Stocks of Oil and Natural Gas Corporation (ONGC) have always been a reliable asset for any Investor. One of the largest PSUs of India, ONGC has been a major fixture in the growth story of India post-independence. The state-owned PSU has also been quite prolific in giving heavy dividends to its customers over the years.
In this writing piece, we will study how ONGC has grown over the years to become one of India’s most profitable PSU post-independence. We will also understand via a hypothetical investment scenario how recovery a small sum investment made in ONGC in the 80s would have fetched huge returns in today’s terms? After that, we will understand the recovery of old and dormant shares of ONGC from IEPF.
History of the Oil and Natural Gas Corporation
Oil and Natural Gas Corporation (ONGC) is a State-Owned entity specialising in oil and natural gas refinery services. The general term used for such entities is Public Sector Unit. ONGC is not just one of India’s Largest PSUs but also the largest PSU after Indian Oil Corporation Limited. Oil and Natural Gas Corporation is a firm of global significance. The corporation specialises in the development, exploration, and production of petroleum and gas. The Company’s other segments include Exploration & Production of oil, and Refining. The Company’s geographical operations segment is divided into two categories: Onshore and Offshore. Onshore operations are conducted in the Indian territory. Offshore businesses are conducted in other countries. The Company’s business is spread in various areas including, oil field services, oil and gas transportation, production of value-added products, Liquefied Petroleum Gas (LPG), Petrochemicals, Power, and alternate sources of energy. The Company’s various subsidiaries include OVL (ONGC Videsh LTD.), MRPL (Mangalore Refinery and Petrochemicals LTD.), and ONGC Mangalore Petrochemicals LTD. The Company’s oil and gas reserves are situated in Russia, Vietnam, Columbia, Brazil, and Venezuela.
The company has been a profitable venture and leads the petrochemical business for Government of India from the time of its inception. Along with LIC, SBI, and IOCL, it has been one of the major money makers for the Government and headed many infrastructure projects. It has survived various economic slowdowns faced by the country and still managed to be one of the best PSUs. The company’s success has been largely due to its impeccable administration monitored by brilliant PSU managers.
In the following section, with a hypothetical investment and related calculation we will demonstrate how a small amount invested in ONGC shares in 1990 would have grown to nearly by 2021. The following calculation will show why recovery of shares/dividends of ONGC is a profitable venture.
Calculation related to ONGC Shares
- Suppose your grandfather had bought 800 shares of Oil and Natural Gas Corporation registered in April 1990.
- Now, the company has released bonus shares thrice, in the last three decades as given in the following table.
Announcement Date Bonus Ratio Record Date Ex-Bonus Date
27/10/2016 1 : 2 16/12/2016 15/12/2016
16/12/2010 1 : 1 09/02/2011 08/02/2011
26/07/2006 1 : 2 30/10/2006 27/10/2006
- The bonus released by the company in 2006 was in the ratio 1:2. This meant that for every two shares owned by the investor, the company gave one share. The bonus increased the no. of shares to 1200 (800 original + 400 bonus).
- In 2010-11, the company released bonus shares in the ratio 1:1. This took the net no. of shares to 2400 (1200 original + 1200 bonus) shares.
- In the same year, ONGC announced a stock split in the ratio of 1:2. This meant that every 1 share of value Rs.10 was split into 2 shares with value Rs. 5. A stock split is done by the company to reduce prices of shares but keeping the net value of stocks the same. This took the total no. of shares to 4800.
|Old FV||New FV||Record Date||Ex-Split Date|
- Now, the company continued to grow and it announced bonus shares in the year 2016. The bonus was announced in the ratio 1:2 which took the original no. of shares to 7200 (4800 original + 2400 bonus).
- Now, in today’s time, the value of one share of ONGC is Rs. 117.60 in June 2021. Now, let us calculate the net value of shares as per today’s rate.
Rs. 117.60 x 7200 shares = Rs. 8, 46, 000 (Eight Lakhs Forty Six Thousand only).
- So, one can easily notice that a penny investment worth thousands would have become almost 8.5 lakhs rupees in 2021. This is a huge increase in net percentage.
With the above calculation, it is quite clear that shares of ONGC have grown tremendously in value over the past 2.5 decades. Remember, in the calculation done above we haven’t calculated the Dividends for the said period. If we add the amount of dividend, then the net return on investment will be even higher. The company has shown tremendous growth in all sections and has been India’s leading player in the domestic and international market when it comes to the petroleum sector. We will study more about the financial details of the company in the following sections.
In the upcoming sections, we have given some datasheets created for dividends released by the company in the past two and a half decades. We have also given information on the shares transferred by the company to IEPF. One can study the information given by ONGC in the table below to understand how much dividend has been given by the company.
