Improved refining margins drive growth, says Mukesh Ambani

Hit by production loss at its KG-D6 fields, Reliance Industries Ltd (RIL) has reported a 4.8 per cent growth in net profit at Rs.21,003 crore for the year ended March 31, 2013, against Rs.20,040 crore in the previous year. The turnover increased by 9.2 per cent to Rs.371,119 crore from Rs.339,792 crore.

For the fourth quarter ended March 31, 2013, RIL’s net profit jumped by 31.9 per cent to Rs.5,589 crore from Rs.4,236 crore in the fourth quarter of the previous year. But during this quarter, sales turnover dropped by 1.4 per cent to Rs.86,618 crore from Rs.87,833 crore in the year-ago period.

The board of the company has proposed a dividend of Rs.9 per fully paid up equity share of Rs.10, aggregating Rs.3,092 crore, including dividend distribution tax.

“Reliance has delivered another year of strong operating performance in an environment of continued volatile economic conditions. The growth in earnings was largely driven by strong and improved refining margins during the year,” Mukesh D. Ambani, Chairman and Managing Director, said in a statement.

“Production growth from our investments in unconventional liquids-rich resource plays in North America has reinforced our confidence in creating long-term value for our shareholders from this diversification,” Mr Ambani added.

Refining business revenues increased by 11.6 per cent, petrochemicals by 9.3 per cent while oil and gas revenues declined by 35.2 per cent on account of lower production. Higher prices accounted for 11 per cent growth in revenue which was partly offset by the decrease in volumes by 1.8 per cent.

Outstanding debt as on March 31, 2013, was Rs.72,427 crore. The company had cash and cash equivalents of Rs.82,975 crore.

“RIL’s profit came in line with expectations. Petrochemicals margins being under pressure and lowering of KG-D6 gas volumes remain areas of concern for the stock. The outlook for the stock would hinge on recovery in D6 gas volumes as well as cash deployment plans,” said Gautam Sinha Roy, Vice-President-Equities, Motilal Oswal Securities. At the KG-D6 block, cumulative production was 2.91 million barrels of crude oil, 0.40 million barrels of condensate and 336 billion cubic feet of natural gas in the financial year, a reduction of 41 per cent, 43 per cent and 39 per cent, respectively on a year-on-year basis.

The reduction in production was due to geological complexity, natural decline in the fields, higher water ingress and effect of shutdown in MA field on account of FPSO maintenance for a period of seven days, RIL said.

Gross refining margin (GRM) for the year was $9.2/ bbl as against $8.6 /bbl in the previous year. The retail business turnover grew by 42 per cent to Rs.10,800 crore. The business achieved cash break-even.

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