Here are some of the major updates that could move the markets tomorrow:
RIL, Superdry signs JV for IP in India, Bangladesh, and Sri Lanka
Reliance Brands Ltd’s (RBL) subsidiary, Reliance Brands Holding UK Ltd (RBUK), has signed a £40 million joint venture (JV) agreement with Superdry Plc. The JV is for the sale of Superdry’s intellectual property assets in India, Sri Lanka and Bangladesh. Reliance Brands (RBL) is a subsidiary of Reliance Retail Ventures Ltd (RRVL). RRVL and Superdry will each own 76% and 24% of the joint venture vehicle, respectively.
JSW Neo Energy signs ₹15,000Cr MoU with Uttarakhand govt
Uttarakhand Government has signed a Memorandum of Understanding (MoU) worth ₹15,000 crores with JSW Neo Energy Ltd (JSW NEL) at the roadshow of its Global Investor Summit. As per the MoU, two pumped storage of 1,500 megawatts (MW) will be developed in the state’s Almora district. JSW NEL is a subsidiary of JSW Energy Ltd.
L&T secures order from West Bengal Power Development Corp
Larsen & Toubro’s (L&T) power business arm secured an order (in the range of ₹1,000-2,500 crore) from West Bengal Power Development Corporation Ltd. The engineering, procurement and construction (EPC) order pertains to setting up wet Flue Gas Desulphurization (FGD) systems for its Thermal Power Plant at Sagardighi, West Bengal.
Manufacturing operations disrupted at Alembic Pharma’s Sikkim plant
Manufacturing operations at Alembic Pharma’s Sikkim plant have been disrupted due to flash floods in the Teesta River. However, the company stated that no loss or harm was caused to any personnel and the assessment of loss will take a while. All assets of the company are adequately insured and necessary intimations have been given to insurance companies.
Strides Pharma gets USFDA approval to market HIV drug
Strides Pharma’s Singaporean subsidiary, Strides Pharma Global, has received approval from the US Food & Drug Administration (USFDA) to market Efavirenz, Emtricitabine, Tenofovir Disproxil Fumurate (EET) tablets. The drug helps control HIV infection. The drug is a generic version of Gilead Sciences’ Atripla tablets. As per IQVIA data, the tablet has a market opportunity of $7.5 million in the US.
Hindustan Zinc to use LNG-fuelled trucks of GreenLine
Hindustan Zinc Ltd (HZL) will use Greenline’s liquefied natural gas (LNG)-powered trucks in its supply chain and transportation operations to cut its carbon footprint. HZL has set a target of becoming a net-zero carbon emitter by 2050. GreenLine (promoted by Essar Group) will invest ₹200 crore to deploy LNG-powered trucks for Hindustan Zinc’s road logistics.
HealthCare Global Enterprises Ltd (HCG) has acquired SRJ CBCC Cancer Hospital in Indore. This acquisition marks HCG’s entry into the key geography of Madhya Pradesh. HCG plans to further expand by adding 100 beds and state of art cancer diagnostic and treatment facility within an estimated operational timeline of 2 years.
SBI launches Mobile Handheld Device to provide banking services
State Bank of India (SBI) launched a ‘Mobile Handheld Device’ to provide banking services to its financial-inclusive (FI) customers. The move is aimed at enhancing accessibility, convenience in availing banking services and empowering financial inclusion and extending essential banking services to the masses. The new device brings kiosk banking directly to customer’s doorstep.
Bandhan Bank’s advances grew 12.3% year-on-year (YoY) to ₹1.08 lakh crore, while its loan collection efficiency remained stable at 98% at the end of the September quarter (Q2 FY24). Total bulk deposits stood at ₹29,098 crore in Q2 FY24, compared to ₹25,705 crore a year back. The Kerala-based bank saw its deposit growth at 23% YoY to ₹2.33 lakh crore in Q2.
Here are some of the major updates that could move the markets on Monday:
RIL Q2 Results: Net profit flat at ₹13,656 crore
Reliance Industries Ltd (RIL) reported a 0.17% YoY (or 24% QoQ) decline in consolidated net profit to ₹13,656 crore for the quarter ended Sept (Q2 FY23). Its revenue from operations rose 33.7% YoY to ₹2.32 lakh crore during the same period. RIL’s revenues from the oil-to-chemicals (O2C) business increased by 33% to ₹1.41 lakh crore.
Reliance Jio’s net profit increased by 28% YoY to ₹4,518 crore in Q2. The telecom major’s revenue from operations rose 20% YoY to ₹22,521 crore.
State-owned Coal India Ltd (CIL) has started 17 more first-mile connectivity projects worth ₹11,000 crore under the third phase. First-mile connectivity (FMC) refers to the transportation of coal from pitheads to dispatch points. CIL is preparing a rollout plan to float tenders for the latest projects by FY25, and the projects would be commissioned by FY27.
JSW Steel Ltd reported a consolidated net loss of ₹915 crore for the quarter ended Sept (Q2 FY23). It posted a net profit of ₹7,179 crore in Q2 FY22. Its revenue from operations rose 29% YoY to ₹41,778 crore in Q2 FY23. Total expenses stood at ₹43,354 crore in Q2, up 29% YoY. The company’s consolidated crude steel output fell 3% QoQ to 5.68 million tonnes (MT).
IEX trade volume falls 11% to 23.1 billion units in Q2
The total trade volume of the Indian Energy Exchange (IEX) fell over 11% to 23.1 billion units (BU) in the July-September quarter (Q2). The volume comprised 19.7 BU in the conventional power market, 1.5 BU in the green market segment, and 1.9 BU in the Renewable Energy Certificates (REC) market. The average Day Ahead Market prices increased to ₹5.40 per unit during Q2 FY23, compared to ₹4.14 in Q2 FY22.