Dividends Shared by ONGC in Last Decades
|Announcement Date||Effective Date||Dividend Type||Dividend (%)||Remarks|
|15/02/2021||17/02/2021||Interim||35%||Rs.1.7500 per share (35%) Interim Dividend|
|28/02/2020||23/03/2020||Interim||100%||Rs.5.0000 per share (100%) Interim Dividend (Revised)|
|30/05/2019||22/08/2019||Final||15%||Rs.0.7500 per share (15%)Final Dividend|
|19/03/2019||26/03/2019||Interim||20%||Rs.1.0000 per share (20%) Interim Dividend|
|04/02/2019||28/02/2019||Interim||105%||Rs.5.2500 per share (105%) Interim Dividend|
|30/05/2018||19/09/2018||Final||27%||Rs.1.3500 per share (27%) Final Dividend|
|19/02/2018||13/03/2018||Interim||45%||Rs.2.2500 per share (45%) Second Interim Dividend (Revised)|
|18/10/2017||03/11/2017||Interim||60%||Rs.3.0000 per share (60%) First Interim Dividend|
|01/06/2017||21/09/2017||Final||16%||Rs.0.8000 per share (16%) Final Dividend|
|18/01/2017||07/02/2017||Interim||45%||Rs.2.2500 per share (45%) Second Interim Dividend|
|19/10/2016||03/11/2016||Interim||90%||Rs.4.5000 per share (90%) Interim Dividend|
|26/05/2016||31/08/2016||Final||65%||Rs.3.2500 per share (65%) Final Dividend|
|03/03/2016||16/03/2016||Interim||15%||Rs.0.7500 per share (15%) Second Interim Dividend|
|28/10/2015||10/11/2015||Interim||90%||Rs.4.5000 per share (90%) Interim Dividend|
|28/05/2015||07/09/2015||Final||10%||Rs.0.5000 per share (10%) Final Dividend|
|24/02/2015||24/03/2015||Interim||80%||Rs.4.0000 per share (80%) Second Interim Dividend|
|28/11/2014||16/12/2014||Interim||100%||Rs.5.0000 per share (100%) Interim Dividend|
|29/05/2014||11/09/2014||Final||5%||Rs.0.2500 per share (5%) Final Dividend|
|04/03/2014||27/03/2014||Interim||85%||Rs.4.2500 per share (85%) Second Interim Dividend|
|14/11/2013||10/12/2013||Interim||100%||Rs.5.0000 per share (100%) Interim Dividend|
|29/05/2013||17/09/2013||Final||10%||Rs.0.5000 per share (10%) Final Dividend|
|29/01/2013||22/03/2013||Interim||80%||Rs.4.0000 per share (80%) Second Interim Dividend|
|04/12/2012||24/12/2012||Interim||100%||Rs.5.0000 per share (100%) Interim Dividend|
|29/05/2012||14/09/2012||Final||40%||Rs.2.00 per share (40%) Final Dividend|
|15/02/2012||19/03/2012||Interim||30%||Rs.1.50 per share (30%) Second Interim Dividend|
|31/05/2011||18/08/2011||Final||15%||Rs.0.75 per share (15%) Final Dividend|
|01/12/2010||20/12/2010||Interim||320%||Special Interim Dividend|
|30/07/1999||Final||55%||AGM & Dividend|
Data on Unclaimed Shares As Per Annual Report 2019-20
The following table shows the data released by the company in the financial year 2019-20 annual report. The data show dates of Dividend transfers made to the IEPF.
|Financial Year||Date of Declaration||Proposed Date/Date|
for transfer to IEPF
|2012-13 (2nd Interim)||20.03.2013||26.05.2020|
|2013-14 (1st Interim)||06.12.2013||11.02.2021|
How Investor Education and Protection Fund Was Formed?
The IEPF was formed by the Central Government in the year 2016 to address the ever-increasing issue of dormant and unclaimed shares of companies. Earlier the shares were bought at smaller prices which led to them being overlooked by the stockholder in the following years. This was often due to non-substantial growth of shares in a time span of five or ten years. However, years later, once the shares made substantial growth then the same people came running to the company asking for dividends for their shares.
However, before IEPF, there was no defined mechanism to address the situation mentioned above as after so many years, companies found it hard to verify the ownership and calculate net dividends for dormant funds. Some companies used to transfer these unclaimed dividends to the public welfare account of the government and so had no money after years to give to investors coming back for their dormant shares. Others would keep the dividends to themselves for years and use it for their benefit while telling the government that they are expecting the investors to come back and claim the dividends.
But this shady practice gave rise to black money. Many companies kept the unclaimed funds as they won’t have to give a detailed account of the money. This was because they would simply say that these are dormant funds with no known claimant. To regularize the dormant funds and their associated dividends, the government came up with a regulatory body to enforce regulatory norms for such funds. This was the reason for establishment of a statutory body named IEPF Authority. The authority employed fund managers to handle the claims related to unclaimed funds. This authority was also responsible to frame rules related to transfer of dormant funds and unclaimed dividends.
