RELIANCE INDUSTRIES LIMITED
Q2 FY 21 RESULTS REVIEW
DATED 01 11 2020
CONSOLIDATED RESULTS FOR
QUARTER ENDED 30THSEPTEMBER,2020
STRONG SEQUENTIAL REBOUND
ACROSS ALL BUSINESSES
CONSOLIDATED QUARTERLY
REVENUE WAS HIGHER BY27.2% AT `128,385 CRORE
CONSOLIDATED QUARTERLY
EBITDA GREW BY 7.9% TO `23,299 CRORE
CONSOLIDATED QUARTERLY PAT
BEFORE EXCEPTIONAL ITEM AT`10,602 CRORE HIGHER BY 28%
CONSUMER BUSINESSES
CONTRIBUTED 49.6% OF CONSOLIDATED SEGMENT EBITDA
RECORD QUARTERLY EBITDA FOR
DIGITAL SERVICES AT `8,345 CRORE
ROBUST RECOVERY IN RETAIL
EBITDA TO`2,006 CRORE HIGHER BY 85.9%
CAPITAL RAISE OF `152,056 CRORE
IN JIO PLATFORMS LIMITED
CAPITAL RAISE OF `37,710 CRORE
IN RELIANCE RETAIL VENTURES LIMITED
FIRST TELECOM OPERATOR OUTSIDE
CHINA TO CROSS 400 MN SUBSCRIBERS IN A SINGLE COUNTRY MARKET
ADDED IN EXCESS OF 30,000 TO
ITS WORKFORCE
STRATEGIC UPDATES
•
Jio Platforms Limited, a wholly owned subsidiary of Reliance Industries
Limited, raised ₹ 152,056 crore
from leading global
investors (including Facebook,
Google, Silver Lake,
Vista Equity Partners, General
Atlantic, KKR, Mubadala,
ADIA, TPG, L
Catterton, PIF, Intel
Capital and Qualcomm Ventures).
•Reliance Retail
Ventures Limited (RRVL),
a wholly owned
subsidiary of Reliance
Industries Limited, raised ` 37,710 crore of investments from leading
global investors (including Silver Lake, KKR, General Atlantic, Mubadala, GIC,
TPG and ADIA).
•RRVL
has entered into an agreement to acquire retail & wholesale business and
the logistics & warehousing business of the Future Group for a
consideration of `24,713 crore. (This acquisition is subject to SEBI, CCI,
NCLT, shareholders, creditors and other requisite approvals.)
•RRVL acquires
majority stake in
leading digital pharma market
place “Netmeds” for a
consideration of ~ `620 crore.
•Qualcomm Technologies,
Inc. and Jio
Platforms Limited (Jio)
along with its
wholly owned subsidiary Radisys Corporation
announced expanded efforts to develop open and interoperable interface
compliant architecture based 5G solutions with a virtualized RAN. This work is
intended to fast track the development and roll out of indigenous 5G network
infrastructure and services in India.
•The Company supported job
creation in the economy during the pandemic-impacted period and generated in
excess of 30,000 new jobs during April – September 2020 in Consumer businesses
and last mile delivery.
