Reliance Q2 net rises 12.5% to Rs6,561 cr despite a 33.8% fall in revenue

16 Oct 2015

Reliance Industries Ltd (RIL) has reported a 12.5 per cent year-on-year increase in its fiscal second-quarter net profit at Rs6,720 crore compared with Rs5,972 crore in the year-ago quarter, on the back of higher refining margin and low global prices of crude oil.

During the July-September 2015-16 quarter, RIL's revenue, however, declined by 33.8 per cent to Rs75,117 crore from Rs1,13,396 crore in the July-September quarter of 2014-15, the company said in an earnings statement.

Total income from operations (net) slid 35.43 per cent to Rs70,901 crore down from Rs1,09,797 crore in the year-ago quarter.

RIL said its profit before depreciation, interest and tax (PBIT) increased by 6.4 per cent from a year earlier to Rs12,636 crore.

Gross refining margins – the money it makes by converting every barrel of crude oil into fuel and allied products – stood at $10.6 per barrel during the quarter, the highest in the past seven years.

The revenue fall reflected a 50.6 per cent year-on-year fall in benchmark oil price, RIL said.

This in turn impacted its exports from India, which were 35.5 per cent during the quarter at Rs42,636 crore compared to a year earlier, it said, adding lower crude prices resulted in lower prices for its products.

''Refining business performance was notable, as it benefited from a combination of high utilisation levels, advantageous crude market opportunities and strong global fuels demand,'' Mukesh D Ambani, chairman of Reliance Industries said.

Reliance Industries' premium over Singapore complex margins – a benchmark in the refining industry – widened to $4.3/bbl during the quarter, the highest level since early 2009, the company said.

During the quarter, revenue from oil and gas exploration and production business of Reliance Industries fell 31.1 per cent globally to Rs2,067 crore, while its domestic operations declined 15.5 per cent  to Rs1,166 crore. RIL attributes the fall in domestic revenue to lower oil/ condensate prices and decline in gas production from its KG-D6 block.

Oil production at RIL's KG-D6 block fell 24 per cent year-on-year to 0.39 mmbbl while gas production declined by 9 per cent to 37 BCF, the company said.

Revenue from RIL's US shale gas operations also saw a 44.6 per cent decline during the quarter to Rs897 crore from the year-ago period, because of lower WTI oil price, higher supplies from Opec, and adverse macro news flows, especially concerns over potential demand slowdown in China, it said.

Reliance Industries' retail business revenue grew 22 per cent year-on-year to Rs5,091 crore, while its profit before depreciation, interest, and tax (PBDIT) increased by 12.9 per cent to Rs210 crore, the company said. The retail unit added 110 stores during the quarter, taking the total stores under operations to 2,857 across 250 cities in the country.

RIL, which is gearing to launch its high-speed telecommunications services, said its retail unit ''will soon launch its own brand of 4G LTE smart phones under the brand LYF. The handset will have features enabling users to make phone calls using LTE and WiFi networks,'' it said.

Its media business - Network18 Media and Investments Ltd- had a revenue of Rs801 crore with an EBIDTA of Rs35 crore during the quarter, the company said.

The company's outstanding debt as of end-September increased by 7.4 per cent to Rs1,72,765 crore compared to Rs1,60,860 crore at the end of last fiscal ended March 2015. Its cash balances were at Rs85,720 crore as of end-September.