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May 2, 2001
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Money > Business Headlines > Report May 2, 2001 |
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Analysts warn on RIL's profit margins in the coming quartersNetScribes / Salil Panchal Foreign brokerages have raised concerns over the profit margins of Reliance Industries over the coming quarters as various petrochemical products are at the bottom of their price cycles. On Monday, RIL failed to post a higher net profit for what would have been a record 44th quarter. RIL reported a 17 per cent dip in net profit to Rs 5,400 million for the March quarter. Sales too declined by 2 per cent to Rs 64.44 billion. The petrochemicals major attributed the lower profit to three factors - change in the method of calculating depreciation, exchange gains difference on repatriation of foreign exchange, and the Gujarat earthquake costs. The financial statement says that the company has altered its method of calculating depreciation of assets and the brunt of it was borne in the last quarter. Profits would have been higher by Rs 1,630 million had there been no change in the calculation of depreciation. However, analysts from BNP Paribas Equities and WI Carr Securities raised concerns on the company's profitability in the medium term. RIL managing director Anil Ambani said that most petrochem products were moving through their lowest cycle. "Most of the global analysts say that different products should be at the top of the cycle by 2003. We are really looking at the trough of the cycle," he said. In its business review, RIL has said that demand growth for POY (partially oriented yarn) and PSF (polyester staple fibre) has been flat over the past 12 months. RIL is the second largest producer of POY and PSF in the world. In the polymers segment, RIL witnessed an overall demand growth of 11 per cent over the past year. The RIL top brass has extended the buyback programme for another year from the current programme's deadline of May 18. The buyback price will stay at Rs 303. The buyback price has become the expected floor price for the stock, say analysts, even though RIL has not deployed any portion of the approved amount for the buyback till date. The RIL scrip dipped below Rs 303 on only 11 of the total 264 days since the announcement of the buyback. |
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