The Hindu Business Line : Higher refining margins help Reliance post 24% rise in Q4 net

Mumbai, April 21 Reliance Industries said its fourth quarter net profit grew 24 per cent on the back of higher refining margins, helped by higher exports which shaved expenditure on tax.

The company’s quarterly net profit was Rs 3,912 crore, against Rs 3,156 crore in the corresponding year-ago quarter.

The net turnover was up 36 per cent, at Rs 37,286 crore, (Rs 27,448 crore); while profit before depreciation interest and taxation at Rs 6,308 crore, rose 19 per cent.

The Gross Refining Margin (GSM) for the quarter was $15.5 a barrel against $13 a year ago, and much higher than several global benchmarks. Revenues from refining and marketing, its largest segment, rose 36 per cent, to Rs 28,686 crore, while the segment Earnings before Interest and Taxation (EBIT) rose 25 per cent, to Rs 2,839 crore.

The EBIT margin for the quarter however, fell to Rs 9.9 per cent, from 10.3 per cent a year ago. It was lower because though the refining margin was a high $15.5 per barrel, the cost of crude per barrel was going up making the refining margin lower in proportion, said Mr Alok Agarwal, Chief Financial Officer, RIL.

The petrochemicals segment continued to be dragged down by high feedstock prices, with polyester margins remaining flat primarily due to lower paraxylene margins. On paraxylene, the margin contraction was as high as $230-240 a tonne as naphtha prices were up by $174/mt while paraxylene prices were down $67 per mt, said Mr Agarwal.

Petrochemical revenues were up 12 per cent (Rs 14,119 crore) and EBIT up 6 per cent (Rs 1,466 crore). The EBIT margin fell to 10.4 per cent from 11 per cent.

Full-year

For fiscal 2007-08, RIL’s net profit rose 63 per cent to Rs 19,458 crore (Rs 11,943 crore). Excluding income from exceptional items of Rs 4,733 crore resulting from a stake sale in subsidiary RPL during the year, the net profit increase becomes 28 per cent. This on a turnover increase of 18 per cent at Rs 1,39,269 crore (Rs 1,18,354 crore).

Price increase accounted for 12 per cent of the increase and volumes 6 per cent. The net operating margin, however, dropped to 17.5 per cent from 17.9 per cent.

Consumption of raw materials rose 17 per cent on account of higher crude and naphtha prices.

Exports were higher by 25 per cent at Rs 83,492 crore. Domestic sales of motor spirit and high speed diesel continued to be under pressure with the RIL’s price being Rs 5 to Rs 20 higher per litre than that of PSUs. However, domestic retail sales accounted for only a very small percentage of its sales.

Its revenues from “other” segments during the year was Rs 778 crore (Rs 337 crore), most of this from Reliance Retail, said Mr Agarwal. RIL’s scrip closed at Rs 2,642.15 on the BSE, 0.2 per cent higher than its previous close at Rs 2,636.95.

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