Mumbai: Billionaire Mukesh Ambani-run Reliance Industries on Thursday beat market forecast to report better-than-expected profits on earning more than average margins on refining oil, despite extreme volatility in prices. Reliance posted a 10 per cent decline in net profit to Rs Rs 3,501 crore in the October-December quarter as opposed to market expectations of net earnings of Rs 3,000-3,100 crore.

The company, which after adding 29 million tons SEZ refinery has become the owner of single largest refining hub, earned USD 10 on refining every barrel of crude oil. This was USD 6.4 per barrel premium over Singapore gross refining margins (GRM).

The Jamnagar refinery’s ability to turn ‘dirtiest’ and ‘cheapest’ crude oil into high value products like diesel helped it post better-than-expected profits.

However, the profits when compared with Rs 8,079 crore earned in third quarter of FY’08 after considering gains on sale of shares in its subsidiary Reliance Petroleum, were 57 per cent lower, a company press statement said here.

The GRMs in Q3 were lower than USD 15.4 per barrel earnings it made a year ago as the spread between crude oil and finished products narrowed due to a slump in global demand in fuel – forced by recession in major economies.

“This was one of the most challenging quarters for Reliance with volatility in prices and margins. Producers and consumers are coming to terms with slower global trade and economic outlook,” chairman and managing director Mukesh Ambani said.

Sales dropped 8.75 per cent to Rs 31,563 crore during the December quarter from Rs 34,590 crore a year ago.

Earnings from its petrochemical business were down 7 per cent, reflecting lower demand for plastics in recessionary economies.

Meanwhile, the company is implementing various capital expenditure schemes at the existing export oriented refinery of Reliance Petroleum consequent to which there were changes in this units to implement the modifications.

“Accordingly crude quantity processed during the quarter was lower at 7.87 million tonnes as compared to 8.21 million tonnes in the trailing quarter,” the RIL statement said.

In the oil and gas arena, RIL along with BP was awarded the deep water block KG-DWN-2005/2 offered under NELP VII.

Besides, oil production commenced from KG-D6 basin on September 17, 2008 with an initial production of 5,000 barrels per day and there were two gas discoveries.

Reliance has executed two production sharing contracts in Iraq, acquired acreage in Peru and farmed out 25 per cent participating interest in block K located in East Timor to Oil India and Indian Oil Corporation.

RIL has incorporated wholly owned subsidiaries in London and Singapore to tap emerging opportunities in global markets of petroleum products.

During the December quarter, EBIT for the petrochemicals business was at Rs 1,657 crore, a decrease of 7 per cent and for the nine month period, EBIT for the petrochemicals business was at Rs 5,133 crore, a fall of 9 per cent.

The polymer production volumes (PP, PE, PVC) decreased by 6 per cent to 2,358 KT and the Polyester production volume (PFY, PSF, PET) decreased by 3 per cent to 1,135 KT.

Meanwhile, RIL subsidiary Reliance Retail launched two new formats– Reliance Living Furnishings and Reliance Living Furniture during the quarter and currently operates a total of more than 900 stores pan India.

source: DnaIndia

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