MERGER AND ACQUISITION IN OIL AND GAS INDUSTRY IN INDIA

Abstract

The Oil and gas sectors play an active role in the political and economic scenario of the globe.India stands fourth place in oil and petroleum consumption and import after United Sates, China and Japan. India is taking effective and efficient steps to develop its various renewable energy sources (EIA June 2014). Mergers and acquisitions in banking sector have become familiar in the majority of all the countries in the world. A large number of oil and gas companies all over the world are engaged in merger and acquisition activities. One of the principal objectives behind the mergers and acquisitions in the this sector is to reap the benefits of economies of scale. As a result of economic changes and liberalization, the corporate sector has been undergoing major changes and restructuring themselves to face these challenges. Corporate restructuring can take place in three different ways; restructuring of business portfolios, financial restructuring, and organisational restructuring. Mergers could be of three types; vertical mergers, horizontal mergers, and conglomerate mergers. Mergers and acquisitions in oil and gas sector are forms of vertical or horizontal merger depending upon whether the company is into upstream or downstream sector. HPCL’s acquisition by ONGC is a form of vertical acquisition as ONGC is into upstream sector (i.e exploration and production) whereas HPCL into downstream sector (i.e., refining of crude oil). The financial performance is the blue print of the financial affairs of a business concern. And, it reveals how a business has prospered under the leadership of its management. This study is based on secondary data. In this study, the data has been taken for last ten years from from 2007-08 to 2016-17 for the analysis of financial performance of Hindustan Petroleum Corporation Limited since 2007-08. The main emphasis in this study has been given to evaluate the financial performance of Hindustan Petroleum Corporation Limited with respect to measure the impact of liquidity, solvency and efficiency ratio on return on capital employed.