Reliance Industries Ltd

NSE:RELIANCE

Earnings Call Transcript 2022-Q2

[B. Srinivasan, President]

[Audio Gap][ Good evening ], everyone. Thank you for patiently waiting to listen to us for the commentary on our second quarter FY '22 financial results presentation.Just like every quarter, we have Mr. Srikanth, Mr. Kiran Thomas, Mr. Anshuman Thakur, Mr. Dinesh Thapar and Mr. Sanjay Roy to walk you through each of the individual businesses as well as the consolidated ones.So I will now request Srikanth to take over and talk about the consolidated numbers, first.

[Srikanth Venkatachari, Joint Chief Financial Officer]

Thanks, Srini. And good evening, ladies and gentlemen.Just on the consolidated financial results, starting with performance: record quarterly EBITDA led by O2C, retail and Digital Services. Our EBITDA was up 30% year-on-year. And net profit at INR 15,479 is 46% growth on a year-on-year basis, all of them records. On the O2C side, this will be a fifth sequential quarter with a sharp recovery in Refining margins. For us, demand for major polymers and polyester products have come to the -- above actually the pre-COVID levels. And upstream volumes, led by KG D6 ramp-up, EBITDA above INR 1,000 crores. This is a number which is [ coming back after ] 6 years.On the retail side, revenues are actually back to pre-COVID levels with the easing of lockdowns. And if I have to be -- or if I have to zoom in on one, it is Fashion & Lifestyle really led the increase in revenues and margins. On the Digital Services side, strong subscription growth almost 36 million, the highest in 7 quarters. The COVID impact in the previous quarter led to churn of low-end subscribers. And ARPU was also up at INR 144.From a vaccination standpoint, 100% of eligible employees have completed dose 1, and 96% fully vaccinated.[ The next ] slide, please. When you look at the revenues and net profits and compare it on a year-on-year basis, strong growth, revenues up almost 50%, net profit up 46%; and when you look at Q-o-Q, the revenue growth led by O2C and retail; also on the O2C side, of course, coming because of higher realization and of -- on retail side because of the removal of the lockdowns; EBITDA, when you look at it, primarily led by retail, but every other business, O2C, Digital Services and Oil and Gas, contributed, yes, positively. The quarter-on-quarter profit, up 12% despite higher finance charges. Depreciation and tax finance was higher because of the spectrum liability in the March auctions.Next slide, please. When you look at the bridge from INR 27,550 crores all the way to INR 30,283 crores: INR 489 crores coming on account of O2C which has benefited from fuel cracks, product placement, yield management. Retail, up almost INR 1,000 crores because of opening of new stores and the good momentum on digital commerce. Digital Services, benefiting from higher ARPU and subscription addition. And of course, Oil and Gas, benefiting from a quarter-on-quarter 18% growth in volumes in KG D6.Next slide, please. Year-on-year, the picture remains the same in terms of contribution by all the businesses, but O2C was the standout, EBITDA up 44% with revival in fuels and demand in downstream. Higher operational store days and omnichannel growth boosted retail performance. On the Digital Services side, [ clearly we're ] benefiting from customer add and ARPU increase. And as I mentioned, Oil and Gas, the sharp jump of almost INR 1,265 crores, back on KG D6 production volumes increasing.Next slide. So when you look at the EBITDA. Similar to O2C actually, when you look at it, consolidated EBITDA too. This is fifth consecutive quarter of growth, benefiting from economic recovery and the ebbing of the pandemic. Given our mix of portfolios spanning industrial and consumer consumption baskets, you are seeing the benefit flow through. And overall, as I mentioned, EBITDA up 40% from the pandemic hit which we saw in first quarter of '21.Here, balance sheet, no really big change. Overall we continue to have more cash, as compared to debt. And cash flow generation is strong across businesses [ that I have said ]. And we will continue to leverage our strengths to capture the opportunities coming from the economic recovery. And the investment grade, we are higher than sovereign ratings across all these 3 rating agencies: S&P, Moody's and Fitch.With this, we'll just go to the next slide, please. Just one slide on each of the businesses before I hand it over to the -- for a more detailed review.When you look at O2C. Clearly the big one is the fact that oil demand for the quarter was actually up by 2.6 million barrels per day. And the bulk of it really came from transportation fuel demand. And also, apart from that, the switch from gas to oil drove the cracks to multi-quarter highs. And of course, the inventory drawdown as well as supply outages did a lot in terms of seeing the -- both the margin recovery as well as the demand. When you see the domestic side: polymer demand up 7%, polyester up 39%. Of course, at the time, it was from a lower base. Oil is also up about 7%.From our own performance standpoint, as I mentioned, fifth consecutive quarter. It's almost now INR 13,000 crores of EBITDA, sequentially up 4% and year-on-year up 44%. We -- as I mentioned, we were benefited from our key enablers, which is on feedstock flexibility; our portfolio integration; strong cost positions. At this point in time, our dependence on imported LNG is very, very negligible. And also the superior placement that we were able to do. Overall I would only say that the fact that mobility -- increased mobility does support oil demand recovery. And we are also seeing very healthy demand on the domestic sector.Next slide, please. On Digital Services side, we had a gross add of 36 million, which is the highest actually in the last 7 quarters. The COVID impact in the previous quarter led to churn of low-end subscribers, driving net decline the -- in the customer base by 11 million in the second quarter. The usage is very, very strong growth. Our per capita now of data usage is about -- close to 18 GB and about 840 minutes per month. Our financial performance, 15% growth year-on-year. EBITDA at INR 9,300 crores, that is also up, 17%; EBITDA margin at 47%. And as I mentioned, ARPU at -- increased to INR 144.Next slide, please. On retail, this is all about operations approaching normalcy. Our operating hours effectively is at 89%. You may recall it was 38% in June. Also footfall recovery has been good, and we continue to scale. We added 813 stores and 91 new supply chain locations. Performance-wise, turnover at INR 45,000 crores-plus is 16% higher on a year-on-year basis; and Fashion & Lifestyle with actually record sales in apparel and footwear and good traction in digital commerce and merchant partnerships with -- Dinesh will talk about. And overall again benefiting from consumer sentiment, festive season and relaxation and vaccination, all contributing to the strong performance of retail. With this, Anshuman and Kiran, if I may request you to take us through.

