The Hindu Business Line : Reliance’s net profit down first time in 12 quarters

Mumbai, Jan. 22 Reliance Industries Ltd said its third quarter net profit fell 9.8 per cent as it processed less crude, and at lower refining margins.

This is the first time in 12 quarters that the company is reporting an absolute decline in net profit.

The company’s margin from processing one barrel of crude fell to $10, from $15.4 on a year-on-year basis.

It processed 7.87 million tonnes (mt) of crude, against 8.21 mt in the trailing quarter. Net turnover dropped 8.75 per cent from the year-ago quarter. (Taking into account the extraordinary gain of Rs 4,700 crore made by RIL from sale of shares in Reliance Petroleum in the year-ago third quarter, net profit for the current third quarter shows a dip of 56 per cent.)

“As an international refiner, RIL’s refining margins are influenced by volatile margin scenario witnessed by the industry globally,” said a company statement.

“This was one of the most challenging quarters for Reliance with volatility in prices and margins,” said the statement, quoting Mr Mukesh Ambani, Chairman of RIL.

Earnings before interest and tax from the refining business at Rs 1,881 crore showed a decrease of 28 per cent, while the segment’s EBIT margin slipped to 8.7 per cent from 10 per cent. Refining accounts for more than 60 per cent of the company’s business.

EBIT for the petrochemicals business, RIL’s second largest business segment, showed a decrease of 7 per cent at Rs 1,657 crore, primarily due to lower product margins. Polymer production volumes decreased 6 per cent.

RIL’s total expenditure for the third quarter was lower, mainly on account of raw material costs, which dipped 31 per cent. The company’s interest expenses were higher, at Rs 484 crore (Rs 253 crore).

Other income more than doubled, at Rs 660 crore (Rs 241 crore). This was due to interest earnings from the infusion of promoter funds of Rs 16,000 crore in the company, upon conversion of their preferential warrants during the quarter, said a spokesperson for the company.

Reliance has cash and cash equivalents in excess of Rs 28,500 crore. Over 95 per cent of these are fixed deposits/certificate of deposits with banks, according to the company statement.

RIL’s share price on BSE fell 1.21 per cent in a flat market, to Rs 1,132.95 on Thursday.