Reliance Industries First Indian Company To Near $100 Billion In Revenue – Profit Remains Under Stress Due To Weaker Petrochem Margins
Reliance Industries First Indian Company To Near $100 Billion In Revenue – Profit Remains Under Stress Due To Weaker Petrochem Margins
Reliance Industries, managed by Mukesh Ambani, has survived the impact of geopolitical tensions, mainly the Russia-Ukraine war and, before that, the COVID-19 epidemic, although the effect is evident on the company’s bottom line.
Mukesh Ambani’s oil-to-telecom conglomerate recorded a lower-than-expected net profit in FY22 and a drop in profitability for the first time.
In the March quarter, it reported a net profit of 18,000 crore on revenue of 2.11 lakh crore, a decrease of 12.25 per cent in profit but a 10.77 per cent increase in revenue. Profit growth of 4.7 per cent and revenue growth of 14.5 per cent was predicted by analysts.
The impact is due to low margins in its most profitable businesses, oil-to-chemicals and gas. This was not entirely unexpected since analysts had predicted lower petrochemical margins due to rising oil prices.
According to the company’s March quarter earnings, weak naphtha cracking economics and a supply overhang in fibre intermediates hurt downstream product margins in oil-to-chemicals.
In addition, the EBITDA margin in the petrochemicals and oil to gas industries fell.
On the other hand, Reliance Industries has become the first Indian firm to cross $100 billion in revenue, with revenue rising over 50% to 7.21 trillion (93.78 billion) in FY22.
The company reported strong performance in other segments, like Reliance Jio and Reliance Retail. Reliance Jio’s net profit increased by 14 per cent between January and March 2022, the fastest growth in five quarters, but it fell short of analyst projections of a 5,000 crore quarterly profit.
An $8 per share dividend has been declared for the fiscal year ending March 31, 2022.
“I am particularly pleased with our Company’s growth in the New Energy and New Materials sectors. Reliance Industries chairman and managing director Mukesh D. Ambani said, “We are moving ahead with developing our New Energy Giga Factories complex across 5,000 acres in Jamnagar.”
About Reliance Industries
Reliance Industries Limited is an Indian multinational enterprise headquartered in Mumbai. Its diverse interests include energy, petrochemicals, natural gas, retail, telecommunications, mass media, and textiles. Reliance Industries is one of India’s most profitable businesses and the country’s largest publicly traded firm in terms of sales and market capitalisation. With nearly 236,000 employees, it is India’s tenth largest employer. As of March 31, 2022, RIL has a market capitalisation of US$243 billion.
As of 2021, the company is placed 155th on Fortune’s Global 500 list of the world’s most powerful corporations. Reliance continues to be India’s top exporter, accounting for 8% of the country’s gross product exports, with access to over 100 nations’ marketplaces. Reliance is responsible for about 5 per cent of the Indian government’s customs and excise duty revenue. In India, it is the top income taxpayer in the private sector. The corporation has a negative free cash flow. Reliance Industries became the first Indian company to achieve $100 billion in revenue.
History
1960–1980
Reliance Commercial Corporation was co-founded by Dhirubhai Ambani and Champaklal Damani in the 1960s. The partnership terminated in 1965, and Dhirubhai took over the firm’s polyester business. Reliance Textiles Engineers Pvt. Ltd. was founded in Maharashtra in 1966. In the same year, it opened a synthetic textiles mill in Naroda, Gujarat. It was renamed Reliance Industries Limited on May 8, 1973. In 1975, the company moved into textiles, with “Vimal” being its most well-known brand later on. In 1977, the company launched its IPO. The issuance was seven times oversubscribed.
Sidhpur Mills, a textiles company, was merged with the corporation in 1979. With financial and technical assistance from E. I. du Pont de Nemours & Co., US, the company extended its polyester yarn industry by establishing a Polyester Filament Yarn Plant in Patalganga, Raigad, Maharashtra in 1980.
1981–2000
The company’s name was changed from Reliance Textiles Industries Ltd. to Reliance Industries Ltd. in 1985. Between 1985 and 1992, the company increased its installed capacity for polyester yarn production by almost 1,45,000 tonnes per year.
From 1991 to 92, the Hazira petrochemical factory was put into operation.
