RIL disappoints with Q1 net growth of 10 per cent
20 Jul 2006
Reliance Industries (RIL) has announced first quarter results, which show very strong revenue growth, but increasing pressure on operating margins because of higher input costs. The company benefited from high crude oil and petrochemical prices during the quarter, but petroleum-retailing operations were on a low key because of negative realisations.
Consolidated net profits for the quarter ended 30th June 2006 increased 10.26 per cent to Rs2,547 crore from Rs2,310 crore for the same period of previous year. Consolidated net sales revenues were higher by 37.89 per cent at Rs24,522 crore as compared to Rs17,784 crore for the previous year quarter.
Operating profits, excluding other income, for the quarter were higher by 18.82 per cent while operating margins declined by nearly 285 basis points. Operating margins as a percentage of net sales declined to 17.28 per cent from 20.05 per cent during the previous year quarter.
Much of the decline in operating costs was due to a sharp 45.44 per cent rise in input costs and operating expenses. Staff costs were higher by 25.69 per cent while other expenses went up by 27.52 per cent.
Interest expenses for the quarter saw a modest rise of 12.24 per cent while depreciation charges were higher by 14.67 per cent. Provision for taxation went up by 32.94 per cent.
Other income for the quarter declined substantially to Rs44 crore from Rs194 croe, affecting the bottom line.
Gross sales revenues of the petrochemicals division witnessed very strong growth of 46.73 per cent during the quarter while gross refining revenues increased 29.62 per cent. The refinery was shut for 14 days for planned maintenance, which affected revenue growth. Despite the shutdown, the refinery achieved 91 per cent capacity utilisation during the quarter and processed 7.51-million tonnes of crude.
RIL's refinery upgradation is paying rich dividends, as gross refining margins are significantly higher than other Asian refineries. The company's average refining margins stood at $12.4 per barrel as compared to average Singapore complex margins of $8.9 per barrel.
Contribution of petrochemicals to total revenues increased to 31.39 per cent from 28.78 per cent for the previous year quarter while contribution of refining declined to 66.91 per cent from 69.44 per cent.
The company produced 3.52 million tonnes of oil & gas and petrochemicals, an increase of 7 per cent from the previous year quarter. Exports jumped substantially by 86 per cent to Rs13,270 crore from Rs7,144 crore.
Capital expenditure for the quarter was over Rs1,900 crore, primarily on account of exploration & production, implementation of value maximisation projects and other capital expenditure. During the quarter the company acquired 90-crore equity shares of Reliance Petroleum (RPL) at Rs60 per share. Consequent to RPL's 20-per cent share issue to public and 5-per cent stake sale to Chevron by RIL, RIL now holds 75 per cent equity stake in RPL at an investment of Rs6,750 crore.