Bajaj Finserv Q2 Results: Net profit rises 39% YoY to ₹1,557 crore
Bajaj Finserv Ltd reported a 39% YoY increase in consolidated net profit to ₹1,557 crore for the quarter ended Sept (Q2 FY23). Its total income grew 16% YoY to ₹20,803 crore during the same period. Total expenses rose 8.7% YoY to ₹16,545.23 crore. Its subsidiary, Bajaj Finance, recorded its highest-ever quarterly consolidated profit of ₹2,781 crore in Q2, up 88% YoY.
Ramkrishna Forgings secures export order worth ₹121.5 crore
Ramkrishna Forgings Ltd received a long-term supply contract worth ₹121.5 crore for two electric vehicle components from a Swedish original equipment manufacturer (OEM). This is the company’s third order in nearly two months. Last week, it received an order worth ₹131.50 crore from a Tier-1 axle maker for a component used in North American heavy commercial vehicles (HCVs).
IDBI Bank Q2 Results: Net profit rises 46% YoY to ₹828 crore
IDBI Bank reported a 46% YoY increase in net profit to ₹828.09 crore for the quarter ended Sept (Q2 FY23). Its net interest income (NII) rose 48% YoY to ₹2,738 crore during the same period. The gross non-performing assets ratio (GNPA) improved to 16.51% in Q2, compared to 19.9% in Q1. The bank’s provisions rose 77% YoY to ₹1,380 crore in Q2 FY23.
HAL concludes contract with Indian Air Force for indigenous trainer aircraft
The Indian Air Force and Hindustan Aeronautics Ltd (HAL) concluded a contract for 70 HTT-40 indigenous trainer aircraft worth Rs 6,800 crore. The aircraft has state-of-the-art contemporary systems and has been designed with pilot-friendly features. Prime Minister Narendra Modi unveiled HAL’s HTT-40 at the 12th DefExpo organised in Gujarat.
HUL Q2 Results: Net profit rises 20% YoY to ₹2,616 crore
Hindustan Unilever Ltd (HUL) reported a 19.6% YoY (or 14% QoQ) increase in net profit to ₹2,616 crore for the quarter ended Sept (Q2 FY23). Its revenue from operations rose 16% YoY to ₹14,751 crore during the same period. EBITDA stood at ₹3,479 crore, up 8% YoY. HUL’s board has declared an interim dividend of ₹17 per share.
Fertiliser manufacturer UPL Ltd. will restructure its major businesses into four separate units to simplify the group structure. The company will transfer its crop protection business on a slump-sale basis to UPL Sustainable Agri Solutions. The global crop protection platform (excluding India) will be housed under UPL Ltd., Cayman. The seed business will be transferred to a new company named Advanta Enterprises Ltd.
Ambuja Cements Q2 Results: Net profit falls 94% YoY to ₹51 crore
Ambuja Cements Ltd reported a 94.24% YoY decline in consolidated net profit to ₹51.3 crore in Q2, mainly due to rising fuel prices and related inflationary impact. Its revenue from operations rose 7.46% YoY to ₹7,143.17 crore during the same period. Total expenses stood at ₹7,179.9 crore in Q2, up 29.5% YoY.
Here are some of the major updates that could move the markets tomorrow:
RIL Q1 Results: Net profit rises 46% YoY to Rs 17,955 crore
Reliance Industries Ltd (RIL) reported a 46.29% YoY increase in consolidated net profit to Rs 17,955 crore for the quarter ended June (Q1 FY23). Its revenue from operations grew 54.5% YoY to Rs 2,23,113 crore during the same period. RIL’s oil-to-chemical (O2C) business delivered its best-ever performance in Q1 despite the global challenges.
Reliance Jio Infocomm reported a 24% YoY (or 4% QoQ) increase in net profit to Rs 4,335 crore in Q1. The telecom giant’s revenue grew 21.6% YoY to Rs 21,873 crore. The growth in revenues was driven by an increase in average revenue per user (ARPU) and modest addition to its subscriber base.
Rupee holding up well relative to advanced, emerging market peers: RBI Governor
Reserve Bank of India (RBI) Governor Shaktikanta Das said the Indian economy is relatively better placed amidst the grim global scenario. He added that the Indian Rupee is holding up well relative to advanced and emerging market peers. “RBI has been supplying US Dollars to the market to ensure adequate supply of liquidity. Also, it is necessary to look at unhedged forex exposures factually, rather than being alarmed by it,” he said.
UltraTech Cement Q1 Results: Net profit falls 7% YoY to Rs 1,584 crore
UltraTech Cement Ltd reported a 7.4% YoY (or 39.5% QoQ) decline in consolidated net profit to Rs 1,584 crore for the quarter ended June (Q1 FY23). The sharp rise in power and fuel costs had an adverse impact on the company’s profits. Its revenue from operations grew 28.2% YoY to Rs 15,163.98 crore during the same period. UltraTech Cement achieved capacity utilisation of 83% in Q1 FY23, compared to 73% in Q1 FY22.
Domestic air traffic records 66% growth in January-June period: DGCA
The number of passengers carried by domestic airlines grew 66.73% YoY to 343.37 lakh in the January-July period. The passenger load factor (PLF) or occupancy rates for IndiGo was 78.6% and 84.1% for SpiceJet during this period. IndiGo had the largest market share in the April-June quarter (Q1 FY23) at 56.3%, followed by Go First at 10.4%, and SpiceJet at 9.7%. The data was released by the Directorate General of Civil Aviation.
