BOMBAY (AFP) - Oil and petrochemicals giant Reliance Industries Ltd, India's largest private sector company, said second-quarter net profit jumped 39 percent, helped by surging oil product prices.
Net profit for the three months to September totalled 17.52 billion rupees (380 million dollars) on sales up 27 percent from a year earlier to 229.17 billion rupees, said Reliance, owner of the world's third largest oil refinery.
"The company's gross refining margins were eight dollars during the second quarter compared with seven dollars in the first quarter," vice-chairman Anil Ambani told a news conference.
"The margins will remain in this region going forward over the next two or three quarters as crude oil prices chart new territories. Margins will be robust as crude oil prices will be the driving force for high product prices."
Asian refinery profit margins have been climbing as oil product price rises outpace the cost of crude oil, helping lift the bottom lines of companies such as Reliance Industries, the main company of the Reliance group.
Ambani forecast crude oil prices would hover between 30 and 45 dollars over the long term. "As of today we think the era of 15 to 25 dollars per barrel of oil is a past story. Future oil prices will be 30 to 45 dollars and on that basis Indian economic strategy and our company's strategy will have to change."
Despite the international pressures, domestic petroleum product demand has been growing constantly, reflecting an expanding economy, he said.
"There has been eight to nine percent growth in diesel consumption and 15 percent in liquefied petroleum gas despite the high oil prices, indicating there's no let-up in economic growth," he said.
"Our general view for two years is the strong petrochemical upturn will continue on the back of growing customer consumptions. During the quarter however petrochemical product demand was subdued due to inventory corrections."
India's economy posted 7.4 percent growth during the quarter to June. But it is seen slowing over the rest of the year as the impact of a patchy monsoon on the agriculture-dependent economy starts to kick in.
Ambani said implementation of new accounting principles and a six percent fall in the rupee during the quarter shaved three billion rupees from profits.
Shares of Reliance Industries, India's second-most valuable company by market capitalisation, slipped after the results as investors took profits following a strong run-up in the stock ahead of the announcement.
"The results are in line with most analyst expectations," said Vijay Tilakraj, assistant vice president at KJMC Capital Market.
On the Bombay Stock Exchange, Reliance shares closed down 2.55 rupees or 0.47 percent at 536.30 rupees but fared better than the overall market which lost 1.06 percent.
Ambani said the company has plans to set up 2,000 retail gas stations in a year's time, adding, "Sales from our outlets are two to three times more than any outlet of a state-run petroleum company."
Reliance has become a key player in oil and gas exploration, telecommunications and petrol retail outlets after making big investments over the past few years.
Ambani said group company Reliance Infocom had posted around a 500 million rupees loss on a subscription base of 10 million. But "in the next two quarters we'll be in the black", he said.
The Reliance group, founded 46 years ago by rags-to-riches entrepreneur Dhirubhai Ambani who died in 2002, accounts for 3.5 percent of India's gross domestic product.
It is now run by his two sons, Mukesh who is chairman, and Anil, who is vice-chairman.
10/25/2004 - 13:52 GMT - AFP