Reliance Industries has emerged as the most profitable company in the Financial Year (FY) 2014-2015. There was a steep fall in the prices of crude that declined the profits of state-run Oil and Natural Gas Corp. Ltd. (ONGC). This made the Mukesh Ambani-led organisation to top the list.
Reliance Industries with its varied business ventures in the fields of oil, retail, yarn, etc., recorded its highest ever profit, this year. Its total net profit as on 31st March, 2015 was Rs. 23,566 crores. Another reason for this high profit is the increase in its refining margins.
Reliance Industries and ONGC
The company to rank second was Tata Consultancy Services Ltd. Its net profit after tax was Rs. 19,852 crores. ONGC slipped to the third number with Rs.18,333.52 crores net profit. At independent level, too, ONGC holds third position with a net profit of Rs.17,733 crores as against Reliance Industries' Rs.22,719 crores.
Capitaline stated that the profit of Reliance Industries has grown by a compound annual growth rate (CAGR) of 10.75% in the past 10 years while that of ONGC was 1.96%. Nine years back, Reliance Industries' net profit was Rs.9,398 crores while that of ONGC was Rs.15,397.63 crores.
According to press release analysts predict that ONGC will face a lot of difficulty to regain its top position as Reliance Industries has almost completed its capital expenditure (capex) cycle. By the end of this FY, the capex will also start adding to Reliance Industries' profit as the company's expanded petrochemical capacity starts coming on stream.
Reliance Industries held the second position on the basis of market value, with a valuation of Rs.283,854.26 crores. TCS ranks first with Rs.511,345.53 crores and ONGC third with Rs.282,288.4 crores.
Reliance Industries undertook a $12 billion capex program, in March, 2012. The company aims to increase its profit twice from its core operations by 2016-17. Major portion of the capex was meant toset up a petcoke gasification plant and a refinery off-gas cracker complex. Besides, Reliance Industries has also decided to expand its petrochemical capacity by 60% by FY 2016-17.
In an analysts' meet held in mid-April, Reliance Industries informed that its petcoke project may be completed in the current FY. Through this, its gross refining margin (GRM) will increase by $2.5 per barrel.
Goldman Sachs and Credit Lyonnais Securities Asia (CLSA) predict the net profit of Reliance Industries will be over Rs.35,000 crores in 2016-17. Another analyst said that its profit will increase by 50%in the next two years.