Reliance Industries declined further on Friday on sustained selling pressure from institutions.

By 12:25 IST, the stock of the diversified company slipped by 1.97% to Rs 286.70 on the BSE, recording a volume of over 7 lakh shares. In the last two sessions, the Reliance Industries scrip shed 3.15% from Rs 296.05 on 22 January 2003.

As per market buzz, today's weakness in the RIL scrip was on selling pressure from institutions. State Bank of India Mutual Fund and Life Insurance Corporation were said to be active sellers on the counter.

Analsyts said there were concerns like the company not furnishing further details about its gas discovery in Gujarat. Earlier, on 9 January 2003, there were reports that the company has struck significant oil and gas reserves in an exploration block off the Gujarat shore.

RIL has struck hydrocarbons in the very first well it drilled in the GK-OSJ/1 block in the shallow waters of Gulf of Cambay. The gas production from the new find was estimated to be close to one million standard cubic metres per day. The block is one of the five blocks RIL acquired from Tullow Oil of UK for just over one million pounds. It is close to the four hydrocarbon discoveries Scottish explorer Cairn Energy Plc had made, of which Lakshmi gas well has already started commercial production.

Secondly, there were also concerns over the company's telecom services business. Dealers said that with competition increasing in this segment (which is already facing slowdown) there were doubts as to how RIL will cope up with its competitors. Also, the gestation period for the huge investments made in the telecom services business is quite long.

On 28 December 2002, RIL launched mobile telephony services nationwide through Reliance Infocom, the day being the birthday of its founder late Dhirubhai Ambani. Reliance Infocomm, an arm of RIL, is expected to roll out basic telephony services in 17 states. It has already laid 40,000 km of optic fibre across the country to cover various facets of telecom services including basic, Internet and long distance telephony.

Reliance Infocomm is expected to provide cheaper services. It is banking on a lower margin-high volume game. RIL has reportedly invested a huge sum in Reliance Infocomm.

RIL is basically a petrochemicals maker (the largest in the country) and a petroleum refiner (after it merged group company Reliance Petroleum with itself last year). The company has emerged as among the largest private sector players in the oil exploration segment as well.

In late October 2002, RIL said that its Krishna-Godavari basin (Andhra Pradesh) gas project will go on stream around mid-2004. The cost of development of the project may total $1.3 billion, it added.

Earlier, RIL had indicated gas reserves in the range of 7 trillion cubic feet (tcf), or 45 million standard cubic metres per day, in its new discovery off the country's eastern coast. However, later reports indicated that RIL's D-6 deepwater block in the KG basin may contain up to 15 tcf reserves of natural gas.

Recently, RIL's initiative in the oil and gas exploration segment received a further boost when it was awarded a new set of oil and gas blocks. Out of the 23 blocks put up by the government under the NELP-III, RIL, in consortium with Hardy Oil of UK, bagged nine blocks including seven of the nine prime deepwater blocks on offer.

The Centre has cleared the acquisition and RIL is likely to sign the production sharing contract agreement soon.

For the second quarter ended 30 September 2002, RIL registered a 25% rise in net profit to Rs 1,002 crore (Rs 10.02 billion) on a 10% increase in sales to Rs 16,206 crore (Rs 162.06 billion).

The petrochemicals business contributed 44.5% of the merged entity's (Reliance Petroleum with RIL) Q2 sales and 55% of operating profit. The refining business contributed 54% to sales and 37% to operating profit.

As on 30 September 2002, the promoters' holding in RIL was at 43.7%, while the public, domestic and foreign institutions held 15.3%, 13% and 26.4% respectively.

BSE Code: 500325