RESULTS AT AGLANCE(Q-O-Q) CONSOLIDATED -RIL
•Revenue for the quarter
was `128,385crore($ 17.4 billion) higher by 27.2%
•EBITDA before exceptional
item for the quarter was `23,299crore($ 3.2 billion) higher by 7.9%
•Net Profit before
exceptional item for the quarter was `10,602 crore ($ 1.4 billion) higher by
28.0%
•Cash Profit before
exceptional item was `16,837 crore ($ 2.3 billion) higher by 20.9%
•EPS before exceptional
item was `14.8 per share, increased 14.9%
STANDALONE -RIL
•Revenue for the quarter
was `64,431crore($ 8.7 billion)higher by 23.3%
•EBITDA before exceptional
item for the quarter was `11,811crore($ 1.6 billion)higher by 4.0%
•Net Profit before
exceptional itemfor the quarter was `6,546crore($ 887 million)higher by 34.3%
•Cash Profit before
exceptional item for the quarter was `7,201 crore ($ 976 million) higher by
31.6%
•Exports for the quarter was
`34,501 crore ($ 4.7 billion)growth of 5.6%
CONSOLIDATED –JIO PLATFORMSLIMITED
•Revenue including access
revenues for the quarter was `21,708crore($ 2.9 billion) higher by 7.1%
•EBITDA for the quarter
was `7,971crore($ 1.1 billion)increase of 8.7 %
•Net profit for the
quarter was `3,020crore($ 409 million)growth of 19.8%
•Total Customer base as on
30thSept 2020 of 405.6 million, growth of 1.8%
•ARPU during the quarter
of ₹145.0 per subscriber per month as against ₹140.3 per subscriber per month
in the trailing quarter
•Total wireless data
traffic during the quarter of 1,442 crore GB;1.5% growth
CONSOLIDATED –RELIANCE RETAIL
•Revenue for the quarter
was `41,100crore ($ 5.6 billion) higher by 30.0%
•EBITDA for the quarter
was `2,006crore ($ 272 million) higher by 85.9%
•Net profit for the
quarter was ₹973crore($ 132 million)higher by 125.8%
•Cash Profit for the
quarter was ₹1,408crore($ 191 million)higher by 77.3%
•11,931 operational
physical stores; net addition of 125 stores during the quarter
Commenting on the results,
Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries
Limited said:
“We delivered strong overall operational and
financial performance compared to previous quarter with recovery
in petrochemicals and retail segment,
and sustained growth in Digital
Services business. Domestic demand has sharply recovered across our O2C
business and is now near pre-Covid level for most products.
Retail business activity
has normalised with strong growth in key consumption baskets as lockdowns ease
across the country.
With large capital raise
in last six months across Jio and
Retail business, we
have welcomed several
strategic and financial
investors into Reliance family. We continue to pursue growth initiatives
in each of
our businesses with
a focus on
the India opportunity.”
OPERATIONALHIGHLIGHTS
CONSOLIDATED JIO
PLATFORMS LIMITED
•Consolidated revenue from
operations, including access revenues, grew by7.2%to ₹18,496crore,Q-o-Q
•Consolidated EBITDA
of ₹7,971 crore
and EBITDA margin
of 43.1%, up from
42.5% in 1QFY20-21
•Consolidated Net Profit
grew by 19.8% to₹3,020 crore, Q-o-Q
•Total Customer base as on
30thSeptember 2020 of 405.6 million
•ARPU during the quarter
of ₹145.0 per subscriber per month
•Total wireless data
traffic during the quarter of 1,442 crore GB
•Total voice traffic
during the quarter of 93,223 crore minutes Connectivity
•Jio has become the only
operator (outside China) to have reached the milestone of 400 million
subscribers in a single country market.
•Wireless gross
addition showed a
strong sequential increase
to 27.2 million
as lockdown restrictions began to
ease during the quarter.
•Monthly churn
rate for wireless subscribers
increased to 1.69% with follow
through impact of COVID on SIM consolidation and recharge
cycle of migrant population.
•Customer engagement
continued to be robust with average wireless data consumption per user per
month at 12.0GB and average voice consumption at 776 minutes per user per
month, with an increasing usage of application-based voice on data networks.
Digital Platforms
•Jio Platforms
expanded efforts to
develop open and
interoperable interface compliant architecture based 5G solution
with a virtualized RAN. This is intended to fast track the roll out of
indigenous 5G network infrastructure and services in India. Qualcomm
Technologies and Jio achieved over a 1 Gbps milestone on the Reliance Jio 5GNR
solution with a Tier-I carrier in the US.
•JioUPI pan
India rollout on
MyJio was completed during
the quarter. This
would help secure financial transactions and bill
payments across all Jio digital platforms.
Update on Investments into
JPL
•JPL has completed the
fund raising of ₹ 152,056 crores across thirteen global investors which
includes Facebook, Google,
Silver Lake, Vista
Equity Partners, General
Atlantic, KKR, Mubadala, ADIA,
TPG, L Catterton,
Public Investment Fund,
Intel Capital and
Qualcomm Ventures for a cumulative equity stake of 32.96%.
•All of
these investments, excluding
Google, have been
completed post fulfilling
applicable conditions and total amount of ₹ 118,319 crore has been
received by the Company.
CONSOLIDATED RELIANCE
RETAIL:
•Consolidated Value of
sales and services for 2Q FY21 increased by 30.0% Q-o-Q to ₹ 41,100crore, a
strong performance given
that the full
store network was
not operational and
with footfalls still significantly lower than pre-COVID levels.
