Oil On Water

Updated: Jun 25 2003, 05:30am hrs
The dismantling of Administered Pricing Mechanism (APM) has helped ONGC to achieve a spectacular performance in the year to March 2003.

The company had sold crude oil at $16 per barrel to refineries during the financial year 2001-02.

In contrast, during financial year 2002-03 it received an average price of $27 per barrel as import parity price.

Turnover (net of excise) grew 50.6 per cent to Rs 34,525 crore. Around 80 per cent of the growth came from higher price realisation and the remaining from higher sales volume.

Operating profit soared 48.9 per cent to Rs 18,279 crore. But OPM marginally declined to 52.9 per cent (53.6 per cent). This was because of an increase in statutory levies (royalty payments) from 24.7 per cent of sales to 25.6 per cent. PBT was up by 62 per cent to Rs 16,021 crore. This would have been higher but for the change in accounting policy. The company has changed the accounting policy on abandonment costs on the basis of unit of production method during the year retrospectively with effect from April 99 when it started recognising such costs. The same was earlier being provided for equally over a period of fifteen years. As a result of this change, the profit before tax for the year is Rs 1,700 core lower.

The government has recommended immediate increase in ceiling prices of natural gas to Rs 3,250 per thousand cubic metres. This will ensure 15 per cent higher revenues from gas business even if sales volume of gas remains at FY 2002-03 level.

Currently, the company suffers from subsidised gas prices.

Under the current policy, gas produced by ONGC is capped at Rs 2,850 per thousand cubic metres.

The company has to bear a revenue shortfall of around Rs 1,300 crore annually on subsidised gas.

ONGCs crude production in FY 2002-03 crossed 26 mt mark, up 1.3 mt. The company has set a target of 26.39 mt crude production for FY 2003-04. Natural gas production increased marginally from 24.04 billion cubic metres in 2001-02 to 24.24 billion cubic metres in FY 2002-03.

Wimco

Wimcos sales declined seven per cent at Rs 166 crore during the year to March 2003.

The offtake for Wimcos products that was up during the second half of the last year, declined during the year.

Wimco has the largest market share in safety matches in the organised sector but faces stiff competition with low excise paying manufacturers in the unorganised sector.

Expenses also declined seven per cent at Rs 157.5 crore.

The company managed to restrict fall in operating profit at 11 per cent to Rs 11.7 crore. Net profit slipped 14 per cent at Rs 7 crore.

Apart from safety matches, its forte, Wimco turns out tomato paste, fruit concentrates and agro products. However, safety matches account for more than 90 per cent of total turnover. Wimco has reputed clients like Nestle for its food products.

The company has tied up with Heinz India Pvt Ltd to produce tomato paste.

Wimco has invested Rs 51 crore in its subsidiary company Wimco Boards for setting up manufacturing facilities for paper boards. The company is keen on disposing of this plant for reasons of cost overrun. Swedish parent company has a 74 per cent equity stake in Wimco.

Recently, the Supreme Court (SC) has asked Swedish Match AB, the parent company, to keep aside Rs 49 crore for acquiring additional shares of Wimco from co-promoters.

The Supreme Court directive relates to the order issued by the Securities Appellate Tribunal (SAT) and the Securities and Exchange Board of India (Sebi).

The apex court has also fixed July 15 as the final date for hearing the appeal filed by the Swedish company, and has asked the company to comply with the order within two weeks.