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RIL Q4 Net Slumps 21% At Rs 4,236 Crore

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Lower production from its KG-D6 and weak refining margins dented profits of the Mukesh Ambani led Reliance Industries (RIL) on Friday which reported its March quarter net profit at Rs 4,236 crore against Rs 5,376 crore a year ago, a drop of 21 per cent. This was the second consecutive quarterly drop in profit of the energy conglomerate. The profit after tax (PAT) for FY 12 also declined at Rs 20,040 crore against Rs 20,286 crore YoY. The company's results lagged market estimates. Sales, however, grew 16.7 per cent to Rs 87,833 crore. Reliance, which operates the world's biggest refining complex in Jamnagar, was expected to post a net profit of Rs 4330 crore, according to Thomson Reuters I/B/E/S. "Somewhere, somehow, Reliance has lost that Midas touch," said Jagannadham Thunuguntla, strategist at brokerage SMC Global Securities in New Delhi. "It is high time they gave clear indication to the analyst, investor community on how they are going to deploy that cash. Otherwise it is going to be a huge overhang," he said. Controlled by billionaire Mukesh Ambani, Asia's second-richest person, Reliance's market value tumbled by a third in 2011, mainly because of worries of falling output from its gas fields hurting growth. RIL announced a dividend of Rs 8.5 per share. The earnings per share (EPS) fell to Rs 12.9 versus Rs 16.4 YoY. Diversification Spree The company has embarked on a diversification spree, venturing recently into the media business and expanding its supermarkets business. Reliance, which operates the world's biggest refining complex, in Jamnagar, plans to make fresh investments in its core business while continuing to grow its retail footprint and work towards rolling out wireless data services, Ambani said in a statement on Friday. The company tied up with BP last year to increase output from some of its oil and gas blocks and is awaiting government approval for investment plans. The company held cash of $13.8 billion at March-end. Gas output from Reliance's fields off India's east coast may decline to an average 27.6 million standard cubic meters a day (mscmd) in 2012/13, about a third of what was initially estimated, a government source said in February. Production of natural gas from the KG D6 block was 551.31 billion cubic feet in the fiscal year to March 31, down 23.5 per cent from a year earlier, the company said in a statement. The company, which has a market value of $46 billion, said net profit fell 21.2 per cent to 42.36 billion rupees for the fiscal fourth quarter ended March from Rs 5,376 crore a year earlier. After profit fell for the first time in more than two years in the December quarter, Reliance moved to bolster its shares by announcing a share buyback of up to $2.1 billion, the biggest ever in India. Still, the stock has underperformed the main Mumbai market over the past 15 months. The shares have risen 5.5 per cent so far this year, lagging a 12.4 percent rise in the main stock index, in which they have the second heaviest weight. Ahead of the results, the stock closed down 1.5 percent. Refining Margins Reliance reported gross refining margins of $7.60 per barrel for the March quarter, compared with $9.20 a year earlier, but more than the $6.80 it reported in the December quarter. Its refinery at Jamnagar in the western state of Gujarat can handle less costly high-sulphur crude oil, giving it among the best refining margins in the industry. Refining accounts for nearly 80 percent of Reliance's revenue. The margins were squeezed by higher crude prices and a narrowing spread between light and heavy crude prices. Reliance's petrochemicals business posted a nearly 18 p ercent rise in revenue on higher domestic demand. Its oil and gas exploration business posted a 36.5 percent fall in revenue, mainly due lower production at its main KG-D6 block, Reliance said. Reliance, which has been looking to diversify, in January invested in India's TV18 media group and is widely expected to launch broadband services using fourth-generation (4G) technology later this year, after paying $2.5 billion for countrywide spectrum in a 2010 state auction. It has also been speeding up the opening of supermarkets across the country. Ahead of the result announcement, shares in Reliance ended down 1.5 per cent at Rs 730.85, while the broader Mumbai market fell 0.7 per cent.