Backed by impressive refining margins and the highest-ever crude throughput, Reliance Industries reported its highest-ever consolidated net profit of Rs.7,290 crore in the October-December quarter 2015. Its gross refining margin – the difference between the cost of crude oil and the price of refined petroleum products – stood at $11.5 a barrel for the quarter, its highest ever in seven years.
However, revenue fell by nearly 24 per cent in the same period, as crude oil prices nosedived over the past few months because of an oversupplied global market.
The benchmark Brent oil price fell 42.7 per cent year-on-year during the December quarter. While the fall in Brent is bad news for RIL’s oil exploration business, its refining and marketing arm benefited as the cost of raw material – essentially the per barrel cost of Brent crude – fell nearly 40 per cent year-on-year from $76.3 to $43.7 in the just concluded quarter. The refining and marketing segment’s operating margins improved to 11.3 per cent in Q3FY16 from four per cent in the year-ago period.
The flagship Jamnagar refinery processed 18 million tonnes of crude this quarter, an average capacity utilisation rate of 116 per cent.
Operating profit in the petrochemicals business increased 27.9 per cent to Rs.2,639 crore in the December quarter from Rs.2,064 crore in Q3FY15.
The petchem business, in general, saw fall in product prices because of capacity addition in the industry (propylene, a polymer, and polyester) or weak demand in the world market (elastomers). Operating profit from the oil and gas exploration business fell 89 per cent year-on-year to Rs.90 crore in Q3FY16.
Reliance Retail turnover up
V Srikanth, Joint CFO, said at a press meeting here that RIL will reduce its capital expenditure in its shale oil projects to $500 million this fiscal, against $900 million in the year-ago period. Reliance Retail, which now operates over 3,000 stores in 371 cities, recorded turnover of Rs.6,042 crore this quarter, nearly 30 per cent up from the previous period. Operating profit rose 10.5 per cent to Rs.147 crore, on margins of 2.4 per cent.
RJio network ready
RIL’s digital arm Reliance Jio Infocomm Ltd (RJIL) has its network ready, however, there is no launch date in sight for the company’s 4G rollout. “Our network is ready for career aggregation and we will introduce it as and when the eco-system is ready. The launch could be in phased manner or it could be pan-India at one go,” said Anshuman Thakur, Head of Strategy and Planning at RJIL.
The cost of acquiring spectrum was about 35 per cent of the total Rs.1-lakh crore it has already incurred. On Monday, RJIL said it intends to Rs.15,000 crore through a rights issue. “This was to inject more equity into the company and bring the debit to equity ratio on 1:1,” Thakur added. Prior to the announcement of the rights issue, the company’s equity was at about Rs.30,000 crore, while the debt was about Rs.45,000 crore.
On December 28, 2015, the company had rolled out the services for its employees, channel partners and multiple external testers. “The feed on the quality of services has been satisfactory,” he added. The company did not give a deadline for when it would launch its payment bank joint venture with partner State Bank of India.