Essar Oil shares fall over Q3 loss; equity issue in 12-15 months
As part of the deal, REpower, which is wholly-owned by Suzlon group, will launch its new 3.XM series in France.
Shares of Essar Oil traded slumped on the bourses on the back of huge losses in the October-December quarter. The earnings were reported after markets closed on Friday.
Essar Oil stocks traded 3.16% lower at Rs 65.90 on the Bombay Stock Exchange at 1405 hours in an up market today. In contrast, the BSE Sensex was up 0.73% or 133 points at 18,422.
The company had reported a Rs 3,986 crore net loss in the third quarter after a one-time reversal of sales tax revenue. The Supreme Court had on January 17 overturned a Gujarat High Court order that allowed the company to defer payment of sales tax to the state government, and asked the company to pay Rs 6,300 crore in sales tax.
Essar Oil, which is 87% owned by London-listed Essar Energy Plc, had posted a net profit of Rs 273 crore in Q3 of the last fiscal.
Below are the edited transcripts with LK Gupta, CEO, Essar Oil:
Q. Your profits are hit by the provision you've made for the reversal of sales tax deferment benefit, how are you going to cope-up with this huge amount, your debt is already high, assuming you have to make this payment, how long will it take for you to return to profitability?
A. As you have seen through results we have made a provision of Rs 4,015 crore and have ended with a loss of Rs 3,900 crore. We have also announced that we are requesting our parent co EEPLC to convert the FCCB which is almost Rs 1,400 crore so if that request is accepted then this Rs 1,400 crore which is sitting in debt will convert into equity. Besides this we will in course of time dilute the holding because presently the promoter group is holding 89-90% and we have an intention to bring it down to 25% which is as per SEBI requirement and therefore we also plan the equity issue in the next 10-15 months and by this we will also be able to boost our networth.
Q. Does this case dent you expansion plans in any way?
A. This quarter was a very important quarter for us as we completed a mega turnaround for 35 days, all our units under expansion are mechanically complete , we have also commissioned most of the units and the last of 4 units are nearing completion and by end of March we will complete our expansion programme which will take our capacity to 18 million tonne and complexity to 11.8 which will unlock substantial value to all stake holders because our GRMs (gross refining margins) are going to get a boost so the EBITA (earnings before interest, tax and amortization) and other cash flows.