Reliance Industries increases related-party disclosures in FY22 report

Transaction details between RIL and its telecom, retail subsidiaries a positive: Analysts

Mukesh Ambani-led Reliance Industries (RIL) has increased related-party disclosures, its annual report for the financial year FY22 shows.

In particular, increased details pertaining to transactions between RIL and its telecom and retail subsidiaries are positive, analysts tracking the company said.

“While it is too early to say if the increased disclosures between RIL and its subsidiaries, such as Jio and retail, are a step towards listing these businesses, it would be seen as a positive,” brokerage JP Morgan said in a report released on Tuesday.

For instance, RIL disclosed in its latest annual report that Reliance Retail — in which it has 85 per cent stake — was the master distributor for Reliance Jio Infocomm for its telecom services. RIL also said that Reliance Retail had undertaken sale of customer premise equipment and enterprise devices for Reliance Jio during the period.

In another instance, Jio Platforms, in which RIL has a 66.4 per cent stake, was providing software and application development services to Reliance Retail. Jio Platforms holds 100 per cent of the paid-up equity share capital of Reliance Jio Infocomm. 

Reliance Retail Ventures, in which RIL has an 85.1 per cent stake, was providing warehousing and logistics services to Reliance Retail. Reliance Retail Ventures, for the uninitiated, holds 99.93 per cent of the paid-up equity share capital of Reliance Retail.

In its annual report, RIL had disclosed that it made investments to the tune of nearly Rs 30,000 crore in FY22 in its retail vertical. It added 2,500 new stores and 11.1 million sq. ft. of warehousing space during the year.

JP Morgan said that compared to FY21, Reliance Retail’s investments had jumped 189 per cent in FY22, indicating its desire to keep its retail growth engine going. Retail contributed 22.7 per cent to RIL’s FY22 revenue, while telecom contributed 11.4 per cent.

Oil-to-chemicals (O2C), on the other hand, remains the largest vertical for RIL, contributing 56.8 per cent to its revenue.

The company said it had further strengthened its sourcing ecosystem in retail. It is working closely with producers, micro, small and medium enterprises (MSMEs), service providers as well as local and international brand companies.

As far as Reliance Jio was concerned, the company said that it had carried half of India’s data traffic and 10 per cent of global mobile data traffic in calendar year 2021. Jio, which has over 410 million mobile customers, had also indigenously developed a 5G stack that encompassed radio and core network, software architecture and hardware equipment, it said in its latest annual report.

Most analysts also expect significant announcements by RIL in green energy during its August 29 annual general meeting (AGM). The company has identified the vertical as a business that can potentially outperform other segments in the next 5-7 years.

While the company had announced a Rs 75,000-crore investment in green energy during its last AGM, it could be enhanced this year, said experts.