Reliance Petroleum issued a global depository issue in 1993 to raise cash from abroad capital markets. It was India’s first private sector company to be rated by international credit rating agencies in 1996. “BB+, stable outlook, restricted by the sovereign ceiling,” according to S&P. “Baa3, Investment grade, limited by the sovereign ceiling,” according to Moody’s.
In 1995/96, the business launched Reliance Telecom Private Limited in India as a joint venture with NYNEX of the United States.
RIL introduced packaged LPG in 15 kg cylinders under the Reliance Gas brand in 1998/99.
The integrated petrochemical complex in Gujarat, the world’s largest refinery, was built between 1998 and 2000.
2001 onwards
In terms of all necessary financial indicators, Reliance Industries Ltd. and Reliance Petroleum Ltd. were India’s two largest firms in 2001. Reliance Petroleum and Reliance Industries combined in 2001–02.
Reliance announced India’s largest gas discovery in nearly three decades (at the Krishna Godavari basin) and one of the world’s largest gas discoveries in 2002. Natural gas in place amounted to more than 7 trillion cubic feet or nearly 120 crore (1.2 billion) barrels of crude oil. This was the first time an Indian private enterprise discovered something.
RIL bought a controlling stake in Indian Petrochemicals Corporation Ltd. (IPCL), India’s second-largest petrochemicals firm, from the government of India in 2002–03 and renamed it Vadodara Manufacturing Division (VMD). When IPCL and RIL amalgamated in 2008, RIL took over IPCL’s Nagothane and Dahej industrial facilities.
The corporation restructured its business in 2005 and 2006 by separating its investments in power generation and distribution, financial services, and telecommunication services into four different entities.
With the launch of its retail shop concept under the brand name ‘Reliance Fresh’ in 2006, Reliance joined the organised retail business in India. Reliance Retail operated around 600 outlets in 57 Indian cities by the end of 2008.
Reliance Industries awarded 1:1 bonus shares to its stockholders in November 2009.
Reliance joined the internet services industry in 2010 with the acquisition of Infotel Broadband Services Limited, the only winning bidder in the government of India’s pan-India fourth-generation (4G) spectrum auction.
Reliance and BP announced a joint venture in the oil and gas industry the same year. For $7.2 billion, BP purchased a 30% stake in 23 oil and gas production sharing contracts operated by Reliance in India, including the KG-D6 block. Reliance has launched a 50:50 joint venture with BP in India for gas sourcing and marketing.
RIL formed a joint venture with Russian firm Sibur in 2017 to build a Butyl rubber plant in Jamnagar, Gujarat, that is expected to be operational by 2018.
Reliance added Fynd to its e-commerce portfolio in August 2019, primarily for its consumer businesses and mobile phone services.
Reliance Industries Limited (RIL) announced on August 18, 2021, that it had closed its manufacturing operations in Nagothane, Maharashtra.
Shareholding
RIL has around 644.51 crore shares outstanding (6.44 billion). The promoter family, the Ambani family, owns approximately 49.38 per cent of the total shares, while public shareholders, including FIIs and corporate bodies, own the remaining 50.62 per cent.
With 7.98 per cent of the company’s shares, Life Insurance Corporation of India is the largest non-promoter shareholder.
The corporation announced a repurchase programme in January 2012, with a maximum of 12 crore (120 million) shares to be purchased for Rs. 10,400 crore (US$1.5 billion). The corporation had bought back 4.62 crore (46.2 million) shares for 3,366 crore (US$440 million) by the end of January 2013.
Listing
The National Stock Exchange of India Limited and the Bombay Stock Exchange Limited both list the company’s equity shares. The company’s Global Depository Receipts (GDRs) are traded on the Luxembourg Stock Exchange. It has issued approximately 5.6 crore GDRs, each of which is equal to two company equity shares. The Luxembourg Stock Exchange lists around 3.46 per cent of its total shares.
Its debt instruments are traded on the National Stock Exchange of India Limited’s Wholesale Debt Market segment.
CRISIL (an S&P affiliate) and Fitch have given it AAA domestic credit ratings. The company has received a Baa2 positive outlook and BBB+ outlook investment-grade ratings from Moody’s and S&P. RIL announced on December 28, 2017, that it would purchase Reliance Communications’ wireless assets for about 23,000 crores.
Operations
The company’s major activity is petrochemical, refining, and oil and gas-related industries; other divisions include cloth, retail, telecommunications, and special economic zone development. It made 76 per cent of its revenue from refining, 19 per cent from petrochemicals, 2% from oil and gas, and 3% from other areas in 2012–13.
