Updated December 26th, 2023 at 08:19 IST
RIL’s standalone and consolidated profit gap doubles: JPMorgan report
Divergence between the two profit figures for the fiscal year 2022-2023 was influenced by 335 individual standalone entities.
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The disparity between the standalone and consolidated net profit of Reliance Industries Ltd has more than doubled, reaching Rs 22,400 crore in recent years. This growth stems from significant advancements in the company's retail and telecom segments housed within distinct subsidiaries, as per a JP Morgan report.
JP Morgan's analysis, drawing from Reliance's annual reports, highlighted that the gap between standalone and consolidated profit after tax (PAT) expanded from Rs 8,400 crore in the fiscal year 2019-2020 to Rs 22,400 crore in the 2022-2023 fiscal year. During this period, Reliance's standalone net profit escalated from Rs 30,902 crore to Rs 44,205 crore, while the consolidated net profit surged from Rs 39,354 crore to Rs 66,702 crore.
The divergence between the two profit figures for the fiscal year 2022-2023 was influenced by 335 individual standalone entities, including associates and joint ventures, contributing to the difference. Notably, around 40 per cent (133) of these entities reported profits for the year, a reduction from the 498 entities in the consolidated accounts of the fiscal year 2019-2020.
The telecom and retail subsidiaries, associates, and joint ventures of Reliance accounted for approximately 89 per cent of the gap in consolidated and standalone profits in the 2022-2023 fiscal year. However, this still leaves a remaining net profit of approximately $400 million from other business segments.
Delving deeper into the annual reports, JP Morgan observed a marked rise in profitability among group companies engaged in trading crude, petrochemicals, and ethane in the 2022-2023 fiscal year, potentially due to expanded cracks, crude discounts, and disruptions in the global supply chain.
Despite these gains, some ventures within Reliance faced challenges. For instance, the fuel retailing joint venture with BP experienced a substantial loss of Rs 910 crore in the 2022-2023 fiscal year, contrasting with a profit of Rs 330 crore in the previous year. Additionally, entities such as Saavn, Sterling and Wilson, Reliance Brands, Reliance Infratel, and skyTran reported significant losses.
The report also highlighted Reliance's strategic investments and acquisitions over the past six years, amounting to an estimated $5 billion across various sectors. Currently, only a few of these ventures appear profitable, suggesting potential future earnings surprises should any of these businesses become lucrative.
(With PTI inputs)
Published December 25th, 2023 at 18:48 IST