Forex loss weighs on Essar Oil's Q2 net loss of Rs 166 cr

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Moneycontrol Bureau

Essar Oil has posted a net loss of Rs 166 crore for the July-Sept quarter compared with a net profit of Rs 130 crore which the company posted in the corresponding quarter last year.

The company has said that it incurred a forex loss of Rs 407 crore  during the quarter versus a forex gain of Rs 115 crore which it had recorded in the year-ago period. This could have weighed on the company's financial performance, say analysts.

However, sales of the company grew 19% at Rs 12,940 crore Year-on-Year.
Meanwhile, shares of the company plunged 4% at Rs 83.70 on the Bombay Stock Exchange at 15.15 hours.

Naresh Nayyar, Essar Oil's CEO & Managing Director, said, "The refinery industry environment in Asia continues to remain healthy, reflecting good margins. The company is at the threshold of achieving a quantum jump in its GRM (Gross Refining Margin), as our Vadinar refinery expansion project is now under start-up."

The expanded refinery with much higher complexity will be fully operational in Q1 CY 2012. This will give a boost to our overall cash flow and bottom line, giving us strong operational and financial flexibility, he added

Essar Oil has recently indicated that it is well underway with an additional optimisation project at its Vadinar refinery which will see the capacity of the refinery further enhanced to 405,000 bbl/day by September 2012 at a capital cost of  around $380 million. This project involves converting the redundant Vizbreaker Unit into a second Crude Distillation Unit and optimising the capacity of all supporting infrastructure.

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