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First
half net up 10% to Rs 1,320 cr
RIL
Q2 net rises 6.36% to Rs 702 crore
Our
Bureaus
Mumbai, Oct 31: Reliance Industries Ltd (RIL) on Wednesday
announced a 6.36 per cent increase in net profit, boosted
by a higher other income of Rs 168 crore, to Rs 702 crore
for the second quarter ended September 30, 2001 as compared
to Rs 660 crore in same period last year. However, on account
of a seven-day inventory over normal inventory, which the
company is carrying, RIL suffered a 7.2 per cent decline in
sales to Rs 6,234 crore (Rs 6,721 crore).
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...delays
plans to issue RPL GDRs
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Our
Markets Bureau
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Mumbai, Oct 31: Reliance Industries Ltd
(RIL) has put its plans for a Global Depositary Receipts
(GDRs) issue for Reliance Petroleum Ltd (RPL) on hold.
RIL managing director Anil Ambani said that the whole
purpose for GDRs is not served as “the basic idea of issuing
GDRs was to unlock value, and the money from the issue
is not currently required for capital expenditure plans
of RPL.”
He added that the capital expenditure is being met through
internal accruals required for any expansion progamme.
Mr Ambani also stated that the current environment is
not suited for GDRs.
Dwelling on the proposed buyback plan at Rs 303 announced
last year, Mr Ambani said: “RIL, till date, has not purchased
a single share as the idea of the buyback programme is
purely to enhance overall shareholder value and returns,
and is not used as a mechanism to artificially support
any particular price level for the company’s share, or
to respond to short-term speculative pressures or to hike
promoters’ holding.”
“We do not want to be speculators/traders to get an exit
route,” Mr Ambani categorically stated.
He added that despite the benchmark of Rs 303 put on the
buyback price, the main reason is to decrease their beta.
“It does not mean the company will buy the share whenever
it fall below that price,” he said.
The main objective of the buyback was to reduce volatility
through which they can lower the beta. Reliance beta in
the last quarter has come down from over two to around
one.
RIL had announced a couple of quarters back to issue a
buyback, with a maximum price of Rs 303 crore with the
amount not to exceed Rs 1,100 crore.
Mr Ambani reiterated the company’s plan to hike the promoters’
holding to 51 per cent in the next few years. |
Addressing media and analysts
on the company’s performance, RIL managing director Anil Ambani
said that in the current scenario of a global slowdown and
a pressure on margins, the company has undertaken cost cutting
and a supply chain management initiatives.
Mr Ambani said that had it not been for the inventory level,
the company would have posted sales higher by a margin of
about Rs 300 crore.
“We are encouraged by Reliance’s strong operational and financial
performance in the continuing adverse environment for the
global domestic petrochemicals industry. It is indeed satisfying
that this performance has been achieved in the face of a general
economic slowdown in India and abroad, which led to weak demand
conditions in several of our major businesses.”
Trading sales to the tune of Rs 1,673 crore in the second
quarter of 2000, resulted in higher income from operations
to Rs 8,394 crore as compared to Rs 6,234 crore in the second
quarter 2001.
The RIL share price on The Stock Exchange, Mumbai (BSE) opened
at Rs 252.55, touched a high of Rs 257.85 before closing at
Rs 255.4 on Wednesday.
An analyst at a European brokerage firm said: “The results
are higher than expected. The sharp rise in other income was
a surprise.
Basically it belongs to dividend and interest income, dividend
symmetrically divided in four quarters received from Reliance
Petroleum, were it holds 64 per cent and interest of investments
made on behalf of Reliance Infocom.”
“To sum up, I would say, these are better results in a tough
market, but the gross margin remained good,” the analyst added.
For the half-year ended September, 2001, net profit increased
by 10 per cent to Rs 1,320 crore (Rs 1,203 crore). Income
from operations for the half-year period declined to Rs 12,624
crore (Rs 12,856 crore).
Mr Ambani said that the recent extraordinary events in the
global arena and consequent negative impact on global demand
are likely to result in an extension of the current tough
phase of petrochemicals cycle.
Operating profit for the first half increased by 3 per cent
to Rs 2,716 crore (Rs 2,643 crore). Earnings per share for
the first half stood at Rs 12.5.
Mr Ambani said: “Our emphasis on maintaining the highest operating
rates for our plants, increased focus on specialties, continuing
productivity gains, enhanced competitiveness arising from
higher integration levels, and reduction in financial costs,
have contributed to the consistent growth in our profits.”
RIL’s production, including toll conversion during the half-year
increased to 5.74 million tonne (mt) from 5.26 mt in the same
period last year, representing a 9 per cent growth.
Mr Ambani added: “We believe Reliance has the financial and
operational strengths to maintain its growth through this
difficult phase, and continue making investments for the future,
with the objective of consistently increasing overall shareholder
value.”
The manufactured exports, including deemed exports, stood
at Rs 1,569 crore (Rs 1,684 crore). The company has revalued
its plant and machinery located at Patalganga and Naroda during
fiscal 1997-98. Consequent to the revaluation, there is an
additional charge for depreciation of Rs 84 crore for the
period ended September 30, 2001 and an equivalent amount has
been withdrawn from the general reserve. This does not have
any impact on the profit for the period, the company has said.
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