It wasn’t too long ago that the state-run oil explorer — Oil and Natural Gas Corporation — was not only debt-free but one of the country’s most profitable and cash-rich firms. Today, however, it is at a critical juncture.
Following its acquisition of refiner HPCL and exploration firm GSPC, the explorer has turned itself into a company with a massive debt of more than Rs 25,000 crore as of the end of the last fiscal from a zero-debt firm a year ago. However, the deal has already paid off close to half of that from revenues it generates, ONGC says. Still, it is reeling under a net debt of about Rs 14,000 crore.
In addition, ONGC has recently taken a risk in buying back 25 crore shares for Rs 4,022 crore as part of the government’s plan to get cash-rich PSUs to part with their surplus. Read More