Reliance Industries Ltd (RIL), the country?s most valuable company, reported a sharper-than-expected 11.5% drop in net profit at Rs 3,636 crore ($759 million) for the first quarter ended June 30, against Rs 4,110 crore for the corresponding period of the previous year, on lower fuel demand and a drop in refining margins. Turnover for the quarter dropped 22.6% to Rs 33,309 crore ($7 billion).

The price squeeze accounted for a 24.4% shaving off revenues, partially offset by higher volumes, which accounted for 1.8% revenue growth. Exports were lower by 38.5% at Rs 17,433 crore ($3.6 billion), against $6.6 billion, a media release stated. The company?s gross refining margins fell to $7.5/bbl in the quarter, against $15.7/bbl in the corresponding period of the previous year.

The middle distillate cracks were under pressure due to low industrial activity, high inventories and global demand contraction. This weak refining environment was partially offset by improved gasoline margins, the company said. RIL shares were down 1.2% to close at Rs 2,013.75 on the BSE on Friday.

Revenues for the refining & marketing segment decreased by 22.7% from Rs 32,587 crore to Rs 25,180 crore ($5.3 billion), mainly due to high product prices driven by dearer crude in the corresponding period of the previous year. Revenues for the quarter include trading sales of

Rs 8,198 crore ($ 1.7 billion).

The export of refined products was at $1.4 billion. This accounted for 2.7 million tonne of product, against 5.3 mt in the corresponding period last year due to higher domestic volumes of naphtha, diesel and gasoline, the statement said. Refining accounted for 65% of Reliance?s revenue in the quarter ended June, while the oil & gas business contributed 5%.

According to Deepak Pareek of Angel Broking, the increase in the minimum alternate tax rate from 16% to 21% hit the company?s bottomline. However, the company?s operating profits were only marginally lower than what analysts had estimated. ?PBT has only dropped 5%. Also, refining margins are just 1% below what we had anticipated,? he added. Profitability on the E&P front has improved for RIL, he said.

RIL CMD Mukesh Ambani said, ?Timely completion with safe and stable start-up of the new SEZ refinery and the deep-water, oil & gas KG D6 block are noteworthy accomplishments.

These projects will not only play a significant role in shaping the future growth at RIL, but, more importantly, will help change the energy landscape of India and the industry globally.?

The company invested $4.7 billion in the D6 gas field in the Bay of Bengal?s Krishna-Godavari basin, which started production on April 2. Reliance has signed agreements to sell about 15 million cubic meter a day of the fuel to fertiliser companies and as much as 18 mcmd to power producers nominated by the government.

For the petrochemicals segment, the quarter was one of the best periods, with EBIT of Rs 2,080 crore ($434 million) on a revenue base of Rs 11,540 crore ($2.4 billion), an EBIT margin of 18%. In the period, domestic demand for most petrochemical products remained strong with polymers demand higher by 19%, polyester by 3% while demand for fibre intermediates remained flat.

According to RIL, there was a substantial improvement in overall petrochemicals margins as the industry was operating on low level of inventory leading to higher domestic realisation.

RIL said its Jamnagar refinery processed 7.96 mt of crude, a utilisation rate of 96.5%, compared with 8.13 million tonnes of crude oil processed in the corresponding period of the previous year.

During the period, the average refinery utilisation rate was 82.2% in North America, 78.9% in Europe and 78.0% in the Asia.