PART B
Answer any three questions
(Each question carries ten marks)
11. Answer the question that follow the case given below:
Indian Oil Corporation (IOC) planned to make a foray into foreign market by acquiring a
substantial stake of the Premier Oil in the Jalali oil field in Iran. The project was estimated to
have a recoverable oil reserve of about 20 million tons and IOC was supposed to get nearly 4
million tons.
When IOC started talking to the Iranian company for the acquisition in October 2005, oil
prices were at rock bottom ($11 per barrel) and most refining companies were closing down
due to falling margins. In fact, a lot of good oil properties in the Middle East were up for sale.
Identifying the opportunity, several developing countries made a killing by acquiring oil
equities abroad.
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IOC needed government clearance to invest abroad. The application by Indian company for
investing abroad is to be scrutinized by a committee represented by the Reserve Bank of
India, Ministry of Finance, and Ministry of Commerce.
By the time the government gave clearance for the acquisition, the oil prices had bounced
back to $ 24 per barrel. The Elf of France had virtually taken away the deal from IOC’s nose
by acquiring Premier Oil.
RBI gave IOC the approval for $20 million investment, took more than a year for clearing
because the structure for such investments were not in place.
Questions:
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