Reliance Industries profit grows as refining margins rise
MUMBAI (Reuters) - Reliance Industries Ltd (RELI.NS) posted a 32 percent rise in quarterly profit on Tuesday, as higher margins at its core oil refining business offset falling oil and gas revenues.
Reliance, which owns the world's biggest refining complex in western India, reported an average gross oil refining margin of $10.1 per barrel for the quarter compared with $7.6 in the same period last year.
"We are seeing a stronger refining environment in Asia," Aloe Agarwal, chief financial officer, told reporters, adding that exports of refined products to Asian countries were growing faster than to Europe.
Revenue, however, fell 1.4 percent to 866 billion rupees, as oil and gas revenue was down nearly 39 percent in the quarter. For the full fiscal year, gas output at a key Krishna Godavari (KG) basin offshore field fell 39 percent.
Falling output at the KG gas field off India's east coast led to four consecutive declines in profit before the October-December quarter.
The company and its partner, BP (BP.L), said in February they jointly plan to invest more than $5 billion over the next three to five years to boost production at the D6 block in the KG basin.
"Pressure on revenue will continue because of the fall in gas production, which is the main worry," said R.K. Gupta, managing director at Taurus Asset Management, which owns Reliance shares.
The Indian government is expected to increase natural gas prices by early 2014, which would help Reliance and BP justify higher spending on the KG block.
Reliance said net profit in its fiscal fourth quarter which ended on March 31 rose 32 percent from a year earlier to 55.89 billion rupees. Analysts had expected it to post a profit of 54.8 billion, according to Thomson Reuters data.
Reliance, controlled by India's richest man, Mukesh Ambani, is widely expected to launch 4G telecom services later this year after spending an initial $3 billion in 2010 including licences for airwaves, making a big bet on a fiercely competitive market.
Its Reliance Jio Infocomm unit this month signed a fibre optic network sharing deal with Reliance Communications (RLCM.NS), controlled by Mukesh Ambani's brother Anil, that will help it make a faster rollout of 4G services.
On Tuesday, the company said Reliance Jio has finalised agreements with infrastructure providers and device makers, among others, for its 4G venture, without naming the partners.
Reliance, which is India's third biggest company by market value and had cash of 830 billion rupees at the end of March, has been under pressure from investors over its slowing energy business and its drive into consumer-focused sectors such as telecoms and retail.
Its retail business reached cash-flow break-even during the fiscal year. "Now the focus is on expanding the footprint and turning profitable at net level," Agarwal said.
Shares in Reliance closed up 1.4 percent at 804.95 rupees ahead of the results. The company, worth roughly $48 billion, has seen its stock fall 4 percent so far in 2013, roughly in line with a 3.5 percent drop on the Sensex.
(Reporting by Prashant Mehra; editing by Miral Fahmy and Elaine Hardcastle)
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