RIL - 9M ending 31-12-2020 numbers are not hunky-dory

By Research Desk
about 8 months ago

Reliance Industries Ltd (RIL) had declared its Q3 and 9M FY21 numbers, which are sending caution ahead. There is no point in analysing Q3 numbers in isolation, either on QoQ or YoY, in view of Covid, but logical to take call on numbers for 9M FY21, with YoY comparison.  

RIL had posted a PAT of Rs. 13,101 cr. For Q3 FY21, but its inhose TV Channel and Business Portal, states it at Rs.14,894 crore (which is inclusive of Minority interest). Is this an intentional error to glorify numbers or lack of understanding to analyse? Both are disaster.

To summarise, 9M FY21 consolidated EPS, before exceptional income is at Rs. 48.14 against Rs. 53.58 YoY, a fall of 10.10%. On standalone basis, 9M FY21 EPS is at Rs. 31.26 against Rs. 44.38 YoY, a fall of 29.56%, This implies that O2C(Refinery & Petrochem) segement has performed badly in this 9M period. Also surprisingly, on PBT of Rs. 39,079 crore, for 9M of FY21, income tax provision (including Deferred Tax credit of Rs. 1,261 crore) is seen at Rs. 335 crore only, which effectively comes to less than 1% of PBT. Is RIL exempted from paying Income tax or are in Tax Haven?

Section 115BAA of Income Tax Act,1961, gives the benefit of a reduced corporate tax rate for the domestic companies, with an option to pay tax at a rate of 22% plus surcharge of 10% and cess of 4%, thus “Effective Tax Rate” seen at 25.17%, while such companies need not pay tax under MAT.  As RIL has not provided for MAT, it can be safely presumed that RIL has opted for Section 115BAA. This will bring down 9M FY21 profits further by Rs. 9,501 crores, if tax is provided at 25.17% on PBT of Rs.39,079 bring down EPS further by Rs. 14.74, as RIL paid up equity is at Rs. 6,445 crore.

Why vested interests are not bringing these 2 points of correct PAT, with Income Tax provision not seen correctly provided (or give reason of not having provided) to the investors, as they have a responsibility to over 31.30 lakh shareholders of RIL.  

Definitely everything is not hunky dory in these Q3 numbers of RIL.

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