Reliance Industries Ltd. (RELIANCE) Q4 FY22 Earnings Concall Transcript

Reliance Industries Ltd. (NSE: RELIANCE) Q4 FY22 Earnings Concall dated May 06, 2022

Corporate Participants:

B Srinivasan — President

V Srikanth — Joint Chief Financial Officer

Kiran Thomas — President, Reliance Jio Infocomm Limited

Anshuman Thakur — Head of Strategy, Reliance Jio Infocomm Limited

Gaurav Jain — Head, Strategy and Business Development, Reliance Retail Limited

Sanjay Roy — Senior Vice President, Exploration & Production

Presentation:

B Srinivasan — President

Good evening, everyone. And first of all want to apologize for the slight delay in the start of the Fourth Quarter FY 22 Financial Results Presentation. As always, we have some of our leaders actually walk you through the highlights of the performance of each of our businesses. First off, I would like to hand it over to Mr. Srikanth Venkatachari to give you an overview, as well as he will come back again to both talk about O2C and also some [Indecipherable] Srikanth, over to you.

V Srikanth — Joint Chief Financial Officer

Thanks, Srini, and good evening ladies and gentlemen. so let me start off with the FY ’22 highlights. Record annual earnings, EBITDA — consolidated EBITDA INR1,26,000 crore which is up 29% year-on-year and net profit at close to INR68,000 crore, again this is also up a 26% year-on-year growth. And you may also see that the five-year average CAGR for both EBITDA and net profits are close to 18%, strong growth there. O2C earnings were pretty strong despite the unprecedented volatility and the dislocation that we saw in the energy markets. Consumer business gross revenue now at INR3,00,000 crore, and the EBITDA crossing INR50,000 crores. All that in the back of highest ever store sales, a lot of momentum on the digital commerce side, subscriber addition and an uplift in ARPU. Oil and gas also did well, seven-year high in EBITDA, and KG D6 production in excess of 18 MMSCMD. Our focus on product liability management continues and in terms of optimization of finance costs. When you look at each of the businesses for FY’22, starting with retail EBITDA INR12,423 crore. Again, revenues up 27%, EBITDA up 26%. We crossed the 15,000-store benchmark. We have been adding about seven stores a day. Our registered user base is now 193 million customers, which is again — that is also up 24%. And as you have noted, we continue to invest in strengthening our brands portfolio offerings and capabilities.

On the digital side, revenues of INR100,000 crore, and EBITDA of INR40,268 crore, revenues up 11% year-on-year, EBITDA up 18% year-on-year, ARPU at INR168, which is up 31%. Our EBITDA margin for JPL 48%, which saw a very big expansion of almost 400 basis points. JioFiber is now the largest broadband provider in India within two years of launch, and both the data traffic and voice traffic continue to grow, growing by 46% and 18%,

Respectively.

On the O2C side, INR5,00,000 crore of revenues and INR52,017 crore of EBITDA. This is — saw revenue up 56%, EBITDA up 38%. And this year in FY’22 we aw high utilization across sites with volumes up 7.2%, really on the back of strong fuel margins that we have seen because of higher demand gas-oil switching, refinery closures. And for us, Feedstock flexibility, which is one of our inherent strengths, has meant that we were able to maximize

Our lights, light feed cracking economics. Also, we completed the restructuring of the gasification asset as well as signed the shareholder agreement with TAZIZ for EDC and PVC.

On oil and gas side, INR7,500 crore revenue and INR5,500 crore in EBITDA. This is — EBITDA is up 21x, revenues is up 3.5x. As you know, Satellite cluster commission was commissioned actually ahead of time. Production, now as I mentioned 18 MMSCMD, which is approximately 20% of India’s gas production, and we completed the exit of Shale gas in Eagle Ford. So, when you look at FY’22 at a glance, as I mentioned revenues up 47% and EBITDA up 28%. All businesses contributed to both revenues and EBITDA. Also, you would have seen that there has been significant savings and finance cost, down 31% and net profits at INR67,845 crore, up 26% despite higher depreciation and tax. Standalone basis RIL net profit was INR39,084 crore, which is again up 32%.

Just a quick bridge between for FY’22 versus FY’21. As I was mentioning, every business has contributed to the increase, the bulk of it, of course, coming from O2C with INR14,500 crore, which is 52% of incremental EBITDA, as I mentioned on the back of higher fuel cracks, especially mid-distillates and also higher volume. Oil and gas ramp up in KG-D6 and improving price realization explains the INR5,200 crore increase. Retail on the back of expanded footprint and the traction that we have seen in digital commerce and Digital Services contributing INR6,233 crore, and this is on the back of continuing customer momentum and also the jump in ARPU that we saw, both of them boosted performance.

So, this is a five-year CAGR. I touched upon it my first slide, but it really highlights the fact that there’s been strong growth after the FY’20, and then you can see the FY’21 being lower, but very strong growth that we have seen in aggregate revenues. So effectively 29% EBITDA growth and which is now in excess of INR1,25,000 crores.

So, this is the performance for the quarter, INR2,32,000 crore Q4 revenue and INR33,968 crore of EBITDA, this is 35% and 28% up respectively. And, of course, revenues were led by O2C and Retail. On the overall side, year-on-year all segments contributed to the profitability and net profits also up sharply 27%. When we see from a quarter-on-quarter point of view, revenues were up by 11% or more because of O2C there because of the strong energy prices. EBITDA has been stable despite the operational challenges and net profit pre-exceptional was up 2%. Lower finance costs partially offset by higher deposition and standalone RIL profitability at INR11,094, which is up 9% quarter-on-quarter.

