India’s Reliance Industries, operator of the world’s biggest refining complex, posted a record net profit on Thursday as strong growth in retail and telecom businesses offset the impact of 17-quarter low refining margins.

Reliance, controlled by billionaire Mukesh Ambani, said while the outlook for its core business of refining and petrochemical operations remained largely stable, the consumer business would drive growth in the future.

“Those two (retail and telecom) are the engines of growth that we continue to focus on,” said V Srikanth, joint Chief Financial Officer of Reliance.

Reliance’s retail business and Jio telecom operations now contribute a fourth of its operating profit from 2 per cent five years ago, Srikanth said.

Reliance ventured into retail a decade ago and its telecom business 2-1/2 years ago. Retail was mostly a laggard for most of the decade but started contributing substantially in the last two to three years and matched the scorching growth pace of Reliance’s telecom operations.

The company now has over 10,000 stores, making it the biggest retailer in India while Jio subscriber numbers topped 300 million last quarter, making it one of the leading players in the industry, Srikanth said.

The oil-to-telecoms conglomerate is in the process of making its consumer business as big a revenue contributor as its core energy operations, the company said earlier.

Net profit for the group rose to 103.62 billion rupees ($1.49 billion) for the quarter ended March, compared with 94.38 billion rupees last year and analysts’ estimate of profit of 99.20 billion rupees, according to Refinitiv data.

Analysts said the company’s consumer business and income from cash investments supported earnings during a tough quarter. Earning from cash investments, rose to 31 billion rupees from 22 billion rupees on a consolidated basis.

Standalone profit that accounts for the firm’s refining, petrochemicals and oil & gas exploration was 85.56 billion rupees.

Srikanth said the outlook in refining was stable but did not say whether the company would go back to the days of double digit gross refining margins in future.

Average gross refining margin came in at $8.2 per barrel for the quarter, the lowest in 17 quarters but outperforming the benchmark Singapore complex margin by $5 per barrel.

Globally, refining margins or profit from converting a barrel of oil into refined products have eased due to low pries of gasoline, diesel and other petroleum products.

Reliance also saw muted prices for petrochemical products.

Traditional businesses, particularly refining (46 percent of overall), witnessed a weak set of numbers that reflect global trends. The segment posted sharp decline in revenues sequentially due to a planned shutdown. Further, weak product cracks adversely impacted GRMs. While GRM was better than the regional metric (Singapore GRM -$5/bbl), premium tapered off in Q4.

Further, petrochemicals business (22 percent of overall) sequential performance was a disappointment. However, it witnessed a 11.3 percent improvement in sales due to better pricing and realizations for PTA (Purified terephthalic acid), Paraxylene and Polypropylene. This helped in partially offsetting the weakness in other petrochemicals which were weighed down by the higher supplies from new US capacities.

While Jio’s subscriber base continued to expand, the pace of the growth moderated primarily due to base effect and increased competition. Interest cost outlay increased by 18.6 per cent leading to a flat growth in profit-after-tax (PAT), lower than the 18.6 percent QoQ growth in EBITDA. While there was no official comment on the media report that Armaco is interested in 25 percent stake in refining and petrochemical business, such a possibility cannot be ruled out.

Meanwhile, Reliance Jio and state-run BSNL were the only telecom operators to broaden their subscriber base in February 2019, according to data released by the Telecom Regulatory Authority of India (TRAI) on Thursday.

The subscriber base of Jio stood at around 29.72 crore in February, with an addition of 77.93 lakh users over January. Crisis-hit BSNL managed to add 8.99 lakh subscribers taking its total tally to over 11.62 crore users, the data showed.

The total wireless subscriber base in the country stood at around 118.36 crore, with a net addition of 17.07 lakh subscribers during the month under review.

“Out of the total wireless subscribers (1,183.68 million), 1,022.62 million wireless subscribers were active on the date of peak VLR (visitor location register) in the month of Feb-19. The proportion of active wireless subscribers was approximately 86.39 per cent of the total wireless subscriber base,” TRAI said in its statement. The operator with the highest number of subscribers, Vodafone Idea, lost the most users -- 57.87 lakh -- in February, pulling its subscriber base down to around 40.93 crore.

Agencies