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We do not expect any subsidy burden at present prices: Subhash Kumar, ONGC

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SubhashKunmar-ONGC
Our top line is driven more by oil prices but it is also backed by our good performance on gas as well as on value added products fronts, Subhash Kumar, Director (Finance), ONGC, tells ET Now.

Edited excerpts:

ONGC had strong realisations this quarter. What has been the trigger given that oil has been at $74 per barrel?

Our top line is driven more by oil prices but it is also backed by our good performance on gas as well as on value added products fronts. Gas production has gone up by around 3% and production of value added products sales have gone up by around 12%. All these have contributed to strong realisations.

How is growth and volumes for oil and gas?

In oil and gas, we are close to the previous corresponding quarter level. This time it is 6.22 mmt compared to 6.44 mmt last year.

Can these volumes be maintained going forward as well?

Yes.

The profit after tax was impacted by higher interest rates. Was that due to the HPCL buyout?

Yes, partly because we had taken some loan for the purpose of HPCL buyout. There have been some impact of interest charges on that.

How much would be the interest burden for FY19 that you are accounting for which would pressure your bottom line?

Whatever borrowings we have made or acquisitions we have been doing through internal accruals, are coming down -- standalone borrowings from around Rs 25,000 crore has come down to around Rs 21000 crore as on 30th of June. These realisations will be maintained, resulting in interest rate reduction.

How much would the interest burden come down through the course of year?

I do not have those numbers with me right now.

CLSA says that additional Rs 10,000 crore subsidy burden may come upon you. Is that a fair estimate to run with? Now it is all up in the air when it comes to what higher oil prices would mean for oil marketing companies and what ONGC’s role will be?

We do not expect ONGC to be bearing any subsidy burden.

You are telling the market that there will be no subsidy issue in this financial year?

We do not expect any subsidy burden at these kind of prices.

What is your view on oil prices as that has a direct correlation to your business in terms of realisations? Do you think the peak for oil has been reached at at between $78-$80?

I personally believe this is the range beyond which there is no logical reason for prices to go up. At the end of the day, there is enough production capability in the world and except for some geopolitical events, prices should stay around these levels.


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