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RIL net profit drops 13.6%, goes in for biggest buyback

This article was posted on Jan 21, 2012 and is filed under Market News

On a day the country’s most valued company, Reliance Industries Ltd (RIL), reported its first net profit drop in the last two years, it tried to cheer investors by announcing its Rs 10,440-crore buyback plan. Analysts, however, see the scrip reacting unfavourably in the next session on Monday, despite the offer of up to 10 per cent premium on Friday’s closing price.

Margin compression in refining and petrochemicals businesses and lower gas output from its Krishna-Godavari block led RIL to post a 13.6 per cent drop in net profit for the October-December quarter of 2011-12.

The company’s net profit stood at Rs 4,440 crore in the quarter, compared to Rs 5,136 crore in the corresponding period last year. The company’s revenue, however, rose 42.3 per cent to Rs 85,135 crore.

RIL Chairman and Managing Director Mukesh Ambani blamed the weakness in economic conditions for reduced earnings, particularly in the refining and petrochemicals businesses. “Notwithstanding these challenges, RIL has delivered reasonably good results, with high operating leverage. Our focus remains on enhancing shareholder value by leveraging an exceptionally strong balance sheet, operating top decile assets and investing prudently in growth engines,” he said in a statement.

RIL’s board of directors also approved the buyback of up to 120 million fully paid-up equity shares of Rs 10 each, at a price not exceeding Rs 870 an equity share, payable in cash, up to an aggregate amount not exceeding Rs 10,440 crore, from the open market. For more visit: Business Standard

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