[Kiran Mathew Thomas, Director]

Thank you, Srikanth.Obviously, in this tough situation that we've all gone through in the past months because of physical distancing, digital connectivity has become extremely meaningful. And that is reflected in the strong growth that we have seen across our digital portfolio, especially digital connectivity. If you look at the past year, we've had our usage on our network grow by [ up to just ] 50%. And our revenue has gone up again on the back of that growing usage, again strong growth in revenues north of 15%, EBITDA growth north of 15%, ARPU growth as well. So all in all, we have had a quarter which is our best quarter over the last 7 quarters. So that's the good news.We've been able to add again a very strong set of customers, gross adds up 35 million-plus in the last quarter. The total customer base, as we speak, stands close to 430 million as on September. Having said that, COVID has been quite tough on a lot of people in India, especially at the bottom of the pyramid. During the peak of the second wave, we have done a lot of initiatives. We have launched a lot of humanitarian initiatives, giving free voice minutes, et cetera, to keep them on our network and keep the life line alive, but now 2 quarters later, we find that a large number of the people in the bottom of the pyramid have not been able to stay up-to-date with recharges. Of course, we have a policy of keeping them in our base for about 90 days, so effectively the effect of these people stopping recharging 2 quarters before is now getting reflected in our subscriber count. And because of that, you see a net reduction about 11 million in this quarter. Having said that, this has 0 impact -- 0 negative impact on all of the numbers that I mentioned before. This is more of an accounting correction that we are having to do.Like I said, the ARPU has also significantly grown to now north of INR 140. This is also because of the improving subscriber mix. We can see the people who are continuing on our network. We can see increasing engagement both on the mobility side as well as the fiber-to-home side. The traffic on our -- the monthly traffic on our network has crossed now 7.5 exabytes. Exabytes is like 1 billion gigabytes. And of course, in a difficult macro environment but, of course, because of the fact that we have the digital foundation helping people navigate this tough scenario, we have seen substantial improvement across our financial metrics. JPL revenues are now at INR 19,000 crores-plus. And there has been an underlying growth of 15% year-on-year after adjusting for the interconnect usage charge regime, which has changed over this period. JPL EBITDA is at INR 9,294 crores, which is healthy 47% margin over revenues.So all in all, this has been a great quarter for us, extremely strong growth both in -- across all of the operating and financial numbers and, like I said, with a downward revision only because of the bottom of the pyramid users who had stopped recharging a couple of quarters back.And of course, again as in the -- like I said, just to add a little bit more detail: In the April-to-May time frame is really when India went to the second peak of -- or the peak of the second wave of COVID. Of course, we did a lot of -- we took a lot of measures by extending free services, extremely attractive tariff plans, a lot of extra GBs along with recharges, which has really made a huge impact for a large chunk of our customer base. And having said that, at the very bottom of the pyramid, we are seeing a very devastating impact of what has happened in the recent month -- on the past months. Moving forward, of course, during this period, we also operationalized a lot of the spectrum that we bought in the previous quarter. We have been able to expand our network and operationalize all of that spectrum that we -- that we were allocated, which meant there has also been a significant capacity improvement that we've been able to make in our network. All in all, we have seen that reflected also in the customer satisfaction metrics as well as the usage metrics that I mentioned earlier.One key thing that I want to mention is the MNP numbers. We have seen a net positive MNP for Jio. And as you know, that is also reflected in net negative for other operators. And we have seen a significant increase in these net MNP customers who are joining the Jio network, all in all reflecting the fact that we still remain the most preferred service provider for Indian customers. Another thing that I want to talk about, a significant development that we want to announce here is the readiness of what we're calling JioPhone Next. We are all aware of the JioPhone and the dramatic impact it made for people who wanted to go from 2G to 3G. Now this is a continuation of that evolution. This has been announced in the past, and this is an effort that we undertook along with our partner Google. So this is -- the JioPhone Next is an extremely affordable value-engineered device, a true smartphone -- a touch smartphone that we will soon be launching in India, but it is entirely powered by a brand-new operating system. While it has all the advantages of Android, which has been contributed through the partnership with Google, but -- we have completely optimized that operating system to work on this extremely affordable value-engineered device. And not only the performance, but we have also given special attention to a number of unique experiences for first-time smartphone users, voice and language translation being the most prominent of them that people will be able to experience because, as you know, India, the diversity of languages and also the fact that sometimes the first-time smartphone users are not very digitally savvy. We are focused on really making that experience seamless further. While it is value engineered, but -- when it comes to the quality of the components, we have not cut corners. We've had the best of partnerships. The most leading providers of chips and other components is what is reflected in this device, so in terms of quality, it is next to none.In terms of making it more affordable, again, we are introducing a lot of services, especially when it comes to how this device would be made available from a financing perspective, again a lot of innovative things which we'll be unveiling in the future, but we have also taken special attention to make this extremely affordable for first-time smartphone users. And of course, we are fortunate that in our own family the Reliance Group, we have Reliance Retail; and JioMart is the digital arm, which has been doing extremely well. We have extended that onto a platform called JioMart Digital, which is an assisted sale platform that we are extending through the new commerce model to a lot of the small digital retailers across India, [ lakhs of them ], who we want to bring on our network, distribution network. And through them, we will also make sure that JioPhone Next has the widest possible availability and reach, especially where the physical proximity and the physical support makes a difference. And of course, Reliance Retail has a well-established aftersales network, services like resQ, et cetera, very prominent and very proven, so we of course want to take advantage of that as well. So it's a wholesome 360-degree proposition driven by the product, driven by the operating system but backed by a full 360-degree set of services and partnerships, so we are very excited about what's to come.On the network side, again a lot of investment that JPL is making when it comes to applying cutting-edge data science, a lot of platforms that we are building to bring in next-generation automation; and like I mentioned, of course, the operational improvements that we are continuing to make, all of that resulting in a dramatic improvement also when it comes to network