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Mr R.S. Sharma, Chairman and Managing Director, ONGC, announcing the company's second quarter results in the Capital on Thursday. - Kamal Narang

Our Bureau

New Delhi, Oct. 30 ONGC has reported a 6 per cent dip in net profit and a 13 per cent increase in sales revenue for the second quarter of this year over the same period last year.

While surge in global crude prices and weakening of rupee were expected to drive company’s financials, ONGC’s performance was depressed due to excessive subsidy burden that it had to shoulder to partially cushion the impact of revenue loss suffered by public sector oil marketing companies (OMCs).

ONGC gives discounts to OMCs on crude sale. The subsidy discount increased more than three times during the quarter to Rs 12,663 crore (Rs 3,799 crore). “But for the discounts, ONGC’s net profit would have been higher by Rs 7,066 crore,” Mr R.S. Sharma, Chairman and Managing Director, ONGC said.

Speaking to newspersons after the board meeting, Mr Sharma said, “I am in a dilemma when addressing the issue of subsidy to investors. As per my understanding there has been no subsidy sharing mechanism followed for the second quarter…The ad hoc subsidy sharing mechanism has to be done away with.”

ONGC’s gross realisation on crude oil sales during the quarter was $119.39 a barrel, but after giving a discount of $72.67 a barrel to the refiners the net realisation was $ 46.72 per barrel ($56.14 a barrel).

When the crude oil was at its peak at $147.27 a barrel in July, ONGC’s crude was at $137.93 during the month.

The net profit for the first half of the current fiscal went up by 18 per cent to Rs 11,445 crore, while sales were up 29 per cent to Rs 37,614 crore. The subsidies outgo in first half of the fiscal went up to Rs 22,474 crore.

During the quarter, the company’s crude oil production was marginally down at 6.853 million tonnes and gas output stood at 6.43 billion cubic metres. ONGC shares closed higher at Rs 648.35 (Rs 644.25) on Wednesday.

More Stories on : Financial Performance | Petroleum | Oil & Natural Gas Corporation Ltd

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