RIL declined further on Thursday on sustained selling pressure from institutions.

The scrip of the diversified giant was down by 1.81% at Rs 260.55 on the BSE by 13:50 IST, off its high of Rs 267. A volume of over 1.4 million shares was recorded on the counter. The scrip has lost 5.6% from Rs 276.05 on 30 April 2003.

Dealers said the fall in the Reliance Industries stock was on sustained selling pressure from institutions. As per market buzz, Kotak Securities was said to have been an active seller of the stock today. In fact, institutions like HSBC, CL Securities, Jardine Fleming and Birla Securities were active sellers on the RIL counter since the last few sessions.

Dealers said that institutions have taken a negative view on the RIL stock following the controversy over its recently-launched mobile telephone services as well as on concerns over the company's huge investments in the telecom project.

However, analysts feel RIL's long-term prospects are good.

Reports of a special court in Delhi directing that RIL' top brass (the Ambani brothers) should be summoned in a case where the company's officials were alleged to have entered into a conspiracy to procure classified government documents, has also led to the negative sentiment towards the stock.

Meanwhile, RIL's fourth quarter performance was also not up to expectations. For the quarter ended 31 March 2003, the company recorded a 32% rise in net profit to Rs 1,101 crore (Rs 11.01 billion) on a 29% increase in net sales to Rs 13,962 crore (Rs 139.62 billion).

Analysts said the company's operating margin is down by around 4% to 14.5%, which is disheartening. In fact, were it not for the change in tax liability - deferred tax write-off of Rs 15 crore against a tax liability of Rs 280 crore (Rs 2.8 billion) last year - net profit growth would have been much lower. Also, the margins are under pressure at a time when petrochemicals product prices are looking up.

For the full year, RIL recorded a 27% increase in net profit to Rs 4,104 crore (Rs 41.04 billion) on a 10% rise in net sales to Rs 50,096 crore (Rs 500.96 billion).

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

The promoters hold 44% equity stake in RIL, while the public, domestic and foreign institutions hold 15%, 13% and 26% respectively.

BSE code: 500325