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BENGALURU -Reliance Industries Ltd on Friday reported a bigger-than-expected drop in quarterly profit as India's biggest company by market valuation took a hit from the government's windfall tax on fuel exports.

The taxes were levied on exports of gasoline, diesel and aviation fuels midway last year, halting the momentum in Reliance's oil-to-chemical (O2C) business built on cheap Russian crude and high demand for transportation fuels.

The downstream chemical products had experienced margin pressure from excess supply and relatively weak regional demand during the quarter, the Mukesh Ambani-led conglomerate said.

Its consolidated profit fell nearly 15% to 157.92 billion rupees ($1.95 billion) in the third quarter, with the windfall tax eating into that by 18.98 billion rupees.

Analysts on average had expected profit to drop to 162.58 billion rupees, according to Refinitiv IBES.

Higher depreciation and finance costs pushed up Reliance's total expenses nearly 16% to 2.01 trillion rupees, a bigger jump than the company's revenue growth of 15.3% to 2.21 trillion rupees.

The company also said it was on track to hit production of 30 million standard cubic meters of gas per day next financial year after the commissioning of its deepwater MJ gas condensate field in the Bay of Bengal KG-D6 block.

It expects gas price realisations to remain high in the near term, the company said in a call.

Reliance, which has diversified its businesses over the years to retail, telecom and, recently, green energy, said it approved raising up to 200 billion rupees via non-convertible debentures. Net debt as of Dec. 31 stood at 1.10 trillion rupees.

While its O2C business remained under pressure, Reliance's telecom arm reported a 28.3% rise in third-quarter profit. Its average revenue per user – a key performance metric for telecos – rose 17.5% year-over-year.

The retail segment's quarterly revenue grew 17.2% to a record 676.23 billion rupees. ($1 = 81.1100 Indian rupees)