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Reliance Q2 net up 27.5 pc to Rs 6.12 billion

Reliance Industries Limited, India's largest private sector enterprise, has announced a sharp rise in profits for the second quarter ended September 1999.

RIL's managing director Anil Ambani said said the company's net profit rose by 27.5 per cent to Rs 6.12 billion rupees ($141 million) from Rs 4.8 billion.

Industry analysts said they were expecting a growth in net profits in the region of 15 to 20 per cent. However, the results exceeded the expectations. They attributed the impressive results to higher margins driven by petroleum product price increases and rise in volumes.

They added that the third and fourth quarter performance could be even better on account of increased volumes as well as prices.

At the Bombay Stock Exchange, the share price of RIL was quoting at Rs 245, up from Rs 237 on Monday.

In terms of the first half of 1999-2000, RIL's net profit at Rs 11.22 billion jumped up by 22 per cent.

Sales for the half year were up by 18 per cent at Rs 86.73 billion as against Rs 73.74 billion in the corresponding period last year. While the production rose by 13 per cent to 3.91 million tonnes, total exports including deemed exports increased by 47 per cent to Rs 4.21 billion during the period.

Both cash and operating profits of the company increased by 19 per cent each to Rs 15.69 billion and Rs 19.92 billion respectively. It contributed Rs 17.64 billion to the national exchequer in the form of various taxes.

In the unaudited half yearly results which were approved by the board in Bombay today, there was an additional charge for depreciation of Rs 1.92 billion following revaluation of its plant and machinery located at Patalganga and Baroda. However, there was no impact on the profits since an equivalent amount had been withdrawn from the general reserve of the company.

Anil Ambani said that the 13 per cent growth in production volumes partially reflected the impact of the start up of two polypropylene lines of 400,000 tonnes per annum and one paraxylene line of 465,000 tonnes per annum at the Jamnagar petrochemicals complex.

The production volume growth for the full year would be a substantially higher consequent upon full commissioning of the Jamnagar complex, he observed. The company sold over 95 per cent of its production within India and export opportunities were selectively pursued to capture better economies.

On increased operating margins, Ambani said that this was driven by strong volume growth, higher product prices (mitigating increased feed stock costs), rationalisation of customs duty and continued focus on efficiency, productivity and cost.

Ambani also informed that the company entered into arrangements to utilise the entire 74,000 tonnes per annum polyester capacity of Raymond Synthetics Limited which would lead to a 30 per cent increase in Reliance's polyster filament yarn capacity to around 300,000 tonnes per annum with a 32 per cent market share.

While the company incurred a 22 per cent increase in interest expenses and 11 per cent in depreciation due to residual capitalisation of Hazira plant and commissioning of new facilites at Jamnagar, it posted a capital expenditure of Rs 16.50 billion during the period mainly at Jamnagar complex.

The completion of the Jamnagar complex during the current financial year would lead to an increase in total production to over nine million tonnes per annum.

The domestic demand for polypropylene and polyethylene witnessed strong growth rates of 24 per cent despite the increase in polymer prices. Demand for PVC remained stagnant due to low off-take by the government bodies and an extended monsoon. In the polymers segment, about 170,000 tonnes of PE and PP were imported into India during the six months period and this indicated the potential for substantial import substitution from RIL's new PP facilities at Jamnagar.

UNI

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