Higher gas volumes from its Krishna-Godavari (KG) fields on the eastern coast have led Mukesh Ambani’s Reliance Industries (RIL) to one of its best quarterly performances till date.
Beating market expectations, it showed a 32 per cent increase in net profit at Rs 4,851 crore for the quarter ended June. The company had recorded a net profit of Rs 3,666 crore in the corresponding quarter a year earlier.
“We had yet another record quarter, due to high operating rates and improving margins across all our businesses. Reliance embarked on two major initiatives to create incremental value. We entered into joint ventures in shale gas to internationalise and diversify our upstream portfolio. Reliance has also committed itself to participate in the high growth and exciting area of broadband wireless. Both initiatives are in line with the strategy to identify and invest in new, value-creating businesses,” said Chairman and Managing Director Mukesh Ambani.
RIL earned $7.3 (Rs 341) on turning every barrel of crude oil into fuel during the quarter, against $6.8 (Rs 318) per barrel during the corresponding previous quarter.
“The numbers are in line with our expectations. The refining margins have moved up and the petrochemical cycle has improved. This is one of RIL’s best quarterly results in the recent past. Our estimate is that RIL would continue this rally for the next few quarters,” said Kamlesh Kotak of Asian Market Securities.
“The refining margins have been in the range expected. The only positive surprise in the result is the petrochemical volumes, that have improved,” said a senior analyst from a Mumbai-based firm.
RIL is producing about 60 million standard cubic metres of gas per day (mscmd) from the KG-D6 fields. The company began gas production at the fields last April. “During the quarter ended June 30, production from KG-D6 was 304,349 tonnes of crude oil and 5,376 mscmd of natural gas, growth of 207 per cent and 210 per cent, respectively, as the oil and gas production was under ramp-up during the corresponding period of the previous year,” the company said in a statement.
The quarter saw the company’s total income increase 84.8 per cent to Rs 58,950 crore from Rs 31,896 crore in the April-June quarter of 2009-10. The increase in volumes accounted for 48.4 per cent of the growth in revenue. Exports were higher by 103.5 per cent at Rs 32,849 crore, as against 16,145 crore in the corresponding previous quarter.
During the quarter, revenue for the petrochemical segment increased by 18.8 per cent from Rs 11,707 crore to Rs 13,903 crore. Increase in volumes accounted for about 60 per cent of this rise and higher prices for th rest.
RIL’s international operations during the quarter included farming out 30 per cent of its participating interest in Oman-Block 18 and 25 per cent in Oman-Block 41 to Oman Oil Company Exploration and Production. The company also farmed out 20 per cent of its participating interest in Colombia Borjo North and Borjo South to Ecopetrol.
Through its subsidiary, Reliance Marcellus LLC, it entered into a joint venture with US-based Atlas Energy and acquired a 40 per cent interest in Atlas’ core Marcellus Shale acreage position. In a similar deal, through its subsidiary, Reliance Eagleford Upstream Holding LP, it took a 45 per cent stake in US-based Pioneer Natural Resources Company’s core Eagle Ford Shale acreage position.
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For the quarter ended June 30, RIL had cash and cash equivalents of Rs 26,407 crore. These were in fixed deposits, certificates of deposits with banks, mutual funds, and government securities and bonds.
During the quarter, RIL bought 95 per cent equity in Infotel Broadband Services Pvt Ltd, which has emerged as a successful bidder in all 22 circles of the auction for Broadband Wireless Access. “RIL sees the broadband opportunity as a new frontier of the knowledge economy, in which it can take a leadership position and provide India with an opportunity to be in the forefront among the countries providing world-class 4G network and services,” the company’s statement added.
RIL’s scrip gained 0.14 per cent to close at Rs 1,053.50 on the Bombay Stock Exchange today.
