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Reliance Q4 profit jumps, plans huge investments


By Sumana Ramanan and Himangshu Watts

BOMBAY (Reuters) - India's largest oil and petrochemicals company, Reliance Industries Ltd, made a 29 percent jump in fourth-quarter profit as product prices rose, and expects to keep up the momentum, it said on Thursday.

It also announced a 350-billion rupee ($7.9 billion) capital expenditure plan over the next five years to expand its petrochemicals capacity, develop its recently discovered gas field and build a network of gas stations.

"We are seeing a new phase of growth in the petrochemicals cycle," Reliance Industries' Managing Director Anil Ambani told an earnings news conference.

The flagship of the powerful Reliance group, India's biggest conglomerate by sales, made a net profit of 14.19 billion rupees ($320 million) for the quarter to March 31, beating the median forecast of 13.37 billion in a Reuters poll of 10 analysts.

But its shares dropped after the results in a weak market, ending down two percent at 529.20 rupees.

"Given the strong demand for oil products, the core business will still be the growth driver. But overall bearish sentiment in the market has overridden the results," said Jigar Shah, head of research at local brokerage K.R. Choksey.

Reliance Industries, which operates India's largest refinery, reported quarterly income of 145.85 billion rupees, up 11.5 percent from 130.81 billion rupees a year earlier.

For the full year to March, Reliance reported a net profit of 51.6 billion rupees, up 26 percent from the preceding year.

Its shares had already lost 5.7 percent in 2004 through Wednesday's close, while the index had dropped two percent. The index lost a further two-thirds of a percent on Thursday.

GAS STATIONS, EXPLORATION

The company plans to set up 2,000 gas stations by March, to add retailing margins to its profit and reduce dependence on state-run firms that now own more than 99 percent of India's 20,000 gas stations.

Reliance, India's sole private refiner, has a licence to set up more than 5,800 gas stations.

Founded by the late Dhirubhai Ambani in 1958 to trade synthetic yarn, Reliance Industries has grown into a fully integrated energy behemoth that is India's largest private-sector company by sales.

It became a virtual monopoly in the domestic petrochemicals sector after it acquired its main rival, state-run Indian Petrochemicals Corporation Ltd, over two years ago, while its 660,000 barrels-a-day refinery processes about a quarter of India's requirements.

Reliance is set to become a key player in oil and gas exploration. In 2002, it discovered an estimated 14.5 trillion cubic feet (410.6 billion cubic metres) of gas, India's largest such find in decades.

In the longer term, it sees its gas exploration business contributing up to 10 percent of revenue.

Reliance Industries and other group companies together own a 51 percent stake in Reliance Energy Ltd, a leading private-sector utility that plans to build what it says will be the world's largest gas-fired power plant, with a capacity of 3,800 megawatts.

It made an aggressive entry into telecoms through Reliance Infocom, a 45 percent subsidiary, in December 2002.

The company, which provides mobile phone services based on CDMA (code division multiple access) technology, now has nearly 6.5 million customers and is neck and neck with GSM (global system for mobile communications) rival Bharti Tele-Ventures for the top slot in the booming sector.

Reliance expects to launch fixed-line and broadband services for the enterprise segment within a month.

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