New Delhi, July 12
OIL and Natural Gas Corporation (ONGC), which has been providing interest-free loans to its subsidiary ONGC Videsh Ltd (OVL), is now weighing the option of doing way with this provision.
According to official sources, ONGC is looking at an arm's length relationship with OVL. However, before taking a final decision, the parent company is examining the aspects of inter-corporate loans under the existing laws. The move is to bring in good corporate governance practices, officials said.
They further said that it would be ensured that the move does not impact the top line or bottom line of OVL.
OVL is the overseas arm of ONGC. During 2004-05, OVL repaid Rs 653 crore of loan and advances to ONGC. The finances for the operations of OVL are provided by ONGC in form of loans, interest-free advance and equity. OVL today has 12 overseas assets and is actively seeking more opportunities across the world. With a long-term target of acquiring 60 MMTPA of equity oil and gas overseas by 2025, OVL is currently working towards a goal of 20 MMTPA by 2010. In fact, its efforts have been supported by the Government, which has allowed OVL exclusive empowerment by giving it single-window clearance for overseas upstream projects irrespective of investments involved.
For 2004-05, OVL has reported a 78 per cent jump in net profit to Rs 761 crore compared to Rs 428 crore in the previous fiscal. The OVL board also recommended a maiden dividend amounting to Rs 105 crore, 35 per cent of its paid-up equity share capital of Rs 300 crore.
The company's consolidated gross revenue increased 72 per cent to Rs 6,026 crore from Rs 3,502 crore in 2003-04. During 2004-05, OVL repaid in full the bank loan of Rs 248 crore for its Vietnam project. OVL's consolidated oil and gas production overseas rose 31 per cent to 5.063 million tonnes from 3.868 million tonnes a year ago. Of this, gas and condensate production in Vietnam increased to 1.349 billion cubic meter and 0.039 million tonnes during 2004-05.