Showing posts with label ONGC. Show all posts
Showing posts with label ONGC. Show all posts

Thursday, October 25, 2012

India’s incredible future potential

In an exclusive interview to B&E’s pathikrit payne, Sir Richard Stagg, British High Commissioner to India speaks about India’s incredible future potential and the positive impact of its outsourcing business...

B&E: Many Indian companies are trying to takeover companies in Europe especially in UK. So what is the mood over there about that?

RS: We are very positive about it and we in fact, encourage companies to come and takeover companies in UK. Even in 2008, ONGC bought a very big UK based oil & gas company, HCL bought a very big UK software company and we are very keen to help them do that as we think these Indian corporate owners are good owners. They are going to help in developing the business. They are good investors in terms of bringing money into our economy and helping to create jobs. So, we have lot of dealings with these investors both before they decide to come to UK, and later when we offer them after carriage support package and try to ensure that they flourish in UK environment. And most of them do. As you must have read in the newspapers that the CORUS and JLR brands are going through difficult period because of the cycle and the sectors they are in. But there are many others in other sectors in UK who are doing very well and have a very happy experience of investment. So we think that it’s a good thing for UK economy and also a good thing for these Indian business houses.

B&E: Is UK lagging behind US and Russia when it comes to high profile defence deals with India?

RS: There is quite a lot going on in this field. The Hawk Advanced Jet Trainers have arrived and we are very much involved with the proposal to provide Indian Air Force with VIP helicopters. We are also interested in selling new artillery, which is something involving a JV with Mahindra & Mahindra. We are keen to sell the Eurofighter Typhoons to your Air Force. In terms of aircraft carriers, I think the experience that India has had with the Russian aircraft carrier Admiral Ghorskhov, may make some of those involved, in the longer run look elsewhere for future supplies. So we think we are good partners because we sell equipments in general, which the Indian Army is familiar with and I think we have good understanding of what India requires.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM : The B-School with a Human Face

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Friday, August 03, 2012

India’s economic objectives with their private counterparts

Indian psus have followed an optimistic trajectory post-liberalisation and have seen some vital successes through well-timed and executed strategic realignment. Virat Bahri of B&E brings out the lessons from these successes and also on how these psus can keep the growth story intact going forward and fulfil india’s economic objectives with their private counterparts

Post-liberalisation, turnaround has also been a recurring theme for quite a few PSEs, which have been stung by the competition and responded with dramatic turnarounds that only look believable in retrospective terms. SAIL itself is a fascinating example, as it was facing a net loss of Rs.15.74 billion in FY 1998-99. A comprehensive rationalisation of production processes was done, the product mix was strongly realigned and production of saleable steel products was ramped up. Within 6 years, the company had posted an impressive profit of Rs.68.17 billion. BHEL had a net sales of Rs.68.962 billion in 1998-99 and a net profit of Rs.5.99 billion. Once the central government passed the Electricity Act for rapid transformation of the power sector, the company was faced with a tremendous surge in demand and was found wanting in terms of manpower and capacity. Besides, Chinese competition has come in droves, buoyed by the Chinese government’s strategy of having an undervalued yuan. BHEL aggressively enhanced capacity and scope of business. Though problems persist, BHEL posted a revenue of Rs.424.95 billion (CAGR of 16.36% since FY 1998-99) and a net profit of Rs.60.11 billion (CAGR of 21.18% since FY 1998-99) in FY 2010-11. ONGC was often criticized for its inefficient practices and relatively staid approach. It is well known how the company transformed under the aegis of erstwhile Chairman Subir Raha and hasn’t looked back since. When he joined, the company was facing depleting production and reserves. He led the company on an expansion spree and also promoted better utilisation of existing assets. Oil & Oil equivalent gas production of ONGC was 62.07 MMtoe in FY 2010-11. Its net profit of Rs.189.24 billion placed it on top of the B&E Power 100 List for the year. State Bank of India (SBI) was similarly losing market share rapidly to private and foreign banks. The challenge was to shake up an institution with 2,00,000 employees from its stupor. Under ex-Chairman O. P. Bhatt (who joined in 2006), SBI took a unique initiative of stopping the VRS scheme so that they would not lose valuable talent to private enterprises. In addition, they ramped up process efficiency by manifolds and Bhatt made the effort to align the organization towards a common vision and a common set of objectives, primary being their drive to gain favour with mid to large enterprise accounts and with the growingly young workforce in India. The State Bank group’s advances stood at Rs.9.94 trillion for FY 2010-11 (growth of 15.87% yoy) while deposits stood at Rs.12.45 trillion (growth of 12.43% yoy).

