Billionaire Mukesh Ambani's Reliance Industries Ltd on Friday
reported a 7 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, the company 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 on operating and financial performance.
Diversified portfolio across the entire consumption basket led to record
earnings 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.
Its petrochemicals segment 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 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, Mukesh D 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 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," he said.
The O2C business, he said, generated strong earnings through an
integrated portfolio and superior product placement capabilities.
Commissioning of satellite cluster gas fields in KG-D6 block has helped
ramp up production, contributing to 20 per cent of gas production in India.
"This will be a major contribution to our country's energy
security," he said.
Ambani further said Jio has posted yet another record quarterly
performance with industry-leading operating metrics.
"COVID-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," he added.
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.
While the firm expanded e-commerce in the retail business, the telecom
segment saw quarterly traffic of over 20 exabytes or 20 billion GB -- a growth
of 38.5 per cent.
Total voice traffic during the quarter of 1.06 trillion minutes was
nearly 20 per cent higher than last year.
Jio is poised to continue its leadership position with
new offerings including Jio Next phone and strong growth in JioFiber, which
currently has over 3 million connected homes.
KG-D6 is currently producing about 18 million standard cubic metres per
day of gas.