Edited Excerpts from Media Release: September 19, 2006
At the 13th AGM of the company held on September 19, 2006 in New Delhi, the shareholders approved (a) Issue of Bonus Shares in the ratio of one share each against two shares held, and (b) final dividend of 200% (in addition to the interim dividend already paid @ 250%) for the fiscal year 2005-06. Post-bonus, the equity of ONGC will increase to INR 2139 Crore.
1. Financials
Riding the crest of strong performance in FY06, ONGC declared the highest-ever dividend of 450% (400% in FY05); the total payout in absolute terms works out to INR 6417 Crore (up 12.5% from INR 5704 Crore in FY 05)
ONGC recorded the highest-ever Gross Income (Turnover) of INR 49440 Crore (up 4% from INR 47,245 Crore in FY05), excluding INR 11956 Crore discount on sale of crude to the downstream Public Sector Oil Marketing Companies (OMCs) as Subsidy, as directed by GoI. 66% of the Turnover came from sale of Crude Oil, 14% from sale of Natural Gas and 13% from sale of Value-Added-Products (VAPs) like C2C3 Feedstock, LPG, NGL, SKO, HSD etc.; trading contributed balance 7%
The Compounded Annual Growth Rate (CAGR) in Gross Income in the last 5 years is 20.6%, notwithstanding price controls imposed by the Government
Net Profit was highest-ever at INR 14431 Crore (up 11% from INR 12983 Crore in FY05), excluding the impact of the highest-ever subsidy payout of INR 11956 Crore (up 244% from INR 4104 Crore in FY05) to the OMCs; the negative impact of this subsidy on Net Profit was INR 7210 Crore
The CAGR on Net Profit over the last 5 years is 23.5%, excluding the impact of price discounts as subsidy
Net Worth increased to INR 53593 Crore (up 15% from INR 46314 Crore in FY05). The CAGR on Net Worth over the last 5 years is 19.0%.
Highest-ever Earning-Per-Share (EPS) of INR 101.20 (up 11% over FY05)
Highest-ever Capital Expenditure of INR 11421 Crore (up 7% from INR 10681 Crore in FY05); of this, 99.7% was spent on Exploration & Production. The CAGR on CAPEX over the last 5 years is 30%.
8.4% of ONGC stock was held by Foreign Institutional Investors at end-March 2006
ONGC’s performance in Net Profit, Net Worth and Dividend pay-out are the highest among all Indian Companies including those in the private sector. ONGC continued to be the Most Valuable Corporate in India, with Market Capitalisation crossing the INR 2 Trillion mark.
2. Credit Rating
ONGC has been awarded the highest-ever Credit Rating for any Indian Corporate, private sector included, by the international credit rating agency Moody's Investors Services. ONGC secured Baa1 (Indicative Foreign Currency debt rating), 2 notches higher than Sovereign rating and A2 (Local Currency issuer rating), 6 notches higher than Sovereign rating, with 'stable' outlook.
Indian credit rating agencies, CRISIL and ICRA have assigned ONGC the highest domestic credit ratings of AAA and LAAA respectively, with 'stable' outlook.
3. Discoveries
10 New Oil & Gas Finds, comprising 5 in Deepwaters of Krishna-Godavari Basin, 3 in Shallow Offshore in Mumbai, Saurashtra and Krishna-Godavari Basins, and 2 Onshore in Krishna-Godavari and Assam Shelf Basins
Reserve Accretion was 51.53 Million Tonnes of Oil-equivalent (MTOE) with Reserve Replenishment Ratio of 1.1
Sagar Sammriddhi (“Wealth from the Oceans”), globally the biggest deepwater exploration campaign launched by a single Operator continues since 2003, with 10 Finds till date
4. Production
Crude production declined to 24.4 Million Tonnes (MMT) in FY06 (down 8% from 26.48 MMT in FY06) due to disruption of production caused by the loss of offshore BHN platform in July 2005. Thanks to proactive actions, 70% of the lost production was restored in one month, notwithstanding the Monsoons
In spite of the loss of production due to the BHN accident, Natural Gas production was maintained at 22.57 billion cubic metres (BCM), almost at the same level of 22.97 BCM in FY05; Natural Gas Sales was maintained at 18.23 BCM (18.52 BCM)
Production of Value-Added-Products (VAP) from Natural Gas was maintained at 3.428 MMT (3.478 MMT)
Production from the Joint Ventures improved: Crude output rose to 1.71 MMT (1.67 MMT) and Natural Gas, to 2.43 BCM (2.11 BCM)
5. Overseas
ONGC’s wholly-owned subsidiary, ONGC Videsh Ltd. (OVL) made the first entry in South America by picking up a stake in a Deepwater Block in Campos Basin in Brazil, with Petrobras and Shell as partners
OVL executed Production Sharing Contract (PSC) with Cuba Petroleos (Cupet) for two deepwater exploration blocks in the Gulf of Mexico, as Operator; earlier, OVL had acquired 30% interest in 6 exploration Blocks in Cuban Deepwaters, with Repsol and Norsk Hydro as partners
ONGC formed the first Joint Venture (50:50) with CNPC in Syria on a producing property; the JV is named Himalaya Energy (Syria) Ltd.
