The Hindu Business Line : Budget levies will impact ONGC bottomline: Raha

Mr Hari S Bhartia, Co Chairman & MD, Jubilant Organosys Ltd, and Mr Subir Raha, CMD, ONGC, at a conference in the Capital on Wednesday. — Kamal Narang

New Delhi , July 14

THE recent Budget announcements have dented Oil and Natural Gas Corporation's (ONGC) bottomline by over Rs 400 crore during 2004-05. The Budget imposed a 10 per cent service tax on survey and exploration besides a 2 per cent cess on all direct and indirect taxes.

"The service tax and education cess will result in ONGC having to account for a sizeable increase in its tax pay-outs.

"We estimate it will be over Rs 400 crore this fiscal," the ONGC Chairman and Managing Director, Mr Subir Raha, told presspersons here on Tuesday on the sidelines of a lecture on hydrocarbons organised by the Confederation of Indian Industry.

ONGC may pay up to Rs 300 crore towards the 10 per cent service tax levy for outsourcing most of the offshore exploration survey works. Further, the 2 per cent education cess will result in an additional outgo of Rs 96 crore, while the liability for dividend distribution tax would increase by Rs 9 crore.

According to Mr Raha, the company's earnings may be further hit if the Government chooses to repeat its last year's action of making it pay for a part of the LPG and kerosene subsidy borne by the public sector oil marketing companies.

"Our profits slid last fiscal (for having to bear the subsidies) while the refining companies saw a handsome growth in bottomline,'' he said.

Pointing to the rise in profits of downstream companies such as Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd, he said, "You cannot run business on donations."

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