Videocon Petroleum, a 49 per cent subsidiary of the flagship company Videocon International, will invest Rs 600 crore to drill the exploratory block, code named KGOS6 (Krishna-Godavari Offshore 6), at Kakinada near Visakhapatnam.

The group had won the bid early last year and was conducting the 3-D seismic surveys. The surveys have indicated a potential oil well in the block and drilling had begun in December 2000.

This block is close to the offshore oil and gas field near Rajahmundry in East Godavari District of Andhra Pradesh, in which Videocon has a 25 per cent stake as part of the Ravva joint venture.

"We are very upbeat on KGOS6 but will have to keep our fingers crossed till we actually strike oil," Videocon group chairman Venugopal Dhoot told The Financial Express.

Further investments in oil exploration do not come as a surprise as petroleum has been a truly rewarding diversification for the group, unlike finance and real estates where the group has burnt its fingers.

The Ravva venture has been a cash cow for the last two years and is yielding profits to the tune of $1 million a day. The group intends to reinvest the profits generated from the Ravva project in the petroleum business itself.

The future income from oil and gas has been securitised and has helped the group finances considerably. The group had earlier borrowed Rs 500 crore from ICICI, when valuations were made in 1997. The boost in crude oil prices and a revaluation of the oil income has led to the borrowing of another Rs 500 crore from ICICI. This will help the group's capex required for expansion.