* Q1 net 48.5 bln rupees vs forecast 48.3 bln
* Refining margins seen improving - analyst
* Capital expenditure in FY11 $1.5 bln-$2 bln - CFO
* Profit rises for 3rd straight qtr on higher gas output
* Refining margins at $7.3/barrel vs yr-ago $6.8/barrel
(Adds analyst, management comments, byline)
By Pratish Narayanan
MUMBAI, July 27 Reliance Industries (RELI.BO),
India's largest listed company, posted a 32 percent rise in June
quarter profit on higher gas production, with demand for refined
products in fast-growing Asia and improving margins set to drive
Reliance, with interests in petrochemicals, refining, oil
and gas exploration, and retail, recently made a dramatic return
to India's telecoms arena and has announced plans to enter the
country's power sector.
The company is also expanding its presence overseas by
investing in new areas such as shale gas, a move that is
expected to boost earnings in the years ahead.
"The new businesses are very important triggers for Reliance
earnings going forward," said Deven Choksey, CEO of KR Choksey
Shares. "We should also see improved margins for petrochemicals
and refining from this quarter as demand for oil product rises."
The conglomerate controlled by billionaire Mukesh Ambani,
the world's fourth-richest man, recently bought significant
stakes in the shale gas assets of U.S. companies Atlas Energy
Inc ATLS.O and Pioneer Natural Resources (PXD.N).
"Every major oil company in the world has made a significant
investment in shale gas. This is something that nobody can
afford not to be a part of," Reliance Chief Financial Officer
Alok Agarwal told reporters.
"The JVs really allows us to understand this business, work
with good operators, learn the business and then be able to do
it ourselves," he said, referring to its shale gas joint
ventures in the United States.
Reliance's capital expenditure on existing projects in this
financial year to March 2011 would be $1.5 billion to $2
billion, Agarwal said.
Ambani struck a deal in May with his long-estranged brother
Anil allowing them to compete directly with each other. Mukesh
has since pursued markets where Anil is an established presence.
This came after India's Supreme Court in May backed Mukesh
in a bitter public dispute over gas pricing that had hit
Reliance Industries' share price performance. [ID:nSGE64M01P]
Shares in Reliance, valued at around $74 billion, remained
largely unchanged at 1,053.50 rupees in Tuesday trade on the
Bombay Stock Exchange .BSESN, which rose 0.3 percent. Reliance
announced quarterly results after the markets closed.
Reliance posted April-June net profit of 48.51 rupees ($1.04
billion), in line with forecasts, versus 36.66 billion rupees
($785 million) a year ago helped by higher gas output from its
fields off India's east coast and improved refining margins.
A Reuters poll had forecast quarterly net profit of 48.3
billion rupees. [ID:nSGE66M09E]
Gross refining margins at Reliance's flagship refining
business showed signs of recovery and stood at $7.3 per barrel
for the June quarter, but were still lower than market forecasts
for $7.7 a barrel.
The margins, a key measure of profitability, stood at $6.8 a
barrel in the year-earlier quarter. Reliance GRMs had dropped 24
percent in the March quarter, and had nearly halved in the
Agarwal said Reliance would not increase output at its KG D6
block off the east coast of India until a full review of the
reservoir is completed. The review will "take time", he said,
but did not elaborate.
Production at the D6 block, from which Reliance started
pumping gas last April, stands at 60 million standard cubic
metres of gas a day (mmscmd). The block is expected to double
India's gas output when it reaches peak production of 80 mmscmd.
Reliance shares have fallen 3.4 percent in 2010, while the
benchmark market index has gained 3.5 percent.
(Writing by Sumeet Chatterjee; Editing by Jui Chakravorty and