Essar oil reports flat profit for third quarter

Ruias promoted Essar Oil, India's second largest private refiner, has reported a flat net profit of Rs 52 crore for the December quarter. Drop in revenues due to dip in crude oil prices impacted the earnings.

Essar had posted Rs 52 crore profit during the October-December quarter of 2013-14.

Gross refining margins or the company's earning on turning every barrel of crude oil into fuels stood at $7 per barrel against $7.93 per barrel in the same period of the previous financial year.

Gross revenues came in at Rs 22,220 crore, down 19%, against 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% during the quarter," Essar oil said in a press statement. During the quarter, Essar's Vadinar refinery in Gujarat processed 5.19 million tons of crude as opposed to 4.86 million tons during the same period last year, up 7%.

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 USD 180 million under EPBG route, resulting in overall reduction in interest cost," he added.

During the quarter, Essar realised 43% of its revenues from the domestic market as against 58% in Q3 FY14. Exports were higher at 57% (vs 42% in Q3FY14) due to sluggish domestic demand and increased production from the newly commissioned PSU refineries.

On the retail front, the company has seen diesel retail sales from its outlets gradually picking up. The government had on October 19, 2014, deregulated diesel prices. Essar Oil has over 1,400 petrol pumps nationwide, with another 600 in various stages of commissioning.

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.