Trial production of Oil & Gas commenced in Sakhalin I where Exxon-Mobil, Sodeco Japan and Roseneft are partners
OVL now has 24 Oil & Gas assets in 14 countries, compared to just 1 in 2001
6. Projects & Investments
Increased Oil Recovery (IOR) and Enhanced Oil Recovery (EOR) projects in 15 major fields with capital investment of INR 12000 Crore were launched in 2001-02; thanks to this investment, the declining trend of production from most of these mature fields, especially Mumbai High, has been reversed
D1 field in Western Offshore was brought into production, and Service Contracts have been awarded to bring a number of onshore and offshore marginal fields into production
In the last 5 years, ONGC has invested approx. INR 40000 Crore CAPEX, the highest among all Indian Corporates, private sector included
7. Underground Coal Gasification (UCG)
ONGC commenced drilling for Underground Coal Gasification (UCG) in Vastan, South Gujarat.
8. Coal Bed Methane (CBM)
INR 950 Crore is being invested for exploration and development of CBM in six blocks in Jharkhand and West Bengal, with production targeted in June 2007 @ peak production of 0.8 MCM per day.
9. CDM Initiatives
The first five Clean Development Mechanism (CDM) projects were submitted for registration with the Designated National Authority in 2005-06 under the United Nations Framework Convention on Climate Change (UNFCCC) in the context of the Kyoto Protocol. These projects cover Gas Flaring Reduction, Waste Heat Recovery and Energy Efficiency based on approved UNFCCC methodologies; ONGC is the first Public Sector Enterprise to take this initiative.
10. Stakeholder Confidence
ONGC became the first organisation in India - Government, Public- and Private Sectors combined - to adopt the Integrity Pact (IP) in its contractual transactions effective July-August 2005. After reviewing the achievement, Transparency International India signed a formal MoU with ONGC on April 17, 2006.
11. Health, Safety and Environment Management (HSE)
ONGC has achieved the goal of becoming the only major listed E&P company in the world to have 100% of its operational facilities and drilling rigs certified for Quality, Occupational Health & Safety and Environment Management (QHSE) based on ISO 9001, OHSAS 18001, ISRS and ISO 14001.
12. Collaborations
ENI (Ente Nazionale Idrocarburi), Italy for
Deepwater E&P in India
Third country opportunities
Technology sharing
Norsk Hydro, Norway, for
Deepwater E&P in India
Third country opportunities
Technical cooperation for oil recovery from thin zones
Shell Exploration BV, The Netherlands, for
pursuing business opportunities jointly, along the entire hydrocarbon value chain
Halliburton, USA, for
pursuing technical collaboration with special focus on field re-development
13. Corporate Strategies
Monetising Assets:
Development of Western Offshore C-series marginal fields at an investment of INR 3195 Crore; these fields hold in-place reserve estimated at 15.54 BCM Gas and 4.46 MCM Condensates
Re-development of Heera & South Heera fields in Western Offshore at an investment of INR 2305.30 Crore, to improve Recovery Factor
Re-development of Assam fields – Assam Renewal Project (ARP) – at an investment of INR 3200 Crore, to boost crude production by 1.5 MMT per year
Assetising Money:
A world-scale Petrochemicals complex, comprising of 1.1 MMT per year of dual-feed cracker with associated polymer plants, to manufacture HDPE, LLDPE, PP and SBR at Dahej, Gujarat. This complex will be integrated with ONGC's C2-C3 plant currently under execution at the same location; feedstock naphtha will be supplied from ONGC's Gas Fractionators at Hazira and Uran.
14. Recognitions
ONGC is Number One among global E&P companies, re: Platts 250 Global Energy Companies List, 2006, on Assets, Revenues, Profits, Return On Invested Capital
ONGC has been ranked 15th among Global Integrated Oil and Gas companies, as per PFC-50 Energy listing, in terms of Market Capitalisation
ONGC is in the 256th rank in the Forbes Global 2000 list, and the topper from India
ONGC has been ranked 158th among the world's largest companies, in terms of Market Capitalisation, in the 10th annual Financial Times Global 500 listing, and the topper from India
ONGC moved up to the 402nd position in the FortuneGlobal 500 (from 454th last year) in terms of revenues, in spite of about 20% of revenues given away as discount to subsidise Oil Marketing Companies under direction of the Government; ONGC (115th) leads all Indian Corporates in the FortuneGlobal 500 list in Profits
Motilal Oswal-CNBC recognised ONGC as the Biggest Wealth Creator among Indian Corporates on two successive 5-year cycles, 2004 and 2005
ONGC was recognised as the Most Valuable Company in India in (i) Business Today 100 and (ii) Economic Times 500 by Market Cap; ONGC is number one in Business India Super 100 list
Business World-IMRB Survey: ONGC is the Most Respected Public Sector Enterprise
ONGC received NDTV Profit Business Leadership Award in the Oil & Gas category
Mr. Subir Raha, former Chairman & Managing Director received the “Energy Executive of the Year 2005” award from the Petroleum Economist, London
15. ONGC Videsh Ltd. (OVL)
In last five years, ONGC has built its wholly-owned subsidiary, OVL, as India’s biggest multinational (MNC) in terms of overseas investment, and the second biggest E&P company in India, next to parent ONGC.
