Reliance H1 Profit Seen At Rs 840 Cr

Reliance Industries is expected to post a profit of between Rs 800-840 crore in the first six months of 1997-98, a 22 per cent jump over the previous year's Rs 651 crore.

The Reliance board is scheduled to meet here on October 14 to approve the first half results for 1997-98.

The growth will be primarily led by volumes which are expected to jump dramatically as many fresh capacities were commissioned in January-April. Higher realisations in polyvinyl chloride, (PVC), mono ethylene glycol, (MEG), could also impact the bottomline. Vivek Jasuja of SSKI Securities estimates Reliances net profit for first6 months at Rs 840 crore, helped largely by volume growth. He estimates the full year profit to be at Rs 1,740 crore.

Reliance commissioned several capacities in the first four months of 1997, the benefits of which will be felt now. Apart from the 7.5-lakh tonne cracker, Reliance commissioned the 2-lakh tonne polyethylene plant, the remaining capacities of polyester staple fibre and polypropylene.

Prices of many of these products have remained low, except PVC, and MEG, which has risen 5.7 per cent and 10 per cent over last year. However, PTA prices are down by 10 per cent, PSF prices 17 per cent and polyester yarn prices by 3.8 per cent.

Net turnover (excluding excise and inter-divisional transfers) is estimated at Rs 4,900 crore, up 68 per cent from last year's Rs 2,911 crore. More than volume growth, this year's performance will be impacted positively by lower operating cost, said an analyst at an FII.

If they were buying ehtylene and propylene in open markets last year, they would not be incurring that expenditure now, said the analyst.

The naphtha cracker was shut for two to three weeks in July this year but is likely to have only a marginal impact. For the full year, net turnover is estimated at Rs 10,900 crore.