Mukesh Ambani-led Reliance Industries Ltd, the country’s largest company by market capitalisation, reported a decline in its net profit for the third successive quarter on Friday as refining margins halved and global recession caused exports to fall.
The oil refiner and explorer with interests in petrochemicals and textiles said its net profit decreased 11.5 per cent to Rs 3,636 crore in the first quarter ended June from Rs 4,110 crore a year earlier. The result was below analyst expectations.
RIL said its refining margin in the first quarter of 2009-10 was $7.5 per barrel, down from $15.7 a year earlier. The company’s sales were also down by 22.6 per cent to Rs 33,309 crore from Rs 43,050 crore a year earlier. Refining accounts for 65 per cent of sales. This is separate from refining by Reliance Petroleum, a special economic zone (SEZ) refinery which is awaiting shareholder approval for merger into RIL.
A drop in prices accounted for 24.4 per cent reduction in revenue partially offset by higher volumes, which accounted for 1.8 per cent revenue growth.
RIL’s exports decreased by 38.5 per cent to Rs 17,433 crore as fuel demand fell globally.
On April 2, RIL commenced gas production from KG D6 block in Krishna-Godavari basin off Andhra Pradesh coast. RIL has invested over $4.7 billion to developing the deepwater field.
“Timely completion with safe and stable start-up of the new SEZ refinery and the deepwater, oil and gas KG D6 block are noteworthy accomplishments,” Chairman Ambani said.
RIL said its cost optimisation activities led to employee cost dropping to Rs 546 crore from Rs 651 crore a year earlier. Other expenditure decreased by 36.9 per cent.