The Ruias-promoted Essar Energy on Monday posted a pre-tax loss of Rs 1,534 crore for the six months ended September 30, against a pre-tax profit of Rs 1,225 crore.
Group revenue was up 97 per cent at Rs 72,450 crore in April-September on higher refining revenues in India, from higher capacity and the acquisition of the Stanlow refinery in Britain. During the first half of 2011, revenue was Rs 33,150 crore.
London-listed Essar Energy has changed its accounting period from December-ending to March-ending, and, therefore, brought out the results for the 15-month.
"We have made good progress during the half year to improve margins at both our Vadinar and Stanlow refineries. At Vadinar, we are capitalising on our new, higher complexity units by selling large volumes of high-value diesel into India and have resolved all sales tax dues and related funding issues," said Naresh Nayyar, CEO.
He added Stanlow delivered a very substantial increase in Ebitda (earnings before interest, tax, depreciation and amortisation), on the back of a good operating performance and favourable market conditions.
"We have several projects underway at Stanlow to deliver significant additional margin enhancements," said Nayyar.
Essar Energy had acquired Stanlow for $350 million from Shell in July 2011. Gross refinery margins rose to average $8.03 per barrel, compared with $3.06 a barrel in the first eight months to March 2012, the company said in a press statement.
"Of this margin uplift, $1 per barrel is due to internal initiatives and investments as part of the '100 day plan' put in place following acquisition by Essar for $350 million in July 2011," the company said.
It added that investments at Stanlow are aimed at improving margins by $2-$3 per barrel by 2014-15. The company is installing natural gas to fuel the six boilers providing steam to drive the refinery.
Stanlow produces 15 per cent of the UK transport fuels.
The 14 per cent depreciation in the rupee against the dollar during the 15-month period resulted in an overall foreign exchange impact of $317 million on adjusted Ebitda including the revaluation impact and other foreign exchange losses of $243.2 million.
Nayyar said, "We are now very much an operational energy business, with many construction projects completed, and our capex investment programme has peaked. The expansion of our Vadinar refinery has been very successful, putting the plant on a par with the best in the world. Here, high-value fuels can be created from lower-cost, ultra heavy crudes."
Clearance for Mahan coal block
The company's power business, however, continues to be hit by regulatory and coal supply issues in India. The firm said it had secured provisional approval for forest clearance for its Mahan coal block in Madhya Pradesh. This would enable it to start mining operations at the site. "Significant progress is still required in a number of areas, and we would continue our dialogue with both the state and the central governments to try and ensure this momentum is not lost," said Nayyar.
Essar said that after getting all clearances, production at its Raniganj CBM block in West Bengal is expected to reach 3 million standard cubic metres (scm) per day. The clearances are expected in the second half of calendar year 2013, the company said. Raniganj's total proven and probable reserves (2P), are 113 billion cubic feet (bcf) gross.