RIL announced in July 2012 that it would invest $1 billion over the next few years in its new aerospace division, which will design, develop, and manufacture equipment and components for military and civilian aircraft, helicopters, unmanned airborne vehicles, and aerostats, including aircraft, engines, radars, avionics, and accessories.
The corporation had 347 subsidiary companies and 150 affiliate companies as of March 31, 2021.
Subsidiaries
• RIL owns a controlling stake in Jio Platforms Limited, which is primarily a technology firm. The outcome of a company reorganisation was announced in October 2019, which places all digital projects and telecoms assets under this new subsidiary.
This new subsidiary owns all of Reliance Jio Infocomm Ltd’s digital assets, including the Jio connectivity business, as well as other digital assets (JIO Apps, Tech backbone, and investments in other tech companies like Haptic, Hathaway, and Den Networks, among others). RIL started in April 2020 when Facebook made a strategic investment of Rs 43,574 crore (US$5.7 billion) in Jio Platforms. This investment equated to a 9.99 per cent equity share on a fully diluted basis.
In May 2020, RIL sold a 1.15 per cent ownership in Jio Platforms to Silver Lake Partners, an American private equity firm, for Rs 5,656 crore (US$740 million). After investing Rs 1,894.50 crore ($250 million), Intel became the 12th business to invest in Reliance Jio platforms, bringing the overall investment in Jio platforms to Rs 117,588.45 crore. On July 16, 2020, Google stated that it would pay Rs 33,737 crore for a 7.7% share in Jio Platforms.
• Reliance Retail is Reliance Industries’ retail business unit. It had 1466 outlets in India as of March 2013. It is the largest retailer in India. Reliance Retail encompasses a number of brands, including Reliance Fresh, Reliance Footprint, Reliance Time Out, Reliance Digital, Reliance Trends, Reliance Autozone, Reliance Super, Reliance Mart, Reliance iStore, Reliance Home Kitchens, Reliance Market (Cash n Carry), and Reliance Jewel. It had annual revenue of 108 billion (US$1.4 billion) in 2012–13, with an EBITDA of 780 million (US$10 million).
• Reliance Life Sciences focuses on a medicinal, plant, and industrial biotechnology prospects. It specialises in biopharmaceuticals, pharmaceuticals, clinical research services, regenerative medicine, molecular medicine, novel therapeutics, biofuels, plant biotechnology, industrial biotechnology sectors of the medical business industry, and manufacturing, branding, and marketing of Reliance Industries’ products.
• Reliance Logistics is a one-stop-shop for transportation, distribution, warehousing, logistics, and supply chain services. Reliance Logistics is a fleet and infrastructure firm with its own assets. It offers logistical services to both Reliance Group enterprises and third parties.
• Reliance Solar, the company’s solar energy division, was founded to manufacture and sell solar energy systems to distant and rural locations. It sells solar lanterns, house lighting systems, street lighting systems, water purification systems, refrigeration systems, and solar air conditioners, among other things.
• Reliance Industrial Infrastructure Limited (RIIL) is a subsidiary of Reliance Industries Limited (RIL). RIL owns 45.43 per cent of RIIL’s total shares. Chembur Patalganga Pipelines Limited was formed in September 1988 to construct and operate cross-country pipelines for the transportation of petroleum products. In September 1992, the company’s name was changed to CPPL Limited, then in March 1994, to its current name, Reliance Industrial Infrastructure Limited. RIIL specialises in the construction and operation of industrial infrastructure.
The company also engages in related industries such as leasing and offering data processing and computer software services. The business built a twin pipeline system with a diameter of 200 millimetres to connect the Bharat Petroleum refinery in Mahul, Maharashtra, to Reliance’s petrochemical plant in Patalganga Maharashtra. Petroleum products such as naphtha and kerosene are transported through the pipeline.
The supervisory control and data acquisition system, the cathodic protection system, a jackwell at River Tapi, and a raw water pipeline system at Hazira have all been completed. At the Jawaharlal Nehru Port Trust (JNPT) Area in Maharashtra, the infrastructure company built a 71,000 kilolitre petrochemical product storage and distribution facility.
