Subsidies pull down ONGC net

State-run ONGC Ltd has posted a 34 per cent fall in net profit for the first quarter of FY14 at Rs 4,016 crore, down from Rs 6,078 crore in the year-ago period. The company ascribed the drop in profit to dwindling sales revenue and swelling subsidy. The oil major’s sales revenue for the first quarter fell 4.3 per cent to Rs 19,283 crore, compared to Rs 20,149 crore during the first quarter of FY13.

“Our sales revenue has come down by Rs 866 crore, while subsidy burden has also increased by 2.24 per cent. Apart from this, our operating expenditure has gone up and we also included a one-time charge towards employee pension benefits,” said A K Banerjee, director (finance).

The under-recovery for the April-June quarter of the current financial year rose to Rs 12,622 crore from Rs 12,346 crore in the year-ago period. The impact of under recovery on net profit stood at Rs 7,131 crore for the quarter under review.

“Subsidy had a huge impact in our cash balance. While we started 2012-13 with Rs 15,500 crore, it came down to Rs 13,200 crore during the beginning of this financial year. The average crude oil price for the first quarter was around $102, but our net realisation was just $40.17 per barrel after subsidy cuts,” added Banerjee. The net realisation for the first quarter of the last financial year was $45.91 a barrel.

Deepwater blocks for sale
ONGC said on Monday it was in talks with global companies such as Shell and ConocoPhillips for selling its stake in deepwater blocks.

When asked about tie-ups, Banerjee said the company was in talks with the two companies for stake sale in the Krishna-Godavari basin. “Talks are still at its initial stage, but we are planning to have a tie-up with them soon.”