Bandhan Bank Q1 Results: Net profit jumps 137% YoY to Rs 887 crore
Bandhan Bank reported a 137% YoY jump in net profit to Rs 886.5 crore for the quarter ended June (Q1 FY23). Its net interest income (NII) grew 18.9% YoY to Rs 2,514.4 crore during the same period. [NII is the difference between the interest income a bank earns on loans and the interest it pays depositors.] The gross non-performing assets (GNPA) ratio stood at 7.25% in Q1 FY23, compared to 8.18% in Q1 FY22. Total deposits increased by 20.3% YoY to Rs 77,336 crore.
Tata Motors wins tender for 1,500 electric buses from DTC
Tata Motors Ltd has received an order of 1,500 electric buses from Delhi Transport Corporation (DTC) as part of a larger tender by Convergence Energy Services Ltd (CESL). The automaker will supply, operate and maintain these buses for 12 years. To date, Tata Motors has supplied over 650 electric buses across multiple cities in India.
JSW Steel Q1 Results: Net profit falls 86% YoY to Rs 838 crore
JSW Steel Ltd reported an 85.8% YoY (or 75% QoQ) decline in consolidated net profit to Rs 838 crore for the quarter ended June (Q1 FY23). Its revenue from operations grew 32% YoY to Rs 38,086 crore during the same period. The rise in the cost of raw materials, power, fuel, and other expenses severely impacted the company’s margins. EBITDA stood at Rs 4,309 crore in Q1, down 58% YoY.
Olectra Greentech to supply 300 electric buses worth Rs 500 crore to Telangana
Olectra Greentech Ltd has received an order for 300 electric buses from Telangana State Road Transport Corporation (TSRTC). The value of this order is approximately Rs 500 crore. These 12-metre, low-floor, non-AC buses have a seating capacity of 35 and wheelchair accessibility. The lithium-ion (Li-ion) battery installed in these buses enables them to travel nearly 200 kilometres on a single charge at 80%.
Coforge Q1 Results: Net profit rises 21% YoY to Rs 150 crore
Coforge Ltd reported a 21.1% YoY increase in consolidated net profit to Rs 149.7 crore for the quarter ended June (Q1 FY23). Net profit declined by 27.9% when compared to the previous quarter. Its gross revenues grew 25.2% YoY (or 5% QoQ) to Rs 1,829.4 crore during the same period. The IT company secured orders worth $315 million (~Rs 2,514 crore) in Q1. Coforge Ltd’s board has declared an interim dividend of Rs 13 per share.
Hindustan Unilever to invest Rs 700 crore in Uttar Pradesh by 2025
Uttar Pradesh is set to see investments worth Rs 700 crore from Hindustan Unilever Ltd (HUL) by 2025, said the state’s Chief Minister Yogi Adityanath. The FMCG firm will create lakhs of direct and indirect employment opportunities in the region in the next three years. CEO Sanjiv Mehta and UP CM virtually unveiled HUL’s new spray-dried detergent factory and co-located distribution centre in Hamirpur district.
A crane operator lifts up a finished steel coil at the storage and distribution facility of German steel maker ThyssenKrupp in Duisburg, Germany, January 30, 2020. REUTERS/Wolfgang Rattay/Files
JSW Steel Q4 Results: Net profit falls 20% YoY to Rs 3,343 crore
JSW Steel Ltd reported a 20.2% YoY decline in consolidated net profit to Rs 3,343 crore for the quarter ended March (Q4 FY22). Its total income rose 73% YoY to Rs 47,128 crore during the same period. Expenses surged 98.9% YoY to Rs 41,282 crore in Q4. The company recorded an exceptional loss of Rs 741 crore. JSW Steel’s board has declared a final dividend of Rs 17.35 per share.
Sun Pharma acquires Uractiv portfolio from Fiterman Pharma in Romania
Sun Pharmaceutical Industries Ltd’s subsidiary, S.C. Terapia, has acquired the Uractive portfolio from Fiterman Pharma in Romania. The portfolio comprises food supplements including minerals, vitamins, cosmetics, and medical devices used for maintaining urinary tract health. Uractiv is a leading brand in its category in Romania, with a portfolio of 12 stock-keeping units (SKUs) having annualised revenues of approximately $8.7 million.
Nykaa Q4 Results: Net profit falls 49% YoY to Rs 8.56 crore
FSN E-Commerce Ventures (Nykaa) reported a 49% YoY decline in consolidated net profit to Rs 8.56 crore for the quarter ended March (Q4 FY22). Its revenue from operations rose 31% YoY to Rs 973.32 crore during the same period. The gross merchandise value (GMV) grew 45% YoY to Rs 179.8 crore in Q4.
RIL, Jindal Group, HPCL-Mittal Energy in race to buy JBF Petro
Reliance Industries Ltd (RIL), an HPCL-Lakshmi Mittal joint venture, two Jindal Group firms, and three other entities have reportedly shown interest in acquiring bankrupt JBF Petrochemicals. JBF Petro manufactures purified terephthalic acid— a raw material for polyester fibre and PET raisin (used to make jars and bottles for mineral water, carbonated soft drinks). The company has an outstanding debt of Rs 4,700 crore.
GAIL Q4 Results: Net profit rises 41% YoY to Rs 2,683 crore
GAIL Limited reported a 40.6% YoY increase in net profit to Rs 2,683.11 crore for the quarter ended March (Q4 FY22). Its revenue from operations rose 73.4% YoY to Rs 26,968.21 crore during the same period. The cost of materials consumed jumped 207.4% YoY to Rs 3,171.4 crore in Q4. GAIL’s board declared a final dividend of ₹1 per share.
Siemens’ board approves transfer of LDA biz to Siemens AG arm for Rs 440 crore
Siemens Ltd’s board has approved the sale of its Large Drivers Application (LDA) business to a subsidiary of Siemens AG for Rs 440 crore. The business will be transferred to Siemens Large Drives India Pvt. Ltd. (a subsidiary of Siemens Large Drives GmbH, which in turn is a subsidiary of Siemens AG). The LDA segment recorded a revenue of Rs 443 crore and an operating profit of Rs 25 crore in FY21.
