Yet another good half-year at Reliance
20 Oct 1999
In what has come to be a hallmark of Reliance Industries Ltd, its managing director Anil Ambani released its first half figures to a hall full of analysts, representatives of the business media of the world and TV teams. Once again the company has shot ahead of the pack by releasing the figures in just over two weeks from the close of the half-year of the financial year.
The company seems to have done very well in the second quarter of the financial year, 1999-2000. It achieved a net profit of Rs. 612 crore in the second quarter – thus making it the first Indian private sector company to declare a net profit of over Rs. 1,100 crore in the first half. In the process it also became the first Indian private sector company to declare an operating profit of Rs. 1,992 crore for the first half.
These are only a few in the string of records the company has created – records which include: an 18 per cent increase in sales to Rs. 8,673 crore, a 19 per cent increase in cash profits to Rs. 1,569 crore, a 13 per cent growth in production to 3.91 million tonnes and a 47 per cent increase in exports to Rs. 421 crore. With exports, however, Mr. Ambani admitted that the company has yet got a long way to go. However, he expressed confidence that in the next two years Reliance will be among India's top three manufacturer-exporters. .
Commenting on the performance, Mr. Ambani stated that the recovery of the national economy, increased domestic demand and the enhanced degree of integration brought about by the start up of the Jamnagar refinery all contributed to the growth and rise in profits. The company is poised to play a greater role with its world class capacity and technology that makes it globally competitive.
Despite imports being freed, Reliance Industries performed well because of its enhanced focus on customer service, its wider distribution network and competitive pricing strategies which ensured that the price was always 10 to 15 per cent lower than the landed cost of imported material. The company continued to be the market leader in all its product categories.
Given the fact that Reliance Industries holds 50 per cent of the equity of Reliance Petroleum, of which Mr. Ambani is also the managing director, he chose to spend some time speaking about the performance of Reliance Petro. With the commissioning of the Jamnagar refinery – which, with an investment of Rs. 24,000 crore is the largest ever investment made by a private sector company in any one area – the company is poised to grow exponentially. Already Reliance Petro represents a quarter of India’s refining capacity, and is already placed among the world’s largest refineries.
In response to a question from domain-B on reports of the group's foray into the IT and software sector, Mr. Ambani replied that the group was only evaluating profitable investment opportunities. At the current juncture it is concentrating all its efforts on what it does best -- petrochemicals -- but if a good investment opportunity in the IT or software sector comes along at the right time, the company would not hesitate to invest in it.
Responding to another question from domain-B about how the company is ensuring that its size does not become its downfall and it can continue to "dance deftly", Mr. Ambani said the 18,000 employees of the company, who have contributed immensely to the company's year-on-year growth would ensure that the company always remained proactive and quick. He pointed out that people management and training are key drivers of the company and that the company will continue to invest in its people to ensure that it can "dance deftly" despite its size.
On another question on the listing of the Reliance stock in the US, Mr. Ambani stated that the company is actively working towards a paradigm that allows the huge retail investor population to be fed with ADRs. The company has already covered a lot of ground in this respect. As a result, if the company wanted to list its shares on the New York Stock Exchange tomorrow it could do so. When pressed for a time line within which the company would list its shares in the US, Mr. Ambani stated that it could be within the next two years.
When asked to predict the next quarter Mr. Ambani stated that it was against company policy to make such predictions. Any prediction in this industry was, according to him very difficult, since the prime ingredient in this process, the crude oil prices, were absolutely unpredictable.