RELIANCE INDUSTRIES LTD - SECOND QUARTER RESULTS - SEPTEMBER,2014 - NPT up 1.7% - Future looks promising

RELIANCE INDUSTRIES LTD

SECOND QUARTER RESULTS

SEPTEMBER,2014

HIGH LIGHTS

RECORD HALF YEARLY CONSOLIDATED REVENUE OF Rs.221,301 CR ($35.8 BILLION), UP 1.0% 

HALF YEARLY CONSOLIDATED PBDIT OF Rs.22,895 CR ($3.7 BILLION), UP 6.4%

HALF YEARLY CONSOLIDATED SEGMENT EBIT OF Rs.14,310 CR ($2.3 BILLION), UP 17.8%

RECORD HALF YEARLY CONSOLIDATED NET PROFIT OF  Rs.11,929 CR ($1.9 BILLION), UP 7.4%

RECORD QUARTERLY CONSOLIDATED NET PROFIT OF Rs.5,972 CR ($967 MILLION), UP 1.7%

HIGHLIGHTS OF QUARTER’S PERFORMANCE

(CONSOLIDATED)

Ø  Revenue (turnover) decreased by 4.3 % to Rs.113,396 Cr ($ 18.4 billion)

Ø  PBDIT increased by 5.6 % to Rs.11,879 Cr ($ 1.9 billion)

Ø  Profit  before Tax increased by 4.9 % to Rs.7,858 Cr ($ 1.3 billion)

Ø  Cash Profit increased by 4.9 % to Rs.9,250 Cr ($ 1.5 billion)

Ø  Net Profit increased by 1.7 % to Rs.5,972 Cr ($ 967 million)

CORPORATE  HIGHLIGHTS

FOR  THE  QUARTER  (2Q FY15)

Ø  In August 2014, Reliance Haryana SEZ Ltd (RHSL) has returned 1383.68 acres of land in Gurgaon acquired from HSIIDC for setting up SEZs due to revision of strategic priorities. RHSL is a joint venture between Reliance Ventures Ltd (RVL), RIL’s wholly-owned subsidiary, and Government of Haryana through HSIIDC. The JV was established for development of SEZs / Model Economic Township (MET) project and other infrastructure facilities in Haryana. HSIIDC  has also exited the JV and the project.

Ø  In May 2014, The Board of RIL approved funding of up to Rs.4,000 Cr to Independent Media Trust (“IMT”), of which RIL is the sole beneficiary, for acquisition of control in Network 18 Media & Investments Ltd (“NW18”) including its subsidiary TV18 Broadcast Ltd (“TV18”). In July 2014, RIL has completed the acquisition of control of Network 18 Media and Investments Ltd (“NW18”) including its subsidiary TV18 Broadcast Ltd (“TV18”).

Ø  In September 2014, Reliance Jio Infocomm Ltd (“RJIL”), a subsidiary of RIL has signed a US$ 750 Million loan backed by Korea Exim Bank on 24 September 2014. The loan is guaranteed by RIL and will be primarily used to finance goods and services procured from Samsung Electronics for the infrastructure rollout of RJIL.

Ø  In September 2014, RJIL, a subsidiary of RIL, and GTL Infrastructure Ltd (“GTL Infra”), a Global Group enterprise, announced signing of a Master Services Agreement (MSA) for tower infrastructure sharing. In addition, in September 2014, RJIL and Indus Towers, the world’s largest and India’s leading provider of telecom tower infrastructure, announced the signing of a Master Services Agreement (MSA) for tower infrastructure sharing. Under the agreement, Reliance Jio would utilize the telecom tower infrastructure services being provided by Indus Towers to launch its services across the country. 

FINANCIAL PERFORMANCE

REVIEW AND ANALYSIS

(CONSOLIDATED)

RIL achieved a turnover of Rs.113,396 Cr ($ 18.4 billion) for the quarter ended 30^th September 2014, decrease of 4.3 %, as compared to Rs.118,439 Cr in the Q2 FY 14. Lower crude prices and volumes mainly in the refining and oil & gas business accounted for decrease in revenue. Exports from India were lower by 14.7% at Rs.66,065 Cr ($ 10.7 billion) as against Rs.77,428 Cr in the Q2 FY 14.

