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Reliance Q2 profit up 28 pc at Rs 3,837 cr

Reliance industries Limited, India's biggest company, posts a 28 per cent increase in second-quarter profit on higher earnings from oil refining and chemicals.
Hindustan Times | By Indulal PM & Agencies, Mumbai
UPDATED ON OCT 18, 2007 11:06 PM IST

Reliance industries Limited, India's biggest company, posted a 28 per cent increase in second-quarter profit on higher earnings from oil refining and chemicals.

Net profit rose to Rs 3,837 crore ($964 million) in the three months to September 30 from Rs 3,000 crore a year ago, the Mumbai-based company said in a statement to the Bombay Stock Exchange. Profit, which included the acquisition this year of a chemicals unit, beat the Rs 3,300 crore estimate of seven analysts surveyed by Bloomberg News.

Profit from refining and chemicals increased as gasoil prices in Singapore rose faster than the Asian benchmark Dubai crude, supporting Chairman Mukesh Ambani's plan to expand into shopping malls and industrial parks. The stock has more than doubled in the past year, valuing Reliance at about $90 billion.

"The company has huge expansion plans and rising profits gives Reliance the confidence to execute them," Karthik Ramakrishnan, analyst at Mumbai-based Sunidhi Consultancy said before the earnings announcement.

"Profits will continue to be driven by high refining margins and petrochemicals," Ramakrishnan added.

Reliance fell Rs 114.40, or 4.3 per cent, to Rs 2,575.90 at the 3:30 p.m. close on the Bombay Stock Exchange on Thursday. The stock fell along with India's Sensitive Index, which dropped the most in two months on concern overseas investment rules to be set next week will curb record capital inflows into the nation's equities.

The earnings announcement came after the market's close. Reliance's sales in the quarter rose to Rs 32,040 crore from Rs 28,470 crore.

The company earned $13.6 from processing each barrel of oil into fuels compared with $9.1 barrel a year ago, according to a statement issued in Mumbai.

Reliance’s performance counters US rivals that reported a drop in profits from refining. Reliance’s products such as gasoline and diesel are sold in the US and Europe.

Valero Energy Corp. and Chevron Corp., the US’s two largest refiners, last week said third-quarter profit declined because of lower earnings from processing oil into fuels.

Reliance’s chemicals business, which accounts for about 35 per cent of revenue, boosted earnings in the quarter.

Prices of polyester have risen 8.5 per cent in the nine months ended September 30 from a year earlier. Polyester staple fiber prices rose to an average of $1.28 a kilogram between January and September this year, from $1.18 for the same period a year ago, according to data from ICIS.

Reliance will use its strength in the domestic market to drive the expansion of its oil and gas business and create “unprecedented value” for shareholders, Ambani told shareholders in Mumbai on October 12.

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