Despite doubling the refinery capacity and commissioning of natural gas production, India’s largest private sector company Reliance Industries
However, the new businesses took the company’s gross profit and pre-tax profit to their highest-ever levels, only to be hampered by a rise in depreciation due to new projects going live and MAT-induced tax.
Although its refinery throughput nearly doubled over the year-ago period, the profits from refining halved, denting the company’s bottomline, which could not be repaired by higher margins in the petrochemical business and doubling of oil & gas profits.
Global oversupply of refined products on the one hand and a crash in the differential between best and worst quality crude oils resulted in pressure on RIL’s refining margins. RIL’s refineries are better-equipped to process the worst quality crude oil, which have traditionally been available at a significant discount to the best quality ones, thereby earning a better margin compared to peers. RIL’s gross refining margins (GRM) dipped to $6 per barrel, the lowest in at least five years.
The company’s petrochemicals
RIL’s sales from petrochemicals business fell 14% despite a 8% y-o-y growth in volumes due to overall lower prices.
The oil & gas segment of the company, which is fast gaining prominence with growing gas volumes from KG basin fields, reported a three-fold rise in sales. Still, an erosion in margin resulted in restricting the profit growth at 90% y-o-y at Rs 1,226 crore.
Going forward, the ramping up of KG basin gas will keep propping up the company’s profitability while the refining business continues to suffer. The petrochemical business, too, is likely to witness increasing margin pressure over the next 2-3 quarters. However, the company would be able to reap full benefits of its expanded capacities once these cyclical businesses see an upturn.
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Reliance Ind net down 6.4%
Reliance Ind net down 6.4%
| Gross refining margin more than halves to $6.3 a barrel. |
Our Bureau
Mumbai, Oct. 29 Reliance Industries has posted a profit of Rs 3,852 crore for the second quarter ended September 30, a fall of 6.4 per cent from Rs 4,116 crore in the corresponding period last year.
For the half-year period, profits were down 8.5 per cent to Rs 7,518 crore (Rs 8,220 crore).
Gross refining margin fell to $6.3 a barrel from $14.4. In addition, the depreciation doubled to Rs 2,400 crore during the quarter while the tax outgo rose to Rs 800 crore (Rs 344 crore).
Total revenue increased by 6.1 per cent to Rs 48,843 crore (Rs 46,014 crore). However, for the first half, it was down 8.7 per cent to Rs 81,284 crore (Rs 88,998 crore). During the period, exports were down 26 per cent to Rs 43,035 crore.
“The timely completion of the new SEZ refinery and the deepwater, oil and gas KG D6 block and their safe and stable ramp-up are noteworthy accomplishments. These projects have contributed meaningfully in RIL achieving a record level of profits despite the challenging business and economic environment,” Mr Mukesh Ambani, Chairman, said.
Operating profit before other income and depreciation was up 7.9 per cent to Rs 13,601 crore (Rs 12,608 crore). Other income was higher at Rs 1,337 crore (Rs 377 crore) due to higher interest income on account of higher cash and cash equivalents totalling Rs 19,421 crore.
Net capital expenditure for the quarter was Rs 7,831 crore. According to RIL, total gas production from the Krishna-Godavari D6 basin is now 40 million metric standard cubic metres (mmscm) a day.
Production has kicked off in 16 of the 18 wells at KG D6 and the total production during the quarter was 222,104 tonnes of crude oil and 4,813 mmscm of natural gas.
KG D6 has constantly been in the news with the latest relating to RIL’s letter to the Centre seeking new buyers for its gas fearing that the reserves could be damaged otherwise. Since then, a Government-appointed panel has allocated 50 mmscm of additional gas to power plants, refineries etc.
Experts say that the transport sector could also benefit from the KG D6 gas though this would call for creation of a national gas grid which could effectively supplement conventional fuels such as petrol and diesel.
RIL’s global exploration and production business comprises 14 blocks spread across Peru, Yemen, Oman, Northern Iraq, Colombia, East Timor and Australia.
At home, the Jamnagar refinery processed 27.63 million tonnes of crude oil, up from 16.34 million tonnes last year. The utilisation rate was nearly 90 per cent, which was higher than other refineries in North America (82.1 per cent), Europe (77.1 per cent) and Asia (79.3 per cent). Exports of refined products totalled $7.5 billion.
In the petrochemicals segment, domestic demand for most products remained strong with polymers demand higher by 25 per cent, polyester by 15 per cent, and fibre intermediates by seven per cent.
The company says there was a substantial improvement in the overall petrochemical margins as the industry was operating on a low level of inventory.
The RIL scrip closed at Rs 2003.85 on Thursday, down 1.56 per cent.
