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Managerial Economics and Indian Economy

Reliance Industries reported a consolidated turnover of over 6.5 trillion Indian rupees in fiscal year 2020, a 5.4% growth from the previous year. However, key financial metrics like EBITDA, total assets, and liabilities all decreased in 2021 compared to previous years of continuous growth. The COVID-19 pandemic impacted Reliance's retail business and revenue, though other sectors like telecommunications saw increased data usage. Investors remained positive about Reliance's future potential for growth as India's largest conglomerate, and the company's share price increased nearly 20% in 2021 despite challenges from the pandemic.

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80 views6 pages

Managerial Economics and Indian Economy

Reliance Industries reported a consolidated turnover of over 6.5 trillion Indian rupees in fiscal year 2020, a 5.4% growth from the previous year. However, key financial metrics like EBITDA, total assets, and liabilities all decreased in 2021 compared to previous years of continuous growth. The COVID-19 pandemic impacted Reliance's retail business and revenue, though other sectors like telecommunications saw increased data usage. Investors remained positive about Reliance's future potential for growth as India's largest conglomerate, and the company's share price increased nearly 20% in 2021 despite challenges from the pandemic.

Uploaded by

Shawn Villa
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SHANE MATHEWS

21MBA078

MANAGERIAL ECONOMICS AND


INDIAN ECONOMY:
COMPANY PERFORMANCE
ANALYSIS-
RELIANCE INDUSTRIES LIMITED

SUBMITTED BY:
SHANE MATHEWS (21MBA078) - SECTION B

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COMPANY PROFILE: RELIANCE JIO INFOCOMM LIMITED

Reliance Industries Limited (RIL) is an Indian


multinational conglomerate company, headquartered
in Mumbai, India. RIL's diverse businesses include
energy, petrochemicals, natural gas, retail,
telecommunications, mass media, and textiles.
Reliance is one of the most profitable companies in
India, the largest publicly traded company in India
by market capitalisation, and the largest company in India as measured by revenue after
recently surpassing the government-owned Indian Oil Corporation. It is also the tenth largest
employer in India with over 236,000 employees. RIL has a market capitalisation of US$243
billion as of October 2021.

The company is ranked 155th on the Fortune Global 500 list of the world's biggest
corporations as of 2021. Reliance continues to be India's largest exporter, accounting for 8%
of India's total merchandise exports and access to markets in over 100 countries. Reliance is
responsible for almost 5% of the government of India's total revenues from customs and
excise duty. It is also the highest income tax payer in the private sector in India. The
company has negative free cash flows.

Reliance Industries is India's largest private sector company on all major financial
parameters. In 2004, Reliance Industries (RIL) became the first Indian private sector
organisation to be listed in the Fortune Global 500 list. The company operates world-class
manufacturing facilities across the country at Allahabad, Barabanki, Dahej, Hazira,
Hoshiarpur, Jamnagar, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and Vadodara.
Reliance Industries' activities span hydrocarbon exploration and production, petroleum
refining and marketing, petrochemicals, retail and telecommunications. The petrochemicals
segment includes production and marketing operations of petrochemical products. The
refining segment includes production and marketing operations of the petroleum products.
The oil and gas segment includes exploration, development and production

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of crude oil and natural gas. The other segment of the company includes textile, retail
business and special economic zone (SEZ) development.

In the year 1966 the RIL was founded by Shri Dhirubhai H.Ambani, it was started as a small
textile manufacturer unit. In May 8, 1973 RIL was incorporated and conformed their name as
RIL in the year 1985. Over the years, the company has transformed their business from
manufacturing of textiles products into a petrochemical major.

The company has set up a texturizing / twisting facilities in 1979, RIL has also set up plants
for Polyester Staple Fiber (PSF) in 1986 and for Linear Alkyl Benzene (LAB) & Purified
Terephthalic Acid (PTA) in 1988. RIL has setup a petrochemical facility to produce HDPE
and PVC at Hazira, Gujarat intechnical collaboration with DuPont and BF Goodich
respectively. The Hazira petrochemical plant was commissioned in 1991-92.

