Reliance Industries Reports Profit Decline Amid Oil Sector Challenges

MUMBAI: In a significant development for the Indian business landscape, Reliance Industries, one of the largest conglomerates in the country, has reported a decline in its quarterly profits. This downturn is primarily attributed to challenges faced by its core oil-to-chemicals division. Despite this setback, the company’s telecom sector has shown promising growth, indicating a mixed performance across its various business arms.

Reliance Industries, led by Asia’s richest man, Mukesh Ambani, is recognized as India’s most valuable company by market capitalization. For the July-September quarter, the net profit attributable to the owners of the company stood at 165.63 billion rupees (approximately $1.97 billion). This figure marks a 4.78 percent decrease from the 173.94 billion rupees reported during the same period last year. The company’s revenues from operations were recorded at 2.35 trillion rupees, which is only slightly higher than the previous year’s figures.

Despite an aggressive push into sectors such as retail, telecom, and green energy, Reliance Industries continues to depend heavily on its traditional oil business for profitability. Chairman Mukesh Ambani acknowledged the “weak contribution” from the oil-to-chemicals segment, which has been adversely affected by “unfavourable global demand-supply dynamics.” This statement highlights the ongoing challenges in the global oil market, where crude oil benchmarks have seen a decline year-on-year due to “lower than expected demand growth, especially in China.”

On a brighter note, the telecom division of Reliance Industries reported a remarkable 23 percent increase in net profit for the September quarter. This growth was driven by a surge in subscribers and an increase in average revenue per user, thanks to recent tariff hikes. Meanwhile, the retail arm of the company experienced a slight decline of one percent in gross revenue, despite an increase in store footfalls, which rose to 297 million, up 14 percent from the 260 million recorded last year.

As the earnings announcement approached, Reliance Industries shares closed flat in Mumbai, reflecting investor caution amid the mixed results. The company’s ability to navigate the challenges in its oil-to-chemicals business while capitalizing on growth in telecom and retail will be crucial for its future performance.

While Reliance Industries faces hurdles in its oil sector, the growth in its telecom division offers a glimmer of hope. The company’s diversified approach, focusing on retail and green energy, may provide the necessary resilience to weather the storm in the oil market. As the global economy continues to evolve, it will be interesting to see how Reliance adapts and positions itself for future growth.