ONGC first quarter net down 34% on high fuel subsidy payout

State-owned Oil and Natural Gas Corp (ONGC) today reported a 34 per cent drop in the June quarter net profit

State-owned Oil and Natural Gas Corp (ONGC) today reported a 34 per cent drop in the June quarter net profit,the fourth straight quarterly decline,on back of high fuel subsidy payout.

Net profit in April-June fell 33.92 per cent to Rs 4,015.98 crore from Rs 6,077.70 crore in the same period a year ago,ONGC director (finance) AK Banerjee told reporters here.

ONGC sells crude to state refiners at a discount to partly compensate them for selling diesel and cooking fuel below cost.

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It paid 2.2 per cent more subsidy at Rs 12,622 crore in April-June despite fuel retailers revenue losses on diesel,cooking gas (LPG) and kerosene declining 43 per cent to Rs 25,579 crore.

The subsidy payout in first quarter ended June 30 compared to Rs 12,346 crore in same quarter last fiscal.

Banerjee said the subsidy payout lowered net profit by Rs 7,131 crore which otherwise would have been invested in exploring for more oil and gas within the country and acquiring assets abroad.

Subsidy payments are likely to result in reduction of ONGCs cash balance. ONGCs net cash declined 16 per cent to Rs 13,200 crore on March 31 from Rs 15,500 crore on April 1,2012.

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Subsidy payments will drop further this year as the company continues to sell crude at a discount and sets aside Rs 1,100 crore for workers retirement benefits.

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