ONGC maintains control on internal finances despite Covid-19 situation, stock up over 1%
Oil and Natural Gas Corporation Limited (ONGC) informed the exchanges Thursday that there has been no material impact on ONGC 'Assets' due to Covid-19. There was impairment loss of Rs4,899cr in Q4FY20 to factor into estimated future crude oil and natural gas prices. However, the company believes that oil and gas prices will recover in future and in that case this impairment loss shall be reversed as and when prices rise.
The company does not foresee any impact of Covid-19 situation on internal financial controls. Even during lockdown, all testing and reporting systems worked seamlessly without any disruption as employees continued to work from home during the lockdown period.
ONGC maintains its accounts on SAP system and leverages technologies for sourcing and processing information which forms cornerstone of its internal financial reporting and control.
The company has put in place adequate Internal Financial Controls by laying down policies and procedures to ensure the efficient conduct of its business; safeguarding of its assets; prevention and detection of frauds and errors; accuracy and completeness of the accounting records; and timely preparation of reliable financial information, commensurate with the operations of the company.
The liquidity position of the company is comfortable. The outstanding loan of the company had reduced from Rs 215.93 billion as on March 31, 2019 to Rs 139.49 billion as on March 31, 2020.
Out of this, long term borrowings account for Rs 22.45 billion which are due for maturity in December 2029. The company has cash and cash equivalent (including other bank balances) of Rs968cr as on March 31, 2020. Stand-alone debt equity ratio at the end of March 31, 2020 is comfortable at 0.07.
The company has sufficient lines of credit and short term fund facilities with banks amounting to Rs 78 billion for meeting the working capital or deficit requirements. Further, the company has an overall limit of Rs 100 billion for raising funds through Commercial Paper.
CARE Rating Limited has assigned rating of CARE AAA with stable outlook/CARE Al + for ONGC's short-term and long-term fund-based and non-fund based facilities amounting to Rs 250 billion. Further, CARE Ratings Ltd. and ICRA Ltd. have assigned a rating of A1+ for Rs 100 billion Commercial Paper Programme of ONGC.
Oil & Natural Gas Corpn Ltd is currently trading at Rs78.90 up by Rs0.95 or 1.22% from its previous closing of Rs77.95 on the BSE.
(Source: IIFL 08-08-2020)