In a clear signal that it is aiming further expansion which would require funds, Reliance Jio Infocomm, which is a wholly-owned subsidiary of Reliance Industries (RIL), on Thursday said that it will be making a rights issue offer to raise Rs 20,000 crore through 400 crore 9% non-cumulative optionally convertible preference shares (OCPS) of Rs 10 each for cash, at a premium of Rs 40 per OCPS.
The company announced the decision taken by its board of directors ahead of the announcement of the parent’s earnings for the April-June quarter. In a notice to the BSE, Jio said, “The amount subscribed/paid on each OCPS shall be either redeemed at Rs 50 or converted into five equity shares of Rs 10 each at any time at the option of the company, but not later than 10 years from the date of allotment of the OCPS.”
Meanwhile, on Thursday, RIL reported a stellar set of numbers for the three months ended June 2017, beating street estimates on all fronts. On the back of strong refining and petrochemicals margins the company’s consolidated net profit excluding exceptional items increased a sharp 12.8% year-on-year to Rs 8,021 crore.
The consolidated net profit including exceptional items was up 28% to Rs 9,108 crore versus Rs 7,113 crore in the three months to June 2016. Exceptional items during the quarter was Rs 1,087 crore representing profit from divestment of stake in Gulf Africa Petroleum Corporation.
Gross refining margins (GRMs) were at a record nine-year-high of $11.9 per barrel against $11.5 per barrel in Q1FY17. The Ebit (earnings before interest and tax) margins for the refining and marketing business was at 11.2% during April-June 2017, down 50 basis from Q1FY17.
However, petrochemicals Ebit margins were at an all-time high of 15.8%. RIL’s GRMs outperformed Singapore complex margins by $5.50 per barrel.
Marginally weaker product cracks environment on a quarter-on-quarter basis was offset by yield shift and robust risk management. Further, favourable Brent-Dubai differential aided crude sourcing during the quarter.
The company recorded revenues of Rs 90,537 crore, an increase of 26.7% year-on-year. The rise was primarily on account of increase in prices and volumes of refining and petrochemical products partially offset by lower prices and volumes from the exploration and production business. A robust growth in the retail business with 73.6% rise in revenues to Rs 11,571 crore also contributed to the increase in revenues. Brent crude oil price averaged $49.90 a barrel in Q1FY18 compared with $45.60 per barrel in the corresponding period of the previous year.
Operating profit before other income and depreciation increased by 11.9% y-o-y to Rs 12,554 crore led by strong performance from petrochemicals business and sustained strength in refining business. This was partially offset by losses in the oil and gas business due to lower volumes and a weak domestic price environment. Other income came in lower by nearly Rs 250 crore during the quarter at Rs 2,124 crore over the corresponding period last year due to lower investible surplus.
RIL’s outstanding debt stood at Rs 2 lakh crore as on June 30, 2017, against Rs 1.96 lakh crore as on March 31, 2017. A drop on account of a lower average exchange rate for the quarter led to a decline in the company’s finance cost to Rs 1,119 crore against Rs 1,206 crore over the previous year. Cash and cash equivalents were down by about 7% q-o-q to Rs 72,107 crore. These were in bank deposits, mutual funds, CDs and government bonds and other marketable securities.
Capital expenditure primarily on account of ongoing projects in the petrochemicals and refining business at Jamnagar and digital services business during Q1FY18 was Rs 25,192 crore including exchange rate difference capitalisation.