Reliance Industries beats expectations with Q2 results

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SME Times News Bureau | 21 Oct, 2016
Reliance Industries on Thursday reported a consolidated net profit of Rs 7,206 crore for the quarter ended September 30.

Excluding exceptional items -- mainly on account of the net impact of the sale of US shale gas assets -- the net profit was 43.1 percent higher over the like period of the previous year. But taking such items into consideration, the profit fell 22.9 percent.

Sequentially, the consolidated net profit was up 1.3 percent.

The company's standalone quarterly net profit stood at Rs 7,704 crore, up 17.9 percent over the corresponding period of the previous year.

"The company achieved outstanding second quarter results with strong refining business performance and record petrochemicals segment earnings," Chairman Mukesh Ambani said in a statement after the release of the latest numbers.

"Refining business sustained high profitability in a tough environment, highlighting our exceptional refining assets, dynamic response to market trends and robust operations," Ambani said.

"Petrochemicals segment gained significantly from higher volumes, integration and supportive product margins."

The main surprise was in the gross refining margin -- the difference between the crude oil price and the value of petroleum products coming out of a refinery -- of $10.1 per barrel, which was below $11.5 per barrel for the previous quarter, but well above market expectations.

"As far as gross refining margin is concerned, our outperformance of the Singapore benchmark has been $2.5 per barrel over the last five years. In this backdrop, the $5 outperformance over the last two quarters is significant," Chief Financial Officer Alok Agarwal said.

On a consolidated basis, Reliance Industries achieved a turnover of Rs 81,651 crore, an increase of 9.6 percent over the corresponding period of the previous year.

"Increase in revenue is primarily on account of increase in volumes in refining, petrochemical and retail businesses," the company said.

The results were announced after the close of Indian equity markets. The company's shares, though, ended the day at Rs 1,088.50, up Rs 1.60, or 0.15 percent.

The company also spoke about its latest venture -- Jio 4G services -- in the results statement.

It took exception to incumbent players not providing enough interconnect points for Jio calls to go through, and said its customers, as a result, continued to face severe quality of service issues.

"Call failure rates continue to be severe with over 75 calls failing out of every 100 call attempts on the networks of some of the operators. This is in breach of quality of service regulation that not more than 5 calls out of every 1,000 call attempts can fail."

Nonetheless, Ambani said: "We are delighted and humbled by the enthusiastic adoption of Jio by India. Jio is built to empower every Indian with the power of data."