Ruchi Soya Q4 Results: Net profit falls 25% YoY to Rs 234 crore
Ruchi Soya Industries Ltd reported a 25.4% YoY decline in net profit to Rs 234.43 crore for the quarter ended March (Q4 FY22). Its revenue from operations rose 37.72% YoY to Rs 6,663.72 crore during the same period. The foods product segment registered a 15% increase in sales over the previous quarter. The company’s board has declared a dividend of Rs 5 per share.
Adani Enterprises’ arm to acquire 50% stake in General Aeronautics
Adani Defence Systems and Technologies Ltd (ADSTL) will acquire a 50% stake in Bengaluru-based General Aeronautics Pvt Ltd. ADSTL is a wholly-owned subsidiary of Adani Enterprises Ltd. General Aeronautics is an end-to-end agri platform solution provider. It provides robotic drones and drone-based solutions for crop protection, yield monitoring, precision-farming, etc.
SJVN signs pact to supply 200 MW solar power to discoms in Bihar
SJVN Limited has signed a power purchase agreement (PPA) for the supply of 200 megawatts (MW) from its solar power projects in Bihar to state discoms. The company has bagged this project at a tariff of Rs 3.11 per unit through Open Competitive Tariff Bidding organised by Bihar Renewable Energy Development Agency (BREDA). The project is scheduled to be commissioned by November, 2023.
Mukesh Ambani has played a pivotal role in Reliance Industries Ltd’s (RIL) multi-fold and aspirational growth into India’s largest conglomerate. His company has established a dominant presence in key sectors, making it a vital entity for the development of our country. In recent years, their fortune and influence have flourished to new heights. The business empire is currently worth a whopping $215 billion! The Reliance brand has become part of our day-to-day lives.
Last week, Ambani mentioned plans to speed up the leadership transition at the oil-to-telecom conglomerate. Investors and media houses have been speculating on the matter for years. He wants to ensure a seamless transition of RIL to the next generation of young leaders— his children. In this article, find out why succession planning is crucial for Reliance Industries and how Ambani aims to go about it.
Why is Succession Planning Important for RIL?
Succession planning is always tricky in a large family-run business. In 2002, visionary entrepreneur and founder of RIL Dhirubhai Ambani passed away due to a stroke. Since he did not leave a will, a nasty feud broke out between his children— Mukesh Ambani and Anil Ambani. RIL was worth around Rs 28,000 crore at the time. There was confusion regarding the business segments each sibling would run.
Their mother, Kokilaben Ambani, intervened and brokered a split in 2005. The oil refining and petrochemicals business was left to Mukesh, while the finance, infrastructure, power, and telecom ventures were handed over to Anil. What followed after this split is well-known to most of us.
The Downfall of Anil Ambani:
In 2008, Anil Ambani was the sixth richest person in the world with a net worth of $42 billion. However, all his businesses are now drowning in debt as a result of poorly executed strategies. Reliance Communications (RCom) suffered due to heavy competition and technological advancements in the telecom industry. Reliance Infra, Reliance Capital, and Reliance Power did not perform as expected.
These entities defaulted on loans worth tens of thousands of crores and continue to face legal battles. In 2020, a filing at a London court revealed that Anil Ambani has pleaded poverty and claimed that his net worth is “zero”. His brother even stepped in to settle an overdue payment and saved him from a jail term. He lacked the constant innovation and investment needed to drive the businesses forward. These events had a severe impact on the Reliance brand.
Mukesh Ambani’s Business Empire:
With a forward-looking mindset, Mukesh Ambani has led RIL to the most profitable company in India. With a market cap of Rs 1,601 lakh crore, it is the largest company in India. RIL has evolved into an integrated player across energy, materials, retail, telecom, entertainment, and digital services. Their products and services are used by all Indians, across economic and social spectrums. As of June 2021, RIL’s contribution to India’s gross domestic product (GDP) remains unmatched at 6.8%!
Based on the lessons he learnt from the rivalry with his brother, Mukesh Ambani now wants to ensure a smooth transition of power. A feud or fallout in his family would be catastrophic not only for the growth of RIL but for the economy at large.
Decoding Mukesh Ambani’s Succession Plan
At his Family Day speech on December 28, Mukesh Ambani said he aims to avoid his father’s mistake of not making clear provisions for the transfer of power. He also indicated that the leadership transition to the next generation will begin shortly. The Reliance NextGen will consist of his three children— Akash Ambani, Isha Ambani, and Anant Ambani. Mukesh Ambani has immense faith that they will take Reliance Industries to greater heights.
A short excerpt from Mukesh Ambani’s speech:
“From seniors belonging to my generation to the next generation of young leaders, I would like this process to be accelerated. All seniors— myself included— should now yield to the highly competent, extremely committed, and incredibly promising young leadership talent at Reliance. We should guide them, enable them, encourage them and empower them… and sit back and applaud as they perform better than us. Let me summarise it this way. At Reliance we must build an organisational culture that outlasts its leaders.”
As per speculative reports, the shares of RIL’s holding company will be put into a trust. The five family members (Mukesh, wife Nita Ambani, and their three children) will own shares in this trust. Various long-term confidants and executives may also hold positions on the trust’s board. While the entrepreneurial drive remains with the family members, the day-to-day operations will be run by highly skilled professionals.
The next generation of leaders will be expected to introduce innovative ideas and execute them efficiently in order to maintain RIL’s rich legacy. The venture into digital technology and renewable energy sectors will be led by the three children. We will have to wait and see how they handle the pressures of running one of the world’s largest business houses.
What are your views on RIL’s succession plan? Let us know in the comments section of the marketfeed app.
