©Reuters

Indian oil products group Reliance Industries reported record profits for the past financial year even as the low price of crude dragged turnover down 24 per cent.

Turnover in the year ending March 31 fell to Rs2.96tn ($44bn), the company said after Indian markets closed on Friday, as net profits rose 17 per cent to Rs270.6bn.

Prices of refined oil products fell less sharply than those in its crude business, helping the division’s profit margin, before interest and tax, to rise 520 basis points from the previous year to 10 per cent.

“The refining business is a story of margin expansion, with gasoline as the star performer,” said Alok Agarwal, chief financial officer.

The company — India’s second-biggest listed entity by sales after state-controlled Indian Oil Corporation — pointed to a rise in global oil demand of 1.8m barrels per day during the year, led by petrol. It said nearly half the growth in demand came from China and India.

But while Reliance’s profit margin on petrol rose strongly to more than $19 a barrel, its margin on diesel products fell by about a fifth. That stemmed in part from a decline in Chinese demand for diesel used to power trucks transporting coal and other freight, as that country’s economic growth slows.

Oil refiners are also braced for the impact of a surge in refined products from China — notably by independent “teapot refiners” — that are turning increasingly to overseas markets as domestic demand fails to keep up with Chinese refining capacity.

In a possible reflection of that trend, fourth-quarter profit for Reliance’s refining and marketing business — while still 30 per cent higher year on year at Rs63.94bn — slipped 1.5 per cent from the third quarter.

Reliance is also in the middle of an ambitious leap into telecoms through its Jio subsidiary, into which it has invested more than $16bn.

Jio has acquired more high-speed 4G spectrum than any other Indian telecoms company. It has been testing the service among employees since December but has repeatedly pushed back the date of a commercial launch. Reliance on Friday again declined to shed light on the likely timing.

Reliance chairman Mukesh Ambani, who has presented in patriotic terms what some in Mumbai view as a gamble, said in the results statement that the business would “propel growth for India”.

But analysts at Nomura call the venture a “key headwind”, saying it is unlikely to contribute to earnings for the first three years of operation.