London-based Essar Energy today reported a 7 per cent decline in its operating profit to $543.7 million in the six months ended September 2013, from $582.6 million a year ago as a weak rupee offset higher margins at its flagship Vadinar refinery.
The LSE-listed flagship Essar Group company, which is also into power generation, oil and gas exploration apart from refining, said during the reporting period it had to take $483 million hit due to the rupee fall.
The newly-appointed Essar Energy chief executive, Sushil Maroo, told reporters in a conference call that pre-tax loss according to IFRS nearly doubled to $498.8 million from $282 million in the six months to September 2012.
Maroo attributed higher losses to the impact of crude oil volatility on inventory of $83 million, forex loss of $483 million on sharp rupee fall from 54 to 63. Much of this is in practice unrealised and will be subsequently recovered through product sales.
The global refining market was very tough during the period, with global industry margins falling sharply in both Asia and Europe. However, Maroo said Essar’s Vadinar and Stanlow refineries outperformed the market, but were nevertheless impacted.
However, Maroo sounded optimistic about the future, saying “future is bright and he expects the overall numbers to see major improvement over the next 12—24 months.”
Vadinar Refinery’s operating profit rose to $339.4 million in H1 from $311.1 million on higher margins which jumped 9 per cent to $6.97 a barrel, against $6.41 a barrel a year ago, Maroo said.