* Q1 profit 59.57 bln rupees vs 56.14 bln rupees estimates
* Gross refining margin $8.7/bbl in Q1 from $8.4/bbl yr ago
* Retail unit revenue up 14.5 pct in June quarter
(Adds comments from company executive, business details)
By Aman Shah
MUMBAI, July 19 Indian energy conglomerate
Reliance Industries Ltd's quarterly net profit topped
market expectations, bolstered by strong revenue growth in its
oil and gas business and higher margins in its core refining
Reliance, which operates the world's biggest refinery
complex in a single location in western India, said average
gross refining margin rose to $8.7 per barrel for the June
quarter from $8.4 per barrel a year earlier.
A 27 percent rise in sales at its oil and gas exploration
and production business - driven by a sharp jump in its U.S.
shale gas unit revenue - helped the company, controlled by
India's richest man, Mukesh Ambani, post a 13.7 percent rise in
the net profit in April-June, its fiscal first quarter.
Investors have been fretting about Reliance's oil and gas
exploration business, which for more than two years has suffered
sharply falling gas output from the Krishna Godavari D6 block
off India's east coast.
Reliance says unexpected geology caused the decline in
output, but this has been rejected by the oil ministry, which
believes output has fallen due to non-drilling of the promised
number of wells. The government has refused Reliance permission
to recover $2.4 billion invested in D6 to develop offshore gas
fields in order to counter the drastic D6 output drop.
Reliance - and its partners in the block, BP Plc and
Niko Resource - are in arbitration with the government
over the matter, and a repeatedly deferred rise in natural gas
Alok Agarwal, the chief financial officer of Reliance, said
the company had not made any provisions related to the matter.
The increase in gas prices, approved by the previous federal
government, would have almost doubled the price of domestically
produced gas from the current $4.2 per million British thermal
unit from April 1.
"We have said that a better gas price is a prerequisite for
investment and nothing has changed," Agarwal said.
Reliance posted a net profit of 59.57 billion rupees ($988
million) in the quarter ended June, rising from 52.37 billion
rupees a year earlier. Revenue rose 7.2 percent to 1.08 trillion
rupees, the company said in a statement on Saturday.
Analysts on average expected it to post a profit of 56.14
billion rupees, according to Thomson Reuters data.
Reliance, which has expanded into consumer-focused services
like retail and telecommunications, is in the middle of its
largest ever capital investment plan - a three-year, $30 billion
investment cycle ending March 2016.
The company posted revenue of nearly 40 billion rupees from
its retail business, a growth of 14.5 percent over a year ago.
Reliance expects to double sales at the unit every three to four
"We are further expanding our retail business in existing
markets while exploring newer markets and channels," Ambani said
in the company statement.
Shares in Reliance, India's third most valuable company with
a market capitalisation of roughly $53 billion, ended down 0.6
percent on Friday at 976.75 rupees. The stock has risen about 9
percent this year.
($1 = 60.2800 Indian Rupees)
(Editing by Sumeet Chatterjee and Sophie Walker)