OREANDA-NEWS. IEA benchmark margins drop sharply to negative USD 0.9/bbl in H1FY14 from USD 1/bbl in H1FY13, adversely impacting the financial results. H1FY14 Current Price Gross Refining Margins (CP GRM) at USD 6.97/bbl compared to USD 6.41/bbl in H1FY13.

EBIDTA at Rs 1,447 crore; up 69% over H1FY13

Refinery crosses 2,000 LTI free days; 2008 as on September 30, 2013

Q2FY14 highlights

Highest ever quarterly gross revenues at Rs 27,392 crore, up 19% over Q2FY13

Highest ever throughput at 5.18 MMT; up 2% over Q2FY13

IEA benchmark margins drop sharply to negative USD 1.3/bbl in Q2FY14 from USD 2.46/bbl in Q2FY13, impacting the financial results. Q2FY14 CP GRM at USD 6.93/bbl Vs USD 7.86/bbl in Q2FY13

EBITDA at Rs 1,033 crore, down 12% over Q2FY13; impacted due to lower refinery margins

Sales mix impacted by timely monsoon leading to higher exports of diesel

Mumbai: Essar Oil, India's second largest private refiner, today reported excellent operational performance for the half year and quarter ended September 30, 2013.

Gross revenues for the six-month period surged to Rs 52,113 crore, up 15% from Rs 45,131 crore reported in H1FY13. The refinery continued to operate well above its rated capacity, delivering a throughput of 10.32 MMT for the period, up 8% from the corresponding period last fiscal.

EBIDTA for the period stood at Rs 1,447 crore, up 69% from Rs 853 crore reported H1FY13. Profit after tax stood at negative Rs 934 crore, against negative Rs 1,413 crore in H1FY13.

During the first half of the current fiscal, Vadinar Refinery processed 92% heavy and ultra heavy crude in its crude diet, against 85% in H1FY13. Production of higher margin light and middle distillates during the same period was 84%, against 82% in H1FY13. On the back of robust operating performance, product yield, and crude mix, CP GRM stood at USD 6.97/bbl, against USD 6.41/bbl in H1FY13, up 9%, despite reduction in benchmark IEA margins by USD 1.9/bbl (IEA margins for the six month period ending September 2013 quarter was negative USD 0.9/bbl against positive USD 1.0/bbl for September 2012).

Quarterly performance

Gross revenue for the July-September 2013 quarter was at all time high of Rs 27,392 crore, which was up 19% from Rs 23,023 crore reported in Q2FY13.

For the quarter, Essar Oil reported Current Price Gross Refining Margin of USD 6.93 per barrel, compared to USD 7.86 per barrel in Q2FY13, mainly due to sharp reduction in benchmark IEA margins by USD 3.76/bbl during the quarter (IEA margins for Sep'13 quarter was negative USD 1.30/bbl against positive USD 2.46/bbl). Negative diesel demand growth in domestic market on the back of heavy, timely, and extended monsoon this year led to substantial increase in diesel exports, further impacting margins adversely.

The EBITDA for the reporting quarter was at Rs 1,033 crore, compared to Rs 1,169 crore in Q2 FY13. EBITDA was impacted due to lower GRM. The profit after tax was negative Rs 71 crore versus a profit of Rs 105 crore in the same period last year due to lower EBIDTA.

During the quarter, Vadinar Refinery processed 5.18 MMT of crude, up 2% over Q2FY13, indicating a capacity utilization of 104%.

“We continue to operate our refinery in a highly optimized manner and this is the fifth consecutive quarter post expansion that the refinery is operating at over its nameplate capacity. Despite a sharp reduction in benchmark margins by about USD 3.8/bbl, our GRMs have been only marginally impacted. Our GRM premium over the IEA benchmark expanded to USD 8.23/bbl during the quarter, against USD 5.4/bbl in Q2FY13. With clarity emerging on deregulation of diesel, we are now looking at expanding our retail network, which going forward will be a big value booster for the company,” said Mr LK Gupta, MD & CEO, Essar Oil.

Mr Suresh Jain, CFO, Essar Oil said, “We have maintained strong operating performance with record throughput and revenue. EBITDA has been impacted due to lower refinery margins. Benefits of debt dollarization, along with rationalisation of other financial charges like hedging and working capital has begun reflecting in our lower interest and financial charges.”