India's Reliance Industries Q2 profit falls 5.7%

India's largest private firm Reliance Industries on Monday reported a fourth consecutive drop in quarterly net profit, owing to declining gas output from its offshore fields. The energy giant, controlled by India's wealthiest man Mukesh Ambani, said net profit for the second quarter slid to 53.7 billion rupees ($1.01 billion), down 5.7 percent from a year earlier. The earnings were marginally below analyst forecasts of a 53.9 billion rupee profit. "Reliance's business and financial performance for the first half of fiscal year 2012-13 has been satisfactory despite weakness in global economies," Ambani said in a statement. On a sequential quarterly basis, net profit had risen in the July-September period by 20 percent, he noted. The earnings come at a time when the company's shares have lost some of their shine among investors due to a slowdown in Reliance's core energy business. Analysts have been concerned in recent months about Reliance's ability to raise gas production from its blocks off India's east coast. In the first half of the fiscal year from April to September, crude oil production from Reliance's main oilfield KG-D6 slid 37 percent year-on-year to 1.7 million barrels of crude oil, the company statement said. Natural gas production tumbled 35 percent from a year earlier to 197 billion cubic feet. "This reduction was due to reservoir complexity and natural decline," the company said. Last year, British energy giant BP paid $7.2 billion to acquire a 30 percent stake in 21 of Reliance's oil and gas fields. Reliance hopes that BP's deepwater drilling expertise will give the Indian giant the skills to develop hard-to-exploit reserves and find more oil. In the quarter, Reliance's gross refining margins slid to $9.5 a barrel from $10.1 a year earlier. Reliance operates the world's largest oil-processing complex in Jamnagar, where two adjacent refineries have a combined capacity to process 1.24 million barrels of oil a day. The company added it was still expanding its retail operations and now operates more than 1,350 stores in 122 cities across the country. Reliance had built up a war chest for acquisitions, generating $2 billion through stock sales in 2009, and has cash reserves of more than 791 billion rupees ($14.9 billion), as of the September-end quarter. The oil and energy giant has been scouting for acquisitions and seeking to diversify its revenue sources by expanding into financial services, retailing, hotels and communications. Ambani has also announced forays into the Indian media sector as well as telecommunications.