Indian Oil Corporation: Vertical Specialization to Vertical Integration

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Indian Oil Corporation: Vertical Specialization to Vertical Integration

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Publication Date:
September 21, 2016

Industry:
Energy & Natural Resources

Source:
Ivey Publishing

Indian Oil Corporation Limited was a large public sector company operating in the downstream segment of the highly regulated oil and natural gas industry in India. It made large investments in the segment-specific assets in refining and distributing petroleum products. In fiscal year 2014/15, the annual turnover of Indian Oil Corporation Limited was ₹4,507 billion (US$73.7 billion), and its net profit was ₹52 billion. The strategic positioning of the company was heavily influenced by its social agenda and supported by the Indian government. After the liberalization of the Indian economy, the company was faced with serious competition from the private sector, and had limited access to the upstream segment. In 2015, Indian Oil Corporation Limited attempted to vertically integrate in order to become an integrated energy company. The senior management team evaluated the challenges and strategic choices available to Indian Oil Corporation Limited in terms of integration and exploration, brownfield investment in the petrochemicals sector, and modernization of refineries. The key question before the team was how to distribute Indian Oil Corporation Limited’s resources among these three strategic choices.

Sushil Kumar is affiliated with Indian Institute of Management Raipur. Satyasiba Das is affiliated with Indian Institute of Management Raipur.

Copyright © 2021 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

Indian Oil Corporation: Vertical Specialization to Vertical Integration

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