Reliance hits roadblock, Q4 profit falls 21 pc

ENS Economic Bureau

Mumbai, April 30: AFTER making continous profits for 44 consecutive quarters, the Reliance juggernaut has finally come to a halt as the net profit of Reliance Industries (RIL) has crashed 21 per cent to Rs 540 crore from Rs 654 crore for the quarter ended March 31 2001 as compared to the corresponding period of last year.

Addressing a news conference here today, RIL managing director Anil Ambani attributed the fall in net profit to changed norms of depreciation and losses arising out of Gujarat earthquake. Sales in the same period has also declined by two per cent to Rs 6,444 crore from Rs 6,594 crore. Reacting to the news, shares of the company came under selling pressure in late afternoon trades, falling two per cent to Rs 340. Soon after the results were declared the scrip hit a low of Rs 333.60.

However, for the full year ended March 31, 2001, the company has recorded a 10 per cent hike in net profit at Rs 2,403 crore as compared to last year. The company, after the board meeting, has recommended a dividend of 42.5 per cent as against 40 per cent last year. Sales during the fiscal increased by 38 per cent during this period to Rs 28,008 crore against Rs 20,301 crore last year.

The profit for the year would have been higher by Rs 163 crore had there been no change in the method of providing depreciation, the company said in a release after the board meeting. Manufactured exports, including deemed exports more than doubled to Rs 2,960 crore from Rs 1,478 crore, the release said.

Total exports from RIL and Reliance Petroleum Ltd, in which RIL has 64 per cent controlling interest, crossed Rs 9,370 crore, making it the largest exporter from India. Ambani said the company has transformed itself over the last five years in to a serious force in the global petrochemicals industry and the new initiatives in the infocom infrastructure and services sector would accelerate the growth impetus and contribute to the overall shareholder value.

The company said other income decreased 44 per cent to Rs 383 crore primarily on account of lower interest income, arising from the reduction in foreign currency monetary assets, and conversion of erwhile interest bearing optionally fully convertible debentures of RPL into equity.

RIL said the directors have proposed an increase in the FII limit to 49 per cent of the equity capital and necessary resolution would move at the forthcoming annual general meeting. On the buyback proposal, it has decided to continue with the programme for an amount of up to Rs 1,100 crore, a maximum of Rs 303 per share. The buyback offer, which was announced last year, is valid up to May 18, 2001.

Ambani said that the company has not bought back a single share during the period under review and added that the maximum specified buyback price has effectively served as a floor price for the company’s share.

On oil and gas, which accounted for three per cent of the revenues during the period under review, ril said oil production increased by 22 per cent to 4.18 lakh tonnes, while gas production was up by two per cent to 6.81 lakh metric tonnes of oil equivalent. RIL said it was in the process of completing the formalities for acquisition of participating interest (up to 50 per cent) in five exploration blocks with acreage exceeding 21,000 sq kms from Tullow of the UK.