Financial Daily from THE HINDU group of publications
Friday, Jan 20, 2006
Financial Daily from THE HINDU group of publications Friday, Jan 20, 2006 |
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Industry & Economy
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Petroleum Subsidy may hit ONGC's Q3 profit Pratim Ranjan Bose
Kolkata , Jan 19 THANKS to a heavy subsidy burden, ONGC is set to record a drop in operating profit in the third quarter of this fiscal compared to thenet profit of Rs 3,493 crore recorded in the third quarter of 2004-05. The company expects a greater impact on profitability in the fourth quarter unless the Union Ministry of Petroleum and Natural Gas reduces the company's share of subsidy burden. "Profits from operations for the third quarter will be lower," a company official said. Sources, however, refused to say whether the drop could be compensated with income from other sources. The ONGC Chairman, Mr Subir Raha, admitted that the company's profitability was taking a beating due to the subsidy burden. ONGC recorded 44 per cent and 24 per cent profit growth respectively in the first two quarters even after footing heavy subsidy bills of Rs 2,876 crore and Rs 2,830 crore. The profit growth largely came from higher crude prices. Though crude prices witnessed a downturn beginning October last year, ONGC was asked to share a subsidy burden of Rs 2,843 crore in the third quarter too. This, coupled with lower production at the company's largest oilfield, Mumbai High, affected profitability. ONGC's Mumbai High North oilfield was ravaged in a fire on July 27. Though gas production has been restored fully, oil production will fully recover by early 2006-07. "If oil prices and the subsidy burden continue at the present level, the adverse impact on profitability will be even higher in the fourth quarter," the official said.
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