Essar Oil reports flat net profit on low crude oil prices

Essar Oil, India's second-largest private refiner, on Tuesday reported a flat net profit of Rs 52 crore for the December quarter after revenues dipped due to lower crude oil prices.

The Mumbai-based firm had posted Rs 52 crore profit in the October-December period of 2013-14 fiscal, Essar Oil said in a statement said.

It earned $7 on turning every barrel of crude oil into valuable fuels like petrol and diesel during the October-December period of 2014-15, as compared to a gross refining margin of $7.93 per barrel in the same period of the previous financial year.

Gross revenues at Rs 22,220 crore were down 19 per cent as compared to Rs 27,385 crore reported in Q3 FY14. "The dip in revenues is mainly due to lower crude oil price, which fell by over 40 per cent during the quarter," the statement said.

During the quarter, Essar's Vadinar refinery in Gujarat processed 5.19 million tonne of crude as opposed to 4.86 million tonne during the same period last year, up 7 per cent.

Essar Oil Managing Director L K Gupta said: "Vadinar refinery continues to operate in a highly optimised manner, exceeding its rated capacity. Our operational performance continues to be excellent with improvement in all major parameters."

Suresh Jain, CFO, said financial performance was impacted on account of sharp decline in oil prices.

"Equity of Rs 1,500 crore has been bought in by Essar Energy, thereby strengthening our balance sheet. Our dollarization programme is progressing well and we added $180 million under EPBG route, resulting in overall reduction in interest cost," he said.

During the quarter, Essar realised 43 per cent of its revenues from the domestic market as against 58 per cent in Q3 FY14.

Exports were higher at 57 per cent (vs 42% in Q3FY14) due to sluggish domestic demand and increased production from the newly commissioned PSU refineries.

Essar Oil has over 1,400 petrol pumps nationwide, with another 600 in various stages of commissioning.

"With the government announcing deregulation of diesel prices on Oct 19, 2014, diesel retail sales from Essar Oil's outlets is gradually picking up," the statement said.

At its Raniganj coal-bed methane (CBM) block, current gas production has achieved open flow production potential of 5,20,000 standard cubic meters per day.

"We have drilled 254 wells and built requisite infrastructure including pipelines to supply CBM Gas to end consumers. Three Gas Gathering Stations (GGS) are complete and one more is under construction," it added.