RIL Q2 net down, Tulsian sees stock correcting by Rs 70
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RIL net drops 6.4% on refining margin pinch
Reliance Industries Ltd (RIL), India’s largest private sector company, reported a fourth straight decline in quarterly profits on shrinking refining margins and reduced exports due to a global economic downturn.
The company today posted a 6.4 per cent fall in net profit at Rs 3,852 crore for the second quarter (July-September) of this year compared to Rs 4,116 crore in the year-ago period.
Refining margins more than halved to $6 a barrel from $13.3 a barrel a year earlier. The results met the Street’s expectations because gas production from its Krishna-Godavari (KG) fields helped offset lower refining margins.
| MORE PAIN (RIL’s Q4 performance in Rs crore) | |||
| Q2 ‘09 | Q2 ‘10 | % Chg | |
| Net turnover | 44,688 | 46,848 | 4.8 |
| Net profit | 4,116 | 3,852 | -6.4 |
| Refining margin ($) | 13.3/bbl | 6/bbl | -54.9 |
Kamlesh Kotak, Head, Asian Market Securities, said RIL’s performance was expected to be subdued anyway. “We see the refining margins low till December. The market is keenly watching the gas dispute (between the two Ambani brothers), as nothing else seems to be greatly positive,” he said.
RIL said the decline in profits was also due to higher depreciation and tax provisioning. Depreciation during the quarter went up 91.4 per cent to Rs 2,432 crore against Rs 1,270 crore in the corresponding previous quarter. The
provision for tax has more than doubled to Rs 800 crore against Rs 344 crore
in the corresponding previous quarter, owing to the higher minimum alternate tax (MAT) rate announced in the last Budget.
RIL Chairman Mukesh Ambani said the timely completion of the new SEZ refinery and the deepwater oil and gas KG-D6 block and their safe and stable ramp-up are noteworthy accomplishments for the company. “These projects have contributed meaningfully in RIL achieving a record level of profits, despite the challenging business and economic environment,” he said.
During the quarter under review, revenue from the oil and gas segment, which includes exploration, development and production, more than tripled to Rs 2,937 crore against Rs 935 crore during the corresponding previous quarter.
Total income rose around 6 per cent to Rs 47,476 crore during the quarter from Rs 44,839 crore a year ago. While the company’s revenue from refining business grew nearly 9 per cent to Rs 39,564 crore, income from the petrochemical business stood at Rs 13,340 crore, down by 14.20 per cent.
The company, which began production of natural gas from its KG D6 facility this April, has ramped up the production to over 40 mscmd. During the period, the total production from KG D6 was 222,104 tonnes of crude oil and 4,813 million standard cubic meter per day of natural gas.
However, the company has said it was producing only about 60 percent of its 60 million standard cubic metres a day (mmscmd) capacity.
That meant it had been missing out on $100 million in monthly revenue since May, and it would delay hitting peak gas output of 80 mmscmd by at least a quarter until April-July 2010. Natural gas from KG D6 block was supplied to 15 fertilisers, 19 power, three steel, one LPG and two city gas distribution companies. For the half-year ended September 30 2009, the company achieved a turnover of Rs 81,284 crore reflecting a decrease of 8.7 per cent over the corresponding period of the previous year.
During the period, exports were lower by 26 per cent at Rs 43,035 crore. For its international operations, RIL has farmed-out 30 per cent of its participating interest in Oman-Block 18 and 25 per cent in Oman-Block 41 to Oman Oil Company Exploration and Production.
The basic earning per share for the half year was Rs 45.8 against Rs. 54.0 for the corresponding period of the previous year.
Ahead of the results, RIL fell 1.56 per cent at Rs 2003.85 on the Bombay Stock Exchange today.
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Other Results:
29 Oct 2009, 1533 hrs IST
LIC Housing Finance on Thursday said its net profit rose by 25.85 per cent to Rs 171.24 crore for the second quarter ended September 30, against the same period last fiscal.
29 Oct 2009, 1515 hrs IST
State-run, Rural Electrification Corporation today said its net profit rose by 60.14 per cent to Rs 494.36 crore for the second quarter ended September 30, 2009, over the same period last year.
29 Oct 2009, 1448 hrs IST
Public sector lender Bank of India today reported a decline of 57 per cent in net profit to Rs 323.34 crore for the second quarter of current fiscal, over the same period a year earlier.
29 Oct 2009, 1436 hrs IST
Housing Development & Infrastructure Ltd today reported a 44 per cent decline in net profit at Rs 148.59 crore during the second quarter ended September 30, 2009.
29 Oct 2009, 1436 hrs IST
Power utility CESC today said its net profit rose by 1.61 per cent to Rs 126 crore for the second quarter ended September 30, 2009, over the same period last year.
