The state owned oil trader, Oil and Natural Gas Corporation (ONGC) is expected to trail off the list of the biggest profit- making companies of India. Replacing its position apparently, Reliance Industries Limited (RIL) seems to be topping the charts with a net profit of Rs 20,286 crore in 2010-11.
ONGC had reported a net profit of Rs. 16,133 crore for the first three quarters of 2010-11 and as the oil subsidy burden is believed to increase by Rs. 3,832 crore, the company"s fourth quarter net profit for 2010-11 may knock down by Rs. 2,000 crore approximately. Also, the government plans to sell five percent stake in the public offer of ONGC coming this July thus the overall market capital of the company is likely to be affected.
ONGC, in the last financial year, failed to contribute Rs. 21,060 crore required to compensate the losses of oil marketing companies (OMCs). When OMCs incurred higher losses on subsidized sale of diesel, kerosene oil and LPG Gas, the government decided to shift this burden on upstream Oil companies like ONGC and Oil India Ltd.
Though the results for the fourth quarter of 2010-11 are yet to be announced, ONGC expects net realization of $55-56 per barrel on crude oil, which is much lower as compared to the second and third quarter realizations of $62.75 and $64.79 respectively. This along with the increased subsidy burden will make things more challenging.