Reliance Industries Ltd (RIL), India's largest company by market capitalisation, reported a quarterly net profit fall of 1 per cent on the back of falling global crude prices that impacted product prices and refining margins.
The company posted a net profit (excluding exceptional items) of Rs 3,874 crore for its fourth quarter ended March, against Rs 3,912 crore a year ago.
A statement from the company said it has provided Rs 370 crore toward estimated claims on account of subsidiaries, but did not elaborate. Profit before providing for the claims was Rs 3,546 crore.
Crude prices fell about 45 per cent to around $40 per barrel during the quarter, while RIL’s refining margins fell to $9.9 per barrel from $15.5 in the same period. The free fall in crude price has dented revenue 24.9 per cent at Rs 29,073 crore, from Rs 38,697 a year ago.
Analysts expected Reliance's refining margins to fall to $8-$12 a barrel in the March quarter, tracking the decline in Asian benchmark Dubai crack margin.
During the quarter, expenditure fell 25.72 per cent to Rs 24,252 crore.
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Segmental revenues of refining and petrochemicals fell 24.59 per cent and 31.13 per cent, respectively. Profit from the refining business was lower by 31.21 per cent at Rs 1,953 crore, while that of the petrochemicals business was Rs 1,722 crore, higher by 17.46 per cent. Other income rose to Rs 993 crore from 289 crore a year ago.
Ahead of the results, shares in Reliance closed up 2.7 per cent at Rs 1,762.35 in a Mumbai market that rose 2.9 per cent.
RIL’s annual profit before exceptional items increased 2.3 per cent to Rs 15,607 crore, while revenue rose 8.3 per cent to Rs 1,50,771 crore. Revenue from exports surged 12.6 per cent to Rs 94,038 crore. Earning per share (EPS), excluding exceptional items, was Rs 103.20 during the fiscal against Rs 105 in 2008-09.
The company with Rs 25,000 crore cash and cash equivalents had an outstanding debt of Rs 53,457 crore on March 31, 2009, against Rs 36,4870 crore in the same time last year.
Reliance agreed to buy crude at high prices last summer on expectations of a continued surge in demand. Since then, a sharp fall in prices due to the global economic turmoil meant cargoes were worth much less when they were delivered. The fall in crude prices resulted in lower prices for refined products, leading to inventory losses, the company said.
| THE BIG SQUEEZE (RIL’s quarterly and annual results) | |||||||
| Quarterly | Annual | ||||||
| Q4 FY08 | Q3 FY09 | Q4 FY09 | % Chg (Y o Y) | (In Rs. Crore) | FY08 | FY09 | % Chg (Y o Y) |
| 38,697 | 32,535 | 29,073 | -24.9 | Turnover | 139,269 | 150,771 | 8.3 |
| 3,912 | 3,501 | 3,546 | -9.4 | Net profit | 19,458 | 15,279 | -21.5 |
| 3,912 | 3,501 | 3,874 | -1.0 | Net profit* | 15,261 | 15,607 | 2.3 |
| * [excluding exceptional items] | |||||||
“This was a transformational year for Reliance,” Chairman and Managing Director Mukesh Ambani said in a statement, pointing to the commissioning of the Reliance Petroleum refinery and the completion of gas development projects. The company said oil production from KG-D6 block was expected to resume in the last week of April. The production was closed for repairs from December.
Analysts said Reliance should show significant growth in the coming quarters from sales of gas it started pumping this month from its deep-sea field off the east coast.
By year-end, output from the field in the Bay of Bengal is expected to reach a peak production of 80 mmscmd (million standard cubic metres of gas a day) — a level the upstream regulator has said can be sustained for six years.