New Delhi: ONGC (Oil and Natural Gas Corporation) has reported its first-ever quarterly loss in the Q4 of FY2019-20 in the wake of a historical decline in crude oil prices and the continuing slump in gas prices. The Maharatna oil PSU posted a massive loss of Rs 3,098 crore in the Q4 of FY2019-20, as compared to a net profit of Rs 4,240 crore in the corresponding period of the previous financial year. ONGC Chairman Shashi Shanker said that the company posted an impairment loss of Rs 4,899 crore in the Q4 of 2019-20, reflecting the valuation of the firm's assets after a fall in crude oil prices. This essentially means that had it not been for the impairment, ONGC would have recorded a profit for the March quarter.
In accounting, impairment describes a permanent reduction in the value of a company's asset, typically a fixed asset or an intangible asset. Impairment can occur as the result of an unusual or one-time event, such as a change in legal or economic conditions, change in consumer demands, or damage that impacts an asset. It exists when an asset's fair value is less than its carrying value on the balance sheet.
The impairment loss has also resulted in ONGC seeing its FY2019-20 net profit halve to Rs 13,445 crore from Rs 26,765 crore a year back. In Q4, revenue fell to Rs 21,456 crore from Rs 26,759 crore a year earlier. Crude oil production slumped marginally at 5.82 MT in the March quarter as compared to 5.9 MT in the previous fiscal. Natural gas production, on the other hand, dipped to 6.04 BCM from 6.56 BCM in January-March 2019.
Shanker said the company's overseas arm ONGC Videsh Ltd too saw its net profit for FY2019-20 drop to Rs 454 crore from Rs 1,682 crore after it also took an impairment loss of around Rs 3,000 crore.
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