•Revenue from operations
for 2Q FY21 increased by 29.7% Q-o-Q to ₹ 36,566 crore, and at the same level
as the last year despite restricted store operations and lower footfalls,
•EBITDA for 2Q FY21
increased by 85.9% Q-o-Q to ₹ 2,006crore. EBITDA margin (on revenue from
operations) recovered by 170 bps to 5.5% in 2Q FY21 against 3.8% in 1Q FY21.
•Overall, Reliance
Retail’s 2Q FY21 performance reflects resilience and customer preferences. The
business is focused on restoring the momentum to pre-pandemic levels as
operating curbs and limitations are relaxed.
•Decisive actions
taken by the
business to adapt
and strengthen its
operating models/capabilities for a post COVID world, positions it well
to maintain its consistent industry leading performance.
•The operating
environment was subdued, though
lockdown related restrictions
on store operations were
progressively eased during the quarter. Partially open and fully open stores
were up to 85% in 2QFY21. Footfalls, while recovering, are still lower than pre
COVID levels, particularly across Fashion & Lifestyle and mall stores.
•With revenues
of `41,100crore and EBITDA
of `2,006crore,the
performance marks an industry leading performance with a ‘V
shaped’ recovery over 1QFY21, as sales grew30%, EBIDTA nearly doubling and
margin improving +170 bps Q-o-Q.
•The quarter saw robust
growth over the previous quarter across all consumption baskets. The
strong growth momentum
was sustained in
Grocery and Connectivity
while Consumer Electronics and
Fashion & Lifestyle staged a significant recovery.
•The robust EBITDA
delivery was enabled by a build back of revenue streams and the continued
emphasis on cost management.
•With operating curbs
being lifted progressively, store expansion resumed with 232 stores being
opened during the quarter, taking the current footprint of the business to
11,931 stores, spread over 29.7 million sq. ft. of retail space.
•The business
continued making steady
progress on bringing
New Commerce to
life. Digital commerce
capabilities were augmented across all consumption baskets and partnerships
with merchants in Grocery and Fashion & Lifestyle expanded further. •We
also entered the Pharma category during the quarter.
Consumer Electronics
•Consumer Electronicsdelivered a
strong performance with
revenues at 2xover
previous quarter, and notably double-digit growth over the previous year, despite lower
footfalls.
•Growth was broad based
across categories, with laptops and productivity devices more than doubling and High
End TVs, Air
Care and Appliances
delivering strong growth.
The performance was bolstered
by sharp and
focused event activation
particularly during the Independence Day Golden Event, enabled by
unmatched offers, strong value proposition and affordability schemes.
•The business
moved swiftly to
make entire network
of Digital stores
omni-enabled. Digital
commerce activation led to a
significant uptick in
orders over last
quarter. Notably 88% of
orders from stores
were delivered in
under 6 hours,
reflecting an unmatched
delivery proposition to customers.
Fashion & Lifestyle
•With more stores being
allowed to operate, Fashion and Lifestyle categories delivered strong
sequential recovery with revenues up 3X over previous quarter. •In Apparel and
Footwear, focused activation in-store saw conversions and bill values move up
to record highs. Trends stores in small towns performed very well.
•With the
continued thrust on
digital commerce, 100%
of Trends stores
were omni-enabled. AJIO scaled
new highs with 4x growth in orders from pre-COVID levels. Its quarterly revenue
run rate is now equivalent to full last year’s revenue.
•The B2B initiative ramped
up further as partnerships with merchants now extend across 1,700 cities and
orders growing 4X over 1Q FY21
•Jewels had one of its
strongest quarter’s with share of diamond sales in the overall mix rising. The
business expanded its presence online with listings on AJIO.
•In the luxury and premium
brands business, omni channel capabilities were ramped up, with digital commerce
revenues up 3X
over previous year.
The business continued
to take pioneering initiatives to
engage with its customers.
Grocery
•The strong growth
momentum in Grocery was sustained as it delivered yet another quarter of
performance well ahead of market. The quarter saw the continued trend of lower
footfalls being more than offset by higher bill values.
•JioMart continues to
scale-uprapidly with consistent increase in daily customer orders.
•From a portfolio
perspective, staples and processed food categories continued to drive growth,
with Home and Personal Care (HPC)delivering a buoyant performance this quarter.
