State-owned Oil and Natural Gas Corp (ONGC) today reported more than doubling of its net profit in March quarter as rupee depreciation helped offset a steep rise in fuel subsidy outgo.
Net profit in January-March quarter rose to Rs 5,644 crore from Rs 2,791 crore a year ago, ONGC Chairman and Managing Director Sudhir Vasudeva told reporters here.
ONGC paid Rs 14,170 crore for subsidising diesel, domestic LPG and kerosene as against Rs 12,136 crore outgo in Q4 last fiscal.
The subsidy outgo was made good by rupee depreciation - from Rs 47.95 to a US dollar in Q4 2010-11 to Rs 50.29 to a US dollar in same period of 2011-12 fiscal.
"Every rupee depreciation against US dollar, increases our topline by about Rs 1,600 crore," ONGC Director (Finance) A K Banerjee said. ONGC gets paid for both crude oil and natural gas it produces in US dollar and rupee depreciation is a bonanza for it.
But for the subsidy outgo, ONGC profits would have been higher by over Rs 8,000 crore, he said.
Upstream firms like ONGC and Oil India give discounts on crude oil and LPG they sell to refiners to make up for 39% of their losses suffered on sale of diesel and cooking gas at government controlled rates. The rest of the loss is made good by the government through cash subsidy.
Vasudeva said ONGC got $44.32 on sale of every barrel of crude oil after giving a record subsidy discount of $77.3 per barrel. "Our cost of production after the recent increase in oil cess to Rs 4,500 per tonne, is USD 44 per barrel," he said.
ONGC plans to invest Rs 121,737 crore in 12th Five Year Plan period. This fiscal it has a capex of Rs 30,432 crore as against Rs 28,276 crore of previous year. Its sales were up 22% to Rs 18,976 crore.
Vasudeva said the company paid a record Rs 44,466 crore in fuel subsidy in 2011-12, up from Rs 24,892 crore in the previous financial year. "This subsidy outgo dented out net profit by Rs 25,535 crore (for the full fiscal)," he said.
ONGC net profit in FY'12 rose 33% to Rs 25,123 crore. But for the fuel subsidy outgo, the net profit should have been over Rs 50,000 crore. Sales was up 15% to Rs 76,130 crore in 2011-12 fiscal.