Embed Size (px)
Citation preview
Essar Oil Limited
Corporate Presentation
Analysts Meet – May 19, 2009
Disclaimer
Essar Refinery View
Essar Oil Limited
Performance Snapshot
Refinery Environment
Operation Performance
Sales & Marketing updates
E &P updates
Financial Snapshot
Expansion Project
Management Team
Company Overview
Essar Oil Limited at a Glance
Ticker (BSE) ESSAROIL
Number of Shares 1,201,529,604
Promoters' Holding (including GDS) 88.6%
Market Capitalisation (Rs in Crore)* 18,263
Free Float (Equity Share without GDS) 38.0%
Employees 1731
Refinery Capacity 2,80,000 bpd
Retail Outlets 1276
E&P Assets 5 blocks
* as on 18th May, 2009
Performance Snapshot
Performance Snapshot Q4 (January – March 2009)
Crude Throughput for the quarter : 3.31 Million Tonnes
Gross Revenue from Operation : Rs. 8041 crore ( USD 1.61 billion)
Domestic & Export Ratio : 78% & 22%
Gross Refinery Margin : USD 10.92 / bbl
Operational EBIDTA : Rs. 1125 crore
Operating Cash Profit : Rs. 804 crore
Profit after Tax : Rs. 660 crore
Bitumen Sales surged to Rs. 233 crore, constitutes 4.5% of Domestic Sales
Retail Sales zoomed three fold to Rs. 732 crore as compared to last quarter
Highest Quarterly Profit due to stable crude prices , favourable crude mix & enhanced focus on value added products in domestic market
Performance Snapshot ( FY08‐09) ( 11 months)
Commencement of Commercial Production : May, 2008
Crude Throughput for the Year : 11.95 Million Tonnes
Refinery consistently operating at 123% of its name plate capacity
Gross Revenue from Operation : Rs. 41856 crore ( USD 8.37 billion)
Domestic & Export Ratio : 74% & 26%
Gross Refinery Margin : USD 8.89 / bbl
Operational EBIDTA : Rs. 1202 crore
Operating Cash Profit : Rs. 111 crore
Profit after Tax : Negative Rs. 514 crore due to inventory & forex loss
Earned cash profit despite unprecedented volatility in Crude Prices & Fluctuation in Foreign Exchange Rates
Industry Environment
The Year gone by‐ Global Oil Market
2008‐09 showed unprecedented volatility in crude oil prices
Crude Oil prices reached a peak of $147/bbl on 11th July 08 and fell sharply
to $32.40/bbl on 19th Dec 08 within a period of five months
Crude Oil price recovered lost ground in Q4; however long lasting economic
crisis & major fall in Oil demand still present
Dubai Crude Movement
0
20
40
60
80
100
120
140
160
Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
11th July 08$147.27/bbl
19th Dec 08$32.40 /bbl
31 March,09$49.66/bbl
Crude Price
20
40
60
80
100
120
140
Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09
US
$ pe
r bar
rel
B onny Light Arab Light Arab H eavy Maya
Light Heavy Crude Price Differential
Fall in light (Bonny Light) & heavy crude price (Maya) differential is in line with fall in crude prices. Light & Heavy differential continues to be in range of 16% ‐18% of Bonny Light Crude Price
Products Cracks Trend
Cracks on all the products have been highly volatile during the yearCracks slumped on all products in Q4 and for all types of refinery configuration, both complex and simple.HSD cracks finally found a floor in March; since then clawed back to $ 11/bbl MS cracks bounced back strongly in Feb,09 after averaging zero in Dec,08
Cracks ($/ bbl) Q1 Q2 Q3 Q4
MS/ Gasoline 12 4 2 8
HSD / Gasoil 38 26 18 9
Kerosene 37 29 22 11
Fuel Oil (26) (12) (9) (5)
Global Oil Consumption
Economic Downturn resulted in demand destruction of 1.3 MMb/d against an increase in demand forecast at more than 1.5 MMb/d made for 2008.
