RIL net profit falls 11.5%

27-Jul-09

(RIL) has announced a worse-than-expected decline in profit in the quarter ended 30 June, as margins from its refining business halved and the global recession reduced fuel demand. The outlook for the refining business is expected to remain gloomy, given the lower demand for petroleum products across the globe while the margins of its gas business will depend on the outcome of the company’s legal tussle with Reliance Natural Resources (RNRL) in the Supreme Court. RIL’s June quarter net profit declined 11.5% to Rs 3,636 crore and turnover declined 23% to Rs 33,309 crore in the period because of falling demand for petroleum products. Exports fell by 38.5% to Rs 17,433 crore as it surrendered the ‘export oriented unit’ status of its 33 metric mln tpa refinery in Jamnagar due to lower demand. Reliance exports most of its products but is now trying to step up domestic sales. RIL’s refinery processed 7.76 mln tons of crude, 4.5% lower than in the corresponding previous quarter. RIL’s gross refining margins (GRMs) — the difference between cost of crude oil and the price of refined petroleum products — came down to $7.5 per barrel compared to $15.7 per barrel in a year-ago period. This was lower than the state-owned Mangalore Refinery and Petrochemicals’ $7.9 per barrel but higher than the regional benchmark Singapore margin of $4.5 a barrel. Essar Oil, which operates a 10.5-mmtpa refinery five km away from the RIL refinery in Jamnagar, posted a GRM of $6.74 per barrel.