29 Oct 2009, 1359 hrs IST
State-owned Corporation Bank today said its net profit rose by 52.30 per cent to Rs 291.67 crore for the quarter ended September 30, 2009, over the same period last year.
29 Oct 2009, 1351 hrs IST
Indian Overseas Bank on Thursady reported 51 per cent decline in its net profit at Rs 176.04 crore for the second quarter ended September 30, 2009.
29 Oct 2009, 1312 hrs IST
State-run Punjab National Bank said on Thursday that its July-September profit was at 9.27 billion rupees, up from 7.07 billion rupees.
29 Oct 2009, 1055 hrs IST
Construction company Patel Engineering today said its net profit rose by 26.76 per cent to Rs 40.69 crore for the quarter ended September 30, 2009, over the same period last year.
29 Oct 2009, 1053 hrs IST
Real estate firm Anant Raj Industries today said its consolidated net profit declined by 44 per cent to Rs 71.27 crore for the quarter ended September 30, 2009, over the same period last year.
29 Oct 2009, 1722 hrs IST
IT firm HCL Infosystems today reported a consolidated net profit of Rs 58.97 crore for the second quarter ended September 2009, a 10.77 per cent drop over the same period a year ago.
29 Oct 2009, 1720 hrs IST
Bharat Petroleum Corp Ltd today reported a net loss of Rs 158.77 crore for the second quarter of the current fiscal, largely because the government did not issue it bonds to compensate for losses on cooking fuel sales.
29 Oct 2009, 1719 hrs IST
Cairn India, a unit of UK-based explorer Cairn Energy, reported a 60 percent rise in quarterly profit, after two straight quarters of decline.
29 Oct 2009, 1642 hrs IST
Swiss-based ABB Group saw third-quarter net profit rise 12 percent to over $1 billion, helped by a $380 million boost from reversing set-asides for taxes, antitrust fines and restructuring charges.
29 Oct 2009, 1636 hrs IST
Indian state-run explorer Oil & Natural Gas Corp reported a 5.8 per cent rise in quarterly net profit, its first rise in five quarters, as its subsidy-sharing burden eased, but lagged market estimates.
29 Oct 2009, 1622 hrs IST
Sterlite Industries, the flagship company of Vedanta Group, today reported a 27.9 per cent decline in consolidated net profit at Rs 1,240.33 crore for the second quarter ended September 30, 2009.
29 Oct 2009, 1621 hrs IST
Energy major CESC posted a marginal increase in net profit at Rs 126 crore for the quarter ended Sep 30 against Rs.124 crore in the corresponding quarter a year ago, a top company official said here Thursday.
29 Oct 2009, 1536 hrs IST
Auto maker Mahindra & Mahindra today reported a net profit of Rs 843.6 crore for the second quarter ended September 30, 2009, driven by good sales in both automotive and farm equipment sectors.
29 Oct 2009, 1535 hrs IST
Tata group firm Tata Chemicals today reported a consolidated net profit of Rs 222.83 crore for the second quarter ended September 30, while it had a net profit of Rs 277.70 crore in the same period last fiscal.
29 Oct 2009, 1534 hrs IST
Drug maker Glenmark Pharmaceuticals today reported 31 per cent drop in its consolidated net profit at Rs 80.88 crore for the second quarter ended September 2009.
30 Oct 2009, 0115 hrs IST, Krishna Kant
M & M grows but excise duty cut played only a small role in the company’s sterling performance in the September 2009 quarter.
29 Oct 2009, 2210 hrs IST
Spice Mobiles, the handset unit of BK Modi-led Spice group, on Thursday reported a net profit of Rs 16.4 crore for the quarter ended September 30, 2009.
29 Oct 2009, 2150 hrs IST
Realty giant DLF's consolidated net profit fell by 77.28 per cent to Rs 439.74 crore in the second quarter of this fiscal due to lower property demand.
29 Oct 2009, 2148 hrs IST
Healthcare products maker Procter & Gamble Hygiene & Health Care Ltd on Thursday announced a profit after tax of Rs 51.48 crore for the first quarter ended September 30, 2009, up 4.71 per cent over the corresponding period a year ago.
29 Oct 2009, 1931 hrs IST
Dharani Sugars and Chemicals ( DSCL), flagship of Chennai-based PGP group, has reported a record net profit of Rs 32.77 crore in the second quarter ending September 30, 2009, up by 10 times over Rs 3.15 crore in the same period last year.
