Ruias-promoted Essar Energy today announced a pre-tax loss of $1.15 billion (about Rs 6,509 crore, at Rs 56.6 to a dollar) for the 15 months ended March 31. The London-listed company has now changed its accounting period from years ending December to those ending March, and therefore, brought out the results for the 15-month.
The London-listed company’s pre-tax profit recorded in the year ended December 31 2010 stood at $365.5 million (Rs 2,068.7 crore).
In January, the Supreme Court had ruled the company was not eligible for incentives for industrial investment in Gujarat under the ‘Capital Incentive to Premier and Prestigious Unit Scheme 1995-2000’. The court also rejected the 125 per cent sales tax deferment benefit it had claimed on its investment in the Vadinar refinery project.
| BOOK VALUE |
| $1.15-billion (Rs 6,509-crore) pre-tax loss posted by Essar for a 15-month period till March 31 |
| $22-billion revenues recorded during the 15-month period |
| $1-billion loan from banks facility is sought by the company to meet sales tax liability |
| 2,800-Mw total operational capacity in power business |
| 14% depreciation of the rupee resulted in an overall forex impact of $317million on adjusted Ebitda |
| Rs 2,000-cr waiver sought on the interest and penalty on its sales tax deferral liability |
The company said the sales tax deferment ruling in January led to the pre-tax loss. The results also included the negative impact of exceptional items worth $1.28 billion, the company said in a press statement.
However, revenues in the 15-month period ended March 31 more than doubled from $10 billion in December 2010 to $22 billion, primarily due to higher refining and marketing revenues in India, owing to high selling prices, and the acquisition of the Stanlow refinery. Essar had acquired the Stanlow refinery near Ellesmere Port in Cheshire from Royal Dutch Shell for $350 million.
The company said a 14 per cent depreciation in the rupee against the dollar during the 15-month period resulted in an overall foreign exchange impact of $317 million on adjusted earnings before interest, tax, depreciation and amortisation, including the revaluation impact and other foreign exchange losses of $243.2 million.
The company expects its margins to remain volatile through this year. Though growth in the West is expected to be weak, demand in Asia is likely to be high.
Chief executive Naresh Nayyar said, “We are now very much an operational energy business, with many construction projects completed, and our capex investment programme has peaked. The expansion of our Vadinar refinery has been very successful, putting the plant on a par with the best in the world. Here, high-value fuels can be created from lower-cost, ultra heavy crudes.”
“Coupled with our low cost base, this would permit a step change in margins. We are also making good headway at our Stanlow refinery, with a number of initiatives to improve margins by at least $2 a barrel over the next 18 months," he added.
In March, Essar Energy had commissioned the first phase of expansion of its flagship Vadinar refinery in Gujarat, enhancing the capacity from 3,00,000 barrels a day to 3,75,000 barrels a day.
In its power business, the company has commissioned 1,580 Mw of capacity since January 2011, taking its total operational capacity to 2,800 Mw. It expects to commission an additional 3,900 Mw in the next 24 months.
The company added it was in advanced negotiations with banks for a $1-billion loan to meet sales tax liability
In May, Essar Oil had approached the Gujarat High Court, seeking a directive to the state government on the repayment of the sales tax deferral and the interest it owed. The firm had sought a waiver on the interest and the penalty— Rs 2,000 crore—on its sales tax deferral liability. It said of the total sales tax of Rs 6,406 crore, it had already paid Rs 237 crore. For the remaining Rs 6,169 crore, it had proposed eight annual installments from April 2013, which was rejected.
Essar Energy shares were trading at £118.3 on the London Stock Exchange, a fall of six per cent over the last close. The Essar Oil scrip closed at Rs 55.1 on the Bombay Stock Exchange, down 2.30 per cent.
Clearance for Mahan coal block
The company said it had secured provisional approval for forest clearance for its Mahan coal block in Madhya Pradesh. This would enable it to start mining operations at the site. “Significant progress is still required in a number of areas, and we would continue our dialogue with both the state and the central governments to try and ensure this momentum is not lost,” Nayyar said.
