Reliance net falls 15%; plans to raise Rs 20,000 crore

Billionaire Mukesh Ambani's Reliance Industries Ltd on Friday reported a 15 per cent drop in its net profit for the December 2022 quarter as higher finance costs, the new windfall profit tax and depreciation neutralised strong operating performance.

The oil-to-retail-to-telecom conglomerate's consolidated net profit of Rs 15,792 crore or Rs 23.34 per share, in October-December compares with Rs 18,549 crore, or Rs 28.08 a share, earnings in the same period a year back, according to company's stock exchange filing.

The firm plans to raise Rs 20,000 crore more to fund expansion across the business - from building Giga factories for a new energy ecosystem to 5G telecom service rollout and retail expansion.

Also Read — Reliance Jio Q3 net profit rise 28.3% to Rs 4,638 cr

While finance cost soared 36.4 per cent to Rs 5,201 crore, other expenses were up by Rs 5,421 crore. Debt, which the company is using to fund its massive green energy foray and expansion in telecom and retail business, soared almost Rs 59,000 crore to Rs 3,03,530 crore in the third quarter of the current fiscal year when compared to the year-ago period.

Depreciation increased by 32.6 per cent to Rs 10,187 crore due to an expanded asset base across all the businesses and higher network utilisation in the digital services business, a company statement said.

Gross revenue was up 15 per cent at Rs 2,40,963 crore.

Sequentially, the net profit was up 15 per cent from Rs 13,656 crore in July-September 2022.

Operationally, all businesses were firing all cylinders. EBITDA at Rs 38,460 crore, was up 13.5 per cent year-on-year led by consumer businesses and higher oil and gas prices aiding the upstream segment.

While digital services, which includes telecom, EBITDA at Rs 12,900 crore was 26 per cent higher, retail EBITDA was up 25 per cent at 4,786 crore. Oil and gas EBITDA almost doubled to Rs 3,880 crore.

However, the mainstay oil refining and petrochemicals business, called O2C, was muted with a 3 per cent rise in EBITDA to Rs 13,926 crore, hurt by a margin squeeze in the chemicals segment.

Reliance said the windfall profit tax on the export of diesel and ATF impacted the profit for the quarter at Rs 1,898 crore.

The government had in July 2022 slapped a new tax on the export of petrol, diesel and jet fuel (ATF) as well as on domestically produced crude oil to scoop some of the gain being made by companies from higher global energy prices.

Telecom arm Jio reported a 28.6 per cent jump in net profit to Rs 4,881 crore on customer base swelling to 43.3 crore and a 17.5 per cent increase in per-user earnings.

Retail business net profit was up 6.2 per cent to Rs 2,400 crore on the addition of 789 more stores, growth across consumption baskets, and rising contribution from digital channels led to a rise in retail segment profits.

The company said its net debt after considering Rs 1,93,282 crore cash balance, was lower than annualised EBITDA.

Commenting on the results, Mukesh D Ambani, Chairman and Managing Director, Reliance Industries Ltd said: "All segments contributed to the robust growth in consolidated EBITDA on a y-o-y basis".

In the O2C business, middle distillate product fundamentals remain strong with firm demand, constrained supply, and high natural gas prices in Europe. Downstream chemical products witnessed margin pressure with excess supply and relatively weak regional demand. "Our focus remains on operating safely and reliably producing vital fuel and materials for consumers," he said.

Telecom arm Jio delivered record revenues and EBITDA driven by strong momentum in customer growth and data consumption. "This quarter, we launched True 5G services. It is now available in 134 cities and towns in India, enhancing the customer experience while enabling next-generation services."

On retail business, he said the firm was focused on delivering superior products and value to customers while improving profitability.

"Our upstream business delivered robust growth with sustained production from KG D6 block along with a higher realisation. We are on track to reach 30 million standard cubic metres per day of gas production in FY24 after the commissioning of the MJ field. This will significantly enhance India's energy security in a volatile energy market environment."

Reliance, he said, is making rapid progress towards the implementation of new energy Giga factories at Jamnagar in Gujarat.

"Our strong balance sheet and robust cash flows remain the cornerstone of our commitment to growing existing businesses as well as investing in new opportunities," he added.

The company's board at its meeting on Friday approved raising Rs 20,000 crore fresh debt through non-convertible debentures (NCDs) on a private placement basis, Reliance said in a separate stock exchange filing.

Reliance said the windfall profit tax on the export of diesel and ATF impacted the profit for the quarter at Rs 1,898 crore.