A double-digit growth in revenue from the Oil-to-Chemicals (O2C) business arrested the decline in Mukesh Ambani-controlled Reliance Industries Ltd (RIL’s) net profit for the January-March 2024 quarter. The multi-faceted business conglomerate, RIL, reported a flat growth in its consolidated net profit for the January-March 2024 quarter due to rising taxes, showing a marginal growth of 0.1 percent. However, net profit attributable to the owners of the company posted a 1.8 percent decline in the January-March 2024 quarter, with the multi-business company announcing a Rs 10 per share dividend.
RIL posted a consolidated net profit of Rs 21,243 crore for the quarter ended March 2024, compared to Rs 21,227 crore in the corresponding period last year. The net profit attributable to the owners of the company stood at Rs 18,951 crore for the fourth quarter of the financial year 2023-24 (ending March 2024) as against Rs 19,299 crore in the comparable period of the previous year. However, the gross revenue of the company rose by 10.8 percent to Rs 264,834 crore during the March quarter, compared to Rs 238,957 crore in the same period last year.
For the full financial year 2023-24, the company’s consolidated revenue surpassed the psychological barrier of Rs 10 lakh crore for the first time, reporting at Rs 1,000,122 crore as against Rs 974,864 crore witnessed in the corresponding period last year. RIL’s net profit for the full year rose by 7.26 percent to Rs 79,020 crore in the financial year 2023-24 compared to Rs 73,670 crore reported in the previous year. Total tax expenses of the company increased sharply by 138.8 percent on the year-on-year (yoy) basis to Rs 6,577 crore due to availing of tax credits in the corresponding quarter of the previous year.
| Operational update (million metric tonnes) |
| Particulars | Jan-Mar 2024 | Oct-Dec 2023 | Jan-Mar 2023 | Apr 2023-Mar 2024 | Apr 2022-Mar 2023 |
| Total throughput | 19.8 | 18.7 | 19.8 | 78.2 | 77.0 |
| Production meant for sale | 17.1 | 16.4 | 17.1 | 67.8 | 66.4 |
Sources: Reliance Industries Ltd, and Polymerupdate Research
Mukesh Ambani, Chairman and Managing Director of RIL, stated, “Initiatives across RIL’s businesses have made a remarkable contribution towards fostering growth of various sectors of the Indian economy. It is heartening to note that alongside strengthening the national economy, all segments have posted robust financial and operating performance. This has helped the company achieve multiple milestones. I am happy to share that this year, Reliance became the first Indian company to cross the Rs 100,000-crore threshold in pre-tax profits.”
Oil-to-chemicals business performanceFrom the Oil-to-Chemicals (O2C) segment, RIL posted a total revenue of Rs 564,749 crore (US$ 67.7 billion) for the financial year 2023-24, a decrease of 5 percent yoy from the corresponding period last year, primarily on account of lower product price realization following a 13.5 percent yoy decline in average Brent crude oil prices. This was partially offset by higher volumes. The company’s earnings before interest, taxes, depreciation, and amortization (EBIDTA) from the O2C segment stood marginally higher at Rs 62,393 crore (US$ 7.5 billion) for the full financial year 2023-24, with optimized feedstock sourcing, advantageous ethane cracking, and lower Special Additional Excise Duty (SAED) or Windfall Tax impact, although the margin environment across transportation fuel and downstream chemicals remained weak through the year.
For the January-March 2024 quarter, total revenue increased by 10.5 percent to Rs 142,634 crore (US$ 17.1 billion) primarily on account of improved realization for the transportation fuels segment and higher volumes. Segment EBITDA for the January-March 2024 quarter marginally increased by 3 percent yoy to Rs 16,777 crore (US$ 2 billion), supported by advantageous feedstock sourcing, ethane cracking, and higher domestic product placement. Primary and secondary units were stabilized posting a major turnaround in the previous quarter with maximized throughput.
| Reliance Industries’ Oil-to-Chemicals performance in FY2023-24 (Rs crore) |
| Particulars | Jan-Mar 2024 | Sept-Dec 2023 | Jan-Mar 2023 | Variations (%) | April 2023-March 2024 | April 2022-March 2023 |
| Revenue | 142,634 | 141,096 | 128,634 | 10.9 | 564,749 | 594,650 |
| Exports | 72,172 | 74,617 | 78,851 | (-)8.5 | 299,629 | 339,811 |
| EBITDA | 16,777 | 14,064 | 16,293 | 3.0 | 62,393 | 62,075 |
| EBITDA margin (%) | 11.8 | 10.0 | 12.7 | 90 basis points | 11.0 | 10.4 |
| Depreciation | 2,422 | 2,071 | 2,099 | 15.4 | 8,776 | 8,192 |
Sources: Reliance Industries Ltd, and Polymerupdate Research; EBITDA = Earnings Before Interest, Tax, Depreciation, and Amortization
Meanwhile, advantageous crude sourcing from Latin America was increased to minimize crude basket cost. Middle Distillates production was maximized with grade mix optimization for capturing the market arbitrage post-Red Sea crisis. Downstream chemical production was optimized to meet captive and domestic demand with subdued petrochemical deltas. Improved gasifier performance helped in minimizing the fuel mix cost.
