New Delhi: Oil and Natural Gas Corp. (ONGC), the largest hydrocarbon exploration company in the country, said net profit for the first quarter ended June, rose 12% to Rs4,611 crore from a year-ago period of Rs4,119 crore, as the company’s share in the subsidy burdendeclined.
But an appreciating rupee, that rose as much as 9.3%, cut the exploration major’s turnover by 6% to Rs13,728 crore from Rs14,677 crore in the same period. There was also a marginal reduction in production.
“The subsidy burden has been equitable, which in turn has helped our numbers. However, the rupee appreciation has affected the results,” said R.S. Sharma, chairman and managing director, ONGC.
ONGC produces 685 million tonne (mt) of crude and 375 billion cu. mt of gas, from its 115 fields.
ONGC’s share of subsidies to oil marketing companies such as Indian Oil Corp. (IOC), Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) amounted to Rs3,649 crore during this year’s first quarter (April-June), 29% less than what was paid during the corresponding period last year.
The government-owned oil marketing companies are losing Rs195 crore daily on account of selling petrol, diesel, domestic cooking gas and kerosene below the cost price.
The rupee appreciation hit the company’s revenue and net profit by Rs1,500 crore and Rs900 crore, respectively.
Commenting on this, Sharma said, “We have a natural hedge. When the rupee appreciates, the under recoveries of the downstream companies (IOC, HPCL, BPCL) are lower. If their under recoveries are lower, then our share in the subsidy burden also reduces.”
Prayesh Jain, an analyst at stock market research firm India Infoline said, “Except for the decline in sales, the other indicators have been positive for ONGC. The depreciation claimed by the company is also lower this year.”
The ONGC stock rose by 2.05% on the Bombay Stock Exchange to close at Rs934.25. The BSE index fell by 0.61% to close at 15,699.3 points.
In another development, on Wednesday, Lakshmi N. Mittal said he plans to transfer the Kazakhstan oil assets that he had acquired from Russia’s Lukoil to his joint venture firm with ONGC Videsh Ltd—ONGC Mittal Energy Ltd (Omel).
“We are in discussion and I think it will be transferred to Omel,” Mittal said.