Turnover of Reliance Industries Limited in India from financial


year 2014 to 2020(in billion Indian rupees)

Inference: Reliance Industries


2021Limited2020
reported a consolidated
2019 turnover
2018 of over 6.5
2017
NETtrillion
SALES 245,667
Indian rupees in fiscal 335978
year 2020. This was 371616
a 5.4 percent 290042 242025
growth compared to
TURNOVER
the previous fiscal year. The conglomerate giant made most of its revenues from its
OTHER INCOME 34220 14541 8822 8820 8709
refining, petrochemicals and retail businesses. The firm showed continuous growth in
TOTAL INCOME 279887 350519 380483 298262 250734
theirEXPENSES
TOTAL turnover till the year237577
2020. 284125 31276 238301 198769

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PROFIT AND LOSS 31944 35148 35163 33612 31425


FOR THE
YEAR

FINANCIAL STATEMENTS OF RELIANCE INDUSTRIES


FROM 2017-2021
Source: Money Control

Key take-aways:

 Net worth of the company has increased by 11.75 %


 EBITDA of the company has decreased by -35.39 %
 Total assets of the company has decreased by -9.83 %
 Liabilities of the company has decreased by -34.95 %

What went wrong with Reliance Industries in the year 2021?


Even though the company posted positive numbers, the numbers compared to the previous
performances was not satisfactory as Reliance has always showed signs of continuous growth
in their turnover till the year 2020 but however considering the Covid-19 pandemic, Reliance
did comparatively a better job than all major enterprises.
Reliance like all companies around the world has been hit hard by the Covid-19 pandemic,
"Company performance and revenue have had an impact on Covid-19. During the current
quarter, there is no significant impact outside the retail segment," Reliance said in an
exchange file.
According to the Bloomberg consensus estimate, RIL was expected to send a combined
revenue of Rs 1.47 trillion with a surplus profit of Rs 11,889 crore in the quarter of June.
Commenting on the results, CEO Mukesh Ambani said: “I am delighted that our company
has grown steadily despite the difficult operating environment caused by the second wave of
the Covid epidemic. The results of the first quarter of FY2022 clearly show the resilience of
the diversified Reliance portfolio of businesses that cater for large parts of a used basket. "
At the time, Reliance Retail held a gross profit of Rs 962 crore in the quarter of June, an
increase of 123.2 percent annually. The unit brought in revenue of up to Rs 38,547 crore ($
5.2 billion), an increase of 21.9 percent YoY.
"Covid-related restrictions on store operations during the quarter impacted our retail business
operations and profitability. This is a temporary phenomenon. We remained focused on
ensuring supplies of necessities, including food, grocery, health & hygiene products through
a combination of online-offline channels," Ambani said

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"We stepped up our efforts in creating partnerships with small merchants and digital
engagement with consumers. This is creating a newer and inclusive model of growth. I am
confident that the retail business is poised to create exponential value and growth," he said.
The Covid Pandemic turned out to be a blessing in disguise for Reliance Industries’ Jio as
data usage soar as all the nation stood confined at their homes. Reliance’s E-commerce and
shopping websites Ajio and JioMart also did extremely well during the pandemic as most
Indian’s preferred to stick to Online modes of shopping.
The Future – Reliance deal collapse also has left big mark in the financials of the
organisation.

Online Media Channels starts buzzing about the 7% fall in Reliance’s June Quarter Results

What does it mean for the Investors?


In addition to the COVID status and related constraints that have hampered the operation of
the RIL, the conglomerate has made a profit. Reliance Jio has been on the list of growing
consumer base and high-profit brands. RIL is expected to remain the largest company in
India with market capitalization. All conglomerate verticals have submitted results
showcasing their immense potential in the near future.

What Investors have to say about the result?

“No business houses can maintain the growth rates steady. There will always be some
fluctuations. RIL has done well, appreciate that they have created several job opportunities.”
“Considering how bad all businesses have been hit during the covid Reliance has post stellar
results this year.”

How the share price reacted to the financials in the year 2021?

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The 52 week high and low of Reliance Industries is INR 1,830.00 and INR 2,751.35 as of 13
Dec '21.
Reliance Industries Shares has gifted investors a ROI of 19.53% in the year 2021.

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