity stake of 50% alonq with Govt of Tripura (0.5%) and IL&FS (26%) to set-up 726.6 MW (363.3 x 2) gas based Combined Cycle Power Plant (CCPP) at Pallatana in Tripura to monetize its idle gas assets in Tripura. Various linkages like gas supply by ONGC and power off-take by NE states have been finalized. The JV company has also tied up debt for the project with Power Finance Corporation Limited. Bharat Heavv Electricals Limited has been enaaaed as EPC aaencv for completion of Generation Project on turnkey basis.The first phase of the project is likely to be completed by December,2011.

(ii) ONGC Petro-additions Limited (OPaL)

Your Company has promoted a JV company ONGC Petro-additions Limited (OPaL) with 26% equity stake along with GAIL (19%) and Gujarat State Petroleum Corporation Ltd (GSPCL) (5%) to implement a mega petrochemical complex comprising of 1.1 MMTPA ethylene Cracker and global scale polymer units within Dahej SEZ as a step towards downstream integration. All major statutory approvals like Environmental Clearance from MoEF, SEZ Unit approval etc. have been obtained and major LSTK contracts relating to site infrastructure development, dual feed cracker contract, technology licensor(s) for downstream polymer units have been awarded. M/s EIL has been engaged as the PMC of the project.

(iii) Mangalore Special Economic Zone Limited (MSEZ)

ONGC with 26% equity stake in MSEZ along with KIADB (23%) and IL&FS+KCCI (51 %), is promoting another SEZ in coastal Mangalore. Ministry of Commerce & Industry has formally notified to set up a Petro-chemical Specific SEZ in 1453 acres of land. MSEZ has allotted requisite land to ONGC Mangalore Petrochemical Ltd, a company promoted by ONGC, for setting up an aromatic based petrochemical unit. MSEZ has signed a Co-developer agreement with Indian Strategic Petroleum Reserves Limited (ISPRL) to develop a free trade zone for warehousing of Strategic Crude Reserve. Resettlement and Rehabilitation work of Project Displaced People is in proqress over 136 acres of land. Requisite infrastructure like water supply system, pipe-line corridor etc. is under implementation.

(iv) ONGC Mangalore Petrochemicals Limited (OMPL)

ONGC has promoted OMPL with 46% equity participation, along with MRPL (3%) for setting up manufacturing facilities for 0.92 MMTPA Para-Xylene and 0.14 MMTPA Benzene from MRPLs aromatic streams in Mangalore SEZ as value addition project. The project is under implementation. Contracts relating to project management, technology licensor and site grading have been awarded while LSTK contract for process packages are underfinalization. Debt syndication process has been completed and Rupee term loan agreement with bankers signed.

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(v) ONGC TERI Biotech Limited (OTBL)

OTBL is a Joint Venture company of ONGC, incorporated on 26 March,2007, with The Energy and Research Institute (TERI). The JV has been promoted for addressing the requirement of Bioremediation of oily sludges, Microbial Enhanced Oil Recovery, prevention of wax deposition bacteria in tubulars, flow assurance of line pipes for E&P operations. Apart from ONGC, OTBL is bagging contracts for application of above technologies from other companies like Oil India Limited, Railways,Refineries, private companies etc.

(vi) Petronet MHB Limited (PMHBL)

PMHBL is a JV company of ONGC (28.766%), HPCL (28.766%) and PIL (7.898%). Balance 34.57% of equity is held by the leading banks. It owns and operates a multiproduct pipeline to transport MRPLs products to hinterland of Kamataka. Maintaining its turnaround trend, PMHBL, as per unaudited results for the year 2009-10, has made a net profit of Rs. 50 million on a throughput of 2.53 MMT against Net profit of Rs. 20 million with throughput of 2.45 MMTduring the year2008-09.

(vii) Petronet LNG Limited (PLL)

ONGC has 12.5% equity stake in PLL, identical to similar stake by other Oil PSUs co-promoters viz., IOCL, GAIL and BPCL. PLL has started commissioning of Dahej LNG terminal of 10 MMTPA capacity and also commenced construction of LNG Receiving and Re-gasification Terminal of 5.0 MMTPAatKochi. The turnover of PLL during 2009-10 was Rs. 106,491 million (previous yearRs. 84,287 million) and net profit wasRs. 4,045 million (previous yearRs. 5,184 million). PLL has declared a dividend of 17.5%, same as the previous year.

(viii) Pawan Hans Helicopters Limited (PHHL)

The Company has 21.5% equity stake in PHHL with balance 78.5% equity with the Government of India. PHHL is one of Asias largest helicopter operators having a well balanced operational fleet of 36 helicopters. It provides helicopter support for ONGCs offshore operations. PHHL was successful in providing all the 12 Dauphin N and N3 helicopters fully compliant with AS-4 as per the new contract with ONGC. The net profit of PHHL for the year 2008-09 was Rs. 251.20 million and it paid a dividend of 10%. The accounts of PHHLfor 2009-10 are underfinalisation.

(ix)DahejSEZ Limited (DSL)

Your Company with 23% equity stake along with Gujarat Industrial Development Corporation (26%) is developing a multi-product SEZ at Dahej in coastal Gujarat over 1717 hectares of land through and SPV Dahej Special Economic Zone Ltd. SEZ has formally been approved by Ministry of Commerce & Industry and Gazette notification issued.This SEZ, now declared as Petroleum, Chemical, Petrochemical Investment,Region (PCPIR) by Government of India, is operational since September 2009. Environment clearance from Ministry of Environment &

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Forest (MoEF) was received on 17th March 2010. About 90% of the saleable land has been allotted to prospective unit holders.

Expansion plan-

India's state-run exploration firm Oil and Natural Gas Corp (ONGC.BO) will review its refinery expansion plans in the wake of a government proposal to end a tax holiday for projects coming on stream after April 2009, its head said on Wednesday.

ONGC plans to set up two new refineries in India besides raising the capacity of its Mangalore refinery in the west coast to 300,000 barrels per day (bpd).

"I have asked my group to work out the financials (for the refinery project). We don't want to carry on with uncertainties," ONGC chairman R. S. Sharma told reporters.

He said the proposal would affect the Mangalore refinery's expansion plans and raised "big question mark" on its planned new units -- 300,000 bpd unit at Kakinada in the east coast, and another one in the desert state of Rajasthan.

The budget proposal, awaiting legislative approval, seeks to end a seven-year tax holiday for refineries commissioned after April 1, 2009, and will affect all proposed new refineries except that of Reliance Petroleum Ltd RPET.BO.

