essar oil limited · 2011. 1. 17. · essar oil limited analyst presentation january, 2011. key...

Essar Oil Limited

Analyst PresentationJanuary, 2011

� Key Highlights

� Industry Overview

� Refinery Operation

Agenda of Presentation

� Refinery Expansion

� CBM Project

� Financial Performance

1

Highlights : Q3 FY2010Q3 FY2010-11

2

Key Highlights ( Q3 FY 2010

Gross Revenue of Rs. 13809 crore; ( 9M ended Dec, 2010 : Rs 38273 crore)2

1 Highest ever throughput achieved : 3.73 MMT (

3 Current Price GRM $7.21/bbl ( 9M ended Dec,

5

EBIDTA improved to Rs 827 crore ( 9M ended Dec, 201 0 : Rs. 1868 crore)4

Refinery Expansion Project completion expected by e nd June, 2011 (Overall progress : 78%)6

7

Ramped up processing of Mangla Crude to 45000 bp d, constituting 15% of crude slate

8 Refinery achieved 1000+ Lost Time Incident Free days

Optimization Project to enhance capacity to 20 MMTPA on track.

Key Highlights ( Q3 FY 2010 - 11)

( 9M ended Dec, 2010 : Rs 38273 crore)

Highest ever throughput achieved : 3.73 MMT ( 9M ended Dec, 2010 : 11.10 MMT )

2010 : $ 6.50/bbl )

EBIDTA improved to Rs 827 crore ( 9M ended Dec, 201 0 : Rs. 1868 crore)

Refinery Expansion Project completion expected by e nd June, 2011 (Overall progress : 78%)

Ramped up processing of Mangla Crude to 45000 bp d, constituting 15% of crude slate

Refinery achieved 1000+ Lost Time Incident Free days

Optimization Project to enhance capacity to 20 MMTPA on track.

3

Industry Overview

4

Industry Trends

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Petro Product Growth in India

Source: PPAC Source : PPAC

4.8

7.4

11.3

9.0

13.9

11.5

1.4

6.7

11.1

8.49.0 6.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0Gasoline (% growth) Gas Oil (% growth)

$0.00

9.02

11.3412.39 13.04

(3.13)

(6.69)

(4.81)

(8.23)

9.43

11.76 12.8614.26

9.86

7.40 6.718.69

-$10

-$5

$0

$5

$10

$15

$20

Jan - Mar, 10 Apr - Jun, 10 Jul - Sept, 10 Sept - Dec, 10

Gasoil FO Jet Gasoline

Cracks on Products ($/bbl)

Source: IEA

Source : Reuters

0.0

2005-06 2006-07 2007-08 2008-09 2009-10 April-Dec,10

2.05

2.80

3.10

2.75

2.85

2.75 2.85

3.15

3.45

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Arab Light & Arab Heavy Difference ($/b bl)

Source : Reuters$0.00

Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10

87.11

86.2385.69

85.04

84.283.9

85.185.7

86.186.6 86.8 87.0

87.6

86.6

88 88.3

81

82

83

84

85

86

87

88

89

Global Oil Demand (mbpd)

Source: IEA

Source :IEA

ActualProjected

5

Refinery Operations

6

Optimisation of Capacity

8

10

12

14

Highest ever throughput achieved 3.73 MMT, consi stently operating above 14 mmtpa annualised capacity

3.51 3.73

-

2

4

6

Q3 FY10 Q3 FY11

Qty : MMT

9.90

11.10

Highest ever throughput achieved 3.73 MMT, consi stently operating above 14

9M FY10 9M FY11

7

Optimization of Crude Mix

Crude Slate

52% 42%

17% 23%

40%

50%

60%

70%

80%

90%

100%

Ultra Heavy

� Processed 20 types of crudes including ultra heavy & tough crudes

like Ras Gharib, Merey, Maya, Nowrooz

� Avg. API (Density) – 32.4 , Avg. Sulphur %

� Mangala crude constitutes 15% of crude basket

31% 35%

0%

10%

20%

30%

40%

Q3 FY10 Q3 FY11

Crude Slate

52% 44%

20% 21%

Heavy Light

Processed 20 types of crudes including ultra heavy & tough crudes

like Ras Gharib, Merey, Maya, Nowrooz

32.4 , Avg. Sulphur % – 1.50 and Avg. TAN – 0.30

Mangala crude constitutes 15% of crude basket

28%35%

9M FY10 9M FY11

8

Product Mix

Product Slate

24% 26%

60%

80%

100%

Light Middle

28% 29%

49% 45%

0%

20%

40%

Q3 FY10 Q3 FY11

Production of high margin middle & light distillate s

Product Slate

23% 27%

Middle Heavy

26% 28%

51% 46%

9M FY10 9M FY11

Production of high margin middle & light distillate s

9

Sales Performance

Sales Mix

56%

7%

5%

8%

7%

50%

60%

70%

80%

90%

100%

Bulk PSUs

Export Sales of Fuel Oil increased due to replaceme nt of FO by natural gas in Domestic Market

