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Reliance beats profit estimates as cost controls blunt oil hit

BENGALURU (Reuters) - Reliance Industries Ltd’s profit jumped in the final quarter of 2020 as it reined in spending, although the Indian conglomerate recorded a sharp fall in revenue from its dominant oil-to-chemicals business.

The logo of Reliance Industries is pictured in a stall at the Vibrant Gujarat Global Trade Show at Gandhinagar, India, January 17, 2019. REUTERS/Amit Dave/Files

Reliance, led by billionaire Mukesh Ambani, said on Friday consolidated profit rose 12.6% to 131.01 billion rupees ($1.79 billion) in the three months ended Dec. 31. The rise was helped by a 22% fall in expenses.

Analysts had expected a profit of 110.09 billion rupees, according to Refinitiv data.

Reliance has built leading consumer-facing businesses in recent years to diversify away from its mainstay energy arm, but a coronavirus-driven slump in fuel demand has weighed on the Mumbai-headquartered group’s recent results.

Reliance, which operates the world’s largest refining complex, said revenue from the oil-to-chemicals division fell nearly 30%.

The business now houses its oil refining, fuel retailing and petrochemicals operations, as part of a reorganisation announced Friday.

Reliance, which aims to become net carbon zero by 2035, has said it wants to produce more petrochemical products, while gradually reducing its exposure to fuels.

Overall, Reliance’s revenue slid 21% to 1.24 trillion rupees.

Results at its retail and telecoms divisions were hit by the pandemic and protests against India’s new farm laws.

Reliance Retail’s revenue dropped 18.7%, as only half of its over 12,000 stores were fully operational.

Reliance’s Jio telecom service reported a higher churn - the rate at which customers stop subscribing - of 1.63%, which it attributed partly to “malicious” campaigns against the company, without providing any details.

It had previously reported attacks against Jio’s telecommunication masts by protesting farmers, who have alleged that Reliance has profited from farm reforms at their expense.

Jio is housed within Reliance’s digital arm, which received more than $20 billion in investments last year including from Facebook and Alphabet Inc’s Google.

($1 = 73.0200 Indian rupees)

Reporting by Sachin Ravikumar in Bengaluru; Additional reporting by Nidhi Verma in New Delhi and Nivedita Bhattacharjee in Bengaluru; Editing by Anil D’Silva