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A steep hike in gross refining margins pushed Essar Oil's fourth quarter net profit to Rs 200 crore, as opposed to Rs 608 crore loss in the same quarter last year.
The fourth quarter revenue too went up 34% to Rs 25,757 crore as compared to Rs 19,160 crore in the same quarter last year, as the company got complete benefits of its refinery expansion and its upgradation to refine heavy crude oil.
The expanded capacity of its refinery is at 20 mmtpa. This quarter also saw a spectacular jump of its gross refining margins to $9.06 per barrel from $4.6 per barrel in the same quarter last year.
“Such quarters are rare,” admits Suresh Jain, the chief financial officer of the company. “This quarter, we were immune from forex and commodity losses, and what we earned from GRM's is directly reflected in EBIDTA,” he explained.
Jain, however, is confident of maintain the 'run rate' of their annual EBITDA at $1 billion (Rs 5,454 crore) going ahead well, after they had clocked in an EBIDTA of Rs 3,651 crore for 2012-13. It had gone up by 2.13 times.
For the year ending 2012-13, the company clocked in highest ever revenues for the company at Rs 96,797 crore, growing by 53%. Its annual profits however continue to be in red as it posed an annual loss of Rs 1,180 crore.
L K Gupta, chief executive officer of the company however remains confident that after their refinery optimisation, resolution of sales tax issue, stepping out of corporate debt restructuring (CDR) will help its performance.
Essar Oil is currently looking to re-finance around $2.27 billion (Rs 12,348 crore) of its loans with foreign loans. They could not do this earlier, as they were under CDR. Since most of the earnings are in Dollars and liabilities are in Rupees, they have been facing a mismatch.
Gupta calls this Dollarisation and it has already re-financed around $480 million. “In the next three to six months, we will re-finance a substantial portion of these loans,” he said.
The company which has around 1,400 fuel retail outlets said that the business is also going from a loss-making business to profits. Their retail business reached breakeven in March due to petrol price deregulation. It is expected to pour in profits after the much-awaited diesel price de-regulation falls through.
The company which has passed through a long cycle of capital expenditure investments, said that going ahead their capex will be minimal. Essar Oil plans to use its free cash to de-leverage their balance sheet.