• Network 18, a media conglomerate. Television, digital platforms, publishing, mobile apps, and films are among its areas of interest. It also has two joint ventures with Viacom and A+E Networks, Viacom 18 and History TV18. It has also purchased a portion of ETV Network and renamed its channels under the Colors TV brand.
• Reliance Eros Productions LLP is a joint venture between Eros International and Eros Productions LLP that produces film content in India.
• RIL’s wholly-owned subsidiary, Reliance Industrial Investments and Holdings Limited (RIIHL) provides financial services. The firm owns securities issued by entities other than banks and provides investment services. In March 2019, RIIHL paid over 146 crore for majority shares in two companies: logistics firm Grab A Grub Services Private Limited (Grab) and software firm C-Square Info Solutions. RIIHL also sponsored the Tower Investment Trust (InvITs) for the Canadian asset management firm Brookfield Infrastructure Partners to buy 49 per cent of RJio’s tower assets for Rs 25,215 crore.
RIIHL paid £57 million for the entire issued share capital of Stoke Park Ltd, a firm that owns and operates athletic and leisure facilities in Stoke Poges, Buckinghamshire.
• In December 2019, Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of RIL, paid Rs 23.12 crore for a 51.78 per cent investment in robotics and AI startup Asteria Aerospace and Rs 141.63 crore for an 85 per cent stake in NowFloats Technologies. It also owns 18.83 per cent of EIH Limited, The Oberoi Group’s leading company and one of India’s top luxury hotel chains. RSBVL invested an undisclosed sum in SkyTran Inc. in November 2019, increasing its stake to 26.3 per cent by April 2020.
With an additional $26.76 million investment in February 2021, RIL became the largest stakeholder with 54.46 per cent.
• Reliance Sibur
• In February 2020, RIL invested 89.91 crore in Embibe, a Bengaluru-based EdTech startup. Over three years, Reliance Industries has invested roughly $180 million in the startup. A portion of it acquired a 72.69 per cent interest from Embibe’s current investors. Embibe stated in December 2019 that it had received equity shares in Bengaluru-based K12 company Funtoot under the proprietary name (Individual Learning Private Limited) (eDreams Edusoft). The transaction was restricted at 71.64 crore in cash, representing 90.5 per cent of Funtoot’s equity share capital. It bought the competitor platform OnlineTyari in February 2020.
Employees
The corporation employed 29,533 permanent employees on March 31, 2018, with 1,521 women and 70 people with impairments. On the same date, it had 158,196 temporary employees, for a total of 187,729 workers. The attrition rate was 7.5 per cent, according to the company’s Sustainability Report for 2011–12. However, according to the organisation’s most recent report, the same attrition rate increased to 23.4 per cent in March 2015.
In the company’s 39th Annual General Meeting, its chairman notified shareholders of the company’s investment plans for the next three years, which total around 1,500 billion (US$20 billion). This would be complemented by an increase in personnel strength in the Retail division from 35,000 to 120,000 in the next three years and an increase in employees in the Telecom sector from 3,000 to 10,000 in the next 12 months.
Reliance Jio reports its strongest profit growth in five quarters as it offloads millions of low-quality subscribers.
Reliance Jio, India’s largest telecom provider, released its financial statistics from January to March 2022, revealing remarkable growth in the average revenue per customer, or ARPU (average revenue per user).
Reliance Jio’s net profit increased by 14 per cent between January and March 2022, the fastest growth in five quarters, but it fell short of analyst projections of a 5,000 crore quarterly profit.
In addition, Reliance Jio’s ARPU, a key indicator for assessing a telecom company’s performance, increased by 11%. Several things contributed to this, including a 21% rate increase and the dumping of millions of low-quality and idle members who had been dragging down the company’s ARPU numbers for several quarters.
After ignoring analyst warnings for months, Jio eventually boosted pricing after rivals Airtel, and Vodafone Idea announced 20-25 per cent increases. Jio’s rates are still the cheapest of the three, and JP Morgan analysts estimate the advantages of this boost to arrive only in the second quarter of 2022.
Reliance Jio has lost over 30 million members in the last three quarters, marking the third consecutive quarter of subscriber loss. Jio’s subscriber counts are down 16 million for the financial year 2021-22. Despite the debut of the JioPhone Next, which was a vital weapon in Mukesh Ambani’s armoury to hit the 500 million subscriber milestone, this is the case.
Jio announced that its entire customer base has fallen to 410 million customers, down from 421 million in the previous quarter.