So, the bridge on our report, that is 4Q versus ’22 versus 4Q’21. And again, big contribution coming from O2C and oil and gas and Retail you’re seeing the ramp up in New Commerce and stores, but it was partially offset by the Omicron variant that we saw. And on digital services we are seeing year-on-year improvement of 21% in ARPU, led by customer engagement and the tariff hike that we saw. So overall strong growth again, 28% growth year-on-year with contribution from almost all segments. This is the Q-o-Q bridge, that is the sequential quarter. And you can see that O2C INR711 crore firm despite volatility caused by Ukraine on the back of fuel cracks that we saw, and this offset some of the weakness in the downstream that we saw. Oil and gas is lower slightly because of the lower EBITDA because of the exit of Shale gas. Retail, we saw some impact of headwinds posed by COVID in January and also lower investment income. Digital Services was strong. We saw strong gross customer addition there and also higher ARPU on the back of the tariff hike. And on the other side, this really reflects lower investment portfolio and the defensive repositioning that we did for portfolio for higher yields. So in short, a EBITDA with strong performance on the digital side.

And coming to the balance sheet side, net debt INR34,815 crore versus INR3,585 crore on the other side. And as you can see, the net debt reflects the change because of refinancing of high-cost spectrum liabilities of INR30,791 crore with cost effective market borrowings. That is really the swing, and you know this group position, which will help us advance our existing and new businesses.

Kiran Thomas — President, Reliance Jio Infocomm Limited

So, kicking off, as you know, the strongest portfolio within JPL as we start talking about it, very well established in the connectivity ecosystem, spanning mobility, home and enterprise, of course with a slew of digital services also coming into play in the recent past. Looking at our historical businesses which have been running along as leaders in our country, it has been a phenomenal year of further strengthening our leadership across all of the connectivity segments. If you look at mobility, we are undisputed number one when it comes to revenue and subscriber market share. In terms of the adjusted revenue –market share, we have now in excess of 45%. In terms of our mobile subscriber market share now approaching 55%. So, by any token, really good set of numbers. We continue to maintain our leadership when it comes to the quality of service of our mobility broadband service. We continue to be number one as we have been for many years now — number one in the average download speed across the country, as per the TRAI myspeed data.

Also, home is now picking up, although it was a tough couple of years if you look at the COVID situation and all the lockdowns. But through it all, we have emerged as the number one FTTH, or fiber to the home service provider. And this is just within two years of launch in a very tough environment. And today, we have in excess of 5 million homes already connected on our FTTX service. And as we come out of the pandemic, we would look for the pace of growth in this area to further accelerate.

And for the next slide. I think the real secret through the reason why we continue to be the leader and further strengthen our leadership position has always been right from the day we launched. The secret of all of this has been our customer centric approach. And when we talk about customer centricity, it is obviously not just a word, there are many dimensions to this that we live every day, everything from keeping our offer and our services extremely simple. As you may all know, we entered this space with a very, very simple set of plans and a very simple offer and we continue to keep our products and services extremely simple for our customers to understand. Of course, India being India, we offer our services in a number of — with very easy to understand user interfaces, which is supporting all of the major languages in India as well. And of course, the transparency of having no hidden charges in terms and conditions, I think we’ve been a pioneer in this space and we believe that has really communicated our proposition to all Indians in the simplest possible manner.

Of course, the trust factor is always there. We are known for a very high degree of service availability, reliability and trust when it comes to our core service. We are reachable through multiple touch points which are convenient to our customers and always available to help our customers as and when they need any assistance from us. When it comes to our value proposition, again, we have established a very clear proposition for providing the best value for money, not just in India, but globally. As far as possible, we try to further add value to our clients by offering a number of additional value-added services even within our basic tariffs. And if you look to our investments, all of these are feature ready. We have a no-legacy network, which is continuing to improve, and we are upgrading towards a pan India 5G rollout. Network is ready for 5G as we speak, and it has

Been right from the day we launched. All of our solutions are digital first, which means we are well positioned as people adopt smartphones and digital solutions we are innovating every day, thanks to the digital capabilities of the group. And through it all, our purpose and our passion right from day one has been to bring about what we call digital life for every Indian. So, all of these put together strengthens our customer centric approach in everything that we do.

Again, looking at the entire lifecycle and really understanding the customer pain points and trying to solve or help our customers accomplish their mission at every stage of their lifecycle with us, everything from discovering our services, whether physically, at home or online, through social media, through all of these, really communicating our proposition and making it really easy for customers to discover what we offer, simplifying

The buying experience. Of course, we have one of the largest distribution channels, what we call our digital physical omni-channel approach. We are we are now firing an associate network which we pioneered during the COVID pandemic lockdown. So, we again have these light onboarding journeys that we are pioneering, further expanding our reach to our customers. And of course, customers today also have the choice of having our SIMs delivered to their home, and of course our connections also very easily provisioned by our agents who visit the home and connect in a very short period of time.

The on-boarding experience itself is very simple, again, pioneering the eKYC, dKYC approach, making it very easy for people to understand what services they want, very simple installation experience like I mentioned and a very easy process for happy customers to refer and onboard other customers into creating that viral effect. When it comes to making payments, of course, we offer, like I said, the highest value for money tariffs anywhere in the world. And to make those payments, we support a whole slew of payment methods. Of course, now including our partner WhatsApp as they introduce payment on their platform as well. And again, an omnichannel approach to care. Of course, we are self-care first through MyJio, as we’ve been for many years now. But their customers do need a human touch. We have everything from the chat channel to voice and email, and

All of those channels which are available to our customers 24/7.

Next slide please. Speaking a little bit about the other pillar of our success for continued leadership in this space, which is our network architecture. Like I said, it has been a no legacy network architecture from day one, a pan India network which is carrying probably the highest amount of traffic on our mobility network and obviously more traffic coming online through our fixed-line network as well. It is a highly distributed network to begin with,

But we believe that as we go into 5G, relatively speaking, we need to go deeper. So, as we speak, we are improving our network infrastructure to take it much closer to the points of consumption, much closer to our customers. So, really creating a deep-edge topology that we are now rolling out in preparation for 5G rollout, which we expect to happen very soon. What that means is, we will be much closer to the customer through these additional points of presence. Obviously, we’ll be making our network architecture even more resilient. And because of the proximity of our network to the customer, or the edge fabric to the customer, we can now push, compute from our data centers to the edge and much closer to where the customers need that compute, especially enterprises for that compute to be placed [Technical Issues] thanks to the to the 5G capabilities of the 5G

Network, as well as the ability for the compute to be much perfect.

