Essar Oil posts Rs 105 cr profit for Jul-Sep

Essar Oil, the nation's second biggest private refiner, today returned to black posting a net profit of Rs 105 crore in the quarter ended September 30 on the back of impressive refining margins.

The company had a net loss of Rs 166 crore in July-September quarter last year which was restated to Rs 419 crore after accounting for impact of sales tax.

Its Vadinar Refinery, which is also the second largest single site refinery in India, is amongst the most complex globally for a facility of this scale. The phase I of the optimisation project was completed last quarter four months ahead of its planned completion.

During the quarter, Vadinar Refinery processed 5.07 million tons of crude oil, the highest every quarterly
throughput, Essar Oil Managing Director & CEO L K Gupta said.

The throughput was 66 per cent higher than Q2 of FY12. "The refinery is now functioning at full capacity of 20 million tons per annum with all units stabilised."

The refinery's diet of ultra heavy crude, which are cheaper and offer better margins, rose almost four fold to 64
per cent in July-September. "The refinery processed almost 3.21 million tons of ultra heavy crude oil in the quarter," he said.

Correspondingly, valuable light distillates (LPG, petrol and naphtha) and middle distillates (kerosene and diesel) improved to 82 per cent of the product slate from 72 per cent over the same period.

Gupta said the company earned USD 7.86 for turning every barrel of crude oil into petroleum product in Q2 in the July-September quarter as against a gross refining margin of USD 5.07 per barrel in the same period a year ago.

It had a double digit refining margin in September, when the refinery operated at its full capacity. The benefit of full scale operations would be realised in the coming quarters. Revenue was up 67 per cent to Rs 23,023 crore while EBITDA was up 27 times at Rs 1,169 crore compared to Rs 43 crore (post sales tax impact) in Q2 FY12.

“While the GRM of the second quarter shows good upward movement with the completion of our expansion and optimisation projects, the full benefit, including from the coal fired power plant, will be reflected from the current quarter onwards," Gupta said.

Essar Oil CFO Suresh Jain said, “The benefits of complex refinery and increased capacity has started reflecting in our profitability and with the conclusion of sales tax matter post Supreme Court judgement and the company’s proposal on CDR exit being accepted by the lenders, we are now fully geared to deliver value to our stakeholders.”