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Refining margins buoy RIL net

Mumbai, April 18: Reliance Industries ratcheted up net profit by 4.7 per cent to Rs 21,984 crore for the full year ended March 31 on the back of a stunning 24 per cent jump in gross refining margins in the fourth quarter at $9.3 per barrel.

The refining giant became the first private company in India to report annual revenues of more than Rs 4 lakh crore.

Revenues rose 8.1 per cent to Rs 401,302 crore.

Powered by its refining and petrochemical businesses, RIL reported a marginal rise in net profits of Rs 5,631 crore during the fourth quarter ended March 31 1, 2014 compared with Rs 5,589 crore in the same period of last year.

Both these businesses compensated RIL for the poor showing in the oil & gas segment where it continues to be haunted by disappointing production in the KG-D6 block.

Revenues from the oil and gas exploration business — engulfed in controversy over an unflattering performance audit by the Comptroller and Auditor General (CAG) and the denial of a part of the cost recovery — fell 26.7 per cent to Rs 6,068 crore in the year from Rs 8,280 crore in the year-ago period.

Analysts had expected RIL to post net profits between Rs 5,600-5,800 crore in the fourth quarter.

The refining segment — which accounts for more than 90 per cent of its turnover at Rs 361,970 crore — saved it the blushes once again as the gross refining margin jumped 24.2 per cent from the $7.6 per barrel in the third quarter. The Street had estimated fourth quarter GRM at $8.7 per barrel against the $9.3 per barrel that the company achieved.

However, the GRM for the year was $8.1 per barrel against $9.2 per barrel in the year ago period.

GRM is the difference between the selling price of finished petroleum products and the cost of processing crude oil.

While revenues from refining & marketing increased 12.5 per cent to Rs 87,624 crore from Rs 77,872 crore in the same period last year, the EBIT (a key measure of profitability) saw a growth of 12.3 per cent over last year to Rs 3954 crore.

RIL added that during the year, the Jamnagar refineries processed 68 million tonnes of crude oil, an average utilisation of 110 per cent.

Total exports of refined products from both the refineries reached $41.1 billion during the year compared to $39.3 billion in the previous year, RIL added.

In volume terms, exports of refined products stood at 43.8 million tonnes compared with 41.2 million tonnes during the same period last year.

The petrochemicals segment also threw up a pleasant surprise. Despite soft prices for some of the products, this segment recorded growth of nearly 10 per cent at Rs 24,343 crore (Rs 22,158 crore) in the fourth quarter.

According to RIL, the revenue growth was led by an 8.6 per cent increase in prices and a 0.9 per cent growth in volumes.

On the other hand, EBIT for the year increased 17.5 per cent to Rs 8,612 crore, led by strong polymer and downstream polyester margins coupled with favourable exchange rate movement.

However, the oil & gas segment continued to be a drag on RIL due to lower production from the KG-D6 field.

RIL said production of natural gas stood at 178 billion cubic feet (bcf), a fall of 47 per cent over the previous year. The fall in production, it added, is mainly due to geological complexity and natural decline in the fields and higher than envisaged water ingress.

The oil and gas behemoth saw its mountain of liquid cash swell to Rs 88,190 crore ($14.7 billion).

But its outstanding debts surged as well by 24.2 per cent to Rs 89,968 crore — which meant that it finally lost its much-vaunted reputation of being a zero-debt company on a net cash basis, a tag that it earned two years ago.

Reliance Retail — the organised retail business — saw its annual revenues rise to Rs 14,496 crore.

“The retail business has turned around and is now India’s largest retail chain,” chairman and managing director Mukesh Ambani said.

During the course of the year, the company added 225 stores and 2.7 million operating square feet across the sectors.

Reliance Retail operates 1,691 stores across 146 cities, with 11.7 million of operating square feet.

There was still no word on when the company planned to launch its much-awaited 4G telecom services.

Reliance Jio, which acquired 1800 Mhz spectrum in 14 circles in the recent auction, plans to provide seamless 4G services on the 1800 Mhz and 2300 Mhz bands by blending two long-term evolution (LTE) technologies.

The company’s board of directors approved an appropriation of Rs 18,000 crore ($3 billion) to the general reserve.

The directors also recommended, subject to approval of shareholders, a dividend of Rs 9.50 per fully paid up equity shares, aggregating to Rs 3,268 crore ($545 million), including dividend distribution tax.

 
 
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