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MUMBAI : Reliance Industries Ltd (RIL) must commit to transparent practices as investors are showing greater interest in India’s most valuable private sector company, said analysts. RIL has stopped disclosing quantitative information in recent quarters, which is a cause for concern, according to nearly half-a-dozen analysts.

“Over the last few quarters, on a quarterly basis, disclosures have stopped on capitalized expenses (JioMart), payments to InvITs (infrastructure investment trusts) from Jio Platforms Ltd (JPL), segment-level retail revenues and earnings before interest, taxes, depreciation and amortization, capex, and gross refining margins (GRM). Investors would like more quantitative quarterly disclosures across JioMart and JPL to gauge the progress of these businesses," said JPMorgan in a note on 3 February.

Digital investors, mostly in the US and Europe, find RIL’s long-term digital story across JioMart and JPL’s digital forays attractive even as they admit there is little to look forward to in the next 12-18 months in these businesses, JPMorgan said. Jio Platforms houses RIL’s digital business assets, including Reliance Jio Infocomm Ltd, which in turn holds the Jio connectivity business, mobile, broadband and enterprise, besides others such as Jio Apps.

RIL reported consolidated turnover of 659,205 crore and net profit of 39,880 crore for the year ended March 2020. Its businesses span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail, and digital services.

For its third quarter earnings report last month, RIL for the first time, did not disclose the GRM, a key metric for assessing its refining business. GRM is the margin earned on every barrel of oil processed. RIL said that with its refining and petrochemicals business being merged into one, oil to chemicals (O2C), it is to be viewed as one downstream business.

Analysts said they were surprised by the company’s decision. RIL has not replied to a query from Mint on Tuesday.

“Transparency levels are falling across businesses. RIL has stopped reporting a key matrix, GRM, altogether. Similarly, it has ceased providing division-wise turnover breakdown for retail and RJio’s key driver FTTH (fibre-to-the-home) lacks granularity," said Edelweiss in a report on 23 January.

BNP Paribas said that the change in reporting makes O2C performance not comparable. “We are not able to analyse the standalone business at a granular level as RIL has started to club its entire O2C operations under one head."

RIL’s core energy business, especially refining, has been a drag in FY21 and given travel restrictions globally, a recovery in refining margins is unlikely before FY22. Petchem spreads had surged in December, but since then headline prices and spreads have come off.

RIL, which till recently had been banking on its refining and marketing and petrochemicals businesses for growth, is now pushing its consumer businesses, telecom and retail. For the first time, the consumer businesses, JPL and Reliance Retail , overtook the cash flow of its core refining and petrochemicals in the December-ended quarter. The digital services and retail businesses reported Ebitda growth of 48.4% and 13.4%, respectively.

“The lack of disclosures leads us to believe that all of RIL’s businesses have been severely impacted by the crisis. I think the company would give more disclosures once the businesses pick up again," said an analyst, requesting anonymity.

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