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A look at ONGC-VIII - Views on News from Equitymaster
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A look at ONGC-VIII
Nov 20, 2007

In the previous articles we profiled the assets of ONGC. In this article, we shall profile the liability side of the company and ask from where does ONGC source its money? We shall also look at how the company deploys its assets i.e. study its operational performance. Sources of money Own internal accruals are ONGC’s chief source of finance. It has a share capital of Rs 22 bn* and accumulated profits of Rs 643 bn.* In terms of long-term borrowing, the company has secured term loans to the tune of Rs 7 bn* while its unsecured borrowings amount to Rs 10bn*.

* As of 31st March 2007 on a consolidated basis.

Operational Performance
ONGC sells crude oil and natural gas produced on its own and petroleum products through its subsidiaries, mainly MRPL. The main point to note about the sales figures is the absence of growth in quantity of Crude oil and Natural gas sold.

Quantity sold (Direct)
Product Units FY07 FY06 FY05 FY04 FY03 FY02 CAGR
Crude oil M Tonnes 24 22 24 24 24 23 1%
Natural gas M Cu. Metres 20,306 20,500 20,644 21,103 21,110 20,446 0%
LPG ' 000 Tonnes 1,033 1,084 1,086 1,161 1,198 1,157 -2%
Naptha ' 000 Tonnes 1,442 1,578 1,567 1,656 1,642 1,681 -3%
Ethane/Propane ' 000 Tonnes 548 535 528 534 619 528 1%
Kerosene ' 000 Tonnes 456 176 177 218 234 231 15%

ONGC has also traded in petroleum products since FY05. The important point to note is the deceleration in the quantity sold in all the products.

Quantity sold (Trading)
Product Units FY07 FY06 FY05 CAGR
Kerosene ' 000 Kilolitres 563 432 970 -24%
Diesel ' 000 Kilolitres 1394 874 1538 -5%
Petrol ' 000 Kilolitres 121 110 262 -32%

So far, we have profiled ONGC’s fundamentals using the accounting equation framework. With this in the background, we shall proceed towards forming an opinion on the company by analysing it through the SWOT framework from the next article onwards.

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