Reliance Petroleum's 580,000 bpd unit in western India is expected to be commissioned in the second quarter of 2008.

India aims to add 2.14 million bpd to its existing 2.98 million bpd nameplate capacity by 2012 as it seeks to become a global refining hub.

Among the refineries, which would be hit by the proposed change, are those of Indian Oil Corp (IOC.BO), Bharat Petroleum Corp (BPCL.BO), Essar Oil (ESRO.BO) and the one planned by steel magnate Lakshmi Mittal in a tie-up with state-run Hindustan Petroleum Corp <HPCL.BO.

While HPCL-Mittal's 180,000 bpd Bhatinda refinery would come on stream in 2010, BPCL's 120,000 bpd Bina plant in central India will be completed by Dec 2009.

Officials at IOC and BPCL said they had written to the ministry of petroleum for restoration of benefits.

"It is not good for refineries particularly Bhatinda and Bina which are going to come up a year or so after the tax incentive ends. Both have assumed the tax incentives or concessions in their financial viability," said Amrit Pandurangi, executive director at Price water House Coopers.

He said this would slow down the pace of refinery expansion in the country. "In general the government is giving a signal that it doesn't want more refinery capacity to be set up on the basis of tax incentives."

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Sharma said the proposed law if applied to exploration activities will reduce rate of return from the projects, but hoped the tax benefits would be restored for future projects.

"Memorandum note cannot have effect of changing the law. Whatever agreements have been signed can not be diluted. They are sacrosanct," he said, referring to the contract for blocks that have already been awarded.

"This seems to be an inadvertent aberration and should be corrected before the finance bill is passed," he said. (Reporting by Nidhi Verma; editing by James Jukwey).

• Envisaged Growth

  • Crude oil production likely to go up 28 MMT by 2012-13 from current production of 24.67 MMT (2009-10).

  • Natural gas production likely to be 72 mmscmd by 2012-13 and envisaged to be 100 mmscmd by 2015-16 from present production level of about 62mmscmd.

• East Coast Hub - Eastern Offshore Asset has been put in place with an aim of putting East Coast discoveries on a fast track basis through an integrated East Coast hub. The oil discoveries in G-4-6, GS-29-1 and G-4-5 discoveries in KG-DWN-98/2 planned to be put on production in 2012-13.

• Exploration Acreage - ONGC has been awarded 17 NELP blocks (including 3 as non-operator and 1 as joint-operator) in NELP-VIII round of bidding for which the contracts were signed on 30th June 2010. ONGC maintains its position as the largest acreage holder in the country.

• Alternate Sources of Energy - ONGC has approved setting up a 102 MW Wind Farm in Rajasthan, in addition to a 51 MW Unit already working successfully in Bhuj, Gujarat. It is also planning to establish a Photo-voltaic Solar Plant. Three Solar Thermal Engines, have been commissioned by ONGC at the Solar Energy Centre (SEC), Ministry of New and Renewable Energy (MNRE) campus at Gurgaon. ONGC Energy Centre which is pursuing a number of alternate energy source projects generates lot of hope in this regard.

• Value-multiplier Projects - Two petrochemical plants being implemented by ONGC promoted SPVs, ONGC Petro-additions Limited (OPaL) at Dahej in Gujarat at the estimated investment of  19,500 crore and ONGC Mangalore Petrochemicals Limited (OMPL) at Mangalore at the estimated investment of  5,750 crore, are progressing well and are expected to become operational in 2013. Both of these plants are unique in terms of their size and investment.

These plants have been located in Dahej SEZ and Mangalore SEZ respectively, which are also being co-promoted by ONGC. A gas based Combined Cycle Power Plant (CCPP) of 726.6 MW, being set up by ONGC Tripura Power Company Limited (OTPC), an SPV promoted by ONGC, at Palatana, Tripura, at an estimated investment of  3,500 crore, aims to monetize ONGC’s idle gas assets in the state of Tripura. This plant is schedule to be operational in 2011-12.

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Corporate governance-

ONGC management continues to strive for excellence in good governance and responsible management practices, benchmarking with best of global companies.

ONGC has been practicing corporate governance principles much before it became mandatory. Your company believes that for a company to be successful it must maintain global standards of corporate conduct towards its stakeholders. The company believes that it is rewarding to be better managed and governed and to identify its activities with national interest. To that end, your company has always focused on good corporate governance which is the key driver of sustainable corporate growth and long term value creation.

Your company views corporate governance in its widest sense almost like a trusteeship, a philosophy to be progressed, a value to be imbibed and an ideology to be ingrained into the corporate culture.

It is not merely compliance and simply a matter of creating checks and balances; it is an ongoing measure of superior delivery of company’s objectives with a view to translate opportunities into reality. It involves leveraging its resources and aligning its activities to national need, shareholders benefit and employee growth, thereby delighting all its stakeholders, while minimizing the risks. The primary objective is to create and adhere to a corporate culture of conscience and consciousness, transparency and openness, fairness, accountability, propriety, equity, sustainable value creation, ethical practices and to develop capabilities and identify opportunities that best serve the goal of value creation, thereby creating an outperforming organization.

1.1 Corporate Governance Recognized

In recognition of excellence in Corporate Governance, the following awards have been conferred on ONGC:

'Golden Peacock Award for Excellence in Corporate Governance - 2002' by the Institute of Directors;

'ICSI National Award for Excellence in Corporate Governance' - 2003 by the Institute of Company Secretaries of India; and

'Golden Peacock Global Award' for Corporate Governance in Emerging Economies -2005 by World Council for Corporate Governance, U.K.

'Golden Peacock Award for Excellence in Corporate Governance - 2005' by the Institute of Directors;

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' Golden Peacock Award for Excellence in Corporate Social Responsibility in Emerging Economies' 2006 - by World Council for Corporate Governance, UK.

'Golden Peacock Award for Excellence in Corporate Governance - 2006' by Institute of Directors.

Board Of Directors

Composition, Meeting And Attendance

The Company is managed by the Board of Directors, which formulates strategies, policies and reviews its performance periodically. The Chairman & Managing Director (CMD) and six whole-time Directors manage the business of the Company under the overall supervision, control and guidance of the Board.

