Reliance profit rises 26; share falls 3

Boosted by higher refining margins, Reliance Industries, India8217;s largest company...

Boosted by higher refining margins, Reliance Industries, India8217;s largest company in terms of market capitalisation, posted a 26 per cent increase in net profit for the third quarter ended December to Rs 3,882 crore from Rs 3,081 crore a year ago. However, if the one-time gain of 1.2 billion through share sale is taken into account, the net profit for the quarter rose by 162 per cent to Rs 8,079 crore.

During the quarter, the company sold shares in Reliance Petroleum, earning Rs 4,733 crore outside the items included in the net profit. The market was not enthused by the Reliance show. RIL shares lost 3.3 per cent to Rs 2,996.25, its lowest close in about two weeks, dragging the Sensex down by another 167 points to 19,700 on the BSE.

8220;The company reported a 3 per cent drop in revenue from its core petrochemical business. Its quarterly profit more than doubled due to one-time gains,8221; said BSE dealer Pawan Dharnidharka.

The petrochemicals giants reported a 21 per cent rise in turnover for the quarter at Rs 35,880 crore from Rs 29,753 crore for the same quarter last fiscal. 8220;The new growth platforms around oil and gas, organised retailing and agro-retail initiatives are gathering momentum and the initial response to these initiatives have been very encouraging,8221; RIL chairman Mukesh Ambani said.

8220;The increase in revenue was due to an 8 per cent increase in prices and a 5 per cent growth in volumes,8221; the company said. The net profit excluding exceptional item for nine months increased by 29 per cent to Rs 11,349 crore 2.9 billion.

However, the company said the results were above its expectations. 8220;Results are ahead of our expectations and that is satisfying,8221; Reliance Industries chief financial officer Alok Agarwal said. 8220;We have sold shares to monetise part of our holding in Reliance Petroleum. We are finding newer and newer investments,8221; Agarwal said.

Analysts said higher gross refining margins boosted the company8217;s bottomline. RIL8217;s refining margins increased on a quarter-on-quarter basis from 11.7 per barrel to 15.4 per barrel in the quarter ended December 2007. The GRM for 9M FY08 was at 14.9 per barrel as against 11.1 per barrel. However, domestic marketing margins on MS and HSD continue to be under pressure due to lack of a level playing field for the private sector marketing companies. 8220;The period witnessed high crude oil prices without any corresponding improvement in the domestic selling price. RIL is currently maintaining a price differential of Rs 5.0 per litre over PSUs8217; retail selling price on HSD and Rs 4.50 per litre for MS across India,8221; RIL said.

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The profitability of the company is expected to rise further next year with gas production from its eastern offshore KG-D6 fields expected to start in FY09.

The company would be investing 2 billion in the next two quarters on oil exploration and development. In the next 3-5 years, it would be expanding its international footprint.