By posting 70 percent whopping increase in net profit for the
financial year ended March 31, 2017, Indian Oil Corp (IOC) has actually
overtaken Oil and Natural Gas Corp (ONGC) and has become India’s most
profitable state-owned company.
IOC recorded a net profit of Rs 19,106.40 crore which was more than the Rs 17,900 crore net profit ONGC
posted in the 2016-17 fiscal, making IOC the most profitable PSU, according to
earning statements of the companies.
Billionaire Mukesh Ambani-led Reliance Industries retained the crown of
being India's most profitable company for the third year in a row, posting a
net Rs 29,901 crore in financial year 2016-17 with Tata Consultancy Services
following next with a net profit of Rs 26,357 crore, becoming the second most
profitable company in the country.
ONGC was long India's most profitable company but lost the crown to private
sector Reliance and TCS a couple of years back. It has now
been unseated as the most profitable PSU by IOC.
In the previous 2015-16 fiscal, IOC had a net profit of Rs 11,242.23 crore as
compared to ONGC's Rs 16,140 crore.
While IOC Chairman B Ashok attributed the profit growth to higher refining
margins, inventory gains and operational efficiencies, ONGC Chairman and
Managing Director Dinesh K Sarraf said the company lost Rs 3,000 crore in net
profit due to government's natural gas pricing policy that has made the
business economically unviable.
The BJP-led government had in October 2014 evolved a new pricing formula using
rates prevalent in gas surplus nations like the US, Canada and Russia to
determine rates in a net importing country.
Prices have halved to $2.48 per million British thermal unit since the formula
Sarraf said the company lost Rs 5,010 crore in revenue on natural gas business
from 35 per cent drop in gas prices in last one year. "Our profit would
have been about Rs 3,000 crore higher if we got remunerative gas price,"
"Natural gas is no more profitable business because cost of production is
very very significantly higher than current gas prices," he said.
Oil Minister Dharmendra
Pradhan in a written reply to a
question in Lok Sabha on March 20 had stated that the cost of production of
natural gas in the prolific Krishna Godavari basin is between $4.99 per mmBtu
and $7.30 per mmBtu.
The same for other basins is in the range of $3.80 per mmBtu to $6.59 per
mmBtu, he had said, adding the production costs of companies vary from field to
field depending upon size of the reservoir, location, logistics and
availability of surface facilities.
ONGC is the country's biggest gas producer, accounting for some 80 per cent of
the 70 million standard cubic meters per day current output.