Cost of raw materials was lower by 12.9% from Rs.93,933 Cr to Rs. 81,815 Cr ($ 13.2 billion) on Y-o-Y.

Employee costs were at Rs.1,575 Cr ($ 255 million) as against Rs.1,409 Cr in Q2 FY 14.

Other expenditure increased by 19.8% on a Y-o-Y basis from Rs.8,063 Cr to Rs.9,660 Cr ($ 1.6 billion) .

The increase of power and fuel is on account of lower usage of internal fuels which were utilized for  value optimization.

Operating profit before other income and depreciation increased by 10.8 % on a Y-o-Y basis from Rs.8,865 Cr to Rs.9,818 Cr ($ 1.6 billion) due to higher contribution from refinery, petrochemicals and oil and gas business.

Other income was lower at Rs.2,009 Cr ($ 325 million) as against Rs.2,346 Cr in Q2 FY 14, primarily on account of lower investible surplus.

Depreciation (including depletion and amortization) was higher by 8.2% to Rs.3,024 Cr ($ 490 million) as compared to Rs.2,796 Cr in Q2 FY 14.

Interest cost was at Rs.997 Cr ($ 161 million) as against Rs.959 Cr in Q2 FY 14.

Profit after tax was higher by 1.7% at Rs.5,972 Cr ($ 967 million) as against Rs.5,873 Cr in the Q2 FY 14.

Basic earnings per share (EPS) for the quarter was Rs.20.3 as against Rs.20.0 in the Q2 FY 14.

Outstanding debt as on 30^th September 2014 was Rs.142,084 Cr ($ 23.0 billion) compared to Rs.138,761 Cr as on 31 st March 2014.

Cash and cash equivalents as on 30^th September 2014 were at Rs.83,456 Cr ($ 13.5 billion).

The net addition to fixed assets for the half year ended 30^th September 2014 was Rs.44,895 Cr ($ 7.3 billion) including exchange rate difference capitalization. Capital expenditure was principally on account of ongoing expansions projects in the petrochemicals and refining business at Jamnagar, Dahej and Hazira, Broad band Access and US Shale gas projects.

Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Ltd said: “RIL’s financial performance for the period stands testimony to the intrinsic strength of our integrated business operations. The refining and petrochemical businesses, once again, delivered robust results, outperforming regional industry benchmarks. Renewed optimism in the domestic economy augurs well for business and consumer confidence particularly against the backdrop of continuing concerns on global economic growth. We expect to create significant value for our stakeholders over the next 12-18 months as we complete our large investment programme across energy and consumer businesses. These projects will propel the next phase of growth for India and Reliance.”

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RELIANCE INDUSTRIES LIMITED - RESULTS FOR - Q2 FY 13-14 SEP 2013 - REVENUE UP 4.7%;NPT UP 9.4%

RELIANCE INDUSTRIES LIMITED

RESULTS FOR Q2 FY 13-14

Q/E SEP 2013

RECORD HALF YEARLY REVENUE

OF Rs.197,112 CR ($31.5BILLION),UP 4.7%

EXPORTS OF Rs.134,455 CR ($21.5BILLION),UP 19.3%

NET PROFIT OF Rs.10,842 CR ($1.7BILLION),UP 9.4%

PBDIT OF Rs.19,519CR ($3.1BILLION),UP 4.9%

RECORD QUARTERLY REVENUE

OF Rs.106,523CR ($17BILLION),UP 14.2%

Highlights of the un-audited financial results (In Rs.Cr)

Ø  Revenue (turnover)increased by 4.7% to Rs.197,112Cr ($ 31.5billion)

Ø  Exports increased by 19.3% to Rs.134,455 Cr ($ 21.5billion)

Ø  PBDIT increased by 4.9% to Rs.19,519 Cr ($ 3.1billion)

Ø  Profit Before Tax increased by 9.9% to Rs.13,533Cr ($ 2.2billion)

