The Hindu Business Line : ONGC net rises

Surviving subsidy
Higher subsidy burden hits net by Rs 3,102 cr
Turnover up on higher price realisations
Crude oil production at 6.48 million tonnes
Natural gas production rises 1.4 per cent
Weakening rupee against dollar helps boost revenue

New Delhi , July 26

Despite a heavy subsidy burden, ONGC has reported 24 per cent increase in net profit for the first quarter of the current fiscal.

The company's net profit rose to Rs 4,119 crore from Rs 3,319 crore in the corresponding previous period.

The increased burden of subsidy sharing had a negative impact of Rs 3,102 crore (Rs 1,748 crore) on the net profit figure.

Bonus issue

The company also announced that its board has approved issue of bonus shares in the ratio of 1:2 - one bonus share for two equity shares held - by capitalisation of reserves.

It will seek shareholder approval for the bonus issue at the AGM.

On whether the decision was on the basis of any directive from the Finance Ministry, company sources told Business Line that it was not.

According to them, the board deliberated on a non-agenda item of issue of bonus shares in the golden jubilee year of ONGC.

Subsidy burden

ONGC earned net profit for the period under review after providing for tax liability of Rs 2,176 crore and subsidy burden of Rs 5,120 crore (Rs 2,876 crore).

The subsidy is given to the oil marketing companies in the form of discounts on crude oil, LPG and SKO to offset their under-realisation on sale of kerosene through the public distribution system (PDS).

In 2004-05, the company's total subsidy burden amounted to Rs 4,104 crore, which rose to Rs 11,956 crore in 2005-06.

Price realisation

Turnover stood at Rs 14,677 crore (Rs 10,954 crore), up 34 per cent, mainly due to higher price realisation from crude oil, natural gas and naphtha, and a marginal increase in sales, the company said.

According to Mr R.S. Sharma, Chairman and Managing Director, better crude and gas price realisations helped the company post higher net profit.

The net price realisation for crude was $45 a barrel ($36.55).

Net price realisation refers to the value of ONGC's crude after discounts to State-owned refiners.

ONGC shares the cost of subsidies on kerosene, diesel, petrol and LPG with other State-owned oil firms in accordance with a Government directive.

"The rupee weakening against the dollar also helped our revenue," Mr Sharma added.

Commenting on the first-quarter results, the Chairman said that with policy support of the administrative Ministry, ONGC is expected to scale new highs in corporate performance.

Production

Crude oil production remained flat at 6.48 million tonnes.

Natural gas production went up 1.4 per cent to 5.782 billion cubic metres (BCM) from 5.704 BCM earlier.

The company reported 3.5 per cent increase in net sales of natural gas to 4.741 BCM (4.581 BCM).

The ONGC scrip gained Rs 44.60 from the previous close of Rs 1,093.65 to close at Rs 1,138.25 on the Bombay Stock Exchange on Wednesday.