Hyderabad: Reliance Industries Ltd (RIL) surprised the markets on Thursday when it announced a better-than-expected 31% growth in consolidated profit at Rs 13,233 crore for the quarter ended June 2020 (Q1).
However, what’s surprising was the company’s Q1 consolidated revenue was actually down by a massive 42% to Rs 1,00,929 crore compared with Rs 1,74,087 in the year-ago quarter.
The decline in revenue was primarily due to fall in income from its oil-to-chemical business that was hit by a sharp correction in Brent crude price.
Retail business was also hit due to nationwide lockdown after the coronavirus outbreak and restrictions in store operations.
So what really aided RIL’s profit growth despite such a sharp fall in revenue?
Consolidated profit for the June quarter was mainly boosted by an exceptional one-time gain of Rs 4,966 crore from the sale of a 49% equity stake in Reliance BP Mobility to BP Global Investments.
The deal for the fuel retail business was originally signed in December 2019 and came into effect in the June quarter.
On top of that, the company’s current tax expense also slumped by a huge 71% to Rs 923 crore in the June quarter compared with Rs 3,193 crore a year ago.
So, if one looks at RIL’s profit before exceptional item and tax, it actually tumbled 40.5% year-on-year to Rs 8,542 crore during the June quarter.
Read more:Reliance Industries posts Rs 13,248 cr net profit for Jun qtr
A strong performance by Reliance Jio Infocomm was also a big contributor to the overall profit number.
The wholly owned subsidiary reported profit at Rs 2,520 crore for the June quarter, up by a whopping 183% from the year-ago quarter.
Operating revenue of the segment also jumped 33.7% year-on-year to Rs 16,557 crore.
In comparison, numbers from the other segment looked quite pale.
For instance, revenue from the refining business fell 54% to Rs 46,642 crore in the June quarter, while the segment’s operating profit dropped by a huge 55% to Rs 3,392 crore.
The revenue from petrochemical business also was down 33% to Rs 25,192 crore, while operating profit dipped 36% to Rs 2,892 crore.
Reliance Retail, too, witnessed a 17.2% year-on-year fall in revenue at Rs 31,633 crore, while operating profit declined 47.4% to Rs 1,083 crore.
(ETV Bharat Report)