Composition

The Board of Directors has an adequate combination of Executive (Functional) and Non-executive Directors. The Board has 14 members, comprising of 7 Functional Directors including the Chairman & Managing Director. The CMD is holding additional charge of Director (Finance) w.e.f 4th July, 2007,on adhoc basis, pending appointment of regular incumbent for which Government of India has already initiated action. Besides, the Board comprises of 6 Non-executive Directors comprising of: 2 part-time official Directors and 4 part-time non-official Directors, all nominated by Government of India. IOC nominee Director ceases w.e.f 31st July, 2007. To share the experience and business strategies, C&MD, Oil India Limited and Managing Director, ONGC Videsh Ltd. are invitees to the meetings of the Board.

Shri R. S. Sharma, Director (Finance) has been elevated to the position of CMD w.e.f 4th July, 2007. Prior to that Shri Sharma was holding additional charge of the post of CMD with effect from 25th May, 2006, upon completion of the tenure of Shri Subir Raha.

Padma Bhushan, Dr. R.K. Pachauri, Director General, The Energy Research Institute (TERI), S/Shri V.P.Singh, former C&MD, IFCI, P.K.Choudhury, Vice Chairman and Group CEO, ICRA Ltd. and Padma Shree Dr. Bakul H. Dholakia, Director, IIM Ahmedabad were appointed as part-time independent Directors on the Board on 26th June, 2006.

Shri M.M.Chitale, Shri U. Sundararajan and Shri Rajesh V. Shah ceased to be members of the Board effective from 10th September,2006.

Upon elevation Shri Anil Razdan as Secretary, Power and Shri Ashok Chawla Secretary Civil Aviation, Govt. of India, respectively, ceased to be Directors w.e.f 08th March, 2007.

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Shri A.K.Jain, Joint Secretary (E), MoP&NG was appointed as Govt. nominee Director, as an interim arrangement on 10.04.07 in place of Shri Anil Razdan, Special Secretary, MoP&NG. Shri S. Sundareshan, Addl. Secretary, MoP&NG and Smt Sindhushree Khullar, Addl Secretary, Department of Economic Affairs, MoF were appointed as Directors in place of Shri A.K.Jain and Shri Ashok Chawla, respectively w.e.f 10th Mat,2007.

Decisions and delibrations of the Board are supported by various committees of the Board as described at Para 7 hereof.

Board Procedure

(A) Institutionalised decision making process:

With a view to institutionalize all corporate affairs and setting up systems and procedures for advance planning for matters requiring discussion/ decisions by the Board , the Company has defined guidelines for the meetings of the Board of Directors and Committees thereof. These Guidelines seek to systematize the decision making process at the meetings of Board/Committees, in an informed and efficient manner.

(B) Scheduling and selection of Agenda items for Board /Committee Meetings:

(i)The meetings are convened by giving appropriate advance notice after obtaining approval of the Chairman of the Board/ Committee. Detailed agenda, management reports and other explanatory statements are circulated in advance in the defined agenda format amongst the members for facilitating meaningful, informed and focused decisions at the meetings. To address specific urgent need, meetings are also being called at a shorter notice. In case of exigencies or urgency Resolutions are passed by circulation.

(ii)Where it is not practicable to attach any document or the agenda is of confidential nature, the same is tabled with the approval of CMD. In special and exceptional circumstances, additional or supplemental item(s) on the agenda are permitted. Sensitive subject matters are discussed at the meeting without written material being circulated.

(iii)The agenda papers are prepared by the concerned officials, sponsored by the concerned functional Directors and submitted for obtaining approval of the Chairman and Managing Director, well in advance. Duly approved agenda papers are circulated amongst the Board members by the Company Secretary and by the respective convener of the Committee.

(iv)The meetings of the Board/Committees are generally held at the Company’s Registered Office in New Delhi.

(v) The Board/Committee is given presentations covering Finance, Production, Operations, major Business Segments, Human Resources, Marketing, Joint Venture operations etc. of the

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Company and for taking on record quarterly / annual financial statements at the pre-scheduled Board/Committee meetings.

(vi) The members of the Board/Committee have complete access to all information of the Company. The Board is also free to recommend inclusion of any matter in agenda for discussion. Senior management officials are called to provide additional inputs to the items being discussed by the Board/Committee, as and when necessary.

(C) Recording minutes of proceedings at the Board Meeting:

Minutes of the proceedings of each Board/Committee meeting are recorded. Draft minutes are circulated amongst all members of the Board/ Committee for their critical appreciations and comments. The comments are incorporated in the minutes, which are finally approved by the Chairman of the Board/Committee. These minutes are confirmed in the next Board/Committee Meeting. The finalized minutes of the proceedings of the meetings are entered in the Minutes Book.

(D) Follow-up mechanism:

The guidelines for the Board/Committee Meetings facilitate an effective post meeting follow-up, review and reporting process for the action taken on decisions of the Board and Committee. Functional Directors submit follow-up Action Taken Report (ATR) on the areas of their responsibilities, at least once in a quarter, on the decisions/ instructions/directions of the Board.

(E) Compliance:

Every functional Director while preparing the agenda notes is responsible for and is required to ensure adherence to all the applicable provisions of law, rules, guidelines etc. The Company Secretary has to ensure compliance to all the applicable provisions of the Companies Act, 1956, Secretarial Standards issued by ICSI, SEBI Guidelines, Listing Agreement, and other statutory requirements pertaining to capital market. A Quarterly Compliance Report (collected from all work centers) confirming adherence to all the applicable laws, rules, guidelines and internal instructions/manuals including on Corporate Governance is reviewed by the Audit & Ethics Committee and the Board.

Board meeting-

During the year 2006-07, Twelve Board Meetings were held on: April 12, May 8, June 06 & 26, July 26, August 08, September 06, October 19, November 28, December 23, 2006 and January 30 and March 08, 2007.

The minimum and maximum interval between any two Board meetings was 13 days and 43 days, respectively.

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Board committees-

The Company has the following Committees of the Board:

Audit & ethics committee

The terms of reference of the Audit & Ethics Committee are in accordance with Section 292 of the Companies Act, 1956 and the guidelines set out in Clause 49 of the Listing Agreement.

The Committee is headed under the stewardship of Shri P.K.Choudhury, an Independent non-executive Director w.e.f. 11 th September, 2006. Shri P.K. Choudhury is a Chartered Accountant, Post graduate diploma in Advance Finance Management with distinction from Maastricht School of Management, Netherlands, CAIIB, CAIB( London) and Post graduate in Commerce from Calcutta University. Shri Choudhury has multifarious and enriched experience of more than 35 years in Finance and Banking. Prior to above, the Committee was headed by Shri M.M.Chitale, a Fellow Member and past president of the Institute of Chartered Accountants of India. All members of the Committee have requisite financial and management experience and have held or hold senior positions in other reputed organisations.

