Telecom and retail businesses drive Reliance Industries’ profit higher

Revenue falls as operating conditions remain 'challenging' and fuel retail business transfers to joint venture with BP

Reliance Industries said it has added more than 50,000 jobs in consumer businesses and last-mile delivery since the beginning of the pandemic last year. Reuters

Indian business conglomerate Reliance Industries’ net profit soared 12.5 per cent during the last quarter of 2020, it said in a statement on Friday.

The Mumbai-based conglomerate said its consolidated net profit rose to more than 131 billion Indian rupees ($1.79bn) in the last three months of 2020, from 116.4bn rupees a year earlier. Operating revenues fell 22 per cent, however, to 1.23 trillion rupees.

“At a time when the Indian economy is poised for a confident recovery, we at Reliance are humbled that we have been able to contribute to it with our company’s impressive performance in the third quarter of FY21,” Mukesh Ambani, chairman and managing director of Reliance Industries, said in the statement.

“We have delivered strong operational results during the quarter with a robust revival in oil-to-chemicals and retail segments, and a steady growth in our digital services business.”

The decline in group revenue came because some of its business units were “impacted by the challenging operating conditions", Reliance said, as well as the transfer of its fuel retail business to a new joint venture with BP, which paid $1 billion for a 49 per cent stake in earlier this year. It also lost some revenue by converting its Reliance Market stores to fulfilment centres as part of its ecommerce rollout plan in a number of cities.

Reliance Industries said it has added more than 50,000 jobs in consumer businesses and last-mile delivery since the beginning of the pandemic last year.

Indian billionaire Mr Ambani added in the statement that Reliance Industries’ oil-to-chemicals platform is being transformed, moving further downstream to create more eco-friendly and affordable energy and materials.

During the quarter, Reliance Retail, the retail arm of the conglomerate, raised 472.65bn rupees of capital for a 10.09 per cent equity stake, making it the largest fundraise in the sector. Saudi Arabia's Public Investment Fund, Abu Dhabi Investment Authority, Mubadala Investment Company, Singapore's sovereign wealth fund GIC, global private equity firm TPG Capital and General Atlantic were among the investors to buy stakes in the business.

Reliance Retail Ventures runs India’s largest consumer electronics chain, supermarkets, a cash and carry wholesaler, fast fashion outlets and JioMart, an online grocery store. The unit opened 327 stores during the quarter and now has 12,201 operational stores.

The country’s largest retail chain recently bought the retail and wholesale businesses of competitor Future Group that also included its logistics and warehousing units. It also spent 1.82bn rupees acquiring a 96 per cent stake in homeware retailer Urban Ladder, the statement said.

Reliance Industries recorded strong growth in its telecoms arm, Jio, with profits soaring 15.5 per cent during the October-December 2020 period to 34.9 billion rupees. Year-on-year profits rose 13 per cent. Jio’s revenue increased 5.3 per cent during the quarter to 228 billion rupees as it added 5.2 million customers, with a total customer base of almost 411 million as of December 31, 2020, according to the statement.

During the quarter, Google invested 337.37bn rupees into Jio Platforms for a 7.73 per cent stake. In total, Reliance Industries raised more than $20bn through sales of stakes in Jio Platforms last year.

Mr Ambani promised last month that Jio will be the first company to roll out 5G in India in the second half of this year. The group’s wireless operator, Reliance Jio Infocomm, has now begun advanced tests to prepare the fifth-generation, high-speed network, it said in the statement.

“Jio will continue to accelerate the roll-out of its digital platforms and indigenously developed next generation 5G stack and make it affordable and available everywhere,” Mr Ambani said in the statement. “Jio is determined to make India 2G-mukt,” or 2G-free, he said.

India’s most valuable company is expanding into retail and technology in a bid to tap into the country's consumer boom and move away from its core oil-refining business.