OREANDA-NEWS. Essar Oil, India's second largest private refiner and part of UK-listed Essar Energy plc, today reported a 12% increase in revenue to Rs24,721 crore for Q1 FY14, compared to Rs22,109 crore reported in Q1FY13, on the back of 15% improvement of throughput, which stood at 5.14 MMT during the quarter, against 4.48 MMT during the same period in FY13.

The EBITDA was at Rs 1,106 crore compared to negative Rs 178 crore in Q1 FY13. The Current Price Gross Refining Margin stood at USD 7.01 / bbl in Q1 FY14 up 49% over USD 4.69 / bbl in Q1 FY13, reflecting the higher complexity benefits post completion of expansion and optimization projects.

The company reported a net loss of Rs863 crore during the quarter, mainly due to negative forex fluctuations arising out of 10% rupee depreciation during the quarter. Essar Oil follows a very prudent risk management policy to hedge all its risks against currency fluctuations. As a result, the forex variations are mostly of mark-to-market nature, which is recoverable through sales or GRM in next quarters and hence have cash and earning neutral impact during the full financial year.

For the quarter, the refinery processed 5.14 metric million tonnes (MMT) of crude, up 15% in Q1 FY14 over Q1 FY13. The refinery continues to function at over its nameplate capacity of 20 MMTPA for the last four consecutive quarters with all units stabilized. During the quarter, the refinery operated at 103% of its capacity.

Share of ultra heavy crude in refinery's crude diet rose to 56% in the reporting quarter from 48% in the same period last year. Overall, the refinery processed 92% of heavy and ultra heavy crude in Q1 FY14.

Production of valuable middle and light distillates share in the overall crude slate improved to 84% in Q1 FY14, from 82% in Q1 FY13 with the capability to produce Euro IV and V grade products.

Talking on the results, Mr L K Gupta, Managing Director and CEO, Essar Oil,said, “The refinery has demonstrated excellent operating performance with a very strong focus on safety and has consistently outperformed the targeted benchmark IEA margins. Going forward, we are looking to further strengthen our retail business as the deregulation of diesel is eventually in sight based on regular increase in the retail prices.”

Mr Suresh Jain, CFO, Essar Oil, said, “The quarter was marked by rupee volatility, which has impacted our profitability due to mark-to-market provisions. Due to prudent risk management policy followed by us, there are no cash losses. We continue on our path to dollarize our debt and have converted rupee term loans into equivalent foreign currency debt of USD 340 million through ECBs / swaps, taking our total dollarized debt to USD 821 million, in line with RBI approval. Besides providing interest saving, this also enhances our liquidity position.”

Optima Plus project

Essar Oil is undertaking a series of low capex and short gestation optimization projects across its refinery and marketing value chain under the banner of Optima Plus, which upon completion would provide a GRM uplift of about USD 1-1.5 per barrel over a period of next three years. These projects include setting up one more hydrogen manufacturing unit and a conversion of existing VGO into more valuable distillates.