Mumbai, 20 October 1999: Reliance Industries Limited is the first private sector company to declare net profit of over Rs 1,100 crore in six months, establishing a new corporate record. Reliance has announced its unaudited results for the half year ended 30 September 1999, establishing several new records of sales of Rs. 8,673 crore ($1,989 million) and net profit of Rs.1,122 crore ($257 million) - the highest in the private sector.

• Sales for the half year ended 30 September 1999 were Rs. 8,673 crore ($1,989 million) against Rs. 7,374 crore for the corresponding period, an increase of 18 per cent.
• Operating profit (PBDIT) for the half year increased by 19 per cent to Rs 1,992 crore ($457 million) against Rs 1,670 crore for the corresponding period.
• Cash profit increased to Rs. 1,569 crore ($360 million) against Rs.1,323 crore for the corresponding period, an increase of 19 per cent.
• Net profit of Rs. 1,122 crore ($257 million) against Rs. 921 crore for the corresponding period, an increase of 22 per cent.
• The total paid up equity share capital has remained unchanged at Rs.934 crore ($214 million).
• Earnings per share for the half year is Rs. 11.8 ($0.27) and cash earnings per share for the half year is Rs. 16.6 ($0.38).
• Annualised earnings per share are Rs.23.6 ($0.54) and cash earnings per share Rs.33.2 ($0.76 ).
• The company's contribution to the national exchequer in the form of various taxes increased by 16 per cent to Rs. 1,764 crore ($405 million) over the corresponding period.
• The company's production increased from 3.45 million tonnes to 3.91 million tonnes, representing a 13 per cent growth.
• Total exports including deemed exports increased by 47 per cent to Rs 421 crore ($97 million) as against Rs 286 crore for the corresponding period.
• The company's operations have helped the nation save precious foreign exchange to the tune of Rs. 5,972 crore ($1,370 million), an increase of 27 per cent over the corresponding period.

The company has reconciled the accounts with US GAAP as well as with International Accounting Standards (IAS). Reconciliation of net profit as per Indian GAAP, US GAAP and IAS is as under:

The difference is mainly on account of deferred taxation and investments of subsidiaries, which are marked to market under US GAAP.

It may, however, be noted that as about 95 per cent of the revenue of the company is earned in India the true and fair picture is indicated as per Indian GAAP.

Commenting on the results, Mr Anil D. Ambani, managing director, Reliance Industries, said:

"We are delighted with the encouraging performance achieved in the first half of the current financial year. Our record production volumes, the continued momentum in domestic demand growth, and the improved environment for the petrochemicals industry in the Asia Pacific region, have contributed to higher earnings growth. The increased volumes and enhanced degree of integration, arising from the start up of the integrated Jamnagar refinery and petrochemicals complex, together with our continuing focus on efficiency, productivity and cost reduction, are expected to positively impact future performance."

For the period ending 31 December 1999 the company expects to announce its results in the third week of January 2000.

Management discussion and analysis for the half year ended 30 September 1999
Sales for the half year ended 30 September 1999 were Rs. 8,673 crore ($1,989 million), up 18 per cent from the corresponding period. Net profit for the half year increased 22 per cent to Rs. 1,122 crore ($ 257million).

Sales growth of 18 per cent during the 6 months is comprised of the positive impact of 13 per cent from volume growth, and 5 per cent increase in product selling prices as compared to the corresponding period.

During the period under review, total production volume increased from 3.45 million tonnes to 3.91 million tonnes. The 13 per cent growth in volumes partially reflects the impact of the start up of two polypropylene lines of 400,000 tonnes per annum and one paraxylene line of 465,000 tonnes per annum at the Jamnagar petrochemicals complex. The production volume growth for the full year is likely to be substantially higher, consequent upon full commissioning of the Jamnagar petrochemicals complex.

The company sold over 95 per cent of its production within India, in keeping with its focus on the domestic market. Export opportunities were selectively pursued, to capture better economics. Export revenues, including deemed exports, increased by 47 per cent to Rs. 421 crore ($97 million).

Financial review
Operating profit, before other income, increased 19 per cent to Rs. 1,713 crore ($393 million).

Operating margin increased to 19.8 per cent, as a result of the following:

• strong volume growth
• higher product prices mitigating increased feed stock costs
• continued focus on efficiency, productivity and cost
• rationalisation of customs duty

Other income increased 22 per cent to Rs.279 crore ($64 million), owing to higher interest income from larger cash balances and investments.

