Reliance Net Up 2.8% At Rs 651cr

Against sales of Rs 3,966 crore for April-September 1995-96, Reliance posted Rs 4,041 crore in the same period this year. Net profit rose from Rs 633 crore to Rs 651 crore in this period.

This is lower than the 20-per cent growth in sales posted in the first six months of 1995-96 over the same period in the previous year. Net profit also grew by 33 per cent in April-September 1995-96 over the previous year.

A similar trend prevailed in respect of operating profit, which rose by only 0.2 per cent from Rs 892 crore in April-September 1995-96 to Rs 894 crore in the first six months of 1996-97. In the first half of 1995-96, operating profit grew by a higher margin of 25.45 per cent over 1994-95.

 

The company deferred payment of the newly-introduced minimum alternate tax (MAT) to March 1997, saying it has been advised that its income-tax liability will be determined only by the end of the year.

The stock-markets reacted positively to RILs financial results, with prices at the major bourses moving up when the results were announced. The stock closed on the BSE at Rs 196, up Rs 2 over the previous days close. On NSE, the stock closed at Rs 194.80, up Rs 1.45 over the previous close.

Trading activity in the RIL scrip was strong and it precipitated fresh buying activity in other counters.

At the NSE, RIL moved to Rs 197-198 by 1.00 pm and at the Bombay Stock Exchange prices moved to a similar level. At the BSE, 50.65 lakh shares were traded for a total value of Rs 98.61 crore while at the NSE, the traded turnover was hectic for a total value of Rs 312.91 crore. At the Calcutta Stock Exchange (CSE) the results met with mixed reaction.

The results have confounded analysts and punters, who had projected a sharp fall in both sales and net profit for the first half. Estimates collated from various research outfits had predicted profits in the range of Rs 450-500 crore.

One can never be sure about Reliance. They always have the ability to surprise, said a Reliance watcher at an FII, whose forecasts had been turned upside down.

Some analysts were sceptical, saying industry conditions were not conducive to an improved performance. With product prices down and very little volume growth, how did they chalk up higher figures? asked an analyst at another FII.

An official Reliance spokesman had a different point of view. He explained the company benefitted from higher volumes in polyester yarn, polyester fibre and polypropylene. This offset the fall in product prices, they explained.

The company commissioned new capacities of 60,000 tonnes of polyester yarn, 80,000 tonnes of polyester staple fibre and 3.5 lakh tonnes of polypropylene in the first half.

Commenting on the results, managing director Anil D Ambani said the company has performed well in spite of the challenging business environment. This is possible due to satisfactory volume growth and global competitiveness of all its major businesses, he added.

One positive feature is that the company managed to maintain margins despite severe competition. Operating margins fell marginally from 19.5 per cent to 19.3 per cent this year.

Interest costs are also down from Rs 107 crore to Rs 72 crore, due to capitalisation of interest and avoidance of short-term borrowings. A company spokesman said the benefits of low-cost borrowings in international markets around June this year would be felt later.

Market conditions for Reliances products were quite bleak in the first half. Though demand growth was sustained and in some cases higher, prices fell across the board.

Polyester prices in April-September 1996 fell more than 15 per cent compared to last year, while polymer prices fell by around 10 per cent.

The company however benefitted to some extent by a fall in ethylene and ethylene dichloride prices, which dropped by between eight and 10 per cent. Reliance uses these two commodities for making PVC.