India’s ONGC reduces crude discounts to refiners

Oil & Natural Gas Corp.’s first-quarter profit gained 14% as the rupee weakened and India’s biggest energy explorer gave smaller discounts to state-run oil refiners. 

Net income rose to 54.6 billion rupees ($839 million), or 6.38 rupees a share, in the three months ended June 30 from 47.8 billion rupees, or 5.59 rupees, a year earlier, the state-owned company said this week. The median of 28 analyst estimates in a Bloomberg survey was 60.7 billion rupees. Sales rose to 227 billion rupees from 217 billion rupees. 

The impact of discounts given to refiners on crude oil, kerosene and cooking gas sales on profit was 6.28 billion rupees, compared with 73.4 billion rupees a year earlier, the company said in the statement. The discount is given to state-run refiners, including Indian Oil Corp., which sells some of its fuels below cost to make them affordable. 

The rupee weakened 5.8% against the dollar in the quarter from a year earlier. ONGC bills its customers in dollars and its selling price increases when the revenue is converted into rupees. 

The company’s subsidy burden was also eased by crude’s decline, which helped cut discounts made to refiners to limit the prices of kerosene and cooking gas. 

ONGC shares gained as much as 1.7% to 274 rupees and traded at 270.60 rupees as of 3:29 p.m. in Mumbai on Thursday. The stock has declined 21% this year. 

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