Financial Daily from THE HINDU group of publications
Friday, Oct 17, 2003
Financial Daily from THE HINDU group of publications Friday, Oct 17, 2003 |
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Corporate
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Performance Columns - Microscope Refining biz to the fore in Reliance performance Raghuvir Srinivasan
THE second quarter ended September 30 has been one of a command performance from the petroleum refining business for Reliance Industries even as its petrochemicals business seems to have under-performed. The 10.35 per cent growth in turnover, net of inter-divisional transfers, to Rs 13,802 crore and the 26.04 per cent rise in net profit to Rs 1,263 crore appear to have been largely driven by the refining business. Gross revenues from the refining business have risen 16.92 per cent to Rs 10,233 crore during the quarter even as the segment's contribution to profit before interest and taxes rose by an impressive 38.91 per cent to Rs 796 crore. In comparison, it has been a more sedate performance from the petrochemicals segment where revenues have risen by just 4.03 per cent to Rs 7,498 crore, while profit before interest and tax has gone up by 3.66 per cent to Rs 877 crore. The sobriety of the petrochemicals division's numbers is surprising considering that production and demand were strong during the quarter. Besides, the period was one of stable feedstock prices and strong product prices, which means that margins should have been very good. Reliance has also strategically pushed production of speciality grades in polymers and fibres that fetch a premium over the commodity grades. Operating margins were marginally higher at 13.70 per cent compared to 13.28 per cent in the same period last year. If the 14.82 per cent growth in operating profits metamorphosed to an impressive 26.04 per cent at the net level, it was largely due to the financial management skills of the company that helped reduce interest cost by 12.59 per cent to Rs 361 crore during the quarter. The second half of this fiscal could prove bountiful to Reliance Industries if the petrochemicals business kicks in with a performance as good as the refining business. At this point in time, the possibility appears good given that the critical user segments of polymers such as automobiles and consumer durables are going through a period of strong growth.
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