Reliance Posts Negative Growth Due To Fall In Oil Prices

India’s petrochemical giant, Reliance Industries (RIL) declared its December 2014 quarter result. The company posted revenue of Rs 96330 crore for December 2014 quarter against Rs 121077 crore in the same period last year. The sharp fall of 20.4 per cent in revenue was primarily due to sharp yearly fall in benchmark oil price of 30 per cent globally. The company’s export registered de-growth of 21.5 per cent at Rs 58507 crore against Rs 74495 crore in same period last year.

On expenses front, the cost of raw material too showed decline of 32.2 per cent at Rs 62196 crore against December 2013 quarter. The reduction in raw material cost was predominantly on account of lower crude oil prices and lower blending and trading activity in the export markets. Other expenditure increased by 17.2 per cent on yearly basis to Rs 9811 crore during the quarter under review from Rs 8371 crore in same period last year. The increase is primarily due to consolidation of Network 18 Media & Investments from current year. Interestingly, the operating profit before other income and depreciation increased marginally by 0.4 per cent on yearly basis to Rs 8689 crore during Q3FY15.

According to the result press release, the quarter witnessed heightened volatility across the hydrocarbon business. While headline deltas were strong, declining feedstock prices impacted buying sentiment across product categories. Downstream converters ran down inventories, operating at minimal stock levels. RIL, in line with its operating strategy, aggressively sold down stocks to maintain optimal levels of inventory, which impacted realized deltas and margins for products. This coupled with lower holding value of closing-stock impacted performance of refining and petrochemicals businesses.

Other income during December 2014 quarter increased by more than 12 per cent to Rs 2340 crore against the same period last year primarily on account of higher profit on sale of investments. However, the profit after tax posted a decline of 4.5 per cent to Rs 5256 crore against Rs 5502 crore in Q3FY14 due to higher depreciation and interest cost during this quarter.

For the nine-month period, the company’s capital expenditure was Rs 70272 crore including exchange rate difference capitalization. Capital expenditure was principally on account of ongoing expansion projects in the petrochemicals and refining business at Jamnagar, Dahej and Hazira, Broadband Access and US Shale gas projects.

Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries said, "Our focus on operational efficiency and the superior configuration of assets helped us deliver an industry-leading performance in the refining and petrochemicals business despite sharp decline in crude and feedstock prices. The performance also highlights the robustness of our risk management and proficiency of people and processes across the integrated chain. We continued to advance our refining and petrochemicals business capital investments, which will come to fruition over the next 4-6 quarters. These investments demonstrate our commitment to creating value through the business cycle. During the quarter, Reliance Retail registered Y-o-Y growth of 19% in turnover with improved margins and profitability”.