Essar Oil today returned to black with a net profit of Rs 32 crore in the December quarter and said it had received an approval from the Reserve Bank of India (RBI) to raise $2.2 billion foreign currency loans to refinance expensive rupee debt.
Essar Oil, India's second largest private oil refiner, plans to raise around $2.2 billion in external commercial borrowings (ECB) shortly to refinance part of rupee loans totaling Rs 17,700 crore.
Net profit in October-December quarter at Rs 32 crore compared to Rs 362 crore of loss in the same period a year ago, the company's managing director and chief executive officer Lalit K Gupta said in a media conference call from Mumbai.
The profit was mainly due to higher refining margin and larger processing of ultra-heavy crude oil.
Essar Oil's CFO Suresh Jain said the company had received RBI's approval to raise ECBs of $2.2 billion.
"We are in discussion with banks," he said refusing to tell when is the company planning to raise the ECBs. The foreign currency debt would help the company save $140-150 million, he added.
Essar's Vadinar refinery in Gujarat earned $9.75 on turning every barrel of crude oil into fuel in the third quarter as against a gross refining margin of $2.82 per barrel in the same period a year ago. This "reflected the higher complexity benefits post completion of expansion and optimistion projects," Mr Gupta said.
Sales was up 86 per cent to Rs 25,909 crore and in the first nine months the company has clocked a revenue of Rs 71,040 crore. Mr Gupta said the turnover will touch Rs 100,000 crore "next fiscal year if not in the current financial year."
The Vadinar refinery, at 20 million tons per annum capacity and 11.8 complexity, is India's second largest single site refinery and amongst the most complex globally for a facility of this scale. During the quarter, it processed 5.14 million tons of crude, up 83 per cent from last year.
"Share of ultra-heavy crude in the refinery's crude diet rose almost three fold to 67 per cent and production of valuable middle and light distillates (LPG, petrol and diesel) improved to 85 per cent of the refinery's product slate from 69 per cent over the same period last year." he said.
"Heavy and ultra-heavy crude constituted 84 per cent of the refinery's crude diet during the quarter, against 74 per cent in Q3 FY12". Mr Gupta said going forward, the company will continue to "optimise crude diet and product slate further to improve our earnings."
He added that Vadinar will continue to have good refining margins in future. He projected $7-8 higher than IEA benchmark margins.
"With gross refining margin (GRM) continuing to remain firm, the company has witnessed major jump in its overall earnings performance in the third quarter," Mr Jain said.
The company's EBIDTA and PAT, he said, would have been higher by Rs 260 crore if not for the foreign exchange gain accounted in the previous quarter which showed up as lower sales realisation during the quarter.
In the nine-months ended December 31, 2012, Essar Oil reported a 61 per cent growth in revenue to Rs 71,040 crore. It reported a net loss of Rs 1,380 crore in April-December against negative Rs 677 crore in the corresponding period of last fiscal year.
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