RIL Q2 net rises 1.7% to Rs5,972 crore despite fall in sales

Mukesh AmbaniReliance Industries Ltd today reported a net profit of Rs 5,972 crore (or Rs20.3 per share0 for the July-September quarter, showing a 1.7 per cent rise quarterly profits year-on-year, on the back of a strong growth in refining margins.

RIL had reported a net profit of Rs5,873 crore (or Rs20 a share) in the comparable period last fiscal, the company said in a statement.

In fact, it was the high refining margins that neutralised the adverse effect of a slump in oil and gas earnings.

RIL's gross refining margins (GRM) rose to $8.3 per barrel from $7.7 per barrel a year ago, helped mainly by softer crude prices.

Reliance Industries, controlled by India's richest billionaire Mukesh Ambani, however, saw its sales dip 4.2 per cent to Rs1,13,396 crore.

Revenues in the refining business, RIL's biggest, dropped 5.9 per cent year-on-year to Rs1,03,590 crore.

Revenues also dropped in RIL's second-biggest segment, petrochemicals, the company said.

However, RIL's retail business continued to be profitable at the operating level.

Gas production from KG-D6 dropped, as expected. The KG-D6 fields, which began production in April 2009, hit a peak output of 69.43 mmscmd in March 2010 before production started falling.

"Fall in production is mainly due to natural decline in the fields partly offset by incremental production from new well MA08 and side track in well MA6H during the previous year," RIL said in a statement.

Other income came in lower at Rs2,009 crore against Rs2,346 crore in corresponding period of the previous year, primarily on account of lower investible surplus.

Depreciation (including depletion and amortization) stood higher by 8.2 per cent at Rs3,024 crore as compared to Rs2,796 crore in July-September 2013-14. Interest cost was at Rs997 crore compared to Rs959 crore in corresponding period of the previous year.

Consolidated net profit for the first half of the fiscal (April-September 2014-15) rose 7.4 per cent to Rs11,929 crore ($1.9 billion) while consolidated revenue for the period rose 1 per cent to Rs221,301 crore ($35.8 billion)

During the current fiscal, RIL acquired and consolidated its ownership of Network 18 Media & Investments Limited, which also impacted revenues of the company.

RIL acquired Network 18 Media and its subsidiary TV18 Broadcast in July. Network 18 Media posted a consolidated net loss of Rs 30.4 crore for the July-September quarter on a turnover of Rs744.8 crore.

''RIL's financial performance for the period stands testimony to the intrinsic strength of our integrated business operations. The refining and petrochemical businesses, once again, delivered robust results, outperforming regional industry benchmarks,'' Mukesh Ambani, chairman and managing director of RIL, said.

''Renewed optimism in the domestic economy augurs well for business and consumer confidence particularly against the backdrop of continuing concerns on global economic growth. We expect to create significant value for our stakeholders over the next 12-18 months as we complete our large investment programme across energy and consumer businesses. These projects will propel the next phase of growth for India and Reliance,'' Ambani added.

RIL which is planning to sell its 45 per cent stake in the Eagle Ford Shale acreage said continued strong performance of Eagle Ford JV provided strong base for current quarter performance.

''While revenue growth suffered sequentially, EBITDA remained steady at first quarter levels benefiting from lower operating expenditure across all JVs,'' RIL said.

Overall capex for the quarter was at $321 million and cumulative investment across all JVs stood at $7.7 billion. Substantial part of Pioneer and Carrizo JV capex are met through cash from respective JV operations.

Revenue from the Petrochemicals segment declined marginally to Rs 26,651 crore. Segment EBIT for the quarter remained flat at Rs 2,361 crore on year-on-year basis. However, on a quarter-on-quarter basis EBIT increased sharply by 26.7%, led by strong rebound in polymers, fibre intermediates and aromatics margins.

The company's retail business recorded the highest revenue and PBDIT in any quarter and as a result of focused expansion, has crossed over 2,000 operational stores spanning 155 Indian cities. Revenue for Reliance Retail grew by 20 per cent to Rs 4,167 crore. The business recorded a PBDIT of Rs 186 crore, a year-on-year increase of 96%.