26% of RIL Q1 topline, 21% pre-tax profit come from consumer business

With Reliance Industries netting as much as 26 per cent of its Rs 1,41,699 crore revenue and 21 per cent of its pre-tax profit from the retail and telecom verticals in the June quarter, chairman Mukesh Ambanis plan to convert the oil-to-telecom conglomerate into a consumer company over the next decade may be closer than the target. During the June quarter, as much as Rs 36,581 crore of its consolidate income of Rs 1,41,699 crore came in from its retail, telecom and media businesses. It helped RIL also report a record net income Rs 9,459 crore which rose 17.9 per cent over the previous year.

Thanks to a massive spurt in oil prices, its revenue jumped 56.5 per cent to Rs 1,41,699 crore. Of this Reliance Retail more than doubled its revenue at Rs 25,890 crore, while Jio reported 13.8 per cent rise in revenue at Rs 9,567 crore, and the media business reported a revenue of Rs 1,124 crore. "As much as 21 per cent of our pre-tax revenue came in from the consumer/retail business including oil marketing, according to group deputy financial officer V Srikanth.

The diesel and petrol retailing business is billed under Reliance Retail and chipped in 12 per cent of the pre-tax profit, he added. In terms of consolidated pre-tax profit which stood at Rs 22,449 for the June quarter, Reliance Retail contributed 4.76 per cent at Rs 1,069 crore which was a massive 266 per cent jump from last year, and Jio chipped in Rs 3,147 crore or a tad over 14 per cent while media business failed the show with a Rs 70 crore loss.

Together these retail and Jiothe two key consumer facing businesses--contributed 18.78 per cent of the total and the rest came in from oil retailing. Against this, the operator of world's largest oil refining complex saw pre-tax earnings from the business declining 16.8 per cent to Rs 5,315 crore as margins dipped. It earned USD 10.5 on turning every barrel of crude oil into fuel as compared to a gross refining margin of USD 11.9 per barrel on lower crude throughput due to a planned turnaround of one crude distillation unit and softer refining margins.

The pre-tax loss of oil and gas business widened to Rs 447 crore from Rs 373 crore in the first quarter of 2017-18 due to continued decline in production. Of the total net income of Rs 9,459 crore, its highest ever in the quarter, which was up 19 per cent, Jio reported a 20 per cent spike in its bottomline with a Rs 612 crore, or 6.5 per cent of the total profit, according to the June earnings filings. Addressing the shareholders at the 41st AGM of RIL, Ambani on July 5 announced a plan to make the countrys second largest oil major, that operates the worlds largest single location refinery of 62 million tonne capacity processing about 1.4 million barrels of crude a day, a more consumer facing one by increasing the focus on telecom with a Jio Gigafibre strategy, and by creating more synergies through an ecommerce platform for its retail and digital operations.

Reliance is still a legacy oil and hydrocarbon businesses company, launched its retail business 11 years ago which is yet report a net income. "As our golden decade rolls on, the consumer business will contribute as much as hydrocarbon," said Ambani, adding consumer businesses accounted for 13 per cent of Rs 59,961 crore pre-tax profit of the conglomerate as March 2018. Among his Ambani vision include taking advantage of digital technologies to build consumer facing businesses. A particularly potent combination is the linkages RIL aims to draw between Reliance Retail and Jio and also oil marketing, by connecting small kirana owners.

"Reliance retail and Jio will bring together the offline and Jio customers who provide last-mile physical market connectivity," Ambani had said. Reliance Retail had 8,533 stores across over 5,200 towns and cities on more than doubling of revenues to Rs 25,890 crore, while Reliance Jio posted a standalone net profit of Rs 612 crore on a revenue of Rs 9567 crore, up 13.8 per cent and media business reported a revenue of Rs 1,124 crore, which reported a Rs 70 crore loss this quarter.

The core petrochemical business saw pre-tax profit jump by 94.9 per cent to Rs 7,857 crore after the company stabilised operations of a new refinery off-gas cracker and other downstream units.