The Hindu Business Line : ONGC Q1 net up 12%, turnover dips 6%

New Delhi, July 25 Better cost management and lower subsidy burden help push ONGC’s net profit up by 12 per cent during the first quarter of 2007-08. However, the company’s turnover was down by 6 per cent due to rupee appreciation by 9.3 per cent and marginal reduction in production.

The company reported a net profit of Rs 4,611 crore (up from Rs 4,119 crore) and a turnover of Rs 13,728 crore (down from Rs 14,677 crore). Speaking to newspersons after the board meeting, Mr R.S. Sharma, Chairman and Managing Director, ONGC, said, “The increase in profit is due to reduction in subsidy discounts for the quarter, and lower costs. In the current quarter, recouped costs also are lower by Rs 476 crore at Rs 1,755 crore.”

Explaining the impact of rupee appreciation, he said, “It is a natural hedge because as the rupee appreciates, our subsidy payments come down. To the extent the rupee rises, the under-recoveries of oil marketing companies will reduce, as will our subsidy burden.”

Subsidies

The subsidies to oil marketing companies on kerosene sold under public distribution system and domestic liquefied petroleum gas and other products in the form of discount on crude oil, LPG, and kerosene for the quarter amounted to Rs 3,649 crore on provisional basis.

However, the gain in rupee also reduced the company’s revenues by Rs 1,500 crore and profit by Rs 900 crore during the quarter. During the quarter under review, rupee appreciated by 9.3 per cent compared to the corresponding quarter last fiscal. The company bills its customers in dollars and the stronger rupee that has gained about 9.3 per cent this year squeezed its revenues and profits.

Output

The company gave a $21-a-barrel discount on crude it sold to the refiners to realise $50.21 per barrel during the quarter when average global market price was $71.77 per barrel. ONGC produced 6.88 million tonnes of crude oil in the quarter compared with 6.93 million tonnes a year ago, the company said. Output fell because of a problem at a processing platform in the country’s west, the company said.

ONGC has made five discoveries during the quarter with two bearing oil and the rest having natural gas, the company said.

It has discovered gas in MDW-4A well in Mahanadi basin and in Uppidi-1 well in Krishna Godavari basin on the east coast and found oil at two places in Assam. ONGC also found gas in Kunjaban-2 well in North Agartala.

ONGC shares at BSE closed at Rs 934.25 after opening at Rs 915.