(Reuters) -Gas distributor GAIL (India) posted a bigger-than-expected fall in quarterly profit on Monday, as higher raw material costs weighed on stable demand.
GAIL, India’s top natural gas distributor by market share, said its net profit after tax fell 30.8% to 18.86 billion rupees ($217.67 million) for the quarter ended June 30.
Analysts, on average, had expected profit to fall 26.6% to 19.99 billion rupees, according to data compiled by LSEG.
A 3.3% rise in the company’s revenue during the quarter was outweighed by a 22.66% jump in raw material costs, which drove total expenses up by 7%.
In April, the Indian government reduced the allocation of low-cost domestic natural gas to city gas distributors, due to a decline in output from domestic producers.
India’s natural gas production dropped by 0.9% year-on-year in April, followed by further declines of 3.6% in May and 2.8% in June.
To keep supplies steady, city gas firms turned to costlier gas sources.
The gas marketing segment, GAIL’s largest revenue contributor through wholesale trading and natural gas distribution, reported a 5.3% rise to 310.03 billion rupees.
Revenue from its natural gas transmission segment, through which GAIL holds a 70% market share in the country, fell 2.1%.
Shares of GAIL fell 1.6% ahead of the results.
($1 = 86.6450 Indian rupees)
(Reporting by Yagnoseni Das in Bengaluru; Editing by Shailesh Kuber)
