Archive for January, 2011


January 25, 2011

Spearheaded by Mukesh Ambani, India’s largest conglomerate Reliance Industries Limited (RIL) reported a record growth of 28% in its quarterly net profit as it earned more dollars for each barrel of oil it refined as demand from recuperating western countries boosted the petrochemicals business to its best-ever performance.

Due to strong Gross Refining Margins (GRM) and high selling price of crude oil, the company was able to enjoy a tremendous profit amount that borders on Rs. 5123 crore in its Q3, making this the company’s highest quarterly profit in three years. RIL, the largest company in terms of market value, accorded an overall growth of 77% in pre-tax profits this quarter via its refining arm alone.

Reliance Industries runs the largest refining complex in Jamnagar, Gujarat. With robust refining capacities, the decision of the company to boost GRM by $9 in its December quarter as compared to $5.9 in previous quarter allowed for a staggering profit of nearly $3 per barrel of fuel produced.
As developed countries regained their form after a period of slow down last year, price of crude oil rose to nearly 14 percent in the fiscal third quarter. Thereby, RIL was able to accumulate net sales of Rs. 59,789 crore (an increase by 5%) during the quarter, which was further boosted by its petrochemicals business, which contributed Rs 15,962 crore in gross revenue, a growth of 8% compared to the corresponding quarter last year.

Commenting on this feat, Mukesh Ambani said, “Reliance had another record quarter as both refining and petrochemical margins continued to improve and for certain products, recorded historic levels. Robust demand growth in home markets and highly competitive assets enabled Reliance to have industry leading operating rates and margins.”

It is likely that this trend of GRM will continue into the next quarter as well. Permanence of this trend will enable Reliance to invest in its shale gas category which it has caught many scrutinizing eyes in recent times. Also, investments in broadband subdivision of Infotel Broadband Services will open new frontiers for Reliance Industries to tap.


Reliance expands it “Retail Dream”

January 13, 2011

Not one to give up easily, Mukesh Ambani and Reliance Retail have planned to expand their operations to Uttar Pradesh and Eastern India where their initial attempts failed due to agitation from political parties. Reliance has plans to introduce specific formats in prior established markets like Lucknow, Kanpur, Ghaziabad and Noida and will then expand further depending on government policies. Reliance retail president, Bijou Kurien, said in a recent interview that East India and Lucknow are two markets where Reliance has had the least penetration yet and hence they will try and target the markets in hope of expansion. With the improvement in the political scenario, this dream is a lot more likely to come true. The biggest road block is the UP government which has put a ban of vegetable retailing and Reliance will have to break through with products like jewellery, apparel and other retail items.


The UP government had previously forcefully closed Reliance Retail in 2007 in Jharkhand as well as other location like Kolkata due to extreme political agitation. These political groups were against the commercialization of vegetables due to the apparent threat it posed for small kirana stores. However, in the past 2 years reliance has opened up over 17 outlets in Kolkata itself and is testing the waters in other cities. Retail contribution to Reliance has dropped from 65% to 50% due to its expansion in the avenue of specialty formats. Reliance plans to invest a hefty amount in its stores at approximately 1 Crore per sq ft with a slightly higher investment for hypermarkets. Reliance has a current network of 1050 stores and plans to open another 150 stores by March, with the aim of doubling the total number of stores in the next 5 years.


The value retailing wing of Reliance focuses primarily on food and grocery which accounts for a large segment of the Indian Retail sector