Essar Oil Q2 net dips 14% to Rs 201 cr

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Essar Oil reported a 14 percent drop in second quarter net profit as its Vadinar refinery in Gujarat processed lesser crude due to a maintenance shutdown. Net profit in July-September at Rs 201 crore was 14 percent lower than Rs 234 crore profit in the same quarter of the previous fiscal, the company said in a statement here. The 20 million tonnes (MT) a year Vadinar refinery in Gujarat turned 4.47 MT of crude oil into fuel, down 11 percent from 5.04 MT crude processed in Q2 of previous fiscal.

"This was due to fewer operational days on account of planned refinery turnaround during September/October 2015, of which 13 days were in the July-September quarter," Essar said. Essar earned USD 9.33 on turning every barrel of crude oil into fuel in the September quarter compared with a gross refining margin of USD 7.03 per barrel in the year ago period. "During the quarter, Vadinar Refinery commenced (nearly a month long) planned turnaround shutdown on September 18, 2015," the statement said adding the unit was shut for 13 days during the quarter.

The turnaround project was successfully completed on October 16, after 28 days of shutdown. "During the turnaround, besides routine maintenance of all its units, the D-Max project was also completed. Under the D-Max project, the VGO-HT unit was converted into a mild hydrocracker unit and the DHDT (Diesel hydro treater) unit was revamped.

"This will enable the refinery to convert lower margin sweet VGO into higher margin diesel, kerosene and other value added products, thereby improving overall margins," it said. Turnover fell 36 percent to Rs 15,561 crore mainly because of lower throughput and lower oil prices compared with the corresponding period. During the quarter, Vadinar Refinery processed 92 percent of heavy and ultra-heavy crudes, and maintained proportion of high margin light and middle distillates at 85 percent.

Crude and product mix are expected to improve post turnaround. Essar Oil Managing Director and CEO L K Gupta termed the quarter as satisfactory and said the refinery turnaround. which "will further improve operational flexibility and boost margins".

Gupta added retail business continues to grow and is seeing encouraging response and improvement in retail sales. Suresh Jain CFO Essar Oil said: "Our EBIDTA for the quarter as well as half year is better compared to the corresponding periods. Our PAT for the quarter is marginal lower compared to Q2FY15 mainly on account of lower throughput due to planned shutdown, lower product cracks and negative inventory variations."