OREANDA-NEWS. July 25, 2012. Reliance Industries Limited (RIL) reported its financial performance for the quarter ended 30th June, 2012. Highlights of the un-audited financial results as compared to the previous year are:

(In ' Crore)

1Q

FY13

4Q

FY12

1Q

FY12

%

Change wrt 4Q FY12

%

Change wrt 1Q FY12

Turnover

 

94,926

87,833

83,689

8.1%

13.4%

PBDIT

 

8,651

8,859

11,005

(2.3%)

(21.4%)

Profit Before Tax

 

5,433

5,432

7,264

-

(25.2%)

Net Profit

 

4,473

4,236

5,661

5.6%

(21.0%)

EPS

 

13.7

12.9

17.3

6.2%

(20.8%)

Highlights of Quarter’s Performance

•           Turnover increased by 8.1% to ' 94,926 crore    (USD  17.1 billion) as compared to Q4 FY12 and 13.4% as compared to Q1 FY12.

•           Exports increased by 7.7 % to ' 55,261 crore (USD       9.9 billion) as compared to Q4 FY12 and 6.8% as compared to Q1 FY12.

•           PBDIT decreased by 2.3% to ' 8,651 crore (USD  1.6 billion) as compared to Q4 FY12 and 21.4% as compared to Q1 FY12.

•           Profit before Tax remains flat at ' 5,433 crore (USD  1.0 billion) as compared to Q4 FY12 and decreased by 25.2% as compared to Q1 FY12.

•           Cash Profit decreased by 3.1% to ' 6,785 crore (USD  1.2 billion) as compared to Q4 FY12 and 24.7% as compared to Q1 FY12.

•           Net Profit increased by 5.6% to ' 4,473 crore (USD  0.8 billion) as compared to Q4 FY12 and decreased by 21.0% as compared to Q1 FY12.

•           Gross Refining Margin at USD  7.6 / bbl for the quarter ended 30th June 2012.

Corporate Highlights

•           Reliance Industries Limited (RIL) has selected Irving, Texas based Fluor Corporation (NYSE: FLR) to perform project management services for its projects being executed at its world scale Jamnagar refining and petrochemical complex on the west coast of India. The investment in the expansion of energy and petrochemicals projects represents one of the largest such investments globally. The proposed coke gasification facility is also among the largest such projects ever built.

•           RIL has announced that it has selected Phillips66’s E-Gas™ technology for its planned gasification plants at Jamnagar. The planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas utilizing the E­Gas™ technology. The synthesis gas will be used as feedstock for a new chemical complex and will fuel the refinery's existing gas turbine power generation units. Phillips 66 will license Gas™ technology to RIL and provide process engineering design and technical support gasification technology relating to the process area.

•           The Government of India, by its letter of 02 May 2012 has communicated that it proposes to disallow certain costs which the PSC relating to Block KG-DWN-98/3 entitles RIL to recover. RIL continues to maintain that a Contractor is entitled to recover all of its costs under the terms of the PSC and there are no provisions that entitle the Government to disallow the recovery of any Contract Cost as defined in the PSC. The company has already initiated arbitration on the above issue.

•           On July 6, 2012 RIL selected Technip as a technology supplier and engineering contractor to implement its Refinery Off-Gas Cracker (ROGC) project. This is part of the expansion project being executed at RIL’s world-scale Jamnagar refining and petrochemical complex in Gujarat, on the West Coast of India. The ROGC plant will be amongst the largest ethylene crackers in the world and will be using refinery off-gas as feedstock. The products from the plant will be utilized for the new downstream petrochemical plants being built at Jamnagar.

•           Reliance Exploration and Production DMCC, a wholly owned subsidiary of Reliance has completed the transaction for divestment of its 80% working interest and operatorship in the production sharing contracts (PSCs) for Rovi and Sarta Blocks in the Kurdistan Region to the subsidiaries of Chevron Corporation. This is in line with its portfolio rationalization strategy of international assets.

•           RIL has signed a USD  2 billion equivalent loan with nine banks covered by Euler Hermes Deutschland AG. ("Euler Hermes”) on 07 May 2012 at Berlin, Germany. The loan will be primarily used to finance goods and services procured from German suppliers as part of RIL's petrochemicals expansion projects at Jamnagar, Hazira, Silvassa and Dahej in India.

Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited said: “RIL has improved its earnings profile as profits from operations were higher on a sequential basis on the back of volume growth in the refining business. We have commenced our next phase of capital investments in the refining and petrochemical segments to enhance earnings and value of our core energy businesses.”