Ambani added, “Strong demand for fuels globally, and limited flexibility in refining system worldwide, supported margins and profitability of the O2C segment. The downstream chemical industry experienced increasingly challenging market conditions throughout the year. Despite headwinds, maintaining leading product positions and feedstock flexibility through our operating model that prioritizes cost management, we delivered a resilient performance. The KG-D6 block has achieved 30 MMSCMD of production and now accounts for 30 percent of India’s domestic gas production. We remain committed to our projects and initiatives, including those in the New Energy segment, which will bolster the company, and help it deliver sustainable growth for the future.”
| Reliance Industries’ oil and gas (exploration and production) segment performance in FY2023-24 (Rs crore) |
| Particulars | Jan-Mar 2024 | Sept-Dec 2023 | Jan-Mar 2023 | Variations (%) | April 2023-March 2024 | April 2022-March 2023 |
| Revenue | 6,468 | 6,719 | 4,556 | 42.0 | 24,439 | 16,508 |
| EBITDA | 5,606 | 5,804 | 3,801 | 47.5 | 20,191 | 13,589 |
| EBITDA margin (%) | 86.7 | 86.4 | 83.4 | 330 basis points | 82.6 | 82.3 |
| Depreciation | 1,525 | 1,688 | 674 | 126.3 | 5,360 | 2,656 |
Sources: Reliance Industries Ltd, and Polymerupdate Research; EBITDA = Earnings Before Interest, Tax, Depreciation, and Amortization
Business EnvironmentGlobal crude oil demand rose by 1.6 million barrels per day or bpd yoy in the January-March 2024 quarter to 102 million bpd due to higher demand, mainly from Americas, and Asia. Jet fuel and kerosene oil posted a strong yoy demand growth of approximately 0.69 million bpd while gasoline demand increased by 0.16 million bpd yoy. Diesel demand grew by 0.26 million bpd on an annual basis.
Dated Brent crude oil averaged US$83.2 a barrel in the January-March 2024 quarter, an increase of US$2 a barrel on yoy basis. Crude oil benchmarks rose yoy as demand trend remained positive amid tanker constraints through the Red Sea crisis. The continuation of voluntary production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+), and reduced availability of Russian production further supported oil prices. Global refinery crude throughput was lower by 0.2 million bpd yoy at 81.8 million bpd in the January-March 2024 quarter. Domestic demand for HSD, MS & ATF increased by 4.2 percent, 8.4 percent, and 10.1 percent, respectively, over the same quarter last year. On yoy basis, domestic polymer and polyester demand remained flat.
Polymer segment performancePolymer prices declined yoy due to subdued global demand and a volatile feedstock energy price environment. Prices declined across polymers with polypropylene (PP) declining by 11 percent, polyethylene (PE) by 10 percent, and polyvinyl chloride (PVC) by 19 percent. In line with lower energy chain prices, key feedstock prices were also down yoy. US Ethane price was at 23 cents per gram (cpg), down by 48 percent yoy in line with lower US gas prices. The Singapore naphtha price was at US$ 621 a tonne, down by 11 percent yoy. EDC price decreased by 20 percent yoy.
Polymer margins were down 8 percent to 21 percent on a yoy basis with subdued demand globally in a well-supplied market. Polyethylene margin over naphtha was lower at US$ 333 a tonne during FY2023-24 as against US$362 a tonne in the previous year. PP margin over naphtha was lower at US$ 315 a tonne during FY2023-24 as against US$ 360 a tonne in FY2022-23. PVC margin over naphtha and EDC was lower at US$373 a tonne in FY2023-24 as against US$474 a tonne in FY2022-23. Interestingly, domestic polymer demand improved by 14 percent yoy. Demand for PE was up by 20 percent, and both PP and PVC demand was up by 9 percent. Polymer domestic markets witnessed healthy demand from end-use sectors like agrochemicals, pipes, retail and FMCG packaging, pharma, furniture, households, consumer durables, paints, automotive, and infrastructure. A robust supply chain network and superior customer service supported optimal product placement in the domestic market. RIL continued to maintain a leadership position in the domestic polymer market.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
