BUSINESS

ONGC asked to pay interim

Special Correspondent

NEW DELHI: Oil and Natural Gas Corporation (ONGC) has been asked by the Union Government to pay interim dividend for the 2005-06 fiscal. The company's board may consider the matter when it meets next week. "We have an advisory for payment of interim dividend. Our board will meet soon to decide on the issue," ONGC Chairman and Managing Director Subir Raha informed media persons.

As 74 per cent owner, the Government would benefit the most out of any ONGC dividend payout. ONGC is among the country's top most dividend payers (more than 30 per cent of its net profit every year is paid as dividend to shareholders).

According to Mr. Raha, the Government had earlier advised it to pay a special dividend. However, since there is no provision for special dividend in Company Law and owing to the company's requirement of funds for overseas acquisitions and cash-outflow due to accident at an oil facility in its prime Mumbai High fields, the request was turned down by the board.

Asked if the Government had asked ONGC to go in for a stock split, he said: "we have no advice for a stock split".

Income tax notice

Mr. Raha admitted that ONGC had received a notice from the tax authorities for payment of about Rs. 1,000 crore towards income tax. The tax authorities have asked the public sector firm to pay its tax on the price realised for sale of its crude before offering discount. ONGC has been paying tax only on the net realisation after discounting the LPG and kerosene subsidy payout it has made to refiners (which buy its crude oil) by way of a trade discount in the price. But income tax authorities now want the company to pay tax on price before the discount.

The income-tax department has claimed that ONGC's tax returns should be billed on the invoice value and not on the discounted rate at which the company sells crude to refining and marketing companies.