RIL net slumps, Bharti shines, Ranbaxy bleeds

Industry leaders` Q3 results reflect global, local business pressures

Sagging fuel prices caused Reliance Industries’ net to fall almost 10 per cent, robust demand for mobile telephony boosted Bharti Airtel’s net a quarter and currency derivative losses blew a Rs 806-crore hole in the books of Ranbaxy Laboratories during the October-December 2008 quarter.

Reliance Industries is India’s most valuable company, Bharti is the largest operator of mobile telecommunication services and Ranbaxy the largest pharmaceutical company by sales. The results, declared today, reflect global and local business trends.

Reliance suffers demand slump: Mukesh Ambani-controlled Reliance Industries attributed the fall in profit to the global recession which has caused demand for fuels to slump and reduced gains from processing crude oil — it exports its entire refinery output. Its net dropped 9.8 per cent to Rs 3,501 crore for the quarter ended 31 December from Rs 3,882 crore a year earlier. Gross turnover fell 9.3 per cent to Rs 32,535 crore during the period.

Reliance Industries earned $10 on every barrel of crude oil processed at its 660,000 barrel-a-day plant at Jamnagar in Gujarat. Though higher than other refineries in South Asia, it is a third lower than the $15.4 a barrel the company earned a year earlier.

On December 25, Reliance Industries started its second refinery (580,000 barrels a day) at Jamnagar. Analysts said some of the losses could be reversed from the gas owned by the company in the Krishna-Godavari basin, which is expected to flow by the end of the quarter. The fields are estimated to hold as much as 9.2 trillion cubic feet of gas.

At the moment, the Bombay High Court has banned the sale of gas because it is hearing a petition filed by public sector NTPC Ltd and Reliance Natural Resources Ltd, a company controlled by Ambani’s estranged younger brother, Anil. The government has requested the court to decide the case early so that the gas can be delivered to starved fertiliser and power plants.

Bharti widens lead over rivals: On the other hand, Sunil Mittal-run Bharti reported net profit of Rs 2,159 crore for the quarter, up 26 per cent from a year ago, after it added a record 8.28 million customers during the three months. Bharti ended the October-December quarter with 85.7 million users, widening its lead to 24.8 million subscribers over Vodafone, its nearest GSM rival. The gap was 22.9 million users at the end of September.

The company attributed the growth to its initiatives to expand in the rural markets. “Bharti’s strategy of extensive roll-out ahead of competition, especially in new villages, has yielded rich dividends,” Chairman Mittal said in the statement. The operator’s network covered more than 400,000 villages across India at the end of December, according to the statement.

Looking forward, analysts said Bharti’s subscriber base will expand further once the government auctions spectrum for third-generation, or 3G, services, which offers high-speed downloads.

The auction has been delayed owing to differences between the government regulator over pricing. Analysts expect the auction expand the subscriber base in the country by 150 million.

Ranbaxy suffers ‘one-time’ accounting change: Meanwhile, Ranbaxy, now owned by Daiichi Sankyo of Japan, reported a standalone loss of Rs 806 crore against a profit of Rs 48.4 crore a year earlier, on account of foreign exchange loss of Rs 307 crore and another loss of Rs 784.3 crore arising from the fair valuation of derivatives.

Malvinder Mohan Singh, the company’s managing director and CEO, said these were a one-time loss as the company had switched to a new accounting standard from 1 October, 2008. The company’s sales fell 4 per cent to Rs 959.3 crore for the quarter.