quality and the experience that our customers are able to get out of the network services that we offer. Using data science, we are able to more proactively predict where there could be customer experience issues, understanding the traffic patterns and more importantly being able to forecast those traffic patterns. Especially around peak events, sporting events and concerts and so on, there are -- we see a pickup in traffic on our network. And we are able to now -- we have rich history now and because of which we are able to marry that to algorithms to really predict this and take proactive measures.And all of these solutions, after having been deployed, we are seeing a consistent improvement in scores. And of course, with respect to the reach, we have always been #1. With respect to quality, we have also been a leading player here, but if you look at -- for example, in this slide, we are showing the latest Opensignal statistics. We can see a consistent improvement that we've seen over the quarter from everything like video scores to download speeds and upload speeds. In fact, in the Opensignal statistics now we are ranked #1 in India when it comes to the video quality scores.Another thing that has also come along extremely well is the homegrown or what we call the indigenous 5G platform that JPL has built. And we are really gearing up to launch that with our telecom subsidiary. The field trials have been ongoing, and we have applied the most rigorous standards vis-a-vis how we run these field trials. And obviously the entire -- the stack itself covers the full spectrum of what is needed to launch 5G, everything from radio, which is called the 5G new radio or NR, 5G NR; the core network; and obviously a whole series of use cases because we strongly believe that 5G is not just about more bandwidth, but 5G is about the kinds of applications that can be launched using that -- extra speeds and extra low latencies which 5G affords. So everything from augmented reality, virtual reality; to gaming; to health delivery; to entertainment, of course; and of course, a number of use cases in and around manufacturing. So the use cases are extremely powerful. And what we are doing with JPL is not just offering the platform that will power 5G but also the applications that will run on top of 5G. And the key idea is we show the way, but we also open this platform up for other like-minded partners to come and partner with us and really showcase the best of their solutions also on this network. And we are very happy to say that, through these trials, we have shown consistently that we can deliver throughputs as high as 1.5 gigabits per second, which is among the highest which has been demonstrated anywhere in the world.JioFiber, another area where we have quietly been making progress. Now JioFiber connects even because -- even during COVID, we had restrictions in entering buildings and premises, but in spite of all of that, today we are present in more than 4 million connected premises. And this number is growing at a steady pace as the situation eases in the country, but on the other hand, the on-the-ground work to lay infrastructure has been somewhat faster in terms of the rollout. And today, we are physically present outside 16 million premises, so there's a huge runway of new customers who are ready to be acquired because of the work that we have done even during COVID. Of course, of the people who already have it, the 4 million customers, we are seeing a steady uptick in terms of customer engagement, which is reflected in the fact that the average home consumes in excess of 300 gigabytes of data per month with more than 5 hours of engagement that we are able to see in the set-top box, the Jio Set Top Box, that we've also placed with these folks. And we believe that the Jio Set Top Box is the gateway for Jio and JPL to offer a rich set of services into the future, so obviously this is just a start and we see this engagement growing month-on-month into the future.Just to give you an idea visually. In addition to the connectivity, of course, which is best in class, we provide them -- we provide each of these 4 million homes with a slew of solutions. Of course, we are -- provide them all the devices which are required to connect to the fiber network, but in addition to that we also have the Jio 4K set-top box along with a smart remote which is voice activated which really brings that 10-foot experience to life. And we today have all of the leading media and content partnerships both local as well as global already supported on that set-top box, so obviously a rich slew of content that we are able to offer right from day 1. And even -- through the partnerships with Facebook and Google, even popular applications like YouTube and Facebook Watch are also present. And this list of applications are growing, hundreds of application developers who are partnering with us every given month. And there's a strong pipeline of applications that we see into the future. Also there are a slew of solutions like smart speakers and connected IoT devices for the smart home, all of which have been developed over the past few months. And now we are gearing up to make it available to these 4 million homes as well as the additional homes that we are connecting on a monthly basis.I think we have made it a practice to also talk about our extended family. So we have now a number of start-ups who form part of the Jio group, especially the JPL ecosystem of digital solutions. Today, we want to talk about one of those partners, which is Jio Haptik. Some of you may know that the Haptik, which is now Jio Haptik after our acquisition, is playing in that space and an exciting space of conversational AI platforms. That means using the power of AI to have natural conversations that users can have with computers and with applications in the back. So obviously this opens up a completely new paradigm of user interaction, and Haptik is a leading player there already. If you look at the rankings from rating agencies like G2, they -- we -- they have already recognized, even in these early days, Haptik as a leader in this category. And the good news is it is not just an Indian audience that Haptik is serving. More than 50% of the revenues for Haptik already comes from outside India, so this is a very strong story for the JPL mantra that we build solutions that is proven in India but then made available to the world.And the good news also here is not just for consumers, but the story for enterprises is also extremely strong for Haptik. So established integrations with CRM platforms like Salesforce, Zendesk, Shopify. Enterprises today can integrate Jio Haptik extremely easily and extend the conversational AI capabilities on top of all of the solutions that they're building as well. And of course, Haptik is also building strong capabilities which are industry specific. So they are training their AI models to understand and to be able to very easily serve the needs across multiple domains of interests like e-commerce, telecom, gaming, banking and insurance and so on and so forth. In the last month, they have also introduced an extension, an extremely powerful platform called interakt, which is a 100% self-service platform. So even without talking to any engineer from Haptik, even small SMBs can use this platform to build an end-to-end conversational platform for engaging their customers. So all in all, a very strong performance by one of our subsidiaries. And we are also glad to announce that recently they crossed the 4 billionth interaction that they were -- or that Haptik as well as their customers did on this platform. So -- and this usage is growing exponentially into the future.At this point, I will probably hand this over to Anshuman, who can give some of the numbers, the operating metrics and the financial performance.

