New Delhi: Billionaire Mukesh Ambani’s Reliance Industries Ltd reported Friday a seven per cent drop in its June quarter net profit as higher expenses negated smart gains across businesses from O2C to telecom and retail. Consolidated net profit of Rs 12,273 crore in April-June compared with Rs 13,233 crore a year ago, Reliance Industries said in a statement.
Expenses, including taxes, soared over 50 per cent, neutralising gains in oil-to-chemicals (O2C), telecom and retail businesses. Expenses rose to Rs 1.31 lakh crore, including tax expenses climbing to Rs 3,464 crore.
The results indicated minimal impact of the second wave of Covid-19 on operating and financial performance. Diversified portfolio across the entire consumption basket led to record earnings for Reliance Industries even in a subdued quarter.
Half of the firm’s pre-tax earnings (EBITDA) came from traditional oil refining and petrochemicals and gas businesses. Consumer-facing businesses contributed 44 per cent.
Operating profit for the firm’s cash-cow oil-to-chemicals (O2C) business rose on better refining and petrochemical margins. Segment EBITDA jumped 50 per cent to Rs 12,231 crore.
The operator of the world’s largest oil refining complex saw improvement in earnings from turning crude oil into fuel on account of inventory gains and recovery in spreads. The petrochemicals segment of Reliance Industries too stayed healthy.
Jio Platforms, which houses the firm’s telecom arm, posted a 45 per cent jump in net profit to Rs 3,651 crore in April-June as it added over 4.2 crore net subscribers. But the larger consumer base of 44 crore also meant that its per user earning remained flat at Rs 138.4 per month.
Both data and voice traffic saw significant rise as most people worked from home and students took classes online.
With a resilient grocery business and strong growth in consumer electronics and fashion, the retail segment saw net profit more than double to Rs 962 crore. The profit surge was also due to the low base of last year when the nation was under a stringent Covid-19 lockdown, which muted economic activity. The firm added 12 stores to take the number of stores to 12,803.
The start of gas production from newer discoveries in the eastern offshore KG-D6 block led to the company seeing its third straight quarter of pre-tax profits in the segment after many years.
Commenting on the results, Ambani, chairman and managing director of Reliance Industries, said the company ‘delivered robust growth despite facing a highly challenging operating environment caused by the second wave of the Covid-19 pandemic’.
“The results of the first quarter of FY2022 clearly demonstrate the resilience of Reliance’s diversified portfolio of businesses that cater to large parts of the consumption basket,” Ambani said.
Ambani further said Jio has posted yet another record quarterly performance with industry-leading operating metrics. “Covid-19 related restrictions on store operations during the quarter impacted our retail business operations and profitability. This is a temporary phenomenon. We remained focused on ensuring supplies of necessities, including food, grocery, health and hygiene products through a combination of online-offline channels,” he said.
Reliance has stepped up efforts in creating partnerships with small merchants and digital engagement with consumers. “This is creating a newer and inclusive model of growth. I am confident that the retail business is poised to create exponential value and growth,” added Ambani.
Reliance’s consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter was up 27.6 per cent year-on-year at Rs 27,550 crore, a record quarterly performance.