88.3
86.7
8787.1
85.50
86.00
86.50
87.00
87.50
88.00
88.50
2 Q 2008 3 Q 2008 4 Q 2008 1 Q 2009
mbp
d
Source : IEA
Global Refinery Capacity Utilization
Refinery Runs
72
74
76
78
80
82
84
86
88
90
92
Jan‐08 Feb‐08 Mar‐08 Apr‐08 May‐08 Jun‐08 Jul‐08 Aug‐08 Sep‐08 Oct‐08 Nov‐08 Dec‐08 Jan‐09 Feb‐09
Period
Ref
iner
y Ru
n
North America Europe Asia‐Pacific
Source - IEA
Asia‐Pacific refineries have demonstrated better capacity utilization
Global Oil Market
Continued Delay in Capacity Additions
Due to financial crisis, companies have resorted to major cuts in their capex spending.
Cost Inflation, regulatory hurdles, economic & financing are resulting in delays
kbpd
6.79%
3.68% 3.48%
3.60%
1.42%
6.66%
3.45%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09
Petro Product Consumption Growth
4.8%
11.3%
8.0%
4.3% 4.5%
7.4%
9.0%
0%
2%
4%
6%
8%
10%
12%
2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09
MS
8.4%
6.7%
6.9%
1.2%0.3%
11.1%
1.4%
0%
2%
4%
6%
8%
10%
12%
2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09
HSD
17.60%
9.20%
‐1%
13%
15.60%
19%
5.10%
‐5%
0%
5%
10%
15%
20%
2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09
BITUMEN
Petro Products Consumption mainly MS & HSD & Bitumen are expected to grow at healthy rate
Petro Products Consumption Growth Rate in India
Source : PPAC
Operational Performance
Capacity Utilization
114%
121%123%
131%
118%
129% 129%
123%126%
130%
121%
100%
105%
110%
115%
120%
125%
130%
135%
May‐08 Jun‐08 Jul‐08 Aug‐08 Sep‐08 Oct‐08 Nov‐08 Dec‐08 Jan‐09 Feb‐09 Mar‐09
Consistently operating above 12.5 MMTPA (123% capacity utilisation) in first
year of commercial operation
10.5 MMTPA
Capacity Utilization ( 2008 ‐ 2009 )
Capacity Utilization one of the Highest in the Industry in first year of Commercial Production
Source - PPAC
% Utilization
130123 122
104 103 97 97 92
0
30
60
90
120
150
MRPL EOL HPCL IOC BPCL RIL CPCL BRPL
Crude Diet
Consistent optimization of Crude Basket during last 4 Quarters.
Processed more than 20 types of crudes during the year
Avg. API : 32, Avg. Sulphur : 1.5 and Avg. TAN : 0.50
Crude Utilization Q1 Q2 Q3 Q4
Light & Sweet Crude 40% 36% 31% 30%
Sour & Tough Crude 60% 64% 69% 70%
Total 100% 100% 100% 100%
Optimized Crude Mix to reduce Average Crude Cost
Product Profile
100%100%100%100%Total
32.6%34.0%34.7%33.3%Heavy Distillates
45.7%46.4%44.9%42.9%Middle Distillates
21.7%19.6%20.4%23.7%Light Distillates
Q4Q3Q2Q1Product Slate
Optimized Production of Middle Distillates – High Margin Segment
Naphtha replaced with profitable middle distillates
Plant capable of producing high margin Bitumen
Consistent optimization of Product Basket based on market dynamics & Refinery configuration
Product Profile
Crude11.95 MT
Furnace
DistillationTower
(Crude Unit)
VacuumUnit
Naphtha
Gasoline
Kerosene
Light Gas Oil
Heavy Gas Oil
Residue Fuel Oil
90”-220” F
220-315” F
315-450” F
450-650” F
650-800” F
800+ “ F
NHT/CCR
SGU/LMU
KMU/DHDS
DHDS
FCCU
VBU
• HSD – 40.70%
• MS – 17.4%
• ATF/SKO – 4.5%
