The Hindu Business Line : ONGC net dips 6.4% in Q3 on higher subsidy bill, rupee impact

New Delhi, Jan 21 Higher subsidy bill and rupee appreciation have made a dent on ONGC’s profits for the third quarter of the current financial year (2007-08). The oil and gas exploration major on Monday reported a 6.4 per cent dip in net profit for the third quarter at Rs 4,367 crore, down from Rs 4,668 crore in same quarter last year. The decline was despite selling crude oil at a high price of $91.19 a barrel (before subsidy payout).

Speaking to presspersons soon after the board meeting, the ONGC Chairman and Managing Director, Mr R.S. Sharma, said, “We had paid Rs 6,080 crore towards subsidising petrol, diesel, domestic LPG and PDS kerosene in October-December quarter as against Rs 2,204 crore a year ago.” The company’s subsidy payout went up almost three times.

Though net realisation on crude sale (after subsidy payout) in dollar terms was $54.52 a barrel during the quarter, after factoring in the 12.23 per cent rise in rupee, it has slipped to Rs 2,151 per barrel against Rs 2,288. In the third quarter of last year, when ONGC got $50.87 a barrel after a subsidy payout of $11.27 a barrel, one dollar was equal to Rs 44.97, which today is Rs 39.47.

For the third quarter, the company’s sales were down 2.6 per cent to Rs 15,218 crore. ONGCs shares at BSE on Monday closed at Rs 1,114.05.

Mr Sharma said ONGC was being made to pay royalty to States on crude oil produced at gross realisation and in effect, it should be calculated at price realised after subsidy payout. “The excess royalty payment in October-December 2007 was Rs 422 crore,” he said.

While the company’s sales revenue for nine months of 2007-08 were at Rs 44,409 crore (Rs 44,454 crore), it posted a 8.6 per cent rise in net profit to Rs 14,075 crore after subsidy payout of Rs 13,528 crore.

During the third quarter ONGC made nine discoveries -- four new prospects and five new pool discoveries in earlier established fields. During the nine months period, ONGC has made 19 discoveries - nine from new prospects and five from new pool. The company’s crude oil production was at 6.62 million tonne in the quarter under review and 19.5 million tonne during the nine months period.

Mr Sharma said ONGC is investing about Rs 16,000 crore in exploration and production during the current fiscal, up from Rs 13,000 crore in the previous year. “Next year, this would go up to Rs 18,000 crore,” he said.

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