The Hindu Business Line : Reliance Q2 net rises 39 pc — Improved margins in petrochem, refining

IMPROVED margins in petrochemicals and refining helped Reliance Industries Ltd (RIL) report a 38.7-per cent jump in its second quarter net profit to Rs 1,752 crore as against Rs 1,263 crore last year.

RIL's net sales for the quarter ended September 30, 2004, were up 27 per cent at Rs 16,164 crore from Rs 12,693 crore in the previous corresponding quarter. The total expenditure increased to Rs 12,994 crore (Rs 10,231 crore).

Announcing the results, Mr Anil Ambani, Vice-Chairman and Managing Director, RIL, said that the company's net profit for the period would have crossed Rs 2,000 crore had it not been for the high interest costs. The interest cost rose by a stiff 87 per cent to Rs 434 crore from Rs 232 crore as the company' foreign borrowings were marked to the market.

The revenues from petrochemicals sales jumped 26 per cent to Rs 9,425 crore (Rs 7,498 crore), while refining income was up 27 per cent to Rs 12,980 crore (Rs 10,233 crore). RIL's second quarter gross refining margins were up to $8 per barrel compared to $5 a barrel last year. In the first quarter, RIL's refining margins were $7 per barrel.

Mr Ambani said the RIL strategy to counter the current instability in crude prices included sourcing of the lower priced sour crude, which produced more middle distillates such as petrol and diesel.

"Reliance exported products worth Rs 10,000 crore in the first half of the current fiscal. Sometimes, it is more economical to export than to sell in India. And I am not talking only of the petroleum sector," Mr Ambani said.

RIL's net profit for the six months ended September 30, 2004 was Rs 3,189 crore (Rs 2,367 crore). Net turnover rose to Rs 30,444 crore (Rs 25,194 crore). Referring to the proposed Iran-India gas pipeline via Pakistan, he said the Myanmar pipeline also made sense, but the question was who needed all this gas with the three LNG terminals and the enhanced levels of natural gas production within the country.

"Roughly 90 per cent of the company's turnover comes from oil and petrochemicals. As a result, in spite of rising crude prices, Reliance will continue to benefit from higher refining margins and growing demand for petroleum products in India," said a senior analyst.

Charts Rs 15,000-cr investment

RELIANCE Industries plans to invest over Rs 15,000 crore on gas exploration and laying pipelines, said Mr Anil Ambani. Of this, the share of laying pipelines would be over Rs 5,000 crore, he said.

Mr Ambani said the company would also focus on adding more retail outlets to sell transport fuels. The company is adding 100 petrol pumps in the current quarter, while 600 new company-owned outlets are under construction.

"Company-owned real estate for retail outlets would continue to be our strategy. The total number of petrol pumps will add up to more than 2,000 by next year," Mr Ambani said.

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