Reliance Industries Ltd (RIL) on Friday reported a net profit of Rs 7,398 crore in the quarter to March, up 16 per cent from a year ago, as it expanded margins in the refining and petrochemical businesses. Gross refining margins for the year improved to $10.80 compared to $8.60 in FY15.
The company’s board also recommended a dividend of Rs 10.5 per share. Revenues for the quarter, however, were down 8.9 per cent to Rs 64,569 crore primarily because of a decrease in the price of crude oil. Benchmark crude oil prices declined about 41 per cent from a year ago to average $30.4 per barrel in the fourth quarter ending March. The lower price of oil also helped bring down its raw material costs.
A strong operating performance in the refining and petrochemical businesses coupled with a favourable exchange rate movement helped the company increase its operating profit by 21.7 per cent.
The refining business accounted for a lion’s share of RIL’s business with revenues of Rs 48,064 crore. While lower crude oil prices dented revenue growth, the company processed a record 17.8 million metric tonnes of crude in January to March, representing an utilisation rate of 115 per cent. That supported with gross refining margins (GRMs — realisation from turning every barrel of crude oil into finished products) of $10.8 per barrel drove up operating margins in this business.
Earnings before interest and tax (Ebit) margin in the quarter was 13.3 per cent, up 4.6 percentage points from a year ago.
The story is the same in the petrochemicals segment as well. While lower product prices led to a year-on-year decline in revenues, higher volumes and robust polymer demand helped expand margins. Ebit margins in this segment was 13 per cent during the quarter, an increase of 3.8 percentage points from the year ago.
The retail business, on the other hand, continues to do well. Revenues increased by one-fifth to Rs 5781 crore in the March quarter while Ebit rose by one-fourth to Rs 131 crore.
Some of the gloss from these numbers was taken off by the poor performance of the oil & gas exploration segment. Revenues fell by one-third from a year ago while profits fell 97 per cent mainly because of lower oil and gas price realisations and decrease in production volume.
Similarly, the company’s other income (or investment income) fell by 19 per cent to Rs 1758 crore. But almost flat tax expense increase and low interest outgo helped cushion the bottomline.
Reliance Industries Ltd’s debt at the end of March 2016 was Rs 1,81,079 crore, an increase of 12.5 per cent from a year ago, but then the company is sitting on a cash pile of Rs 86,033 crore.
For the full financial year 2015, its net profit was higher by 17.2 per cent from a year ago at Rs 27,630 crore.
“Looking ahead, we are focused on ensuring a flawless start-up and stabilisation of the new growth platforms across our hydrocarbon and consumer businesses. The commercial roll-out of our Jio services this year will digitally enable a billion Indians and propel growth for India and Reliance, “ said company chairman Mukesh Ambani in a statement.
The company’s shares closed marginally down at Rs 1,038.75 at the Bombay Stock Exchange on Friday, ahead of the results announcement. The stock gained 18 per cent in the past 12 months compared to a 7.4 per cent loss for the benchmark BSE Sensex.