Total income has, however, dropped from Rs 135.70 crore to Rs 121.85 crore during the period, while other income was lower at Rs 3.15 crore, compared with Rs 6.99 crore last year. Gross profit increased marginally to Rs 33.45 crore, from Rs 32.04 crore, during the first half of last year.

Total expenditure was lower at Rs 88.37 crore, from Rs 106.51 crore, while the provision for depreciation remained almost unchanged at Rs 10.5 crore.

"Even though the total income was marginally lower, a strict control over expenses has enabled the company to increase its net profit," Essar Oil said in a statement.

Interest charges fell from Rs 4.14 crore to Rs 3.18 crore during the period. The company has not provided for taxation during the first half. The company had provided Rs 2.10 crore for taxation last fiscal.

During the second quarter, Essar Oil has posted a net profit of Rs 10.73 crore, up from Rs 9.82 crore in the same period last year. Net sales was lower at Rs 61.45 crore, against Rs 62.73 crore in the corresponding quarter last year.

The company has said that its drilling operations, which remained depressed last year, has stabilised with the rise in crude prices. Essar Oil now plans to drill an exploratory well in Rajasthan (onshore) and Saurashtra (offshore) during the current fiscal.

The company has also said that its 10.5-million-tonne refinery will be commissioned by the first quarter of 2001. "The company is in the process of achieving financial closure, which is expected shortly. The induction of a strategic partner will add strength to the company's operations and marketing efforts, while helping fund the equity and thus expedite the implementation of the project," Essar Oil has said.