Director (Finance), ED-Chief-Corporate Finance and Head-Corporate Internal Audit are the permanent invitees. Representatives of Statutory Auditors were invited to attend and participate in the meetings. Functional Directors, Executives of Finance and other departments are invited on need basis.

The Chairman of the Audit & Ethics Committee was present at the last AGM of the Company.

Company Secretary acts as the Secretary to the Committee.

The role of the Audit & Ethics Committee includes the following:

a) Overseeing financial reporting processes and the disclosure of financial information, to ensure that the financial statements are correct, sufficient and credible;

b) Recommending to the Board, audit fees payable to Statutory Auditors appointed by C&AG and approving payments for any other services;

c) Reviewing with management the periodic financial statements/results before submission to the Board, focusing primarily on:

matters required to be included in the Directors’ Responsibility Statement ;

any changes in accounting policies and practices;

major accounting entries based on exercise of judgement by the management;

qualifications in draft audit report;

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significant adjustments arising out of the audit;

the going concern assumption;

compliance with accounting standards;

compliance with listing agreement and legal requirements concerning financial statements;

any related party transactions i.e. transactions of the company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interest of the company at large;

d) Reviewing with the management, Statutory Auditors, Govt. Audit and Internal audit reports, adequacy of internal control systems and recommending improvements to the management;

e) Reviewing the adequacy of internal audit function, approving internal audit plans and efficacy of the functions including the structure of the internal audit department, staffing, reporting structure, coverage and frequency of internal audits;

f) Discussion with internal auditors any significant findings and follow-up thereon;

g) Reviewing the findings of any internal investigations by the internal auditors into the matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

h) Discussion with the Statutory Auditors before the audit commences, the nature and scope of audit, as well as post-audit discussion including their observations to ascertain any area of concern;

i) Reviewing the Company’s financial and risk management policies;

j) Reviewing Quarterly Compliance Report confirming adherence to all the applicable laws, rules, guidelines, instructions and internal instructions/manuals including on Corporate Governance principles;

k) Reviewing the management discussion and analysis of financial condition and results of operations, statement of significant related party transactions, management letters/letter of internal control weaknesses issued by the statutory auditors, internal audit reports; and

l) Reviewing the financial statements and in particular the investments made by the unlisted subsidiaries of the Company.

m) Matters relating to Corporate Governance including Ethics in business.

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Financial status-

Despite volatile markets, your Company has earned a Profit After Tax of Rs.167,676 million (Rs. 161,263 million in 2008-09), up 3.98 %, which is incidentally the highest-ever. During the year under review, your Company registered Gross revenue ofRs. 619,832 million (Rs. 566,357 million in 2008-09), up 9.44%, by netting off the revenue from trading of products of Mangalore Refinery& Petrochemicals Limited (MRPL), a subsidiary of your Company amounting to Rs. Nil (Rs. 85,098 million in 2008-09). Highlights: Gross Revenue Rs. 619,832 million Profit after Tax (PAT) Rs. 167,676 million Contribution to Exchequer Rs.280,988 million* Return on Capital Employed 50.9% Debt-Equity Ratio 0.00006:1 Earning Per Shared) 78.39 Book Value Per Share (Rs.) 404 *OID Cess, Excise duty, Royalty, Corporate and Dividend Distribution Tax and Dividend on Government shareholding. Financial Results (Rs. in million) 2009-10 2008-09 Gross Revenue 619,832 651,455 Gross Profit 396,054 378,292 Less: Interest 686 1190 Exchange Variation (4,033) 3819 Depreciation 12,312 14,491 Amortisation 89,407 68,281

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Depletion 45,302 42,148 Impairment (433) (3110) Provision/WriteOffs 2,974 11,666 Provision forTaxation (including deferred tax 82,163 228,378 78,544 217,029 liability of Rs. 11,160 million); Profit After Tax 167,676 161,263 Appropriations Profit & Loss B/F - (1) Interim Dividend 38,500 38,500 Proposed Final Dividend 32,083 29,944 Tax on Dividend 11,616 11,632 Transfer to General Reserve 85,477 81,188 Total 167,676 161,263

• Highest-ever Net Profit of  16,768 Crore during FY’10 , despite sharing under-recoveries of  11,554 Crore.

• Due to its sound accounting practices, ONGC received ‘nil’ comments from CAG as well as Statutory Auditors, the fourth time in a row and six times in last seven years.

 

Details FY 2008-09 2009-10 % Variation

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Total Revenue (Rs in Crore) 65,049 61,983 -4.71

Net Profit ( Rs in Crore) 16,126 16,768 3.98

Subsidy Discounts (Rs in Crore) 28,225 11,554 -59

Gross Realization (US$/bbl) 86.15 71.65 -16.83

Net Realization (US$/bbl) 47.70 55.94 17.27

Subsidy Impact on Profit (  in crore)

  2009-10 2008-09 2007-08 2006-07 2005-06

Gross Discount 11,554 28,225 22,001 17,024 11,956

Impact on Statutory Levies 1,629 4,292 1,942 1,448 1,089

Impact on Profit before tax 9,925 23,933 20,059 15,576 10,867

Impact on Profit after tax 6,551 15,798 13,241 10,333 7,210

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Balance Sheet of ONGC.

------------------- in Rs. Cr. -------------------

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 1,425.93 2,138.89 2,138.89 2,138.89 2,138.89

Equity Share Capital 1,425.93 2,138.89 2,138.89 2,138.89 2,138.89

Share Application Money

0.00 0.00 0.00 0.00 0.00

Preference Share Capital

0.00 0.00 0.00 0.00 0.00

Reserves 52,533.74 59,785.04 68,478.51 76,596.53 85,143.72

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Networth 53,959.67 61,923.93 70,617.40 78,735.42 87,282.61

Secured Loans 0.00 0.00 0.00 0.00 0.00

Unsecured Loans 12,722.61 15,109.07 12,482.71 16,035.70 16,405.64

Total Debt 12,722.61 15,109.07 12,482.71 16,035.70 16,405.64

Total Liabilities 66,682.28 77,033.00 83,100.11 94,771.12 103,688.25

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 47,882.35 52,038.07 57,463.78 61,355.61 71,553.78

