MOSCOW (MRC) -- India’s Reliance Industries has cut the pay of some top oil-and-gas division employees by up to 50%, according to six sources and a letter seen by Reuters, as it battles lower profitability because of the coronavirus epidemic, reported Hydrocarbonprocessing.
Reliance, headed by India’s richest man, Mukesh Ambani, has decided that employees earning more than 1.5 million rupees (USD20,000) a year will face a 10% salary cut, while the cuts will be 30% to 50% for senior executives, the sources said.
The pay cuts were cited in a company note to employees.
“The hydrocarbons business has been adversely impacted due to reduction in demand for refined products and petrochemicals ... the situation demands that we maintain razor sharp focus on operating costs and fixed costs and all of us need to contribute to make this happen,” Executive Director Hital R. Meswani said in the letter.
“Our Chairman has agreed to forgo his entire compensation,” he added, referring to Ambani.
A spokesman for Reliance did not immediately respond to calls or an emailed request for comment. The company announced its quarterly results later that day.
Thus, Reliance Industries says that its group net profit for the fiscal fourth quarter ended 31 March decreased 37.2% compared with the same period of the prior year, to 65.46 billion Indian rupees (USD873.9 million). The company reports a 2.5% year-on-year (YOY) decline in sales, to Rs1.51 trillion.
Reliance’s petchem business saw a YOY decline in quarterly revenue of 24%, to Rs322 billion, because of lower price realization together with disruptions in local and regional markets. Quarterly EBIT in the petchem sector declined 42.8% YOY to Rs45.5 billion because of a significant decline in margins. The impact of lower margins was mitigated by optimizing the feedstock mix during the quarter.
It was not immediately clear whether other Reliance divisions were affected, but three of the sources said that the company’s telecom unit, Reliance Jio Infocomm, did not appear to have been impacted.
Reliance also said it would consider its first rights issue in almost 30 years, part of its broader commitment to eliminating net debt by March 2021. Reliance’s outstanding debt was about USD43 billion at the end of last year.
India’s crude processing in March fell 5.7% from a year earlier, its biggest drop since September, as the coronavirus crisis and travel restrictions to curb it hit demand for fuel and forced refineries to cut output.
While Reliance has raised crude processing at its domestic- markets-focussed plant by about 6% it had cut oil refining at its export-focussed plant by 24% in March, from the same month last year.
As MRC wrote before, RIL has been running its two refineries almost uninterrupted at its integrated Jamnagar petrochemical complex despite the lockdown.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.