29 Oct 2009, 1920 hrs IST
Net profit of Sundram Fasteners doubled to Rs 18.87 crore in the second quarter ending September 30, 2009 against Rs 9.17 crore in the same period last year even as net sales including exports dropped to Rs 330.95 crore ( Rs 388 crore).
29 Oct 2009, 1918 hrs IST
Voltas Limited, the Tata Group's global air-conditioning and engineering services provider, has posted a net profit of Rs 92-crore in the second quarter ended September 30, up 50 per cent as against the same period last fiscal.
29 Oct 2009, 1847 hrs IST
Apollo Hospitals Enterprise has reported a 13% rise in net profit of Rs 34.06 crore in the second quarter ending September 30, 2009 against Rs 30.13 crore in the same period last year.
29 Oct 2009, 1747 hrs IST
RIL reported a net profit of Rs 3850 crore for the quarter ended Sept 30, down from Rs 4120 crore a year earlier.
29 Oct 2009, 1733 hrs IST
State-run explorer Oil & Natural Gas Corp posted a 6 per cent rise in quarterly net profit, its first gain in five quarters as lower oil prices eased the burden of having to subsidise state-run fuel retailers.
30 Oct 2009, 0249 hrs IST
CESC posted a marginal increase in net profit at Rs126 crore for the quarter ended September 30.
30 Oct 2009, 0247 hrs IST
An inorganic growth of 151 % helped Emami clock a 112.7% rise in net profit.
30 Oct 2009, 0244 hrs IST
Voltas has reported a 50.1% increase in its consolidated net profit even as revenues from engineering products & services segment remain under pressure.
30 Oct 2009, 0243 hrs IST
The construction company, specialising in hydro power generation and irrigation segment, also announced a 25.8% increase in half yearly consolidated net profit to Rs 77.03 crore.
30 Oct 2009, 0242 hrs IST
JM Financial has posted a consolidated net profit of Rs 56.9 crore for the quarter ended September 30 against Rs 20.8 crore in the year ago-period.
30 Oct 2009, 0241 hrs IST
Apollo Hospitals Enterprise has reported a 13% rise in net profit at Rs 34.1 crore in the second quarter ended September 30, against Rs 30.1 crore in the same period last year.
30 Oct 2009, 0139 hrs IST, Devangi Joshi
Voltas stock performance seems in line with the company’s financial performance in the past three quarters.
30 Oct 2009, 0134 hrs IST, Ramkrishna Kashelkar
Despite doubling the refinery capacity and commissioning of natural gas production, Reliance Industries posted a 6% dip in its net profit.
30 Oct 2009, 0128 hrs IST, Ramkrishna Kashelkar
ONGC reported a marginal net profit growth of 6%;price revision could boost profiit.
30 Oct 2009, 0120 hrs IST, Santanu Mishra
Zinc business continues to be the best-performing business segment for Sterlite Industries, quarter after quarter.
30 Oct 2009, 0353 hrs IST, Joji Thomas Philip & Ranjit Shinde
Tata Teleservices suffers net loss of Rs 2,505 cr even as innovative billing scheme helps co attract record subscribers.
30 Oct 2009, 0327 hrs IST
Shoppers Stop shares closed at Rs 287 on BSE on Thursday, up 4.65 % from its previous day’s close.
30 Oct 2009, 0326 hrs IST
Bajaj Electricals on Thursday announced a 139% quarterly growth on higher sales of consumer durables amidst economic slowdown.
30 Oct 2009, 0325 hrs IST
The total business grew from Rs 1,60,514 crore to Rs 1,87,853 crore, posting a 17.03% year-on-year growth.
30 Oct 2009, 0324 hrs IST
Rise in treasury gains and net interest income have helped Corporation Bank post a net profit of Rs 291 crore for the quarter ended September 2009 - an increase of 52% over the corresponding quarter last year.
30 Oct 2009, 0323 hrs IST
HeidelbergCement India reported a net profit of Rs 27.1 crore for the quarter ended September 30, 2009, while it had a net profit of Rs 10.1 crore in the same period previous fiscal.
30 Oct 2009, 0322 hrs IST
Losses in the July-September quarter narrowed to Rs 158.8 crore from Rs 2,625.3 crore a year ago, the company said in a statement.
30 Oct 2009, 0321 hrs IST
The growth in profit is fuelled by higher interest and treasury income.
30 Oct 2009, 0318 hrs IST
The quarterly net sales grew to Rs 858.5 crore in the July-September quarter, a marginal increase of 2.38%.
30 Oct 2009, 0317 hrs IST
DLF’s profit of Rs 440 crore was slightly lower than analysts’ expectations. An ET poll of 15 analysts saw the net profit at Rs 492 crore.
Src: Economictimes, Businessline, BusinessStandard, Moneycontrol
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