Digital, retail show there's life beyond O2C for RIL

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₹19,641 crore, as newer businesses found their feet. RIL’s profit beat the Bloomberg estimate of ₹18,080 crore, but weakness in the core oil-to-chemical (O2C) business is proving to be a headache for the Mukesh Ambani-led conglomerate. “Reliance’s O2C segment quarterly revenue fell 2.4% y-o-y to ₹1,41,096 crore primarily on account of lower price realization led by 5.3% y-o-y decline in average Brent crude oil prices," the company said in a statement.

The O2C business includes RIL’s refining, petrochemical plants and manufacturing assets located at Jamnagar, Hazira, Dahej, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki and Hoshiarpur. More than half of RIL’s overall revenues come from its O2C business. RIL’s revenues were 3.2% up year-on-year (y-o-y) at ₹2.48 trillion on a consolidated basis, beating a Bloomberg estimate of ₹2.32 trillion.

Given the lacklustre sales in O2C, both revenue and net profit were lower sequentially. In Q3, O2C revenue was down at ₹1.41 trillion, from ₹1.48 trillion in September and ₹1.45 trillion in the December 2022 quarter. This is primarily due to falling crude prices and weak chemicals demand.

The average price of Brent crude oil was $84/bbl during Q3, which is $4.7/bbl lower y-o-y. Demand for key chemicals derived from oil remained subdued as well. “Polymer prices declined slightly y-o-y with subdued global demand and volatile feedstock energy price environment…Polymer margins were down 4-17% on a y-o-y basis with subdued demand globally in a well-supplied market," RIL said.