Essar Energy reports 28 per cent rise in pre-tax profits for the year 2010

Essar Energy posts strong 2010 numbers on
better refining margin
.......by...Vidya Ram ....from the pages of the HINDUBusiness Line
.London, March 21:
Revenues will continue to grow in 2011, despite the soaring cost of
oil, Essar Energy said as the firm reported a 28 per cent rise in
pre-tax profits for the year 2010 — its first full-year results since
last year's IPO in London. Pre-tax profits of $365.5 million were some
25 per cent ahead of consensus as refining sales volumes grew, and
gross refining margins rose to $6.6 on a barrel from $4.2 the year
before. "2010 was a transformational year," said Mr Prashant Ruia,
vice-chairman of Essar Energy, the refiner and power generation, which
raised $1.8 billion in last year's listing, alongside an additional
$550 million through a convertible bond issue in February. "We are
well funded."
Essar Energy, which signed an exclusivity agreement to buy Royal Dutch
Shell's Stanlow refinery in the UK last month, expects the deal to be
signed within 10 days (before a March-end deadline). Shell's
consultations with staff were progressing well, the chief executive,
Mr Naresh Nayyar, told a conference call, adding that Essar expected
to take control of the plant in the second half of the year. When
asked if the firm had been hit by Iran's decision to pull out of the
Asian Clearing Unit, Mr Nayyar said they expected no disruption to
supplies of oil from the country — one of the firm's biggest suppliers
— and that the agreement remained in place. However, market sentiment
in London was hit by news of new delays to approval for clearing
forest for its Mahan, Chakla, Ashok Karkata coal blocks — which were
to supply its Mahan 1 and Tori Power stations. The firm said that as a
result, it would be sourcing coal from external sources for the
commissioning of the Mahan 1 coal fired power project in September.
There was also news of delays in its refining and marketing business,
as the firm pushed back the start-up of three plans — Salaya 1, Mahan
and Vadinar P2 by a quarter respectively. Salaya 1, a 1,200-MW plant,
has been hit by delays during the monsoon season, and will start up in
the third quarter, while the other two will begin operations in the
final quarter of the year. EBITDA at the firm's power division were up
37 per cent, but fell marginally to $515.5 million from 514.7 million
in refining and marketing — which the firm attributed to higher
operating costs, and lower foreign exchange gains. Losses at the
exploration and production division fell to $1.1 million, from $8
million the year before.