A shift in investment from bank deposits to instruments like MFs and G-secs has trimmed treasury profit for Reliance Industries to just over 29 per cent of the net income in the June quarter, from 40 per cent for many quarters.
Trading profit, which used to average around 40 per cent in the past many years, has narrowed to just about Rs 1,832 crore which is 29.4 per cent of the overall net income of Rs 6,222 crore in the quarter to June of the Mukesh Ambani-led behemoth, according to the Q1 numbers released by it.
“The proportion of our bank deposits in our overall investments has now come down to about 15 per cent which used to be the highest for long. Now we park most of our cash balance (which stood at over 87,000 crore in Q1) in debt mutual funds, government bonds, etc. Therefore you see a decline in the other income,” RIL joint chief financial officer Srikanth Venkatachari said.
He was talking to reporters here over the weekend while announcing the June quarter earnings when the company reported its best set of numbers in the past seven years.
For the quarter to June 2015, RIL’s treasury income or other income or trading income stood at Rs 1,832 crore, down from Rs 1,974 crore a year ago and further down from Rs 2,172 crore in the March quarter of the last fiscal.
In FY15, with a whopping Rs 8,495 crore (down from Rs 8,911 crore in FY14), trading income contributed 36 per cent of its total Rs 23,566 crore net profit.
For the fiscal year 2014, the share of Reliance’s treasury income was a still higher 40.53 per cent at Rs 8,936 crore out of the total net income of Rs 21,984 crore, as per the company’s declared numbers. In FY13, contribution of treasury income was 37.14 per cent at Rs 7,800 crore.
RIL, known for its largest cash balance among the domestic companies, had a cash balance of Rs 87,391 crore in the quarter to June, up from over Rs 84,000 crore in the March quarter, while the debt on its book jumped to Rs 170,814 crore from Rs 160,860 crore during the same period.
In the December quarter its debt stood at Rs 160,860 crore from Rs 150,007 crore a year ago.
RIL began to net a good chunk of its profit from trading income when its oil and gas business was not doing well in the past few year due to subdued demand. Reliance is one of the largest treasury dealers in the country.
In the June quarter RIL, which operates the world’s biggest refining complex at Jamnagar in Gujarat which can process low-grade crude and switch between fuels depending on market prices, reported its best set of numbers in seven and a half years.
Its standalone net profit growth of 11.8 per cent at Rs 6,318 crore, and a 4.4 per cent jump in consolidated net at Rs 6,222 crore, even as revenue fell 26 per cent to Rs 77,130 crore, hurt by a sharp fall in prices of crude oil and petroleum products.
The first quarter profit in the current financial year was highest since earnings in the December 2007 quarter. The margins were boosted by a near record USD 10.4 gross refining margin it could book on each barrel of crude.
This was the highest gross refining margin it has earned in six years as compared to USD 10.1 per barrel margin in preceding March quarter and USD 8.7 in Q1 of FY15.