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Mumbai, April 30, 2020
The economic disruption caused by COVID-19 and the subsequent impact on crude oil prices dented Reliance Industries Limited's balance sheet during the January-March quarter of financial year 2019-20.
Consequently, the company marked Rs 4,245 crore as an exceptional item, net of tax in the financial results.
This exceptional item pulled RIL's consolidated net profit on an YoY basis for the January-March quarter of financial year 2019-20 down by 37.2 per cent.
The consolidated net profit during the fourth quarter of FY 2019-20 declined to Rs 6,546 crore, against Rs 10,427 crore reported during the corresponding period of the previous fiscal.
In a regulatory filing, RIL said: "Net Profit excluding exceptional items increased by 3.7 per cent to Rs 10,813 crore ($ 1.4 billion)... Net Profit including exceptional items decreased by 37.2 per cent to Rs 6,546 crore ($ 0.9 billion)."
According to the company, the outbreak of coronavirus pandemic globally and in India has caused significant disturbance and slowdown of economic activity.
"During this period, there has been significant volatility in oil prices, resulting in uncertainty and sharp reduction in oil prices. Through the quarter, oil prices declined 73 per cent impacting inventory valuation. In view of the above, the company has provided for non-cash inventory holding losses for the quarter," the filing said.
"This has been disclosed as an Exceptional Item of Rs 4,245 crore, net of tax (tax Rs 899 crore) in the financial results."
The company reported a total revenue of Rs 151,209 crore during the quarter under review, down 2.5 per cent from Rs 155,151 crore on a YoY basis.
For the financial year 2019-20, the company recorded a rise of 0.1 per cent in its consolidated net profit including exceptional item to Rs 39,880 crore ($5.3 billion) as against Rs 39,837 crore in the previous year.
"In spite of the Covid-19 crisis and the lockdowns, the due-diligence by Saudi Aramco for the planned investment in the O2C business is on track as both the parties are committed and actively engaged," the filing said.
Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Ltd 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.
"Our O2C (Oil to Chemicals) businesses delivered sustained earnings due to its integrated portfolio, cost-competitiveness, feedstock flexibility and product placement capabilities. We continue to operate all our major facilities at near normal utilisation levels.
"Our consumer businesses further strengthened their leadership positions and recorded robust growth on all operating and financial parameters during the year. Both Retail and Jio, continue to work towards providing superior products and services to Indian consumers."
The company has recommended a dividend of Rs 6.50 per equity share of Rs 10 each for the financial year ended March 31, 2020.
Furthermore, RIL's board approved a rights issue of up to Rs 53,125 crore at Rs 1,257 per share.
Analysts have said that the rights issue is a major development for RIL towards becoming a zero net debt company.
"At its meeting held today, i.e., April 30, 2020 considered and approved, amongst others, the issuance of equity shares of Rs 10/- each of the Company on rights basis to eligible equity shareholders of the Company as on the record date (to be notified later), of an issue size of Rs 53,125 crore," the regulatory filing said.
The rights entitlement ratio would be 1 equity share for every 15 equity shares held by eligible shareholders as on the record date.
On the terms of payment of issue price, the filing said that 25 per cent would have to be paid on application and the balance amount in one or more calls as may be decided by the board or the committee of the board from time to time.
The board also constituted a Rights Issue Committee to decide the other terms and conditions of the issue, including the record date.
The promoter and promoter group of the company have confirmed that they will subscribe to the full extent of their aggregate rights entitlement, RIL said, adding that they will also subscribe to all the unsubscribed shares in the issue.