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Essar Oil reports strong performance for December quarter

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Hydrocarbon Engineering,

Essar Oil Ltd, India’s second largest private refiner, has reported results for the third quarter ended 31 December 2015.

3Q16 performance

Refinery throughput stood at 4.24 million t, compared with 5.19 million t in the same period of the previous year. The decline in throughput was due to the planned shutdown of 30 days (completed in 28 days from 18 September 2015 to 15 October 2015).

Gross revenues for the quarter stood at Rs.13 947 crore, compared with Rs.22 220 crore in the same period last year. This decline in revenues was due to the fall in oil prices and lower throughput due to the continuation of shutdown for 15 days in the quarter.

The EBIDTA increased by 36% to Rs.1759 crore as against Rs.1291 crore in 3Q15. The net profit after tax soared 7 times to Rs.364 crore from Rs.52 crore in the same quarter of previous year.

The current price gross refining margin (CP GRM) for the latest quarter was US$13.25/bbl, the highest ever for Essar Oil, versus US$7.00/bbl in the same quarter last year.

FY16 nine month highlights

The refinery throughput for the nine month period ended December 2015 was 13.88 million t, compared with 15.37 million t in the same period of previous year. Gross revenues for the period were Rs.50 080 crore, as against Rs.73 731 crore in the same period of last year.

The EBIDTA stood at Rs.5252 crore versus Rs.3957 crore in the previous year period. The net profit was Rs.1628 crore compared with Rs.976 crore in the nine months of the previous financial year.

The CP GRM for the nine month period ended December 2015 was US$10.45/bbl versus US$7.69/bbl in the same period last year.

Refinery performance

In the quarter ended 31 December 2015, the refinery successfully completed its planned turnaround shutdown on 15 October 2015. During the shutdown the company undertook the routine inspection and maintenance and converted VGO-HT unit into a mild hydrocracker unit to enable the refinery to convert the entire VGO (vacuum gas oil) into higher margin products. Also, the company modified crude blend window to enable the refinery to process higher quantity of ultra-heavy and high acidic crudes.


Lalit Kumar Gupta, Managing Director and Chief Executive Officer, on the announcement of the performance, said: “Essar Oil has delivered excellent performance despite very challenging domestic and global macroeconomic environment. The safe and successful completion of the turnaround shutdown of the refinery before schedule along with completion of the diesel maximisation Project will help us to sustain our excellent all round performance in future. We have generated a vibrant momentum in expanding our retail network as well as leveraging the potential of our existing network.”

Suresh Jain, Chief Financial Officer, said: “Our company has reported excellent financial performance despite shutdown and inventory impact due to fall in oil prices. The refinery clocked a CP GRM of US$13.25/bbl during the quarter, which is the highest ever since the commissioning of refinery in 2008. Our profitability is further expected to improve pursuant to overall improvement in crude mix and product slate post shut down. Retail business contribution in overall revenue has improved to 16% compared to 6% in 3Q15 and it will be the key driver to foster the overall growth and profitability of the company.”

Retail operations

During the quarter, Essar Oil commissioned 220 new outlets taking the total operational outlets nationwide to 1910. As many as 2186 are at different stages of implementation.

Retail sale volumes for the quarter under review advanced 87% to 448 kl from 239 kl in the same period of last year. Retail sales accounted for 16% of Essar Oil’s revenues in 3Q16 as against 6% in the corresponding quarter last fiscal.

Exploration and production

At Essar’s flagship Raniganj CBM asset, it has achieved production of 655 000 m3/d. This is being sold to industrial consumers in the catchment area. Essar Oil is presently India’s largest CBM gas producer. As many as 286 wells have been drilled and the company is on course to increase production to 2.5 million m3/d.

The promoters of Essar Oil Ltd completed the delisting process from the National Stock Exchange and Bombay Stock Exchange after agreeing to pay Rs.262.8 per share to the public shareholders. Consequently, trading in shares of Essar Oil Ltd will halt from 10 February 2016 and delisting will be effective from 17 February 2016.

Essar Oil has been recognised as one of the top Climate Disclosure Leaders for India for the 5th year in a row in 2015 by Carbon Disclosure Project India. CDP publishes an annual index on climate disclosure that ranks companies on the basis of their energy management techniques and climate change initiatives.Essar Oil won the Golden Peacock HR Excellence award for 2015.

Adapted from press release by Rosalie Starling

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