The Hindu Business Line : Refining margins lift Reliance

Riding on an unprecedented gross refining margin of $10.3 a barrel, Reliance Industries Ltd shrugged off the back drag of firm crude prices and posted a net profit of Rs 2,502 crore for the quarter ended March 31, 2006, up 9.2 per cent from Rs 2,292 crore in the year-ago period.

The company saw its net turnover rise by over 37 per cent during the quarter to Rs 24,542 crore from Rs 17,839 crore a year back. The refining margin bettered that in the trailing quarter when it had a margin of $ 9.1 a barrel.

The board of directors that met here today declared a 100 per cent dividend (Rs 10 a share) that entails a payout of Rs 1,394 crore.

Reliance net profit for the full fiscal reflected a 19.5 per cent rise at Rs 9,069 crore (Rs 7,572 crore) even as its net turnover went up by nearly 23 per cent to Rs 81,211 crore (Rs 66,051 crore).

Refining revenue

In line with RIL's strategy to enhance its export portfolio, sale of manufactured products were up 28 per cent at Rs 32,691 crore from Rs 25,532 crore.

RIL's refining segment accounted for revenue to the tune of Rs 21,248 crore during the quarter, while Rs 10,608 crore came from its petrochemicals business.

"RIL seems to have beaten de-growth in margins by hedging crude at good rates during the quarter that saw volatility in prices," said Mr Raj Gandhi, Research Analyst, Angel Broking.

During the day's trade on the BSE, the RIL share touched an all-time high of Rs 1,013 but settled lower at Rs 996.50, up 1.91 per cent from previous close of Rs 977.85.

In 2005-06, consumption of raw materials went up by 27 per cent at Rs 58,343 crore (Rs 45,932 crore) primarily on account of increased crude prices. Employee cost was also up 16 per cent last fiscal at Rs 978 crore (Rs 846 crore), mainly due to higher salaries. Interest cost dropped by 40 per cent at Rs 877 crore (Rs 1,469 crore) with both lower interest rates and higher interest capitalisation coming into play.

Interest capitalised during the year was Rs 637 crore as against Rs 297 crore in the previous year.

Good year

Mr Mukesh Ambani, Chairman and Managing Director, RIL, said it was gratifying that the company profits have grown from over $1 billion to more than $2 billion in the last 24 months. "It has been a very good year in an extremely challenging environment. We took several strategic steps to enhance and distribute wealth to our shareholders. We are now investing in each of our businesses to achieve substantial earnings growth in the future and create further value for millions of our shareholders," he said.

Overseas plans

During the period, RIL continued the pursuit of its overseas plans. In the Yemen onshore block where Reliance had oil discoveries, the development plan to develop the discoveries has been approved by the Ministry of Yemen and test production has commenced.

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