RIL Q4 net dips 9% to Rs 3,546 cr

Written by Corporate Bureau | Mumbai | Updated: Apr 24 2009, 06:22am hrs
Reliance report
Reliance Industries (RIL), Indias largest private company by market capitalisation, on Thursday reported a 9.4% drop in its quarterly net profit, on falling fuel demand and thinning crude processing margins.

The companys net profit for Q4 of FY09 stood at Rs 3,546 crore, compared to Rs 3,912 crore in Q4 of 2007-08 . The profits were aided by a one-time gain of Rs 993 crore in the quarter from interest on cash balance and an insurance claim of Rs 60 crore.

Reliance made a one-time provision of Rs 370 crore towards estimated claims on subsidiaries, it said, without elaborating. Before providing for the claims, profits stood at Rs 3,874 crore. Sales for the quarter dipped 24.9% to Rs 29,073 crore from 38,697 crore.

In the third quarter, too, the companys net profits had dipped 10%. This time round, RIL managed to prevent a drastic profit fall by posting better gross refining margins (GRMs). The GRM for the quarter was at $9.9 per barrel, while for the year ended March 31, 2009, it was at $12.2.

Meanwhile, the market got a whiff of a better-than-expected results for the company; its shares gained 2.7% to close at Rs 1,762.35 on the Bombay Stock Exchange on Thursday.

For the financial year 2008-09, the companys net profit dropped 21.5% to Rs 15, 279 crore from Rs 19,458 crore in the previous year. Sales for the year stood at Rs 1,50,771 crore against 1,39,269 crore a year ago, a growth of 8.3%.

RIL is understood to have kept all greenfield projects on hold for the next two years, which will be a phase of consolidation for it.

Commenting on the results, Mukesh Ambani, chairman & managing director, RIL, said, This was a transformational year for Reliance. We commissioned our large refinery and substantially completed gas development projects. We have set new global benchmarks for project execution. Our operating performance with earnings growth is creditable in a year of extraordinary challenges of price volatility and demand reduction.

Reliances top line came in line with our expectations, while adjusted net profit came above expectations, mainly driven by higher petrochemical margins and higher than expected other income, said Amitabh Chakraborty, president-equity, Religare Capitals Market.

RIL said its revenue for the refining and marketing segment rose 11.5% to Rs 1,12,351 crore, from Rs 1,00,743 crore, mainly on high product prices driven by high crude oil prices during first half of the year.

Also, RILs Jamnagar refinery processed 32 million tonnes of crude, a utilisation rate of 97% compared to 31.8 million tonnes in the previous year. Average refinery utilisation was 83% in North America, 81.9% in Europe and 80.5% in the Asia-Pacific region.

On the flip side, RILs employee cost increased to Rs 2,358 crore for the year from Rs 2,119 crore, primarily on a voluntary separation scheme (VSS) offered to employees at the Patalganga unit in the December quarter.

RIL is expected to get an earnings boost only after natural gas production from the KG basin oilfields goes fully on stream, pumping over 40 million cubic metres of natural gas a day, say analysts.

Deepak Pareek, an analyst with Angel Broking, said RILs performance has been driven by its petrochemical segment, alhough revenues in the petrochemical business saw a marginal decline from Rs 53,000 crore to Rs 52,767 crore during the year.