[Anshuman Thakur]

Thanks, Kiran. Good evening, everyone.Starting with the operating metrics for this quarter.Kiran spoke about the subscriber base. We ended the quarter at 429.5 million, gross adds at 36 million, as Kiran spoke. We saw a reduction in customer base on account of nonactivity during the previous quarter which got recorded as churn in the September quarter. In some ways, this is, this was really a function of recent consolidation that happened, people using multiple SIMs deciding to not use all the SIMs. So SIM consolidation, which is a [ healthy ] trend from our point of view; and even strategically, that's something that we want to focus on, some of the low-end users which -- who stopped using the service. Hopefully, with the new device strategies that we're working on, some of them will come back, but we'll continue to expand the market and strategically focus on customers, more than SIMs; and make sure that for the customers, each of the customers, we are getting very active engagement and which is what is really reflected in the rest of the operating metrics.So ARPU has gone up, INR 143.6, significant jump over the previous quarter because of the improving customer mix. Total data consumption, as again Kiran pointed out, over 50% growth year-on-year to 2,300 crores GBs or 23 exabyte; per capita data consumption at 17.6 GB per user per month; and per -- voice consumption at 840 minutes. So all of those operating metrics have been very healthy. Really if you see, during the September quarter, the customers who left had already -- that impact had already come in the June quarter. And therefore, the operating metrics have been very steady and very [ healthy ].Moving on. On the financials. And Jio, RJIL, this is the connectivity business, has delivered another strong quarter of operating -- financial results, operating revenues at INR 18,700 crores, which is a 16% growth year-on-year. And this is why you see EBITDA at INR 9,003 crores. 48.1% EBITDA margin continues to grow. Both growth and the operating leverage are improving the financial numbers. Once again, to remind you that what you see here, the drop in the March '21 quarter in operating revenues was on account of IUC regime moving to bill and keep. So overall, the connectivity business has been showing fairly steady growth continuously.Moving on to Jio Platforms and key financials there, gross revenues of INR 23,200 crores; operating revenues of INR 19,777 crores during the quarter, again a 15% year-on-year growth. EBITDA came in at INR 9,294 crores. And a net profit of INR 3,728 crores, which is a 23% year-on-year growth, continues to grow and despite COVID challenges and other limitations on the ground, where as you all are aware the fiber rollout has been impacted. The enterprise rollout has been impacted, but things are getting better on the ground now. And despite those challenges, we have another very strong quarter of financial results delivered by Jio Platforms.With this, I'm going to hand over to Dinesh to take you through the retail results.Over to you, Dinesh.

[Dinesh Thapar, Chief Financial Officer]