Ø  Cash Profit increased by 3.1% to Rs.15,077 Cr ($ 2.4billion)

Ø  Net Profit increased by 9.4% to Rs.10,842Cr ($ 1.7billion)

Ø  Gross Refining Margin at $ 8.0/bbl for H/Y ended 30^th Sept 2013

HIGHLIGHTS OF QUARTER’S PERFORMANCE

Ø  Revenue (turnover) increased by 14.2% to Rs.106,523Cr ($ 17.0 billion)

Ø  Exports increased by 34.9% to Rs.77,429Cr ($ 12.4billion)

Ø  PBDIT increased to Rs.9,909 Cr ($ 1.6 billion)

Ø  Profit Before Tax increased to Rs.6,871Cr ($ 1.1 billion)

Ø  Cash Profit decreased by 1.5% to Rs.7,668Cr ($ 1.2 billion)

Ø  Net Profit increased by 1.5% to Rs.5,490Cr ($ 0.9 billion)

Ø  Gross Refining Margin at $ 7.7/bbl for q/e 30th September 2013

CORPORATE HIGHLIGHTS

·Reliance and BP announced a new gas condensate discovery off the east coast of India in Cauvery basin. The discovery, in the deepwater block CY-DWN-2001/2 (CYD5), is situated 62 kilometers from the coast in Cauvery Basin and is the second gas discovery in the block. RIL is the operator with 70% equity and BP has a 30% share. Well CYIII-D5-S1 was drilled in a water depth of 1,743 meters, to a total depth of 5,731 meters, with the primary objective of exploring Mesozoic-aged reservoirs.

·In July 2013, Reliance has inked a MOU with ONGC to explore the possibility of sharing RIL’s infrastructural facility in the East Coast. In line with global practice of sharing infrastructure, the MoU aims at working out modalities for sharing of infrastructure, identifying additional requirements as well as firming up commercial terms.

·RIL and its partners BP and NIKO announced a significant gas and condensate discovery in the KG-D6 block off the eastern coast of India. The KG-D6-MJ1 well was drilled in a water depth of 1,024 metres - and to a total depth of 4,509 metres -to explore the prospectivity of a Mesozoic Synrift Clastic reservoir lying over 2,000 metres below the already producing reservoirs in the D1-D3 gas fields. The discovery, named ‘D55’, has been notified to Government of India and the Management Committee of the block. This discovery is expected to add to the hydrocarbon resources in the KG-D6 block. Appraisal will now commence to better define the scale and quality of the field.

·In April 2013, Reliance Jio Infocomm Limited and Bharti Airtel Limited signed an Indefeasible Right to Use (IRU)Agreement, under which Bharti will provide Reliance Jio data capacity on its i2i submarine cable. Reliance Jio will utilize a dedicated fiber pair on i2i. The high speed link will enable Reliance Jio to extend its network and service reach to customers across Asia Pacific region. 

· In April 2013, Telekom Malaysia Berhad (TM) (Malaysia), Vodafone Group (UK), Omantel (Oman), Etisalat (UAE), Reliance Jio Infocomm Limited (India) and Dialog Axiata (Sri Lanka) –signed the Construction and Maintenance Agreement (C&MA) and Supply Contract for “Bay Of Bengal Gateway” Cable System (BBG) in Kuala Lumpur. The construction of BBG is planned not only to provide connectivity between South East Asia, South Asia and the Middle East, but also to Europe, Africa and to the Far East Asia through interconnections with other existing and newly built cable systems landing in India, the Middle East and the Far East Asia. 

·Reliance Jio Infocomm Limited and Reliance Communications Limited signed of a definitive agreement for sharing of RCOM’s nationwide telecom towers infrastructure. Under the terms of the agreement, Reliance Jio Infocomm will utilise upto 45,000 ground and rooftop based towers across RCOM’s nationwide network for accelerated roll-out of its state-of-the-art 4G services. 

The agreement provides for joint working arrangements to configure the scope of additional towers to be built at new locations to ensure deep penetration and seamless delivery of next generation services. 

