RIL overtakes ONGC to become India's most profitable firm, sells blue chip stocks

Reliance Industries has overtaken state-owned Oil and Natural Gas Corp (ONGC ) to become the nation's most profitable company, posting a consolidated net profit of Rs 23,566 crore in the 2014-15 fiscal.

ONGC, which posted a consolidated net profit of Rs 18,334 crore in 2014-15, slipped to number three, behind RIL and Tata Consultancy Services Ltd, India's largest IT firm, according to earning data of listed firms available on the BSE.

The state-owned firm had for long held the pole position as India's most profitable firm. It remained on top till 2013-14 when it posted a consolidated net profit of Rs 26,506.53 crore. That year RIL had a net profit of Rs 22,493 crore. TCS posted a net profit of Rs 19,852 crore in the fiscal ending March 31, 2015 to become the second most profitable firm in the country.

Another Tata Group firm, Tata Motors too figured on the list of top 10 profit-making firms. State Bank of India, the nation's largest lender, with a net profit of Rs 16,994 crore was fourth on the list, followed by Tata Motors with Rs 13,986 crore net profit in 2014-15. Coal India Ltd, the world's largest coal producer, came a close sixth with a net profit of Rs 13,727 crore, followed by Infosys (Rs 12,329 crore), ICICI Bank (Rs 12,247 crore), HDFC Bank (Rs 10,689 crore) and ITC (Rs 9,663 crore). RIL, which has presence from oil to yarn to retail, has seen profits grow by a compounded annual growth rate (CAGR) of 10.75 per cent over the past one decade.

In contrast ONGC's profit has seen 1.96 per cent CAGR growth in the same period. In 2005-06, RIL's consolidated net profit was Rs 9,398 crore. In the same year, ONGC had reported a net profit of Rs 15,397.63 crore. Even on quarterly profit basis, RIL topped the list with a net profit of Rs 6,381 crore in January-March period. ONGC came a distance fourth with Rs 3,935 crore fourth quarter net profit. Indian Oil Corp (IOC) had the second biggest quarterly net profit of Rs 6,285 crore, followed by Coal India at Rs 4,239 crore.

In a major rejig of its investment portfolio, Mukesh Ambani-led corporate giant Reliance Industries has enhanced its exposure to bonds and mutual funds, while pruning its holding of listed shares with sale of blue-chips like HDFC Bank, ONGC and NTPC.

Reliance Industries Ltd (RIL) has also sold its holdings of blue-chip public sector stocks like Oil India and NMDC, while it has lowered its exposure to banking behemoth SBI and mortgage giant HDFC Ltd. Overall, RIL's non-current investments (which are mostly long term in nature) has come down to Rs 25,437 crore as on March 31, 2015, from Rs 26,867 crore a year ago. However, its current investments (which include trade investments and are generally short-term in nature) rose sharply to Rs 51,014 crore during the financial year 2014-15, from Rs 33,735 crore.

The disclosures have been made by RIL in its latest annual report being distributed to its shareholders ahead of the company's Annual General Meeting on June 12. An analysis of the company's investment portfolios also show that its 'cash and bank balances' at consolidated level came down to Rs 12,545 crore at the end of last fiscal, from Rs 37,984 crore a year ago. Among others, RIL has also lowered its exposure to Fixed Maturity Plans (FMPs) in both its current and non-current investment portfolios, while its holdings of debentures or bonds, as also of mutual funds went up during the last fiscal. For government securities, the company increased the exposure for its current investments, but lowered the same in its long-term investment portfolio. In its long-term investment portfolio, the company has lowered its exposure to the listed stocks, while its current investments in commercial papers of various companies has gone up.

The country's most profitable firm has also added a number of unlisted companies to its investment portfolio, including BookMyShow, Delhi Stock Exchange, 24X7 Learnings and Aeon Learnings, some of which it has got through acquisition of Network 18 firms and others. RIL said it manages its working capital efficiently by optimising the cash-to-cash cycle through active financing of receivables and extending maturities of payables. Reliance effectively manages its cash and cash equivalents and cash generated from operations through diversified investment portfolio. Reliance's investment portfolio consists of wide ranging financial instruments such as liquid and highly rated securities, bank fixed deposits, CDs, government securities, corporate bonds and mutual funds.