ONGC flat profit stumps Street

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Contrary to the market street expectations, Oil and Natural Gas Corporation (ONGC) has posted a modest 0.87 per cent rise in net profit at Rs 4,174 crore during the July-September quarter. During the period under review, India's main crude oil exploration and production company's income was up 10.8 per cent at Rs 15,008 crore.

"The hit was on account of abnormal bookings of expenditure during the quarter," chairman and managing director of the company RS Sharma said.

These include Rs 485 crore cost incurred due to the floods at Hazira, Rs 305 crore staff expenditure (payment of arrears and golden jubilee expenses) and Rs 365 crore advance provisioning for non-completion of minimum work programme on certain oil blocks.

"If you take out these three expenses, the next quarter should be better," added Sharma. Analysts, however, disagreed, with some expecting a "flat to declining" performance in the next quarter.

"Realisation on sale of crude and net of subsidy are expected to remain flat while exploration cost is expected to remain high throughout the current quarter," said an analyst, tracking the company, and added: "There may be some respite in the January-March period if oil prices firm up."

The subsidy payout during the quarter was to the tune of Rs 5,032 crore and there may be some reduction of this burden. The results were announced after close of trading.

While ONGC's crude production during the quarter was up at 6.39 million tonne against 5.81 million tonne in the same period last year, natural gas production was down to 5.18 billion cubic metres (bcm) against 5.50 bcm last year, due to the shutdown of the Hazira gas processing plant for 10 days.