Mumbai, Oct. 16: Reliance Industries’ second-quarter profit vaulted 26 per cent to Rs 1,263 crore from Rs 1,002 crore in the same period of the previous financial year.
The figures beat analyst expectations, which had ranged in the region of Rs 1,200 crore. Net turnover increased 10 per cent to Rs 12,693 crore from Rs 11,519 crore.
First-half profit at Rs 2,367 crore was 23 per cent higher than Rs 1,920 crore in the same period of 2002. Gross turnover stood at Rs 35,202 crore, up 11 per cent from Rs 31,782 crore; net turnover rose 13 per cent to Rs 27,311 crore.
The gains were fuelled by a robust demand for petrochemical products and higher operating margins. There is growing optimism that an imminent upturn in the petrochemicals cycle will boost the bottomline further.
“We are happy with Reliance’s good financial performance in a quarter that has seen continuing improvement in overall macro-economic conditions in the country. With the upswing in the petrochemicals cycle, we are confident of better performance,” chairman and managing director Mukesh Ambani said.
Vice-chairman and managing director Anil Ambani said strong demand for petrochemical products and improvement in margins were not the only reasons for the company’s rosy scorecard. The focus on speciality products in petrochemicals, for instance, helped protect it from the perils of commoditisation and made it possible to sell at higher prices.
Other factors included an optimum capacity utilisation, changes in the product mix, slim inventories, low cost of capital and a fall in financial costs.
Talking about the company’s expansion plan, Ambani said annual investments will be Rs 2,500 crore in oil and gas, Rs 1,500 crore in refining and marketing and Rs 1,250 crore in petrochemicals over three to four years.
Exploration and production, apart from volumes growth in refining and petro- chemicals, will fuel future growth.
Reliance is entitled to buy 5 per cent of the 34 per cent that the government is left with in Indian Petrochemicals Corporation (IPCL) under a modified agreement in place for the sale of Centre’s rump holding.
The Ambanis can acquire the fresh stake from the government at a price to be decided by valuers. Then, the Centre is free to sell its remaining 29 per cent through an initial public offer (IPO) — taking its stake in the one-time public-sector undertaking to 51 per cent.
However, if RIL does not exercise the option to buy the additional shares, the government can sell its 34 per cent stake through the IPO.
If the government does not sell and Reliance does not buy, Ambani said both sides can revert to an earlier agreement that gives the Centre a put option on its holding in October 2004 and the company a call option to buy the residual stake in 2005.