Refining margins fuel Essar Oil's Rs 200 cr Q4 net profit
Essar Oil Managing director and Chief Executive L K Gupta attributed the jump in GRM to higher complexity benefits of its refineries, wherein it was able to use more of the low cost but heavy crude and yet refine it to deliver lighter products
A near-doubling of refining margins helped country's second largest private refiner Essar Oil clock a post-tax profit of Rs 200 crore in fourth quarter ended March 31 compared to a Rs 608 crore net loss in the same period last year.
The Ruias-promoted company's gross refining margins (GRMs) nearly doubled to USD 9.06 per barrel, up from USD 4.60 a barrel a year ago. Essar Oil Managing director and Chief Executive L K Gupta attributed the jump in GRM to higher complexity benefits of its refineries, wherein it was able to use more of the low cost but heavy crude and yet refine it to deliver lighter products.Must read: Diesel price hiked by 90 paise per litre effective midnight Besides this, the overall margins situation in the industry was also very good, which helped the GRMs, he told reporters at the Essar Group headquarters here after announcing the results. Helped by the capacity expansion and optimisation at its refineries, the company's revenues grew 34 per cent to Rs 25,757 crore in Q4, while the pre-tax profit was up 254 per cent to Rs 1,556 crore as compared to last year. Going forward, the company is targeting to take up its pre-tax profit to USD 1 billion, Chief Financial Officer Suresh Jain said, adding a greater emphasis will be on "dollarisation", or converting its rupee debt into foreign currency loans to lower the interest costs. Essar Oil used USD 480 million, of the USD 2.7-billion external commercial borrowing window given by the Reserve Bank, so far and will exhaust the balance limit in the next six months, he said. "We save 6 per cent on interest rate in dollarisation and the total benefits which this would have, would be USD 180-200 million per annum," Jain said. The company's debt-to-equity ratio stands at 7:1 at present, Jain said, adding he would like it to stabilise at 2 to 2.5 times of the pre-tax profit. Essar Oil scrip ended up 1.77 per cent at Rs 83.25 apiece on the BSE, whose 30-share benchmark closed the session up 0.72 per cent. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
