Essar Oil on Tuesday reported its highest quarterly profit ever at Rs 1,063 crore, up 54% year-on-year (y-o-y) in the April-June quarter boosted by strong refinery margins. The countries second largest private refiner, which operates a 20 million tonne a year refinery at Vadinar in Gujarat, reported a gross refining margin of $11.05 as compared to $ 9.04 in the first quarter of the previous 2014-15 fiscal.
Lalit Kumar Gupta, MD and CEO, Essar Oil, said that with its increased complexity the company’s refinery can now process a high volume of heavy and ultra-heavy crudes that enable better refining margins. “The Vadinar unit continues to produce a high proportion of light and middle distillates that also have a positive impact on margins,” he added.
The Vadinar refinery continued to operate above 100% capacity for the 12th quarter in a row, registering a throughput of 5.17 million tonne.
Essar Oil however reported lower revenues for the quarter at Rs 20,572 crore, 25% lower than the Rs 27,317 crore reported in Q1FY15. “This dip in revenues was mainly because of lower crude oil prices prevailing in the global market,” said Suresh Jain, CFO, Essar Oil.
Jain added that the company has so far dollarized debts to the tune of $ 1.9 billion of the total debt of $2.4 billion in its books. “Our average interest rates are now down to 6.5-7% from 13% prior to the dollarization. We are working towards dollarizing the remaining $ 500 million of our debts,” he said. Jain said the average quarterly finance costs will henceforth go down to around Rs 500 crore from the current Rs 700 crore plus levels.
On the fuel retail side the Essar Oil plans to add another 1,600 retail outlets to the current 1,550 outlets currently operational. Earlier this month Russian oil major Rosneft announced it is taking a 49% stake in Essar Oil’s Vadinar refinery, with plans to raise capacity and create a retail chain of stations. Essar Oil plans to delist itself from Indian bourses.