New Delhi: Essar Oil on Tuesday returned to black with a net profit of Rs 32 crore in the December quarter and said it had received RBI approval to raise USD 2.2 billion foreign currency loans to refinance expensive rupee debt.
Essar Oil, India's second largest private oil refiner, plans to raise around USD 2.2 billion in external commercial borrowings (ECB) shortly to refinance part of rupee loans totalling Rs 17,700 crore.
Net profit in October-December quarter at Rs 32 crore compared to Rs 362 crore of loss in the same period a year ago, company Managing Director & CEO Lalit K Gupta said in a media conference call from Mumbai.
The profit was mainly due to higher refining margin and larger processing of ultra heavy crude oil.
Company CFO Suresh Jain said Essar Oil had received Reserve Bank of India approval to raise ECBs of USD 2.2 billion.
"We are in discussion with banks," he said refusing to say when the company plans to raise the ECBs.
The foreign currency debt would help the company save USD 140-150 million, he said.
Essar's Vadinar refinery in Gujarat earned USD 9.75 on turning every barrel of crude oil into fuel in the third quarter as against a gross refining margin of USD 2.82 per barrel in the same period a year ago.
This "reflected the higher complexity benefits post completion of expansion and optimistion projects," Gupta said.
Sales were up 86 percent to Rs 25,909 crore and in the first nine months the company has clocked a revenue of Rs 71,040 crore.
Gupta said the turnover will touch Rs 100,000 crore "next fiscal if not in the current financial year".
The Vadinar refinery, at 20 million tons per annum capacity and 11.8 complexity, is India's second largest single site refinery and amongst the most complex globally for a facility of this scale.
During the quarter, it processed 5.14 million tons of crude, up 83 percent from last year.
"Share of ultra heavy crude in the refinery's crude diet rose almost three fold to 67 percent and production of valuable middle and light distillates (LPG, petrol and diesel) improved to 85 percent of the refinery's product slate from 69 percent over the same period last year." he said.
"Heavy and ultra heavy crude constituted 84 percent of the refinery's crude diet during the quarter, against 74 percent in Q3FY12".
Gupta said going forward, the company will continue to "optimise crude diet and product slate further to improve our earnings."
Gupta said Vadinar will continue to have good refining margins in future. He projected USD 7-8 higher than IEA benchmark margins.
"With gross refining margin (GRM) continuing to remain firm, the company has witnessed major jump in its overall earnings performance in the third quarter," Jain said.
The company's EBIDTA and PAT, he said, would have been higher by Rs 260 crore if not for the foreign exchange gain accounted in the previous quarter which showed up as lower sales realisation during the quarter.
In the nine-months ended December 31, 2012, Essar Oil reported a 61 percent growth in revenue to Rs 71,040 crore. It reported a net loss of Rs 1,380 crore in April-December against negative Rs 677 crore in the corresponding period of last fiscal.