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Reliance surprises with profits surge


Wire services
Photo by Reuters


India's Reliance Industries beat market forecasts today as its quarterly profit rose by nearly 25%, and said it saw natural gas sales boosting earnings later this year.

The integrated oil and petrochemicals company, valued at more than $96 billion, will begin to pump gas from its deep-water fields off India's east coast in the second half of fiscal 2008/09.

"Our key investments in oil and gas development and refining are expected to commission this year. I expect them to be key drivers to deliver earnings growth in the near future," chairman Mukesh Ambani said in a statement.

Reliance, which may sell a stake of up to 10% in its D6 gas block off India's east coast, is expected to produce up to 80 million cubic metres of gas per day later this year.

Chief financial officer Alok Agarwal told reporters gas sales would account for a significant portion of the company's cash flow and earnings in later quarters.

Reliance said net profit for the January-March period, its fiscal fourth quarter, rose to 39.12 billion rupees ($978 million), from 31.56 billion rupees a year earlier, boosted by strong refining margins.

Turnover rose to 386.97 billion rupees from 292.76 billion, the company said.

Thirteen analysts polled by Reuters had forecast a net profit of 37.4 billion rupees and net sales of 356.3 billion rupees.

Full-year consolidated net profit rose 62% to 195.23 billion rupees and net sales rose 21% to 1.37 trillion rupees, it said in a statement to the stock exchange.

Agarwal said the company, which currently has four rigs in operation, would hire seven more over the next 24 months.

"Contracting rigs is a serious challenge for operators and due to this shortage, rig utilisation rates are expected to remain high," the company said in a statement.

Agarwal said the company was awaiting regulatory approval for a development plan it had submitted for the discoveries made in the NEC 25 block, off India's east coast.

Last January, a company source told Reuters Reliance plans to produce 35-40 million cubic metres of gas per day from six finds in the block.

Ahead of the results, shares in Reliance ended 0.2% higher at 2642.15 rupees in a Mumbai market that rose 1.6%.

The shares had fallen 21.4% during the January-March quarter, outperforming the sector index's 24.7% drop and the main BSE index's 22.9% fall.


Tuesday, 22 April, 2008, 04:15 GMT  | last updated: Tuesday, 22 April, 2008, 06:32 GMT

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