ONGC expects a marginal increase in profits for FY11

ONGC expects a marginal increase in profits for FY11
State owned oil and gas company, Oil & Natural Gas Corporation (ONGC) is expected to report a marginal increase in net profit for FY11, due to increase in subsidy burden. Despite increase in oil and gas prices, ONGC expects a net profit of Rs 17,000 crore to Rs 18,000 crore in 2010-11, slightly up from Rs 16,767.55 crore in the previous year, due to increase in subsidy to be paid to oil marketing companies.

Commenting on this, acting chairman AK Hazarika said, " ONGC will bear about Rs 3,832 crore more towards upstream discount which will dent company's profit by 2,000 crore. But our net profit in 2010-11 will be more than the last year."

Commenting on the subsidy burden for ONGC, Hazarika said, "ONGC's share was 24,892.43. This will now go up by Rs 3,832 crore." The government has asked upstream oil companies, such as ONGC and Oil India, to bear 38.5 per cent fuel subsidy burden which is more than one-third subsidy burden according to Hazarika.

The total subsidy amount for 2010-11 is about Rs 78,000 crore. The finance ministry has paid a cash compensation of only Rs 41,000 crore in 2010-11 against the oil ministry's demand for 47,000 crore, leaving a gap of Rs 6,000 crore, which is equitably distributed among both upstream and downstream companies so that they would make some decent profit, an oil ministry official said requesting anonymity.

Read more about: ongc, bse, oil and gas, nse
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