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43RD CONSECUTIVE QUARTER IN A ROW OF HIGHER QUARTER ON QUARTER SALES AND NET PROFIT FIRST PRIVATE SECTOR COMPANY TO DECLARE NET PROFIT OF OVER RS. 2000 CRORES NET PROFIT UP 20% AT RS. 2,106 CRORES SALES OF RS. 21,564 CRORES, AN INCREASE OF 57%, OPERATING MARGIN MAINTAINED AT 20% EXPORTS OF RS. 2,292 CRORES, AN INCREASE OF 200% PRODUCTION VOLUME OF 7.9 MILLION TONNES, AN INCREASE OF 24% Mumbai, January 31, 2001 - Reliance Industries Limited, has announced its unaudited results for nine months ended December 31, 2000, establishing several new corporate records of Sales of Rs. 21,564 crores (US $ 4,619 million) and Net Profit of Rs. 2,106 crores (US $ 451 million) - the highest in the private sector. Sales (excluding merchant sales) for nine months ended December 31, 2000 were Rs. 19,287 crores (US$ 4,132 million) against Rs. 13,707 crores for the corresponding period, an increase of 41% Operating Profit (PBDIT) for nine months increased by 28% to Rs 4,049 crores (US$ 867 million) as against Rs 3,153 crores for the corresponding period. Cash Profit increased to Rs. 3,124 crores (US$ 669 million) against Rs. 2,454 crores for the corresponding period, an increase of 27%. Net Profit of Rs. 2,106 crores (US$ 451 million) against Rs. 1,749 crores for the corresponding period, an increase of 20%. The total paid up equity share capital has remained unchanged at Rs.1,054 crores (US $ 226 million). Earnings Per Share (EPS) for the nine months is Rs. 19.9 (US $ 0.43) & Cash Earnings Per Share (CEPS) for the nine months is Rs. 29.6 (US $ 0.63). (Annualised Earnings Per Share (EPS) is Rs. 26.6 (US $ 0.57) & Cash Earnings Per Share (CEPS) is Rs. 39.5 (US $ 0.85) The company’s contribution to the national exchequer in the form of various taxes increased by 12% to Rs. 3,073 Crores (US $ 658 million) over the corresponding period. The Company’s production increased from 6.4 million tonnes to 7.9 million tonnes, representing a 24% growth. Manufactured exports including deemed exports increased by over 200% to Rs 2,292 crores (US $ 491 million) as against Rs 759 crores for the corresponding previous period. Total Exports including merchant exports of petroleum products were Rs 4,569 crores (US $ 979 million). Total Exports from Reliance Industries Ltd. (RIL) and Reliance Petroleum Ltd. (RPL) during the nine months were over Rs. 7000 crores (US $ 1,500 million). This ranks Reliance as the largest exporter from India. The Company’s operations have helped the nation save precious foreign exchange to the tune of Rs. 13,153 crores (US $ 2,818 million). The Company has reconciled the accounts with US GAAP. Reconciliation of Net Profit as per Indian GAAP and US GAAP is as under: Indian GAAP US GAAP Rs Crs $ MM Rs Crs $ MM Net Profit 2,106 451 1,754 376 Difference (352) (75) % Difference (17%) The difference is mainly on account of foreign exchange fluctuation and deferred taxation. It may, however be noted that as about 88% of the revenue of the Company is earned in India the true and fair picture is indicated as per Indian GAAP. Commenting on the results, Mr. Anil D. Ambani, Managing Director, Reliance Industries said: "Record high levels of energy prices, leading to a steep increase in feedstock costs, and simultaneous sharp declines in selling prices of most products, characterised the operating environment for the third quarter, placing unprecedented pressures on margins of petrochemicals companies worldwide. We are encouraged that Reliance has maintained its track record of consistent financial performance, despite these all-round pressures on profitability. Reliance has now reported higher quarter-on-quarter sales and profits for 43 consecutive quarters in a row, through several economic and business cycles. This is a reflection of Reliance's continuing market leadership, and the overall global competitiveness of its operations. During the first nine months, Reliance has emerged as India's largest manufacturer exporter, achieving exports of US$ 1.5 billion (Rs. 7,000 crores). The record levels of export revenues demonstrate the international quality of Reliance's products, and contribute to diversification of markets. Reliance extends its sympathy to the families of all persons affected by the recent earthquake in Gujarat. Reliance is working in close co-operation with the government and the armed forces, and has deployed all available human and material resources, including doctors and paramedics, other manpower, communications, power and earthmoving equipment, vehicles, aircraft, medical supplies, and continuous provision of food and water, besides an initial monetary contribution of Rs. 5 crores (US$ 1.1 million) and commitment of a total of Rs 15 crores (US$ 3.2 million), to actively support relief measures in the state, and to contribute to restoration of normalcy." For the year ending March 2001 the Company expects to announce its results in the second half of April, 2001. Management Discussion & Analysis for the Nine Months Ended December 31, 2000 Sales for the nine months ended December 31, 2000 were Rs. 21,564 crores (US $ 4,619 million), up 57 % from the corresponding period. Sales (excluding merchant sales) were Rs. 19,287 crores (US$ 4,132 million), an increase of 41 %. Sales include inter-divisional transfers of Rs. 3,726 crores (US$ 798) against Rs. 3,708 crores in the corresponding period. Sales growth of 41 % during the nine months (excluding merchant sales) is comprised of the positive impact of 32% from volume growth, and 9 % increase in product selling prices, as compared to the corresponding period. Net profit for the nine months increased 20 % to Rs. 2,106 crores (US $ 451 million). Total Exports from Reliance Industries Ltd. (RIL) and Reliance Petroleum Ltd. (RPL) during the nine months were over Rs. 7000 crores (US $ 1,500 million). This ranks Reliance as the largest manufacturer exporter in India. RIL’s manufactured exports, including deemed exports, increased by over 200 % to Rs. 2,292 crores (US $ 491 million), as against Rs. 759 crores (US $ 174 million) for the corresponding period. The increased exports demonstrate the international quality of Reliance’s products, and reflect the diversification of its markets. During the period under review, total production volume increased 24 % to 7.9 million tonnes, from 6.4 million tonnes in the corresponding period. This increase is primarily attributable to the commissioning of the integrated Jamnagar petrochemicals complex, subsequent to the close of the corresponding period last year. Financial Review Prices of major feedstocks increased sharply during the period under review, primarily as a result of the steep rise in crude oil prices. The rise in product selling prices lagged the increase in feedstock costs, leading to all round pressures on profitability. Despite these pressures, Reliance’s operating profit, before other income, increased 41 % to Rs. 3,844 crores (US $ 823 million). Operating margin remained largely stable at 20 %, as a result of the following: increased volumes higher product selling prices, partially offsetting increased feedstock costs continued focus on efficiency, productivity and cost reduction higher degree of integration and value addition, as a result of commissioning of the paraxylene facilities at Jamnagar. Other income decreased 52 % to Rs. 205 crores (US $ 44 million), primarily on account of lower interest income, arising from the reduction in foreign currency monetary assets, and conversion of interest bearing Optionally Fully Convertible Debentures of RPL into equity. The 32 % increase in interest expenses and 44 % increase in depreciation reflects the impact of capitalisation of the new plants at the integrated Jamnagar petrochemicals complex. Capex during the nine months under review was Rs. 400 crores (US $ 86 million), mainly representing normal capital expenditure. During the period, the Company has repatriated Rs. 3,401 crores (US$ 749 million approximately) from its foreign currency monetary assets. Export revenues alone cover the foreign exchange denominated interest liabilities on foreign exchange debt, by more than 4 times. Business Review Polyester (PFY, PSF, PET) Reliance has been ranked the 2nd largest polyester producer in the world, and the largest polyester manufacturer in India, with a market share of 52 %. Reliance’s production volumes in the polyester business (PFY, PSF and PET) increased 16 % during the period under review, to 560,000 tonnes - higher than the growth rates achieved by the industry. Demand growth for polyester, for the period under review, was flat, in line with the general slowdown in the economy. However, PET demand growth was buoyant, at 31%. The annual compounded growth rates in polyester consumption in India have been in double digits over the past more than 2 decades. Per capita polyester consumption in the country also still remains amongst the lowest in the world. This reflects the continued potential for strong demand growth in the future. Reliance has increased its focus on speciality products in the polyester business. This has enhanced market share, offers a wider product range, improves margins, and provides a superior overall value proposition to customers. During the period under review, 63% of PSF production, and 19% of PFY production represented speciality products, contributing a premium of 5 – 25 % over commodity prices. Reliance has continued its active participation in the restructuring of the domestic polyester industry. During the first nine months of the year, Reliance has acquired control over one more polyester manufacturing facility, DCL Polyester Ltd., with a capacity of 40,000 tonnes per annum. This takes the total capacity acquired over the last 2 years to 1,80,000 tonnes per annum. Fibre Intermediates (PX, PTA and MEG) Reliance is the world’s 3rd largest producer of paraxylene, and the world’s 4th largest producer of PTA. Within the country, Reliance is the largest manufacturer of PX, PTA and MEG, with a market share of over 80%. Production volumes in the fibre intermediates business (PX , PTA and MEG) were up 45 % to 2.18 million tonnes. This primarily reflects the impact of commissioning of the 1.4 million