ONGC reports highest-ever quarterly net profit by any corporate at Rs 18,347 crore

State-owned Oil and Natural Gas Corporation (ONGC) recently reported the highest-ever quarterly net profit by any Indian firm of over Rs 18,347 crore as it made a one-time tax gain on opting for a lower rate regime.

Net profit in July-September period was Rs 18,347.73 crore, compared with Rs 2,757.77 crore net profit in the same period a year back, according to the company's filing to the stock exchanges.

The profit in the quarter is compared with Rs 11,246.44 crore net profit ONGC had earned in full 2020-21 fiscal year (April 2020 to March 2021).

This is the highest-ever quarterly net profit by any company in the country.

Prior to this, Indian Oil Corporation (IOC) held the distinction of posting the highest-ever quarterly profit when it reported a net earning of Rs 14,512.81 crore in January-March 2013.

IOC's net profit in the fourth quarter of 2012-13 fiscal was abnormally high because of receipt of fuel subsidy for the full year in one quarter. Its annual profit that fiscal was Rs 5,005.17 crore as it had posted losses in the previous quarter on failing to get fuel subsidy support.

ONGC, in the first half (April-September) of the current fiscal, earned Rs 22,682.48 crore net profit as against Rs 3,254.35 crore a year back.

The profit in the second quarter (July-September) was aided by higher oil prices and the one-time tax gain of Rs 8,541 crore.

ONGC said the company has an option to pay corporate income tax at the rate of 22 per cent plus applicable surcharge and cess (lower rate) as against the earlier rate of 30 per cent plus applicable surcharge and cess, subject to certain conditions.

“Considering all the provisions under said section 115BAA of the Income Tax Act, 1961, during the quarter, the company has decided to avail the option of lower rate with effect from the financial year 2020-21. Accordingly, the company has recognised provision for tax expenses in the financial results for the quarter and half-year ended September 30, 2021, and re-measured its net deferred tax liabilities on the basis of the provision prescribed in the said section,” it said.

The net impact due to availing of the option has resulted in a decrease in deferred tax by Rs 8,541 crore and a decrease in current tax by Rs 1,304 crore (including relating to earlier years).

Also aiding the profit was a surge in oil prices, it added.

ONGC got $69.36 for every barrel of crude oil it produced from fields under its operation as against $41.38 per barrel realisation in July-September 2020.

Revenue soared 44 per cent to Rs 24,353 crore.

The higher price offset lower production.

ONGC produced almost 4 per cent less crude oil at 5.471 million tonne while gas output fell 7 per cent to 5.467 billion cubic meters.

“The production of crude oil and gas has declined during current year mainly due to restrictive conditions created by cyclone Tauktae and due to COVID impact,” the firm later said in a press statement.

Also, delay in mobilisation of mobile processing unit to WO-16 Cluster project in the western offshore also impacted production from this field. The board approved interim dividend of 110 per cent (Rs 5.50 on each equity share of Rs 5). Total pay-out on this account will be Rs 6,919 crore.