Thanks, Anshuman. Good evening, everyone.Let me start by talking -- giving you a sense on the operating context. Now most of you would remember that, when we spoke last time around in July, I had mentioned that the operating context was directionally improving, having come off what was a very tough first quarter when wave 2 erupted. Through the last 3 months of quarter 2, things have gotten progressively better. Each month has been better than the preceding month, and we've now seen pretty much most of the operating curbs and limitations of it. We had close to about 90% of our stores that were operational through this quarter compared to about 60% in the preceding one. More importantly, if you recall the last time around, while stores were open, we had restrictions in terms of the hours that they could operate. Most of those restrictions have now been removed, so therefore, you see it reflected in a significant improvement of operating hours, which are almost, again, close to 90% as we exited September relative to what was 38%, 40% in June. So really getting very closely back to normal.Footfalls have recovered. Footfalls are at about 78% for the quarter compared to 46% for the preceding quarter. And as I look at the October numbers: We're getting closer to 90%. And I think sentiment has distinctly improved. We're seeing demand which is buoyant. We're seeing demand come back in a big way across the country. We've had a good festive season. And I think relaxations and the confidence on vaccination has really meant that many more people are out shopping across our stores.So what are the key messages? I think, by far, retail has had a very good quarter. Our revenues have surpassed pre-COVID levels. I'm not just talking about year-on-year. Of course, over the previous year, we are 16% up, but when you compare it against quarter 2 of FY '20, we're clearly ahead, so therefore we've really built back momentum over pre COVID, led by a very strong uptick on Fashion & Lifestyle. In fact, that's been the star performer in many ways. [ It's been a ] record quarter for Fashion & Lifestyle. EBITDA has come back in a big way. It's up 45% year-on-year, driven by favorable revenue mix. Clearly our most profitable business in Fashion & Lifestyle has come back to the growth [ party and buoyed ] by some amount of investment income that you've been used to seeing.Rapid infrastructure expansion has resumed. We have over 800 new stores now, and about 86 new supply chain locations have been added to the network in this quarter. Digital commerce and merchant partnerships, which were clearly very, very strategically important, have been much of a focus area over the last few quarters, more particularly so after COVID broke out. It continues to gain momentum; and in fact, we've now had record orders across our platforms, most notably on JioMart and on AJIO. And from the few announcements that you would have heard us put out: We continue to take very decisive actions to bolster the portfolio for retail. We completed with the acquisition of Milkbasket, which in many ways [ front of the ] subscription business that we're looking to build out; Portico, which is really going to bolster the portfolio in our home and living space; and of course, the acquisition of Justdial, which is what we're very excited about as we look to build a marketplace business. And then recently, a couple of weeks back, we announced the partnership with 7-Eleven to really set up a range of convenience stores, so a whole host of actions being taken to really bolster the capabilities for the retail business.Next. So now looking on to revenues, strong revenue performance, growth of 16%. And I'm talking 16% apples to apples and just keeping the effect of the petrol retailing business out. That's a business, you will recall, and we've spoken about this for a few quarters now, that we've hived off and transferred to the RBML JV when that was formed. So really apples-to-apples comparison of 16% even though it's 11% on headline numbers. Fashion & Lifestyle, by far, strong outperformance over there, 2x over last year. And it's been a record quarter of sorts for that business. Store revenues, which have taken a beating as operating curbs were imposed and restrictions were imposed, are back on track and now again trending ahead of pre-COVID levels.We continue to build very strong momentum on digital and new commerce. You'll recall, the last time around when we met, I mentioned that, that was close to 19%, 20% of our business, of our retail business. And that was in a quarter when our store revenues were curtailed by the operating curbs. Now our store revenues have come back. This business has continued to maintain its menu and continues to contribute to about 20% of our sales in this quarter. Petrol retailing, I mentioned, INR 2,000 crores which was there in the base, no longer here. And therefore, that's a bit of a drag, but as we get to the next quarter onwards, it starts to ease out because it comes into the base.Looking at EBITDA, the next chart, please. So on EBITDA. EBITDA has strong build back, 45% year-on-year, 50% up over the preceding quarter. We've added almost INR 1,000 crores, again led very clearly by the build back of our most profitable business. So Fashion & Lifestyle has led the way over here. Electronics and grocery has seen a very steady and consistent performance, but revenues have built back as operating curbs have been lifted; and that's contributed to EBITDA performance.We've continued to remain very, very judicious on cost management. You'll recall that I mentioned this when COVID broke out and we've continued that effort right through, and that continues to keep us very tightly managed on our fixed costs. A boost from investment income now has been part of the base for some time, and that's continued to play out in this quarter. And most importantly, I think you're now starting to see, again as revenues come back and with the confidence that we now have on the outlook up ahead, operating leverage starting to come back into the business as you start to see the growth for them come back.Next. So rapid infrastructure has now resumed. We are up with a little over 800 stores right now. We've added 86 new warehousing locations. And I think, when you look at the first half, therefore between quarter 1 and quarter 2, we've now got about -- over 1,000 locations that have been added to the retail network, of course, across stores and supply chain, with about 6 million-thereabouts square feet of additional space. And that in the first 6 months of what has been reasonably constrained would represent a fairly significant edition. Of course, we've got plans on the offing to really be able to accelerate the infrastructure from here onwards.So these -- when you put it on a time line. These are really some of the actions that we've taken on acquisitions and partnerships to build the capabilities for the retail business, all the way going back. And we've done this across fundamentally 3 lens, acquisitions and partnerships to bolster our capabilities, whether it's about filling a white space in our portfolio. And something like Zivame was in that space completely. Portico was in that space. Hamleys was in that space. The second is supply chain, and that was where Grab came in very handy. [ They really front ] a lot of our last-mile fulfillment at the moment. And of course, technology, a whole host of platforms that power various parts of our retail business. Most recently, we concluded the acquisition of Justdial, Portico, Milkbasket, for which we have very exciting plans in place; and we will talk about that in the quarters ahead. And a couple of weeks back, we made 3 announcements. We signed out the master franchise agreement with [ 7-Eleven Inc. ] very recently, set -- to set up a whole host of convenience stores in the country, starting with the Greater Mumbai cluster; and then of course, 2 partnerships with leading designers in the fashion space, Ritu Kumar and Manish Malhotra, which we are very excited about.So quick set of numbers, the headlines. Gross revenue was up, INR 45,000 crores-plus. That was 11% on just the headline, about 16% on an underlying apples-to-apple basis. EBITDA at INR 2,913 crores was 50% more than it was last quarter, about INR 1,000 crores added, and 45% higher year-on-year. And profit after tax was up 74% year-on-year, clearly reflecting the benefit between EBITDA; and a lower rate of growth in depreciation and interest income, which allowed profit after tax to really grow 74% on a year-on-year basis. More importantly, operating margin is now up 200 basis points over what was preceding quarter. Preceding quarter was clearly a challenging one because we had most of the retail operation that was constrained by what was happening in the environment, but we're now back, 200 basis points higher, as the normal growth [ to the working business is starting ] to come back.So a quick set of comments for each of our businesses. Consumer electronics have been on a very, very steady growth momentum, double-digit growth across store sales. It's been the highest quarterly revenues for our resQ business, which is really the services arm that we have -- the [ captive ] services arm that we have. That business is doing really well right now. We've had the best-ever 15th August sale. And you will hear this thematic on multiple occasions as I talk about it right now, that we've made our sales days even bigger. Progressively, every sales day is now starting to become even bigger, driven by ticket sizes. And we've done everything else that has really led to very strong execution of events, whether it's the affordability programs [ and the most compelling offers ] and launches in partnership with a number of brand partners. Double-digit growth across categories.Reliance Digital, which is the digital commerce arm, continues to expand. We're now across 2,000 cities and we're back. Now that logistics constraints have been lifted, we are back to delivering over 90% from stores in under 6 hours. We continue to expand own brands. And headline revenues would have been a bit higher, but we had lower devices revenue on the deferment of the JioPhone Next launch. You just heard Kiran speak about that. And so therefore that is something to look forward for in the future, but it's clearly had an impact in terms of how we phase it out, in terms of just the numbers for electronics. But otherwise, on the rhythm of the -- both the stores business and the digital commerce business, very, very steady momentum that has continued on this business.Fashion & Lifestyle. It's a record quarter. It's the highest-ever performance that we've had for this part of the business. From apparel and footwear, sales are up over 2x. Very strong festive seasonal performance that we've had. Footfalls haven't quite recovered in this business as yet. They're still 78%, but what we've done is to really be able to activate in store; have the right portfolio, contemporary portfolio locally activated, locally activated for festivals; and really drive conversion. Conversion in this business is at record highs, and book values are clearly 20% higher over normative levels. So that rhythm