An anlysis on financial and capital structure of oil and gas industry -A case study of ONGC Videsh Limited

The Indian Oil and Gas (O&G) sector is one of the six core industries of India and contributes over 15 per cent to the Gross Domestic Product (GDP). The country is the sixth largest consumer of oil in the world and the ninth largest crude oil importer. The sector is of immense importance to the economy owing to its significant forward integration with many other sectors. India is committed to boosting its growth in the years to come and this progress would translate into the country's energy needs growing many times. Under new exploration licensing policy (NELP) ONGCVL has to compete with private sector companies for obtaining petroleum exploration license, which was almost a monopoly for ONGCVL till recently. Under such circumstance, ONGCVL has to be care full and at the same time aggressive to cease the opportunity available by taking quick and prompt decision. In order to maintain the profit growth as well as business growth, National Oil Companies have now to focus more on volume growth of various products as well as to attempt significant cost reduction so as to sustain competitive edge and lead position. In the changing scenario the role of finance is shifting from controlling to influencing where finance plays an equally important role as business partner providing valuable information support to the operating managers which will facilitate taking more prudent decisions by the operating managers so that there is increasing value to the business from such decisions. The financial structure decision is a continuous one and has to be taken whenever a firm needs additional finances. Keeping the above facts this paper proposes to analyse the financial and capital structure in oil and gas industry with specific reference to ONGC Videsh Limited (ONGCVL).