30%37%

56%51%

0%

10%

20%

30%

40%

50%

Q3 FY10 Q3 FY11

Sales Mix

61%56%

7%

6%

9%

7%

Exports Retail

10

Export Sales of Fuel Oil increased due to replaceme nt of FO by natural gas in

23%32%

56%

9M FY10 9M FY11

Expansion of Retail Network

1,385

240

1,200

1,400

1,600

1,800

� No of Retail Outlets increased to 1385 with 240 und er construction providing a clear roadmap to reach the target of 1700 by end of March, 2011

� ALPG and CNG pumps through tie- ups with Aegis Gas and GAIL Gas respectively

1,000

Operation Under Construction

Expansion of Retail Network

75 1700

No of Retail Outlets increased to 1385 with 240 und er construction providing a clear roadmap to reach the target of 1700 by end of March, 2011

ups with Aegis Gas and GAIL Gas respectively .

Under Construction Under Planning Total

11

Non-Fuel Retail Services Bouquet

Lubricants: Servo, Castrol, BP, Total, Elf

Services: Car Wash, Servicing

Auto Components: BOSCH, EXIDE, JK Tyres

Multi fuel options: Gasoil, Gasoline, CNG and ALPG

Alli

ed S

ervi

ces

Food & Beverage Agricultural Products

Non-allied Services

Increased focus on NFR activities to provide franch isees with additional sources of revenue

Fuel Retail Services Bouquet

Telecom / Internet

Banking / Finance

Increased focus on NFR activities to provide franch isees with additional sources of revenue

12

Refinery Expansion ProgressRefinery Expansion Progress

13

Expansion to 18 MMTPA

Complexity to improve to 11.8 from 6.1

� Overall progress : 78.13%

� Engineering : 99.28%

� Procurement : 83.41%

Refining Expansion - Phase I

� Construction : 67.15%

� 100% purchase order done for long lead Items

� Zero Lost Time Incident

� Cost : within Budget

� All units on schedule except two units

� Planned shutdown in May/June – Tie - ins new units

Phase I

100% purchase order done for long lead Items

ins for

14

Upgradation of existing unit

� Overall Progress : 88.30%

� 107 out of 126 equipments received

� Erection of all equipments completed

� Revamp will be completed during the

Upgradation of existing unit – CDU/VDU

completed

the Shutdown

15

Delayed Coker Unit

Sept -10

� Overall Progress : 70.39%

� Four Coker drums erected & last two received

� Major equipments erected : 4 Coke drums, Debutanize r, Absorber, Stripper, Light cycle & Heavy cycle gas oil stripper, Blow d own tower, Fuel gas scrubber, etc

� 179 out of 264 equipments received

Dec-2010

Four Coker drums erected & last two received

Major equipments erected : 4 Coke drums, Debutanize r, Absorber, Stripper, Light cycle & Heavy cycle gas oil stripper, Blow d own tower, Fuel gas scrubber, etc

16

VGO – HT (Vacuum Gas Oil Hydrotreater Unit)

Sept -10

� Overall Progress : 80.61%

� 119 out of 177 equipments received

� Major equipments erected : Kerosene & Diesel Stri pper, MP Medium pressure Off Gas Stripper, LP Low pressure Off Gas Scrubber, Recycle gas scrubber, Product fractionators, Recycle gas compre ssor, Feed surge drum

� Project Schedule currently lagging by a quarter

HT (Vacuum Gas Oil Hydrotreater Unit)

Dec-2010

Major equipments erected : Kerosene & Diesel Stri pper, MP Medium pressure Off Gas Stripper, LP Low pressure Off Gas Scrubber, Recycle gas scrubber, Product fractionators, Recycle gas compre ssor, Feed surge drum

Project Schedule currently lagging by a quarter17

ISOM Unit (Isomerization unit)

Sept -10

� Overall Progress : 83.59%

� Major equipments erected- Stabilizer, Net Gas Scrubber, LPG Stripper

Deisohexanizer, Methanator Reactor, Feed surge drum & Atm. flash vessel

� 86 out of 101 equipments received

(Isomerization unit)

Dec-2010

Stabilizer, Net Gas Scrubber, LPG Stripper

Deisohexanizer, Methanator Reactor, Feed surge drum & Atm. flash vessel

18

DHDT Unit (Diesel Hydrotreater Unit)