• LPG – 3.70%
• FO ‐ 32.7%
Butane & Lighter
• Bitumen – 1.00%
% for FY 2008‐09
Sales & Marketing
Sales Analysis
Qty in Tonnes
Company is aiming to increase presence in domestic market by increasing Retail & Direct Sales
‐
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Q1 Q2 Q3 Q4
‐
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Direct Sales
Retail Sales
PSUs Sales
Export Sales
Sales Analysis
100%Total
0.3%Sulphur/VGO
0.7%Bitumen
15.7%Fuel Oil
53.5%Diesel
5.8%ATF / SKO
19.6%Motor Spirit
0.3%Naphtha
4.0%LPG
Revenue Realized (%)Products70% 71%
78% 78%
30% 29%22% 22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q1 Q2 Q3 Q4
Domestic Export
93.6% 92.7% 89.5%
74.7%
7% 7%6% 11%
4%0% 0%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 Q2 Q3 Q4
PSUs Bulk Sales Retail Sales
As % of Domestic Sales value
Marketing Developments
Firm arrangements with HPCL, BPCL & IOC for product offtake of 7 million tonnes
and infrastructure sharing provides strong foothold in domestic market.
Bitumen Sales touched 108 TMT during the quarter, within 4 month of its
production, the company has captured 10% of Indian Market
Multiple Infrastructure Capabilities to deliver products by Road, Rail & Coastal
transportation.
Retail Sales jumped to 14% of Domestic Sales in Q4 as compared to 4% in last
Quarter primarily due to reactivation of Retail Outlets and increase in Retail Sales of
MS & HSD.
Retail Sales increased to Rs. 732 crore in Q4 from as compared to Rs. 214 crore in
Q3 due to maintenance of RSP at PSU level.
3
78
8
22
31
2
1
199
46
29
72
39
44
173
1106
34
53
101
1
61
1
191
8
25
1
First private company in India to enter petro retailing sector (2003) through a franchiseemodel
First private company in India to enter petro retailing sector (2003) through a franchiseemodel
1184 are operational as on 31st March, 20091184 are operational as on 31st March, 2009
Pan India Presence with 1,276 retail Outlets
Present revenue from retail is about Rs. 240 crores per month (Avg of Q4)Present revenue from retail is about Rs. 240 crores per month (Avg of Q4)
Positive Gross Margin on MS and HSDPositive Gross Margin on MS and HSD
Retail Outlets
Flexible Model to optimize profit both in short and long term
Exploration & Production Updates
E&P Assets
Ratna● 50% joint operators interest in Ratna & R series blocks
Gujarat● 70% operatorship interest in Mehsana block CB‐ON/3
● Certified 2P Reserves of 2.7 mmbbl of oil in one discovery alone
Assam● Part interest in 2 exploration blocks
West Bengal● 100% interest in RG(East)‐CBM‐2001/1 block in Durgapur, WB
Exploration & Production Updates
Raniganj RG(E)‐CBM‐2001/1
• Raniganj block has high prospects of recoverable reserves
• Deployment of Innovative & Cost effective technique for drilling of Production Test Wells.
• Estimated CBM production per well is more than 5000 SCMD.
• Identification of Consumers & Markets are underway.
• Infrastructure for the collection and compression of gas is being set up.
