Windfall tax hits Reliance; Q2 net profit flat at Rs 13,656 crore

PTI

New Delhi, October 21

Billionaire Mukesh Ambani's Reliance Industries Ltd on Friday posted flat growth in net profit in the September quarter after a newly introduced windfall profit tax and lower refining margins dented earnings in the mainstay oil business.

Costs Rs 4,039 cr to the company

• The government slapped a tax on the export of fuel and crude oil produced domestically to take away gain accruing from the spurt in global oil prices following the war in Ukraine
• The day was saved by a record rise in consumer-facing telecom, retail businesses and earnings from natural gas output
• But for the windfall profit tax, the net profit would have been 20% higher
• The windfall profit tax cost the company Rs 4,039 crore in the quarter, lowering pre-tax earnings from the O2C business by almost 6% to Rs 11,968 crore

The oil-to-retail-to-telecom conglomerate's consolidated net profit at Rs 13,656 crore in July-September was almost unchanged from Rs 13,680 crore net earnings in the same period last year, according to a company statement. Sequentially, net profit fell 24% from Rs 17,955 crore in April-June.

This is primarily because the firm's mainstay oil-to-chemicals (O2C) business earnings were hit by a new tax that the government imposed on the export of diesel, petrol and ATF from July 1.

The government slapped a tax on the export of fuel and crude oil produced domestically to take away gain accruing from the spurt in global energy prices following the war in Ukraine.

The day was saved by a record rise in consumer-facing telecom and retail businesses and earnings from natural gas production.

But for the windfall profit tax, the net profit would have been 20% higher.

The windfall profit tax cost the company Rs 4,039 crore in the quarter, lowering pre-tax earnings from the O2C business by almost 6% to Rs 11,968 crore.

The O2C earnings also fell because of lower refining margins and the company's oil refinery taking a planned maintenance shutdown during the quarter, lowering the output.

This was offset by a 27% jump in the net profit of its digital arm Jio Platforms to Rs 4,729 crore and a 51% jump in pre-tax earnings from the retail business of Rs 4,404 crore. The firm's revenue from oil and gas production rose 3x to Rs 3,171 crore. This is the first quarterly dip in profit that the company has reported since January-March.

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