•The business continued to
leverage brand partnerships and strengthen its own brand portfolio with a range
of product launches to delight its customers.
•JioMart Kirana partnerships were extended to 20 cities
during the period with 4X increase in orders over 1Q
FY21. With a
strong value proposition
and uninterrupted service
despite operating constraints, JioMart continues to win the trust of
Kirana partners.
O2C-PETROCHEMICALS
•Segment Revenue increased
by 17.8% Q-o-Q with higher prices across product portfolio and higher volumes. PP,
PE and PVC
prices strengthened by 13%,
17% and 25% Q-o-Q respectively due to tight supply with
regional turnarounds and improvement in demand. With increase in
feedstock prices, PX prices firmed
10% Q-o-Q while PTA and MEG prices increased by 4% and 10%
respectively.
•Naphtha prices increased by
56% Q-o-Q following crude prices and healthy demand.
•Cracking margins
for Reliance improved
Q-o-Q due to
feedstock mix and
favourable economics for ethane
cracking. RIL crackers
operated at near
100% utilisations during
the quarter.
•Segment EBITDA for 2QFY21
increased by 34.6% Q-o-Q to ₹ 5,964 crore primarily on account of higher production volume and higher
volume placement in domestic
market. EBITDA margins also improved sequentially by 250 bps with firm
cracker margins, effective product and sales mix and superior ethane cracking
economics.
•PP margins reduced by 21%
($ 126/MT) due to higher feedstock prices despite robust demand from health
& hygiene applications. PE margins remained stable ($ 478/MT) with firm
demand from packaging sector. PVC
margins improved by 14%
($546/MT)led by strong
demand recovery in agri and construction sector.
•PX-Naphtha delta declined
37% Q-o-Q ($ 136/MT)with sharp increase in naphtha price while PTA margins
declined by 14% Q-o-Q ($107/MT)in well-supplied markets. PX and PTA markets
were also impacted by start-up of new capacities in China.
•Domestic polymer and
polyester demand improved amidst easing of lockdown and revival of downstream
operations with improved labour availability. RIL achieved highest ever
quarterly polymer domestic sales by leveraging domestic supply chain,
multimodal logistics and nation-wide
warehousing facility. RIL placed
higher volumes of polyester
products in the domestic market with improved operating rates
for spinning and texturizing units
O2C-REFINING &MARKETING
Global oil demand for
2QFY21 was at 93.6 mb/das per IEA, Q-o-Q increase of10.6 mb/d with easing of
lockdowns across economies. Indian oil product demand also improved by 11.3%
Q-o-Q, led by HSD (5.3%), MS (41.1%)and ATF (107.4%).
•Segment Revenues for 2Q
FY21 increased by 33.3% Q-o-Q to ₹ 62,154 crore primarily due to higher crude
oil price. Dubai crude price averaged at $42.9/bbl during the quarter v/s
$30.5/bbl in 1QFY21, up40.5% Q-o-Q.
•Average Singapore
Complex margins for the
quarter was at $0.05/bbl
as against $-0.9/bbl in
1QFY21with recovery in
mobility fuels led
by gasoline. Reliance maintained
a significant premium of $5.7/bbl
over regional benchmark.
•Crude throughput was
optimized with opportunistic sourcing of Crude barrels in view of higher crude
prices and narrow Arab Light-Heavy differentials.
•RIL used flexibility in
its refining configuration to swing significant production of ATF into Diesel
and other products, as ATF demand was severely impacted due to air travel
restrictions.
•Segment EBITDA for 2Q
FY21 declined by 21.4% Q-o-Q to ₹ 3,002 crore primarily on account of lower middle
distillates cracks and
narrower light-heavy crude differential leading
to higher crude cost. The performance
wasalso partially affected
by planned turnaround
during the quarter.
•Reliance BP Mobility
Limited (“RBML”), a joint venture (JV) of RIL and BP operated 1,406 fuel retail
outlets. Against industry growth of 5.3% and 41.1%Q-o-Q in HSD and MS, RBML
clocked 15.1% and 55.4% respectively.
OIL AND GAS (EXPLORATION &PRODUCTION)BUSINESS
•Segment Revenues for
2QFY21 declined by 29.8% Q-o-Q to ₹ 355crore primarily due to lower price
realisation and decline in production.