Next slide. If you look at JioFiber, which is now the other pillar after mobility. Like I mentioned, JioFiber has very steadily scaled up and today we have connected more than 5 million homes within two short years of launch, despite multiple lockdowns and other constraints. But over the past few months, obviously the pace of home connections has accelerated substantially. Obviously, we believe we are pioneering the next generation fixed-line infrastructure in the country, thanks to the deep fiber assets that we are — that we are laying across our nation. And if we just look at our performance over the last year, we were contributing to nearly two thirds of the total industry wide connections that were provided over the last year. Put in other words, we have done twice the number of connections than the rest of the industry put together when it comes to fiber

Connections.

Next slide. Also, what you have done is, the early adopters for JioFiber, what we have understood are relatively premium customers for whom our initial slew of prepaid tariffs were probably not their preferred way of paying for — paying for these services. So, now we have introduced a rich portfolio of postpaid plans, all of which have a slew of add-on content. And along with our fiber connection, we are also providing a Jio set-top box to enable all of that content to be viewable on the large screen have a home for a very attractive price of just INR100 rupees that customers

Have to pay, in addition to their fiber tariffs on a monthly basis. And the Jio set-top itself, we are offering to all of our fiber customers at a zero-entry cost — and we mean literally zero, so obviously no extra outlay from the customer of any kind. As you see on the graphic to the right, obviously the customers get high-speed internet as well as hundreds of on-demand channels, more than 14 leading over-the-top content applications, and even

Communication services like video calling on the TV all bundled for that postpaid tariffs that customers can take from us.

Next slide. Again, the third pillar, this is targeted at enterprises. So obviously, Jio’s focus since its initial days has been making sure that our communication services are available, first to consumers and then to homes. But the enterprise focus has been steadily increasing over the — over the years. And if we look at our readiness to offer a rich set of solutions to enterprises, it subsumes everything from the ICT stack, which includes the customer premises, equipment, the gateways which are now fully software defined, the end-to-end infrastructure that is needed for that communication stack to be delivered, everything from connectivity, to like I said cloud compute, and now increasingly edge compute. And for the Internet of Things that now industries are adopting — industries and consumers are adopting, again, both the infrastructure and the NBIoT network.

And in addition to that, the solutions that most enterprises require when it comes to communication and collaboration on our own and through partnerships with partners like Microsoft, and a number of other horizontal solutions like security as well as industry specific vertical applications. All of these, we are now well positioned to offer that. Very innovative model of how we are offering it, in most cases enterprises have had to outlay a lot of capex to set up this stack irrespective of the partners whom they dealt with. So Jio is stepping up to ensure that we migrate our enterprises from a capex to an opex model for using as they require, which also means that we take on the responsibility of upgrading most of these technologies for our customers, which means our customers can enjoy a very low technology obsolescence. And where required, we are also able to step in

Because we ourselves are a very large operator of a lot of complex technology and Jio. Many of those services now we are able to offer to external customers as well as managed services.

Also, like I said, our approach has been to offer, obviously our own services that we have developed internally, but also through partnerships. And what we are now working on introducing very shortly is a digital marketplace where we can bring a curated set of applications from very select partners. Everything from horizontal applications that enterprises require, also to industry specific vertical solutions. And all of these covering almost

All the functionalities which are needed by enterprises, including the functionalities which are needed for commercial utilization and e-commerce. So that is really something that we are now working to introduce to our enterprise customers, in addition to connectivity.

We also — next slide. We also continue to enhance our technology ecosystem through a number of partnerships. On this slide, we are just calling out a few of the prominent partnerships that we have entered into recently. The first one is with a company called Glance, who have been a global pioneer to bringing in an AI-driven experience to what is considered to be a dead property, which is the lock screen of your phone. So, for the first time what Glance has done is to bring in relevant content that people can consume even while their phones are in locked mode. So really converting the lock screen of the phone into a very usable and valuable property for end users. We have invested $200 billion in Glance, because we believe in the potential of this platform not just for Indian customers but for global customers. And obviously, there is an integration — a close integration that we are doing with them for all of the devices that we ourselves are building, including the JioPhone next line of smartphones. The second company we want to highlight is a company called Two Platforms. A very interesting company, which is in the space of Artificial Reality. Which means that they can create, again, AI powered digital humans, whether it in voice or video mode, and also create artificial spaces, all of which have multiple applications, everything from communication to creating human personas, to creating very immersive spaces, including for gaming.

Again, we have invested $15 million for a 25% stake in this company.

The third one we want to talk about is a company called SCS satellite. Again, JPL and SCS announced a joint venture, delivering a constellation of high-performance satellites over India, targeted at providing satellite-based broadband services. This multi-orbit network of satellites will enable us to further deepen, almost create a ubiquitous capability to offer multi-gigabit links, irrespective of where anybody may be in India. Likewise, we also continue to strengthen our undersea cable portfolio. Again, we have joined a new cable system called IAX, which is connecting Maldives directly to India and to Singapore. This is obviously in addition to all of the undersea cable assets that we already have, again, positioning Jio to become not just a strong local player, but also a strong regional player in this part of the world

Finally, some recognitions. Of course, this is just a sampling of all the recognition that we have received globally, which is good to know that in addition to obviously our customers and partners, we are also getting some recognition from the from the industry broadly. If you look at our presence in the TIME 100 most influential companies globally, where Jio Platforms featured. If you look at Brand Finance, where we are number five in the top strongest brands globally and obviously number one in India. If you look at Fast Company, we are number one in India, and again, in the top 20 globally. And obviously, from a slew of partners like TM forum, Aegis Graham Bell awards and so on. So, all of this obviously is icing on the cake. I think we derive true satisfaction from what we are able to deliver to our customers and obviously adding value to the country with respect to the digital life that we are providing. But also global recognition is obviously the icing on the cake when it comes to the past year, which has been great.