of that business continues to chug along quite well and make up for footfalls which quite haven't recovered as yet. What we've done too is to also strengthen the portfolio. We've now expanded the store format into sarees. We've launched a new format called Avantra by Trends and another one called [ trends sarees ], very exciting space. You'd be familiar with how large sarees is as a category within the Indian and ethnic fashion and lifestyle space. And we've now made a very focused entry, and we're excited by the opportunity that, that could potentially bring as we look to expanding that nationally.And we continue to expand our own brands portfolio. AJIO has had again a phenomenal run. It's been a record quarter for AJIO. And you've heard me say this time and again now, that each quarter is getting bigger than the preceding quarter. We are delivering serious sequential momentum on AJIO, strong activation, strong event execution. Again over here, each of the days that we have, each of the sale days that we have, the AJIO Big Bold Sale, is getting bigger with each successive edition. We're expanding the catalog. [ We are adding ] many more categories. We launched beauty, fashion accessories. And we are clearly widening the offerings on AJIO to make it really the premier lifestyle destination for Fashion & Lifestyle.In terms of our B2B business, which is our merchant partnerships, we've continued to expand. I think, last time I spoke to you, we were close to about 2,400 cities. We've now expanded our reach to 3,000 cities. We are adding many more brands, many more sellers to build the supply-side ecosystem. And we're expanding the catalog for this business. And now that fashion markets are starting to open up, we will look to accelerate both recruitment and the [ business on this front ].Looking at our jewels business. Jewels has continued its very strong growth momentum. It's been another fantastic quarter for this business. Share of diamond jewelry has increased. It's about 24%, 25% this quarter; clearly higher than what it was same time last year. We're leveraging design capabilities increasingly. You've heard me talk about this, very, very core and strategically important for this business. We introduced 9 collections with both national and regional themes, and those have been well received. And clearly enrollments on gold-saving schemes have surpassed pre-pandemic levels. Our luxury business, luxury and premium business, which is the partner brands: Revenue is up 2x. And clearly as more stores have opened out and as businesses come back, that business is coming back to normal. The distance selling that we have pioneered is still contributing sizably to sales even as stores have opened up. We've continued to expand our partnerships, a few more brands that have -- coming on and refreshes that are happening across our brands and [ AJIO Luxe ]. So this was another business where we did not have a sizable digital commerce presence pre COVID. We since have it now across all our brands between listings on [ AJIO Luxe ], which is a luxury curated section that we have on AJIO, and the monobrand sites. We've really scaled up our digital commerce business. On [ AJIO Luxe ], we now have over 100 brands, 100 of the most premium and luxury brands available in the country now well listed; over 15,000 options to pick and choose from. And surprisingly, over half the revenues that we've seen in this initial period since [ AJIO Luxe ] was launched comes in beyond the top 10 cities.Grocery. Double-digit growth momentum has continued; and this is on the continuing business, on higher operating hours. The share of nonessentials is up. You would recall that, as operating curbs were imposed, we were restricted from selling parts of portfolio which was not considered to be essential. And as that has eased out, this part of the business has come back in a big way, and that's almost up 2x. The SMART super store that we have, which is a flagship store supermarket big-box format, has now reached, crossed the 400-store milestone. And interestingly, 200 -- over 200 of these, over half of these stores were opened in just the last 2 years itself. And we've clearly got plans to accelerate the footprint on SMART as well, just as much as we have for the remaining formats in grocery as well. And interestingly, over half these stores are in Tier 2 and below because -- we've always mentioned that we see huge opportunity not just in the way [ it's called as India but even in Bharat ] as well. Successful execution of mega events, broad-based growth across all categories. And that's another instance of where we've made one of our sale days even bigger. It's the highest ever again.JioMart. And I think this is really the big callout. We ran a sale on 11th and 12th of September, and in those 2 days -- we recorded 3.7 million orders in those 2 days that we were very pleasantly surprised. It pressure tested our systems, but it's given the team a lot of confidence really now to be able to handle what is truly an exponential increase in the volume that we saw in those 2 days, very strong conversion rates, a high degree of traffic that came in from new users. And I think 3.7 million was clearly something which would pleasantly surprise us, way ahead of our expectations but, like I said, given us a lot of confidence on the JioMart proposition.Our merchant base has grown 20x over last year. We just try to give you a sense of the fact that we started the journey and we've grown sequentially quarter after quarter. Despite the fact that markets have been on, off, shut, opened, we've continued to go ahead and build out the proposition with kiranas. And we're significantly investing behind supply chain service capabilities and enhancing the user experience for our merchant partners.New businesses, just a quick sneak preview. Pharma: We're seeding the business, starting to build up. Netmeds, we're investing behind [ serious ] activation, behind growing the catalog. Traffic was up 48%. We've launched a subscription model on stores. We have doubled the pharma footprint and we've now started and expanded the hyperlocal capability. You'll recall I'd -- and I'd mentioned at a point of time in the past that we were piloting this in Bangalore. We're now extending this. And clearly, double-digit contribution, that's now starting to come through from the hyperlocal business, which is where fundamentally you place the order in Netmeds and you get serviced from one of the local stores that we have. We are launching the -- we've launched the Netmeds Wholesale. We're looking to scale that up. This is really the new commerce equivalent that we have where we are partnering very closely with partner pharmacies. And we've continued to strengthen the product mix. And this was an area where we needed to invest in supply chain, and we really brought on 20 of new fulfillment centers. We've operationalized them to be able to extend our play nationally.Zivame. Zivame has had a fantastic quarter, and again it's been a record quarter for that business. As we build the business digital -- on digital commerce, we are also expanding our footprint off-line. We've added 15 new stores, many more in the offings. We now expanded -- the Zivame portfolio has now been extended to the rest of the Reliance Retail formats. It's available on AJIO. It's available on the new Avantra by Trends, the sarees format, across from our stores. It is our intention, therefore, to really be able to leverage our existing store formats to be able to grow many of the new acquired businesses and brands that we have. The Grand Lingerie Festival was very well executed. And clearly traffic and activation have more than doubled and another one of those instances of where we are making sale days even bigger. Urban Ladder, which is our business now in home and living, has seen good growth as markets have opened out. That business has seen, again, another 2x growth on orders, growth across all major categories and key cities. And we're now building both local manufacturing and the portfolio with the widest selection of options across both furniture and home decor. So all these businesses [ heating for serious ] growth up ahead.So looking ahead. You've noticed these themes very consistently because this is really what we're looking to do and drive consistently, which is, now that markets are opening up, normalcy seems to be coming back and operating curbs are being lifted, rapidly roll out new stores. It's always been part of the works. We have a very significant pipeline that is there which is in various stages of development. We'd like to bring those to market now that operations have opened out, expand digital commerce and the service capabilities. And the service capabilities, I'm really talking about investing behind technology for the new peaks that we are seeing with each of these businesses. So you can well imagine, on JioMart, when I told you that we got 3.7 million orders in 2 days, what that would have meant in terms of pressure testing both our tech platforms as well as fulfillment capacity. And we now are seeing similar surges in AJIO and across the rest of our digital commerce channels. And we're now preparing it for the, let me say, subsequent peaks across both these dimensions, which is just so important.We're looking to accelerate new commerce merchant onboarding across the business; ramp up grocery and Fashion & Lifestyle, which is well underway, expand coverage, expand supply chain so that we can cover wider pieces; and then as you heard from Kiran, which is to really go and launch full-fledged and scale up JioMart Digital, which is the play in electronics; and to scale up, of course, the partner pharmacy, which is what we're calling Netmeds Wholesale.Develop and scale up the new businesses, marketplace with Justdial; the 7-Eleven piece on convenience stores; subscription, led by the Milkbasket acquisition; Zivame and then Urban Ladder, which are plain spaces which have well-placed strong portfolio poised for exponential growth, has the leverage to Reliance Retail ecosystem. And then of course, we're readying the grounds for a bigger play in beauty.And I think what we're also doing is to really augment and fast track a lot of the work that we wanted to do but were not able to and were stifled from doing on really augmenting supply chain infrastructure and really building this whole product and design ecosystem that we have across all verticals. Because you've heard me say this in the past, that building out our own brands across the businesses is as much of a strategic priority. [ And we are ] going to invest significantly behind building product and design to be able to underlie each of those strategic priorities.So that's really, in a sense, looking ahead, acceleration plan across all growth levers. And I think -- with the markets and operating conditions looking to normalize now [ with stores ] coming back, stores remaining open, I think we feel very confident to be able to restore and accelerate the growth momentum in the business and in really putting out the numbers that you've been used to seeing from Reliance Retail.With that, thank you. And let me hand the session over to Sanjay.

