Reliance Industries net profit up 11.5% courtesy standout refining business performance


The bottom line for the quarter was partly boosted by lower taxes and interest expenses; operating profits rose by 9.76% year-on-year to Rs 13,613 crore. (Reuters)

Thanks to a spectacular performance by its refining business which clocked a gross refining margin (GRM) of $11.50 a barrel, Reliance Industries (RIL) on Monday reported a consolidated net profit Rs 8,053 crore for the three months to March, an increase of 11.5% year-on-year. The bottom line for the quarter was partly boosted by lower taxes and interest expenses; operating profits rose by 9.76% year-on-year to Rs 13,613 crore.

For the year to March, RIL reported a net profit of Rs 29,833 crore, marginally lower than the Rs 29,861 crore in FY16. Excluding exceptional items, however, net profit rose 18.8% to Rs 29,901 crore.

Chief financial officer Alok Agarwal said several of the company’s projects were reaching completion and were in various stages of pre-commissioning. The refining segment posted strong margins of $11 per barrel for the year, the highest in eight years, outperforming Singapore benchmarks thanks partly to efficient sourcing of crude and the fact that the product slate had less of the light distillates. Exports amounted to 60% of the product placement while 20% was for domestic consumption with the rest being used for captive consumption.

However, difficult conditions continued in the upstream business, Agarwal said, adding production in 2016-17 was 95 billion cubic feet (bcf) in FY17, about 23% lower than in the previous year. The production at KG-D6 was under 8 million cubic metres of gas.

Agarwal said the company had not been investing meaningfully in the shale gas business and was in the value preservation mode; production during the year, he said, had been160 bcf. Although the unit realisations had picked up, business was is in a difficult state.

Agarwal said RJio — the company’s telecom business — had over 72 million paid subscribers at the end of March 2017 and the tariff plans were gaining traction. It is the largest data network globally and carried 85% of all data traffic in the country.

The RIL subsidiary’s net loss widened to Rs 22.50 crore for the six months ended March 2017 against a net loss of Rs 13.63 crore in the year-ago period.

The retail business grew its revenues by 60% plus during the year to Rs 33,765 crore, reporting an Ebit or earnings before interest and tax of Rs 784 crore. The company has 3,616 stores in 702 cities and a trading area of 13.5 million sq ft.

Despite the strong GRM of $11.50 per barrel in the March quarter, which outperformed the Singapore complex margin handsomely, the stand-alone Ebit from the refining and marketing business fell 1.3% year-on-year in the March quarter to Rs 6,294 crore, partly on account of lower gasoline and naphtha cracks. However, on a sequential basis, Ebit was higher by 1.6%. The company had debt of Rs 1.96 lakh crore and cash and cash equivalents of Rs 77,300 crore. The company’s net debt is below Rs 1.2 lakh crore.

Revenue from operations rose to Rs 3.3 lakh crore in FY17 from Rs 2.93 lakh crore in the previous year, up 12.5%. Operating profit came in at Rs 55,529 crore, higher by 12.4%.