tonnes per annum paraxylene facilities at the integrated Jamnagar petrochemicals complex. Polymers (PP,PE and PVC) Reliance is the largest producer of polymers in the country, with a market share of 53%. Reliance has nearly a million tonnes per year of polypropylene (PP) capacity, and 400,000 tonnes per year of polyethylene (PE) capacity and 300,000 tonnes of polyvinyl chloride (PVC). Reliance’s polymers business (PP, PE and PVC) reported a 30% increase in production volumes, to 1.2 tonnes. This mainly reflects the impact of commissioning of the 600,000 tonnes per annum of PP capacity at the integrated Jamnagar petrochemicals complex. Overall demand growth for Reliance’s polymer products was 15 % during the period under review. Demand for Reliance’s major product, PP (accounting for over 60 % of production), witnessed exceptionally strong growth rates of 25 % per annum, as a result of the continuing substitution effect, and its wider acceptability over competing products. Cracker Products (Ethylene, Propylene and by Products) Reliance operates the world's largest grassroot, multi-feed cracker at its Hazira petrochemical complex. During the period under review, Reliance produced 554,000 tonnes of ethylene and 264,000 tonnes of propylene. Oil & Gas Reliance holds a 30% interest in an unincorporated Joint Venture with Enron and ONGC, to develop the proven Panna, Mukta and Tapti (PMT) oil and gas fields. Enron has a 30% share, and ONGC the balance 40% share. Oil and gas production from the Panna-Mukta-Tapti Oil and Gas fields recorded further growth, during the period under review. Oil production increased 20% from 256,000 tonnes to 307,000 tonnes. Gas production was up 2% at 517,000 MTOE (metric tonnes of oil equivalent). Oil and Gas accounted for 3% of Reliance's revenues during the period under review, reflecting the impact of increased production, and higher energy prices. During the nine months, Reliance has, in a 90:10 consortium with Niko Resources of Canada, been awarded 12 new exploration blocks by the Government, through a process of competitive international bidding. These 12 blocks cover a wide range of geological settings, spanning shallow and deep waters. Together with the 2 blocks awarded to Reliance in the earlier rounds of bidding, this has made Reliance the country's largest E&P (Exploration and Production) player in the private sector, with exploration acreage of 1,05,765 sq. kms, off both, the east coast and west coast of India. The Production Sharing Contracts with the Government have been signed in April 2000. Development work will begin shortly. UNAUDITED FINANCIAL RESULTS FOR THE QUARTER/NINE MONTHS ENDED DECEMBER 31, 2000 (Rs.in crores, except per share data) Sr. Particulars Quarter Ended Nine Months Year ended No December 31 Ended March 31 . December 31 2000 1999 2000 1999 2000 1. Sales 6,555 5,034 21,564 13,707 20,301 2. Other Income 51 148 205 426 687 3. Total Expenditure a) Increase/decrease in stock in trade (512) (539) (739) (584) (344) b) Consumption of raw materials (incl. Inter- 4,247 3,156 14,235 7,850 11,583 Divisional Transfers) c) Staff cost 105 104 309 306 375 d) Excise Duty 722 671 2,035 1,794 2,452 e) Other expenditure 638 629 1,880 1,615 2,176 4. Interest 294 276 925 699 1,008 5. Depreciation 353 258 1,018 705 1,278 6. Profit before tax 759 627 2,106 1,749 2,460 7. Provision for taxation - - - - 57 8. Net Profit 759 627 2,106 1,749 2,403 9. Paid-up equity share capital 1,054 934 1,054 934 1,054 10. Reserves excluding revaluation - - - - 9,865 reserves (as per balance sheet) of previous accounting year 11. Earnings per share (of Rs. 10) from ordinary activities 7.2 6.7 19.9 18.4 22.4 Basic 7.2 5.9 19.9 16.3 22.4 Diluted 12. Dividend per share - - - - 4.00 Notes: 1. The unaudited financial results are in accordance with the standard accounting practices followed by the Company in preparation of its statutory accounts. 2. The Company had revalued its Plant and Machinery located at Patalganga and Naroda during the financial year 1997-98. Consequent to the revaluation, there is an additional charge for depreciation of Rs 201 crores (US $ 43 million) for the period ended 31st December 2000 and an equivalent amount has been withdrawn from General Reserve. This has no impact on profit for the period. 3. During the quarter ended 31st March 2000, the Company had changed the method of providing depreciation from straight-line method (SLM) to written down value (WDV) method in respect of certain assets, with effect from April 1, 1999. This has been disclosed in the audited balance sheet of the Company for the year ended March 31, 2000. No effect of the change has been given in the financial results for the previous period. Had the change been given effect to, the depreciation would have been higher by Rs 225 crores (US $ 52 million) for the period ended 31st December 1999. 4. The provision for taxation, as applicable, will be made at the end of the year. 5. This statement has been placed before the Board at its meeting held on 31 st January 2001 and approved by it for release.
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