India's Reliance Posts Flat 4Q Profit, Meets Estimates

Article title
Reliance Industries posted a flat quarterly profit, in line with estimates, hurt by a slimmer margin in its oil refining business.

Reuters

MUMBAI, April 18 (Reuters) - Indian energy company Reliance Industries Ltd posted nearly flat fourth-quarter profits, in line with estimates, as a slimmer margin in its oil refining business offset higher revenue.

Reliance, which operates the world's biggest refining complex in western India, reported net profit of 56.31 billion rupees for the quarter to end-March, compared with analysts' expectations of 56.62 billion rupees.

Its average gross refining margin dropped to $9.30 per barrel from $10.10 a year earlier, although it was up from the preceding quarter's $7.60. Net sales rose 13 percent.

Investors have focussed, however, on the oil and gas production business at Reliance, India's second most valuable company which is controlled by its richest man, Mukesh Ambani.

The upstream business, which is small relative to refining, has several concessions including the Krishna Godavari D6 block off India's east cost.

Gas output from the block has fallen sharply since 2010. The company says the decline is due to the geological complexity of the block, while the government says contractors have failed to drill the promised number of wells.

The block, in which BP Plc has a 30 percent stake and Canada's Niko Resources 10 percent, currently produces about 13 million cubic metres of gas per day, a government source said last month.

Reliance has said further investment at the field to reverse falling output would require a rise in domestic gas prices.

A formula that would have nearly doubled prices from April 1 was approved by the cabinet, but the Election Commission last month asked the government to defer the increase until the end of the five-week general election in the middle of May.

India's main opposition Bharatiya Janata Party (BJP), which surveys show is on course to become the largest parliamentary party, has said it will review the gas pricing formula if it is elected.


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