NEW DELHI: India’s high oil and fuel producer ONGC has scripted a pointy turnaround in fortunes of its subsidiaries with its petrochemical unit reporting its first ever revenue, a high official stated.
ONGC Petro additions Ltd (OPaL), the enterprise ONGC floated for downward integration and enlargement into petrochemical discipline by using its naphtha stream from Hazira and Uran and C2+ elements from imported LNG, has been steadily seeing operational revenue or EBITDA enchancment since 2016-17 however the lopsided capital construction with high-debt servicing price and excessive depreciation in the course of the preliminary interval of capitalisation led to incurring internet losses.
“In the course of the first half of the present fiscal (April to September), OPaL made a revenue after tax of Rs 18 crore,” ONGC Chairman and Managing Director Subhash Kumar stated.
Kumar, who pivoted the turnaround story along with his finance background, stated OPaL is within the technique of exiting from the SEZ which might enhance the profitability by Rs 800 crore each year and about Rs 600 crore of extra income might be added if the federal government have been to approve a proposal for the corporate changing into a unit of ONGC or is merged with it.
Oil and Pure Gasoline Company (ONGC) throughout 2002 to 2006 conceptualized a number of joint ventures to diversify in aside from exploration and manufacturing (E&P) enterprise with an goal of worth addition, downstream integration and monetisation of its personal stranded fuel property. These tasks – OPaL, ONGC Mangalore Petrochemicals Ltd (OMPL) and ONGC Tripura Energy Firm (OTPC) have been efficiently carried out and are actually working at full capability.
ONGC as promoter performed lead function in choice of LSTK/PMC contractors, execution of assorted feedstock and off-take agreements, decision of assorted advanced techno- industrial, regulatory and taxation points crept throughout execution and commissioning of those tasks. Apart from resolving operational, monetary and regulatory points, it let the joint ventures be headed by skilled area professional finest from the trade.
Kumar stated as per ONGC 2040 Technique, going ahead 70 per cent income is anticipated from refinery and petrochemical enterprise and 10 per cent revenue might be contributed from non-oil and fuel sector, and so the function of those non-E&P JVs will proceed to play a vital function within the Group.
ONGC holds 49.36 per cent stake within the 1.1 million tons each year capability OPaL, GAIL has 49.21 per cent and GSPC the remaining 1.43 per cent.
“ONGC has performed a vital function in OPaL’s turnaround story ranging from assist throughout building part, its stabilization and steady provide of feed inventory from its plant which is essential to the profitability of any petrochemical enterprise. Along with an fairness contribution of Rs 998 crore, ONGC has additionally subscribed to share warrants issued by OPaL amounting to Rs 3,451 crore,” he stated.
The agency additionally single handedly backstopped Rs 7,778 crore CCDs and supplied consolation letters amounting to Rs 9,500 crore for the loans, he stated.
OTPC, through which ONGC holds 50% stake, arrange a 726.6 MW gas-based energy plant in Tripura. The plant began operation in March 2014.
Kumar stated OTPC is a traditional case of an effectively managed entity. In the course of the challenge part with a view to keep away from delays, complete outsized cargo (ODC) was routed by means of Bangladesh. Plant has been producing revenue since inception and is one of some fuel primarily based corporations paying dividends.
OTPC caters to about 30% of electrical energy requirement of the whole North Japanese area at a aggressive tariff. It’s the anchor buyer for offtake of ONGC’s fuel from Tripura, off-taking about 60% of whole fuel manufacturing and thus using the stranded fuel within the area unlocking the worth of Rs 700 crore each year.
With these investments, the state of Tripura has turn out to be energy surplus from energy poor state, enabling exporting electrical energy to Bangladesh.
Until date with an fairness funding of Rs 560 crore, ONGC has acquired about Rs 310 crore as dividend and Rs 106 crore premium on sale of residual fairness to GIP in 2015.
Petronet MHB Ltd is one other traditional flip round story the place ONGC as a promoter performed a vital function in turning a loss making entity to a revenue making dividend paying entity. With steady steerage at Board stage and efficient administration the corporate is constantly making income even in the course of the Pandemic interval. ONGC has earned a complete dividend of Rs 208 crore out of whole funding of Rs 274 crore.
In case of OMPL, the standalone petchem unit was topic to low spreads because of cyclic nature because of provide/demand dynamics within the area. To tide over this, ONGC has initiated a merger of the corporate with its refinery subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL).
“ONGCs presence throughout the worth chain and past the E&P enterprise can also be an efficient method to mitigate threat. ONGC Group is ready to higher protect itself from risky crude markets because the mixed entity may have publicity throughout commodity cycles,” he stated.
The corporate had acquired the federal government’s 51.11% fairness stake in HPCL to develop its presence into midstream and downstream sectors. “Going ahead, ONGC’s main stake in HPCL andPL will turn out to be the dominant driving issue for maximizing the shareholding worth,” he added.
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