February 17 2020
Reliance Ind net dips 21% on weak margins, lower output
21 April 2012


Profit hit for 2nd quarter running; 150% jump in ‘other income' saves day



Oil and gas major Reliance Industries Ltd has reported a lower net profit for the second consecutive quarter. In the quarter ending March 31, the company's net profit dipped 21.2 per cent to Rs 4,236 crore, while in the year-ago quarter, it was Rs 5,376 crore.The headwinds of global recession, coupled with lower refining margins, have led to a dip in profits.

In the reporting quarter, RIL reported a gross refining margin of $7.6 for every barrel of crude oil it processed, compared with $9.2 in the corresponding year-ago period.

The decline in net profit in the quarter was arrested by a near 150 per cent rise in other income to Rs 2,295 crore (Rs 917 crore in Q4-FY2011) and the lower tax outgo.

Net sales in the quarter rose 17.2 per cent to Rs 85,182 crore (Rs 72,674 crore).

In the year the ending March 31, the company reported a marginally lower net profit of Rs 20,040 crore (Rs 20,286 crore).

Net sales for the year increased 32 per cent to Rs 3,29,904 crore ( Rs 2,48,170 crore). In the year, the turnover was Rs 339,792 crore ($ 66.8 billion), an increase of 31.4 per cent on a year-on-year basis.

The refinery business accounted for a 36.8 per cent increase, petrochemicals recorded a 27.7 per cent increase while oil and gas revenues dipped by 25.2 per cent.

Higher crude oil prices resulted in cost of raw materials consumed increasing 42.2 per cent to Rs 274,814 crore ($ 54 billion) on a year-on-year basis.

Mr Jagannadham Thunuguntla, Strategist & Head of Research, SMC Global Securities, said: “The ‘core business' of the company is contributing just about 58 per cent of the profit before tax and the ‘other income' is contributing about 42 per cent of the profit before tax. To summarise, Reliance is making more and more money out of money, less and less money out of oil.”

It is perhaps time the company clearly outlined the cash deployment plan — regarding how it is going to use the Rs 70,252 crore. Else, this factor may remain a huge overhang on the performance of the stock, said Mr Thunuguntla.


Production from the KG-D6 block has been hit. In the year ending March 31, natural gas and crude oil production was 551.31 billion cubic feet (a dip of 23.5 per cent) and 4.94 million barrels (a decline of 37.9 per cent), respectively over the previous year.

The company, in a statement, said production from the block has been adversely impacted mainly because of unforeseen reservoir complexities and water ingress in the producing fields. Significant steps have been taken by the joint technical teams at BP and RIL in assessing the complexities.

The management committee that oversees the block's operations today approved the request from Reliance and BP for surveying the potential of all gas discoveries made in the block.

RIL shares closed at Rs 731.45 per share on the BSE, a decline of 1.39 per cent over the previous close.




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