India’s largest company by market capitalization, Reliance Industries Ltd (RIL), has declared its second-quarter results for FY22. The conglomerate reported total revenue from operations of Rs 1,74,104 crore, an increase of 50% year-on-year (YoY). RIL’s net profit increased by a massive 43% YoY (or 11% QoQ) to Rs 13,680 crore. The figures have beaten all street estimates. In today’s article, we discuss how RIL and its various segments have performed in Q2 FY22.
Digital Services
Jio Platforms Ltd reported total revenue of Rs 19,777 crore in Q2, compared to Rs 18,952 crore reported in the previous quarter. The net profit witnessed a 23.5% YoY (or 0.6% QoQ) increase to Rs 3,728 crore. There was a net decline in Jio’s customer base by 11.1 million due to the impact of the Covid-19 pandemic on low-end customers. Many users were unable to recharge due to financial difficulties. As of September 2021, the total customer base stood at 429.5 million users. Average Revenue Per User (ARPU) grew sequentially from Rs 138.4 to Rs 143.6 in this quarter.
All figures except EBITDA Margin in Rs crore
There has been an improvement in subscriber mix and increased customer engagement levels. Total data traffic during the quarter increased by 51% YoY to reach 2,300 crore gigabytes (GB). The Covid-19 pandemic has forced most of us to get on digital platforms. Jio Fibre has over 4 million connected premises now. Also, JioMeet is now used extensively for conducting online meetings by many large enterprises, healthcare companies, and government institutions.
Reliance Jio has maintained its top position in the 4G speed chart with a 20.9 Mbps average download speed in September 2021. The company is working with tech giant Google to make JioPhone Next (a highly affordable smartphone) available in time for the Diwali festive season.
Reliance Retail
The retail segment of RIL was one of the hardest hit in the previous financial year due to nationwide lockdowns. But as restrictions have eased and vaccination rates are up, Reliance Retail has delivered a strong performance in Q2. The segment poised a 74% YoY growth in net profit to Rs 1,695 crore in Q2 FY22. Its revenue increased by 10.5% YoY (or 17.8% QoQ) to Rs 45,426 crore.
All figures except EBITDA Margin in Rs crore
RIL’s retail business recorded higher store operating days at 89% in Q2, compared to 61% in the previous quarter. Meanwhile, footfalls (number of people entering shops) recovered to 78% of pre-Covid levels. The Fashion & Lifestyle business delivered record performance with the highest ever quarterly revenues. Consumer electronics and grocery divisions maintained strong growth momentum during the quarter. JioMart’s reach has extended to 249 cities with the launch of new stores and fulfillment centers.
During the quarter, 813 new stores were launched, taking the total count to 13,635. Reliance Retail also commissioned 86 warehouses and fulfillment centres across an area of 2.5 million sq ft. to improve its service capabilities. They acquired Milkbasket (a subscription-based grocery delivery platform) and Portico (a home styling solutions brand). Reliance Retail Ventures Ltd’s (RRVL) acquisition of JustDial will add value to its merchant partners. You may have also come across reports of RRVL entering into a master franchise agreement with US-based 7-Eleven Inc. to launch convenience stores across India.
Oil-to-Chemical (O2C)
The Oil-to-Chemical arm of Reliance performed well as a result of improved realisation on the back of an increase in oil prices and higher volumes. The segment posted a 58% YoY (or 16.7% QoQ) increase in revenue to Rs 1,20,475 crore in Q2. Earnings before Interest, Tax Depreciation, and Amortization (EBITDA) rose 44% YoY to Rs 12,720 crore. Last quarter, this number was at Rs 12,231 crore. The surge in the global demand for refining and petrochemical products has also aided growth in this segment.
Figures in Rs crore
To Sum Up
RIL’s other segments such as Oil & Gas and Media had performed exceedingly well in the July-Sept quarter of FY22. Revenue of the Oil & Gas segment jumped 363.1% YoY to Rs 1,644 crore due to a 23% rise in production in Q2. Meanwhile, the media vertical’s revenue rose 31% YoY to Rs 1,387 crore, aided by a good recovery in advertisement sales.
The sharp recovery in the retail segment, along with sustained growth in the O2C and digital services business has helped RIL post better-than-expected results. Reliance Retail’s rapid expansion of both physical stores and digital offerings has resulted in healthy growth of revenues and margins. Jio continues to hold a top position in 4G coverage and availability. The company has kickstarted 5G field trials at various locations. RIL continues to focus on green energy initiatives through strategic partnerships with multiple firms.
“I am pleased that Reliance has posted a strong performance in 2QFY22. This demonstrates the inherent strengths of our businesses and the robust recovery of the Indian and global economies,” said Mukesh Ambani, Chairman and Managing Director at RIL.
You can find RIL’s media release for its Q2 results here. What are your opinions on Reliance Industries? Do you think that they will grow even faster in the coming quarters? Let us know in the comments section of the marketfeed app.
Govt in the process of setting up National Infra Bank: Finance Minister
Union Finance Minister, Nirmala Sitharaman, said that the government is in the process of setting up a national bank for funding infrastructure investments. She stated that creating institutional structures, big thrust on monetising assets, and enhancing the share of capital expenditure in central and state budgets were three concrete steps taken by the government for building infrastructure. The minister is expected to introduce the National Bank for Financing Infrastructure and Development Bill, 2021, in Parliament next week.
Bharti Airtel to acquire 7.48% stake in Sandhya Hydro
Bharti Airtel Ltd said it will acquire 17.43 lakh equity shares (or 7.48% stake) in Sandhya Hydro Power Project Balargha. The cost of the acquisition is Rs 1.74 crore. Sandhya Hydro owns and operates a small hydro project of 9 megawatt (plus 10% continuous overload) in Kullu district, Himachal Pradesh. It is a subsidiary of Continuum Energy, Singapore.
