Hit by higher expenses, Reliance Industries net drops 7% in Q1

New Delhi: 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.