Less: Accum. Depreciation

40,040.15 43,198.95 46,945.77 50,941.23 55,905.28

Net Block 7,842.20 8,839.12 10,518.01 10,414.38 15,648.50

Capital Work in Progress 33,373.92 37,794.16 41,154.63 52,923.19 56,073.25

Investments 4,888.57 5,702.05 5,899.50 5,090.32 5,772.03

Inventories 3,038.49 3,033.76 3,480.64 4,060.67 4,678.57

Sundry Debtors 3,704.28 2,759.44 4,360.37 4,083.80 3,058.64

Cash and Bank Balance 699.80 27.42 269.22 161.48 282.85

Total Current Assets 7,442.57 5,820.62 8,110.23 8,305.95 8,020.06

Loans and Advances 52,293.83 58,710.79 38,906.53 55,964.02 63,721.90

Fixed Deposits 8,113.02 19,253.37 22,148.43 18,934.74 17,948.18

Total CA, Loans & 67,849.42 83,784.78 69,165.19 83,204.71 89,690.14

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Advances

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 16,515.78 19,835.99 22,482.94 26,854.11 27,244.53

Provisions 31,122.39 39,765.20 21,828.17 30,657.98 37,092.46

Total CL & Provisions 47,638.17 59,601.19 44,311.11 57,512.09 64,336.99

Net Current Assets 20,211.25 24,183.59 24,854.08 25,692.62 25,353.15

Miscellaneous Expenses 366.34 514.06 673.90 650.61 841.32

Total Assets 66,682.28 77,032.98 83,100.12 94,771.12 103,688.25

Contingent Liabilities 32,907.71 34,157.17 26,006.73 36,024.57 39,178.54

Book Value (Rs) 378.42 289.52 330.16 368.12 408.08

Share price analysis-

Prices of ongc on datewise-

Date Open High Low Close Volume Adj Close*

26-Oct-2010 1,354.90 1,354.90 1,320.00 1,321.00 960,800 1,321.00

25-Oct-2010 1,360.00 1,362.00 1,343.80 1,346.60 858,100 1,346.60

22-Oct-2010 1,366.95 1,368.40 1,338.20 1,345.00 448,200 1,345.00

21-Oct-2010 1,357.95 1,371.00 1,342.10 1,358.00 835,500 1,358.00

20-Oct-2010 1,348.00 1,365.70 1,340.00 1,347.00 314,900 1,347.00

19-Oct-2010 1,371.00 1,374.40 1,339.00 1,346.80 896,800 1,346.80

18-Oct-2010 1,340.35 1,373.70 1,320.50 1,370.05 1,073,000 1,370.05

15-Oct-2010 1,370.00 1,370.00 1,331.55 1,340.00 727,400 1,340.00

14-Oct-2010 1,382.80 1,387.60 1,350.05 1,352.00 540,500 1,352.00

13-Oct-2010 1,367.00 1,389.90 1,360.35 1,374.70 1,269,500 1,374.70

12-Oct-2010 1,371.40 1,371.60 1,346.05 1,366.40 806,200 1,366.40

11-Oct-2010 1,384.45 1,384.50 1,353.50 1,362.15 695,900 1,362.15

08-Oct-2010 1,390.00 1,395.00 1,354.75 1,366.00 785,200 1,366.00

07-Oct-2010 1,385.25 1,400.35 1,373.00 1,378.00 1,033,800 1,378.00

06-Oct-2010 1,408.65 1,408.65 1,382.25 1,383.00 1,026,300 1,383.00

05-Oct-2010 1,354.00 1,407.70 1,354.00 1,390.90 802,100 1,390.90

04-Oct-2010 1,409.00 1,444.40 1,390.00 1,394.50 1,304,700 1,394.50

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01-Oct-2010 1,406.35 1,425.80 1,398.20 1,404.30 1,687,700 1,404.30

30-Sep-2010 1,425.05 1,426.90 1,382.35 1,398.80 1,684,500 1,398.80

29-Sep-2010 1,467.00 1,467.00 1,416.00 1,418.00 773,500 1,418.00

28-Sep-2010 1,443.15 1,472.60 1,443.15 1,457.00 1,020,600 1,457.00

27-Sep-2010 1,445.00 1,467.10 1,439.50 1,458.05 1,069,400 1,458.05

24-Sep-2010 1,432.00 1,447.70 1,414.20 1,437.95 1,158,400 1,437.95

23-Sep-2010 1,410.00 1,433.50 1,405.00 1,422.10 1,502,000 1,422.10

22-Sep-2010 1,410.00 1,418.80 1,395.00 1,400.00 839,700 1,400.00

21-Sep-2010 1,406.00 1,416.00 1,397.35 1,403.50 899,800 1,403.50

20-Sep-2010 1,405.00 1,420.90 1,400.10 1,403.20 1,141,900 1,403.20

17-Sep-2010 1,410.00 1,422.50 1,389.00 1,403.00 1,286,000 1,403.00

16-Sep-2010 1,410.00 1,432.00 1,394.00 1,399.00 833,600 1,399.00

15-Sep-2010 1,400.00 1,453.40 1,395.50 1,412.00 2,595,800 1,412.00

14-Sep-2010 1,385.00 1,413.70 1,366.45 1,398.00 1,387,100 1,398.00

13-Sep-2010 1,380.00 1,389.00 1,366.35 1,383.00 1,095,400 1,383.00

09-Sep-2010 1,345.00 1,359.00 1,332.50 1,357.00 794,300 1,357.00

09-Sep-2010 $ 15.00 Dividend

08-Sep-2010 1,345.30 1,364.80 1,340.05 1,356.00 1,066,500 1,341.00

07-Sep-2010 1,357.40 1,364.75 1,343.00 1,353.75 1,184,100 1,338.77

06-Sep-2010 1,332.00 1,372.00 1,320.00 1,347.05 1,084,800 1,332.15

03-Sep-2010 1,333.00 1,343.70 1,324.00 1,339.85 773,400 1,325.03

02-Sep-2010 1,345.00 1,358.80 1,320.00 1,320.25 893,800 1,305.65

01-Sep-2010 1,349.60 1,354.70 1,332.30 1,335.90 671,500 1,321.12

31-Aug-2010 1,340.00 1,350.00 1,329.00 1,334.00 1,041,600 1,319.24

30-Aug-2010 1,331.00 1,359.90 1,325.10 1,342.70 1,971,400 1,327.85

27-Aug-2010 1,295.50 1,333.90 1,282.00 1,315.00 1,635,600 1,300.45

26-Aug-2010 1,278.00 1,298.40 1,275.35 1,290.00 1,199,200 1,275.73

25-Aug-2010 1,275.00 1,289.00 1,265.35 1,276.60 685,000 1,262.48

24-Aug-2010 1,286.00 1,291.70 1,265.00 1,273.95 876,700 1,259.86

23-Aug-2010 1,254.30 1,297.00 1,252.00 1,283.05 744,800 1,268.86

20-Aug-2010 1,263.00 1,280.00 1,251.55 1,259.35 375,000 1,245.42

19-Aug-2010 1,288.00 1,295.75 1,262.00 1,266.70 465,800 1,252.69

18-Aug-2010 1,260.55 1,303.10 1,245.65 1,282.15 1,386,800 1,267.97

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17-Aug-2010 1,262.00 1,275.45 1,246.85 1,259.65 333,500 1,245.72

