Rupee depreciation helps offset a steep rise in fuel subsidy outgo

Helped by the sharp rupee depreciation that offset the steep subsidy bill, Oil and Natural Gas Corporation (ONGC), on Tuesday, posted more than doubling of its net profit in the March quarter at Rs.5,644 crore.

Briefing journalists here, Chairman and Managing Director Sudhir Vasudeva said the net profit in the January-March quarter rose to Rs.5,644 crore from Rs.2,791 crore a year ago. ONGC paid Rs.14,170 crore for subsidising diesel, domestic LPG and kerosene as against Rs.12,136 crore out go in Q4 in the previous fiscal.

The subsidy out go was made good by rupee depreciation from Rs.47.95 in Q4 2010-11 to Rs.50.29 to a U.S. dollar in 2011-12. Every rupee depreciation against the U.S. dollar increases ONGC's top line by about Rs.1,600 crore.

But for the subsidy outgo, ONGC profits would have been higher by over Rs.8,000 crore, he added.

Mr. Vasudeva said ONGC got $44.32 on sale of every barrel of crude oil. ONGC plans to invest Rs.121,737 crore in the XII Plan. This fiscal, it has a capex of Rs.30,432 crore. Its sales were up 22 per cent at Rs.18,976 crore.

The company paid a record Rs.44,466 crore in fuel subsidy in 2011-12, up from Rs.24,892 crore.

The net profit in 2011-12 rose 33 per cent to Rs.25,123 crore. But for the fuel subsidy outgo, the net profit should have been over Rs.50,000 crore. Sales were up 15 per cent at Rs.76,130 crore in 2011-12.

Keywords: ONGCQ4 earnings