� Overall Progress : 71.30%

� 69 equipments out of 122 equipments received

� Major equipments erected : Recycle gas compressor, Recycle gas scrubber,

Stripper, Product fractionators, Feed surge drum, R ecycle gas compressor

� Project Schedule currently lagging by a quarter

DHDT Unit (Diesel Hydrotreater Unit)

69 equipments out of 122 equipments received

Major equipments erected : Recycle gas compressor, Recycle gas scrubber,

Stripper, Product fractionators, Feed surge drum, R ecycle gas compressor

Project Schedule currently lagging by a quarter

19

HMU Unit (Hydrogen Manufacturing

� Overall Progress : 67.20%

� 53 equipments out of 74 equipments

� Major equipments erected : Process condensate stri pper, Process gas boiler, Pre reformer, Common LPG Surge drum, Flare knock out drum, Fuel gas knock out drum, HP condensate flash drum, StartSeparator, Continuous & Intermittent Blow down dru m

(Hydrogen Manufacturing Unit)

Major equipments erected : Process condensate stri pper, Process gas boiler, Pre reformer, Common LPG Surge drum, Flare knock out drum, Fuel gas knock out drum, HP condensate flash drum, Start -up Nitrogen Separator, Continuous & Intermittent Blow down dru m

20

Desalination Unit : 98% Erection Completed & Pipe Racks : 87% completed

Sept -10

98% Erection Completed & Pipe Racks : 87% completed

Dec-2010

21

Supporting Infrastructure: Commissioning of Power Plant

Power Plants (Owned by Essar Power)

� Existing Power Plant : 77 MW & steam

� Commercial operation of Vadinar Phase

synchronized with Grid, ready to supply power to Ref inery Expansion Project.

Supporting Infrastructure: Commissioning of

22

& steam @ 230 TPH

Commercial operation of Vadinar Phase – I Expansion of 380 MW completed;

synchronized with Grid, ready to supply power to Ref inery Expansion Project.

Supporting Infrastructure Facilities Supporting Infrastructure Facilities

Ports & Terminals (Owned by ESPLL)

Current facilities

� 5 road & 1 rail gantry : 7 mmtpa

� 1 berth at Jetty for product evacuation : 7

mmtpa

� 1 SPM with crude intake capacity : 27

mmtpa

� Tankages, Pipelines & other facilities

23

� Tankages, Pipelines & other facilities

New Additional facilities

� 5.5 mmtpa tankages facilities : being

commissioned in phases

� 1 Berth at existing jetty : 7 mmtpa

completed

� 1 Road Gantry : completed

Train 1 Optimisation Project to 20 MMTPATrain 1 Optimisation Project to 20 MMTPA

24

Optimization to 20 MMTPA

Rationale for Expansion

� Improvement in economics due to maximum utilization of low priced Ultra Heavy Crude

� Capacity expansion to 20 MMTPA in minimum time and cost

� Optimum utilization of available infrastructure & s upport facilities

New Units/ Facilities

� CDU/VDU-1 Debottlenecking

� CDU/VDU-2 (Converted VBU) Augmentation

� Mangala Crude Tankages & Pipeline & blending Facili ties

� Coke Drums (two) & Associated Facilities

� Desal-Demin Tank, Cooling Tower & Air Generation Faciliti es

� VGO & FCCU Modification & NG Compressor for HMU

Funding & Timeline

� Estimated cost of above facilities : Rs. 1,700 Cror es, being funded through mix of Debt & Equity

� Optimzation expected to be completed by Sept, 2012

Improvement in economics due to maximum utilization of low priced Ultra Heavy Crude

Capacity expansion to 20 MMTPA in minimum time and cost

Optimum utilization of available infrastructure & s upport facilities

2 (Converted VBU) Augmentation

Mangala Crude Tankages & Pipeline & blending Facili ties

Demin Tank, Cooling Tower & Air Generation Faciliti es

VGO & FCCU Modification & NG Compressor for HMU

Estimated cost of above facilities : Rs. 1,700 Cror es, being funded through mix of Debt &

Optimzation expected to be completed by Sept, 201225

Unit Configuration

Unit Configuration10.5 MMTPA

(Operating @ 14.5 MMTPA)

CDU

VDU

VBU / Converted CDU

NHT

CCR

FCC

DHDS

SRU

ARU

SWSU

DHDT

VGOHT

DCU

ISOM

HMU,Nm3/hr

10.5 MMTPA(Operating @ 14.5 MMTPA)

20 MMTPA

10.5 18.0

7.2 10.9

1.9 2.0 (CDU)

1.6 1.8

0.9 1.1

2.9 3.9

3.7 5.3

440 TPD 1115 TPD

- 11.9

- 3.5

- 4.0

- 6.5

- 7.5

- 0.7

- 155,00026

CBM ProjectCBM Project

27

Status of CBM Production at Raniganj

� 15 test wells are presently producing & 10 well

are under production & dewatering.

