Reliance Q1 net down; KG gas to drive earnings

MUMBAI Fri Jul 24, 2009 8:09pm IST

Reliance Industries KG-D6's facility located in Andhra Pradesh is pictured in this undated handout photo. REUTERS/Reliance Industries/Handout

Reliance Industries KG-D6's facility located in Andhra Pradesh is pictured in this undated handout photo.

Credit: Reuters/Reliance Industries/Handout

Related Topics

MUMBAI (Reuters) - Reliance Industries, India's top energy firm, on Friday posted a larger-than-expected 11.5 percent fall in quarterly net profit, its third straight quarterly decline, as its refining margins more than halved.

The country's most valuable listed company, with a market value of about $66 billion, said it saw growth driven by its new refinery, and oil and gas production from the its fields off India's east coast.

"These projects will not only play a significant role in shaping the future growth at RIL, but more importantly will help change the energy landscape of India and the industry globally," Chairman and Managing Director Mukesh Ambani said in a statement.

Ambareesh Baliga, a vice-president at Karvy Stock Broking, said while the results were disappointing, he saw better earnings ahead.

"The results were below our expectations. Going ahead, refining margins are not likely to fall from those reported in June quarter. Also, petrochemical margins are likely to improve," he said.

The company said its Reliance Petroleum unit had commissioned all key processing units at its new refinery.

The company struck a deal in February to absorb Reliance Petroleum, giving it full control over the world's largest refinery operation.

The company said its gas production from its KG D6 block in the Krishna Godavari basin has risen to around 30 million standard cubic metres a day (mmscmd).

Reliance started pumping gas from the block in April, and when production is running at full throttle it will nearly double India's gas output.

"Gas production should be one of the key earning drivers in quarters to come," Baliga said.

During the quarter, production from KG D6 was 1,733 million standard cubic metres of natural gas and 99,274 tonnes of crude oil.

Reliance said it was supplying the gas to 15 fertiliser, 15 power and two steel companies, and said agreements with 6 more customers for nearly 5 mmscmd would start soon.

The firm is in a legal battle over terms of a gas supply agreement reached in a 2005 family settlement with Mukesh Ambani's estranged younger brother Anil's Reliance Natural Resources.


Reliance's refining margins more than halved to $7.5 per barrel in the quarter, from $15.7 a year earlier, tracking the decline in Asia's benchmark Dubai crack margin .

"During the period, light heavy differential were lowest in last few years. The middle distillate cracks were under pressure due to low industrial activity, high inventory and global demand contraction," the company said in a statement.

Reliance said its net profit fell to 36.36 billion rupees ($754 million) from 41.1 billion a year ago.

A Reuters poll had forecast a net profit of 39.88 billion rupees.

The company's net turnover declined to 320.55 billion rupees from 415.79 billion rupees.

Ahead of the results, Reliance shares fell 1.2 percent to 2,013.75 rupees in a Mumbai market that rose 1 percent.

In the June quarter, shares in Reliance rose 32.8 percent, while the main index rose by nearly half.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 


Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 



Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage