Essar Oil on Friday said it plans to raise Rs3,000 crore.
“We will infuse fresh equity in the company to the tune of Rs3,000 crore. We will require funds to run the refinery once the capacity expansion is over,” L K Gupta, its MD & CEO, said in a conference call.
He said the company will also use part of the funds to retire some debt on its books — currently at a gargantuan Rs15,000 crore.
Analysts, however, see a good part of the funds being used to meet the liability arising out of sales tax deferment to the Gujarat government.
Essar Oil is on track to reach an operational refining capacity of 18 million tonne per annum (mtpa) by this fiscal end and 20 mtpa by end-September. This will not only increase the throughput substantially, but also give the refinery a Nelson Complexity Index of 11.8, so it can process ultra-heavy crude, said Gupta.
“Most of the crude will come from Latin American countries and the Middle East, barring Iran,” he said.
Of its total current crude requirement of 14 mtpa, the company sources as much as 5 mtpa from Iran. However, it has decided to reduce the share of Iranian crude in view of the global situation. “Our contract with Iran ends on March 31, 2013, and till then we will not increase the share of Iranian crude in our basket,” said Gupta.
Meanwhile, Essar Oil has requested its parent company — London Stock Exchange-listed Essar Energy Plc — to “immediately” convert `1,396 crore of foreign currency convertible bonds into equity as the Indian company wants to increase its net worth.
For the quarter ended December 2011, Essar Oil posted a net loss of `3,986 crore on account of an exceptional debit of `4,015 crore towards reversal of sales tax deferral income accounted during May 2008 to December 2011.
Comments