The special additional excise duty imposed by the government in July left a dent in the earnings of India’s largest private sector refiner Reliance Industries.
The special excise duty imposed on the export of diesel and jet fuel from India resulted in a cost of Rs 4,039 crore in the quarter ended September, the company said in its Q2 earnings filing to the bourses.
While the government reviews the additional excise duty on a fortnightly basis, its determination of the quantum of the duty is swayed by current global crude oil prices as well as global refining margins.
Also Read: RIL Q2 consolidated net profit flat on-year at Rs 13,656 crore
In the latest fortnightly review, the government had reduced the excise duty on diesel exports to Rs 5 per litre from Rs 10 per litre earlier, while the excise duty on jet fuel exports was scrapped.
RIL’s oil-to-chemical business reported a 5.9 percent year-on-year decline in operating profit at Rs 11,968 crore in the quarter ended September.
That said, RIL's consolidated operating profit in the reported quarter rose 14.5 percent on-year to Rs 34,663 crore despite accounting for the impact of the special excise duty.
Also Read: Reliance Retail reports 36% YoY jump in Q2 net profit to Rs 2,305 crore
The oil-to-telecom company said that excluding the impact of the special excise duty, consolidated operating profit grew 27.8 percent on-year to Rs 38,702 crore.
“Segment performance was also impacted by the introduction of special additional excise duties during the quarter to ensure stable supply and lower volatility in the domestic market,” Mukesh Ambani, chairman and managing director at Reliance Industries said in a press statement.
The weakness in the oil-to-chemical business’ operating performance was also due to a sharp sequential decline in global refining margins owing to less-than-expected gasoline demand in the US from a weak summer driving season.
Domestic demand for high-speed diesel and jet fuel jumped 11 percent and 64 percent on a year-on-year basis, respectively, as the reopening of the economy led to a surge in domestic travel.
On October 21, shares of Reliance Industries ended 1.2 percent lower at Rs 2,470 on the National Stock Exchange.
(Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary)
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