RIL Q1 net profit up 17%

Reliance Industries Ltd has posted a net profit of Rs. 56610 mn for the quarter ended June 30, 2011 as compared to Rs. 48510 mn for the quarter ended June 30, 2010.

Total Income has increased from Rs. 589500 mn for the quarter ended June 30, 2010 to Rs. 820960 mn for the quarter ended June 30, 2011.

CORPORATE HIGHLIGHTS

Reliance Industries Limited (RIL) has been informed that the Cabinet Committee of Economic Affairs has given its approval to the proposal of RIL to assign 30% of its interest to BP Exploration (Alpha) Limited in 21 out of 23 Blocks. RIL will pursue with the Government to resolve the issues, if any, concerning the balance two blocks.

Reliance Industries Limited (RIL) announced a rich gas and condensate discovery in the very first well drilled in the block CY-PR-DWN-2001/3(CYPR-D6) located in deepwater Cauvery-Palar basin. The block with an area of about 8600 sq km was awarded to RIL under the bidding round of NELP-III. RIL currently holds 100% participating interest in this block. This is one of the 23 exploration blocks where BP would have 30% participating interest.
AXA, Bharti Enterprises (“Bharti”) and Reliance Industries Limited (“RIL”) reached an understanding on the acquisition by RIL and its associate Reliance Industrial Infrastructure Limited (“RIIL”) of Bharti‟s shareholding of 74% in Bharti AXA Life Insurance Co. Ltd (“Bharti AXA Life”) and Bharti AXA General Insurance Co. Ltd. (“Bharti AXA GI”).

Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited said:“Reliance Industries continues to deliver strong financial and operating results. The growth in earnings was driven by strong refining margins and sustained performance in the petrochemicals business. Our cash flows give us the unparalleled opportunity to allocate capital to higher-margin resource plays in leading markets around the world. We remain committed towards investing in India and have commenced the investment program in the petrochemical business.”

FINANCIAL PERFORMANCE REVIEW AND ANALYSIS
Turnover achieved for the quarter ended 30th June 2011 was Rs 83,689 crore ($ 18.7 billion), an increase of 37.2% on a year-on-year basis. Increase in volume accounted for 4.5% growth in revenue and higher prices accounted for 32.7% growth in revenue. Exports were higher by 57.5% at Rs51,737 crore ($ 11.6 billion) as against Rs32,849 crore in the corresponding period of the previous year.

Consumption of raw materials increased by 40.6% to Rs64,443 crore ($ 14.4 billion) mainly on account of higher crude oil prices. Purchases for traded goods increased from Rs 474 crore to Rs573 crore.

Employee costs were at Rs878 crore ($ 196 million) for the quarter as against Rs617 crore due to higher benefits.

Other expenditure increased by 20.1% from Rs3,583 crore to Rs4,301 crore ($ 962 million). This was on account of higher power and fuel expenses, higher stores, chemicals and repair charges, higher selling expenses and lower exchange differences.

Operating profit before other income and depreciation increased by 6.3% from Rs 9,342 crore to Rs9,927 crore ($ 2.2 bn). Net operating margin was lower at 11.9% as compared to 15.3% on a year-on-year basis. This was due to base effect and higher weightage of the low-margin refining business.

Other income was higher at Rs10.78bn ($ 241 million) as against Rs7.22bn on a year-on-year basis due to income from larger cash balance and higher yields.

Debt as on 30th June 2011 was Rs67,041 crore ($ 15.0 bn) compared to Rs67,397 crore as on 31st March 2011. Net gearing as on 30th June 2011 was 11.4% as against 13.3% as on 31st March 2011.

RIL has cash and cash equivalents of Rs45,775 crore ($ 10.2 billion) which are invested mainly in bank deposits, mutual funds and Government securities / bonds. RIL‟s net debt is equivalent to 0.5 times its annualized PBDIT for the quarter ended 30th June 2011.

The net capital expenditure for the quarter ended 30th June 2011 was Rs 1,202 crore ($ 269 mn).

RIL retained its credit ratings. Its domestic credit rating is AAA from CRISIL and FITCH while it has investment grade ratings for its international debt from Moody‟s and S&P as Baa2 and BBB respectively.