ONGC profits likely to plunge by 35% | business | Hindustan Times
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ONGC profits likely to plunge by 35%

The state-owned Oil and Natural Gas Corporation, a Fortune 500 company, has said that its profits are likely to fall by more than 35 per cent in 2009-10, reports Anupama Airy.

business Updated: Feb 12, 2009 13:49 IST
Anupama Airy

India’s most profitable company has said that its profits are likely to fall by more than 35 per cent in 2009-10.

The state-owned Oil and Natural Gas Corporation (ONGC), a Fortune 500 company, has told the government that its profits for the year 2009-10 may fall by more than Rs 6,000 crore because of a sharp drop in international prices of crude oil — from $146 a barrel in July 2008 to $40 a barrel.

The net profit estimate for the company in 2009-10 has been reworked to Rs 11,409 crore from Rs 17,556 crore.

“This is a global phenomenon,” said R.S. Sharma, chairman and managing director, ONGC. “It is bound to squeeze the profit margins of all oil producers the world over.”

The government has other worries because ONGC is “a tax cow”, as a senior Planning Commission member, requesting anonymity, put it. Last year, the company paid Rs 20,955 crore as taxes and dividends to the government, which own 74 per cent of the company.

“If the numbers are true, they will have an impact in the (stock) market,” said Aseem Dhru, CEO, HDFC Securities.

ONGC has a weight of 7.8 per cent on the National Stock Exchange’s Nifty and 4.4 per cent in Bombay Stock Exchange’s Sensex.

In 2008, ONGC was ranked 335 in the Fortune 500 list of the world’s largest companies, leapfrogging 35 places since 2007.

It accounts for more than three-fourths of India’s crude-oil production and more than 80 per cent of natural gas.