Essar Oil posts third straight quarterly loss

Essar Oil, India’s second-biggest private refiner, today reported its third straight quarterly loss due to a decline in gross refining margin and reduced throughput because of a 35-day planned shutdown.

The Ruias-promoted company posted a loss of Rs 515 crore for the March quarter, compared to a profit of Rs 321 crore in the year-ago period. Gross revenue grew by 29 per cent to Rs 19,160 crore.

“The quarterly performance has been affected due to a combination of factors, which include a reduced throughput due to 35 days’ planned shutdown, decline in gross refining margin and non-availability of sales tax deferral benefit during the quarter and MTM (mark-to-marketing) provisioning for forex losses,” said L K Gupta, managing director and chief executive officer of Essar Oil, during a conference call.

The company said it had already provided Rs 4,015 crore as an exceptional item in its books as reversal of sales tax incentive income in the third quarter of 2011-12.

Gross refinery margin, or earnings from turning crude into fuels, stood at $4.60 per barrel, against $5.29 a year earlier.

“We have completed a very challenging yet satisfying year at Essar Oil. During the year, we completed our refinery expansion programme and this has made us the second-largest single location refinery in India and one of the most complex refineries in the world. It has opened up new markets for our products and provides flexibility for sourcing of crude,” said Gupta.

“With our optimisation programme now nearing completion, we have reached the closure of our major capex initiatives. With this, we have significantly moved up in the refining value chain and are now fully focused on delivering the value of investments to the stakeholders,” Gupta added.