Despite a fall in the gross refining margin and a refinery shutdown for seven days in December, Essar Oil, the downstream oil and gas arm of the Essar Group, posted a 63% jump in net profit for the quarter ended December 2013 on a year-on-year basis.
This was driven mainly by an 8% reduction in interest costs to R812 crore in Q3FY14. Also, an 11% increase in the company's other income due to an increased interest income also led to the gain at the profit after tax (PAT) level.
“On a net basis, including reduced interest outgo and increase in interest income, there is a saving of 16% in interest cost as we have already started getting benefit of the dollarisation of the debt,” said Suresh Jain,CFO, Essar Oil.
He said for the first nine months, the company converted $900 m of its rupee debt into dollars and the focus now is to convert the remaining $1.3 bn.
For the third quarter, Essar Oil's Ebitda stayed almost flat at R1,202 crore as the company faced a seven-day shutdown in November. This reduced the quarterly throughput of the 20-mtpa Vadinar refinery from 5.14 million metric tonne (mmt) in Q3FY13 to 4.86 mmt.
It also witnessed a 19% year-on-year fall in its GRM to $7.93 per barrel, which hit the company's operational performance.
“If we reduce the number of days of shutdown, we have still crossed 100% capacity utilisation in the third quarter. But we have been able to increase our GRMs compared with the benchmark at a time when the benchmark margins have itself languished,” said LK Gupta, MD and CEO, Essar Oil.