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RIL Q1 consolidated net profit up 18 percent on higher refining margins

The company's gross refining margins (GRM) rose to $11.5 a barrel in Q1 FY17, from $10.4 per barrel a year earlier

Salil Panchal
Published: Jul 15, 2016 06:46:53 PM IST
Updated: Jul 15, 2016 07:54:41 PM IST
RIL Q1 consolidated net profit up 18 percent on higher refining margins
Image: Shailesh Andrade / Reuters

India’s second largest firm by market value, Reliance Industries Ltd (RIL) on Friday reported a consolidated net profit of Rs 7,113 crore for the quarter ended June 30, 2016—up 18.1 percent from Rs 6,024 crore a year ago, led by strong refining margins, beating street expectations.

In a statement to BSE, the oil-to-yarn and retail conglomerate reported consolidated revenues of Rs 64,990 crore in the three months ended June 30, a 15.17 percent decline compared with Rs 76,615 crore in the year-ago quarter. The fall in turnover was due to a correction in global crude oil prices, which had a bearing on the rates of crude-linked products that RIL manufactures and sells such as petrol, diesel and petrochemicals.

“We maintained our earnings growth trajectory during this quarter, as the world grappled with new dimensions of economic uncertainty,” said RIL chairman Mukesh Ambani in a statement. “Though regional refining margins trended downwards, our high-conversion refining system was able to take advantage of higher margins on middle distillates and wider discounts on sour crude oils,” he added in the statement.

In its fiscal first quarter, Reliance’s profits were boosted by a jump in gross refining margins (GRM)— the difference between the value of refined products sold and the cost of crude—that stood at $11.5 per barrel, compared with $10.4 per barrel a year earlier. A dip in crude oil prices brought down RIL’s cost of raw material by 25.5 percent to Rs 37,469 crore in Q1 FY17, from Rs 50,305 crore a year earlier, thereby boosting profitability.

The company’s stock ended up 0.61 percent at Rs 1,012.55 on BSE, ahead of the earnings which were announced after market hours.

Finance costs for the company jumped by around a third year-on-year (Y-o-Y) to Rs 1,206 crore in the quarter, from Rs 915 crore.

Revenues for oil and gas segment decreased 34.8 percent Y-o-Y to Rs 1,340 crore in the three months. “The decline in revenue was led by lower upstream production in domestic blocks coupled with sharply lower oil and gas prices in both the domestic and US shale segments,” the company statement said.

RIL’s petrochemicals segment reported a marginal decline in revenues, dipping 0.7 percent to Rs 20,718 crore in the quarter ended June 30, compared with Rs 20,858 crore a year earlier. This reflected lower product prices resulting from decline in feedstock prices, the company said, but was partially offset by higher volumes mainly due to new PTA and PET capacities. 

RIL is gearing up for the launch of its state-of-the-art fourth generation (4G) digital services business through its arm Reliance Jio Infocomm Ltd (RJIL), in the coming months. RJIL now has over 1.5 million test users on its network, with an average monthly consumption per user in excess of 26 GB and average voice usage per month of over 355 minutes. “The test programme will be progressively upgraded into commercial operations in the coming months,” the company statement said.

The conglomerate’s retail business continued to do well with a 45.8 percent increase in revenue to Rs 6,666 crore in the quarter, from Rs 4,572 crore a year ago.

RIL’s outstanding debt stood at Rs  1,86,692 crore as of June 30, 2016, compared with Rs 1,80,388 crore on March 31, 2016. The company’s cash and cash equivalents stood at Rs 90,812 crore on June 30, compared with Rs 89,966 crore on March 31, 2016.

(Reliance Industries Ltd. owns Network 18, the publishers of Forbes India)

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