* Q1 net profit at 53.5 bln rupees vs estimate of 52.7 bln
* Q1 refining margin rises to $8.4 per bbl vs $7.6 year ago
* Company hopes to stabilise D6 production - CFO
By Prashant Mehra
July 19 Higher margins from its core refining
business helped Indian energy conglomerate Reliance Industries
Ltd post a third consecutive increase in quarterly
profit, even as revenue from gas sales fell and output continued
Average gross refining margin rose to $8.4 per barrel for
the June quarter compared with $7.6 in the same period last
year, helping boost profits nearly 19 percent to a
higher-than-expected 53.52 billion rupees ($897.91 million).
Net sales fell 4.6 percent to 876.5 billion rupees while
revenue from its oil and gas business fell 42 percent after
weakening nearly 39 percent in the previous quarter.
Reliance, controlled by Mukesh Ambani, India's richest man,
operates the world's biggest refining complex and derives nearly
80 percent of its revenue from refining. It was expected to post
June quarter net profit of 52.7 billion rupees, according to
Thomson Reuters I/B/E/S.
Reliance is poised to benefit from a recent government
decision to double domestic gas prices from April 1, 2014, a
measure the company had set as a precondition for any further
investments in gas production.
Falling output at the company's key Krishna Godavari (KG) D6
field has capped revenues, but analysts said the price hike was
likely to give Reliance, and partner BP Plc, an incentive
to boost exploration and infrastructure spending.
Reliance said last month it would spend more than $26
billion over three years, much of it to bolster its refining,
petrochemicals and exploration businesses, after coming under
pressure from investors over its drive into telecoms and
"In oil and gas, we have capex approval for 2013/14, which
will allow us to do everything to stabilise production at D6,"
Alok Agarwal, joint chief financial officer told reporters.
"For any new development, it will take us at least three
years to start production. It's a long cycle," he added.
Refining revenue during the June quarter fell marginally to
nearly 816 billion rupees, while revenue from petrochemicals was
almost flat at 219.5 billion rupees.
Other income, mainly treasury-related gains, accounted for
38 percent of pretax profit for the quarter. The company held
cash reserves of $15.7 billion at June-end.
Shares in Reliance, India's second biggest company by market
value, rose 0.7 percent ahead of the results. Its shares have
gained 7 percent so far this year, outperforming a 2.2 percent
rise in the main stock index.