(Adds details, company comments)
* Q2 net profit 58.97 bln rupees vs 60.9 bln estimate
* Profit slips on high subsidy burden, lower crude prices
* ONGC head says subsidy may impact planned expenditure
NEW DELHI, Nov 8 Indian state-run producer Oil &
Natural Gas Corp.'s quarterly profit dropped more than
30 percent because of a sharp rise in the discount it has to
give state refiners even as crude prices fell.
ONGC, India's third-biggest company by market value, is
forced to subsidise state refineries by selling them crude
cheaply so they can supply retail markets at capped prices. The
government increased the discount that crude oil suppliers have
to give refiners earlier this year.
ONGC's cash could be depleted rapidly if the subsidy stayed
at the same level, top officials warned.
"We are only meeting our day-to-day operations," Chairman
Sudhir Vasudeva told reporters on Thursday. "This is a matter of
concern because our cost of production is increasing."
Net profit fell to 58.97 billion rupees ($1.1 billion) for
the second quarter ended September from 86.42 billion rupees in
2011. Analysts had expected net profit of nearly 61 billion
rupees, according to a Reuters poll of brokerages.
The cost of the subsidy more than doubled to 123.30 billion
rupees while the amount ONGC gets paid per barrel of crude fell
to $46.8 per barrel from $82.6 a barrel a year ago.
ONGC needs more than $60 per barrel to fund planned
expenditure, Vasudeva said.
ONGC has been investing to maintain output from its old
fields and has capital spending plans of around 340 billion
rupees both this year and next. It has also been scouting for
assets abroad, under pressure from the government to meet rising
demand from an economy expected to grow 6.5 percent in 2012.
Shares in ONGC, valued at nearly $42 billion, closed 0.6
percent lower on Thursday, ahead of the results. The stock has
risen about 3.5 percent so far in 2012, underperforming a 10.2
percent rise in the sectoral index.
(Reporting by Nidhi Verma and Prashant Mehra; Editing by