Every 5 per cent devaluation of the rupee against the dollar adds proportionately to the company's bottomline since its pricing is entirely related to import parity levels. So, if at all there is further protection from the government for the industry (including anti-dumping action), as well as depreciation of the rupee, the company will add substantially to its bottomline in 1998-99 unless international prices crash. Listing these crucial factors at a press conference in Mumbai, Reliance managing director Anil Ambani said the growth, based on the above factors, would come against the backdrop of a first quarter of 1998-99 when price realisation had improved substantially aftera last quarter of 1997 when due to the Asian economic turmoil, the petrochemicals market had seen a tremendous decline in prices.

He said the outlook had improved somewhat with the end of destocking in Korea and some improvements in the regional demand and supply positions However, more than a dozen projects on the drawing board had to be cancelled and more than 30 ongoing projects were derailed as a result of the Asian economic shock, and therefore, financiers would be extremely careful before funding petrochemical projects. He said Reliance had faced the downturn in the petrochemicals industry through aggressive domestic pricing, leveraging the huge domestic capacities it has built up (it is the largest petrochemicals player in Asia), operated all plants flat out, and monitored receivables and other production parameters very carefully.

Reliance has achieved a 54 per cent rise in net sales (which includes Rs 3,600 crore in inter-divisional transfers) and a 25 per cent increase in net profit. It hasachieved this despite a 50 per cent fall in purified terepthalic acid prices, of which it has a 70 per cent market share, and equally precipitate price falls in other product groups, of which polyester and plastics are most important.

He said there was two major factors behind Reliance's success in spite of difficult conditions: a strategy of pre-emptive capacity creation, and the ability to visualise and capture a growing market size. The other factor was that Reliance had concentrated its efforts on marketing and distribution in a market which grew despite "complaints of industrial slowdown from other companies," Ambani said. As much as 97 per cent of Reliance's record turnover came from sales in the domestic market. He said Reliance's value-creation targets over the last few years had been three: doubling the company's value, attaining a sharp increase in compounded annual growth rate of earnings, and attaining stability despite fluctuations.