It’s now common knowledge that Chinese state-owned enterprises are so well integrated with the central government that they are able to serve long term national strategic objectives with amazing efficiency. In addition, they go global with a clinical aggression that surprises even the leading private companies in the Western world. As with other aspects of the Indian economy, our PSUs are a few steps behind China, but there are notable examples where they are making their contributions count. ONGC itself has been competing head to head with global oil majors to acquire E&P assets. This year, it signed a deal with KazMunaiGas in Kazhakastan for acquiring 25% interest in the Satpayev exploration block. SAIL, which has an order book of Rs.540 billion in its drive for 23.5 million tonnes hot metal capacity by FY 2012-13, has also developed a structured R&D set up and plans to take R&D spends to over 1% of total turnover. Along with NTPC, NMDC, Coal India & RINL, SAIL set up a consortium named International Coal Ventures Ltd. (initial authorised capital of $2 billion) a few years back to pursue metallurgical coal and thermal coal assets across the globe. On the flip side, though, no successful bid has happened yet, in large part due to mines getting expensive, and the initiative needs a push. Also, it has got into tie ups with global giants like POSCO and Kobe Steel for strategic collaboration over projects, technologies, et al. ONGC now runs 31 projects across 14 countries and also made the big ticket acquisition of Imperial Energy. NTPC is planning to become a 75,000 MW company by 2017 compared to current capacity of 34,854 MW and is setting up a power plant in Sri Lanka. By 2032, it is also planning to have 28% of its power production coming from carbon free energy sources. GAIL is targetting a turnover of Rs.1 trillion by FY 2016-17 from Rs.324 billion currently. Part of the plan is to aggressively pursue global investment opportunities throug investment arms and JVs. Another interesting case is Rural Electrification Corporation of India, which finances rural power projects after proper due diligence. The company has been proactive on tapping international markets for funding and in FY 2010-11, it mobilised $1.17 billion from overseas instruments. Indeed, there are struggling firms and Air India is the most vivid example of the worst that can happen with PSUs. They are telling reminders of the road that’s not to be taken.


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Tuesday, July 17, 2012

BRIC: Is it still relevant to India?

Contrary to the belief that BRIC would overtake the economic might of the West, the lack of progress of the bloc due to China’s hegemony and pessimism calls for a rethink of policies, especially for India. Perhaps, it is time for us to look at other partners that could actually help India’s growth story.

Bilateral problems between India and China have existed for long and border disputes keep simmering every now and then, especially in relation to Kashmir, the Aksai Chin area and Arunachal Pradesh. Experts believe that China, because of its own domestic politics and strategic interests, would never foresake its claim from Arunachal and return Aksai Chin to India. The government of India has claimed and reclaimed this area, which legitimately belongs to India and was captured by China during the 1962 Indo-China war, every now and then. China, however, due to its own strategic policies does not seem to be in any mood to give up this land which is basically a corridor connector between the Xinjiang and Tibet. China has constructed an all weathered metal road through Aksai Chin which starts from Lhasa and goes all the way upto the capital of Xinjiang. A part of this metal road (called the Karakoram Highway) also passes through Pakistan occupied Kashmir (PoK) and connects Islamabad with China. It’s said that China even has plans to link Karachi with Gwadar, a sea port that China is developing in Pakistan’s Balochistan province (Makran coast area). There is a strategic motive of China behind this and the question of China giving up the Aksai Chin territory does not seem likely to arise. As long as this dispute remains, the relation between India & China is not going to be cordial in the real sense of the term.

The relevance here is that border disputes between India and China are going to have a major repercussions on the BRIC bloc. For the sustainability of BRIC as a viable alternative to the West, it is extremely crucial that India has a friendly and cordial relation with China. Historically, India has very friendly ties with the other nations of BRIC, i.e, Russia and Brazil. The only problem for India lies with China which is a major component of BRIC. Even thinking of BRIC as a bloc without China is not practical. But then, because of historical differences, territorial claims and counter claims, reasonable relations between India and China also do not seem likely in the near future.

Apart from the territorial disputes, there is also a huge trade imbalance between these two countries. The balance of trade is abnormally tilted towards China and despite India making repeated requests to China to give it the most favoured nation status for several goods, the Chinese leadership is yet to oblige. Even though Indian companies have requested the Indian government to take up this issue with China, no fruitful results have emerged yet. On the flipside, when it comes to Chinese companies, they are making huge profits here in India. India’s trade imbalances, as a result, have been increasing everyday.

If we come to the question of power play within the BRIC nations itself, Russia still has major problems with China with respect to Central Asia and countries around it. The problems are in relation with countries such as Uzbekistan, Kazakhstan, Turkmenistan, Azerbaijan, Georgia, Kyrgyzstan, Armenia, which have huge reserves of natural resources, especially oil and gas. While China has major interests in staking claim and forging partnerships with all these countries for exploration of oil and natural gas, Russia does not seem too happy with it as it does not want any other power to have stake in any of these countries which are close to its sphere of influence. China already has problems with India and with the Indo-China dispute over the South China Sea that has recently come up, things have gone from bad to worse. Further, India’s penetration into the South China Sea for oil exploration (after Vietnam’s invitation to ONGC and OIL for exploration on a 50:50 basis) has Russia’s tactic support because of its interests in Central Asia. South China Sea (SCS) is an inland sea which has a stake of four nations – Philippines, Vietnam, China and Taiwan. The SCS has huge reserves of natural oil and gas, uranium, thorium, plutonium etc. The dispute here is territorial between the four countries as China feels that it has the right to claim this whole area of Spartly Islands as the area historically belonged to it before the United Kingdom took over. The stakes have gone high after the discovery of oil. Today, these four nations have staked claim to portions of the SCS, which happens to be in accordance with the international jurisprudence. China here is just playing the big bully and its claims are against the international jurisprudence on the laws of the sea, according to which the South China Sea should be equally divided between the four surrounding nations.


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