Defying the general industry slowdown, Reliance Industries has notched up sales of Rs 13,404 crore for the financial year ended March 31, 1998, a whopping 54 per cent increase over the previous year's sales of Rs 8,730 crore. Net profit at Rs 1,653 crore increased 25 per cent over the previous year, even as product prices plunged below the average level during the last 10 years.

The board of directors of the company has recommended a dividend of Rs 3.50 per Rs 10 share, which constitutes a total payout of Rs 327 crore for the year. Last year, on half the present equity, the company had declared a dividend of Rs 6.50 per share. The price realisation, in some cases 50 per cent lower than last year, was compensated by a 91 per cent sales volumegrowth as a result of the commissioning of all new plants at the Hazira petrochemicals complex. The lower prices accelerated the domestic demand, which grew substantially despite an otherwise generally prevailing industrial slowdown. Reliance captured this demand through pre-emptive capacity expansion and implementation. Thus, 97 per cent of the Reliance production was absorbed by the domestic market (with market shares between 33 and 78 per cent in different product groups), and despite a nearly five-fold rise, exports into a chaotic international market accounted for only 2.7 per cent of the turnover.Speaking to newspersons at the company's first ever post-results press conference, Reliance Industries managing director Anil Ambani said: "We at Reliance are enthused by the strong performance in possibly the most challenging times faced by the global petrochemical industry in the recent past, especially in the context of the Asian economic crisis."

The petrochemicals company recorded operating profits of Rs2,887 crore during 1997-98, up 48 per cent over the previous year, while the cash profits at Rs 2,383 crore grew by 34 per cent from the previous year's levels of Rs 1,778 crore.

Interest cost increased sharply to Rs 504 crore, from Rs 170 crore during the previous year.

Even provision for depreciation shot up from Rs 410 crore to Rs 667 crore during the period.

"The higher interest charges were a result of lower capitalisation since most of our plants went into production," Ambani said.

During the year the company's share capital more than doubled to Rs 934 crore following a 1:1 bonus issue and partial conversion of over 42 per cent of the outstanding Euro-convertible bonds. As a result the earnings per share (EPS) dipped sharply to Rs 17.6, from Rs 28.7 in the previous year. Even the cash earnings per share at Rs 24.8 was lower than the previous year's CEPS of Rs 37.6. The company has recorded an annual EPS growth (compounded) of 22 per cent over the last five years.

According to Ambani, "Relianceachieved its overall financial performance from strong revenue growth and stability of operating margins, and due to its sustained globally competitive cost positions, its single-minded focus on productivity and efficiency, and its conservative financial policies."

Even as the company continued to scale new heights under the various financial parameters, the company's production increased sharply to 5.2 million tonnes, from 1.8 million tonnes during 1996-97.

The total exports (including deemed exports) recorded a very impressive four-fold growth from Rs 107 crore to Rs 366 crore. Reliance Industries will base its growth strategy over 1998-99 on four key factors: a projected correction in the petrochemicals cycle, fluctuation in international prices into which Reliance is locked, the exchange rate dynamics of the rupee and the US dollar, and efficiency factors internal to Reliance's operations.

Ambani said that the growth based on the above factors would come against the backdrop of a first quarter of1998-99 when price realisation had improved substantially after a 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 financing 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.