RIL logs 19% profit growth in Q1 on strong margins

Reliance Industries posted a 19 per cent jump in its first-quarter net profit at Rs 5,352 crore (Rs 53.52 billion) on back of stronger margins in its core oil refining and petrochem businesses.Net profit soared 18.9 per cent to Rs 5,352 crore, or Rs 16.6 per share, in April-June quarter from Rs 4,503 crore (Rs 45.03 billion), or Rs 13.8 per share, a year earlier, the company said in a statement.

Reliance Industries Ltd (RIL), which operates the world's biggest refining complex at Jamnagar in Gujarat, reported a 84 per cent rise in revenue from its shale gas venture in US on rising production. Petrochemical margins improved while retail revenue rose 53 per cent.

The company posted a better-than-expected gross refining margin of $8.4 per barrel in the first quarter ended June, 30. It had earned $7.6 on turning every barrel of crude oil into fuel in Q1 of 2012-13 fiscal.

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However, gas production at its flagship KG-D6 field dropped by a steep 53 per cent to 49.2 billion cubic feet or 15.32 million cubic metres per day. RIL had produced about 33 mmcmd in April-June quarter last year and 49 mmcmd in Q1 of 2011-12.

"Fall in production is mainly attributed to geological complexity, natural decline in the fields and higher than envisaged water ingress," RIL said.

Production at Krishna Godavari basin fields has since dropped 14.02 mmcmd this month and government's Directorate General of Hydrocarbons (DGH) predicts it will not rise before 2016-17.

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"Reliance achieved strong results during the first quarter of FY 2013-14, while investing in projects that will provide sustainable advantage for a longer period," company Chairman and Managing Director Mukesh Ambani said.

RIL is investing Rs 1.5 lakh crore (Rs 1.5 trillion) in new projects.

Ahead of the results announcement, RIL shares hit a six-month high of Rs 923.15.

Performance in Q1, Ambani said, reflects "higher operating rates and embedded options in crude sourcing and product placement, given the size and scale of the refining business."

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Robust growth in petrochemical products demand augurs well for our biggest ever expansion programme, he said adding retail has seen "remarkable" progress with a 53 per cent growth in revenues in Q1 to Rs 3,474 crore.

Sequentially, the company's performance was not good with a 4.2 per cent drop in net profit over Rs 5,589 crore (Rs 55.89 billion) profit in January-March quarter.

Debt soared to Rs 80,307 crore (Rs 803.07 billion) at the end of Q1, up from Rs 72,427 crore (Rs 724.27 billion) at the beginning of the fiscal.

At quarter end, it had a cash pile of Rs 93,066 crore (Rs 930.66 billion), making the company debt free on a net basis. Cash in hand increased from Rs 70,252 crore (Rs 702.52 billion) at the end of March.

The company, which has invested an aggregate of  $6 billion in three shale gas projects in US, saw revenues from its American operations rose 84 per cent to $214.5 billion.

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Its revenue from oil and gas business fell 42 per cent to Rs 1,454 crore (Rs 14.54 billion) and segment earnings before interest and tax by 64 per cent to Rs 352 crore (Rs 3.52 billion).

Reliance's twin refineries at Jamnagar process slightly less crude oil at 17.1 million tonnes and saw segment revenue drop 4.6 per cent to Rs 81,458 crore (Rs 814.58 billion). But the segment EBIT was up 38.5 per cent to Rs 2,951 crore (Rs 29.51 billion).

Petrochem EBIT was up 7.5 per cent at Rs 1,888 crore (Rs 18.88 billion).

Other income increased from Rs 1,904 crore (Rs 190.4 billion) to Rs 2,535 crore (Rs 25.35 billion) on account of a larger cash balance.