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Stay-at-home orders across the world drove India’s most profitable oil refiner’s net income down 39%.

Reliance Industries Ltd.’s earnings slumped in the three months through March as lockdowns slammed oil prices and destroyed demand for fuels, hitting its mainstay refining business. The oil-to-chemicals business posted the biggest profit drop in nearly two decades, and prompted its chairman and Asia’s richest man, Mukesh Ambani, to forgo his pay and cut salaries of employees.

The industry’s woes may deepen. The historic collapse in the price of oil triggered by the coronavirus pandemic is devastating the energy industry with the biggest companies from China to the U.S. reporting big drops in profit and growing financial stress amid the worst global slump since the Great Depression. Asia’s biggest refiner Sinopec swung to a loss, while BP Plc reported a drop in profit and Exxon Mobil Corp. has frozen its dividend for the first time in 13 years.

(Also read: India’s oil revenue loss in lockdown seen exceeding $5 billion)

The volatility in oil prices, which declined 73% during the quarter, and perishing demand eroded the value of the crude and oil products it keeps in stock, resulting in a rare inventory loss of 42.45 billion rupees, according to Reliance.

India’s biggest company by market value is known for its agility in oil trading that shields it against losses from price swings, which regularly impacts its state-run peers in India.

Earnings before interest and taxes at its petrochemicals business declined 43% to 45.53 billion rupees during the quarter. Reliance said the pandemic outbreak impacted its petrochemicals business as demand slowed, including for packaging.

“While RIL maintained near normal utilization at all major facilities, gradual resumption of economic activity in the coming months is expected to aid demand recovery for fuels and petrochemical products," it said.

(Also read: Refiners stare at 25,000 crore inventory loss: Crisil Ratings)

Sustained weakness in its energy business will threaten valuations for a planned 20% stake sale to Saudi Arabian Oil Co. Reliance said Thursday that Aramco’s due diligence is on track and “both the parties are committed and actively engaged."

Shedding Debt

The deal is crucial for Ambani’s goal of cutting the company’s net debt to zero by early next year. Reliance in August valued its oil-to-chemicals division, which comprises of refining, petrochemicals and fuel marketing, at $75 billion including debt.

Consumer-facing businesses, where Reliance has plowed in billions of dollars, is partially shielding the company against the uncertainties and falling contribution from its oil refining and petrochemicals operations. The oil-to-chemicals business contributed 57% to the group’s operating income during the quarter, a sharp decline from more than 70% a year earlier.

(Also read: India's oil refineries scale back output as coronavirus chokes fuel demand)

On Thursday, the company flagged plans to complete raising 1.04 trillion rupees by June, including a $5.7 billion investment by Facebook Inc. in its digital platform business and a $7.1 billion share sale to existing investors for the first time in about 30 years. That’s fuelling the company’s ambitions of shedding debt, with Joint Chief Financial Officer V. Srikanth saying Reliance will have zero net-debt ahead of its own deadline.

“Reliance is well positioned to navigate macro headwinds because of the robust and resilient business model with diversified earnings," Chief Financial Officer Alok Agarwal said during a video-conference after the earnings. “Technology and consumers are new investment themes."

This story has been published from a wire agency feed without modifications to the text.