India Reliance Q3 profits fall as crude oil slide hits margins

MUMBAI: India's Reliance Industries reported a 4.5 percent decline in quarterly net profits Friday as the massive fall in global crude prices hit margins in firm's petrochemicals and refining businesses.

Reliance, controlled by the country's wealthiest man Mukesh Ambani, said in statement that group net profit for the three months to December decreased to 52.56 billion rupees ($849.11 million) from 55.02 billion rupees a year ago.

The sharp fall in benchmark crude oil prices during the October-December period was the "key factor" in the 20.4 percent drop in revenues to 963.3 billion rupees ($15.56 billion) as well as in margins, Reliance said in a statement.

Gross refining margins, or profit from each oil barrel, shrunk to $7.30 a barrel from $7.60 a year ago. Last quarter profits stood at $8.30 per barrel, the firm said.

The subdued demand from customers also caused exports for the Mumbai-based firm to fall 21.5 percent, while revenues from its key petrochemical business shrank 15.2 percent from a year ago.

But Reliance, that sits on a cash pile of nearly $13 billion, is confident that its fortunes will improve.

"We continued to advance our refining and petrochemicals business capital investments, which will come to fruition over the next 4-6 quarters," said its chairman and managing director Mukesh Ambani in a statement.

Reliance derives most of its earnings from its massive energy operations, but is trying to diversify and now owns a supermarket chain and a telecommunications company.

It aims to launch a multi-billion-dollar telecommunications network called Reliance Jio Infocomm this year to capitalise on fast-growing mobile and internet demand in India.

The need for such services could rise further if Narendra Modi's government continues economic reforms and removes bottlenecks in infrastructure that are holding back growth.

India's central bank in a bid to boost economic activity announced a much anticipated but yet surprising out-of-policy meeting cut in key lending rates Thursday citing cooling inflation.

Until then, the central bank had focused on controlling inflation and defied loud calls from the industry and the government to cut interest rates.