Reliance Industries on Friday reported a 4.4% jump in its net profit to Rs 6,222 crore in the April-June quarter, driven by better-than-expected gross refining margins (GRMs). GRMs, the highest recorded by the company in the last six years, stood at $10.40 per barrel compared with $8.70 a barrel in the first quarter of the last fiscal and $10.10 a barrel in the preceding quarter. The GRMs were at a premium to the benchmark Singapore complex margin, which averaged $8 per barrel during the first quarter.
RIL officials said that the demand-supply scenario for fuels was favourable at the moment with a sharp rise in demand for transportation fuels helping the company realise strong refining margins. Strong gasoline cracks led by strong demand, lower energy costs and favourable crude differentials supported the margins.
“Oil product demand globally is estimated to have grown at 1.6 million barrels per day year to date (YTD), resulting in high refinery runs across all regions,” RIL chairman and managing director Mukesh Ambani stated in a release.
The chairman added that the financial performance reflects the benefits of integrated hydrocarbon chain activities in a benign oil price environment.
During the quarter, earnings before interest and tax or Ebit of the refining and marketing business rose by 37.7% to Rs 5,252 crore.
The Jamnagar refinery processed 16.6 million tonnes of crude with an average utilisation of 107%. RIL saw its turnover for the first quarter fall 23% y-o-y to Rs 83,064 crore.
The decline in revenue was led by the 43.5% y-o-y decline in the benchmark (Brent) oil price. Also, exports from RIL’s Indian operations were 45% lower at Rs 36,717 crore due to lower product prices in line with lower crude oil prices.
The petrochemicals segment’s Ebit increased sharply by 25.5% to Rs 2,338 crore, led by strong polymer deltas and a sharp rebound in fibre intermediate deltas. “Our petrochemicals business recorded a strong quarterly performance supported by high operating rates and margin strength in the ethylene chain,” Ambani stated. He added that the petcoke gasification project and ethylene cracker are on track for planned start-up in 2016.
Ebit from the oil and gas production business, however, dropped 97% to Rs 32 crore. Revenue for the domestic E&P operations was at Rs 1,200 crore, down 22.9% on account of lower oil/condensate prices and a decline in gas production. As a result, Ebit for the domestic operations also declined by 83% to Rs 83 crore.
The shale business in the US continued to face challenges due to strong macro headwinds characterised by weak benchmark prices and high differentials. The segment revenue fell sharply by 47.2% to Rs 854 crore, while the company posted an Ebit level loss for the first time at Rs 49 crore.
Revenue for Reliance Retail in the first quarter grew by 17.5% y-o-y to Rs 4,698 crore and a PBDIT of Rs 203 crore against Rs 171 crore in the corresponding period a year earlier. As on June 30, 2015, Reliance Retail operated 2,747 stores across 210 cities in India.
RIL’s outstanding debt was higher at Rs 1,70,814 crore as on June 30, 2015, compared with Rs 1,60,860 crore as on March 31, 2015. It had a cash balance of Rs 87,391 crore. Interest costs during the quarter stood at Rs 902 crore against Rs 505 crore in the corresponding period of the previous year. Interest cost was higher mainly on account of the depreciation of the rupee during the quarter.