By Aman Shah
MUMBAI (Reuters) - Reliance Industries posted a sharper than expected fall in quarterly net profit, the first such drop in more than two years, due to a plunge in global oil prices and said market volatility remained challenging.
A near 60 percent drop in crude oil since June has led to inventory losses and tepid interest from buyers, Reliance said in a statement on Friday, hitting the company's flagship refining operations.
Reliance Co-Chief Financial Officer Alok Agarwal said the quarter ended Dec. 31, its fiscal third, was a tough quarter for Reliance since most of its products are affected by fluctuations in crude prices. It was the first quarterly drop in net profit since October 2012.
"As we look ahead, the volatility and nervousness in the market is still there," Agarwal said on a live video feed on the company's YouTube channel.
The company's gross refining margin, or profit from each barrel of crude oil refined, fell to $7.3 per barrel in the quarter ended on Dec. 31, down from $7.6 per barrel a year ago, Reliance said.
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However, Reliance said it continued to see steady product cracks in refining and earnings in the next fiscal year starting in April would get a boost from major expansion projects planned across its businesses coming on stream.
"We continued to advance our refining and petrochemicals business capital investments, which will come to fruition over the next 4-6 quarters," chairman Mukesh Ambani, India's richest man, said in a statement.
PROFIT MISSES ESTIMATES
Net profit was 50.85 billion rupees ($822 million) in the December quarter on a standalone basis, down 7.7 percent from 55.11 billion in the year-ago period. Analysts, on an average, expected it to post profit of 52.70 billion, according to Thomson Reuters data.
Sales for the quarter fell in the company's petrochemicals, refining, and oil and gas businesses, pushing consolidated revenue down by more than a fifth to 963.30 billion rupees.
Reliance, which operates the world's largest refinery complex in Gujarat, has been investing heavily in consumer-facing areas like retail and telecoms to expand beyond refining and petrochemicals.
The retail business, which posted its first annual profit last year, posted a 19 percent jump in sales. Reliance has been dogged by concerns about large investments in its yet to be launched telecoms unit, Reliance Jio.
Agarwal declined to comment on the venture.
($1 = 61.8650 rupees)
(Editing by Sumeet Chatterjee, Jane Merriman and David Evans)