Essar Oil on Friday reported a Rs.3,986 crore net loss in the third quarter after a one-time reversal of sales tax revenue. It would raise Rs.3,000 crore in fresh equity capital to shore up the net worth.
To raise fresh capital
“With a view to boosting its net worth and shoring up the liquidity, the company is proposing to request Essar Energy Plc, its parent company, to convert its FCCB (Foreign Currency Convertible Bonds) holding of Rs.1,396 crore in the company to equity immediately; and (will) raise fresh equity capital of about Rs.3,000 crore in the next 12-15 months,” Company CEO L. K. Gupta said in a conference call.
Mr. Gupta, however, said the mode of fresh equity had not yet been decided.
Net loss in the October-December quarter was “on account of an exceptional debit of Rs.4,015 crore towards reversal of sales tax deferral income accounted during May, 2008, to December, 2011,” he said.
The Supreme Court had on January 17 overturned a Gujarat High Court order that allowed the company to defer payment of sales tax to the State Government, and asked the company to pay Rs.6,300 crore in sales tax. He said the reversal had been done pending a decision on a petition the company had filed seeking review of the decision.
Essar Oil, which is 87 per cent owned by London-listed Essar Energy Plc, had posted a net profit of Rs.273 crore in the third quarter of last fiscal.
Mr. Gupta said the profit was also down because of 25 per cent less processing of crude oil at 2.81 million tonnes after the Vadinar refinery in Gujarat was shutdown for 35—days to ramp up capacity.
The expanded refinery capacity of 18 million tonnes from the current 14 million tonnes would be operational by March, he said adding that the unit would further be expanded to 20 million tonnes by September.
“Our single-minded focus is on completing the Phase I expansion and optimisation projects at the Vadinar refinery by March, 2012, and September, 2012, respectively. This will unlock substantial value for our shareholders by way of improved margins, profit and better cash flows,'' he said.
