Essar Oil Q1 loss at Rs 1400 cr

Essar Oil CFO Suresh Jain said the company8217;s earnings have been impacted due to significant drop in crude oil prices coupled with rupee depreciation.

Also,the company incurred higher interest and depreciation cost due to ramp up in its Vadinar refinery capacity.

8220;We had an inventory loss of close to Rs 700 crore. Also,sharp depreciation in rupee led to a foreign exchange loss of Rs 150-200 crore,8221; he said.

The company on an average carries crude oil inventory of 8-9 million barrels,whose value declined inventory loss due to fall in international oil prices.

The unit of London-listed Essar Energy PLC in June expanded capacity the Vadinar refinery in Gujarat to 400,000 barrels a day 20 million tonnes from 360,000 bpd.

Essar Oil expects significant improvement in its performance from the second quarter.

8220;With upward movement of crude prices and stabilisation of rupee at Rs 56 levels against the US dollar,coupled with higher margins coming out of enhanced refinery complexity from 6.1 to 11.8 and stabilisation of ramped up capacity,

the results are expected to witness significant upward movement from next quarter,8221; company CEO Lalit K Gupta said.

The company earned USD 5.12 on turning every barrel of crude oil into product in April-June better than the benchmark IEA margin as against USD 2.5 a barrel gross refining margin in a year ago period.

It expects GRMs to be USD 7-8 a barrel higher than the benchmark IEA margins from current quarter onwards.

Gupta said the company clocked its highest-ever quarterly revenue of Rs 22,109 crore in first quarter,up 34 per cent from Rs 16,478 crore in the corresponding period of last fiscal.

8220;We are now targeting a benchmark turnover of Rs 100,000 crore this year,8221; he said.

Essar Oil shares closed flat at Rs 53.85 apiece on the Bombay Stock Exchange.

Higher complexity has already resulted in the share of heavy and ultra heavy crude going up to 89 per cent in first quarter against 66 per cent last year,he said.

Share of valuable light and middle distillates like petrol and diesel in the overall crude slate has increased to 83 per cent from 73 per cent previously,he added.

8220;With the completion of our optimisation project during the quarter,we have significantly moved up in the refining value chain and our world class assets have begun delivering value to our stakeholders,8221; Gupta said. 8220;Benefits of higher

capacity and complexity have already begun reflecting in our results.8221;

Jain said,8221;Significant drop is crude oil prices,coupled with rupee depreciation has impacted the whole industry. In addition,due to ramp up in capacity,we had higher interest and depreciation cost post capitalisation,which will be offset in the coming quarters with improved margins.8221;

During April-June,the Vadinar refinery achieved a throughput of 4.48 million tonnes compared with 3.62 million tonnes in same period last year,a 24 per cent increase.

The increase in throughput was primarily due to the completion of the refinery expansion project at the end of quarter ending March,2012.

The operation of all expansion units were stabilised during the quarter and by the end of the period the refinery achieved the full design capacity of 20 million tons,Gupta said.

Also,domestic sales increased to 80 per cent of total sales compared to 68 per cent for same period of previous year,mainly on account of heavy demand of diesel,which has replaced petrol,fuel oil and even CNG whose rates have been raised recently,he said.

Export sales from Vadinar Refinery decreased to 20 per cent of the total against 32 per cent in the same quarter last year. Export sales mainly comprise petrol,fuel oil and VGO.