[Sanjay Barman Roy, Senior Vice President of E&P]

Good evening, everyone.I mean, if you can go to the next slide, please. Once again, this quarter gone by, we've done very well. We've exceeded by almost -- in terms of revenue as well as EBITDA growth. We've seen growth in those areas. In terms of EBITDA, we've almost seen a 34.5% growth. Now this is mainly on account of sustained production from KG D6; as well as the higher price realizations from CBM, US Shale. And as we go forward, as you may be aware, that the price ceiling has been revised by the government; and we'll see an upside of almost 70%. So it's been revised from $3.62 to $6.13. So essentially [ the volume ] growth and higher price realizations are driving the margin expansion, and we expect that to continue as we go forward.In terms of the MJ field. Now that we're more or less stabilizing between 18 million to 19 million standard cubic meters and, yes, we've got this MJ field, it is currently under development. We expect the first gas to come onstream by the third quarter of FY '23. All the fronts are on track in the project. The wells have been drilled and we expect to undertake the completions in the early part of next year. The FPSO is currently [ underbuilt ]. And the subsea production systems, the fabrication is underway. And [ we are planning ] to have the next installation campaign come up in December. So all put -- all the pieces are coming together, and we expect to be on track with first gas by third -- 3Q of FY '23. With this, we expect to achieve a cumulative production of more than 30 million standard cubic meters from the block.Meanwhile, we are also looking at leveraging [ our knowledge ] of the area and considering developing prospects based on the seismic data. Now there are potential resources that we are looking at. And we expect to mature something, by early next year, of our potential exploration drilling. Just to give you a perspective on the gas outlook: As you are all aware, gas prices have gone up multifold. And in fact, during the COVID, we had seen prices almost dip to $1.50 to $2, but -- and today we've also seen prices swing upwards of $35, so it's been quite a volatile market, but long term, we believe that gas will be an ideal transition fuel. And considering that the -- COVID is more or less at an endemic state, there's been quite a sharp demand recovery, this along with -- some of the demand that has emerged has come from Asia. Been -- China, Japan and Korea have been the key drivers. And what we expect is this demand will continue to sustain, but on the other hand, we've seen supply constraints come in. [ There have been ] planned and unplanned outages of LNG export facilities in several countries. In fact, we also had [indiscernible] at a large gas production field in Europe.So all that put together, with inventories also remaining at historical lows -- if we compare, current inventory levels are 77% full versus in the 90% or so that we have seen in the last 5 years. So this indicates that prices are likely to remain strong. In India, the demand has recovered and it's sustained. It's been quite resilient [ at about ] 168 million standard cubic meters. With prices remaining high overall, we expect that the price ceiling will also remain -- will go upwards, which bodes well in terms of overall price realizations in the quarters to come.So that's the outlook. So production as well as better price outlook is what we are expecting in the upcoming quarters.Thank you. With this, I'll hand over to Srikanth.

[Srikanth Venkatachari, Joint Chief Financial Officer]

