Essar Oil on Wednesday reported a net loss of R863 crore for the first quarter ended June, compared with a profit of R400 crore in the fourth quarter, hit by forex losses due to the weaker rupee and a fall in gross refining margins (GRM). In the same quarter last year, the company reported a loss of R1,518 crore.
Current price of GRM, which came in at $7.01 per barrel in the first quarter, were 49% higher than $4.69 per barrel in the same quarter last year due to higher complexity post refinery expansion.
However, GRM — the difference between prices of crude oil and petroleum products — contracted from around $9.06 per barrel in the fourth quarter of fiscal 2013, on declining spreads of key products gasoline and gas oil, which saw a sharp decline in prices in the quarter.
The Essar Group company has been increasing its intake of cheaper heavy crude to boost its margins by increasing imports from the Latin American region. Overall, 92% of crude processed by the Vadinar refinery was of the heavy and ultra heavy varieties.
Gross revenue rose 12% to R24,721 crore in Q1 FY14, from R22,109 crore in Q1 FY13, helped by a 15% increase in throughput. In total, forex variations hurt the company by R913 crore in the quarter. However, R165 crore of this was recovered during the first quarter and a further R56 crore of derivatives/swaps. The remaining R692 crore of the mark-to-market forex loss is recoverable in the coming quarters, CFO Suresh Jain said.