With that, I will hand it over to my colleague Anshuman, who can then take you through the quarterly highlights.

Anshuman Thakur — Head of Strategy, Reliance Jio Infocomm Limited

Thanks, Kiran. Coming to the highlights, operational and financial performance for the quarter and full year. For the quarter, we had very strong financial performance across the connectivity and in digital platform businesses. Consolidated revenues for the quarter were INR22,261 crores and EBITDA at INR10,918 crores. A significant jump in the ARPU over 10% quarter-on-quarter from INR151.6 to INR167.6, with improving subscriber mix and inflow through the impact of the tariff hike that we saw in December. We had very strong gross additions, over 25 million, and that continues

To be healthy. As has been over the last several quarters, we have done over 30 million gross additions, 30 million gross subscriber additions. The customer base at the end of the quarter was at 410 million. Some reduction in the net base mainly on account of the SIM consolidation behavior that we saw even in the previous quarter after the tariff increase. That seems to be abating now with the flow through impact of the tariff increase now more or less we are completing one full cycle of recharge

Data traffic continues to be very strong, 48% year-on-year increase in the total data being consumed on the network, with overall traffic of 24.6 exabytes for the quarter, over 8 exabytes per month. And this continues to show a very strong healthy growth trend. Kiran spoke about the investments that we have made and the partnerships that we have entered into with Glance, Two Platforms and SCS. So, sustained scaling of the business across all the verticals.

Next, ARPU, I mentioned this, there’s been a very significant increase in ARPU over the last couple of quarters, and even more so in the last quarter — 10.6% quarter-on-quarter increase in ARPU, improving subscriber quality. Also, the ramp up of our FTTH and business and the follow through of the tariff hike on the ARPU, all of which have helped in the ARPU increase, but also very heavily increase in per capita data and voice consumption. So, as you can see in the chart at the bottom, the per capita data consumption has now gone to 19.7 GB per month on a base of over 400 million subscribers, and that continues to show very strong growth trend. And this is something which shows that the customer engagement is improving, and the customer activity levels is improving as time goes by.

On the key operating matrices for RJIL, our connectivity business. As I said, we ended the quarter at 410 million subscribers. The very healthy gross additions of over 35.6 million, getting offset by decent consolidation. But that trend seems to be coming to an end now. ARPU at 167.6, 21% YOY increase in ARPU, over 10% quarter-on-quarter increase. Data traffic grew by 47.5% year-on-year to 24.6 exabyte during the quarter, and very healthy per capita voice and data consumption. As you can see, data consumption per capita has grown from 13.3 to 19.7 in the last one year, and even voice consumption has shown a very healthy increase from 823 minutes to 968 minutes per user count.

Key financials for the connectivity business, that is RJIL. Operating revenues of INR20,901 crores. That’s a healthy — over 20% year-on-year increase, with partial impact coming on account of the tariff increases. EBITDA at INR10,554 crores, EBITDA margin of 50.5%, the first time RJIL has crossed the INR10,000 crore EBITDA mark. If you recollect, JPL had crossed it last quarter and RJIL showed an EBITDA increase of 27% year-on-year. So, growth

Momentum and also the operating leverage as we see the business growing, continuing to get more subscribers and more revenues, the operating leverage should help us in improving our margins further.

Coming to JPL, the key financials — operating revenues at the consolidated JPL level, that’s Jio Platform Limited was INR22,261 cores, that’s a 22% year-on-year increase. EBITDA growth of 27.4% year-on-year to INR10,918 crores and net profit of INR4298 crores for the quarter. And moving on in terms of full year numbers, operating revenue for the full year for Jio Platforms Limited was INR81,587 crores, which grew from INR73,503 crores the previous year. EBITDA came in at INR39,112 crores. The EBITDA margin was 47.9% for the full year, but as shown in the previous slide, it’s inching closer to 50% with every quarter increase. EBITDA margin grew by 3.9% year-on-year with the benefit of the ARPU increase and the operating leverage. Strong net profit growth of 23.6% to INR15,487 crores for the full financial year. So, despite COVID challenges, all of you are aware that we lost time — we went through some hardships, especially during the Q1 of the financial year and some of that flow through impact in the Q2. A very strong operating and financial performance on the whole for the full financial year and very good momentum as we as we have started the next financial year.

With that, I’m going to hand over to Gaurav to take you through the Reliance Retail results summary.

Gaurav Jain — Head, Strategy and Business Development, Reliance Retail Limited

Thanks, Anshuman. Good evening to all. Before I can give you a walkthrough of the full year highlights for the year, let me just spend a minute talking through the operating context. This year has been challenging for us given the spread of two waves, which was the Delta which impacted the quarter 1 performance and also Omicron which impacted the fourth quarter, during which there were several operating restrictions which got imposed, which impacted service delivery, store opening and expansion plans. So despite these adversities, we operated about 87% of our stores and also had about 81% of the footfalls to pre-COVID levels. Despite these adversities, we made all attempts and all our employees rose to the occasion to ensure that all our customers are served to their best service expectations.

With said, our performance for the year has been very, very strong. All time high revenues and profits were delivered this year. Revenue base of close to about INR2,00,000 crores with a milestone EBITDA profit of over INR12,000 crores was achieved. We crossed a milestone of 15,000 stores during this year with over 2500 stores launched this year. This operates to about seven stores per day kind of store opening rate. What is also worth noting is that we have expanded close to 48 million square foot of operating space which is our highest level in any given year. We now have about 42 million square foot of operating retail space.

