Despite paying higher subsidies to refiners, net profits of the company exceeded their targets. ONGC paid double the oil subsidy to refiners as compared to last year to protect consumers from the rising oil prices.

“ONGC has exceeded MoU targets resulting in increase in net profit inspite of higher subsidy payments," Chairman and Managing Director A K Hazarika said after reviewing the quarterly result.

ONGC's sales surged by 18.7% from Rs 13,710 crore to Rs 16,268 crore in first quarter.

In its 221st board meeting on Thursday, company announced 118.4% rise in its subsidy burden to Rs 12,046 crore during the quarter ended on June 2011.

ONGC supplies oil to state refiners at a discount to provide subsidies to consumer. It supplied oil at only $48.76 a barrel in the quarter, while crude is trading in the range of $100 - $120 a barrel.

The government increased prices of diesel, kerosene and cooking fuel on June 25 for the first time in a year to reduce losses at state refiners.

"The government's decision should mean better profitability in the next few quarters," ONGC Chairman A.K. Hazarika said in New Delhi yesterday. "We hope the government maintains the percentage of subsidy we pay and oil doesn't rise higher than it is now."

OneIndia Money