The 22 per cent increase in interest expenses and 11 per cent increase in depreciation is primarily due to residual capitalisation of Hazira plants and commissioning of new facilities at Jamnagar.

The company's foreign exchange borrowings remained fully hedged during the half-year. As a result, there was no adverse impact arising from depreciation of the Indian rupee.

Business review

• Production volumes in the polyester business (PFY, PSF and PET) increased 9 per cent to 318,000 tonnes - higher than the growth rates achieved by the industry.
• During the period under review, Reliance announced its intention to enter into arrangements to utilise the entire 74,000 tonnes per annum polyester capacity of Raymond Synthetics Limited. This arrangement will lead to a 30 per cent increase in Reliance's polyester filament yarn capacity from the current 228,000 tonnes per annum to around 300,000 tonnes per annum. This will make Reliance the fifth largest PFY producer in the world, and increase its domestic market share to 32 per cent.
• Reliance intends to further participate in the restructuring of the domestic polyester industry, in a manner, which will strengthen its market leadership position, improve the competitive structure of the industry and create shareholder value.
• Production volumes in the fibre intermediates business (PTA and MEG) were up 17 per cent to 745,000 tonnes, higher than the growth rates achieved by the industry. The company's feed stock requirements for its PTA plants at the Hazira petrochemicals complex, will be fully met captively, from the paraxylene facilities at the Jamnagar petrochemicals complex.
• The polyester business continues to witness healthy double-digit growth in demand.
• The polymers business (PP, PE and PVC) reported a 13 per cent increase in production volumes to 583,000 tonnes. This partly reflects the impact of the recent commissioning of 400,000 tonnes per annum of PP capacity at the Jamnagar petrochemicals complex. The impact of the recently commissioned capacities will be seen more fully in the second half of the current financial year.
• The domestic demand for polypropylene and polyethylene witnessed extremely strong growth rates of 24 per cent, despite the increase in polymer prices. Demand for PVC remained stagnant due to low off-take by Government bodies and an extended monsoon.
• In the polymers segment, 170,000 tonnes of PE and PP were imported into India, during the first half. This reflects the potential for substantial import substitution from Reliance's new and upcoming PP facilities.
• Oil and gas production from Panna-Mukta-Tapti Oil and Gas fields recorded impressive growth. Oil production increased from 133,000 tonnes to 167,000 tonnes- growth of 25 per cent. Gas production increased by 33 per cent from 5.7 to 7.6 million cubic metres per day.
• Reliance continues to be a market leader in all its businesses. Imports were unable to make significant inroads in the Indian market, owing to Reliance's enhanced focus on customer service, its wider distribution network and competitive pricing strategies.
• The company's petrochemicals complex at Jamnagar, comprising the new PX and PP facilities, is slated for completion ahead of schedule during the current financial year.
• The second line of Paraxylene with a capacity of 465,000 tonnes per annum was commissioned in early October. The third line of Paraxylene with capacity of 465,000 tonnes per annum, and Polypropylene of 200,000 tonnes per annum, are expected to be commissioned in the coming few months.
• The completion of the Jamnagar complex during the current financial year will lead to a substantial increase in total production capacity to over 9 million tonnes per annum.

The unaudited financial results (provisional) are in accordance with the standard accounting practices followed by the Company in preparation of its statutory accounts.

The Company had revalued its plant and machinery located at Patalganga and Naroda during the financial year 1997-98. Consequent to the revaluation, there is an additional charge for depreciation of Rs 192 crore ($ 44 million) for the half year ended 30^th September 1999 and an equivalent amount has been withdrawn from General Reserve. This has no impact on the profits for the period.

During the half year under review, 400,000 tonnes per annum of Polypropylene and 465,000 tonnes per annum of Paraxylene facilities were commissioned at the Jamnagar Petrochemicals complex

Provision for taxation as applicable will be made at the end of the year.

Major elements of company's Year 2000 compliance plan have been completed as planned and all mission critical business systems, manufacturing systems and automation and control systems have been made "Y2K capable". Remediation of some non-critical systems will extend in third quarter of 1999, owing to plant scheduling and equipment lead times. With the contingency plans in place, the Company will be able to control any possible risk arising out of year 2000 problem. The company believes that cost being incurred for achieving Year 2000 compliance will not have any significant impact on its financial position or results of operations.

This statement has been placed before the Board at its meeting held on 20^th October 1999 and approved by it for release.