COMPANY ANAlYSIS About ONGC: Oil and Natural Gas Corporation Limited (ONGC) (incorporated on June 23, 1993)

is an Indian public sector petroleum company. It is a Fortune Global 500 company ran ed 335t!, and contributes ""# o$ India%s crude oil production and &1# o$ India%s natural 'as production. It is t!e !i'!est pro$it ma in' corporation in India. It (as set up as a commission on )u'ust 1*, 195+. Indian 'o,ernment !olds "*.1*# e-uity sta e in t!is company. ./G0 is t!e $la's!ip company o$ India1 and ma in' t!is possible is a dedicated team o$ nearly *0,000 pro$essionals (!o toil round t!e cloc . It is t!is toil (!ic! amply re$lects in t!e per$ormance $i'ures and aspirations o$ ./G0. 2!e company !as adapted pro'ressi,e policies in scienti$ic plannin', ac-uisition, utili3ation, trainin' and moti,ation o$ t!e team. )t ./G0 e,erybody matters, e,ery soul counts. .,er 1&,000 e4perienced and tec!nically competent e4ecuti,es mostly scientists and en'ineers $rom distin'uis!ed 5ni,ersities 6 Institutions o$ India and abroad $orm t!e core o$ our manpo(er. 2!ey include 'eolo'ists, 'eop!ysicists, 'eoc!emists, drillin' en'ineers, reser,oir en'ineers, petroleum en'ineers, production en'ineers, en'ineerin' 7 tec!nical ser,ice pro,iders, $inancial and !uman resource e4perts, I2 pro$essionals and so on. ./G0 89:F.:;)/09 I/ <)=2 2>. ?9):= t!e0ompany !as been t!e $irst and only Indian company to be enlisted in Fortunes ;ost )dmired 0ompanies 200&. 2!e Fortune Global 500, 200& list !as ran ed your 0ompany at 335, 3* notc!es !i'!er t!an t!e pre,ious year. 2!e $iscal 200&@09 (as yet anot!er year o$ 'ro(t! and success $or your 0ompany, (!ic! alon' (it! ot!er 'roup companies, e4celled in all its endea,ours1 particularly in t!e core acti,ity o$ 94ploration and 8roduction (978) o$ 0rude .il and /atural Gas. t!e 0ompany maintained

a :eser,e :eplacement :atio (:::) o$ more t!an one, $or t!e $ourt! consecuti,e year. Aurin' t!e year, your 0ompany re'istered ::: at 1.32, (it! 5ltimate reser,e accretion (38 reser,es) o$ +3.&2 ;illion ;etric 2onnes (;;2) a'ainst production o$ *&.2& ;;2 o$ .il 7 .il 9-ui,alent Gas (0B.9G). ./G0 !as accreted 1&2.23 ;;2 o$ Initial In@place reser,es, t!e !i'!est in last decade and "# more t!an t!e last years accretion o$1+9.52 ;;2, (it! 33 disco,eries (.ilC 13, GasC 20) spread across Indian sedimentary basins a'ainst 22 disco,eries durin' 200+@0". 94ploratory per$ormance durin' ensuin' $iscal 200&@09 also started on a !i'! note (it! 11 disco,eries in t!e $irst -uarter o$ current $iscal.

Aurin' t!e year, .B.9G production o$ t!e 0ompany, includin' t!e production $rom domestic Doint ,entures and o,erseas assets, (as t!e !i'!est@e,er at +1.&5 ;;2, 1.&*# more t!an t!e pre,ious year. ./G0 maintained t!e .B.9G production le,el at *&.2& ;;2, mar'inally (0.*#) lo(er t!an last year, a'ainst t!e natural decline o$ mature $ields. Eo(e,er, t!e oil and 'as production $rom o,erseas assets increased by 10."# and .B.9G production $rom domestic Doint ,entures also increased by 11.2#. 2!e au'mentin' and en!ancin' e$$orts ta en up by t!e 0ompany, t!rou'! Impro,ed .il :eco,ery and 9n!anced .il :eco,ery (I.:69.:) sc!emes, implemented since 2001, !a,e !elped to arrest production decline in t!e mature $ields. 2(el,e I.:6 9.: sc!emes !a,e been completed and si4 proDects are under implementation (it! an in,estment o$ :s. &5,+30 million. .ut o$ t!e 1+5 mar'inal $ields, 1*3 are eit!er moneti3ed or under delineation or under moneti3ation on ser,ice contract. :emainin'22 $ields (ill be put on production by o$$er under ne(

mar'inal $ield policy. 2!e ne( $ield Fasai 9ast disco,ered in >estern .$$s!ore !as commenced production $rom "t! July, 200&. on'c is settin' up a 50 ;> >ind Farm in GuDarat consistin' o$ 3* (!eelin' units (it! an in,estment o$ :s. 3,0"0 million. 8o(er (ill be utili3ed in nearby ./G0 installations. )ll 3* units !a,e been erected, 10 !a,e started (!eelin' po(er. 2!e $irst 0G; de,elopment (ell $or 0G; (as spudded in 8arbatpur pilot area on 1st Aecember, 200" near Go aro =teel 0ity o$ J!ar !and1 production !as commence $rom )pril 2009. PORTERS 5 ORCE MO!EL

