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Essar Energy Plc, the London-listed arm of India’s Essar Group, expects to conclude talks on refinancing its $2 billion rupee-denominated debt into dollars in three months, CEO Sushil Maroo said on Monday, as the company released results for the six months ended September 30.
The company is in talks with Indian and overseas lenders, including Chinese ones.
“They are very actively looking at it and we should know positively in the next three months,” Maroo said.
The company has so far refinanced $870 million, which has cut its refinancing costs by $6 million for every $100 million refinanced.
Essar had targeted the dollarisation of $2 billion of debt by next April.
Shares of Essar Energy slid sharply on Monday – down 7.5 per cent in early afternoon trade in London, as the firm reported weaker-than-expected results for the six months, on account of weak refining margins in the UK, high financing costs, and an increase in depreciation and interest costs from power stations at Vadinar, Gujarat, and Mahan, Madhya Pradesh.
Maroo, who took over as CEO in September, said he would continue to focus on maximising value.
Project Optima Plus
In addition to the refinancing, the company continued to focus on ‘Project Optima Plus’ to add $1.5 a barrel to margins in three years, as well as expanding its presence in fuel retail.
Essar is also awaiting regulatory approval for coal blocks for its Tori power project in Jharkhand, and the so-called ‘stage 2’ clearances for its Mahan power project.
The company is not looking at any acquisitions, Maroo said.
India’s GDP prospects would be a key driver for both refinery margins and the firm’s power business, the CEO added.
“We have elections next year, and there will be a new government in place. Decisions will be taken with a long-term perspective. These factors all have a positive impact.”
Outlook
The company admitted the situation in the UK remained challenging.
“Going forward, we can expect margins to be volatile,” said Volker Schultz, head of Essar Oil UK.
He added the impact of shale gas on the refinery market in Europe had been bigger than anticipated.
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