RIL Net Profit grows 16.3%

 On 30th August 2011, RIL and BP announced the completion of BP‟s acquisition of a 30% stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG- D6 block.

Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited said: "Our first half financial performance has been consistent. The increase in profits was largely driven by improved performance in the refining and petrochemicals business.

"All our manufacturing facilities operated at record levels withrefineries achieving operating rates of 110%. RIL has strong balance sheet and sustained earning base to pursue growth opportunities."

RIL achieved a record turnover for the half year ended 30th September 2011 of ` 164,479 crore ($ 33.6 billion), an increase of 36.0% on a year-on-year basis.

Increase in volumes accounted for 3.5% growth in revenue and higher prices accounted for 32.5% growth in revenue. Exports were higher by 52.2% at ` 101,872 crore ($ 20.8 billion) as against ` 66,936 crore in 1H FY10-11.

Higher crude prices resulted in consumption of raw materials increasing by 44.4% to ` 129,104 crore ($ 26.4 billion) on a year-on-year basis.

Employee costs were at ` 1,593 crore ($ 325 million) for the half year as against ` 1,277 crore.

Other expenditure increased by 17.3% from ` 7,452 crore to ` 8,743 crore ($ 1.8 billion) due to higher power & fuel expenses and exchange difference.

Operating profit before other income and depreciation increased by 5.5% from ` 18,738 crore to ` 19,770 crore ($ 4.0 billion). Net operating margin was lower at 12.0% as compared to 15.5% in the corresponding period of the previous year due to base effect.

Other income was higher at ` 2,180 crore ($ 445 million) as against ` 1,394 crore on a year-on-year basis primarily due to higher average liquid investments.

Depreciation (including depletion and amortization) was lower by 10.2% at ` 6,164 crore ($ 1.3 billion) against ` 6,862 crore in 1H FY 2010-11 due to lower depletion charge in oil & gas as a consequence of the transfer of 30% Participating Interest (PI) in 21 blocks to BP.

Interest cost was higher at ` 1,205 crore ($ 246 million) as against ` 1,083 crore in 1H FY 2010-11 principally due to higher foreign exchange difference. This resulted in gross interest cost being higher at ` 1,481 crore ($ 302 million) as against ` 1,311 crore in 1H FY 2010-11. Interest capitalized was higher at ` 276 crore ($ 56 million) as against ` 228 crore.

Profit after tax was ` 11,364 crore ($ 2.3 billion) as against ` 9,774 crore for the corresponding period of the previous year.

Basic earnings per share (EPS) for the half year ended 30th September 2011 was ` 34.7 ($ 0.70) against ` 29.9 for the corresponding period of the previous year.

Outstanding debt as on 30th September 2011 was ` 71,399 crore ($ 14.6 billion) compared to ` 67,397 crore as on 31st March 2011. Net gearing as on 30th September 2011 was 5.4% as against 13.5% as on 31st March 2011.

RIL had cash and cash equivalents of ` 61,490 crore ($ 12.6 billion). These were in fixed deposits, certificate of deposits with banks, mutual funds and Government securities / bonds. RIL‟s net debt was equivalent to 0.2 time annualized PBDIT for the half year ended 30th September 2011.

The net capital expenditure towards projects for the half year ended 30th September 2011 was ` 6,691 crore ($ 1.4 billion). However, cash outflow on account of capex for the first half amounted to ` 3,533 crore ($ 721 million).