New Delhi: Indian Oil Corp. Ltd (IOC) has for the second year in a row beaten Oil and Natural Gas Corp. Ltd (ONGC) to become India’s most profitable state-owned company, raising questions over calls for the explorer to subsidise retailers amid soaring petrol and diesel rates.

IOC, which has for decades been India’s biggest company by turnover, last week posted a record net profit of Rs21,346 crore in the fiscal year ended 31 March (FY 2017-18), up 12% from Rs19,106 crore in the last fiscal.

ONGC on Wednesday reported its FY18 numbers—11.4% rise in net profit to Rs19,945 crore.

Billionaire Mukesh Ambani-led Reliance Industries Ltd (RIL) retained the crown of being India’s most profitable company for the third year in a row, posting highest ever net profit of Rs36,075 crore. Tata Consultancy Services Ltd (TCS,)India’s largest software services exporter, with a net profit of Rs25,880 crore was the second most profitable company in the country.

ONGC was for long India’s most profitable company but lost the crown to private sector Reliance and TCS three years back. In fact, its profit was higher than the combined net profit of the three state-owned fuel retailers—IOC, Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) but now it is behind IOC.

For 2017-18, HPCL last week reported its highest ever net profit of Rs6,357 crore on a turnover of Rs2.43 trillion. BPCL earlier this week reported a net profit of Rs7,919 crore for the fiscal.

The sustained profitability of the refining and marketing companies has led to some questioning the rationale of asking ONGC to subsidise fuel that IOC, BPCL and HPCL sell. “Look at their profits. They don’t need any subsidy support," said a senior ONGC official.

“We are in the capital-intensive business of oil and gas exploration and production which has to be necessarily funded through internal accruals. Unlike refiners, we cannot get loans for risk E&P business," he said.

ONGC is investing Rs30,000 crore to Rs35,000 crore annually, which cannot be sustained if it is again asked to subsidise fuel, he insisted. Upstream oil producers, ONGC and Oil India Ltd had until June 2015 provided for up to 40% of the annual fuel subsidy bill. This they did this by way of providing discounts on crude sold to downstream refining and marketing companies, IOC, BPCL, and HPCL. This discount helped the retailers make good a part of the losses they incurred on selling petrol and diesel below cost.

The idea of upstream producers again subsidising fuel has been mooted after petrol and diesel prices earlier this week hit a record high of Rs78.43 per litre and Rs69.31 respectively. Rates have since marginally cooled but the threat still remains.