Essar Oil logs Q3 loss of Rs 3,986 crore

 Essar Oil Ltd has reported a Rs 3,986 crore net loss in the third quarter after a one-time reversal of sales tax revenue and said it will raise Rs 3,000 crore in fresh equity capital to shore up the networth.

“With a view to boosting its networth 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 approximately Rs 3,000 crore in the next 12-15 months,” CEO L K Gupta said in a conference call. Gupta, however, said the mode of fresh equity has not yet been decided.

Net loss in 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 has been done pending a decision on a petition the company has 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 Q3 of the last fiscal.

Gupta said the profit was also down because of 25 per cent less processing of crude oil at 2.81 million tonne after the Vadinar refinery in Gujarat was shutdown for 35-days to ramp up capacity.

The expanded refinery capacity of 18 million tons from current 14 million tons would be operational by March, he said adding the unit would further be expanded to 20 million tons by September.

“Our single-minded focus is on completing the Phase I expansion and optimisation projects at the Vadinar refinery by 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.

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