Significant rise in gap between standalone, consolidated net profit of Reliance Industries

Reliance Industries' standalone and consolidated net profit gap has more than doubled to ₹22,400 crore, driven by growth in retail and telecom.

The gap between Reliance Industries Ltd's standalone and consolidated net profit has more than doubled to ₹22,400 crore in the last couple of years, as the retail and telecom businesses housed in separate subsidiaries saw significant growth, a report said.

"The gap between Reliance's standalone and consolidated profit after tax (PAT) has increased significantly — from ₹8,400 crore in FY20 (April 2019 to March 2020) to ₹22,400 crore in FY23, as telecom and retail have ramped up," JP Morgan said in a note that used data from the firm's annual reports to reconcile the difference between the two reported profit numbers.

Reliance reported a standalone net profit of ₹30,902 crore in 2019-20 fiscal year, which grew to ₹44,205 crore in 2022-23 fiscal. Consolidated net profit soared from ₹39,354 crore in FY20 to ₹66,702 crore in FY23.

As many as 335 individual standalone companies/associates/joint ventures accounted for the difference between Reliance's consolidated and standalone PAT for the year FY23. Around 40% of these (133) reported profits for the year.

This breadth of companies is down from 498, which were part of consolidated accounts in FY20.

"These look like large numbers, but several standalone subsidiary companies are part of a single business group / operation (such as for US shale, or the multiple ethane shipping JVs)," it said.

Reliance's telecom and retail subsidiaries/associates/JV accounted for around 89% of the gap between consolidated and standalone profits (pre-minority / eliminations) in FY23 — but that still leaves about $ 400 million in net profits from other businesses.