2016 to be a big year for Reliance Industries as refinery projects on completion stage, says CFO Alok Agarwal

Reliance Industries (RIL) third quarter earnings was largely aided by domestic oil demand and strong growth across core verticals despite a slowing growth scenario in emerging markets, Chief Financial Officer (CFO), Alok Agarwal said on Tuesday. RIL reported a 38.7 percent jump, year-on-year, in its consolidated net profit for the quarter. Explaining the rationale behind RIL’s performance, Agarwal said that slowing growth was the central theme in the last quarter, but a strong growth in oil demand and gasoline aided the earnings. “This has been difficult, volatile year because of the low oil prices,” Agarwal said. “The oil prices averaged at $44 per barrel in the last quarter, down nearly 43 percent on year. Also the rupee at 66 per dollar was also 6.6 percent weaker”. [caption id=“attachment_2590630” align=“alignleft” width=“380”] RIL chief financial officer Alok Agarwal[/caption] However, Agarwal noted global oil demand grew by 1.8 million barrels per day in 2015, the highest seen in the last five years. Gasoline trading demand grew over 800,000 barrel per day, primarily in the US, China and India. Agarwal attributed the reason for the buoyancy in gasoline to the record vehicle sales. “We benefited from strong demand growth in India across all our four major product categories. Diesel demand in India rose 7 percent on year, gasoline demand 14 percent, polymer demand 15 percent and polyester 4 percent,” he said. RIL’s consolidated revenue, at Rs73,300 crore, fell 24 percent due to lower commodity prices. The PBDIT, however, went up by 24 percent to Rs 13,800 crore on account of higher volumes and margin expansion. EBIT was up 48 percent at Rs9600 crore. Agarwal said gross refining margin (GRM) nearly doubled to $11.5 per bbl in the quarter compared with $7.3 per bbl recorded a year ago. The company’s consolidated net profit grew 38.7 percent to Rs 7,290 crore. RIL’s retail business set another benchmark in terms of revenue and number of stores. Revenue from the segment crossed Rs6000 crore registering a new record. The company’s cash and cash equivalents stood at over Rs 90,000 crore in the quarter, which Agarwal said, adding this will set the company well for spending in the next 12-15 months. Agarwal said the year 2016 is anticipated to be a big year for RIL. “The year 2016 will be big for all of us at Reliance. It is the year in which our projects at Jamnagar and other locations will come to completion. Also, it is the year in which we expect our digital services initiative to get to the market,” Agarwal said. (Disclosure: Firstpost is part of Network18 Media & Investment Limited which is owned by Reliance Industries Limited.)