Our efforts in scaling up digital commerce and new commerce businesses are on track, and we continue to make new highs quarter after quarter. Digital orders are up 2.5x, our merchant base is up 3x over the course of the year. Our share of business through all these new emerging channels is at about 17%. While we continue to invest in expanding our reach through stores and platforms, we also are investing in our supply chain capabilities. During this year, we have expanded the warehousing and fulfillment space to 22.7 million square foot, which is double that what we started with before the start of the year. The trust with our customers continue to grow and our loyalty customer base stands now at 193 million customers, which is up 24% year-on-year. We continue to bolster our capabilities through acquisitions and partnerships and that’s not just in building portfolio brands, but it’s also about service capabilities, it’s also about unique products that we are able to bring to our customers and we have

Spent close to about INR9,700 crores during the course of the year in bolstering these capabilities.

One of the ethos of Reliance Retail is all about inclusive growth and the cornerstone of inclusive growth is about jobs and reskilling of people. It has been an resonated period with 150,000 new jobs being added. But it is the highest by any company this year given the impact of COVID, especially. Our employees base is well over 361,000 people. So, all in all, it has been a period where we have resumed our growth momentum as the impact of COVID has subsided with the end of the year.

Looking at the financial performance, so our gross revenues at INR1,99,704 crores. At this level of nearly INR2,00,000 crore revenues, we see ourselves among the top 10 Asia retailers, which is a feat not achieved by any retailer in the country. Our EBITDA growth at 26% at INR12,381 crores. Our EBITDA excluding the investment income grew at 29%. Our EBITDA margins grew by 10 basis points delivered at 7.1%, and profit after tax at INR7,055 crore against INR5,481 crore last year.

While we are improving our service capabilities, expanding our engagement with the customers, all our efforts are also getting noticed by various industry forums. So, some of the key recognitions are shown below. Some of them are very heartening to see. So, we ranked 56th in the Global Powers of Retailing by Deloitte list in the world’s largest retailers. We continue to rank second fastest growing retail company in the world. We were also ranked third in the list of Fast Company’s Most Innovative Companies for Asia Pacific for JioMart platform. Some of the other recognitions were with regard to great places to work certification, Association of Talent Development award for Reliance Digital, which is one of the most coveted awards in the industry and most admired retail group through Images, MAPIC India and others. So, some key recognitions that we received during the course of the year.

Talking about the fourth quarter highlights and again, just giving the context of where we operated. So normal store operations were impacted in January because of disruption brought by Omicron strain, which actually impacted normal operations of stores and footfall really dropped during the month. So, I think I was talking about the operating environment. It was challenging environment at the beginning of the quarter because of the Omicron strain, but at the end of the quarter there was a return to normalcy. And that’s what we see on the right side of the curve shown where we see footfalls gaining beyond the pre-COVID period at 104%.

With cases subsided and also the restrictions being relaxed, we saw consumer sentiments also improve gradually at the end discretionary spend came back. All through the period, not only just in this quarter, but also through the entire COVID period, we have seen the resilience of small towns and over two thirds of our stores and digital commerce platforms actually get businesses from small towns and that has really led to our

Business recovery even in this quarter.

So, some of the key call outs for this quarter. So, our revenues have been all time high for this quarter. And the base of this growth has been well rounded with double digit growth across all the consumption baskets year-on-year. Our EBITDA performance has been strong. Operating EBITDA has been even better than the festive quarter, which is a very strong period and mindful that our last quarter was also our best quarter in performance.

Momentum on new store opening continues, so we opened 793 stores during the quarter, additional 1.6 billion square foot, and digital orders as well as merchant partnerships continue to scale further

So, the growth momentum has sustained through the quarter for us. Looking at the growth, again a broad-based growth across all the conventional baskets at INR58,017 crores for the quarter against INR47,064 crores for last year same period. Record revenue performance, it’s a growth of 23% and led by consumer electronics and fashion lifestyle, but it’s really grocery which is the most resilient business. That business recorded all time high

Revenues. And that has been across all the channels not just our stores, but also digital commerce channel led by JioMart, as well as our new commerce merchant partners. So digital and new commerce as a channel now contributes 19% of sales. So very broad-based growth across the business.

On the profit side, resilient delivery for us. Our EBITDA performance is 2% up year-on-year at INR3,705 crores against INR3,617 crores last year, EBITDA from operations is 16% up year-on-year. The growth has been brought by again grocery and fashion lifestyle revenue as the business rebounded and also the continuous emphasis on ensuring that the costs are well under control. So, our operating EBITDA is at a new high for this quarter.

Our focus on our infrastructure expansion is on track. So, we opened to a now 1,000 during the course of this year, 793 stores for this quarter, additional 1.6 million square foot of space with about 42 million square foot total operational. So, while we are focusing on additional stores and strengthening our reach to our customers, it’s really our investment which is also in the backend. So, we have added 71 New warehouses and fulfilment centers with an area of 3.1 million square foot of space during this period. Talked about job creation, which is really a cornerstone of our initiatives of inclusive growth. So, 75,000 new jobs created in this quarter alone and our employee base is well over now 3,61,000 people.

We have also been focusing on strengthening our brand portfolio and we announced a series of partnerships and acquisitions during the course of the quarter. The focus has been strengthening our portfolio for the Indian fashion brands. So, the transactions with Abu Jani, Sandeep Khosla, Abraham Thakore, Rahul Mishra, AK-OK were really towards building that strong portfolio. The investment in Clovia further strengthens our position in the intimate wear segment. So, with Clovia, Zivame, Amante, Marks and Spencer and Hunkemoller, pretty much we now have presence across various income segments and customer choice segments.

Looking at the financial summary for the period, gross selling at INR58,017 crores up 23% year on year, EBITDA at INR3,705 crores, 2% up year on year, profit after tax at INR2,139 crores against INR2247 crore. So very strong revenue [Technical Issues] the entire value proposition is now getting well accepted by merchant partner base. We have seen a 50% growth in Merchant partner base sequentially and we continue to engage with them further.

