RPL plans maiden dividend, seeks nod for marketing

RPL plans maiden dividend, seeks nod for marketing
ENS ECONOMIC BUREAU

Ahmedabad/Mumbai, Sept 13: Reliance Petroleum Ltd is poised to declare a hefty maiden dividend of at least 20 to 30 per cent within the first year of its Rs 14,250-crore refinery at Jamnagar commencing operations. Indications to this effect were given by Reliance group chairman Dhirubhai Ambani on Wednesday in his speech to shareholders at 9th annual general meeting of the company in Jamnagar.

``Looking at the operating and financial performance in the first few months of the current financial year, we feel confident that RPL will be able to reward its shareholders by disbursing its maiden dividend in the current year, which is the very first year of its commercial operations. This will be a unique achievement for a capital-intensive greenfield project of this size, scale and magnitude,'' Ambani said.

Given the fact that the company has pegged its annualised earnings per share at Rs 3 and cash earnings per share at Rs 4.3 (company officials however say it is premature to forecast the exact figures), market observers expect the dividend to be in the vicinity of 20 to 30 per cent even if the company retains 10 per cent of the declared net profit of Rs 324 crore on total sales figures of Rs 5,983 crore.

On RPL's future plans, Ambani indicated that the company would leverage these strengths in line with global trends to reach directly to end customers through robust infrastructure facilities and efficient logistics and provide the highest quality products and services ``thereby delivering a complete value proposition to customers''.

The chairman stated that the company has finalised a three-pronged strategy for optimising operating costs which would include maximising production from existing assets, further improvement in product mix and better energy conservation. ``A combination of capital and operating productivity will enable the RPL refinery to achieve its goal of becoming the lowest-cost producer of petroleum products,'' he said.

Marketing rights: RPL said it has asked the government for rights to market petro products from its Jamnagar refinery. "RPL has applied for the marketing rights for the controlled products, as it meets all the criteria specified in this regard by the Government, as per the gazette notification of November 1997," Ambani said.

Under the present dispensation of administered pricing mechanism (APM), the marketing rights are given only to the state-owned oil companies and the government is believed to have turned down Reliance's request for marketing rights made two years ago.

Oil Ministry sources said that the issue involved management of oil pool, which presently has a deficit of Rs 9,000 crore, and cross subsidies to make kerosene and LPG available at lower prices. However, the Cabinet has earlier decided that a company could be given marketing rights provided it invested at least Rs 2,000 crore for setting up refinery or oil sector infrastructure.

Consequently, IOC has tied up for marketing of 50 per cent of Reliance's products in the controlled scenario till 2002. Thereafter, the national oil company would lift the entire products for the next seven years.

RBI nod for hedging: Reliance Petroleum has received the much awaited one-time clearance from the Reserve Bank of India for hedging its underlying exposures in crude oil and petroleum products in the international markets.

The Ambanis had approached RBI on Monday, September four, a day after the bank invited applications, the official said. RPL chairman Dhirubhai Ambani also said in the company's first annual general meeting held today in Jamnagar, Gujarat that RPL would adopt an integrated approach to risk management for hedging of petro products and risk mitigation of its overall margins in the international oil market.

Late last month, Union government had extended hedging facilities in crude and petro products to the corporates. RBI's approval was subject only to monthly reporting of transactions through concerned authorised dealers, the official said adding no approval was required for individual transactions.