Refining boost to RIL net

Mumbai, July 25: Reliance Industries Ltd (RIL) — the country’s largest private conglomerate — today reported a 16.7 per cent increase in first-quarter net profit at Rs 5,661 crore broadly in line with the market’s expectations.

The robust growth in profits was underpinned by the surge in the gross refining margin to $10.3 per barrel — significantly higher than the Singapore-Dubai benchmark margin of $9 in June.

The refining margins more than compensated for the fall in gas production from the KG-D6 basin.

“The growth in earnings was driven by strong refining margins and sustained performance in the petrochemicals business,” said RIL chairman and managing director Mukesh D. Ambani.

“Our cash flows give us the unparalleled opportunity to allocate capital to higher margin resource plays in leading markets around the world.”

RIL has cash and cash equivalents of Rs 45,775 crore, or $10.2 billion. This will swell by another $7.2 billion soon as the cabinet committee on economic affairs approved last Friday the deal between BP and Reliance Industries that was struck in February.

Under the terms of the deal, Europe’s second largest energy giant is due to take a 30 per cent participating interest in 21 oil and gasfields that the Ambani-owned company operates.

“We remain committed towards investing in India and have commenced the investment programme in the petrochemical business,” Ambani said.

Turnover during the quarter rose 37.2 per cent to Rs 83,689 crore compared with Rs 61,007 crore in the corresponding period of the last year.

The company said it would engage with the government to extend the approval to two other blocks over which there were some “technical issues” that needed to be resolved.

In February, in what was billed as the biggest foreign direct investment into India, BP agreed to pay $7.2 billion for a 30 per cent participating interest in 23 blocks in the KG basin.

The company admitted that lower production from KG-D6 and Panna-Mukta and Tapti resulted in lower oil and gas revenues and was partly offset by higher crude oil price realisation. During the quarter, crude oil and natural gas output from KG-D6 were 41 per cent and 18 per cent lower, respectively, than a year ago.

In Panna-Mukta and Tapti, gas production was down marginally by 1 per cent, while crude oil from this block was lower by 14 per cent during the quarter on a year-on-year basis.

The RIL scrip closed at Rs 882.15 on the BSE today, nearly 1 per cent higher than the previous close of Rs 873.60.