16-Aug-2010 1,275.00 1,282.60 1,261.05 1,271.00 344,000 1,256.94

13-Aug-2010 1,267.00 1,288.00 1,267.00 1,274.40 842,300 1,260.30

12-Aug-2010 1,235.00 1,274.55 1,229.00 1,263.00 1,278,000 1,249.03

11-Aug-2010 1,240.00 1,249.10 1,228.00 1,235.00 1,048,200 1,221.34

10-Aug-2010 1,239.60 1,241.80 1,222.50 1,236.65 742,900 1,222.97

09-Aug-2010 1,240.00 1,264.95 1,223.55 1,233.90 910,100 1,220.25

06-Aug-2010 1,224.40 1,246.80 1,208.00 1,234.00 844,300 1,220.35

05-Aug-2010 1,227.85 1,269.40 1,227.85 1,240.80 890,000 1,227.07

04-Aug-2010 1,275.00 1,278.00 1,257.80 1,261.30 678,500 1,247.35

03-Aug-2010 1,290.00 1,290.00 1,266.35 1,271.80 901,400 1,257.73

02-Aug-2010 1,240.00 1,284.00 1,240.00 1,276.50 698,600 1,262.38

30-Jul-2010 1,240.00 1,249.60 1,220.65 1,238.00 1,214,300 1,224.31

29-Jul-2010 1,245.40 1,266.10 1,220.00 1,250.00 2,557,300 1,236.17

28-Jul-2010 1,260.00 1,279.70 1,255.00 1,255.05 872,600 1,241.17

27-Jul-2010 1,260.10 1,272.40 1,258.55 1,265.00 458,400 1,251.01

26-Jul-2010 1,265.00 1,266.00 1,248.80 1,253.35 539,800 1,239.49

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According to Vijay Bhambwani(share market analysist),Ongc can run into a wall of resistance at about Rs 1,420-1,425 odd. Once it overcomes that, possibly it can go up to Rs 1,450-1,460. Bhambwani told CNBC-TV18, "Since an investor has already bought ONGC, one cannot do anything much other than wait because booking a loss in ONGC doesn’t make sense. But if you were to make a relative strength comparative between ONGC and Reliance Industries, I think Reliance stands a better chance of making an up thrust from here. Rs 1,120 is what I would watch out for Reliance and once it overcomes Rs 1,120-1,130 band, it can easily beef up another Rs 100-120 whereas ONGC can run into a wall of resistance at about Rs 1,420-1,425 odd. Once it overcomes that, possibly it can go up to Rs 1,450-1,460 and that might take a while in coming because this stock does move in spurts but the spurts are fairly constrained in size as compared to Reliance. So if you have got it, hold on to it, there is no need of booking a loss here and if you have the time the markets are poised for another up thrust from here. In the coming three-six

32

months you will easily get your cost and at that point in time you can take call between whether you would like to hold on to ONGC or switch to Reliance, which I would prefer to do."And on the another day,Bhambwani told CNBC-TV18, "In the coming 6 months, ONGC is unlikely to give return in tandem with possibly some of the other index heavyweights barring Reliance Industries. This stock is somewhat sluggish as compared to the overall markets, compare it with something like HDFC Bank or HDFC Limited or even fast moving counters like Gas Authority of India Limited. This  stock is basically an underperformer within its peers because it’s heavily weighted and the kind of holding pattern is such that the retail investor doesn’t really get to make too much money in the short term. Having said that there will be a huge amount of resistance and overhead supply coming in at close to around Rs 1405 or Rs 1410 unless I see ONGC trading consistently above that threshold. Upticks are likely to be a little difficult if not labored. On declines the stock has the potential to test Rs 1260 to Rs 1280 band. Should the markets experience deeper cuts from here which seems like a fair possibility. So if you are in the stock for the coming 6 months or something, you have to prepare yourself for further declines from here in case you choose to hold on. If you can’t bear anymore cuts from here onwards then you may have to exit the trade at a loss which I think in the absolute near term which might be a possibility for you. If you give it time I think getting your acquisition cost will not be a problem in the coming 6 months."

ONGC,the country's top oil explorer, has appointed two auditors to quantify its oil and gas reserves ahead of a planned share sale, Chairman RS Sharma said on Wednesday."We have appointed D&M (DeGolyer and MacNaughton) and Gaffney, Cline & Associates as reserve auditors two weeks back to value our reserves," Sharma said.He said ONGC, which has about 150 oil and gas fields, may not ask the two firms to audit all of them as that would take six to eight months.The state-run firm usually gets its reserves audited every five years, but is doing so after three years because of its planned share sale, Sharma said.India has approved a 5% stake sale in ONGC that is expected to raise as much as USD 3.2 billion."My hunch is that it (share sale) may not happen this year ... but we will be ready by the fourth quarter (of the current financial year)," Sharma said.The share sale will be part of a government plan to sell stakes in about 60 state-run firms over the next few years, as India moves to cut a stubbornly high fiscal deficit and garner funds to spend on schemes for the poor.

ONGC-Comparative analysis

1 month 3 month 1 year 3 yearONGC 7.72% 5.68% 13.47% 14.72%Sensex 0.87% 12.21% 20.79% 5.08%Nifty 1.05% 12.24% 22.35% 6.65%

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Only italic number (7.72%, last one months changes of ongc share price) shows the decreasement and all tha percentage changes recorded in the increase order.

Achievements of business

In its eventful 46 years of existence, the Oil & Natural Gas Corporation (ONGC) Ltd. has achieved many a landmark. On the occasion of 46th ONGC Day, Mr. Raj Kanwar, a veteran journalist and a freelance writer, summarises the highlights.

THE ACHIEVEMENTS

The first was the discovery of oil in Cambay in September 1958. This was followed by discovery of oil in a well at Hazat, 16 kilometers from Ankleshwar, on 14 May 1960. These two discoveries exploded the myth about the non-existence of oil in the Cambay Basin and happily brought Gujarat forward on the country's oil map.