•KGD6 -R-Cluster development:
oAll wells have been
drilled, completed, tested and connected. The sub-sea installation and testing
works have also been completed.
oCurrently work on Control
& Riser Platform is underway, with first gas expected in 3Q FY21.
•CBM: Production level remained
stable at 0.94 MMSCMD with ongoing focus on sustaining and augmenting
production.
•US Shale: Oil and Gas
companies in US responded to Covid-19 pandemic with significant Capex cuts, as
a result of which both WTI and HH prices improved Q-o-Q by 47% and 15%
respectively. Both the Chevron and Ensign JV have suspended development
activity.
•For July’2020-Sept’2020
period, the overall price realization was at $ 1.82/Mcfe, up 15%Q-o-Qand
production was3% lower at 24.5Bcfe.
MEDIA BUSINESS
•Segment Revenues for 2Q
FY21 roseby31.5% Q-o-Q as COVID-linked impact on ad-revenues receded over the
quarter.
•EBITDA for 2Q
FY21was at ₹ 166 crore. Operating margins
continued to improve,
as Broadcasting margins rose sharply, and Digital News business swung
into profitability.
•Ad-revenues rebounded
sharply, as economic activity restarted on tapering of lockdowns. News
business’ advertising has fully recovered, and Entertainment recovery is
near-complete by the end of the
quarter. Subscription revenues
have been resilient;
and domestic subscription revenue continues to rise led by
expanding TV & Digital distribution tie-ups.
•Concerted efforts
to re-base cost-structures in
the new normal
have driven efficiencies
and improved operating leverage.
•TV viewership has now
settled at ~1.1x pre-COVID levels. Pay-TV has clawed back its share from
free-to-air channels, as entertainment programming is back in full-swing.
•An increased
propensity to pay
for content has
been witnessed. Flagship
properties MoneyControl and Voot have witnessed rapid growth in
subscribers.
CONSOLIDATED FINANCIAL
HIGHLIGHTS:
•For the quarter ended
30thSep, 2020, RIL achieved revenue of ₹ 128,385crore ($17.4billion), as
compared to ₹ 100,929crore in the trailing quarter. The increase in revenue was
primarily due to higher price realizations in O2C
segment, strong recovery in Retail operations and sustained subscriber
addition with improvement in ARPU in Digital services business.
•Exports (including deemed
exports) from RIL’s India operations increased by 5.6% to ₹ 34,501 crore ($
4.7billion) as against ₹ 32,681crore in the trailing quarter due to higher
price realizations despite lower export volume.
•EBITDA increased by 7.9%
to ₹ 23,299crore ($ 3.2 billion) from ₹ 21,585crore in the trailing quarter,
led by EBITDA margin improvement across businesses.
•Finance cost was at ₹
6,084crore ($ 825million) as against ₹ 6,735crore in the trailing quarter. The
decrease in finance cost was due to pay down of higher cost liabilities. This
was partially offset by higher charges on account of prepayment of liabilities.
Increase in finance cost was also due
to merger of
RHUSA during the quarter as the current
quarter reflects cumulative finance costs of 1Q FY21 as well
as 2Q FY21.
•Current tax expense was
₹923crore in the trailing quarter as against ₹378crore ($ 51 million)in the
current quarter on account of reduction in annual effective tax rate for the
financial year. Deferred tax liability largely remained unchanged.
•Profit after
tax(pre-exceptional)grew sharply by 28% Q-o-Q at ₹10,602crore ($ 1.4billion)as
against ₹8,282crorein the trailing quarter.
•Outstanding debt
as on 30thSeptember, 2020
was `279,251 crore
($37.9billion).Cash and cash equivalents as on 30thSeptember, 2020 were
at `185,711crore ($ 25.2billion).Funds received post quarter-end and balance
capital commitment receivables are in excess of quarter-end Net Debt levels.
•The capital expenditure
for the half-year ended 30th September, 2020 was `28,332crore ($
3.8billion)including exchange rate difference.
•RIL retained
its domestic credit
ratings of “CRISIL
AAA/Stable” from CRISIL and
“IND AAA/Stable” from India Ratings and an investment grade rating for
its international debt from Moody’s as “Baa2” and “BBB+” from S&P. Fitch
has upgraded RIL Local-Currency Issuer Default Rating (IDR) to ‘BBB+’ from
‘BBB’ and retained Foreign-Currency IDR as ‘BBB-‘.
