New Delhi: Reliance Industries Ltd (RIL) on Saturday reported nearly 16 percent rise in net profit for the second quarter this fiscal as higher earnings from oil refining and petrochemicals business helped it offset a dip in natural gas production.
The net profit was up 15.8 per cent at Rs 5,703 crore during July-September -- RIL's highest quarterly profit since 2007, the company said in a press statement.
RIL said its showpiece Krishna Godavari basin D6 gas fields have seen a sharp drop in production "mainly due to reservoir complexity".
KG-D6 fields output dropped 20 per cent to 147.2 billion cubic feet or an average of just over 45 million standard cubic meters per day during the quarter.
The drop led to revenue from oil and gas exploration business fall 17.2 per cent to Rs 3,563 crore and pre-tax segment profit by 10.2 per cent to Rs 1,531 crore.
But this was more than made up by good performance by its twin adjacent refineries at Jamnagar in Gujarat with a combined capacity of 1.24 million barrels a day.
RIL said it earned USD 10.1 on turning every barrel of crude oil into fuel in the quarter as compared to USD 7.9 per barrel gross refining margin (GRM) a year ago. Higher GRM helped the firm earn 40.3 per cent higher pre-tax profit of Rs 3,075 crore.
The company's refining margins were better than Singapore average of USD 6.18 per barrel.    

Higher volumes and prices helped the firm's petrochemical business post a 10.2 percent rise in pretax profit to Rs 2,422 crore.

Even though the company had received at least two installments, of the USD 7.2 billion it is getting from UK's BP Plc for selling 30 per cent interest in 23 oil and gas blocks including the prime KG-D6, its debt has risen.

RIL had an outstanding debt of Rs 71,399 crore on September 30 compared to Rs 67,397 crore as on March 31, 2011. It was expected that the company would use proceeds from BP to pre-pay its debt and reduce its interest outgo.

It had cash of Rs 61,490 crore ($ 12.6 billion), up from Rs 45,775 crore as on June 30, 2011.

RIL Chairman & Managing Director Mukesh D Ambani said, "The increase in profits was largely driven by improved performance in the refining and petrochemicals business. All
our manufacturing facilities operated at record levels with refineries achieving operating rates of 110 per cent.

"RIL has strong balance sheet and sustained earning base to pursue growth opportunities."

The GRM in Q2 was however lower than USD 10.3 per barrel margin RIL earned in April-June quarter of current fiscal. Turnover was up 34.7 per cent to Rs 80,790 crore.

Increase in volumes accounted for 3.5 per cent growth in revenue and higher prices accounted for 32.5 per cent growth in revenue. Exports were higher by 52.2 per cent at Rs 101,872 crore as against Rs 66,936 crore in first half (H1) FY10-11.

RIL said interest cost was higher at Rs 1,205 crore in first half of current fiscal as against Rs 1,083 crore a year ago principally due to higher foreign exchange difference.

"This resulted in gross interest cost being higher at Rs 1,481 crore as against Rs 1,311 crore," the statement said.