Reliance posts 37 pc drop in Q4 profit, announces Rs 53,125 cr rights issue

Oil-to-telecom conglomerate Reliance Industries on Thursday posted its biggest drop in quarterly net profit, even as it announced India's largest rights issue and said the Saudi Aramco deal was on track and more strategic investors have evinced interest in buying a stake in its digital platform.

Net profit in January-March slipped 37 per cent to Rs 6,546 crore, the lowest in three years, as a rise in consumer-facing business was not enough to shield the firm from fall in the petrochemical business. The profit was also down due to one-off spending.

The company's board approved a rights issue of Rs 53,125 crore, which it said was the biggest in India and the first by RIL in three decades. "The price of rights issue has been determined at Rs 1,257 per share and the share ratio at 1:15," the company said in a statement.

On the back of last week's USD 5.7 billion (Rs 43,574 crore) Facebook investment in the company's recently created digital arm Jio Platform, Reliance Industries Ltd (RIL) said it is expected to complete capital raising of over Rs 1.04 lakh crore before June.

Besides Facebook's 9.99 per cent investment in Jio Platforms and the upcoming rights issue, this fund includes Rs 7,000 crore that it got for selling 49 per cent stake in the fuel retailing business to BP plc of the UK.

The company said it is in talks with other strategic and financial investors for a Facebook-sized deal in Jio Platform -- the unit that houses India's youngest but biggest mobile operator.

Without revealing the identity of the companies, RIL in its fourth-quarter earnings statement said the investment would be announced in the coming months.

The firm further said its board has approved hiving off its USD 75 billion worth oil-to-chemicals business into a separate division to enable the sale of a 20 per cent stake in the unit to Saudi Arabia's national oil company Saudi Aramco.

The hiving off will be subject to the approval of the National Company Law Tribunal.

"Saudi Aramco due diligence process is on track," it said, without giving timelines for completion of the deal.

The firm's billionaire owner Mukesh Ambani had in August last year announced the deal as part of plans to cut debt at the firm to zero by March 2021. The deal was to conclude by March 2020.

In the fourth quarter, the company said it had an exceptional item of Rs 4,267 crore which dented the profit.

Revenue fell 2.5 per cent to Rs 151,209 crore.

Net profit excluding exceptional items increased by 3.7 per cent to Rs 10,813 crore, it said.

This is the second quarter in 2019-20 that saw a dip in profit. It had reported a quarter-on-quarter decline in Q1 FY20.

Commenting on the results, Ambani, chairman and managing director of RIL, said: "Today I am pleased to announce that despite the daunting challenges arising from the fallout of the global pandemic, our company has once again delivered a resilient performance for FY 2019-20."