As forecasted by analysts, Reliance India Ltd (RIL) - Indian petrochemical and refinery giant has announced a 13% rise in profits for Q1 ending June 30. The US$77 bln company, having witnessed above 20% growth for the past four quarters addressed that the refinery earnings surpassed the slow growth for petrochemicals business. Against an anticipated net profit of Rs 41.4 bln, Reliance's net profit reached Rs 41.1 bln in Q1-08 compared to the Rs 36.3 bln for the Q1 of the previous year. Net sales grew to Rs 430.5 bln from Rs 312.9 bln for the last year's Q1.
A bleak performance of petrochemicals business due to higher naphtha and crude oil prices lowered the degree of growth in earnings for Reliance. However, the refinery business showed strong margins which boosted the company's earnings and this along with the gas output is expected to spell a growth curve for the company in the coming quarters. The 94% completed new 580,000 bpd Jamnagar refinery built by Reliance Petroleum slated to start operations by September combined with the already existing 660,000 bpd unit at the same location will the refining capacity the biggest in the world. Reliance said gross refining margins were US$15.7 a barrel, well above the average US$8 a barrel benchmark of Asian Dubai crack margin for June quarter. The margins, which were US$15.4 a year earlier, are bolstered by the refinery's ability to process cheaper, high-sulphur crude oil.
Raw material consumption costs showed 75% increment in the Q1 to 335.3 bln rupees and the exports doubled to 283.6 bln rupees, with fuel contributing most, the company said. Also, the company's capital expenditure in the quarter was 72.15 bln rupees, primarily in the oil and gas business which is in line with its endeavour to add six more rigs by year-end to its fleet of six for development and exploration.