Rules Related to Dormant Funds by IEPF Authority
IEPF authority regularly comes up with regulations regarding the unclaimed dividends lying dormant with listed firms. As per the current norms, the companies publish the list of unclaimed dividends of investors with details on their website every fiscal year. This has been made a mandatory practice for the companies to ensure transparency in release of data related to unclaimed dividends. Also, IEPF has made it mandatory for firms to appoint a Nodal Officer that hears and resolves complaints related to unclaimed shares and dividends. the claims. The transfer or nodal officer should also handle the firm’s special unclaimed dividend account. Under the IEPF regulations, this account is mandatory and must be created by each listed company. This account holds unclaimed dividends after 30 days for 7 years. Post the seven years period, the unclaimed shares gets transferred to the IEPF.
It is also mandatory for a Nodal Officer to send a verification report to the IEPF’s fund manager. This report is sent along with other documents mandated by IEPF to the fund manager of the IEPF. The documents also contain the claim application form and should be sent to authority within 15 days after receiving from the claimant’s end. Any failure in meeting the compliance norms could invoke compliance-related action against the company from the IEPF Authority. The companies need to keep IEPF informed about any changes made to the company’s Nodal or Deputy Nodal Officer’s positions.
Necessity of Legal Help to Claim ONGC’s Shares
In the previous sections, we explored how a small investment made in ONGC shares could increase to inflated values. We also looked at the annual report of the company to look at the previous dates of Dividend transfers to the IEPF the dividends released each year by ONGC for its stockholders. Now we will take a stroll through the process of claiming unclaimed shares from IEPF. This is so because, after understanding the complete process one can easily understand why legal help is needed to get the claimed shares from the authority.
If you have unclaimed dividends of ONGC that are unclaimed but not for more than o 7 years, then an investor can ask the status of the funds from the nodal officer of the company. An investor can search the details of their shares and simply contact the ONGC’s appointed agent and registrar with share ownership proofs and relevant documents. Following are the details of the Nodal officer appointed by the ONGC for such purposes.
Nodal Officer: Shri M E V Selvamm
Contact.: +91 11 26754080
Deputy Nodal Officer: Shri S B Singh
Deputy Company Secretary
Contact.: +91 11 26754085
The nodal officer has all the details regarding the shares owned by any investor. And thus, even old investors of the ONGC can ask for the status of their owned shares from its nodal officer. If the shares are older than 7 years then the process of getting the shares goes through the IEPF authority. The claimant needs to get his share details from the nodal officer and then apply on the IEPF’s portal with his details to place the claim. Post this, he needs to download the filled form and compile all the other prescribed documents from the authority. The compiled list of documents along with the form is sent to the Nodal officer who then creates a verification report. This report is created within 15 days of receipt of application from the claimant.
After receiving the application, the nodal officer verifies all the documents and creates a verification report for the claimant authorising his ownership. This report along with the claim form is sent to the IEPF authority for final verification. The fund manager at the IEPF authority verifies the claims and takes the final decision on the claim form. He can either accept the application and sanction the claim, ask for some more document for further clarity, or plainly reject the claim.
The strict scrutiny from the fund manager at the IEPF generally leads to furnishing more documents. Now, remaining in continuous touch with the authority for the claim resolution period could be hard for a common investor. This is why hiring a legal and financial consultancy firm is a good idea. The experts of these firms help a company in liaising with the authority and nodal officer to furnish any missing document. They also help the investor by claiming ownership of shares if the original shareholder dies. These are the reasons why hiring a legal and financial consultancy is necessary.
So in this writing piece, we understood why hiring a financial and legal consultancy is necessary to get an IEPF unclaimed dividend. We also understood the rich history of ONGC to understand the mammoth growth it has been able to achieve since its inception. The company has also recently got into agreements with foreign companies to research for gas or petroleum mining sites. The company is also doing extensive research in the area of alternative energy. All of this stuff indicates the future of the company is bright. The trust of the investors has obviously grown in the past few years. The company has always released handsome dividends for its investors over the years leading to its shares showing significant growth. All of these reasons make the prospect of recovery of ONGC shares from IEPF a profitable decision.
With this we have come to the conclusion that recovery of shares with the help of a reputed financial consultancy can be really easy. The business owners need to get the help of these firms to save time and work hours of liaising with the nodal officers and IEPF authority. The immense growth in shares could give a healthy share of capital to investors who have just found old physical shares of ONGC from their grandparents or parents. We recommend the investors to immediately consult a legal and financial advisory firm if they have old physical shares of Ongc but transferred to the IEPF.