Mumbai, Oct. 15: Reliance Industries — the country’s largest private sector conglomerate — today reported a 5.7 per cent fall in net profit at Rs 5,376 crore in the second quarter ended September 30, largely in line with Street estimates.
Analysts had expected the oil and petrochemicals giant to report profits between Rs 5,300 crore and Rs 5,400 crore.
A sharp 18.4 per cent jump in total expenditure to Rs 84,907 crore from Rs 71,694 crore in the same quarter a year ago and the continued uncertainty that envelops production prospects from the KG-D6 gas block have blighted performance once again. This is the fourth consecutive quarter that RIL has reported a drop in net profits on a year-on-year basis.
Analysts were optimistic about a strong showing in the refining business, and RIL did not disappoint them. It realised a gross refining margin (GRM) of $9.5 per barrel during the quarter against $7.6 per barrel in the April-June quarter. GRM is the difference between the cost of processing crude oil and revenues obtained from the sale of finished products.
The company is sitting on a cash mountain of Rs 79,159 crore ($14.9 billion), up almost 12 per cent from the Rs 70,732 crore it reported at the end of the first quarter on June 30.
During the quarter, revenue from the refining & marketing business jumped 23.1 per cent to Rs 83,878 crore from Rs 68,096 crore in the corresponding period last year. However, it was down 2 per cent from the level of Rs 85,383 crore in the preceding quarter. On a sequential basis, margins improved to 4.2 per cent from 2.5 per cent, though it came off by around 30 basis points on a year-on-year basis.
Higher crude oil prices resulted in consumption of raw materials increasing 21.7 per cent to Rs 157,131 crore ($ 29.7 billion) on a year-on-year basis.
However, other income jumped to Rs 2,112 crore, from Rs 1,102 crore in the same period last year.
Depreciation (including depletion and amortisation) was lower 23.6 per cent at Rs 4,711 crore ($0.9 billion) against Rs 6,164 crore in the first half of 2012 because of lower production of oil and gas.
Outstanding debt rose marginally to Rs 70,059 crore ($13.3 billion) compared with Rs 68,259 crore at the end of March 2012. Reliance continues to remain a zero debt company on a net cash basis.
In the exploration and production business, RIL reported a 37 per cent drop in revenues at Rs 2,254 crore, mainly because of the lower output from its KG-D6 block. RIL said it was looking to formulate an integrated development strategy for the D6 block, including three undeveloped areas in consultation with its joint venture partners. The relevant field development plans are likely to be submitted in the second half of the year.
The petrochemicals business also failed to shine during the quarter as margins dropped to 7.9 per cent from 11.5 per cent in the same period of last year.