Essar Oil ends last quarter with net loss of Rs 1400 crore

MUMBAI: Essar Oil ended its most eventful quarter with a net loss of Rs 1400 crore. However, considering its recent capacity expansion that made it one of the most complex refineries in the country, this could very well be its last quarter of a net loss.

During the last quarter Essar Oil not only expanded its refining capacity from 14 MTPA to 20 MTPA, but also improved the refinery’s complexity – trade terminology used for ability to convert worse types of crude oils to make better grades of fuels. Thanks to the higher complexity the company is confident of earning $7-$8 per barrel extra over the benchmark refinery margins calculated by the International Energy Agency (IEA).

“The losses through the Apr-Jun ’12 quarter were mainly attributable to inventory losses of Rs 700 crore as global oil prices crashed. Depreciation in rupee led to a loss of around Rs 150-200 crore, while the interest and depreciation jumped on projects commissioning,” noted Suresh Jain, chief financial officer of the company in a conference call for media.

The company is taking efforts to bring down its interest costs and make sure its inventory losses never recur in future.