Future Still Looks Hazy for RIL

The June '12 quarter results of Reliance Industries were slightly better than market expectations. More surprising was the healthy performance of its refining division and poor performance of the petrochemicals division, when the street was expecting the opposite. But, the results don't provide any positive cues for its future, which will depend on the global economic conditions.  Against expectation of gross refining margins around $7 per barrel, RIL reported a GRM of $7.6 per barrel for the quarter, mainly due to better margins in the US and Europe for gasoline than in the Asian markets.  Its petrochemicals business came under pressure from weakening demand. Its E&P revenues and profits continued to dwindle in line with the falling production.  In the quarter, the company lost its debt-free status it had enjoyed briefly in the March '12 quarter, mainly due to its share buyback scheme for which it spent over . 2,000 crore to buy and extinguish nearly 2.86 crore shares. It also spent . 2,398 crore on capex for the petrochemical projects at Dahej and Silvassa. The net debt to equity ratio stood at 1.3% as on June 30. The results offered no clear indication of RIL's future performance. With the company selling off or relinquishing its E&P assets in international and domestic markets, any surprise can only come from its producing or discovered fields in India.  Meanwhile, agency reports said LIC and Government of Singapore have hiked their stakes in RIL with the purchase of shares worth over . 1,550 crore during the last quarter ramkrishna.kashelkar@timesgroup.com