The Telegraph
Sunday , July 20 , 2014
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Reliance profit tops forecast

Mumbai, July 19: Reliance Industries Ltd (RIL) today beat Street estimates for the first quarter ended June 30, backed by a stable refining business and inclusion of its US shale gas numbers in the consolidated figures.

The private sector giant posted a net profit of Rs 5,957 crore, a 13.7 per cent rise over Rs 5,237 crore in the corresponding period last year. Analysts had expected the company to report net profits in the region of Rs 5,400 crore.

Revenues grew 7.2 per cent to Rs 107,905 crore in the June quarter from Rs 100,615 crore in the year-ago period.

The refining and marketing segment once again led the growth story, with revenues rising 7 per cent over last year to Rs 98,081 crore.

Moreover, the gross refining margin (GRM) was in line with estimates at $8.7 per barrel, which is relatively lower than $9.3 per barrel in the preceding quarter. This came at a time the benchmark Singapore refining margin was also lower at $5.8 per barrel.

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

RIL said during the quarter, its Jamnagar refineries processed 16.7 million tonnes of crude at an average utilisation rate higher than its counterparts in North America and Asia.

A key surprise in the first-quarter was the strong show in the oil and gas segment where revenues shot up over 27 per cent to Rs 3,178 crore (Rs 2,496 crore) with margins also jumping to nearly 33 per cent.

Gas production from the KG-D6 block was 42 billion cubic feet during the period, a decline of 15 per cent over last year. This drop in production was on account of a shutdown of wells in the D1-D3 field, partly offset by the incremental output from new wells drilled as part of enhanced gas recovery activities.

Shale gas show

Another highlight was the inclusion of the US shale gas business in the first-quarter consolidated numbers. Revenues from the shale gas business stood at $270 million, a growth of 22 per cent over the same period last year.

“RIL has delivered a record level of consolidated net profit this quarter. This was achieved despite weak regional refining margins and a planned turnaround in our refinery. We have a great pipeline of new projects, which will give Reliance an enduring competitive advantage. We are further expanding our retail business in existing markets while exploring newer markets and channels,” Mukesh Ambani, chairman and managing director of RIL, said.

Other segments

The petrochemical division saw revenues rising over 9 per cent to Rs 25,398 crore. Margins, however, dropped because of volatility across the polyester chain.

Numbers were robust in organised retail with revenues rising to Rs 39,99 crore, a jump of 14.5 per cent over Rs 3,492 crore in the same period last year.

RIL’s telecom arm Reliance Jio Infocomm has finalised key vendors and suppliers required for the launch of its telecom services. Reliance Jio is expected to launch 4G services in 2015.