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