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Reliance springs a surprise

Mumbai, Jan. 22: Reliance Industries today surprised the market by posting a higher-than-expected net profit of Rs 3,501 crore for the third quarter of the current financial year. The net profit was, however, 9.81 per cent lower than last year’s figure of Rs 3,882 crore.

The market had estimated the Mukesh Ambani flagship to post a net profit of around Rs 3,000 crore. Analysts had feared the impact of a global slowdown to be much more severe on Reliance. This is the first time in more than two years that the company has reported a drop in profit.

Net turnover dipped to Rs 31,562 crore from Rs 34,590 crore in the corresponding period of 2007-08, a drop of 8.75 per cent. However, a surge in other income contributed to the better-than-expected profit numbers. Other income during the quarter jumped to Rs 663 crore from Rs 241 crore in the same period last year.

The company also performed well on the refining front. Though gross refining margin at $10 per barrel during the quarter was lower than the year-ago figure of $15.4 per barrel, analysts had expected it to be around $9 per barrel. The gross refining margin is the difference between the value of petroleum products and crude price. Refining revenues of Reliance fell to Rs 21,740 crore from Rs 26,154 crore last year.

Sources said one of the main reasons for Reliance’s better refining margin compared with its Singapore counterparts was its stress on producing middle and light distillates such as LPG, petrol, diesel, naphtha and kerosone over heavy distillates such as fuel oil and lubricating oils. “The company has also a flexible export strategy and it changes the production mix according to demand,” the source added.

Reliance chairman and managing director Mukesh Ambani said, “This was one of the most challenging quarters for Reliance with volatility in prices and margins. Producers and consumers are coming to terms with slower global trade and economic outlook.

“Reliance performed commendably in this environment, with high operating rates. We also reached an important milestone with the RPL refinery going on stream.”

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