FINANCIAL PERFORMANCE REVIEW AND ANALYSIS

RIL achieved a turnover of Rs.197,112Cr ($31.5billion)for the half year ended 30th September 2013, an increase of 4.7%,as compared to Rs.188,193 Cr in Q2 FY 12-13. Higher price accounted for 4.5% growth in revenue while increase in volume accounted for 0.2% growth in revenue.

Exports were higher by 19.3% on a Y-o-Y basis at Rs.134,455 Cr ($21.5billion)as against Rs.112,667 Cr in Q2 FY 12-13.Higher crude oil prices Were the main reason for the 3.3% increase in cost of raw materials from Rs.156,975 Cr to Rs.162,094 Cr($ 25.9billion)on Y-o-Y basis.

Employee costs were at Rs.1,707Cr ($ 273million) as against Rs.1,699 Cr in the

corresponding period of the previous year.

Other expenditure increased by 13.6% on a Y-o-Y basis from Rs.11,531 Cr to Rs.13,101Cr ($ 2.1billion) primarily due to higher expenses on account of power & fuel consumption and higher selling expenseson account of higher exports.

Operating profit before other income and depreciation increased by 2.3% on a Y-o-Y basis from Rs.14,588 Cr to Rs.14,924($ 2.4billion) Cr due to higher margins in refining and petrochemicals business. This was partly offset by lower production in the oil and as business.

Other income was higher at Rs.4,595Cr ($ 734million) as against Rs.4,016 Cr in the corresponding period of the previous year. This was mainly on account of higher investment income. Depreciation (including depletion and amortization)was lower by 8.3% to Rs.4,371($698million) Cr as compared to Rs.4,769Cr in Q2 FY 12-13. This was primarily due to lower production of oil & gas.

Interest cost was higher at Rs.1,615 Cr ($ 258million) as against Rs.1,521Cr in Q2 FY 12-13 principally due to depreciation of  Indian rupee. This resulted in gross interest cost being higher at Rs.1,944Cr ($310million) as against Rs.1,615Cr in Q2 FY 12-13.

Interest capitalized was at Rs.329Cr ($ 53million) as against Rs.95Cr in Q2 FY 12-13.

Profit after tax was higher by 9.4% at Rs.10,842Cr ($ 1.7billion) as against Rs.9,912 Cr in Q2 FY 12-13. 

Basic earnings per share (EPS)for the half year ended 30^th September2013 was Rs.33.6 ($ 0.5) against Rs.30.5 in Q2 FY 12-13.

Outstanding debt as on 30^th September2013 was Rs.83,982Cr ($13.4billion) compared to Rs.72,427Cr as on 31^st March 2013.

RIL had cash and cash equivalents of  Rs.90,540Cr ($ 14.5billion). RIL is debt free on a net basis as at 30thSeptember2013.

The net addition to fixed assets for the half year ended 30^th September 2013 was Rs.20,154 Cr ($ 3.2billion) including exchange rate difference capitalization. Capital expenditure was principally on account of ongoing expansions projectsin the petrochemicals and refining business at Jamnagar, Dahej, Silvassa and Hazira.

DOMESTIC OPERATIONS:- KG-D6Production update:KG-D6 field produced 1.0 million barrels of crude oil, 0.13million barrels of condensate and 94.6BCF of natural gas in 1H FY14 , a reduction of 41%, 50% and 52%respectively on a Y-o-Ybasis. Fall in production is mainly attributed to geological complexity and natural decline in the fields.

Key Project update

·Exploration

Appraisal program for MJ1 discovery (D55) reviewed by Management Committee (MC) of KG-D6 block 

First appraisal well for MJ-A1 spud in mid-September 2013

R-Cluster development

Field Development Plan approved by MC in August 2013

Front End Engineering & Design (FEED)completed

D1-D3 and MA field

Booster compressor–FEED completed and detailed engineering in progress

Development well A8 spud in mid-September 2013

Side-track and water shut-off jobs to follow after drilling and completion of MA8 well

Panna-Mukta and Tapti (PMT)Production update:

Panna-Mukta fields produced 3.6 million barrels of crude oil and 33.8 BCF of natural gas in 1H FY14–reduction of 17% in case of crude oil and 6% in case of natural gas on Y-o-Ybasis. Lower production due to Mukta A shut down in Panna-Mukta field coupled with natural decline. Tapti produced 0.14 million barrels of condensate and 14.9 BCF of natural as in 1H FY14–a decline of 53% and 42% respectively on Y-o-Y basis. The decrease was due to natural decline and under performance of new ERD  wells drilled last year.

