Ril Net Expected To Dip 26 Per Cent

"The fall entirely reflects the fall in polyester fibre and yarn selling prices during the year," said V V Sivakumar, head of research at Peregrine Capital India.

"Polyester yarn prices in the first six months on an average are about 27 per cent down compared with the previous half year," said Jal Irani, analyst at Jardine Fleming India Broking.

The price drop for polyester fibre has been even steeper, falling by about 30 per cent year-on-year, Irani said.

An analyst at a European securities firm said that polyester as a percentage of Reliance's total sales would fall to 50 per cent this year from more than 55 per cent last year.

"This is entirely because of the price fall. Volumes haven't fallen," said the analyst, who did not want to be named.

The global fall in polyester price is attributed to the sharply reduced imports by China, one of the world's largest importers.

The new minimum alternative tax will take almost Rs 150 crore out of the company's profits for the full year ended March 31, 1997, analysts said.

One analyst said he expected profits to fall by more than 30 per cent, sharper than the poll consensus. High working capital costs despite lower sales turnover this year, and the impact of a 10 per cent price hike in Reliance's raw material, naphtha, in June, would cause profits to plunge by more than 30 per cent in the first half, he said.

Volumes should rise in the second half because of the expected commissioning of new capacities. But profitability would continue to be depressed by interest and depreciation burdens.

"This year's profits don't matter," said ananalyst at a leading Indian brokerage. He said Reliance would see a rise of more than 70 per cent in volume growth in 1997-98.m.inc"-->