Reliance Industries reports robust performance, turnover up 24% YOY to Rs.110,886 crores

Reliance Industries Limited (RIL) today reported its financial performance for year ended March 31, 2007. The highlights of the un-audited financial results as compared to the previous year are:

• Turnover has risen by 24 % to Rs. 110,886 crore (US$ 25.51 billion).
• Cash Profit has risen by 20% to Rs. 15,768 crore (US$ 3.63 billion)
• Net Profit has risen by 20% to Rs. 10,908 crore (US$ 2.51 billion) - the highest ever for any private sector company in India.
• Gross refining margins of US$ 11.7 / bbl for the year

The other major highlights are:

• Shareholders and creditors of IPCL and RIL approve merger of IPCL with RIL
• Jamnagar complex of RIL declared as a 100% EOU with effect from 16th April 2007
• Preferential offer of 12 crore warrants to Promoter / Promoter’s Group successfully completed
• Company implements its Employee Stock Option Scheme (ESOS)

Commenting on the results, Mukesh D. Ambani, CMD, Reliance Industries Limited said: "I am pleased to report yet another year of robust performance by RIL. 2006 - 07 has also been an eventful year for the company. While our petrochemicals and refining business recorded it’s best ever performance, we have made substantial investments in our future growth engines such as E&P and Retail businesses. In the past year, we created further value for millions of our shareholders through our strategic investment in RPL and through the value accretive merger of IPCL with RIL. I am confident that RIL shall continue to deliver sustainable value for all its stakeholders."

Turnover for the year ended 31st March 2007 stood at Rs. 110,886 crore (US$ 25.51 billion), reflecting a growth of 24% over the previous year. Increase in revenues reflects the impact of 11% higher product prices and 13% higher volumes. During the year, aggregate exports were higher by 100% at Rs. 65,300 crore (US$ 15.02 billion).

Consumption of raw materials increased by 34% from Rs 58,343 crore to Rs 77,889 crore (US$ 17.92 billion) primarily on account of higher crude prices.

Employee cost increased by 22% from Rs 978 crore to Rs 1,197 crore (US$ 275 million). This increase was mainly on account of performance linked incentives and increments. Reliance’s employee cost as a percentage of turnover at 1% is very competitive when compared with other companies internationally.

Other expenditure, which also includes conversion costs, selling expenses, sales tax, repairs and maintenance, excise duty on stock and establishment expenses, decreased by 7% from Rs 9,722 crore to Rs 9,037 crore (US$ 2.08 billion), primarily due to lower sales tax incidence for refinery product sales on account of higher exports.

Operating Profit before other income increased by 27% from Rs. 14,299 crore to Rs. 18,210 crore (US$ 4.19 billion). Net operating margin during the year ended 31st March 2007 was 17.3% as compared to 17.6% in the previous year.

Other income was lower at Rs. 193 crore (US$ 44 million) against Rs. 683 crore primarily on account of a decrease in interest income due to utilization of surplus funds for investment in Reliance Petroleum Ltd.

In April 2006, RIL invested in 270 crore equity shares at Rs. 10 per share of Reliance Petroleum Limited (RPL) and 90 crore equity shares at Rs. 60 per share. Consequent to RPL’s 20% share issue to public and 5% sale to Chevron, RIL now holds 75% equity stake in RPL at an investment cost of Rs 6,750 crore (US$ 1.55 billion). The current market value of this strategic investment is over Rs. 24,000 crore (US$ 5.52 billion).

Interest costs were higher by 27% at Rs. 1,114 crore (US$ 256 million) primarily due to an increase in borrowings. During the year, Rs. 535 crore of interest was capitalised, as against Rs 637 crore in the previous year. Interest cost includes Rs. 81 crore on account of exchange rate difference considered as interest as against Rs. 73 crore in the previous year. Interest cover was 8.7 compared to 7.7 for the previous year.

Depreciation was higher at Rs. 4,009 crore (US$ 922 million) against Rs. 3,401 crore in the previous year. The higher charge of depreciation was on account of assets capitalized during the year and during the last quarter of FY 2005-06.

Profit after tax is Rs. 10,908 crore (US$ 2.51 billion) against Rs. 9,069 crore for the previous year reflecting an increase of 20%. Basic earning per share (EPS) for the year is at Rs. 78.3 (US$ 1.8) against Rs. 65.1 for the previous year.

During the year, RIL’s contribution to the national exchequer in the form of various taxes was Rs. 12,392 crore (US$ 2.85 billion).

Source : Equity Bulls

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