Essar Oil Q3 net up 63%; Rs 146-crore forex gain

India's second largest private oil refiner Essar Oil today reported a 63 per cent rise in net profit for the December quarter at Rs 52 crore, boosted by hefty forex gains and all-round business growth.

Net profit of the company in the December quarter in 2012-13 stood at Rs 32 crore.

The company recorded forex gain of Rs 146 crore in October-December 2013 period.

The company said its throughput from the flagship Vadinar facility in Gujarat touched 4.86 MT in 85 days, as the company had a seven-day planned shutdown in November.

Despite this, it notched up the highest ever quarterly sales of Rs 27,385 crore, up 6 per cent over the year-ago quarter, Essar Oil managing director and chief executive L K Gupta told reporters here.

"We had an excellent quarter during which we demonstrated further improvement in all our operational areas, from refinery to marketing to finance. In spite of benchmark margins continuing to languish due to lower gasoline and fuel oil cracks, we have delivered very good results," he said.

He said Essar's premium over benchmark IEA margin for the quarter reached a high of $9.33 per barrel.
However, at the current price, gross refining margin declined to $7.93 a barrel in the quarter from $9.75 a year ago due to a $2.16 a barrel reduction in the benchmark IEA margin.

Essar Energy, the parent company, converted FCCBs (foreign currency convertible bonds) worth $262 million into domestic equity shares of Essar Oil and with this the company has cleared all its past ECBs, chief financial officer Suresh Jain said.

Jain said as of December quarter, it dollarised $900 million of its $2.3-billion programme and expressed hope that he will be able to close entire amount this fiscal itself. Dollarisation was done through ECBs (external commercial borrowings) and swaps.

In rupee terms, the company had debt of Rs 17,610 crore on its books at the end of third quarter, he added. It stood at Rs 21,200 crore in the September quarter.

Jain said the conversion of the rupee debt into forex loans has helped the company save 6-8 per cent, or $50-60 million, on interest payments during the quarter under review.

Essar's 20-MT Vadinar Refinery, the second largest single-site facility in the country, processed 4.86 MT of crude. This was lower than 5.14 MT a year ago due to the planned seven-day shutdown during the quarter.

In the third quarter, it realised 58 per cent of revenues from the domestic market as against 44 per cent in the immediate past quarter on account of improved demand.