Reliance Industries posted a 16.7% rise in net profits

Mukesh Ambani's big arm Reliance Industries announced first quarter results on Monday. Despite low oil and gas production, it reported a 16.7% rise in profits on account of a bounce in refining margins and other income.

Company's April – June net profit rose from Rs 4,851 crore a year ago to Rs 5,661 crore. Company's net turnover during the three months rose 40.4% from the year ago period to Rs 81,018 crore.

A big leap in turnover was seen due to high refining margins. The gross refining margins for the first quarter stood at $10.3 per barrel as against $7.3 per barrel in the corresponding quarter of last year.

RIL is India's largest petroleum refining firm and it runs its refining complex in Jamnagar, Gujarat, which has a refining capacity of 1.24 million barrels a day.

Company's other income rose from Rs 722 crore a year ago to Rs 1,078 crore.

Company's refining margins and other income offset the impact of low gas production, its KG-D6 block's natural gas output declined 18%, while oil output dropped 41%.

The company earns broad margins by producing higher grades of crude oil over its refineries in Jamnagar. The oil and gas segment contributes 4.1% of the revenue and 21.4% of the earnings before interest and tax.

The petrochemicals segment's business revenue increased 32.1% to Rs 18,366 crore but operating profit rose just 7.9%. The EBIT margin of the petrochemicals segment shrunk to 12.1% from 14.8% in the first quarter of 2010-11.

Last week, Cabinet Committee of Economic Affairs (CCEA) approved British Petroleum's plan to buy a stake in the oil and gas blocks operated by RIL. BP is to pay $7.2 billion for a 30% stake in RIL's 23 oil and gas blocks including KG-D6 gas fields. RIL got the approval for 21 of those blocks from CCEA.

OneIndia Money