Reliance Industries ltd (RIl) registered a meagre 1.5 per cent increase in its net profit for the period ending September 2013 (or Q2 of the current fiscal) owing to a decline in refining margins, though at the same time it managed to achieve sales worth more than Rs1,00,000 crore in a quarter.
The company’s net profit rose to Rs5,490 crore in July-September from Rs5,409 crore a year earlier, according to a statement issued by RIl. Its turnover soared 14.2 per cent to Rs1,06,523 crore.
According to the oil major, higher sales in the refining and petrochemicals businesses and a weaker rupee helped in minimising the impact of falling gas production at its main fields in the Krishna Godavari basin, a dip in refining margins and muted revenue from organised retail.
The company earned $7.7 on turning every barrel of crude oil into fuel in Q2 compared with a gross refining margin of $9.5 a barrel a year earlier and $8.4 in the preceding three months.
RIl processed a record 17.7 million tonnes of crude oil in the quarter. Profit was also impeded by a 13.6 per cent rise in spending on power and fuel and selling expenses on increased exports to Rs 13,101 crore in the first half.
The company had cash and equivalents of Rs90,540 crore at the end of Q2, more than enough to cover Rs83,982 crore of debt.
RIl Chairman and Managing Director Mukesh Ambani said the performance reflects the resilience of the firm’s business model in “a period of volatility and uncertainty”.
“Our diversified and integrated petrochemicals business captured margins across segments - delivering near-record profit levels even as the domestic economy slowed,” he said, adding the company earned healthy operating profits by optimal utilisation of its twin refineries.
“Reliance’s ongoing counter-cyclical investments will strengthen our competitive position in each business segment,” he added.
RIl’s profit before interest and tax from the refining business dipped almost 10 per cent to Rs3,174 crore as petrol and diesel demand slumped.
KG-D6 gas output fell to about 13.4 million standard cubic meters per day due to “geological complexity and natural decline in the fields.” The segment pre-tax profit dipped 59 per cent to Rs356 crore.
Higher petrochem prices helped the company to post a 44 per cent higher segment pre-tax profit of Rs2,504 crore.
In the retail business, RIl said the September quarter was “difficult” as factors such as “subdued economic growth, continued inflation and devaluation of the rupee have resulted in the dip in consumer confidence.”
The statement further added that “additionally, high volatility in gold prices coupled with high import duties and restrictions on import have impacted the jewellery sector. Further, extended business disruptions due to regional unrests in Andhra Pradesh also had an impact on the retail sector”.
RIl shares rose 0.8 per cent to close at Rs870.30 on the BSE. The results were announced after close of trading.
During 2Q, the Jamnagar refineries processed 17.7 million tons of crude and achieved a utilisation rate of 114 per cent.
“In comparison, average utilisation rates for refineries globally during the same period were 86.7 per cent in North America, 78.7 per cent in Europe and 85.2 per cent in Asia,” the statement said.
RIl said its refining business was “positively impacted by increased crude throughput, stable middle distillate and naphtha cracks, and favourable exchange rate movement. This was partly offset by weak gasoline and solid products (pet-coke/sulphur) cracks, widening Brent-Dubai differential and lower domestic sales on weak demand”.
Meanwhile, the retail arm Reliance Industries. Reliance Retail reported a 31 per cent increase in turnover at Rs3,456 crore for the quarter ended September 30, 2013.
The company had reported a turnover of Rs 2,638 crore in the corresponding quarter a year ago.
The company reported a turnover of Rs6,930 crore for the first six months of the financial year, a growth of 41 per cent compared with Rs4,915 crore in the corresponding period last year, the company said in a statement.
“Retail business continues to break new ground, growing 41 per cent in the first half of FY14,” Reliance Industries Chairman and Managing Director Mukesh Ambani said in the statement.