Reliance Industries's (RIL) flagship business, refining and marketing, stares at a margin crisis when the oil prices go volatile amid geopolitical uncertainties. The gross refining margin (GRM) --- the difference between cost of crude and value of refined products produced from it --- crashed to $5.7 a barrel in the September quarter from $9.4 in the same period last year.
In the second quarter, RIL refined 15.4 million tonne (MT) of crude to generate a revenue of Rs 62,154 crore. In the comparative quarter last year, it refined 16.7 MT crude, but generated Rs 97,229 crore. The company has provided the earnings before interest, tax, depreciation and amortization (EBITDA) of Rs 3,002 crore in Q2FY21, but not given the comparative number for the Q2FY20. According to an old press release, it posted an earnings before interest and tax (EBIT) of Rs 4,957 crore in Q2FY20. Though it didn't reflect the depreciation and amortisation, the reduction in earnings is evident in the numbers.
The global oil giants are also in dire crisis after the crash of crude price in April and the continuing lockdowns in different parts of the world. RIL reported a net profit of Rs 9,567 crore in the July-September period, marking an annual decline of 15 per cent, compared to a profit of Rs 11,262 crore in the corresponding period a year ago. The revenue from operations fell 24 per cent to Rs 1,16,195 crore from Rs 1,53,384 crore in the year-ago period.
Crude oil collapsed earlier this week after France and Germany announced new lockdowns in response to surging COVID-19 cases, and now it is set for its worst month since late spring.
The petrochemicals business has reported a segment revenue of Rs 29,665 crore compared to Rs 38,538 crore. The EBITDA of Q2FY21 stood at Rs 5,964 crore, while EBIT of Q2FY20 was Rs 7,602 crore. It indicates that there is also a severe impact on RIL's petchem business, which invested nearly Rs 1.5 lakh crore until last year to expand the capacities at its complex.
Woes at its oil and gas business also are continuing despite the new investments of RIL and its partner BP Plc at the hydrocarbon blocks in KG D6. It made an EBITDA loss of Rs 194 crore in Q2.
The highlight of the quarter is the rocking performance of consumer businesses --- Jio Platforms (JPL) and Reliance Retail Ventures. Jio's subscriber base increased to 405.6 million and the average revenue per user (ARPU) increased to Rs 145 Q2 from Rs 140 in Q1. JPL has reported a net profit of Rs 3,020 crore Q2 vis-a-vis Rs 2,520 crore in Q1. Retail business has reported EBITDA of Rs 2,006 crore, compared to Rs 1,079 crore.
RIL had a net debt of Rs 1.61 lakh crore in March, but it turned net cash of Rs 10,256 crore as the company received Rs 1.47 lakh crore of the promised investments. The company has got Rs 2.5 lakh crore investment from investors like Facebook, Google and BP Plc.