Talking about the fashion lifestyle. It’s really a resilient performance, which has come from small towns, which ensure that the customers came back to stores during the quarter soon after January Omicron Period. So, we’ve seen footfalls surpass pre COVID period and also saw build-up of average bill values by 27%. So, it has been a robust growth over the last year for our apparel and footwear business. We ensured that there is a freshness of

Range in our stores and our platforms. So, we also did an early inward on spring summer range. But what we also saw is that with cases subsiding and normalcy returning, so offices reopening, schools reopening, there was a sudden rush of wardrobe refreshing by families and we saw some of the categories like menswear, casual wear, office wear, kids wear, open footwear are doing particularly well during this period.

On the small towns, which is our big focus area, Trends Small Town is a format that crossed 600 stores and we announced last quarter that we had crossed over 500 stores as a milestone. So, we continuously are upgrading and ensuring our reach is further with more stores. So, we have added 100 stores this quarter alone. On AJIO our performance is all time high. So, we are making records with every passing quarter. Our growth is driven by catalogue expansion and also impactful campaigns. So, the campaign like All Star Sale campaign is one of the big properties that now AJIO is driving that is helping increase conversions. It also helped making March as the best ever month for the platform. And all of this is also helping us to really democratize fashion. So, we are now taking fashion into really the small towns and really connecting that Bharat with the fashion pyramid of what India as well as the world has to offer. So over two-third of our orders really come from small towns. And it just ensures that you know the most and the best of the fashion is really made available to all customers across the country.

On the new commerce side, revenues up 3.5x over last year; our catalogue continues to be strong, 55% growth year on year and we continuously adding more labels, brands. We also launched four of our own brands in the value segment. It’s really the promotional events, which is building more traction with our merchants and our average value per merchant has doubled year on year. So, there is a lot of value which our customers especially these small merchants are seeing through the broad range and also the promotion that we are bringing to them. The strong traction from small town merchants remains on track; so two thirds of our business or even a little bit more — or 70% of our business really comes from tier Tier 3 towns and below. So, it’s really our reach into the small towns which is really giving us that growth platform.

Talking about jewelry, so jewelry has been a volatile business during this quarter, that’s largely driven by volatility in gold value, but what we have seen is very resilient performance through this period which is led by small town growth but also the wedding season which continued in the quarter. One of the focus areas for our business is to drive diamond jewelry, and that actually gives us a much broader palette for building designs for our collections. So, the diamond share has improved by 230 basis points year-on-year.

On the partner brand business which is really our premium brand play, we are the partners of choice with over 45 global being represented by us in our portfolio. But that part of the business demonstrated strong double-digit growth led by the mall recovery as well as continued business coming from digital commerce platform. We also strengthened our portfolio through the strategic partnerships that I talked about. And that is strongly led by

The focus on strengthening the Indian fashion designer as an offering. Zivame, which is the leader in intimate wear, that as a business has been on a double-digit growth year-on-year. The platform has been focusing on strengthening the product portfolio and that is also being guided by the

Marketplace model with more and more brands and categories being introduced. The Grand Laundry Festival is also one of the big properties which is an annual property, and that property did 3x growth in traffic and orders as compared to the rest of the period for the year, so it is become more and more meaningful and getting more and more traction with our customers.

Next slide, please. Grocery has been a very resilient business for us throughout the period, but also we see that as the stores have opened up the customer falls are back to pre-COVID levels in our stores. But what is heartening to see is that customers who have been using omnichannel capabilities for they have been getting the benefit of the convergence of technology and physical stores. Those customers are shopping on both channels and are buying about 35% more than customers who only are shopping at single channel. So really the play of omnichannel is really come to life through our offline and online conversions. One of the milestones for us has been that we have been able to operationalize over 2,000 grocery stores across the country.

On JioMart, we continue to scale high with the addition of new categories, electronics and beauty got added. We invested in Milk Basket and the subscription business has now doubled year-on-year since the time we integrated that business. We have expanded that business into newer cities like Jaipur, Chennai, and that expansion is also well tested and is now ready to scale up. Talking about the new commerce business or merchant basis of forex, year-on-year, older merchants have been buying significantly more, also ordering more and also ordering a wider set of product lines. So, it is a fantastic story to really talk about how our merchant partners or small kiranas are really finding tremendous value in associating the Reliance platforms. We have been looking at adding more specific, region-specific assortment, also augmenting our supply chain capabilities to ensure that our delivery times are shorter and more dependable.

Next slide, please. Talking about Pharma — store productivity and online orders have really doubled during this period, which is led by better offers, also wider range and also deliveries. One of the faster deliveries has also been our focus on integrating with the hyperlocal capability. So, 30% of our orders are now being delivered through our stores across 8000 PIN codes. Our focus on expanding our range of products is really taking shape. Our catalogue is 40% up year-on-year and outside of the prescription drugs that that we offer, we are looking at adding a wide range of products on the OTC, beauty, ayush and homeopathy side as well. Our new commerce efforts are now expanded to 1,900 cities and our merchant base has doubled on quarter-on-quarter basis

On the urban ladder side, our business has been strong over the last year with improved walk-ins, also higher conversions. But one of the things that we have been really pushing for is expanding our base of products and ensuring that we become a destination. So, the presence of third-party brands is really helping us scale up that part. Our product portfolio has grown 5x year on year during this period. So, as we look ahead, into the new year for our business, the priorities are very clearly charted out. So, we are looking at delivering a very strong and a competitive growth in revenue and profits. Some of these initiatives would be centered around accelerated store expansion. So, we will take all our formats into new geographies. We would look at continuing to strengthen our digital commerce as well as omnichannel capabilities across businesses. We would be onboarding new merchants across the categories and geographies and also ensuring that we also improve on the wallet share of all our partner merchants. We would look at augmenting our product design and sourcing capabilities which is really one of our big competitive strengths. And we would look at growing our own brand portfolio. And of course, looking at how to scale up all the new businesses that we have acquired and also started over the course of recent times. So that’s really what I had to talk about On Reliance Retail.

