MUMBAI 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.
REFINING MARGINS TUMBLE
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.
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