Adani Green Energy to acquire 50 MW solar asset from SkyPower Global
Adani Green Energy has signed definitive agreements with Toronto-based SkyPower Global to acquire a 100% stake in a special purpose vehicle (SPV) that owns a 50 megawatt (MW) operating solar asset in Telangana. The cost of the acquisition is based on the enterprise value of Rs 317 crore. The SPV, Surajkiran Renewable Resources, was commissioned in October 2017. It has a long-term Power Purchase Agreement (PPA) with the Southern Power Distribution Company of Telangana at Rs 5.37 per kilowatt-hour (kWh).
Power Grid to acquire 74% stake in Jaypee Powergrid for Rs 351.64 crore
Power Grid Corporation of India Ltd (PGCIL) has signed an agreement with Jaiprakash Power Ventures Ltd (JPVL) to acquire 74% stake in Japyee Powergrid Ltd (JPL) for Rs 351.64 crore. JPL is a joint venture (JV) between Power Grid and JPVL. After the acquisition, JPL will become a wholly-owned subsidiary of PGCIL. The transmission JV has a 214 km transmission link to supply electricity from the Karcham-Wangtoo hydropower project in Himachal Pradesh to Himachal Pradesh, Haryana, Punjab, Uttar Pradesh, and Rajasthan
Failure at NSE clearing arm led to February outage: RBI
The Reserve Bank of India (RBI) said that shutting down of the system at NSE Clearing Limited (NCL) had led to the day-long trading blackout in the stock exchange on February 24, 2021. NCL is responsible for the clearing and settlement of all trades executed on the NSE, as well as risk management functions. “The major issue faced on Feb 24th was the ineffectiveness of inter-operability because of the shutting down of NCL”, said RBI in its State of the Economy bulletin. Another failure was the inability to switch NSE’s operations to the disaster recovery site.
Barbeque Nation Hospitality IPO to open on March 24; price band fixed at Rs 498-500 per share
Barbeque Nation Hospitality Ltd will open its initial public offering (IPO) on March 24. The price band for the IPO has been fixed at Rs 498 – Rs 500 per share. The IPO comprises a fresh issue of shares worth Rs 180 crore and an offer for sale (OFS) of 54.57 lakh equity shares by existing shareholders. Net proceeds aggregating up to Rs 54.62 crore will be used for setting up 26 new Barbeque Nation Restaurants during financial years 2022 and 2023.
India’s crude oil processing hit 4-month low in February
India’s crude oil processing fell to its lowest level in four months in February 2021. According to provisional data released by the government, crude oil processing in February declined by 8.8% year-on-year (YoY) to 4.87 million barrels per day. On a monthly basis, crude oil throughput fell by 5.6%. Fuel consumption in the country also fell to a five-month low last month as higher retail prices affected demand.
Future Group to challenge Delhi HC order on Biyani over RIL deal: Report
As per a report from Mint, the Future Group has decided to challenge the Delhi High Court (HC) order directing detention of its founder Kishore Biyani and attachment of his assets, while restraining the debt-ridden group from taking any step towards its proposed Rs 24,713 crore asset sale deal with Reliance Industries Ltd (RIL). The report states that an appeal challenging the order may be filed on Monday or Tuesday. On March 18, a single-judge bench of the Delhi HC ordered Future Retail not to go ahead with its deal with RIL, as it had willfully violated Singapore International Arbitration Centre’s emergency order.
Govt receives Rs 747 crore from GAIL’s share buyback
The Central government has received Rs 747 crore from share buyback by GAIL (India) Ltd, said DIPAM Secretary Tuhin Kanta Pandey. The total share buyback size was Rs 1,046 crore. The government’s current holding in the company stands at 51.45%. To meet revenue targets, the Centre wants public sector undertakings (PSUs) to either meet their targets for capital expenditure or reward its shareholders in the form of dividends or share buybacks.
Serum Institute seeks emergency use authorisation of Covidshield in India
The Serum Institute of India (SII) has sought approval from the Drugs Controller General of India (DCGI) for emergency use authorisation (EUA) of the AstraZeneca-Oxford vaccine, Covidshield, in the country. It is the second firm, after Pfizer, to seek EUA approval from the Indian drug regulator. SII is currently conducting Phase-3 clinical trials of Covidshield in India, with the support of the Indian Council of Medical Research (ICMR).
Jet Airways may restart operations by summer of 2021
The consortium led by Murari Lal Jalan and Kalrock Capital, on Monday, said that it plans to operationalise Jet Airways by the summer of 2021. They are awaiting approval of the airlines’ resolution plan from the National Company Law Tribunal (NCLT) and other regulatory authorities. As per the resolution plan, Jet Airlines intends to operate all of its historic domestic slots in India and restart international operations.
L&T wins multiple orders for supply of mining equipment to coal, cement sectors
Larsen & Toubro’s (L&T) construction and mining equipment business has secured multiple orders from Coal India subsidiaries and firms in the cement sector. These orders are for supplying 66 units of Komatsu dump trucks, 15 units of Komatsu wheel loaders, 7 units of Komatsu hydraulic excavators, and other allied equipment. The scope of the order includes supplying equipment and maintenance contracts for supporting operations over three to four years.
Hindalco to invest Rs 730 crore to set up new plant in Silvassa
Hindalco Industries Limited announced plans to invest Rs 730 crore to set up a 34,000-tonne extrusion plant at Silvassa, in Dadra. The company stated that the new plant will service the fast-growing market for extruded aluminum products in the western and southern regions. The commercial production at the plant is expected to start in 24 months.
