India conglomerate Reliance’s profits hit by oil business slump


Indian conglomerate Reliance Industries reported weaker-than-expected quarterly profits on Friday, weighed down by its oil-to-chemicals arm even as its consumer-facing divisions posted healthy profits.

Reliance, owned by Asia’s richest man Mukesh Ambani, reported a 10.8 percent fall in net profit to 160.1 billion rupees ($1.95 billion) in the three months to June 30, compared to the same period last year.

Revenues from operations for India’s most valuable company by market capitalisation slipped by 5.3 percent year-on-year to 2.1 trillion rupees ($25.7 billion).

Revenues from Reliance’s oil-to-chemicals business — which account for more than half of the company’s overall sales — came in at 1.33 trillion rupees ($16.2 billion), a 17.7 percent decline from the previous corresponding period.

“O2C (oil-to-chemicals) segment delivered a resilient performance despite short-term macro challenges,” Reliance said in its earnings report, adding that the year-on-year readings were skewed due to last year’s “historic high” refining margins.

“Demand was impacted by destocking on recessionary fears and high interest rates, as well as slower-than-expected ramp-up in China markets.”

Telecoms arm Reliance Jio saw net profit lift by 12.18 percent to 48.6 billion rupees ($593 million) from the previous corresponding period, and by 3.12 percent from the first three months of the year.

It added more than nine million new subscribers for the period.

Revenues from Reliance’s retail business jumped 19.46 percent on-year to 699.4 billion rupees ($853 billion) for the quarter.

The Mumbai-headquartered firm reported a record-high footfall of 249 million for the quarter, with 555 new store openings.

The company declared a dividend of nine rupees per share.

Reliance’s multibillion-dollar enterprise has been driven by its oil and petrochemicals businesses. In recent years, the company has diversified into new areas including telecoms and retail.

On Thursday, the company spun off Jio Financial Services in a bid to expand its reach into the consumer lending space.

Reliance Industries shares closed 3.19 percent lower in Mumbai ahead of the earnings announcement on Friday.


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