RIL's first quarter sales, profit up

By Our Special Correspondent

MUMBAI, JULY 31. Reliance Industries today announced a net profit of Rs. 618 crores for the first quarter ended June 30, 2001 compared to Rs. 543 crores for the corresponding period last year, an increase of 14 per cent. Its sales, for the same period, increased by 4 per cent to Rs. 6,390 crores from Rs. 6,136 crores.

The operating profit (profit before depreciation, interest and taxation) increased by 5 per cent to Rs. 1,302 crores from Rs. 1,235 crores. The cash profit improved by 12 per cent to Rs. 1,405 crores. The total paid up equity share capital stood at Rs. 1,054 crores. Earnings per share (EPS) for the quarter work out to Rs. 5.90 and cash earnings per share (CEPS) Rs. 9.60. On an annualised basis, EPS will work out to Rs. 23.40 and CEPS to Rs. 38.50.

In the first quarter, production increased to 2.81 million tonnes from 2.63 million tonnes in same quarter last year, representing a 7 per cent growth. Manufactured exports including deemed exports were Rs. 749 crores as against Rs. 832 crores.

The net profit of Reliance's Proforma Consolidated is Rs. 860 crores, considering its investments in its subsidiaries, Reliance Petroleum, BSES, Reliance Capital and Reliance Industrial Infrastructure. This reflects the true picture of returns on RIL's investments. The Proforma Consolidated EPS for the quarter works out to Rs. 8.20. (annualised EPS works out to Rs. 32.60).

Commenting on the results, Mr. Anil D. Ambani, Managing Director, Reliance Industries, said, ``We are encouraged by Reliance's strong financial performance at a time when the global petrochemicals industry is encountering among the most challenging conditions in its history. The combined impact of major additions to global capacity, a weak international demand scenario, and a sharp volatility in feedstock costs, has led to unprecedented pressures on margins and profitability. Our strategy in setting up globally competitive assets and continuing efforts at productivity improvements and cost reduction has enabled Reliance to overcome these challenges, reporting strong quarter on quarter growth. We are committed to the utilisation of our resources for enhancement of overall shareholder value, by directing our future investments in oil and gas, petrochemicals an infocom, towards the generation of attractive rates of return and strong cash flows.''

Other income of the company has increased by 63 per cent to Rs. 127 crores, owing to higher dividend and interest income. Interest expenditure reduced by 14 per cent to Rs. 257 crores due to repayment/pre-payment of long term debts and refinancing. Depreciation was higher by 8 per cent at Rs. 396 crores as against Rs. 366 crores due to the change in the basis of providing depreciation from the straight-line method (SLM) to the written down value (WDV) method in respect of certain assets at Jamnagar. The additional charge to the profit and loss account due to the change is Rs. 58 crores.

Capex during the quarter was over Rs. 200 crores, primarily on account of oil and gas and normal capital expenditure. Mr. Ambani said export revenues alone were more than adequate to cover the foreign exchange denominated interest liabilities on foreign currency debt.

Reliance holds a 30 per cent interest in an unincorporated joint venture with Enron and ONGC, to develop the proven Panna, Mukta and Tapti oil and gas fields. Enron has a 30 per cent share and ONGC the balance 40 per cent share. Oil and gas accounted for 3 per cent of Reliance's revenues during the quarter. Oil production was 99,500 tonnes, an increase of 8 per cent and gas production 1.65 lakh tonnes (oil equivalent), an increase of 6 per cent. Mr. Ambani also said his company was not interested in taking over Enron's Dhabol Power Project as they had to focus more on projects in the oil and gas sector.

In April 2001, RIL has successfully completed the first phase of a comprehensive restructuring plan for its textiles business, located at Naroda, near Ahmedabad in Gujarat, which now contributes one per cent of RIL's total revenue. As part of restructuring of its textiles business, RIL had announced a voluntary retirement scheme for its workers and staff at Naroda. About 4,900 people were offered the benefits of the scheme out of which over 4,600 people have accepted and an amount of Rs. 77 crores has been disbursed during this quarter. This expenditure is being amortised over a period of five years.

The restructuring of the textiles business is aimed at strengthening the leadership of the Vimal and Harmony brands, enhancing the market share and the overall competitiveness, by focussing on superior quality, higher margin products and substantially enhancing overall shareholder value.

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