Essar Oil hit by US$252 million net loss

India's second biggest private oil refiner reported a US$252 million net loss in the June quarter from a US$84.3 million net profit year-on-year.

Mumbai-based Essar Oil said the huge plunge was caused by higher interest costs and a drop in oil prices, but said it could hit its target US$18 billion turnover this fiscal year.

CFO Suresh Jain said Essar Oil’s earnings were hard hit by a significant drop in crude oil prices coupled with the rupee’s depreciation. The company also incurred higher interest and depreciation costs due to increased production at its Vadinar refinery to 400,000 barrels a day from 360,000 bpd.

Jain said the company suffered an inventory loss of close to US$126 million. The sharp depreciation in the rupee led to a foreign exchange loss that could range from US$26 million to US$27 million.

Essar Oil, however, expects significant improvement in its performance beginning the second quarter.

CEO Lalit Gupta said he is encouraged by the upward movement of crude prices and the stabilisation of the rupee, coupled with higher margins and the company’s ramped-up capacity,