Margins push Reliance net profit up 42 per cent

Reliance Industries Ltd (RIL), India’s largest private-sector company, once again beat market expectations and came out with a 42 per c...

Reliance Industries Ltd (RIL), India’s largest private-sector company, once again beat market expectations and came out with a 42 per cent rise in quarterly net profit, boosted by better petrochemical prices and good refining margins.

Indicating that all’s well in its performance in the petrochem/refining sector, the July-September net profit of the Mukesh Ambani-controlled company rose to Rs 2,481 crore from Rs 1,752 crore a year ago. Net turnover rose 27 per cent to Rs 20,939 crore.

Analysts had earlier forecast the Q2 net profit to rise by 25-30 per cent.

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The company said increase in sales for the April-September sales reflected a 23 per cent rise in product prices and a 4 per cent rise in volumes from the same period a year ago.

Despite the good performance, Reliance — heaviest weight of 11.75 per cent in the Sensex — fell by 1.7 per cent to Rs 751.20 in a weak market.

It’s estimated that Reliance’s refining margins rose to $12 a barrel in the second quarter to end-September from $11 in April-June, on higher exports to the US, where hurricanes shut down refineries in August and September.

The refinery operated at 96 per cent capacity and processed 15.87 million tonnes of crude in from April to September. ‘‘Refinery margins were robust in all regions as product price increases were higher than the concomitant rise in crude oil prices,’’ Reliance said.

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Other income in April-September fell 35 per cent to Rs 416 crore due to the rise in crude prices, which the company was unable to absorb fully because it competes with government-subsidised fuel prices.

However, net operating margins were lower during the period at 19 per cent because of the conversion of preference shares of its telecom firm Reliance Infocomm into equity.

Exports rose 51 per cent to Rs 15,176 crore. The company’s production of oil, gas and petrochemicals, including toll conversion, increased to 6.54 million tonnes for the half-year, against 6.29 million tonnes for the corresponding previous period, an increase of 4 per cent.

In refining and marketing during the period under review, the domestic demand for petroleum products reduced by 0.6 per cent compared to first half of last year. This is against 5.5 per cent growth last year.

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The implementation of setting up of retail outlets at various locations is in full swing. Reliance already has the necessary approvals for setting up 5,849 retail outlets in India. As on date, over 850 outlets are operational.

For the half-year ended September, its turnover was up 27 per cent at Rs 42,777 crore while the net profit surged 50 per cent to Rs 4,791 crore, the highest in the private sector.