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Mukesh Ambani-led Reliance Industries Limited (RIL) on Friday posted a near-flat quarterly profit as export tax on refined fuels and weak refining margins dented performance at its mainstay oil-to-chemical business. The oil-to-telecom conglomerate reported a consolidated net profit for the second quarter (Q2) ended September 2022 at 13,656 crore, down 0.2% YoY. It was 13,680 crore in the corresponding quarter of last year (Q2FY22).

On a sequential basis, the profit after tax (PAT) fell 24%, as against 17,955 crore in the previous June quarter.

According to analysts' estimates, RIL was expected to report a double-digit year-on-year (YoY) growth in the consolidated net revenue and profit for the September quarter.

Reliance, which operates the world's biggest oil refining complex, reported 33.7% increase in revenue from operations at 2.32 lakh crore in the quarter under review. The company had posted revenue of 1.74 lakh crore in the year-ago period.

Segment wise revenues

Segment wise, revenues from the dominant oil-to-chemicals (O2C) business increased by 33% to 1.41 lakh crore in the reporting period. It was 1.2 lakh crore in the same quarter last year. This business made up for nearly 69% of RIL's consolidated topline in the quarter.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the O2C segment dropped 5.9% on-year to 11,968 crore.

The retail business' revenue grew by around 43% on year to 64,936 crore. The digital services business under the umbrella of Reliance Jio Infocomm registered a revenue growth of over 21% to 29,558 crore.

The firm's consolidated operating profit in the quarter, including the impact of special additional excise duty imposed by the government in July, surged 14.5% on-year to 34,663 crore, RIL said in a regulatory filing.

O2C biz sees subdued demand

The O2C business that witnessed a great run over the past few quarters on higher demand for transportation fuels, helped by cheap Russian crude, saw refinery margins cooling off from record highs in the quarter.

"Performance of our O2C business reflect subdued demand and weak margin environment across downstream chemical products. Transportation fuel margins were better than last year but significantly lower sequentially. Segment performance was also impacted by the introduction of special additional excise duties during the quarter to ensure stable supply and lower volatility in the domestic market," said Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited.

"Our domestic Oil and Gas business continued to deliver robust performance maintaining production at 19 MMSCMD levels in the KG D6 block, significantly enhancing energy security for the country. We are confident of commissioning MJ Fields by year end," the RIL Chairman stated.

A bigger shock came in the form of windfall tax on exports of gasoline, diesel and aviation fuel levied by the Central Government.

Reliance also shut a crude distillation unit and gasoline making fluid catalytic cracker at Jamnagar in Gujarat in September for usual maintenance.

On Friday, the company's scrip on NSE closed at 2,470.00, down 1.22% from previous day's close.

ABOUT THE AUTHOR

Meghna Sen

Meghna Sen is a deputy chief content producer at Livemint where she tracks companies, markets, news. She has 5+ years of experience with online and print publications. Email: meghna.sen@htdigital.in
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