E&P to contribute 10-15% to RIL`s topline
Reliance Industries, the country`s largest private sector company, expects its exploration and production (E&P) business to contribute to 10-15 per cent to total revenues within next three to four years. Anil Ambani, vice-chairman and managing director of Reliance disclosed this information at a analyst meet held to discuss the company`s second quarter results.
The company expects its E&P efforts to gross around Rs 10,000 crore in revenues within the same period. `The earning before interest depreciation and tax margins would be around 40-50 per cent and the payback period will be around 3-4 years`, said Anil Ambani.
`The capital expenditure would be funded through internal cash accruals and debts` he added. The company has strong cash flow of around Rs 7,500 crore. According to Ambani, this money is sufficient to fund its capex plans related to E&P, retail marketing and infocomm etc. Moreover, the company enjoys a low leverage ratio (Debt Equity Ratio) of 0.59 and high interest coverage ratio of 17.3.
Commenting on the results, Ambani said,`Robust demand for petrochemical products, high capacity utilisation, improved product mix with focus specialised products and lower interest cost led to robust performance`. The company reported improvement in OPM and NPM, which stood at 13.5 per cent (13.2 per cent) and 7 per cent (6 per cent), respectively.`
Earlier in the day, Reliance declared its second quarter results. The company reported a 26 per cent rise in net profit to Rs 1,263 crore for the second quarter ended September 30, 2003, compared to Rs 1,002 crore in the corresponding period last fiscal. The gross turnover has gone up to Rs 18,036 crore from Rs 16,206 crore. For the six months ended September 30, 2003, the company has reported net profit of Rs 2,367 crore, as against Rs 1,920 crore for the corresponding period last year. The gross turnover rose to Rs 35,202 crore from Rs 31,782 crore.
The company has increased its refining capacity to 31 MMTPA from 27 MMTPA and the company plans to increase it to 31 MMTPA by March, 2004. The company expects its refinery margins to remain robust in the balance two quarters.
Talking about the petrochemical cycle, he said, that the industry pundits have forecast upsides in the petrochemical cylce for the year 2005-06 and we are at start of it now.
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