ONGC Net Up By 28% Due To Other Income and Rupee Decline

Exploration major Oil and Natural Gas Corporation (ONGC) earned Rs 7126 crore Profit After Tax (PAT) in Q3 as against Rs 5563 crore earned during corresponding quarter last year, a robust increase of 28%. This increase is mainly due to an increase in other income and rupee depreciation viz-a-viz last year. At the same time, the company’s topline declined marginally by 1.2 % to Rs 20833 crore owing to provisions made in the past.
The biggest concern for the company is the pace at which production from the ageing fields are declining. During this quarter also, crude production remained stagnant at 6.106 MMT, while natural gas production declined by around 1% to 6.28 5BCM.
During Q3, the company has given under recovery discount (shouldered subsidy burden) of Rs 13764 crore while it was at Rs 12433 crore during corresponding quarter last year, which is massive 11% more than quarter ending December, 2012. “We expect that during FY14 total subsidy burden should be in the tune of around Rs 53-54000 crore while it was Rs 49000 crore in the last fiscal,” informed Sudhir Vasudeva, CMD, ONGC.
While decline in rupee against the dollar has turned positive for the company, despite a decline in the net realization in USD terms from USD 47.94/bbl to USD 45.98/bbl, its net realisation in terms of rupee increased from Rs 2595/bbl to Rs 2852/bbl in the third quarter, an increase of 10%.
An important fact to note is that the company gives under recovery discount to downstream companies in dollar term and during Q3 the dollar was averaged at Rs 62.03/USD while it was at Rs 54.14/USD in quarter ending December 2012. “This has resulted in the positive income for the company, otherwise in dollar term we have posted loss,” informs A K Banerjee, Director Finance, ONGC.
On the gas pricing issue,  Sudhir Vasudeva said “Currently the company is producing gas in the range of 65MMT but we are gearing for more marginal fields to come up for production as with new hither pricing formula all these field are now feasible to produce gas”.
Considering this, real spurt in production would come from FY17 and production would touch 100 MMT as additional production would come from eastern and southern coast. Meanwhile, the company’s board hasn’t yet decided about the dividend and will take a call in March. Till now the company has announced 100% interim dividend.