ONGC Q2 profit tumbles 30% to Rs 12,826 crore on windfall tax woes

ONGC India’s standalone net profit dived 30.1 per cent to Rs 12,826 crore in the September quarter (Q2) as the impact of the government’s windfall tax brought down its profit from Rs 18,348 crore in the same quarter in the previous year. Profit fell 15.6 per cent over the preceding June quarter when it had reported a net of Rs 15,205.85 crore.

The company’s gross billing for crude oil it produced soared 37.7 per cent to $95.49 per barrel in the quarter from $69.36 a barrel last year. Net realisation after considering windfall taxes stood at $72.2 per barrel.

India’s largest oil producer, ONGC produces over 1.26 million barrels of oil equivalent per day, contributing about 71 per cent of India’s domestic production. It's wholly owned subsidiary, ONGC Videsh (OVL) is the biggest Indian multinational, with 35 oil & gas assets in 15 countries.

Windfall impact

Crude oil prices have witnessed extreme volatility this year. This has resulted in very high prices for end consumers at petrol pumps. Countries around the world have implemented various measures to mitigate the adverse impacts on consumers. “Windfall tax” is one of the measures that helps in dealing with the situation.

The government is reviewing windfall taxes every fortnight. This is expected to reduce the overall realisation of the company going forward. Additionally, low volume growth on a sustainable basis remains a key concern for the company and needs to be addressed in order to create value for shareholders, ICICI Securities said in a note.

EBITDA during the quarter decreased 27.5 per cent quarter on quarter to Rs 18,812 crore. ONGC reported its gas realisation remained unchanged sequentially at $6.1 per MMBTU. ONGC said its board approved an interim dividend of 135 per cent or Rs 6.75 on each equity share of Rs 5. The company has fixed November 22 as the date for distribution of dividend.