Plagued by volatile global oil prices, economic slowdown and rupee depreciation, private oil refiner and retailer Essar Oil's net loss for the third quarter this fiscal rose a staggering 8,686 per cent as compared to the net loss posted in the corresponding period last year.
This was despite its revenue increasing by over 5,500 per cent.
In a regulatory statement on Monday, Essar Oil said it posted a net loss of Rs 12.3 billion for the quarter ending Dec 31, 2008 a stunning increase from Rs 140 million in the corresponding quarter in 2007.
The total income for the same period rose by 5,518 per cent to Rs 84.2 billion, compared to Rs 1.5 billion last year.
The company in its release said the quarter had been a “challenging one because of the extraordinary factors that global macro economics forces have brought”.
The gross refinery margins dropped to $2.2 per barrel in the third quarter, compared to $6.59 per barrel in the second quarter.
“The recessionary environment triggered off a steep fall in commodity prices that negatively impacted the profitability of the business. This was primarily due to shrinking of the refinery margins and erosion of the value of the crude and product inventory which the company held,” the company said.
Further, due to the liquidity crisis and the sharp fall in value of rupee, borrowings became more expensive.
Essar has reopened over 1,000 retail outlets, after the sharp fall in global crude prices had made operations “profitable” in the domestic market.
The company already runs a 10.5 million tonne per annum capacity refinery at Vadinar in Gujarat, which it plans to expand to 34 million tonnes in two phases.
In the first phase, the capacity will be increased to 16 million tonne per annum by December 2010, with the remaining capacity being added by December 2011.