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Reliance achieves record half-yearly sales

Reliance Industries Limited has set a record among the Indian private sector corporates in its sales and profits for the first half year ended September 30, 1997.

The sales for the first half stood at Rs 63.3 billion (US $1.75 billion) as against Rs 40.41 billion for the corresponding period last year, recording a growth of 57 per cent, a company spokesman said in Bombay on Tuesday while releasing the unaudited results.

Net profits were Rs 8.4 billion (US $232 million) as against Rs 6.51 billion for the previous period, witnessing a growth of 29 per cent.

The company has attributed the growth in sales to the commissioning of most of the new plants at the Hazira petrochemicals complex. The impact of volume growth in sales was partially offset by the lower international prices while reduced excise duties led to a substantial growth in domestic demand, the spokesperson added.

During the period under review, the company commissioned a new 200,000 tonnes per annum polyethylene plant and debottlenecked its multifeed cracker from 500,000 tonnes per annum to 750,000 tonnes per annum of ethylene.

Ten new plants -- all with world-class technologies -- were commissioned safely by Reliance since October last year, a company statement said.

A corporate analyst at Jardine Fleming said the market was disappointed by the sales and profit growth, as they were expecting an even higher figure. But he laughed it off saying that market expectations were always on the higher side. He also pointed out that the disappointment was mitigated by the high volumes achieved by Reliance.

The analyst said the company results were in line with the expectations of most analysts and bankers. He predicted better results for the next half.

The main highlights in the half-yearly results of Reliance is that operating profit (PBDIT) increased by 55 per cent to Rs 13.83 billion ($382 million) as against Rs 8.94 billion ($247 million) for the previous period. Cash profit increased to Rs 11.45 billion ($317 million ) against Rs 8.22 billion ($227 million), with an increase of 39 per cent.

The spokesperson further said that the total paid up equity capital of the company increased to Rs 4.62 billion ($128 million) from Rs 4.58 billion ($127 million) as a result of conversion of over the 25 per cent of Euro-convertible bonds.

The earning per share is Rs 36.3 and cash ($1) earning per share is Rs 49.5 ($1.37 ) on an equity capital of Rs 4.62 billion ($128 million).

The petrochemical giant has maintained its operating margin at 19 per cent despite the lower international prices and higher raw material cost, due to backward integration through commissioning of its multifeed cracker and enhanced focus on costs and productivity.

Other income, which primarily include interest and dividend income, increased to Rs 1.72 billion ($48 million) from Rs 1.14 billion ($32 million) due to higher interest income derived from larger cash balances and investments.

Payment on interest has shot up from Rs 720 million ($20 million) to Rs 2.38 billion ($66 million) due to increased borrowings and lower capitalisation of interest as a result of the commissioning of new plants at the Hazira petrochemicals complex.

The company spokesperson, however, claimed that the increase in interest expense was controlled by repayment of high cost debt, and more efficient working capital management.

The company has also attributed the increase in depreciation from Rs 1.71 billion ($47 million) to Rs 3.05 billion ($84 million) to the commissioning of new plants at Hazira.

The company's board of the directors, which met on Tuesday, approved the half yearly results, the Reliance spokesperson added.