Key project update:·Panna-Mukta 

Two rigs are in operation

O Development wells in Panna L” area –4 wells completed and put to production. Balance 2 wells to be completed by3QFY14

O Infill drilling campaign –3 wells completed and put to production.Balance 4wells to be ompleted by4Q FY14

o Mukta-B development -FEED completed. Expect to submit development plan in 3Q FY14

The Fashion and lifestyle business continued to deliver a strong performance in the quarter with launch of private brands and collections in collaboration with Indian and nternational designers. Reliance Trends was awarded Images “Most Admired Retailer of the Year –Large Format Fashion/ Lifestyle” at the India Retail Forum.

Witnessing the rapid migration of books and music delivery via digital channels, the business has decided to discontinue offering books and music through physical stores being operated under Time Out banner.

In the quarter, Reliance Brands opened the first stores for Dune and Stuart Weitzman apart from new store openings for other partner brands.

Towards the next phase of growth, the Company has identified strategic technology enabled initiatives, spanning across all formats and functional areas. The Company has partnered with strategic technology partners to implement industry-leading solutions in areas such as supply chain management, assortment planning, etc. Some of these strategic initiatives include Mobile Point of Sales systems, RFID based automation, Enhanced version of Customer Relationship Management (CRM), Assortment Planning and Space Optimization, etc.

BROADBAND ACCESS

RIL’s subsidiary, Reliance Jio Infocomm Limited (“RJIL”), which is the only private player with Broadband Wireless Access spectrum in all the 22 telecom circles of India, plans to provide reliable fast internet connectivity and rich digital services on a Pan India basis.

In addition to fixed and wireless broadband connectivity, RJIL also plans to enable end-to-end solutions that address the entire value chain across various digital services in key domains of national interest such as education, healthcare, security, financial services, government-citizen interfaces and entertainment. RJIL aims to comprehensively address the requisite components of the customer need, thereby fundamentally enhancing the opportunity and experience of hundreds of millions of Indian citizens and organizations.

From less than 700 employees last year, most of them based in RJIL’s Navi Mumbai campus, the RJIL team has grown rapidly to a national footprint of over 4,000 employees today. The key leadership positions required to execute the project are in place. RJIL has finalized the key vendor and supplier partnerships that are required for the launch of our services, and is making rapid progress in building the critical infrastructure needed to launch its services.

In the past year, RJIL has announced key definitive agreements with Reliance Communications (RCOM) for inter-city optic fibre sharing, for sharing of up to 45,000 of RCOM’s nationwide telecom towers, and for joint working arrangements to configure the scope of additional towers to be built at new locations. RJIL also announced a key agreement for international data connectivity with Bharti to utilise dedicated fiber pair on Bharti’s i2i submarine cable that connects India and Singapore. In addition, RJIL also signed the Construction and Maintenance Agreement (C&MA) and the Supply Contract for “Bay Of Bengal Gateway” Cable System (BBG) in Kuala Lumpur, to provide connectivity between South East Asia, South Asia and the Middle East, Europe, Africa and to the Far East Asia.

RJIL has received LoI from DOT for award of Unified Licence with Authorisation for all Services under Unified License in all service areas and RJIL has complied with requirements of LoI including payment of the requisite entry fee. In addition RJIL has been awarded with a Facility Based Operator License (“FBO License”) in Singapore which will allow Reliance Jio Infocomm Pte Ltd.to buy, operate and sell undersea and/or terrestrial fibre connectivity, setup its internet point of presence, offer internet transit and peering services as well as data and voice roaming services in Singapore.

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