ONGC profit down 5% at Rs 6,741.41 cr;1st fall in 3 quarters

ONGC profit down 5% at Rs 6,741.41 cr;1st fall in 3 quarters

State-owned Oil and Natural Gas Corp (ONGC) today reported its first decline in net profit in three quarters as a sharp rise in fuel subsidy output offset one-time gains it made from Cairn India's Rajasthan oilfields.

Net profit in October-December quarter at Rs 6,741.41 crore was 4.8 per cent lower than Rs 7,083.23 crore a year ago, the company said in a statement here.

ONGC said it received Rs 3,142 crore from Cairn India for royalties paid on output from the Rajasthan oilfields. This payment came after the royalty ONGC pays not just on its 30 per cent stake but also 70 per cent interest of Cairn India on crude oil produced from prolific Rajasthan block is now being treated as cost recoverable.

It had paid the levy since output started in August 2009.Cairn India does not pay royalty on its 70 per cent interest and prior to its takeover by London-based mining group Vedanta Resources, it considered royalty paid by ONGC was not recoverable from revenues earned from oil sales. But post the Vedanta deal, Cairn India treats royalty as a cost recoverable item like other taxes.

"As a result, an income of Rs 3,142 crore received from Cairn India towards royalty paid for the period August 2009 to September 2011 has been disclosed as an exceptional item," ONGC said.

Further, for the period October to December 2011, an amount of Rs 627 crore has been accounted as receivable.

ONGC paid Rs 12,536 crore in fuel subsidy in Q3, nearly three fold increase from Rs 4,222 crore in the same period the previous fiscal.

The subsidy payout lowered the company's net profit by Rs 7,172 crore, it said.
Upstream firms like ONGC meet a portion of the revenue that retailers lose on selling diesel, domestic LPG and kerosene at government controlled rates. This year the upstream subsidy contribution has been fixed at 38 per cent, up from previous 33.33 per cent.

The energy explorer fell 1.1 per cent to Rs 283.20 at the close of trading on the Bombay Stock Exchange (BSE), the most in a week. The stock had gained 10 per cent this year, compared with a 15 per cent increase in the benchmark Sensex.

ONGC said sales dropped 2.4 per cent to Rs 18,199 crore in Q3.It got USD 111.73 per barrel for crude oil but made a net realisation of USD 44.96 a barrel after giving subsidy discounts to retailers Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum. This was lower than net realisation of USD 64.79 a barrel.

ONGC said its board of directors has declared an interim dividend of Rs 6.25 per share (125 per cent) amounting to Rs 5,347.18 crore.