Financial Performance Review and Analysis

RIL achieved a turnover for the quarter ended 30th June 2012 of ' 94,926 crore (USD  17.1 billion), an increase of 8.1% over the trailing quarter. Higher prices accounted for 4.1% growth in revenue while higher volumes accounted for the balance 4.0% growth. Exports were higher by 7.7% at ' 55,261 crore (USD  9.9 billion) as against ' 51,290 crore in the trailing quarter. Higher exports were mainly on account of increase in volumes of refining products by 8.8 % over the trailing quarter. However, on a Y-o-Y basis, higher prices resulted in turnover increasing by 13.4 % from ' 83,689 crore to ' 94,926 crore. Exports were higher by 6.8% at ' 55,261 crore (USD  9.9 billion) as against ' 51,737 crore in the corresponding period of the previous year.

On a sequential quarter basis, raw materials consumption increased by 10.9% to ' 79,335 crore (USD  14.3 billion) on account of incremental crude processed and higher exchange rate partially offset by lower average crude prices. On a Y-o-Y basis, raw material consumption increased by 23.1% from ' 64,443 crore to ' 79,335 crore mainly on account of higher exchange rate.

Employee costs for the quarter were ' 847 crore (USD  152 million). Employee costs were higher by 41.9 % over the trailing quarter on account of one-time performance linked payments for the previous year’s performance. However, employee costs were lower by 3.5% from ' 878 crore to ' 847 crore as against the corresponding period of the previous year.

Other expenditure increased by 17.0% from ' 4,933 crore to ' 5,770 crore (USD  1.0 billion) over the trailing quarter and 34.2 % over the corresponding period of the previous year. The increase is primarily due to higher power & fuel expenses and higher exchange differences.

Operating profit before other income and depreciation, increased by 2.8% from ' 6,564 crore to ' 6,747 crore (USD  1.2 billion) over the trailing quarter. Net operating margin was lower at 7.1% as compared to 7.5% in the trailing quarter basis.

On a Q-o-Q basis, other income was lower at ' 1,904 crore (USD  342 million) as against ' 2,295 crore primarily due to gain on maturity of mutual funds booked during the trailing quarter. Other income has increased by 76.6% from '1,078 crore to ' 1,904 crore on a Y-o-Y basis on account of larger cash balance.

Depreciation (including depletion and amortization) was lower by 8.5% at ' 2,434 crore (USD  438 million) against ' 2,659 crore over the trailing quarter. This was primarily due to lower depletion charges in oil & gas and lower depreciation on petrochemical assets due to WDV method.

Interest cost was at ' 784 crore (USD  141 million) as against ' 768 crore in the trailing quarter. Gross interest cost was ' 822 crore (USD  148 million) as against ' 811 crore in the trailing quarter. Interest capitalized was lower at ' 38 crore as against ' 43 crore for the trailing quarter. Exchange difference included in interest for the quarter were ' 210 crore as against ' 239 crore for the trailing quarter.

Interest cost was higher by 43.9% from ' 545 crore to ' 784 crore compared to the corresponding period of the previous year mainly due to higher foreign currency loan denomination and sharp

decline in the rupee exchange rate. Interest capitalized was lower at ' 38 crore as against ' 135 crore for the corresponding previous quarter. Exchange difference included in interest for the quarter were ' 210 crore as against ' 125 crore for the corresponding previous quarter.

During the quarter, deferred tax reversal was ' 122 crore as against deferred tax expense of ' 110 crore in the trailing quarter. The difference is due to estimated lower tax depreciation as compared to book depreciation. Deferred tax was ' 150 crore in the corresponding period of the previous year.

Profit after tax was higher at ' 4,473 crore (USD  0.8 billion) as against ' 4,236 crore in the trailing quarter and lower by 21% from ' 5,661 crore to ' 4,473 crore as compared to the corresponding period of the previous year.

Basic earnings per share (EPS) for the quarter ended 30th June 2012 was ' 13.7 (USD  0.2) against ' 12.9 in the trailing quarter. Basic earnings per share (EPS) for the quarter ended 30th June 2011 was ' 17.3.

Outstanding debt as on 30th June 2012 was ' 73,213 crore (USD  13.2 billion) compared to ' 68,259 crore as on 31st March 2012. The increase in debt in rupee terms is mainly on account of change in exchange rates. Net gearing as on 30 June 2012 was 1.3% as compared to nil as on 31 March 2012.

RIL had cash and cash equivalents of ' 70,732 crore (USD  12.7 billion). These are primarily invested in fixed deposits, certificate of deposits with banks, mutual funds and Government securities / bonds.

Cash outflow on account of capital expenditure for the year amounted to ' 2,398 crore (USD  431 million) .The increase in capital expenditure is primarily on account of capital expenditure incurred for the Petrochemical Projects at Dahej and Silvassa. The net capital expenditure for the quarter ended 30th June 2012 was ' 7,656 crore (USD  1.4 billion) including ' 5,218 crore capitalized on account of exchange difference on loans.

RIL retained its domestic credit ratings of AAA from CRISIL and FITCH and has investment grade ratings for its international debt from Moody’s and S&P as Baa2 and BBB respectively.