� Actual production increased to 30000 scmd

from 18000 scmd.

� Hydrofacturing of 12 wells with 74 jobs also

completed during the quarter.

� Significant progress achieved in drilling surface � Significant progress achieved in drilling surface

holes & vertical wells.

� Commerciality sales to commence shortly.

� Pipeline Construction from Raniganj to

Durgapur under trial stage; expected to be

commissioned by Q4 FY11.

� Financial closure for Phase – I (143 wells)

achieved with project cost : Rs 819 crore & debt

& equity (70:30)

Status of CBM Production at Raniganj

31

35

29

30

31

32

33

34

35

36

Sept, 2010 Dec, 2010

Production Wells15 test wells are presently producing & 10 well

Significant progress achieved in drilling surface

59

75

0

10

20

30

40

50

60

70

80

Sept, 2010 Dec, 2010

Surface hole

Significant progress achieved in drilling surface

achieved with project cost : Rs 819 crore & debt

28

Financial PerformanceFinancial Performance

29

Financial Results

Particulars Q3 FY10

Throughtput-Million Tonnes 3.51

INCOME

Income from Operation 11,420

Less: Excise Duty & Taxes 1,494

Net Income from Operation 9,926

Other Income 39

Total Income 9,965

EXPENDITUREEXPENDITURE

Cost of Goods Sold 9,573

Operating Expenditure 333

Forex Loss/(Gain) (169)

Total Expenditure 9,737

EBITDA 228

Interest & Finance Charges 285

Operational Cash Profit (57)

Depreciation 184

PBT (241)

Tax (15)

PAT (226)

C P GRM $/bbl (0.52)$

C P GRM $/bbl (With STI) 1.56$

( Rs Crore )

Q3 FY10 Q3 FY11 9M FY10 9M FY11

3.51 3.73 9.90 11.10

11,420 13,809 30,460 38,273

1,494 1,576 4,409 4,600

9,926 12,233 26,050 33,673

39 100 120 194

9,965 12,333 26,170 33,867

30

9,573 11,156 24,415 31,088

333 318 915 984

(169) 32 (415) (74)

9,737 11,506 24,915 31,999

228 827 1,255 1,868

285 300 859 905

(57) 526 396 963

184 185 547 550

(241) 341 (151) 413

(15) 68 (1) 80

(226) 273 (150) 333

(0.52) 4.69$ 1.06$ 4.28$

1.56 7.21$ 3.10$ 6.50$

Key Financials

Current Price GRM (U SD/bbl)

$5.79

$4.24

$1.56

$5.37

$5.79 $6.49

$7.21

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

169

(94)

(226)

180

(70)

130

273

-300

-200

-100

0

100

200

300

Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11

Profit After Tax (R s Crores)

Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11

7895 11144 11420 11942 12048 12415 13809

667

359

228

681

407

634

827

0

100

200

300

400

500

600

700

800

900

0

2000

4000

6000

8000

10000

12000

14000

16000Gross Sales EBITDA

Gross Sales & EBITDA (R s Crores)

4674

6348

71217391

2.19

1.64 1.53 1.56

0.00

0.50

1.00

1.50

2.00

2.50

0

1000

2000

3000

4000

5000

6000

7000

8000

Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11

Net Worth Debt/Equity

00

Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11

Net Worth (Rs Crores) & Debt Equity Ratio

31

Particulars 31-Dec-10

Debt

Refinery 7,347

Expansion 3,229

E&P & Others 968

Total Debt11,544

Equity 6,215

FCCBs1,174

Debt/Equity Ratio 1.56

Essar Oil – Financial IndicatorsRs crore

Ticker (BSE / NSE) ESSAROIL

Number of Shares (mn) 1365.66

Promoter’s Ownership

( including GDS)

89.96%

Free Float 10.04%

Market Capitalization ($ –Million)

4,552

Average cost of debt 10.5% - 11.0%

Expansion 31-Dec-10

Equity/Internal Accruals 3210

Debt 4600

Total 7,810

Working Capital 31-Dec-10

Short Term Loan 2,057

Financial IndicatorsRs crore

•Total cash spent including bills accepted uner L/C s: Rs 6377 crore• LCs opened, yet to be utilized : Rs 1433 crore

621

3777

5994

FY11 FY12 – FY16 FY16 onwards

Debt Maturity Profile

Short Term Loan 2,057

Crude Liabilities 5,869

Total 7,926

Rs crore

32