MUMBAI, India -- India's Reliance Industries on Monday reported a 5.7 percent slide in September quarter profits from a year ago, as the company scales back investment in India's largest oil and gas fields.
A bounce in refining margins and investment income on Reliance's $14.9 billion pile of cash helped make up for falling gas production and weakness in its petrochemicals business, which the company said was a "cyclical low" caused by the slowdown in China.
Net profit was 53.8 billion rupees ($1.0 billion) on sales of 932.7 billion rupees ($17.6 billion) in the July to September quarter, the company said, in line with estimates.
It was the fourth consecutive slide in quarterly profit for Reliance, according to financial information provider FactSet. Analysts polled by FactSet forecast net profit of 53.9 billion rupees ($1.0 billion) on sales of 906.5 billion rupees ($17.1 billion).
"On a sequential quarter basis, net profit for the quarter was up 20 percent at $1 billion," chairman Mukesh Ambani said in a statement. "Despite current weakness in global economies, we continue to invest in our long-term growth projects to deliver sustainable value."
Reliance, which runs the world's largest refining complex, reported gross refining margins of $9.5 per barrel for the September quarter, in line with estimates, up from $7.6 a barrel during the prior quarter.
The company said refinery outages in Japan, China and Taiwan, as well as shutdowns at refineries in California and Venezuela boosted margins. Higher volumes raised refining revenues 23.1 percent from a year ago, to 838.8 billion rupees ($15.8 billion).
Revenues from oil and gas exploration and production fell 36.7 percent from a year ago, to 22.5 billion rupees ($425.3 million) on falling production.
Reliance, which produces gas in partnership with BP, said it won't spend an additional $3 billion on its most productive fields in the Bay of Bengal, off India's eastern coast, where it is able to extract less gas than expected.
Reliance plans to scale back capital expenditure on its most productive fields to $5.9 billion, down from a 2006 plan of $8.8 billion, spokesman Tushar Pania said.
The company has produced close to 2 trillion cubic feet of gas from the key D1 and D3 fields in the last three years and can extract an additional 3.1 trillion cubic feet, about 5 trillion cubic feet less than initially predicted, Pania said.
Analysts said the scaleback was also likely due to an ongoing struggle with the government over setting natural gas prices.
Reliance has been pushing the government to triple the price cap on natural gas sales.
"We have not seen any resolution so far," said Angel Broking analyst Bhavesh Chauhan. "There is no clarity whether they'd get a good rise in the price of gas."
The stock rose 0.5 percent in Mumbai trading ahead of the earnings announcement, beating the benchmark Sensex's 0.2 percent rise.