Reliance Q4 net up 12.3% on record refining margins

Reliance Industries reported a consolidated net profit of ₹8,046 crore for the January-March 2017 quarter, up 12.3 per cent from the corresponding period last year, thanks to a rebound in global crude oil prices and excellent refining margins.

For whole of 2016-17, the consolidated net profit stood at a record ₹29,901 crore, up 18.8 per cent from FY16.

RIL’s quarterly revenue stood at ₹92,889 crore against ₹63,954 crore in the March 2016 quarter.

For the crude oil refining and marketing business — which contributes the largest chunk of RIL’s revenue mix — the gross refining margin hit an eight-year high of $11.5 a barrel, a $5.2 advantage over the global Singapore complex benchmark. (The gross refining margin is the difference between the cost of crude oil and the final selling prices of different refined petroleum products.) The segment revenue stood at ₹72,045 crore, up nearly 50 per cent year-on-year.

Revenue from the petrochemicals segment grew 26.4 per cent over the same period to ₹26,478 crore in the just-concluded quarter. The petchem segment saw a recovery in prices of polymers, elastomers and the polyester chains.

The upstream oil exploration and production business — a segment which has for the past few years fallen out of favour with the company and where it has ongoing disputes with the government — saw revenues fall to ₹1,309 crore this quarter down 19.9 per cent from the previous period.

The company has no capital expenditure plans at the moment to raise its production in shale oil fields in the US despite the recovery in global crude prices.

“We’re at the cusp of delivering on our long-term capital expenditure cycle (in the hydrocarbons businesses), which came to an end this quarter,” V Srikanth, Joint CFO, RIL, told journalists at a press conference.

“This will give a lift to earnings in the 2017-18 fiscal in both volume and value, with 60-65 per cent of the economic value of these projects starting to show in the current fiscal.”

In FY17, the company spent ₹1,14,742 crore in capital expenditure. The projected capex for 2017-18 is ₹15,000-18,000 crore in the hydrocarbons segment.

At the end of FY17, RIL’s net debt stood at ₹1,19,000 crore, Srikanth said.

RIL’s newly launched telecom business Jio had brought in 108.9 million subscribers as of end-March, of whom about 72 million have subscribed to the paid Jio Prime membership. However, the number of active subscribers is 8.9 million, with company spokespersons saying that it has begun service degradation of customers who haven’t recharged their memberships.

In a BSE filing, Reliance Jio Infocomm Ltd reported a net loss of ₹22.5 crore for the six months ended March 2017, the bulk of which, company spokespersons said, was spent on marketing and distribution of the Jio Prime product (₹17.36 crore), which went live over the last few months.

RIL said it will begin to report exclusive revenue and expense figures and capital its expenditures on Jio either from the June or September 2017 quarters. RIL spent about ₹18,000 crore in capital expenditure for Jio in the March quarter and expects to spend a similar amount in the current quarter. The telecom business’s total asset base stands at ₹1,79,000 crore.

The organised retail segment reported quarterly segment revenue of ₹10,332 crore up 83 per cent year-on-year, witnessing strong consumption in the food, fashion and fuel retail baskets.

RIL’s shares rose 1.19 per cent to close at ₹1,416.40 on the BSE on Monday.

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