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| S&P improves RIL outlook to 'stable' |
| Press Trust of India / New Delhi Apr 13, 2010, 20:18 IST |
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Rating agency Standard & Poor's (S&P) today said it has raised outlook on Reliance Industries (RIL) from "negative" to "stable" in view of its improved and sustainable performance over the past year.
"We expect the outlook to reflect our expectation of an improvement in RIL's financial metrics because we believe the consistent improvement in the company's operating performance over the past years is sustainable," S&P said in a statement.
The agency affirmed or retained Reliance Industries'long-term corporate credit rating at BBB, which indicates "Investment Grade" medium class borrowers who are satisfactory at the moment.
S&P said it expects RIL's operating profit for the previous fiscal ended March 31, 2010, to improve by 20 per cent, driven by its KG D6 block gas production which surpassed 60 mmscmd (million standard cubic meter per day) within 12 months of commencement and strong market conditions for the petrochemical business.
Besides, it said RIL has done a successful ramp-up of the new Jamnagar refinery.
"These factors offset the effects of the very weak market environment for the refining business," S&P said.
The company is expected to improve operating performance by maintaining existing level of production and better refining margins, it added.
S&P, however, said that the performance will also depend "on favourable resolution of RIL's legal dispute with Reliance Natural Resources and NTPC that relates to the company's gas business".
But, it added that RIL's financials have headroom to accommodate a potential adverse ruling on the legal dispute.
S&P also said that RIL is expected to use its cash flows for growth, including small acquisitions and new capital expenditure such as last week's JV with US-based Atlas Energy.
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