This was followed by discovery of oil near Rudrasagar in Assam in December 1960 much to the anguish of the doubting Thomas, who had predicted gloomy prospects.

However, the most significant of the achievements was the discovery of Bombay High on 19th February 1974, which, in reality, was the turning point in ONGC's history. The rig Sagar Samrat (self-propelled jack-up), was purchased at a cost of Rs. 12.7 crore from Mitsubishi.

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At that time no one would have dreamt that Sagar Samrat would create a niche for itself in the offshore oil world. This old workhorse has already completed drilling of 125 wells in a life span of 27 years, a feat unmatched by any other rig in the world, and is still going strong. Sagar Samrat had been instrumental in discovering 14 major structures, and adding more than three billion tonnes of oil and gas reserves.

THE 46th YEAR

Mr. Subir Raha had joined ONGC on 25th May last year and the metamorphosis that he brought about in this organization is absolutely amazing. He has been trying his best to enthuse the 40,000 odd work force. And he will have achieved a miracle if he brings about a change in the mindset and work culture of even half the members of this giant Parivar.

Raha believes in the best and top-of-the-class technology, and has been making endeavours to hire the best available consultants in the world. Thus ONGC has now engaged several reputed international consultants such as McKinsey, AT Kearney, SAP AG, Worley, Gaffney Cline and Associates, Lloyds Register of Shipping, KLG-TNO and CEIL, Ernst & Young and chartered accountants A. F. Ferguson, with a view to introduce the best available practices.

Just consider these facts:

The total oil production in India during financial year 2000-2001 was 32.42 million metric tonnes (MMT). This included 4.08 MMT of crude produced by the joint-venture companies and 3.286 MMT by Oil India Ltd.

The production of the gas during the same period was 29.48 billion cubic meters (BCM). The joint venture companies contributed 3.60 BCM to the kitty.

The oil and gas production figures during the subsequent year i.e. 2001-2002 were not much better. Total production of crude was 32.50 MMT while that of gas 29.8 BCM.

In late 1950s and early 1960s, the total demand for oil products in India was to the tune of 30 MMT. Today the entire yearly production of crude oil hovers around 30 MMT. In other words, if the time had stood still in 1960s with no increase in consumption of petroleum products, India today could deemed to have become self-sufficient in oil. But the time did not stand still and continued to make its inexorable march through the decades. Industrialization grew, economy exploded, bringing in its wake manifold increase in road, rail and air transport. As a result, country's oil requirements have today jumped to 122 MMT - a yawning gap of 92 MMT, which has to be met through imports at an enormous cost.

The total quantity of crude imported during 2000-01 exceeded 74 million metric tonnes. The cost of this import was Rs. 65,932 crores. Likewise petroleum products imported during the same period were 9.267 MMT valued at Rs. 12,093 crores. The only silver lining here was that India

35

too had started selling petroleum products overseas and its exports during 2000-01 was to the order of 8.265 MMT and earnings on this account touched Rs. 7,672 crores.

If that was not enough, India's demand for petroleum products has been growing at far rapid a pace. As per the projections in HYDROCARBON VISION 2025, the estimated requirement of crude in the country will gallop to 364 MMT by 2024-25. And the demand for natural gas will increase substantially to 391 MMSCMD during the same period.

This was the situation that confronted Raha as C&MD of ONGC. And how did Raha go about dealing with this? He fixed newer thresholds, recreated different norms of functioning, enthused and motivated the hitherto lethargic workforce, sifted the chaff from the grain and put square pegs in square holes, and round ones in round holes.

Raha's long stint with Indian Oil Corporation as the Director of Human Resources and Business Development came in handy in tackling similar problems in ONGC. In such a large, unwieldy and scattered workforce, homogeneity was the last element he expected. Likewise, there too must have been beehives of "vested interests" which needed to be handled with care, but handled they must be. And he set about inculcating feelings of pride and belonging amongst the ONGC Parivar.

ACHIEVEMENTS DURING THE 46th YEAR

A target of doubling the reserves in the nest 20 years has been set. About 2.0 BMT of oil + oil equivalent of gas (O + OEG) comes from the onshore and frontier basins. 4.0 BMT O + OEG should hopefully be established in deep offshore waters. These additional 6.0 BMT of O + OEG both onshore and offshore would undoubtedly require higher risks, state-of-art new technology and much bigger investments.

The Chairman's Advisory Council on exploration strategy was reconstituted with the induction of a few more veterans.

ONGC decided to clear, by 31st March 2003, the entire backlog in exploratory drilling. And that is the crux. The more exploratory drilling, the greater likelihood of finding more oil.

The long-pending organizational transformation project (OTP) was given a final shape after it had taken many twists and turns. This was not an easy task since the result of the pilot projects had to be objectively re-assessed. Now rechristened Corporate Rejuvenation Campaign (CRC), it was formally launched on 20th August 2001. What is CRC ? It divides ONGC into numerous Assets, Basins and Services, each headed by a senior executive, and which in turn became virtual corporates. The Multi-Disciplinary Team (MDT) concept is now reflected in the matrix relationship of CRC structure wherein the cadre specialization is blended with team orientation.

But the most important achievement of ONGC was the accretion by 191 MMT of recoverable reserves during 200-02.

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Among the significant long-term strategic goals fixed by the Navaratna Board in consultation with the administrative ministry in July 2001 were:

To improve recovery factor from 28 to 40 percent.

Of the 115 producing fields, one field alone (Mumbai High) contributes 40 percent of production. Another 14 fields add 35% to the production. The remaining 100 fields contribute only 25% of the entire oil/ gas production. However ONGC decided to focus on the 15 fields (including Mumbai High) in order to increase production by inducting the top-of-the-class enhanced oil recovery (EOR) and improved oil recovery (IOR) techniques. All this will involve a total investment of Rs. 12, 097 crores and will improve the recovery factor by 4% average, yielding 116 MMT of O + OEG over the 20 years. A special re-development project for Mumbai High was also launched last year. It will cost Rs. 8,200 crores and expects to improve the recovery factor by 4% yielding incremental 76 MMT of O + OEG. Mumbai High South Re-development project alone will yield extra production of 45.6 MMT valued at Rs. 36,000 crores at current international price.

To bring in 20 MMTs of equity oil from abroad over a period of 20 years between 2001-20.

