ONGC Q2 net jumps 565% to Rs 18,348 cr; firm to pay Rs 5.5 interim dividend

Public sector behemoth Oil and Natural Gas Corporation (ONGC) on Friday reported 565% surge in standalone net profit at Rs 18,348 crore for the quarter ending September 30, 2021 as it made a one-time tax gain on opting for a lower rate regime. State-owned ONGC reported net profit of Rs 2,758 crore in the year-ago period. 

Revenue rose 44% to Rs 24,353 crore as compared to Rs 16,916 crore in Q2FY21. 

The company also declared interim dividend of Rs 5.5 per share. The total payout on this account will be Rs 6,919 crore. The record date for distribution of dividend has been fixed for November 23, 2021.

On Friday, the company's scrip on NSE closed nearly 1% higher at Rs 154.80. 

"The production of crude oil and gas has declined during current year mainly due to restrictive conditions created by cyclone Tauktae and due to Covid impact," ONGC said in a statement. 

ONGC said the company has an option to pay corporate income tax at the rate of 22 per cent plus applicable surcharge and cess (lower rate) as against the earlier rate of 30 per cent plus applicable surcharge and cess, subject to certain conditions.

"Considering all the provisions under said section 115BAA of the Income Tax Act, 1961, during the quarter the company has decided to avail the option of lower rate with effect from the financial year 2020-21.

"Accordingly, the company has recognized provision for tax expenses in the financial results for the quarter and half year ended September 30, 2021, and re-measured its net Deferred Tax liabilities on the basis of the provision prescribed in the said section," it said.

The net impact due to availing of the option has resulted in a decrease in deferred tax by Rs 8,541 crore and a decrease in current tax by Rs 1,304 crore (including relating to earlier years).

Also aiding the profit was a surge in oil prices, it added.

ONGC got USD 69.36 for every barrel of crude oil it produced from fields under its operation as against USD 41.38 per barrel realisation in July-September 2020.

ONGC produced almost 4 per cent less crude oil at 5.471 million tonne while gas output fell 7 per cent to 5.467 billion cubic meters.

Also, delay in mobilization of mobile processing unit to WO-16 Cluster project in the western offshore also impacted production from this field. The board approved interim dividend of 110 per cent (Rs 5.50 on each equity share of Rs 5). Total payout on this account will be Rs 6,919 crore.