Corporate Tax

ongc: ONGC stories highest internet earnings ever of Rs 18,347 billion within the second quarter

NEW DELHI: State-owned Oil and Natural Gas Corporation (ONGC) reported the highest quarterly net profit of any Indian company of over Rs.18,347 billion on Friday, as it made a one-off tax gain from opting for a lower tax system.
The July-September net income of Rs 18,347.73 crore is compared to Rs 2,757.77 crore net income for the same period a year ago, the company reported to the stock exchanges.
Earnings for the quarter are compared to net income of Rs 11,246.44 crore that ONGC had for the full fiscal year 2020-21 (April 2020 to March 2021).
This is the highest quarterly net income for any company in the country to date.
Previously, the Indian Oil Corporation (IOC) had its highest quarterly profit of all time when it reported a net profit of 14,512.81 billion rupees in January-March 2013.
The IOC’s net income for the fourth quarter of fiscal 2012/13 was unusually high, as fuel subsidies were granted in one quarter for the entire year. Annual profit for that fiscal year was Rs 5,005.17 billion, as the company posted losses in the previous quarter for not receiving fuel subsidy support.
ONGC posted net income of Rs 22,682.48 billion for the first half (April-September) of the current fiscal year, compared to Rs 3,254.35 billion a year ago.
The second quarter (July-September) profit was supported by higher oil prices and the one-time tax gain of Rs.8,541 billion.
ONGC said the company has the ability, under certain conditions, to pay corporation tax at a rate of 22 percent plus applicable surcharges and charges (lower rate) versus the previous rate of 30 percent plus applicable surcharges and charges.
“Taking into account all the provisions of Section 115BAA of the 1961 Income Tax Act, the company decided in the quarter to make use of the option of a lower tax rate from fiscal year 2020-21.
“Accordingly, the company has made provisions for tax expenses in the financial results for the quarter and half-year ended September 30, 2021 and revalued its net deferred tax liabilities based on the provision prescribed in the section mentioned,” it said.
The net effect of exercising the option has resulted in a reduction in deferred taxes of Rs.8,541 billion and a reduction in current taxes of Rs. 1,304 billion (including with respect to previous years).
The gain was also aided by a surge in oil prices, she added.
ONGC received $ 69.36 for every barrel of crude oil it produced from the fields it operated, up from $ 41.38 per barrel realized in July-September 2020.
Sales rose 44 percent to Rs 24,353 billion.
The higher price compensates for the lower production.
ONGC produced almost 4 percent less crude oil at 5.471 million tons, while gas production fell 7 percent to 5.467 billion cubic meters.
“Production of crude oil and gas has declined this year mainly due to restrictive conditions from cyclone Takutae and the effects of Covid,” the company later said in a press release.
The delay in mobilizing the mobile processing unit for the WO-16 cluster project in the western offshore region also affected production from this field. The board of directors approved an interim dividend of 110 percent (5.50 rupees for each share of 5 rupees). The total payout on this account is Rs 6,919 crore.

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