(LiveMint)
India’s Oil and Natural Gas Corp. Ltd (ONGC), which once had $4.3 billion of funds, is now bleeding cash.The state-run company’s cash reserves have shrunk by more than 90% in the past year, after it was ordered to purchase the administration’s stake in a refiner and it paid a record dividend. ONGC’s reserves dropped to about Rs1,000 crore as on 31 March from nearly Rs13,000 crore a year earlier, according to data complied by Bloomberg.
ONGC’s largest shareholder, Prime Minister Narendra Modi’s government, has been tapping state-run companies including India’s biggest energy explorer to bridge its fiscal deficit. That’s left the company with depleting cash at a time when it has been ordered to boost investment to help cut the nation’s crude imports. ONGC paid Rs42,600 crore last fiscal year as dividend to the government and to buy its stake in the refiner.
“ONGC is heavily leveraged now,” Aloke Kumar Banerjee, the company’s former finance head, said in an interview. “It’s important for exploration companies to have sizable cash balance as buffer. It’s a high-risk business.” The energy explorer’s shares have fallen 17% from a January high. They dropped as much as 0.6% at 9:51 am in Mumbai, while the benchmark S&P BSE Sensex gained 0.4%. The company’s spokesman declined to comment on its falling cash levels.