OVL now has 24 Assets (31 E&P Blocks) in 14 countries
OVL is the Sole Operator in 8 Blocks and Joint Operator in 2 Blocks
Highest-ever Oil & Gas production (6.34 MTOE), Reserve-Replenishment Ratio of 2.3
Highest-ever Turnover of INR 8171 Crore (up 36%)
Highest-Ever Net profit of INR 901 Crore (up 18%)
OVL’s Joint Venture with Mittal Investment Sarl - ONGC Mittal Energy Ltd. (OMEL), formed in July 2005 opened its account with two deepwater Oil & Gas blocks in the Nigeria 2006 Mini Bid Round
16. Mangalore Refinery and Petrochemicals Ltd. (MRPL)
ONGC acquired majority equity and management control of MRPL in March 2003 when the company was about to be declared ‘sick’. This acquisition has been recognised as “the best M&A deal in Asia” for that year by AsiaMoney. Under ONGC management, MRPL turned around in 2003-04 itself, and this is acknowledged as the best and the fastest corporate turn-around in India, with 1100% increase in Market Capitalisation. MRPL now leads all Indian Refineries in Capacity Utilisation and Energy Management.
Highest-ever Capacity Utilisation of 125% for 2005-06
Best-in-class Energy Management, improved distillate yield
The Isomerisation Project is being commissioned within cost- and time targets; with this, MRPL will become the first Indian refinery to produce Euro IV quality autofuels, repeating its achievement of being the first to produce Euro II quality in 2004
The mixed xylene project is now due for commissioning; this will improve the product range and the profitability of the refinery
Refinery Upgradation and Expansion from 9.69 MMTpa to 15 MMTpa being taken up, at an investment of INR 8000 Crore to achieve
84% distillate yield,
Improved product range and
Higher capability of using heavy, sour & high TAN crude oils
The expansion includes an integrated Aromatics Complex to produce 0.9 MMTpa of Paraxylene, at an estimated investment of INR 5000 Crore. Feasibility study for an integrated Olefin Complex at an estimated investment of INR 12000 Crore is in progress. With these investments, MRPL will become one of the most profitable refineries in South Asia region.
Note: conversion rate on March 31, 2006: USD 1 = INR 44.61
Corporate Awards to ONGC Group: 2001 - 2006
ONGC
Management
Excellence in MoU Targets Achievement, 2002-03, 2003-04 & 2005-06
Star Company in Public Sector, 2004, Business Standard
Business Leadership in Oil & Gas Sector, 2005, NDTV Profit
(All of the above from the Prime Minister of India)
Best Deal of the Year 2004, Asiamoney, for INR 106.94 Million Equity Float in 2004
Creating Maximum Shareholder Value on the Indian Bourse over five-year cycles, 2004 and 2005, Motilal Oswal Securities
Best Oil & Gas Company in India, 2006, Dun & Bradstreet Ranking
Top E&P Company, Platts 2006 ranking of Global Energy Companies
Safety & Conservation
Safety Initiatives Award, 2005, Institution of Engineers (India)
Greenest Company, 2004, AC Nielsen ORG-Marg Survey, Business Today
Awards for Upstream Sector, 2002 and 2003, Petroleum Conservation Research Association (PCRA)
Several National Safety Awards (Mines) to Units
Several Greentech Awards for Environment- and Safety Management to Units
Finance
Excellence is Cost Management in Public Sector, 2004, Institute of Cost & Works Accountants of India (ICWAI)
Excellence in Finance Management, 2002, 2003 and 2004, National Petroleum Management Programme (NPMP)
Corporate Governance
Excellence in Corporate Governance, 2006, Institute of Directors (IOD)
Golden Peacock Global Award for Corporate Governance in Emerging Economics (Public Sector), 2005, World Council for Corporate Governance, UK
National Award for Excellence in Corporate Governance, 2003, Institute of Company Secretaries of India (ICSI)
Information Technology
Special Jury Award in SAP Awards for Customer Excellence (SAP ACE) 2006 for the most outstanding ERP implementation: successful company-wide roll-out, from drilling rigs and field stations to corporate office, of 23 modules across user-base exceeding 10,000 in 27 months
Corporate Social Responsibility (CSR)
Award for Good Corporate Citizenship, 2005, The Energy Resource Institute (TERI)
Golden Peacock Award, 2004, Centre for Social Responsibility
Innovative Brand Strategies Award, 2004, India Brand Summit
Business Superbrand, 2004, Business Superbrands Council
MRPL
First Prize, Jawaharlal Nehru Centenary Awards for Energy Conservation in the Refineries, 2003-04 & 2004-05, Centre for High Technology, Ministry of Petroleum & Natural Gas
Export Awards, 2002, 2003, 2004 & 2005, Govt. of Karnataka
Gold Awards, Environment & Safety Management, 2003-04, Greentech Foundation
Golden Peacock Award for Environment Management, 2004-05