RIL raises Rs $1.4 billion in overseas debt to prepay Reliance Holding’s loans
Reliance Industries Ltd (RIL) has raised $1.4 billion (~Rs 10,342 crore) to prepay its existing foreign loans. The proceeds will be used by RIL to repay the loans of its subsidiary, Reliance Holding USA. Fourteen international banks had signed up for the transaction last week. This is the highest amount raised through debt by an Indian company from international lenders.
IndiGo to refund all passengers for flight cancellations due to Covid-19 lockdown by January 31
Interglobe Aviation Ltd (IndiGo) said that it will refund all customer credit shells, which were created when flights were canceled due to the Covid-19 lockdowns earlier this year. The company stated that it will disburse the full 100% credit shell payments by January 31, 2021. IndiGo stated that it has already processed close to Rs 1,000 crore of refunds, which is 90% of the total amount it owed to customers.
Goodyear India announces interim dividend of Rs 80 per share
The Board of Directors of Goodyear India Ltd has approved an interim dividend of Rs 80 per equity share of face value of Rs 10 each, for FY21. The company has fixed 15 December as the record date for determining the entitlement of the shareholder for the interim dividend. The share price of Goodyear jumped by 14% and closed at Rs 997.65 on the NSE today.
NSE introduces weekly F&O contracts in three more currency pairs
The National Stock Exchange (NSE), on Monday, launched weekly futures and options (F&O) contracts on three currency pairs: Euro-Indian rupee, Japanese Yen-Indian rupee, and Pound Sterling-Indian rupee. The NSE stated that the weekly derivatives on currency pairs will help market participants to hedge their currency exposure from short-term market movements. It will also help in reducing time-related costs.
LTI partners with UAE-based Injazat for accelerating digital transformation in the Middle East
Larsen & Toubro Infotech (LTI) has entered into a strategic partnership with UAE-based Injazat, to implement its best-shore service delivery model in the Middle East. The delivery model will provide Injazat’s customers with a hybrid of delivery approaches including onshore and cloud. LTI will further advance Injazat’s wider digital delivery ecosystem.
BLS International signs contract with Brazil Embassy in China to operate visa application centres
BLS International Ltd announced that it has commenced accepting appointments for visa applications for the Embassy of Brazil in China. The five-year exclusive contract from the Embassy mandates BLS to operate 15 centres across China. The company is expected to process over 4,00,000 applications over the next 5 years.
Dhirubhai Ambani, who gave birth to Reliance, started his mission in 1957 with a small 500 sq. ft. office. He developed a little yarn trading business but always dreamt of establishing India’s largest company.
In 1977, Reliance Textile Industries’ IPO was subscribed over 7 times thus, giving a major financial and morale boost to the company. Following the idea of backward integration, Reliance set up its first mega manufacturing plant at Patalganga under just 18 months. Reliance Industrial Infra was also launched in 1988.
With the idea to reap benefits of backward integration, the Hazira plant was started in 1991 which made them the world’s largest integrated producer of polyester. A huge breakthrough was found in 2000 as Reliance built the world’s largest grassroots refinery in Jamnagar, that too in just 36 months!
The year 2002 witnessed the launch of Reliance Communications as Reliance Infocomm Limited. The same year witnessed the death of Dhirubhai Ambani. From there on, reports of disagreement between the two brothers, Anil Ambani and Mukesh Ambani came to surface. When the feud became public in 2005, their mother Kokilaben intervened to split the Reliance empire.
Mukesh Ambani led Reliance got the soul of the business: Reliance Industries, along with IPCL. On the other hand, Anil Ambani got the responsibility to command Infocomm, Reliance Energy and Reliance Capital.
The oil & gas business took a massive upturn in 2009 when Reliance commenced production of hydrocarbons in its KGD6 block. This helped them to develop the world’s fastest green-field deepwater oil development project. After penetrating the retail business, Reliance Retail becomes the largest retailer by revenue in 2014.
Mukesh Ambani led Reliance ventured into the digital revolution of the country by launching wireless broadband 4G services and Jio. In just four decades, the company has grown from a small start-up to one of the biggest companies around the world. It has been some journey!
Reliance is dominating the current Indian market. Thus, it is no wrong that everyone is talking about this company. Yes, it is a huge empire, but do you know where the revenue and profits come from? Everything below will explain to you how the company makes money from and which segment helps them to achieve this consistent growth.
Revenue and Profit Distribution
Reliance reported a consolidated turnover of Rs 6,59,205 crore for FY20, a rise of 5% over the previous year. Consolidated net worth also increased by 15% to reach Rs 3,75,734 crore. Reliance operates in several markets. From trading yarn to oil and now to digital transformation, Reliance has ventured in many spaces. The tables below show which segment has contributed more to revenues and profits over the past four years.
2017
2018
2019
2020
Refining
63.7%
56.4%
50.9%
47.8%
Organized Retail
8.6%
12.8%
16.9%
20.1%
Petrochemicals
23.5%
23.1%
22.3%
17.9%
Digital Services
0.2%
4.4%
6.3%
8.4%
Crude Petroleum
2.7%
2.3%
2.9%
5.2%
Percentage contribution of different segments to Total Revenue
2017
2018
2019
2020
Refining
65.5%
49.4%
33%
30.1%
Organized Retail
2.0%
3.8%
7.7%
11.3%
Petrochemicals
34%
40%
46.7%
36%
Digital Services
-0.1%
6.1%
12.6%
20.3%
Crude Petroleum
2.8%
3.2%
1.7%
3.1%
Percentage contribution of different segments to Net Profits
Digital Services
Jio is an entire ecosystem which aims to help Indians enjoys digital life to the fullest. It aims to cover 90% of India’s population in the next year. Under the music stream, it acquired Saavn and turned it into Jio Saavn. To counter zoom’s dominance, it launched video conferencing app JioMeet. Reliance Jio becamethe number 1 ranked mobile telecom operator in the country by both Adjusted Gross Revenue (AGR) and subscribers.
