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Tuesday, November 3, 2009

RIL corrects sharply ahead of apex court hearing

India's largest private sector company by market capitalistion and oil refiner has an equity capital of Rs 1643.12 crore. Face value per share is Rs 10.The current price of Rs 1829.70 discounts the company's Q2 September 2009 annualised EPS of Rs 93.78, by a PE multiple of 19.51A dispute between Reliance Industries, controlled by Mukesh Ambani, to sell gas to Reliance Natural Resources, run by Mukesh's estranged younger brother Anil Dhirubhai Ambani, is before the Supreme Court.In the previous hearing on Tuesday, 27 October 2009, the Supreme Court had observed that gas is a national resource owned by the Government and, therefore, subject to Government policy.The Court also asked why the brothers cannot settle the matter through arbitration or mutual consensus.The two brothers are fighting a legal battle in the apex court over division of natural gas produced by RIL from KG-D6.RIL began production at the D6 block in the Krishna-Godavari basin off India's east coast last April 2009 and is currently producing about 42 million metric standard cubic meters of gas a day.Reliance Natural Resources wants gas to be delivered to the later at $2.34 per million metric British Thermal Unit (mmBtu), based on some contractual agreements. But RIL says it can sell gas only at the government-mandated price of $4.20 per mmBbtu.Late last month, RIL had signed a pact with state-run utility NTPC to supply gas for some of the power plants of NTPC, for five years.

RIL will supply 0.61 mmscmd to NTPC at a price of $4.20 per mmBtu. The quantities and price of gas under the Gas Sale & Purchase Agreements (GSPAs) signed for five years are as approved by the government, RIL said.RIL manufactures petrochemicals, synthetic fibers, fiber intermediates, textiles, blended yarn and polyster stale fiber. The company also owns a petroleum refinery cum petrochemicals complex in Jamnagar, Gujarat that produces a wide range of products such as gasoline, superior kerosene oil and liquefied petroleum gas.Reliance Industries' net profit fell in Q2 September 2009 on shrinking refining margins. The result was announced after trading hours on Thursday, 30 October 2009.Reliance Industries' (RIL) net profit fell 6.4% to Rs 3852 crore on a 4.8% increase in sales to Rs 46848 crore in Q2 September 2009 over Q2 September 2008. Gross refining margins (GRM) fell to $6 a barrel, the lowest in at least five years, in Q2 September 2009 from $13.4 a barrel in Q2 September 2008. The GRM is the difference in the price of refined product and the cost of buying crude.

The earnings met market estimates as gas production from its east coast field helped offset lower refining margins.RIL, controlled by billionaire Mukesh Ambani, agreed to buy crude at higher prices last year on hopes demand would remain robust. But a slowing global economy and a sharp fall in crude prices meant the cargoes were worth much less than when they were purchased, leading to inventory losses.Crude oil prices in the second quarter averaged $68 per barrel, down 43% year-on-year. Oil prices had touched their peak of $147 a barrel in July last year.RIL said the quarterly profit figure does not include the Rs 2941 crore profit from its recent sale of 1.5 crore treasury shares.RIL operates a 660,000-barrel-a-day refinery in Jamnagar in the western state of Gujarat. It began operations last December at a second refinery in the same complex that can process 580,000 barrels a day.RIL processed 27.63 million metric tonns of crude in the second quarter, compared with 16.34 million tonnes a year earlier.

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