Yet another good show by its refining business helped Reliance Industries grow its June quarter profit 19 per cent over the same period last year.
The ‘other income’ component which rose almost one-third was the second largest contributor (after refining) to the company’s profits. The petrochemicals segment, after a weak run over the past few quarters, did somewhat better and managed single-digit profit growth. The oil and gas business meanwhile lived up to its low expectation, with segment profit almost 64 per cent lower than a year ago.
The refining segment’s operating profit grew almost 39 per cent, despite a near 5 per cent dip in sales. This was aided by better gross refining margin (GRM) of $8.4 a barrel against $7.6 a year ago. GRM is the difference between the company’s realisation from its product basket and its cost of crude oil. The company’s refineries are equipped to process cheaper, heavier crude oil. The marginal widening in the spread between heavy and light crude helped. Compared with the $10.1 a barrel in the March quarter though, GRM was weaker in June, a reflection of lower spreads on key products such as diesel.
The sharp rise in the company’s cash hoard from Rs 82,975 crore as of March end to Rs 93,066 crore as of June aided the significant growth in other income, up nearly 13 per cent on a sequential basis.
Despite only marginal sales growth, operating profit in the petrochemicals segment grew 7.5 per cent over the same period last year. This was due to improvement in margins in the ethylene chain. On a sequential basis though, sales and profit were almost flat.
The high margin oil and gas segment meanwhile continued to languish with declining output in the KG-D6 field. Compared with the March quarter, operating profit was down nearly 24 per cent. Things may improve in the domestic gas business in the years ahead, with the new gas pricing policy.
Meanwhile, shale gas output in the company’s US operations continued to improve. So did the organised retail business which broke even last quarter.