RIL’s O2C segment posts 10% increase in revenue as demand picks up

Reliance Industries’ oil to chemicals business posted an increase of 10% at 83838 crore in revenue primarily on account of higher volumes mainly in transportation fuels, PTA and Polyester supported by improved product realization across Polymers, Intermediates and Polyester.

RIL had last September carved out oil-to-chemicals business into a separate entity, six months after it first announced the proposal as a precursor to a stake sale.

The separation of the assets was planned as part of RIL’s target to sell 20% in its refining and chemicals business to Saudi Aramco. The deal, however, has been delayed.

In April 2020, RIL approved an arrangement for transfer of its oil-to-chemicals (O2C) business to Reliance O2C Ltd as a going concern on slump sale basis.

Segment ebitda for improved by 10.3% quarter-on-quarter to 9,756 crore primarily on account of higher product sales and shifting of product placement from exports to domestic market, RIL said in its earnings statement. Ebitda (earnings before interest, taxes, depreciation, and amortization) is a measure of a company’s operating performance.

Though the company did not declare its gross refining margin (GRM) numbers for the first time this quarter, it said total refining throughput increased from 16.8 MMT to 18.2 MMT.

On the petrochemicals front, during the quarter, Polymers margins were at a record high while intermediate margins were sequentially better, RIL said.

Domestic demand in India continued to improve with oil product demand growth at 19% on quarter. Oil demand for December was at 99% of pre-covid level.

“Restraints on public transport and increased preference for personal vehicles improved demand for personal mobility fuels – gasoline and diesel,” RIL said, adding that domestic petrol demand continued its upward month-on-month growth trend through the quarter. Petrol demand in December was at 110% of pre-COVID level, while diesel demand was at 103% of pre-COVID level.

ATF demand however, remained below pre-COVID level, as airlines continue to under-operate due to ban on international flights which has been extended till 31st Jan’2021.

Demand growth for polymers, polyester and elastomers was robust on a Q-o-Q basis led by FMCG, Health & Hygiene, Pipes, Auto, Paint and Apparels.

“The lockdown period has led a systemic shift in consumer behavior and purchasing preference from offline to online. There is also increased consumption of hygiene related products. This is expected to have a lasting impact on consumption patterns, ” RIL said.

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