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Energy major Reliance Industries Ltd reported a 5.73 per cent dip in net profit for the second quarter due to the rise in material costs, other expenses and decline in exploration business.
The profit for the quarter was Rs 5,376 crore, while in the year-ago period, it stood at Rs 5,703 crore. The profit has been under pressure also due to higher crude oil prices, rising fuel expenses and higher chemical consumption.
For the second quarter, net sales increased 14.97 per cent to Rs 90,335 crore, while in the year-ago quarter, it was Rs 78,569 crore. Other income almost doubled in the period to Rs 2,112 crore.
In its refinery and marketing business, the company witnessed a slide in its gross refining margin (GRM) to $9.5 a barrel for second quarter ($10.1). GRM is the differential between cost of a barrel of crude oil and the price at which its process output can be sold.
As for domestic production from its controversial KG-D6 block, the cumulative output stood at 1.7 million barrels of crude oil and 197 billion cubic feet of natural gas in the first half of this fiscal. This is a reduction of 37 per cent and 35.1 per cent respectively on a year-on-year basis which the company continued to attribute to “reservoir complexity and natural decline”.
In its oil and gas (E&P) business, the company saw a decline in its earnings before interest and taxes (EBIT) margin to 38.4 per cent (43 per cent). In the petrochemical business, the company suffered a fall in EBIT margins at 7.9 per cent (11.5 per cent). The company attributed this to “the base effect of higher prices.” Jagannadham Thunuguntla, Head of Research at SMC Global Securities, pointed out that “RIL results appear to be lot more qualitative over the previous quarters; this is largely because the core earnings (refining and petrochemical business) of the company have significantly improved, in comparison to other income,” he said.
The RIL stock closed at Rs 823.20, up 0.53 per cent from its previous close on the BSE.
Our Delhi bureau adds: Reliance Industries Ltd is examining expansion of capacity at its two refineries in Jamnagar.
“We are looking at the option for both the DTA & SEZ refinery (for expansion). Our Chairman (Mukesh Ambani) has set a target of doubling revenue for Reliance Industries. Downstream is very much part of it. We are very much looking at all sorts of plans,” Tony Fountain, CEO for Marketing and Refinery at RIL, told mediapersons at Petrotech 2012.
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