Thanks, Sanjay.So on the O2C business. Looking at the demand factors, you can see the jump in demand across both [ within oil ] globally; as well as Indian demand for oil, polymer, polyester.Just on oil, for the quarter you saw a very sharp jump, 2.6 million barrels per day. That's pretty big. And also, year-on-year, the growth was 5.1 million barrels per day. When you look at it, overall we can attribute it to the very positive sentiment that on the consumer side, vaccination drive, supportive monetary policy, all these things have played a big part. Of course, the mobility indices are up 135% of pre COVID. Air travel has gone up. And as far as demand growth for polymer and polyester are concerned, it has surpassed the pre-COVID levels.On the operating rates. Refinery operating rate is up 200 basis points at 78%, cracker at 86%. That's up 4 full percentage points. And this is despite Hurricane Ida, which you saw the number of supply outages in the U.S. And also a reflection of strong demand and high prices supported the high utilization levels.Next slide, please. When you look at now the feedstock prices: oil up almost 7%. LNG at $19 a MMBtu is up 86%. And therefore, you saw the cascading impact going through on naphtha and ethane, where you saw the prices up 12% and -- on naphtha and almost 34% on ethane. The -- so clearly the demand has been strong. Supply constraints have been there, and it's all reflected in the price.On the margins side. The total impact the -- of strong demand and the mobility that I talked about is that -- transportation fuel crack spreads up between 17% and 20%. This is when you look at the inventories of refined product stock that is at a 5-year low. And also you saw a lot of high gas prices. You see, we saw that leading to switching to liquid fuels. And the -- of course, the impact of the higher input prices meant that you did see the polymer margin down 16% to 18% and polyesters chain down slightly by about 5%. So here the demand revival and supply chain issues and low inventory is what pushed both prices and overall margins.Next slide, please. This is just the pictorial depicting the fact that you're seeing the sharp jump in crack spreads for gasoline, gas oil, jet fuel. And that's on the left side. On the gas prices, you saw $6 in '21 April becoming $12 and then going to as high as $36, so very, very sharp jump. And this is overall again back to coupled with the fact that there are seasonal demand also in U.S. and Europe. Thin Chinese exports are -- clearly also played a big part, yes, of course, in addition to the outages that you saw in the refineries in the U.S. And the fact that -- the jump in the gas prices explains almost a "0.75 million barrels per day" shift away from gas, to oil. And if you recall, I mentioned about an overall demand of 2.6 million barrels per day of increase, of which 0.75 million is attributable to -- in some sense, to natural gas prices, and then the balance coming on the transportation fuel.We go to the next slide, please. So this is again a quick one, a pictorial depiction but mobility index that I talked about. It's well above pre COVID and it is seen from the condition in traffic across the world. And also, when you look at flight departures, again, over the last 3 months, a big jump, maybe barring, of course, Asia Pacific, but otherwise, the trend remains intact. It is going up.Next slide, please. When you look at the domestic market environment for polymer and polyester. Demand growth is strong; polymer demand up 14% Q-o-Q, up 7%. And we have seen it, I mean, in e-com. You have seen the demand coming through in e-com, health and hygiene, FMCG. Polyester, of course, it's almost 40% both year-on-year and quarter-on-quarter. And last year, of course, we had the impact of a lower base, but overall, festive season, all that helped. The container shortage and port congestion led to higher freight. It did restrict imports. And the -- there was higher Indian premium for most of the downstream chemical products on the back of the higher demand from India.Oil overall, 7% increase; on gasoline, 12%; gas oil, 9%; ATF, a big jump, 37%. And if you look at just the petrol demand compared to FY '20, now in the second quarter FY '22, yes, the absolute petrol demand is up 6%, clearly indicating preference for personal mobility.Next slide, please. This slide, you will recall, we had presented last time too, but this is very -- one slide. It captures the fact that overall PP, PE demand is at 12% above pre COVID, starting with fourth quarter FY '20 as the base. And on quarter-on-quarter basis, the demand is 14% up, and year-on-year is up 7%.When you look at deltas. They are actually now 10% to 20%, depending on the product, above the pre-COVID levels. Of course, on a Q-on-Q basis, the delta over naphtha is down between 16% to 18%. I talked about higher oil prices and all the translation coming through in both prices of naphtha and ethane. Same story with PVC: price all-time high but margins constrained by strong naphtha and EDC prices. And of course, logistic constraints and strong demand supported domestic deltas. So to that extent, it was offset by the demand and the fact that there's restrictions there.Next slide, please. Polyester, again, demand is now 19% above pre COVID; and it has recovered fast. And it's recovered with the onset of the festive season and the vaccination coverage, economic outlook; and year-on-year, quarter-on-quarter, up 40%, so good growth there. On the deltas side, marginally lower, I would say, [ 622 ]. Chain delta is now at [ 593 ], so it's marginally lower on a quarter-on-quarter but up 12% from pre-COVID levels. And PTA specifically, prices remained pretty firm on the back of the constraints, logistic constraints, that I've talked about.Next slide, please. So quick ones on each of the -- we can see. Starting with gas oil, quarter-on-quarter, you can see that this is $7 becoming $8 on an average basis, but if you see, by end of the quarter, the gas oil cracks jumped to $13. And just for this quarter, the improvement in demand was 0.5 million barrels per day. So this is 0.5 million out of the 2.6 million that I talked about. And you may also note the sharp fall in the inventory, 225 million and -- million barrels and down to 176 million, so a very sharp inventory drawdown that you can see.Similarly, on the jet side, not much on the inventory, yes, [ which is ] from [ 58 down to 54 ], but demand up 0.3 million barrels per day. And the removal of the restrictions on travel in the West definitely helped. And by the end of the quarter, what was an average of $5.4 for second quarter is -- had jumped up to $10.2 by the end of the quarter.Next slide, please. And on gas oil -- on gasoline, the demand is about (sic) [ improved ] 0.7 million barrels per day. And the overall margins was -- for second quarter was close to $10 versus $8 in the previous quarter. And end of the quarter, we can see it was well above $11. So overall, the mobility, supply outages, all that has led to a significant improvement in cracks.So when you bring that together from a performance point of view, O2C, of INR 121,000 crores in revenue, a sharp increase year-on-year, 58%; EBITDA close to INR 13,000 crores, 44% up on a year-on-year basis; margins at about 10.6%. It's -- that's slightly lower, but I explained to you the -- especially on the petrochemical side, margins were a little lower. But on an absolute level, the earnings, you can see the jump there.The -- again, we have gone through the factors, and all of them are applicable for us. We saw the demand benefiting us. We saw the crack spreads essentially benefiting us. And more importantly or as importantly, on the costs side, the fact that we had syngas as well as the fact that we had a lot of domestic gas coming to us, it meant that our -- it kept our high-cost LNG exposure -- imported LNG exposure to absolutely negligible levels. So that absolutely helped. And this is a structural advantage. I mean this is not a 1-quarter phenomenon and that will come in -- the benefit will be there for a long time. And finally, the utilization rates continue to be good. Our product placement strategies have helped, especially for us in the quest for getting the highest netbacks in product placement.

[Unknown Attendee]

Okay?

[Srikanth Venkatachari, Joint Chief Financial Officer]

Yes, so next slide, please. So this is the overall operating performance. Throughputs are slightly lower, but we maximized gasoline. We maximized paraxylene, all the mid-distillate products. Placements were pretty good. Our product export capability has improved with the commissioning of the [ A2 ] jetty as well as the [ PCN ] quality upgrade facility. That helped. And we have also completed successful trial of the high-value needle coke production that will come in, as you know, its application in graphite. And we were able to mix, get a very -- grip on the grade mix optimization in PE and PP, which was really helping to catering to the domestic market.Next slide, please. So overall when we look at it: Oil demand in 2021 is, from IEA forecast, $96 -- 96 million barrels per day. This is almost 97% of the 2019 levels, so the overall direction looks good from a demand point of view. Infection rates are lower. There are significant improvements in the mobility restrictions that are there. On the price and margin, the fact that economies are opening up -- Chinese exports across the whole chain, you are seeing a reduction there. Specifically, of course, mid-distillates will benefit from that. The dual-control policy and restrictions are likely to support regional prices for chemicals.On the demand side, those drivers are in place, the end-of-monsoon season harvest, all that is expected to boost diesel demand. And we have seen on the confidence -- consumer confidence side the upcoming festive season, government policies are all looking very favorable in as far as supporting consumption of polymer and polyesters. Challenges, of course, are feedstock price volatility; and those factors are very much there. There is significant volatility which is real and the -- of course, the uncertainty of COVID. Those factors are always there, but overall, structural factors and cyclical factors point towards a very healthy environment for this -- overall for this business.In summary, I would say that the -- when you look us -- when you look at us, we have very strong financial positions. You have seen the -- all businesses generating very robust cash flows. Our balance sheet is very strong with high liquidity and effectively cash in excess of debt. We are very committed to maintain our investment-grade ratings. The - overall when you look at it, our cyclical and secular tailwinds are absolutely in our favor. And the Digital Services, we are seeing a lot of traction in our Digital Services platform. Our omnichannel strategy is intended to meet the consumer need there. The focus has been on customer-centric products and services. And all the factors about reopening, all aspects of it, will benefit us across our product chain.And finally, on the advancement on the net zero. We have -- you've seen the series of acquisitions on the new energy side. We have also laid the foundations for the giga factories and -- yes, and are focused on building the -- a hydrogen ecosystem in India. And we will be talking about it more in the [ coming ] quarters.So in short, we are completely positioned to accelerate growth and achieve the objectives that we have across each of the businesses that we talked about.Thank you so much. And let me also take this opportunity to wish you a very, very happy Deepavali in the early part of next month.Thank you so much.