Reliance Industries log first profit decline in nine quarters, Q3 net down by 4.5%

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New Delhi | Updated: January 16, 2015 8:34:53 PM

Reliance Industries reported a 4.5 per cent drop in its December quarter net profit at Rs 5,256 crore.

Reliance Industries, Reliance Industries December quarter, Reliance Industries quarter, Reliance Industries net profit, Reliance Industries profit, Reliance Industries shares, Reliance Industries newsConsolidated net profit in October-December 2013 stood at Rs 5,502 crore, Reliance Industries said. (Reuters)

Reliance Industries’ December quarter net profit dipped by 4.5 per cent to Rs 5,256 crore, its first profit decline in nine quarters, after a steep fall in crude oil prices hurt core refining business and margins.

Net profit in October-December 2013 quarter stood at Rs 5,502 crore, or Rs 18.7 a share while profit was Rs 5,972 crore, or Rs 20.3 per share, in June-September 2014 quarter.

RIL, the operator of world’s biggest oil-refinery complex, earned USD 7.3 for turning every barrel of crude oil into fuel in third quarter as compared to USD 7.6 a barrel gross refining margin (GRM) a year ago. The GRM in December 2014 quarter was also lower than USD 8.3 per barrel in the previous July-September quarter.

“The quarter witnessed heightened volatility across the hydrocarbon business. Benchmark crude oil prices declined by around 40 per cent through the quarter, with consequent impact on petrochemical feedstock and product prices,” the company today said in a statement.

Declining feedstock prices impacted buying sentiment across product categories, it said.

Commenting on the results, Mukesh D Ambani, Chairman and Managing Director, RIL said: “Our focus on operational efficiency and the superior configuration of assets helped us deliver an industry-leading performance in the refining and petrochemicals business despite sharp decline in crude and feedstock prices.”

RIL, he said, continued to advance margin adding refining and petrochemicals business capital investments, which will come to fruition over the next 4-6 quarters.

“These investments demonstrate our commitment to creating value through the business cycle,” he said.

Turnover dipped 20.4 per cent to Rs 96,330 crore in the December 2014 quarter. Exports also declined by 21.5 per cent to Rs 58,507 crore.

While debt rose to Rs 150,007 crore from Rs 142,084 crore as on September 30, 2014, cash-in-hand fell to Rs 78,691 crore as on December 31 from Rs 83,456 crore at the end of previous first quarter.

Earning from refining business fell 24.1 per cent to Rs 81,777 crore while the segment pre-tax profit was down 15 per cent at Rs 3,267 crore. Petrochemical business revenue too was down 15.2 per cent at Rs 23,001 and segment profit was down 2.4 per cent at Rs 2,064 crore.

Upstream oil and gas continued to slide with drop in the prime KG-D6 field production. Segment revenue slid 22.3 per cent to Rs 1,347 crore while pre-tax profit halved to Rs 267 crore.

“Fall in gas production (in KG-D6) is mainly due to natural decline in the fields partly offset by incremental production from new well MA08 and side track in well MA6H which was implemented in 2H FY14,” the statement said.

“Reliance results are broadly in-line with estimates,” said a report by Morningstar India.

RIL said its retail business defied the trend and continued to grow with turnover rising by 19 per cent to Rs 4,686 crore.

“The business recorded a strong like-for-like growth of up to 19 per cent across format sectors in the quarter aided by festive shopping and saw Reliance Retail post its highest ever PBDIT in a quarter of Rs 227 crore, an increase of 114 per cent on a Y-o-Y basis,” the statement said.

Reliance Retail saw net addition of 279 stores during the quarter accelerating the pace of store opening to over 3 stores a day.

RIL is investing close to USD 16 billion in expanding petrochemical production capacity and lower feed and fuel costs to boost profits.

It is investing USD 4.6 billion in an integrated gasification combined cycle (IGCC) project that will convert captive petrocoke to synthetic gas (syngas) which can be used to generate power, steam and hydrogen, which currently are being produced using expensive imported LNG.

Refinery off-gas from this unit will be used to extract petrochemical compounds like ethane, ethylene, propylene, butanes and propanes at a USD 4.5 billion Refinery off-gas cracker (ROGC). Another USD 5 billion is being spent on expanding polyester production capacity.

The firm will spend another USD 1.5 billion to import ethane from US to replace higher cost propane imports and naphtha.

The projects will be completed by FY18.

Reliance Industries, ONGC on top-100 global list for education CSR spending

Only two Indian companies — Reliance Industries and ONGC — have managed to made to a list of the world’s top-100 companies in terms of CSR spending on education, a new study said today.

Still, the Indian companies fare better than their counterparts in China and Japan in terms of the average CSR spending on education.

On the top-100 list, Reliance Industries is also ranked very low at 80th position, while ONGC is further down at 91st, according to the world’s first comprehensive study into global corporate education CSR spend, published today by the Varkey Foundation in partnership with UNESCO.

UK-based ArcelorMittal, owned by Laskhmi Mittal family of Indian origin, is ranked 75th, while the overall list is topped by Spain’s Banco Santander.

US-based IBM is ranked second, followed by Telefonica (Spain), ExxonMobil and Target (both from the US) in the top five.

As per the report, RIL spends USD 5.4 million on education related CSR activity while, ONGC spends USD 4.4 million and ArcelorMittal spends USD 5.6 million.

The top ten spenders on education-related CSR in the Global Fortune 500 are: Banco Santander (USD 197 million), IBM (USD 144 million), Telefonica (USD 130 million), Exxon Mobil (USD 116 million), Target (USD 95 million).

The figures are an average of the three years 2011-2013.

“The promotion of education and employment-enhancing vocational skills were two key focus areas for Indian companies, especially at primary and secondary levels,” the report said.

The vast majority of education related CSR spend went to primary education (39 per cent), followed by secondary education (29 per cent), vocational education (14 per cent), followed by spending on infrastructure (14 per cent).

Meanwhile, there are eight Indian companies in the Fortune Global 500 list of companies in terms of CSR spending on education, who spend USD 15 million a year, on education related CSR activities.

As a comparison, the 132 US companies in the Global Fortune 500 spend USD 1 billion on Education related CSR, the eight Spanish companies spend USD 344 million, 26 UK companies spend USD 331 million, eight Australian firms spend USD 151 million, 62 Japanese firms spend USD 136 million, 31 French firms spend USD 63 million and 95 Chinese firms spend USD 52 million on education related CSR.

The report further said that the largest 100 companies in India based on net sales, plus information from the government on Maharatna and Navratna Public Sector Undertakings (PSUs), showed an actual corporate spend of USD 57.9 million annually on education-related CSR.

The report noted that the entire 2013 Global Fortune 500 companies only spend 13 per cent of their total Fortune 500 CSR budget on education related activities and corporate giving to education is considerably below spending on other areas such as health.

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