Reliance profit drops 7% in Q1

New Delhi, July 23: Mukesh Ambani-led Reliance Industries Ltd on Friday reported a 7 per cent drop in its June quarter net profit, hurt by a surge in expenses.

Consolidated net profit stood at Rs 12,273 crore in April-June compared with Rs 13,233 crore a year ago, the oil-to-telecom conglomerate said.

Expenses, including taxes, soared over 50 per cent, eating away gains in oil-to-chemicals (O2C), telecom and retail businesses. Expenses rose to Rs 1.31 lakh crore, as tax expenses climbed to Rs 3,464 crore.

The results indicated minimal impact of the second wave of Covid on the company’s operating and financial performance.

Half of the firm's pre-tax earnings (Ebitda) came from oil refining and petrochemicals and gas businesses. Consumer-facing businesses contributed 44 per cent.

Operating profit for the firm's cash-cow 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 inventory gains and recovery in spreads.

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.

The retail segment, comprising grocery, consumer electronics and fashion businesses, saw net profit more than double to Rs 962 crore. The profit surge was also due to the low base of last year from the nationwide lockdown.

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.