Despite all its efforts and deployment of the latest-in-the-line technology, ONGC might not acquire within the country all the oil and gas to meet its fast expanding demand. The alternative is to buy equity in promising oil fields abroad. ONGC Videsh Ltd. (OVL), its wholly owned subsidiary, has invested heavily in some overseas oil and gas fields. ONGC has lent to OVL a gigantic amount of Rs. 1,963 crores at no interest for investing in Sakhalin-1 project in Russia. Sakhalin is being considered a very promising field and its progress is on schedule. Oil is expected to flow there from 2005 and gas from 2007. Meanwhile OVL's earlier investment in Vietnam is expected to start bearing fruit by the end of 2002. OVL has also taken a 20% equity in an offshore gas exploration block in Myanmar.

OTHER ACHIEVEMENTS

ONGC once again exceeded its profits of last year. In the fiscal ended 31st March 2002, its profits rose to Rs. 6197 crores compared to Rs.5228 crore. in the previous year. Happily, the trend of rising profit continues. In the first quarter of 2002-2003 (April-June) ONGC posted a net profit of Rs. 1,980 crores, recording a growth of 34 percent over the corresponding period last year.

ONGC also signed a conditional share purchase agreement (SPA) with Aditya Birla group of companies for acquisition of 37.4% of their equity in Mangalore Refineries & Petrochemicals Ltd (MRPL). Thus ONGC took the first but important step towards becoming the first national integrated oil and gas corporate in the country.

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ONGC achieved the distinction of becoming zero debt corporate by pre-paying the bulk of its foreign loans.

If Raha succeeds in making ONGC a top-class global oil major, much of the credit should go to his practice of consulting people at all levels, from former chairmen and directors (earlier designated members) to middle level executives in ONGC. His "Vichar" series, Vichar "Manthan", Vichar "Dhara" and Vichar "Vishleshan" have generated much interest in ONGC and have brought to the fore a flurry of new ideas, which are then fine-tuned and implemented. The difference in these Vichar series is the level of participating executives.

In short, the 46th year in the chequered history of ONGC has been one of great changes and achievements. And much of the credit should go to Raha and directors on the ONGC Board, besides of course, to the hundreds and thousands of executives working all over the country.

Accolades

• Global Rankings: ONGC has been ranked as number 3 E&P Company in the world and 26th among leading global energy majors as per Platts Top 250 Global Energy Rankings 2009 announced in November 2009. It is ranked 24th among the Global publicly-listed energy companies as per ‘PFC Energy 50’ list (Jan 2010). It is also ranked number 1 Top Blue Chip of India in the Finance Asia 100 list for 2009 with the highest aggregate net profit and ranked at 155 in the Forbes Global 2000 list 2010 (April 2010).

• Indian Rankings: ONGC has been ranked as the Best Company to work for in the Core Sector. ONGC scores high at 13th place in overall ranking amongst all the Indian Companies, including public and private (Feb 2010).

• SCOPE Meritorious Awards: ONGC won the Gold Trophy for SCOPE Meritorious Award for Corporate Social Responsibility and Responsiveness for the year 2007-08 and Gold Trophy for R&D, Technology Development & Innovation for the year 2008-09 (awarded in April 2010).

• Dainik Baskar India Pride Awards: ONGC bagged the Gold Award in the Corporate Social Responsibility category in 2010 at the ‘Dainik Bhaskar India Pride Awards for Excellence in PSUs’ instituted by the Dainik Bhaskar group for its CSR project Ashadeep-Shiksha Ki Jyoti on girl child education.

• DSIJ Award: ONGC Clinched two DSIJ-PSU awards 2010, one for excellent overall performance in the category of Heavy Weights and the other for Highest Market capitalization amogst PSU’s in the category of Wealth Builders (April 2010).

Sports

• Arjuna Awards: ONGCians Ms Sinimole Poulose and Shri Gautam Gambhir were conferred with Arjuna Award in 2009 in recognition of their achievements in athletics and

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cricket respectively. Shri Gautam Gambhir was also ranked No. 1 batsman in ICC Test world rankings.

• Badminton: Shri Chetan Anand won the Dutch Open Grand Prix badminton tournament in October, 2009 and also the Gold medal in SAF Games held at Dhaka,Bangladesh in February, 2010. Shri Rupesh Kumar finished Runners up in Australia Open Grand Prix badminton tournament held in July, 2009.

• Cycling: Ms. Koneru Humpy won the 1st place in Fide World Women’s Grand Prix Chess cycle event at Turkey in March, 2010.

• Chess: Shri K.Sasikaran was the member of the Chess team that won Bronze medal in World Team Championship at Bursa in January, 2010.

Ten new Discoveries in 2010-2011

  Basin/State Prospect Name PeriodType of

Discovery

1. Western offshore Basin GK-28-2 April-2010 Oil

2. Wester Onshore Basin Virgovindpura-3 May 2010 Gas

3. KG Basin- Onland Lakshminarsimhapuram-1 May 2010 Oil

4. KG Base onland West Kesavadasupalem May 2010 Gas

5. Cauvery Basin- Onland Kuthanalur-12 May 2010 Oil

6. Western Onshore Basin Karannagar-1 July 2010 Oil

7. KG Basin- ShallowOffhore

GS-21-3 July 2010 Gas

8. Western Onshore Vadatal-1 Aug-2010 Oil

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9. KG Onland Basin Vygreswaram Aug-2010 Gas

10. Western Onshore Basin Limbodara East -1 Sept-2010 Oil

 

Competitors

last price market cap sales ternover net profit total asset

(Rs.in crore) (Rs.in crore) (Rs.in crore) (Rs.in crore)

ONGC 1,343.85 287,432.38 64,017.82 16,126.31 103,688.25

GAIL 504.45 63,988.34 25,103.25 3,139.84 18,279.38

Cairn India 334.75 63,517.30 3.73 54.24 33,281.73

Oil India 1,459.75 35,100.33 - - -

Petronet LNG 127.05 9,528.75 10,649.09 404.50 4,734.68

Guj State Petro 123.40 6,941.55 1,000.87 413.77 2,820.38

Reliance Natura 39.40 6,434.53 298.39 73.32 3,321.78

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Guj Gas 396.90 5,090.24 1,417.64 175.12 754.54

IndraprasthaGas 330.35 4,624.91 857.12 172.47 825.46

Aban Offshore 832.35 3,621.80 1,182.01 280.44 5,326.09

Above list shows the whole performance of competitors of ongc.

BIBLIOGRAPHY

Internet-

www.ongcindia.com

www.bseindia.com

www.rediff.com

Articles-

www.moneycontrol.com

www.bspindia.com

www.itsourindia.com

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