Reliance Jio’s last quarter in numbers
In terms of the numbers, Jio recorded a robust two-digit gain in net profit between January and March 2022, rising to 4,313 crore from 3,795 crore the previous quarter — a 14 per cent increase. Its earnings increased by 23 per cent year over year.
Jio’s revenue increased by 8% during the period, rising to 26,139 crore from 24,176 crore in the last quarter. This represents a roughly 21% increase over the last year.
Both data and voice usage saw a substantial increase this quarter
In comparison to the last quarter, data traffic increased by 7%. The average data usage per user was 19.7GB during the quarter, up from 18.4GB the last quarter.
From 901 minutes in the last quarter, voice usage grew to 968 minutes.
About Reliance Jio
Reliance Jio is an Indian telecommunications company headquartered in Navi Mumbai, Maharashtra, India. It is a subsidiary of Jio Platforms. It runs a nationwide LTE network that serves all 22 telecom circles. Jio presently offers 4G and 4G+ services, but it is striving to expand to 5G and 6G in the future.
Jio soft was first made accessible to partners and staff on December 27, 2015, and then to the public on September 5, 2016. With around 42.62 crore members, it is India’s largest and the world’s third-largest mobile network operator.
Jio announced a fibre to the home service in September 2019, including home broadband, television, and phone services. The company has raised Rs.1.65 lakh crore by selling nearly a third of its stock investment in Jio Platforms as of September 2020.
History
Infotel Broadband Services Limited was established on February 15, 2007, in Ambawadi, Ahmedabad, Gujarat. In June 2010, Reliance Industries paid 4,800 crore (equal to 91 billion or US$1.2 billion in 2020) for a 95 per cent share in IBSL. Despite being unlisted, IBSL was the only business to win broadband spectrum in all 22 Indian circles in the 4G auction earlier that year. After continuing as RIL’s telecom subsidiary, Infotel Broadband Services Limited was renamed Reliance Jio Infocomm Limited (RJIL) in January 2013.
Jio said in June 2015 that it would begin operations across the country by the end of the year. However, four months later, in October, the firm announced that the launch would be delayed until the first quarter of 2016–2017.
Later, in July 2015, an NGO named the Centre for Public Interest Litigation, through Prashant Bhushan, filed a PIL in the Supreme Court challenging the Government of India’s grant of a pan-India licence to Jio. The PIL further said that the company was allowed to provide voice telephony with its 4G data service for an additional charge of only 165.8 crore (US$22 million), which was arbitrary and excessive, and resulted in a loss to the government of Rs 2,284.2 crore (US$300 million).
However, the Indian Department of Telecommunications (DoT) emphasised that the rules for 3G and BWA spectrum did not prevent BWA winners from offering voice services. As a result, the PIL was dismissed, and the charges were dropped.
Internally, the 4G services were released on December 27, 2015. On September 5, 2016, the firm commercially debuted its 4G services, offering free data and phone services until December 31, which was extended until March 31, 2017. Jio reported that it had gained 1.6 crore (16 million) subscribers in the first month and had crossed the five crore (50 million) subscriber barrier in 83 days from its introduction, eventually breaking the 100 million subscriber mark on February 22, 2017. It had around 13 crore (130 million) customers by October 2017.
Jio 5G will be available in 1000 Indian towns soon
Reliance Jio has declared that they have completed their 5G coverage strategy for India’s top 1,000 cities. After the Department of Telecommunication (DoT) stated that 5G services would be available in India, the company announced its growth.
Jio announced that its 5G network had been used to test healthcare and industrial automation. Jio is likely to roll out 5G in stages, as the Department of Transportation has stated that 5G services will be provided in only 13 large cities at first. The corporation used heat maps, 3D maps, and ray-tracing technologies for accurate coverage planning to target high-consumption and high-perception places to develop a 5G data-driven network-based on targeted consumer consumption revenue.
Jio announced that they worked with WhatsApp to streamline the prepaid recharge experience and that their net profit increased by 8.8% to Rs 3,795 crore at the end of December 2021. (in the third quarter).
Month over month, Jio’s Average Revenue Per User (ARPU) grew to Rs 151 from Rs 143.6 in the last quarter (October-December 2021). This is likely due to the increase in the cost of new Jio recharge plans across the country.
edited and proofread by nikita sharma
