ONGC cash reserves crash to Rs 167, ONGC rules out share-swap, Rs 9,511 crore in 1.5 years under Modi government. ONGC, India's biggest oil and gas producer, last year completed acquisition of Hindustan Petroleum Corp Ltd for Rs 36,915 crore. Oil and Natural Gas Corp (ONGC), India's biggest oil and gas producer, last year completed acquisition of Hindustan Petroleum Corp Ltd (HPCL) for Rs 36,915 crore.
ONGC’s cash & bank balances hit Rs 167 crore in Sept 2018, down from Rs 9,511 crore in March 2017, following the acquisition of HPCL and other government diktats. ONGC is operating on precariously low cash reserves as it looks to pay off debts from its acquisition of Hindustan Petroleum Corporation Limited (HPCL) and follow the government’s diktat on share buybacks and dividend payouts.
Hindustan Petroleum Corp Ltd's plans to acquire Mangalore Refinery and Petrochemicals Ltd (MRPL) has hit a cash hurdle, with parent ONGC preferring a cash deal rather than a share-swap, sources aware of the development said. According to multiple sources, the central government has given clearance for ONGC to take over the operations and the latter has issued a notice to the other partners that it would do so in six months.
“In addition, the dividends also have to be paid. All this is eroding the surplus. Ideally, in exploration, working capital requirements have to be met and a cash balance of Rs 5,000-10,000 crore is needed.” ONGC paid a dividend of Rs 8,470 crore in 2017-18, including dividend distribution tax, compared to Rs 7,764 crore in 2016-17.
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