Mukesh Ambani led Reliance Reliance Industries Limited (RIL) has posted 18.3% increase in its second quarter net profits 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 one-third of RIL’s overall EBITDA during the quarter.
The rise in profits was reported on 4.4% increase in its revenues to ₹1,63,854 crore.
Commenting on the results, Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited said: “The Company has reported record net profit for the quarter. These excellent results reflect 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 GRMs of $9.5 per barrel in the year ago period.
Revenue and EBIT from refining and marketing business fell by 1.6% and 6.9% respectively to ₹97,229 crore and ₹4,957 crore. Similarly, revenues and EBIT from petrochemicals business fell by 11.9% and 6.4% respectively to ₹38,538 crore and ₹7,602 crore.
The fall in revenue and EBIT from RIL’s core business of refining and petrochemicals were compensated by rise in revenue and EBIT of consumer facing businesses.
Organised retail saw 27% growth in revenues to ₹41,202 crore and 63.6% increase n EBIT to ₹2,035 crore while digital services saw 42.7% growth in revenues to ₹15,619 crore and 62.7% growth in EBIT to ₹3,322 crore.
“"I talked about the mix of digital and retail with 23% digital and 10% retail so that is 33%. It is almost like digital is almost equal to refining in mix sense,” said RIL’s joint CFO V Srikanth.
Company’s outstanding debt as on 30th September 2019 was stood at ₹291,982 crore ($ 41.2 billion) compared to ₹2,87,505 crore as on 31 st March, 2019. Cash and cash equivalents as on 30th September, 2019 were at ₹1,34,746 crore ($ 19.0 billion) compared to ₹1,33,027 crore as on 31 st March, 2019.
Talking about reduced corporate taxes, Mr. Srikanth said, ““Our effective tax during the quarter stood at 21% compared to 25% in the previous quarter due to the fall in MAT rates. We have still time decide on switching to the new tax regime.”
When asked for comments on the Saudi Aramco deal, Mr. Srikanth said, “Wecontinue to move ahead in terms of conversation, in terms of number of things that needs to be done, be it due diligence, structure finalization. Work is going on.”
RIL shares on BSE closed up 1.37% at ₹1,415.30 ahead of the results announcement. The shares touched its 52-week high of ₹1428 during the intra-day trade, valuing the company over ₹9 lakh crore, India’s first firm to cross the milestone.
"I am disappointed with the performance of oil to chemicals business. At this rate, I doubt if they will get the valuations of $75 billion for the Saudi Aramco deal. The GRMs of $9.4 per barrel is disappointing as the company didn't maintained the differential margins with the benchmark Singapore margins. Reliance Retail and Reliance Jio lift the show for RIL. The company would have benefited around ₹1000 crore from lower taxation,” investment advisor S P Tulsian told The Hindu .