T"reat o# ne$ entrantsC Aue mostly to t!e industry t!at ./G0 is in, itHs !ard $or t!ere to be many ne( entrants. 2!e only real t!reat t!at mi'!t arise (ould be anot!er 'o,ernment $unded .il and Gas company. 2!e reason $or t!is is t!at a 'o,ernment (ould not !a,e as !ard a time raisin' $unds and 'ainin' access to resources. 2!is is assumin' t!at t!e company (ould be researc!in' and de,elopin' on domestic soil. 2!e only ot!er t!reat may not be $rom ne( entrants but $rom smaller competitors (!o already !a,e access to resources and distribution c!annels. 2!ere is really not muc! o$ a t!reat because t!ere are t(o main barriers to entry t!at (ould be stoppin' potential t!reats. 2!ese (ould be ,ery !i'! capital requirements as (ell as access to Cost disadvantages independent of scale%

9,en t!ou'! t!is industry i$ ,ery attracti,e because o$ t!e !i'! pro$its it (ould be ,ery !ard $or a company to !a,e enou'! capital to 'et in t!e mar et. 9,ery part o$ .il and Gas 94ploration and Ae,elopment is costly and not somet!in' t!at (ould be (ort! t!e costs as a ne( entrant into t!e industry. Goin' alon' (it! t!e !i'! cost o$ capital are t!e cost disad,anta'es. 2!e companies already in t!e industry already !a,e t!e access to ra( materials as (ell as desirable locations. 2!is is somet!in' t!at (ould be ,ery di$$icult $or a ne( entrant to try and 'ain.

&ar'ainin' Po$er o# SuppliersC

./G0 is a ,ertically inte'rated company t!at really deals in all areas $rom $indin' t!e product to re$inin' t!e product to sellin' t!e product. >it! t!is bein' said t!ere is not muc! to (orry about t!e bar'ainin' po(er o$ t!e suppliers. =upplier po(er is !i'! as t!e net mar'ins are stron'ly dependent on t!e price o$ t!e crude. Aue to crude price ,olatility and supply ris s, a lot o$ t!e Indian companies are inte'ratin' bac (ards into 978 acti,ities

&ar'ainin' Po$er o# &u(ersC

/ot too critical $or most companies as re$inin' operations are a part o$ t!e complete supply c!ain, (it! t!e re$inin' operations supplyin' t!e product to t!e mar etin' company. Eo(e,er in case o$ standalone companies ((!ic! may no lon'er apply) lon' term contracts !a,e to be si'ned (it! t!e mar etin' companies. 2!e mar'ins in suc! cases are dependent on suc! lon' term contracts. 2!e industry t!at ./G0 is a part o$ is di$$erent t!an many ot!er industries. It is di$$erent in t!e $act t!at people really cannot 'o (it!out t!eir product. >!ile o,er a lon' period o$ time it may be possible to $ind ot!er $uels it is not really $easible in t!e s!ort term. 2!is !as been seen in t!e 5= in t!e last $e( years. Gas companies can t!e !i'! prices. eep t!e prices !i'! and consumers (ill still pay >!en loo in' at t!e indi,idual buyer t!ey !a,e

almost no bar'ainin' po(er because t!ey are only buyin' suc! an e4tremely small portion o$ t!e industries total output. )not!er reason $or t!is lac o$ bar'ainin' po(er is t!at as o$ ri'!t no( t!ere is not a real alternati,e to .il. )ll o$ t!ese reasons ma e it ,ery !ard $or t!e buyer to !a,e muc! bar'ainin' po(er at all.

T"reat o# Substitutable Produ)tsC

)lt!ou'! 'as, solar po(er etc e4ist as substitiutes , none o$ t!em are bi' enou'! to impact t!e demand o$ t!e petroleum products. )s stated abo,e t!ere is not a real alternati,e to oil at t!is time.

2!ere is researc! bein' done to try and $ind substitutes. >it! t!e price o$ oil as !i'! as it is at t!is time, it is only 'i,in' more reason to try and $ind ot!er $uel sources. 2!is is (!ere t!e main players in t!is mar et must be care$ul. 2!e prices are stayin' $airly !i'! no( because people really donHt !a,e a c!oice and must pay. I$ ot!er $uel sources do come out t!at are less costly, many people (ill 'o to(ards t!ose alternati,es. It does not seem t!at at t!is time t!ere is a !u'e t!reat o$ t!is !appenin' but it is de$initely a possibility t!at any player in t!e mar et must be a(are o$. Intensit( o# Ri*alr( amon' Competitors:

2!e ri,alry in t!e industry (as lo( till as t!e industry (as ti'!lty re'ulated by t!e 'o,ernment. Eo(e,er, t!e le,el competition !as increased a''ressi,e. 2!e lar'est competitors in t!is industry $or ./G0 are 944on ;obile and :oyal Autc! =!ell. ./G0 is currently in 1* di$$erent companies (!ereas 944on ;obile is in 20 di$$erent countries. >!ile 944on may be a lar'er company no( ./G0 is 'ro(in' and is becomin' a ,ery important 'lobal player. (it! :eliance and ot!er ;/0 becomin' more