Essar Oil completes exit from CDR

Essar Oil Ltd today said it has completed the process for exiting the Corporate Debt Restructuring (CDR) loan facility set up in December 2004 to help it build the Vadinar refinery in Gujarat.

India's second-largest private sector refiner said the CDR loan facility has been replaced with a new debt facility of about Rs 9,100 crore on commercial terms from similar group of lenders.

Essar Oil Managing Director and CEO Lalit Gupta said: "The CDR exit marks a significant step forward for Essar Oil. Complete stabalising of our expanded capacity pave the way for us to move forward positively to maximize value for all our stakeholders. Capacity expansion and high complexity has already improved our profitability."

The firm's Chief Financial Officer Suresh Jain said the CDR exit will lead to greater operational and financial flexibility for the organization.

"We have begun the process of swapping our costly rupee debt with cheaper dollar loans that will lower our interest cost significantly, improve our cash flow, and strengthen the balance sheet," he said.

In addition, as part of dollarization of its rupee term debt, Essar Oil has refinanced Rs 2,611 crore of rupee term loans into equivalent foreign currency debt of $481 million through ECBs /Swaps to cut its interest cost.

"The company had received RBI approval of $2.27 billion to replace its high cost rupee debt with ECBs, and now with the CDR exit, the company will be able to refinance the remaining rupee loans to ECB," the statement said.

Vadinar Refinery, which commenced commercial production in May 2008 with a capacity of 10.5 million tonnes per year and complexity of 6.1, now has a capacity of 20 million tonnes and complexity of 11.8.

With increased complexity, Essar Oil is able to take over 85% of ultra heavy and heavy crude in its crude diet and yet produce higher grade products like Euro IV and Euro V compliant petrol and diesel to cater to the domestic and international markets.