Reliance Industries Limited (RIL) has posted an 18% increase in its second quarter net profit to ₹11,262 crore led by better performance from consumer-facing businesses of retail and telecommunications and reduced corporate taxes.
Consumer facing businesses accounted for a third of RIL’s overall EBITDA during the quarter. The rise in profit came on a 5% rise in revenue to ₹1,63,854 crore.
Mukesh D. Ambani, CMD, RIL, said: “The company has reported a record net profit for the quarter. These excellent results reflect the benefits of our integrated oil-to- chemicals (O2C) value chain and the rapid scale-up of our consumer businesses.”
RIL’s gross refining margins (GRM) during the quarter stood at $9.4 per barrel compared to GRM of $9.5 per barrel in the year-ago period.
Revenue and EBIT from refining and marketing business fell by 1.6% and 6.9% respectively to ₹97,229 crore and ₹4,957 crore. Similarly, revenue and EBIT from petrochemicals business fell by 11.9% and 6.4% respectively to ₹38,538 crore and ₹7,602 crore.
The fall in revenue and EBIT from RIL’s core business of refining and petrochemicals were compensated by a rise in revenue and EBIT of consumer-facing businesses.
Retail business
Organised retail saw 27% growth in revenue to ₹41,202 crore and 63.6% increase n EBIT to ₹2,035 crore while digital services saw 42.7% growth in revenue to ₹15,619 crore and 62.7% growth in EBIT to ₹3,322 crore.
“”I talked about the mix of digital and retail with 23% digital and 10% retail so that it is 33%. It is like digital almost equal to refining in a mixed sense,” said V. Srikanth, joint CFO, RIL.
Outstanding debt
RIL’s outstanding debt as on September 30, 2019 was ₹2,91,982 crore ($41.2 billion) compared with ₹2,87,505 crore as on March 31, 2019. Cash and cash equivalents as on September 30,2019 were ₹1,34,746 crore ($19 billion) compared with ₹1,33,027 crore as on March 31,2019.
About reduced corporate taxes, Mr. Srikanth said, “Our effective tax during the quarter stood at 21% compared with 25% in the previous quarter due to the fall in MAT rates. We still have time to decide on switching to the new tax regime.”
Asked for comments on the Saudi Aramco deal, Mr. Srikanth said, “We continue to move ahead in terms of conversation, in terms of number of things that needs to be done. Work is going on.”
RIL shares on BSE closed up 1.37% to ₹1,415.30.
“I am disappointed with the performance of oil-to- chemicals business. At this rate, I doubt if they will get the valuation of $75 billion for the Saudi Aramco deal. GRMs of $9.4 per barrel is disappointing as the company didn’t maintain the differential margins with the benchmark Singapore margins. Reliance Retail and Reliance Jio lifted the show for RIL. The company would have benefited by around ₹1,000 crore from lower taxation,” investment adviser S. P. Tulsian told The Hindu.