Sanjay Roy — Senior Vice President, Exploration & Production

So, in Oil and Gas segment, just to recap the performance for the year. With the commissioning of the R-cluster field in December of ’20, and subsequently the satellite field in April of ’21, a couple of months ahead of schedule, we have seen a production rise from KG-D6. Consequently, we are seeing the production increase considerably from the earlier year. In fact, we have also seen prices rise, as we know the gas markets are quite tight and prices have been elevated, and that effect we are seeing now in the revenues as well as improved EBITDA margins. Now, going forward, we expect prices — ceiling prices to increase to $9.92 in the first half — that has been notified. And further we expect increases going from there onwards in the second half of the year.

Next slide, please. So just to recap the quarter gone by, whilst production was steady, the EBITDA was lower simply because of the US shale divestment. There were certain tests that we had to carry out to validate our understanding of the reservoirs and some of the well intervention jobs. So consequently, we saw a slightly lower EBITDA, but we expect this to increase in this year, particularly as we bring on stream the MJ fields. So currently, we are producing around 20% of India’s domestic production. We expect to increase that to 30% with the commissioning of the MJ field in the next 15 to 18 months.

Next slide please. So, the MJ field is very much on track. We have now drilled all the wells and we expect to undertake the lower and upper completions over the next few months. The FPSO is on track. It is coming together, and we expect that to converge with the completion of the wells towards the end of this year. In fact, the final offshore installation campaign is also — although we had a little slightly challenging circumstances because the weather window was not as kind as in the construction window within December and mid-April. But nevertheless, we are tiding over the challenges, and we expect to bring this field on stream by the end of year.

And meanwhile in the block KG-DW1, which is contiguous to this KG-D6, where in are we taking exploration activities with the perspective that we can monetize any resources by leveraging the existing infrastructure. So, we are very much on track with our plans right now. And we expect to commission the field by the end of the year.

Next slide. So just to give a perspective on the gas market and its outlook. As you can see, you know, the tightness continues. Again, it has been exacerbated by the conflict. Now in Europe as they try to diversify their source from Russian supplies, there seems to be quite a bit of competition with the Asian consumption. Europe itself consumes about 85 million tons per annum, which is 1% of global supplies. So, you know, with them moving away from Russian supplies there’s going to be tightness, particularly because there’s no additional capacity coming on stream until at least ’26 or so. So, we expect this tightness to continue, prices to be elevated. And in India. We have seen a slight pullback because of the high prices. But KG-D6, which has the price ceiling, that would be quite attractive because of the lower prices compared to the market prices. So that is an outlook that we believe will meet. So, in terms of demand remain quite strong.

That is the overview. So essentially forward outlook is the production — sustained production and increased production based on KG-D6 field as well

As prices will drive value for the E&P business. We are currently producing about 20% of India’s total domestic production and we are working on increasing this to up to 30%. Thank you.

V Srikanth — Joint Chief Financial Officer

So the last presentation of the evening. Looking at demand, overall year-on-year demand was up 4.7 million barrels with easing of restrictions, vaccination drive. However, on a quarter-and-quarter basis we did see a falling demand by almost 2 million barrels on the back of the Russia-Ukrainian conflict as well as some aspect of the Omicron variant coming in. Polymer and polyester demand year-on-year improved, but it was constrained in a volatile price environment. Overall domestic oil demand increased 1% year-on-year on the back of road travel and passenger traffic that we saw and operating rates on the cracker side we did see a reduction because of the volatility as well winter Olympics and fresh lockdown in China. So overall, I would say a more moderate recovery in demand with the opening up of the economy, which was constrained by price volatility.

Moving to the price and margin trends, when you look at feedstock prices, oil at a 10-year high on the back of the conflict. Also, European bid for LNG meant that LNG energy prices was significantly higher. When you look at Naphtha prices $871 a tonne, again up 19% And this kind of move in Naphtha did have an impact on cracking economics. When you look at product margin, very strong growth in transportation and fuel margins, gasoline were up 17%, gasoil by 71%, ATF 159 higher on a quarter-on-quarter basis. And as I mentioned, higher Naphtha prices and its impact, you could see the downstream chemical margins coming off polymer anywhere between 21% to 27% lower, polyester chain lower by about 11%.

And the primary driver for transportation fuel, which we saw a two to three year high, has been — the demand continuing to be good, lower inventories, and also sanctions on Russia and crude had an and limited Chinese exports is also an explanation of why transportation fuel was higher. And benchmark polymer and polyester margin declined quarter-on-quarter with higher feedstock prices.

When you look at the domestic demand, first one is fourth quarter of FY’22 a year-on-year and you can see that oil demand is up 3.1%. Diesel and Gasoline remained flat on the back of subdued manufacturing activity and also on impact of Omicron. However, ATF we saw 6.5% year-on-year increase on the back of air passenger traffic up, which was up 37% in March. Overall when you look at ’22 versus ’21, overall demand increased by 4% to about 203 million tonnes. The domestic growth has been constrained by high prices and as well as some of the COVID restrictions we saw.

When you look at polymer demand for fourth quarter basis, it was up 3% both on year-on-year as well as on a sequential basis. Broadly I would say that demand remained stable despite higher feedstock and polymer prices and we didn’t see growth in essential sectors, especially health and hygiene, food and packaging. PVC, minus 2%, demand remained subdued because of multiyear high that we saw as well as seasonal rains. But when you look at FY’22 or FY’21, polymer demand 8% on the back of the improved activity and we did see more broad-based demand in health, hygiene, packaging, agriculture infrastructure. So overall year-on-year good, otherwise quarter-on-quarter as well as, when you compare quarter has been a bit stable.

