RIL net up 17% on refining margins

Higher gross refining margins helped Reliance Industries (RIL) offset lower oil and gas production and post its highest net profit in over three years.

Meeting forecast, RIL reported a 16.6 per cent increase in net profit at Rs 5,661 crore for the June quarter. Its net profit for the corresponding previous quarter was Rs 4,851 crore.

The company's gross refining margins (turning every barrel of crude oil into fuel), was up 41 per cent at $10.3 a barrel against $7.3 in the same quarter last year.

“The growth in earnings was driven by strong refining margins and sustained performance in the petrochemicals business. Our cash flows give us unparalleled opportunity to allocate capital to higher-margin resource plays in leading markets around the world. We remain committed towards investing in India and have commenced the investment programme in the petrochemical business,” said Mukesh Ambani, chairman and managing director in a statement issued after the declaration of results.

RIL's revenue for the quarter rose 39 per cent at Rs 81,018 crore against Rs 58,228 crore during the corresponding previous quarter.

Segment revenue for oil and gas was down 16.5 per cent due to lower gas production from its flagship asset, the Krishna Godavari basin's D-6 block and Panna-Mukta-Tapti fields, where RIL partners British Gas and state-run Oil and Natural Gas Corporation.

Revenues from the company's petrochemicals business was up 32 per cent at Rs 18,366 crore from Rs 13,903 last year. Refining business saw its revenue up 45.8 per cent at Rs 73,689 crore against Rs 50,531 crore during corresponding quarter of last year.

Refining forms 40 per cent of RIL's overall business with petrochemicals and oil and gas forming 35 per cent and 15 per cent, respectively.

"Higher gross refining margins (GRMs), which were led by an increase in the product cracks, helped RIL post strong year-on-year growth. This has helped the company compensate for lower petchem margins and lower KG-D6 gas production," said a Mumbai-based analyst from a financial services and securities firm.

During the quarter, RIL had cash and cash equivalents of Rs 45,775 crore invested mainly in bank deposits, mutual funds and government securities and bonds.

The company's share closed at Rs 882.15, up 0.98 per cent on the Bombay Stock Exchange on Monday. The company in its press statement said gas production from KG-D6 was down 18 per cent. The block is producing 49 million standard cubic metres of gas per day, down from 60 million cubic meters per day, a year ago.