Reliance Industries Ltd. [ RIL ]

| June 14, 2008 | 0 Comments

Reliance Industries Ltd. was founded by Mr. Dhirubhai Ambani and is India’s largest private sector enterprise. Starting with textiles in the late seventies, Reliance pursued a strategy of backward integration from textiles to polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production. RIL has facilities in Naroda, Hazira, Patalganga and Jamnagar. RIL had set up the world’s largest grassroot refinery in record time and is currently in the process of setting up a second refinery with a capacity of 580,000 bpd in Jamnagar. The company is also aggressively pursuing E&P activities in the offshore segment. RIL has been successful in finding gas in the KG basin and the company is currently in the process of developing the KG-D6 block.


Financial Summary

(Rs mn.)

4QFY07

4QFY08

% Change

FY07

FY08

% Change

Net Sales

274.48

372.86

35.8

1137.8

1371.5

20.5

PBIDT

51.68

60.18

16.4

201.2

231.5

15.0

OPM (%)

18.8

16.1

17.7

16.9 >

PAT

31.6

39.1

24.0

120.8

195.2

61.7

EPS Fully diluted (Rs)

21.7

26.9

24.0

83.0

134.3

61.7

Key Points
•
GRM’s in refining business are flat on a quarterly basis: The refining business of RIL showed good performance during the quarter with GRM’s rising from $ 13bbl to $ 15.5/bbl yoy. However on a qoq basis GRM’s are flat due to differential between crude and distillates being flat. EBIT margins in the refining business stood at 9.9% against 10% in 3QFY08 and 10.8% in 4QFY07. For the quarter the refinery division clocked revenues of Rs. 286.9bn up by 36% yoy and reported an EBIT of Rs. 28.4bn an increase of 25% yoy.
•
Petrochemicals division drags profitability during the quarter: The petrochemicals division was a drag on profitability in the second quarter as compared to 3QFY08. However on a yoy basis there was a slight improvement in profitability. Segmental EBIT was up by 6% yoy at Rs. 14.7bn but on a qoq basis EBIT dropped by 17.5%. EBIT margins for the quarter stood at 10.4% as against 11% in 4QFY07 and 14% in 3QFY08. During the quarter there was a pressure on margins on account of higher feedstock prices namely naptha.
•
RPL refinery to be completed ahead of schedule: Reliance Petroleum Ltd. has achieved 90% overall progress in implementation of its refinery and the management expects completion of its project ahead of its Dec-08 schedule. Moreover the development work on the KG-D6 block is on schedule for production in 2HFY09 but there is still lack of clarity on the dispute between Reliance Industries and RNRL over gas pricing formula.

Courtesy : HDFC Bank

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