Presentation On Mergers And

Acquisition of ONGC And

Imperial Energy
 Oil and Natural Gas
Corporation (ONGC)
• It is an Indian Multinational Crude Oil and Gas Corporation. Its
registered office is now at New Delhi, India. It is a state-owned
enterprise of the Government of India, under the administrative control of
the Ministry of Petroleum and Natural Gas. It is the largest oil and gas
exploration and production company in the country. It produces around
70% of India's crude oil (equivalent to around 57% of the country's total
demand) and around 84% of its natural gas and (ONGC) is the largest
Indian state oil and gas corporation
• The company was incorporated by the Indian Government on August 14,
1956. The Indian Government holds 69.23% equity stake in the
Company. ONGC contributes 69% of India’s crude oil production and 62%
of India’s natural gas production .
 IMPERIAL ENERGY

• The business was founded in 2004. In 2007 it was first listed on

the London Stock Exchange The company was acquired by ONGC for
$2.1 billion in January 2009.
• Imperial Energy Group has started its operations in the territory of the
Russian Federation since October 18th, 2004. The Group was founded
by Russian and foreign investors as an independent middle size oil
producer.
• The head office of Imperial Energy is located in Tomsk. The company
is run by the skilled management team with working experience in
more than 18 countries
 MOTIVES OF THE MERGER

• The motives behind any merger/acquisitions are often

numerous.
 They want to increase their market share, spread their costs
and risks, become more international and also for the need to
transform their corporate identity.
India's explorers have been outbid by Chinese rivals as the
two most populous nations compete for energy assets
globally.
 The South Asian nation is looking to invest in oil projects in
Russia, Kazakhstan, Iran and Africa as the government
expects economic growth to accelerate to as much as 10
percent by 2012.
 Imperial would be biggest overseas acquisition for
ONGC, which has as much as 6.8 billion barrels of oil
equivalent in reserves.

The explorer paid $1.7 billion to buy a stake in Exxon

Mobil Corp.'s Sakhalin-1field in Russia and $785
million for a stake in the Greater Nile project in Sudan,
both in 2003. State-run ONGC owns 20 percent of
Sakhalin-1, which began pumping oil in 2005 and
produced 250,000 barrels a day in February 2007.
 Scheme of merger

Effective : 31st March 2010

Date of Merger

Year of Merger 2010

Industry Acquiring company: Oil and

Natural gas
Acquired company: Natural Gas
Type of Merger Horizontal with concentric merger
Business Group (Product Extension)
ONGC group
Exchange Ratio It has takeover of Imperial energy
with about 2.1 billion.
.
Table showing Pre and Post-merger Key Indicators
of ONGC

Key indicators Pre-merger Post-merger % change

N P margin (in %) 26.82 28.38 105.81
RONW (in %) 23.13 28.38 122.69
Liquidity Ratio 220.68 272.39 123.4
Leverage Ratio 0.83 1.07 128.9
EPS (in Rs.) 88.46 38.58 43.61
DPS (in Rs.) 0.56 1.63 291.07
P/E Ratio 1.49 2.92 195.97
BVPS (in Rs.) 332.15 119.88 36.09
Share Price (in
Rs.) 128.66 91 70.72
 Table showing Pre and Post-merger Key
Indicators of Imperial energy
Key indicators Pre-Merger post-merger % change

N P Margin (in %) 25.07 26.84 107.06

RONW (in %) 23.33 17.18 73.63
Liquidity Ratio 2.99 2.43 81.27
Leverage Ratio 127.58 113.6 89.04
Sales (in crores) 60666 72328.25 119.22
R & S (in crores) 68286.33 101805.5 149.08
EPS (in Rs.) 75.54 38.58 51.07
DPS (in Rs.) 31.66 15.25 48.16
P/E Ratio 3.72 3.55 95.43
BVPS (in Rs.) 329.26 199.88 60.70
Share Price (in Rs.)
282.05 139.075 48.57
 Conclusion

 Mergers and Acquisitions (M&A) prime motive is to

improve the value, wealth and growth of the enterprise but in
the current case it is been observed that M&A has no effect
on the company performance in Oil and Gas sector.

 It has been concluded that that there is no

significant improvement in financial and operating
standards in post-merger period.