RIL Q2 net profit down 5.7% to Rs5,376 crore despite higher revenues

Moneylife Digital Team 15 October 2012

Reliance Industries said weakness in global economies and resultant margin environment resulted in its second quarter net profit declining 5.7% even as its revenues increased by 15.4% to Rs93,265 crore

Reliance Industries (RIL), India's largest private sector company, on Monday reported a 5.7% fall in its second quarter net profit.

For the quarter to end-September, RIL said its net profit fell to Rs5,376 crore from Rs5,703 crore even as its total revenues, including sales, increased 15.4% to Rs93,265 crore.

Similarly, for the first half ending 30th September, the Mukesh Ambani-owned company said its net profit fell 13.3% to Rs9,849 crore while total revenues rose 14.4% to Rs1,88,191 crore.

“RIL’s business and financial performance for the first half of FY 2012-13 has been satisfactory despite weakness in global economies and the resultant margin environment. On a sequential quarter basis, net profit for the quarter was up 20% at $1 billion," said Mr Ambani, in a release.

During the second quarter, RIL reported a gross refining margin (GRM) at $9.5 per barrel (bbl). For the first half, the company said its GRM was at $8.5 per bbl.

RIL said cumulative production its Krishna-Godavari (KG) Basin D6 block was 1.7 million barrels of crude oil and 197 billion cubic feet (BCF) of natural gas in first half of FY13, reduction of 37% and 35.1% respectively on a year-on-year (Y-o-Y) basis. This reduction was due to reservoir complexity and natural decline. Production of gas condensate was 0.3 million barrels, a reduction of 25% over the previous period, it added.

RIL is setting up a $4 billion petroleum coke gasification project that will produce synthetic gas which will replace expensive LNG as fuel at the refinery. “We are adding significant project of petroleum coke gasification,” Tony Fountain, chief executive for refining and marketing, RIL, told reporters earlier in the day.

He said the company continues to keep most of its 1,452 petrol pumps closed in the absence of a level playing field with its main public sector competition.

While the government has freed petrol pricing, diesel continues to be sold at heavily subsidised rates. “We are not selling diesel anywhere... Only a few outlets are operating (for petrol sales),” he said. “We were 13% of the market (before outlets were shutdown as it could not complete with public sector).”

“We are ready to reopen (petrol pumps) if the fiscal environment is right,” Fountain said, adding that the government should either free diesel pricing from its control or provide subsidy equivalent to private firms as well.

India has 25 oil refineries with a crude oil processing capacity of 215.066 million tonnes. This will rise to 264.966 million tonnes by 2015-16 as fuel demand grows. Diesel consumption grew by 7.8% in 2011-12 and by 10.2% in the first quarter of current fiscal.

On Monday, RIL closed marginally higher at Rs823.20 on the BSE, while the benchmark Sensex also closed marginally up at 18,713.

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