On polyester — going to the deltas, and here you can seen that quarter-on-quarter deltas are being lower by between 21% to 27% on the back of unfavorable Naphtha cracking economics and that has had an impact on margins. Ethane has become very advantageous in such a high oil price environment. Of course on the counter side, some of the logistics constraints and higher ocean freight supported the India prices.

And when you look at FY 22, again overall delta is down between 3% and 17%. You know the product price increase that we saw were anywhere between 20% and 40% significantly lagged the Naphtha prices were up 82% to the back of higher oil. Furthermore, in the case of Polymer, the markets remained well supplied with all the new capacities that we saw. So it was in way only if we had an integrated operations and feedstock flexibility could be a little bit more resilient.

On the polyester chain margins, fourth quarter down 11% and we weak MEG and PTA margins led by higher feedstock prices. It was partially offset by strong rebound that we saw in PX margins. Also overall I would say that global polyester market has also been slow to recover and that impacted a stable fiber and yarn. On a year-on-year basis, the overall polyester chain margins up 17%, reflecting a recovery in the polyester markets, of course from a low base and there was improvement in PX and PTA deltas which was offset by polyester and MEG deltas.

Coming to the transportation fuel, quarter-on-quarter actually gasoil demand was lower by 0.9 million barrels. But when you look at the cracks at 21.6, its a very sharp rebound 13 in the previous quarter and 6 a year back and that’s the cracks that we seen due to the outcome of disruptions that we saw in Russian exports to Europe as well as the natural gas price impact and therefore they switched to gasoil and also overall you can see inventory level down to 508. So lower inventories and also limited Chinese exports caused the big jump in the gasoil prices and you have seen this trend to continue through April also.

On the ATF and kero side, again flat on a quarter-on-quarter basis, but here again you can see the jump $16, last quarter about $10 and before that a year back about $3. So that is on the back of Gasoil strength actually, prompting refiners to shift from jet to gasoil, also improving aviation demand in Asia as well as winter heating demand caused this kind of big jump in jet kero. And finally on gasoil side, again demand lowered by 0.6 million barrels per day and cracks at $15 versus $13 in previous quarter and $6 a year back. This strengthening again because of demand in Asia. We did see some unplanned outages in Thailand and Vietnam and supplies from China continue to be lower, also increase in regional inventories, you can see the chart there 455, there has been an increase in inventories that that weighed in on the margins overall. And, of course, sanctions on Russia, that increased tock supply to US refineries also had and impact. This is just the year-on-year view and it very clearly talks about the overall jump that you’re seeing in cracks of $12 for gasoil, $11 for gasoline and $9, and you can compare it to to FY 21 which was $6, $3, and $1 respectively. And again on gasoil, it it — demand — it lower exports from China, lower inventories and gasoil switching. And on gasoline side, again, inventories, Chinese exports restrictions and the closure of refineries in several demand centers had an impact. And on the ATF side, easing of border and higher travel and the fact that there has been the overall tightness in diesel complex also lifted ATF crack. So when you put that context and see our performance for the whole year, revenues up 56% at INR5 lakh crores, INR52,732 is the EBITDA, which was higher by 38% and when you look at FY 22 big benefit coming from higher volumes, up 7.2%, strong recovery in transportation field that we saw, domestic demand — domestic sales was good as our economy opened up and also we saw strength in TX, PTA and polypropylene along with feedstock flexibility that we had. Overall, margins were lower, but that is I would say is really the base effect that we have seen.

Ad when you look at for the quarter, INR1,46,000 crore revenue, sequentially up 11% year-on-year, up 44%, 14,241 crores sequentially, up 5% and 25% on a year-on-year basis. This performance is despite the utility that that we saw and benefited again from the distillate cracks and we maximized our mid distillate pool and within that we maximized gasoil production versus ATF because of better economics. And as I mentioned earlier on, downstream chemical profitability has been impacted by weak NASDAQ cracking economics as well as lower demand. This is the operating performance throughput of 19.3 million tonnes and production for sale for 17.3.

A few important for me to highlight. There was a deferred planned turnaround with improvement in margins. We’ve minimized our feedstock by sourcing arbitrage barrels, had a higher this quarter, we had a higher mix in our basket which and therefore helped us capture the wider Brent Dubai differential. I talked about having maximize the mid distillate pool and within that diesel or ATF. Also in this quarter we rationalized our Aromatics production and maximizing reformat for gasoline blending. Also we maximized our naphtha exports given where cracks and premium was and that we were able to do by optimizing our cracker feed, and we have tried to maximize our biomass profiling at Hazira and Dahej, a step towards a more sustainable fuel mix. In short, I would say that we exploit the operational flexibility that we have in our refinery configuration to get the maximum amount.

Coming to the last slide on the dynamics. Overall, our own thought process is that this year too there will be a further increase in demand by almost 2 million barrels per day. Lowering of GDP growth and oil demand is something that is possible with the way on because of the conflict and Russian crude and product supply is definitely having an impact on supplies. Overall margin, we think that lower Chinese exports and peak maintenance season will help support the product margins, also reduced diesel imports by Europe from Russia is supporting margins and PX-PTA and imaging margins are expected to be range bound on the back of the capacity overhang that we have. Overall, demand drivers are good, are very resilient industrial demand that we’re seeing and including you’ll see more on the agriculture demand too. Driving season is good for gasoline and polyester polymer demand we expect that trend to continue with the opening of the economy anywhere between 6% to 8% is something that India can see.

Challenges are there. Resurgence in China of the virus. The impact of the impact on demand because of these high prices. Supply chain disruptions and logistics, this is a continuing trend that we’re seeing, continuously having an impact on global trade and further sanctions, etc., all of them do have an impact on the overall price.

With this, I’m bringing — come to the end of my presentation. Thank you so much for being on the call.