INDIA's Reliance Industries has reported a 39 per cent slump in its March quarter profit, the steepest drop since December 2008, mainly due to sharp fall in oil prices.
The company, India’s largest by market value, posted consolidated profit of 63.48 billion rupees ($845 million) in the three months ended March 31.
The company also unveiled the terms of a rights issue, its first in nearly three decades, to raise money and eliminate net debt by the end of this year. Its net debt at the end of March was $21.4 billion.
Reliance set a price of 1,257 rupees per share for India’s biggest rights issue of 531.25 billion rupees with a ratio of 1:15.
Brent crude lost an unprecedented two-thirds of its value in the first three months of 2020 as the health crisis crushed demand and oil producers delayed supply cuts.
Reliance's profitability in March quarter was dented by an inventory loss of about 42.45 billion rupees ($565 million).
Refiners like Reliance buy and store crude oil for weeks, before processing it into fuel and petroleum products. An inventory loss is booked when oil prices drop by the time crude is processed into refined fuels.
Reliance said gross refining margin, the profit earned on each barrel of crude oil processed, was $8.90 per barrel in the March quarter, less than the $9.20 in the prior quarter but better than the $8.20 a year earlier.
However, revenue at its telecom business Jio grew in double-digits as more Indians signed up for cheap voice-calling and mobile internet. Jio’s subscriber base at the end of March stood at 387.5 million.
Its retail business, which runs 10,000 stores selling groceries, consumer electronics and apparel, reported a modest four per cent rise in revenue, hurt in part by India’s nationwide lockdown.
Overall, Reliance’s consolidated revenue from operations fell 2.3 per cent to 1.39 trillion rupees.
Reliance has formed a joint venture with BP Plc to sell refined fuels in India and recently struck a deal with Facebook Inc to sell about 10 per cent stake in its digital arm, Jio Platforms, for $5.7 billion.
The company said it has received additional interest from global investors for a deal similar to Facebook and an announcement could be made in coming months.
It is also in the process of selling a 20 per cent stake in its oil-to-chemical business to Saudi Aramco.
The deal with Aramco was on track to close, the company said after it missed the deadline for closing the deal by March.
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