Friday, July 18, 2008

Performance

When a government-run entity prides itself on being a Rs.2.75 lakh crore entity in terms of Mcap, you wonder, “Is the government machinery working alright?” With ONGC Videsh Ltd. and ONGC Mittal Energy Ltd. promising an even brighter tomorrow, this PSU deserves honour for its consistent performance

As an explorer and primary producer, ONGC controls the raw material i.e. crude, while HPCL, BPCL et al are all dependent on crude oil. The learning curve effect is the greatest advantage for ONGC and it has helped it reduce its project execution time. Stronger geographical presence and data collection has further increased its efficiency. Despite the fact that as an upstream company it has to share the burden of 33% oil subsidy its performance is praiseworthy. Retaining talent at the mid-level has been a problem though; all thanks to its PSU status. It has a huge cash reserve too. The company can very well take advantage of the heightened crude prices, the only hindrance being the administered price mechanism. Despite government apathy, the company continues to perform well and will surely be more successful in future.

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    Source :
    IIPM Editorial, 2008
    An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative