Reliance Industries, the flagship company of Mukesh Dhirubhai Ambani Group, said profit on standalone basis increased 4.1 percent sequentially to Rs 8,022 crore in the quarter ended December 2016. Bottomline was boosted by other income that grew sharply by 32.7 percent quarter-on-quarter to Rs 3,025 crore despite higher finance cost.
Revenue during the quarter rose 3.5 percent quarter-on-quarter to Rs 66,606 crore in the quarter ended December 2016. "Robust integrated platform, sound operational processes and business portfolio aligned to the needs of emerging India enabled Reliance to deliver another record performance in challenging market conditions," Mukesh Dhirubhai Ambani, Chairman and MD said.
He further said the refining business has delivered eight consecutive quarters of double-digit GRMs, benefiting from the global demand for transportation fuels and improved product cracks. Gross refining margin (GRM) increased to USD 10.80 a barrel from USD 10.1 a barrel and Singapore GRM jumped to USD 6.70 a barrel from USD 5.10 a barrel on sequential basis. "Margins improved on back of strong fuel oil and gasoline cracks with other product cracks also being higher.
Strength in refining margins led by robust demand growth in the Asia region," Reliance said. Refining segment registered a 2.6 percent growth at Rs 53,215 crore compared with previous quarter with EBIT (earnings before interest and tax) rising 3.8 percent to Rs 6,127 crore and margin expansion of 12 paise at 11.5 percent QoQ. The Reliance Group company said Singapore gasoil cracks averaged USD 12.1 a barrel during December quarter as against USD 11 a barrel in September quarter.
Cracks improved from unsustainable lows reached in the previous quarters. Singapore gasoline cracks during the quarter averaged USD 14.6 a barrel, higher compared with USD 11.6 a barrel in previous quarter due to strong demand growth from emerging markets and seasonal turnarounds. Reliance said on a QoQ basis, Brent crude oil prices firmed up by 8 percent and Asian naphtha prices by 17 percent. Ethylene and propylene prices were lower by 8 percent and 4 percent, respectively.
Petrochemical business showed a 1.9 percent sequential growth at Rs 21,690 crore but its EBIT declined 3 percent to Rs 3,359 crore and margin contracted by 180 basis points to 14.5 percent. Earnings performance was mixed for the quarter. According to average of estimates of analysts polled by CNBC-TV18, Profit was expected at Rs 7,850 crore and gross refining margin at USD 11.5 a barrel for the quarter. Revenues from petrochemical and refining business were expected at Rs 3,010 crore and Rs 6,690 crore, respectively.
EBITDA (earnings before interest, tax, depreciation and amortisation) on standalone basis declined half a percent sequentially to Rs 10,604 crore and margin also slipped 50 basis points to 15.9 percent in Q3. Demand for polyester fibre and yarn remained stable during Q3FY17, Reliance said, adding polyester filament yarns lifting remained healthy in shirting fabrics & circular knitting segment during the quarter.
Its KG-D6 field produced 0.26 MMBBL (million barrels of oil) of crude oil and 24.4 BCF (billion cubic feet) of natural gas in Q3FY17, a reduction of 28 percent and 29 percent respectively on a yearly basis. Fall in oil and gas production was mainly on account of natural decline in the fields, it said. Panna-Mukta fields produced 1.47 MMBBL of crude oil and 15.6 BCF of natural gas in Q3FY17, a reduction of 8 percent and 7 percent respectively on yearly basis, which was due to repair work on 3 well platforms to address asset integrity issues.
Finance cost during the quarter jumped 47 percent quarter-on-quarter to Rs 931 crore. Meanwhile, profit on consolidated basis increased 4.2 percent to Rs 7,506 crore and revenue rose 3.1 percent to Rs 84,189 crore on sequential basis. Reliance said Reliance Retail delivered strong performance across the board during the quarter. The demonetisation of large denomination notes led to cautious buying by customers for a short period. Retail segment added 111 stores across various store concepts during the quarter.
It operated 3,553 stores across 686 cities with an area of over 13.25 million square feet as on December 31, 2016. Organised retail business grew by 7.5 percent sequentially to Rs 8,688 crore and its EBIT jumped 42.6 percent to Rs 231 crore and margin expanded by 66 basis points to 2.66 percent in Q3. During the quarter, Reliance Jio Infocomm, a subsidiary of Reliance Industries, announced the launch of 'Jio Happy New Year Offer (JNO)' effective from December 4. Under JNO, all Jio subscribers are entitled to certain special benefits, which comprise of Jio's data, voice, video and the full bouquet of Jio applications and content, absolutely free, up to March 31, 2017.
"In view of the unprecedented customer response to Jio's services as well as to address the anticipated growth in demand for digital services, additional investments are proposed to be made into the network to enhance its coverage and capacity," Reliance said. Outstanding debt at end of December 2016 was Rs 1,94,381 crore, increased from Rs 1,89,132 crore in September quarter while cash and cash equivalents during the quarter declined to Rs 76,339 crore from Rs 82,533 crore in previous quarter.
Capital expenditure for third quarter increased sharply to Rs 37,791 crore compared with Rs 17,210 crore in second quarter. Capital expenditure was principally on account of ongoing projects in the petrochemicals and refining business at Jamnagar, Dahej, Hazira, US Shale gas projects and digital services business.
Disclosure: Reliance Industries owns Network 18 that publishes News18.com.