The fourth quarter profits were down by 32% at Rs.4045 crore. The fall in profit was despite the company realizing better average prices on crude oil output and its gas output. The sharp fall in profits was largely attributed to higher statutory levies and provisions for asset impairment.

When you consider an investment in ONGC there are 3 factors to consider. Firstly, the company has heavy investments lined up in the next few years and hence the pressure on the cash flows will continue. Secondly, ONGC rarely gets the full benefit of a rise in crude prices as you would have seen in the past. Thirdly, since ONGC is a cash rich company, the government may always fall back upon companies like ONGC to acquire other companies in the same sector, pay higher dividends and undertake buybacks. All these can put pressure on cash flows.