The turnover jump at Reliance Industries is largely due to increased capacities in polyester and petrochemicals at its Hazira complex. The total capacities of several products rose from 1.5 million tonnes to nearly six million tonnes.
Though prices have been falling in polyester and polymers, Reliance officials say they have been able to offset this with volume increase. The commissioning of the cracker also resulted in large savings.
Though Reliance officially announced the cracker commissioning only in March the cracker had started production in January itself. Reliance annually spends over Rs 1,000 crore on ethylene imports.
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Even before commissioning, Reliance had a major saving in ethylene imports as global ethylene prices fell to less than $400 per tonne from over $1,200 per tonne. In first quarter 1997, the company was also helped by a small upswing in polymer prices helping the company gain better realisations. In LLDPE (linear low density polyethylene) prices rose from Rs 49,500 per tonne to Rs 50,500 per tonne.
Polypropylene prices touched Rs 51,000 per tonne from Rs 50,000 per tonne. HDPE (High density polyethylene) touched Rs 52,500 from Rs 50,500 per tonne.
The price increases were due to similar hikes in global markets and happened just after the February 28 budget. In polyesters, Reliance suffered from sharp falls in all major prices, including polyester filament yarn and polyester staple fibre.
In fibre intermediates too, Reliance faced price falls. PTA prices fell to an average price of Rs 31,000 per tonne against prices of over Rs 50,000 per tonne last year.
Though the company expressed satisfaction about its performance, not everyone is very happy. Analysts, who for the second time in a year saw their forecasts being beaten, said the results are mysterious and unexplainable. "You don't need a spreadsheet and a computer to forecast Reliance. You need a psychoanalyst to do that.
The company cannot be analysed by just numbers," said an analyst in one of the research outfits. In first half of 1996-97, the company similarly confounded analysts by announcing higher than projected estimates. While estimates suggested that Reliance will end up profits of between Rs 500-550 crore, the company announced a net profit of Rs 651 crore.
Reliance reported higher inter-divisional transfers of Rs 2,289 crore against Rs 2,060 crore last year due to higher sales of PTA following the commissioning of its 3.5 lakh tonne plant in first quarter of 1997. In paraxylene, the company had to buy from outside as its own capacity is limited to 1.8 lakh tonnes.
Reliance will be outsourcing paraxylene not only for its current plant, but also the new 3.5 lakh tonne plant being set up in 1998.
The 1997-98 performance is expected to significantly improve as benefits of all volume expansions will be felt. If prices remain stable, the company could well announce yet another record performance.