Essar Oil Q2 Net Dips 14% to Rs 201 Crore

New Delhi: Essar Oil on Friday reported a 14 per cent drop in net profit at Rs 201 crore for the fiscal second quarter that ended on September 30, 2015 as its Vadinar refinery in Gujarat processed lesser crude due to a maintenance shutdown.

The company had registered a net profit of Rs 234 crore for the corresponding period a year ago, it said in a statement here.

The 20 million tonnes (MT) a year Vadinar refinery in Gujarat turned 4.47 MT of crude oil into fuel, down 11 per cent from 5.04 MT crude processed in Q2 of the previous fiscal year.

"This was due to fewer operational days on account of planned refinery turnaround during September/October 2015, of which 13 days were in the July-September quarter," Essar said.

Essar earned $9.33 on turning every barrel of crude oil into fuel in the September quarter compared with a gross refining margin of $7.03 per barrel in the year ago period.

"During the quarter, Vadinar Refinery commenced (nearly a month long) planned turnaround shutdown on September 18, 2015," the statement said adding the unit was shut for 13 days during the quarter.

The turnaround project was successfully completed on October 16, after 28 days of shutdown.

"During the turnaround, besides routine maintenance of all its units, the D-Max project was also completed. Under the D-Max project, the VGO-HT unit was converted into a mild hydrocracker unit and the DHDT (Diesel hydro treater) unit was revamped."

"This will enable the refinery to convert lower margin sweet VGO into higher margin diesel, kerosene and other value added products, thereby improving overall margins," it said.

Turnover fell 36 per cent to Rs 15,561 crore mainly because of lower throughput and lower oil prices compared with the corresponding period.

During the quarter, Vadinar Refinery processed 92 per cent of heavy and ultra-heavy crudes, and maintained proportion of high margin light and middle distillates at 85 per cent. Crude and product mix are expected to improve post turnaround.

Essar Oil managing director and CEO L K Gupta termed the quarter as satisfactory and said the refinery turnaround "will further improve operational flexibility and boost margins".

Gupta added retail business continues to grow and is seeing encouraging response and improvement in retail sales.

Suresh Jain CFO Essar Oil said, "Our EBIDTA for the quarter as well as half year is better compared to the corresponding periods. Our PAT for the quarter is marginal lower compared to Q2FY15 mainly on account of lower throughput due to planned shutdown, lower product cracks and negative inventory variations."

For the first half, Essar Oil saw a profit rise of 37 per cent to Rs 1,264 crore.

Essar Oil said domestic sales made up for 46 per cent of the revenues as the company exported more fuel on account of lower offtake by PSU customers due to monsoon and restart of some of their refineries post shutdown.

Retail sales accounted for 10 per cent of Essar Oil's revenues in the second quarter of FY16 as against 3 per cent in the corresponding quarter last fiscal year.

"Retail sales volumes of diesel have seen a consistent rise post-deregulation and has contributed to the overall rise in domestic sales," the statement said.

During the quarter, Essar Oil commissioned 148 new petrol pumps. It now has about 1,700 operational retail outlets nationwide with another 1,900 in various stages of implementation.