India has around 450 million unique smartphone users, second only to China in the whole world. This gives them additional motivation to turn this segment into a cash cow and utilize the already dominated market.
Jio has been the driving force behind RIL in the past four months. With the world under lockdown, the oil & gas domain faced a drastic decline in demand. In these extreme times, sale of stake in Jio Platforms helped the company become net-debt free much before their targeted time.
Revenue from this domainhas increased by a CAGR of 226% in the past four years. In 2017, the digital services made just 0.7% of the total revenues. This has increased to 8.4% in FY20, according to the recent annual report of the company. Digital services were accruing losses in 2017. But a well-planned strategy has made this segment the crown jewel of Mukesh Ambani. Jio contributed around 20% of profits for RIL this year.
Source: Author’s own creation
Refining and Marketing
Reliance R&M helps in making a wide range of products like Liquified Petroleum Gas, Propylene, Gasoline, Jet fuel, sulphur etc. These products are used widely as domestic and industrial fuel, transport fuel, feedstocks for fertilizer and pharmaceuticals, etc.
The global oil industry has been in turmoil since the spread of COVID-19. The demand for oil worldwide fell to the lowest level since 2011. From 2018 to 2019, this domain registered a growth of 29% but things were way different this year. FY2019-20 revenue from this segment fell by 1.6% y-o-y to 3,87,522 crore. Crude oil prices fell massively. This made the production more expensive for the company. Thus, their gross refining margin (GRM) fell to $6.3 per barrel from $8.1 per barrel.
The problem in this segment is not in the top line, but actually in the bottom line. Even though the revenue is decreasing at a gradual pace, the profits contributing to the total profits is decreasing even faster. In fact, in the space of four years, profits % contribution has fallen by more than half. Good time to switch from oil to telecom maybe?
Source: Author’s own creation
Retail
Reliance Retail is the retail segment of the Reliance group. The retail serves under the food and grocery, consumer electronics and fashion & lifestyle category. Reliance Trends, Trends Women, Reliance Fresh, Reliance Smart, Reliance Footprint and Reliance Jewels and some of the stores under which Reliance operates.
The general perception is that growth in digital services is helping the company to thrive. Here’s an eye-opener. The retail business of Reliance has grown with a CAGR of 382% during financial years 2017-’20. This is in contrast to digital services’ 226%.
The company has focussed on store expansion and increasing the number of product mix so that the consumers can consider it a one-stop-shop. Roll-out of the Digital Commerce initiative will further increase customer’s awareness and customer’s accessibility.
Recently, Reliance Retail and WhatsApp entered a partnership to support small businesses on WhatsApp via JioMart. And as many reports suggest, Reliance is inching closer every day to acquire Future Retail as soon as possible.
Source: Author’s own creation
Petrochemicals
Reliance is among the top ten largest producers of petrochemicals in the world and the biggest in India. Petrochemical is a chemical which is obtained from refining of petroleum and chemical. These chemical compounds are later used to manufacture a range of products which comes is the daily use of people. Few products are resins, synthetic fibres, plastics, detergents and pesticides. With the power of chemistry and innovation, the Reliance focuses on making several products across agriculture, automobile, housing, industrial and healthcare. The company produced a range of polymers, aromatics, polyesters, etc.
The disturbed global factors related to oil echoed in petrochemicals performance this year. Their overall contribution to the revenue decreased from 22.3% last year to 18% this year. Due to lower price realization and lower sales, revenues from this segment has decreased by 15.5%.
Last year, revenues amassed from petrochemicals was Rs 1,72,065 crore. This year, it fell to Rs 1,45,264 crore. Petrochemical has been the second most revenue generated area for a while but this changed in FY20. Organized retail leapfrogged the petrochemicals by almost 3% when it comes to revenue contribution.
Petrochemical has always been one of the biggest contributors to total net profits for Reliance. From 2017-19, it has increased from 34% to 46.7% but with the pandemic affecting half of the financial year, expenses shot up due to trade barriers. This has resulted in a decrease in contribution from 46.7% to 36%.
Source: Author’s own creation
Shortly, we will be knocking on your doors to explain each and every segment in detail. Until next time.
Reliance Industries (RIL) declared their Q1 FY21 results on Thursday. They have reported a consolidated net profit of Rs 13,233 crore which is 31% higher than Rs 10,141 announced in the same quarter last year. Street estimated that it will be a tough quarter for RIL after the prices and demand of oil & gas nosedived in recent months. Yet, Mukesh Ambani led Reliance Industries has beaten all the street estimates.
Q1 FY21
Q4 FY20
Q1 FY20
QoQ
YoY
Revenue
88,253
151,209
164,495
-41.6%
-46.3%
Profits
13,233
6,546
10,141
102%
30.4%
Values in Crore Rupees
Their consolidated revenue is recorded at Rs 88,253 crore when compared to Rs 1,56,976 crore declared last year. This quarter has been very special for the company. The equity sale of Jio platform has helped them to raise Rs 1,52,056 crore and become net-debt free, even in these times of global pandemic.
RIL has been the biggest gainer among Nifty stocks after rising 145% since last March. The oil-to-telecom company has enjoyed the benefits of the increasing popularity of its digital services as workers are switching to the work-from-home model. This has also led to higher growth in its retail business. In the June quarter alone, the company’s stock price has rallied upwards by 54%.
All of this success has pushed Mukesh Ambani to become one of the richest businessmen in the world. Also, RIL entered into the list of most valued companies globally with a market capitalisation of Rs 13.92 lakh crore. In the coming months, more is expected RIL as they lead India’s fight against COVID-19 in the stock market.
