RELIANCE Industries, India’s largest private firm, reported its first quarterly drop in profit in two years on Friday (December 20) and announced a $2bn (£1.28bn) share buyback to boost its sagging stock.

The energy giant, controlled by India’s wealthiest man, Mukesh Ambani, said net profit fell 14 per cent to $870m/£555.68m in the three months to December from a year earlier, undershooting analysts’ expectations.

“The global nature of our businesses and weakness in economic conditions resulted in reduced earnings in the quarter, particularly in our refining and petrochemicals businesses,” Ambani, chairman of Reliance, said.

The fall in profit marked the first quarterly drop in two years.

Analysts had expected Reliance to report a profit of Rs46bn ($9.15m/£5.87m).

The company, whose shares are held by one out of every four Indian investors, said it would spend up to $2bn to buy back its shares in a bid to bolster their sagging performance.

Cash-rich Reliance's share price slumped by 35 per cent in 2011, hit by investor concerns about slowing gas output from its fields off India’s east coast, and valuation worries about other still-to-be-explored energy assets.