Reliance industries (RIL) resisted the persisting global economic uncertainty and delivered the best operating and financial performance in its history. This is the seventh time in a row RIL managed to stay at the top of BW Real 500 rankings. RIL’s new projects in the hydrocarbons and digital services businesses have made significant progress. They have invested over Rs 1,12,000 crore in FY 2015-16, the highest-ever by any corporate in Indian history. This large investment spread across all their businesses will create sustained and significant value for their stakeholders. According to RIL Chairman Mukesh Ambani, “Reliance recorded its highest-ever consolidated net profit during the year. The benefits of low crude oil and energy prices for our downstream businesses clearly outweigh the impact of global macro headwinds on our upstream segment, reflected in the record earnings for the year.”
But, this year again it slipped to second position, behind Indian Oil Corporation in terms of income. Its total income declined to Rs 285,340 crore compared to last year’s Rs 384,048 crore. However, RIL’s combined income and assets of Rs 891,554 crore is way ahead of IOC’s Rs 603,878 crore this year. Similarly last year too, RIL registered a combined income of Rs 888,534 crore against IOL’s Rs 689,386 crore.
Ambani explains, “Our large investment spread across all our businesses will create sustained and significant value for our stakeholders. As we near the end of our largest capital expenditure cycle, we are focused on ensuring a smooth stabilisation of the new growth platforms across our hydrocarbon and consumer businesses.”
Global economic activity remained muted during the year as oil prices remained soft. The oversupply situation continued as oil producing countries vied for market share. Emerging markets dependent on Chinese growth were impacted as China moves from an infrastructure and export economy to a consumption-based economy. Despite these hindrances, RIL recorded its highest-ever consolidated net profit of Rs 27,715 crore during the year, a growth of 17.2 per cent y-o-y. The global oil demand is expected to grow by 1.4 million b/d in CY 2016 and probably by 1.3 million b/d in CY 2017.
RIL is engaged in refining, including manufacturing of refined petroleum products, and petrochemicals, including basic chemicals, fertilisers and nitrogen compounds, plastic and synthetic rubber in primary forms. The oil and gas segment includes exploration, development and production of crude oil and natural gas. The organised retail segment includes organised retail business in India. The others segment includes textile, SEZ development, telecom or broadband business and media.
The outlook for the telecom sector took a hit since Prime Minister Narendra Modi imposed a ban on Rs 500 and Rs 1,000 notes, sparking an intense cash crunch that threatens to erode consumer spending. Most Indians still use cash at local touch points to recharge so-called pre-paid connections. But the move also boosts service providers such as Bharti that are expanding into digital payments.
Ambani, recently through a live feed on YouTube also announced that Jio would roll out Jio-Money Merchant Solutions, a mobile payments application, for enabling digital payments for small merchants at their various point of transactions.
BW Reporters
The author is associate editor at BW Businessworld
