Reliance Industries Ltd (RIL) has reported 13.7 per cent growth, on a consolidated basis, in net profit at Rs.5,957 crore for the first quarter ended June 30, 2014, as compared to Rs.5,237 crore in the same period last year. The company’s turnover during the period has gone up by 7.2 per cent to Rs.1.08 lakh crore from Rs.1.01 crore in the same period last year. This is the first time that the company has included the performance of its retail and shale gas business in the consolidated balance sheet.
Higher prices primarily accounted for growth in revenue and higher gross refining margin (GRM) in its refining business contributed to growth.
“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. The petrochemicals business performance highlights the strength of our portfolio-mix and end-market diversity,” said Mukesh Ambani, Chairman and Managing Director, RIL.
“Alongside this robust financial performance, we also made significant progress on our growth commitments. We have 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,” Mr Ambani added.
In the refining and marketing business, RIL reported GRM of $8.7 a barrel as against $8.4 a barrel in the corresponding period of the previous year and $9.3 a barrel in the previous quarter.
RIL’s GRM was much better than Singapore refining margin, which was lower at $5.8 a barrel in the first quarter and $6.7 a barrel in the first quarter of the previous year.
In the first quarter, revenue from the petrochemicals segment increased by 9.3 per cent. In the oil and gas exploration and production business, the company’s KG-D6 field produced 0.53 million barrels of crude oil and 0.09 million barrels of condensate in the first quarter, a reduction of one per cent in crude oil and a growth of 48 per cent in condensate.
The company’s gas production from KG-D6 was 42 BCF, a decline of 15 per cent from the same period last year. “Fall in production is mainly on account of shut down of wells in D1-D3 field, partly offset by incremental production from new wells drilled as part of Enhanced Gas Recovery (EGR) activities during the second quarter of last year,” the company said.
RIL top officials declined to comment on the ongoing dispute with the government concerning shortfall in production from the KG fields, stating that the matter was under arbitration. The company also dismissed reports that penalty was imposed by the government due to shortfall in KG gas production. RIL said its shale gas business performed well.
In organised retail space, the company’s revenue in the quarter grew by 15 per cent year-on-year to Rs.3,999 crore from Rs.3,492 crore. The company said it recorded strong profitability and continued growth momentum in the first quarter. “Gross margin improvement, strong variable expense control and leverage of fixed expenses contributed to this performance,” RIL said.
“The result is much better than street expectations. Refining margin was better, top line was expected to be flat but it grew over 7 per cent and there was lower interest cost. Overall the result was positive,” said Ambareesh Baliga, Independent analyst.
