Essar Oil, India's second biggest private refiner, today reported a Rs 1,400 crore net loss in the June quarter due to higher interest costs and fall in oil prices but said it is set to hit Rs 100,000 crore turnover this fiscal.
The Rs 1,400 crore net loss in April-June quarter compared to Rs 469 crore net profit in the year ago period.
Essar Oil CFO Suresh Jain said the company's earnings have been impacted due to significant drop in crude oil prices coupled with rupee depreciation.
Also, the company incurred higher interest and depreciation cost due to ramp up in its Vadinar refinery capacity.
"We had an inventory loss of close to Rs 700 crore. Also, sharp depreciation in rupee led to a foreign exchange loss of Rs 150-200 crore," he said.
The company on an average carries crude oil inventory of 8-9 million barrels, whose value declined (inventory loss) due to fall in international oil prices.
The unit of London-listed Essar Energy PLC in June expanded capacity the Vadinar refinery in Gujarat to 400,000 barrels a day (20 million tonnes) from 360,000 bpd.
Essar Oil expects significant improvement in its performance from the second quarter.
"With upward movement of crude prices and stabilisation of rupee at Rs 56 levels against the US dollar, coupled with higher margins coming out of enhanced refinery complexity (from 6.1 to 11.8) and stabilisation of ramped up capacity,
the results are expected to witness significant upward movement from next quarter," company CEO Lalit K Gupta said.
The company earned USD 5.12 on turning every barrel of crude oil into product in April-June (better than the benchmark IEA margin) as against USD 2.5 a barrel gross refining margin in a year ago period.
It expects GRMs to be USD 7-8 a barrel higher than the benchmark IEA margins from current quarter onwards.
Gupta said the company clocked its highest-ever quarterly revenue of Rs 22,109 crore in first quarter, up 34 per cent from Rs 16,478 crore in the corresponding period of last fiscal.
"We are now targeting a benchmark turnover of Rs 100,000 crore this year," he said.
Essar Oil shares closed flat at Rs 53.85 apiece on the Bombay Stock Exchange.
Higher complexity has already resulted in the share of heavy and ultra heavy crude going up to 89 per cent in first quarter against 66 per cent last year, he said.
Share of valuable light and middle distillates like petrol and