Last Updated :
02 July 2009 at 12:10 IST
ONGC up 6% as price hike to ease subsidy burden
Commodity Online
MUMBAI: State run oil exploration major, Oil & Natural Gas Corporation Ltd (ONGC) (BOM: 500312) zoomed in the morning trading hours following government’s decision of hiking retail fuel prices, which is expected to lessen the subsidy burden on the company for the current year.
As the international crude oil prices hovered around USD 70 per barrel, the central government had to resort to an inevitable fuel price hike, which was effective from Wednesday mid-night.
Trading platform that even a 5 year old can trade. Join nowONGC's chairman and managing director R S Sharma had mentioned that the latest fuel price hike would help ease the company's subsidy burden if the crude prices stay at current levels of around USD 70 per barrel.
The government had raised the price of petrol by Rs.4 per litre and diesel by Rs.2 per litre after market hours yesterday, 1 July 2009.
ONGC stocks surged close to 6% in the morning trading hours and traded at Rs.1115 on the Bombay Stock Exchange (BSE). Meanwhile, the benchmark index, Sensex was trading at 14620 points down by 0.17% in the morning trading hours.
The current government-controlled fuel pricing regime in India forces state-run producers such as ONGC to partially subsidize state oil marketing companies to sell oil products at low prices to consumers.
ONGC's net profits fell 16% to Rs.2206.76 crore on a 12.3% decline in sales to Rs.13703.80 crore in Q4 March 2009 over Q4 March 2008.
The net profit fell 3.4% to Rs.16126.31 crore on a 6.3% rise in sales to Rs.63599.83 crore in the year ended March 2009 over the year ended March 2008.
Company’s profits had fallen due to subsidy burden for cheap retail fuel and after it set aside Rs.860 crore as a provision for a matter under arbitration. Fall in output and lower realisations also weighed on the company's profits.
ONGC's gross crude realisations more than halved to USD 47.85 per barrel in the quarter as global crude prices fell, and net realisations fell to USD 43.40 per barrel from USD 49.66 a year ago.
The company has recommended a final dividend of Rs.14 per share for the financial year ended March 2009, subject to shareholders approval.
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