Reliance Industries (Reliance) has announced impressive results for the full year ended March 2000. While the turnover has increased 40% to a level of Rs 203 bn, the net profit has increased 41% to touch a level of Rs 24.0 bn.
The company’s production increased from 7.06 m tonnes during 1998-99 to nearly 8.92 million tonnes during 1999–2000 an increase of 26%. A 40% increase in turnover implies a 14% increase due to improved realisations, mainly petrochemicals polypropylene and polyethylene.
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During the year, the company acquired control over the 75,000 tpa polyester manufacturing facilities of Raymond Synthetics. Thus the company now controls market shares of over 46% in polyester, 85% in fibre intermediates and 56% in plastics.
The company’s interest expense increased 38% to Rs 10.08 bn and depreciation increased 50% to touch Rs 12.78 bn consequent upon capitalisation of the assets on completion of the Jamnagar petrochemicals complex. The interest expense capitalised during the year was Rs 2.68 bn against Rs 3.63 bn in the previous year.
However, the profit for the year included Rs 3.28 bn on account of exchange difference arising on repatriation of Rs 34.72 bn from its foreign currency monetary assets lying abroad. If one were to adjust for this the operating margin (excluding other income) would actually drop 1% from 19% in FY 99 to 18% in FY 2000.
During the year the company also changed the method of providing depreciation from straight line to written down value method in respect of certain assets. This profit for the year would have been higher by Rs 3 bn had there been no change in the method of providing depreciation. Thus at the net level, there will not be a difference in the bottomline growth, if one adjusts for the two factors put together.
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