Reliance has made some of the biggest gains from the falling crude oil prices, with profits for the third quarter reaching a 7-year high of INR 7218. Chairman of Reliance Industries, MukeshAmbani, acknowledged the role of declining crude oil prices when he stated, "Benefits of low crude oil and energy prices for downstream businesses clearly outweigh the impact of these factors on upstream segment, reflecting in the record earnings for the quarter."
The standalone profits from this quarter surpassed all expectations from analysts, as it rose by 10 percent to reach INR 7,218 crores, as opposed to the expected 6,950 crores. Refining contributes significantly to the company’s revenue and with falling crude prices, the gross refining margin, which was at USD 10.6 per barrel in the September quarter, showed a significant rise at USD 11.5 per barrel, which is a seven-year high.
Similarly, benchmark Singapore complex margin also recorded a rise during the period.As pointed out by MukeshAmbani, the performance of the refining business has been stunning and its earnings in the last three quarters alone have greatly surpassed, what were record earnings in the previous financial year of 2015. He noted that the quarterly performance for petrochemical business was also among its best. This can be attributed to robust polymer margins.
With the robust performance of the refining and petchem businesses, the October-December quarter standalone operating profits showed an increase of 4.5 percent, while the margin expanded by 18.2 percent with 200 basis points. EBIT for refining showed a growth of 17 percent and a margin rise of 12.8 percent. According to reliance, the all-time high crude throughput of 18 MMT helped to boost EBIT.
Sourcesfrom the company also revealed that there was growth of 8.5 percent in consolidated profits during the quarter, while there was a 3.7 percent decline in revenue.
Highest Ever Turnover for Reliance Retail
Reliance Retail has sustained its tremendous growth. It recorded 18.7 percent growth as the third quarter brought in its highest ever turnover of INR 6,042 crore, as compared to the INR 5,091 crores for Q2. EBIT also showed an increase of 25.6 percent.
This continued growth and high turnover can be attributed to rapid expansion activities that included the setting up of numerous stores across the country. At the end of 2015, Reliance Retail there were 3,043 stores in operation, across 371 cities.
Reliance Jio’s Telecommunications Venture
In addition, Reliance Jio began its rollout of digital services across the country during Q3. The ambitious plans for digitization have already gained momentum, with more than 100,000employees and their familieshaving been given access to world-class digital services and applications. This is part of company’s endeavor to develop and deliver the best possible service for customers.
Summary
Reliance Industries Limited has seen its net profits soar to over Rupees 7000 crore from widening refining margins that have been aided by declining crude oil prices.