<b>NEWSMAKER: </b> Radhe Shyam Sharma

Imperial ambitions

In September 2006, ONGC Videsh Ltd (OVL), the overseas arm of state-owned Oil and Natural Gas Corporation, acquired Colombian oil company Omimex de Colombia. It was the Indian company’s first acquisition of an oil company abroad. Two years later, OVL is confident of making its second overseas acquisition – UK-based Imperial Energy for $2.5 billion. This is over five times the value of the Colombian acquisition.

The man who has spearheaded both the strategic moves is naturally more excited about the Imperial acquisition. “In this acquisition, we hope to buy the entire company. The Colombian acquisition was in partnership with a Chinese company,” says ONGC Chairman and Managing Director Radhe Shyam Sharma, who is also the OVL Chairman.

The challenges are not small. The Indian company is fighting off a possible counter bid by its partner in the Colombian buyout, Sinopec of China, which has beaten OVL in the race for many other oil companies in the last couple of years. China’s aggressive bidding has seen it walk away with prized catches such as Marathon Oil Corporation and the BP-operated Block B in Angola, EnCana in Ecuador, Petro Kazakhstan and Udmurtneft in Russia.

The list is long and embarrassing for the Indian company. Still, Sharma and OVL are confident that their bid will go through and Imperial will soon be in the ONGC stables. “OVL is going all out this time. It has structured this bid in such a way that the Chinese will stay away,” said an official in the petroleum ministry, who thinks the deal is as good as done, even though Imperial’s shareholders have not yet cleared the deal and there is a 45-day window for a counter bid.

Unusual aggression from a state-owned company? ONGC officials said OVL is finally acquiring some oil companies overseas because of Sharma’s training as a banker with Union Bank of India, where he served for 10 years in the finance, banking and credit appraisal departments. “That experience helps him immensely in financial structuring,” said an ONGC official close to Sharma.

As the finance director of ONGC, Sharma was instrumental in the divestment of 10 per cent stake to the public in 2004 in what was then the country’s largest public offering. His colleagues said it was Sharma who made ONGC a debt-free company.

After staying for 10 years with the public sector bank, Sharma went to Baghdad to head the finance section of another public sector enterprise, Indian Road Construction Corporation Ltd. It was in Baghdad that he picked up much of his oil and gas sector knowledge.

Sharma is now using the dual experience to good effect. OVL evaluates 15-20 acquisition targets every year, Sharma, 55, and an avid football fan, said: “It boils down to what’s the price, and how we negotiate. And even more important, an acquisition works when everyone brings in ideas. I give the company’s board the time and space to bring in its ideas.”

This working style endears Sharma to the nearly 35,000 employees working with the country’s largest oil and gas producing company.

“He is a team leader, and he takes the team along with him,” said a director in ONGC’s board. On his part, Sharma admitted that his style of functioning costs him time, which rivals can use to their advantage. “But this has worked for me. When everyone comes on board and there are no broken hearts, the work is smoother,” Sharma said.

Will it work this time?