An over 115 per cent jump in subsidy burden has pulled down ONGC’s net profit by 31.8 per cent in the quarter ended September 30. Net profit for the company stood at Rs 5,897 crore against Rs 8,642 crore in the same quarter last year. Revenue for the quarter dipped 12.5 per cent to Rs 19,853 crore.
Announcing the results, company chairman Sudhir Vasudeva said, “The sharp increase in subsidy burden is the single reason behind the drop in profits”.
Under the government’s subsidy burden sharing mechanism, the company contributed Rs 12,330 crore towards partly compensating revenue loss of oil marketing companies on diesel, kerosene and domestic LPG. In the last year’s corresponding quarter, the company had contributed Rs 5,713 crore. The subsidy outgo has pulled down the company’s net profit by Rs 7,103 crore in the quarter.
The government owned company realized $46.80 on every barrel of crude oil after giving discount of $63.05 to OMCs. Last year same quarter, it had realized $82.62 per barrel after discount of $33.24 per barrel.
Vasudeva said the low net realisation is a matter of concern for the company since operating cost is going up by 7 per cent every year. “We are barely hand to mouth and not generating surplus for the company”.
The company’s crude oil output dipped 8.2 per cent to 5.103 million tonnes in the second quarter while gas output rose 1.2 per cent to 5,898 million standard cubic metres. ONGC notified 14 new oil and gas discoveries in the first half of the fiscal year.
Capex to eat into ONGC’s cash surplus
Little over a fortnight after Prime Minister Manmohan Singh asked PSU chiefs to speed up investments, country’s biggest exploration firm ONGC today said it will have to eat into its surpluses to fund capex plans. “In order to fund this year’s capex of Rs 33,577 crore the company will have to dip into its cash surplus. The surplus stood at Rs 12,000 crore in the beginning of the fiscal but it may come down to around Rs 4,000 crore by year-end,” said A K Banerjee, director (Finance) at the government owned company. Chairman Sudhir Vasudeva said it is clearly evident that notion of ONGC sitting on huge surplus is a myth. “The cash surplus can be wiped out in no time. We need a price realisation in excess of $60 per barrel to sustain the business”, he said. The company's next year capex budget is Rs 34,010 crore.
