ONGC Has Biggest Profit in Nine Quarters on Provision Writeback

Oil & Natural Gas Corp. (ONGC), India’s biggest energy explorer, reported its biggest profit in nine quarters after income from sources other than its main operations doubled because of a provision writeback.

Net income rose to 71.3 billion rupees ($1.14 billion) in the three months ended Dec. 31 from 55.6 billion rupees a year earlier, according to a stock exchange filing today. That beat the 57.7 billion-rupee median estimate of 30 analysts surveyed by Bloomberg. Sales fell 1.2 percent to 207.4 billion rupees.

The company wrote back 25 billion rupees of tax provisions it had made in earlier quarters on crude oil discounts it offers refiners. The company contested the refiners’ decision to claim tax discounts on crude sales. The dispute is before the federal oil ministry and pending a decision.

“In the absence of any further communication from the oil ministry, the company has decided to revise the sales revenue and write back the provision made” until Sept. 30, ONGC said in the statement.

Prime Minister Manmohan Singh’s government is asking state-controlled oil explorers ONGC and Oil India Ltd. to bear a larger portion of the subsidy given to state-run refiners for selling fuels below cost. The higher subsidy is cutting the company’s cash reserves and may turn it into a cash-deficit company, Chairman Sudhir Vasudeva said on Sept. 25.

Total costs declined to 129 billion rupees, compared with 141.6 billion rupees a year ago. Other income rose to 26.6 billion rupees from 12.8 billion a year ago.

To contact the reporters on this story: Debjit Chakraborty in New Delhi at dchakrabor10@bloomberg.net; Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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