Reliance Industries (RIL), the country's largest private sector oil refiner, posted a 9.8 per cent drop in net profit for the quarter ended December 2008, as refining margins and income declined.
The company’s net profit (excluding exceptional items) slipped to Rs 3,501 crore during the quarter -- described by RIL Chairman Mukesh Ambani as "one of the most challenging quarters for Reliance" -- from Rs 3,882 crore in the previous corresponding quarter, beating analysts forecasts.
This was its first drop in quarterly profit in three years.
Gross refining margins (GRM) were at $10 per barrel against $15.4 per barrel a year ago. RIL refinery, however, maintained a premium of $6.4 per barrel over Singapore complex GRM.
Turnover during the quarter was down 9.3 per cent to Rs 31,563 crore. The company’s revenue from refining was down 16.8 per cent to Rs 21,740 crore as against Rs 26,154 crore in the corresponding previous quarter.
RIL controls around 22 per cent of the country’s refining capacity.
Revenue from the petrochemicals division, the main money-spinner for the company, almost remained flat at Rs 12,623 crore as compared to Rs 12,706 crore a year ago.
Revenue from the oil and gas increased 36 per cent at Rs 1,031 crore as against Rs 758 crore third quarter of 2007. The company began producing crude oil from its Krishna-Godavari basin in September.
Commenting on the results, Kamlesh Kotak, head, Asian Market Securities said: “The heat on account of interest cost has been lower and the company gained from interest on money parked in bank and other deposits.”
For the nine months ended December 2008, the company's net profit was up 3.4 per cent to Rs 11,733 crore as compared to Rs 11,349 crore in the same quarter last year.
Profits for the third quarter would have been lower by Rs 1,177 crore had the company provided for loss arising out of the foreign exchange difference on overseas borrowings according to the Accounting Standard-11, the company said in a statement. RIL adjusted this loss on value of assets it holds in the balance sheet in compliance with the Companies Act, citing legal advice.
The company has spent around Rs 18,109 crore primarily on its oil and gas business during the first nine months of the financial year, the statement added.
Expressing satisfaction over the company's performance at a time of extreme volatility in prices and margins, Ambani said: "Reliance performed commendably in this environment, with high operating rates."
During the quarter under review, the expenditure of the company declined 8 per cent to Rs 27,517 crore, mainly due to 31 per cent decline in consumption of raw material, which stood at Rs 16,261 crore against Rs 23,593 a year earlier.
The Jamnagar refinery processed 24.2 million tonnes of crude, a utilization rate of 98 per as compared to 23.7 million tonnes of crude oil processed during the corresponding period of the previous year. Average refinery utilization was at 83.2 per cent in North America and 83.6 per cent in Europe, the statement said.
The company also announced a voluntary separation scheme for the employees of Patalganga unit during the quarter. About 430 employees accepted the Voluntary Separation Scheme offer, where the company paid Rs 110 crore towards the same.
The company’s scrip closed at Rs 1,132.95, up 1.21 per cent on the Bombay Stock Exchange today.
