The company, however, has been paying off its loans and its borrowings stood at ₹13,994.91 crore as of September 2018, down from ₹25,592.21 crore in March 2018
It also announced a share buyback of around ₹4,022 crore in December
The slump in cash and bank balances comes on the back of the Centre's policy of pushing public sector enterprises to acquire stakes in other PSUs, give out more dividends or go for share buybacks to meet its own fiscal deficit targets, analysts said.
The policy of trying to meet fiscal deficit targets by means of the finances of state-run companies has severely hurt the country's largest oil explorer.
As per the company's financial statement for the quarter ended September 2018, the company's "cash and cash equivalents" were ₹7.71 crore and "other bank balances" stood at ₹159.71 crore, thereby taking the total cash reserves to ₹167.42 crore. In the end of the financial year 2017-2018, the ONGC reported a cash reserve of ₹2,385.98 crore.
A major blow to the company's financials came with its acquisition of Hindustan Petroleum Corporation Ltd (HPCL) last year for ₹36,915 crore. This acquisition too was part of the government's efforts to meet its disinvestment targets. Although the ONGC funded part of the acquisition through its cash reserves, it had also borrowed over ₹20,000 crore.
The company, however, has been paying off its loans and its borrowings stood at ₹13,994.91 crore as of September 2018, down from ₹25,592.21 crore in March 2018.
As its cash reserves plummetted to ₹167 crore, markets experts say it is a worrying situation because the ideal cash reserve for oil explorers should be over ₹5,000 crore, given the risk factor in the work and the need for working capital.
Along with the acquisition, payment of dividends and the announced share buyback by the company would further hurt the oil major. The ONGC paid a dividend of ₹8,470 crore in 2017-18, including dividend distribution tax, compared to ₹7,764 crore in 2016-17.
It also announced a share buyback of around ₹4,022 crore in December.