It has been close to two years since Reliance Industries, or RIL, reported extra gains from treasury operations to spring a surprise or two while unveiling its quarterly numbers. The company's results for the quarter to June stood out for the fact that treasury gains were at an all time high, beating analysts forecasts.

RIL's other income for the quarter soared 33% compared with the year-ago period to 2,535 crore, a historic high. The company said this was mainly on account of profit on sale of investments in fixed income instruments and higher average liquid investments.

Two factors have contributed to this. First, the company was generating more cash than it was investing, resulting in a bulging cash balance, which was 93,066 crore at the end of June this year. Second, the company was using low-cost foreign currency debt - $12 billion, according to Barclays' estimates - to fund its capital expenditure plans.

This helps it to book interest income on idle funds as income every quarter, when interest expenditure - as well as foreign exchange losses - on borrowed funds get capitalised or added to the cost of assets being constructed. Reliance Industries, India's second biggest by market capitalization, had outstanding debt of 80,307 crore at the end of June this year, up from 72,427 crore at the end of FY13.

For main business segments such as refining and petrochemicals, the numbers RIL posted for the June quarter were more or less in line with forecast. Gross refining margins, or GRM's, - a measure of the differential between the cost of raw material and revenues from selling finished products - rose to $8.4 per barrel from $7.6 a year ago. For the oil and gas segment, the output drop and its impact on profitability were also in line with analyst forecasts.

Investors need not feel disappointed, however. The company's liquidity position will boost capacity expansion. RIL's capital expenditure programme appears to be gaining pace. During the three-month period April-June 2013 the company added 10,523 crore to its fixed assets, which was more than half its net addition in entire FY13.

This could gain pace as the stated capacities start getting commissioned, possibly from the second half of FY14. For those with a long-term perspective, these may be good news.

Keywords: Reliance Industries, RIL, income, liquid investments,company , foreign currency , book interest income, borrowed funds , capital expenditure, programme ,Business news