• Sizeable CBM production in commercial quantities expected to start shortly
Ratna & R‐Series block – PSC is yet to be executed by Govt. of India
Other Blocks are at exploratory stage only
Financial Snapshot
Financial Performance
Rs. In Crore
May ‐ Dec 08 (Jan ‐ March 09) Cumulative
Q1+Q2+Q3 Q4 Full Year
Gross Sales / Income from operation 33,814 8,041 41,856
Less : Excise duty & Taxes 3,052 1,247 4,300
Net Income from operation 30,763 6,793 37,556
Other Income 103 40 144
Total Income 30,866 6,833 37,700
Cost of Goods Sold 28,733 5,469 34,203
Operating Expenditure 700 334 1,033
Forex Loss 1,356 (95) 1,261
Operational EBIDTA 77 1,125 1,202
Interest & Finance Charges 770 321 1,091
Operational Cash Profit (693) 804 111
Depreciation 480 175 655
PBT (1,172) 629 (544)
Tax 1 (31) (30)
PAT (1,174) 660 (514)
GRM (USD/bbl) 6.41 10.92 8.89
Particular
EOL’s GRM v/s Singapore Cracking
Company is set to create a platform to improve the performance for next year After recovering from forex and Inventory losses in third quarter.
GRM
8.17
5.48
12.54
10.92
3.785.81
2.26
6.59
‐
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Q1 Q2 Q3 Q4
Singapore Cracking EOL's GRM
Sourece : Platts
USD/bbl
Tax Benefits
Income Tax Benefit100% income‐tax exemption on refinery profits for 7 years u/s 80‐IB
Sales Tax/ VAT Deferral Benefit Sales Tax Deferment benefit of Rs. 9100 cr.
Huge benefits in terms of NPV & Cash flow availability.
Deferment upto August 2020 or exhaustion of limit, whichever is earlier.
Repayment will be in 6 equal annual installments thereafter
Gujarat High Court has given a decision in favour of company for
deferment of sales tax.
Gujarat Government preferred appeal before Supreme Court against
High Court Order
Presently, the Company is availing the deferment benefit
Expansion Project
Ramping up Capacity to 34 MMTPA with complexity 12.8
EURO V/US spec /CARBS
EURO IV/VUpto Euro III/IVUpto Euro IIIProduct Grade
3%3%2%2%Sulphur % Avg.
2424.831.535.5API (Density) Avg.
12.8 complexity 34 MMTPA
11.8 complexity 16 MMTPA
000000000000000000000000000000000000000000000
00
6.1 complexity 14 MMTPA
6.1 complexity 10.5 MMTPA
Refinery Details
Phase ‐IIPhase ‐IExisting RefineryBase RefineryParticular
Dec, 2011Dec, 2010TodayPlannedPeriod
Upgradation & Expansion Project ‐ Implementation
Phase – I to debottleneck & upgrade the base refinery by 31/12/2010,
which will take the capacity to 16 MMTPA in addition to increase in
complexity.
Considering the impact of global macro economic development, the
completion schedule of Phase – II of the Project (18 MMTPA) has been
reviewed to ensure the expansion in capacity matches with global
demand revival. Now, it is expected to be commissioned by 31/12/2011.
Expanding to 16 MMTPA with higher complexity
Note: Products as % of total Production
Substantial Increase in Gross Refinery Margin
(complexity : 11.8)(complexity : 6.1)
• Conversion of entire negative margin FO into high value products & Pet Coke.
• Enhancing ability to process Tough & Sour Crude
• Build flexibility between light & middle distillates
• Flexibility to produce petrochemical feed stock
• 62% of Gasoline & HSD will be compatible to EURO IV/V
Refinery Debottlenecking & upgradation - Configuration
World Renowned Technology and Process Licensors
Major Units Licensor / Basic Engg. ProviderExisting Units New Units
Crude Distillation Unit (CDU) 16.00 Open Art (ABB) / Open Art (UOP)Vacuum Distillatin Unit (VDU) 9.70 Open Art (ABB) / Open Art (UOP)Visbreaker Unit (VBU) 2.20 Axens, FranceVacuum Gasoil Hydrotreater (VGO HDT) 6.20 UOPFluid Catalytic Cracker Unit (FCCU) 3.50 Stone & Webster / UOPNaphtha HydroTreater (NHT) 1.75 Axens/ UOPDelayed Coker Unit (DCU) 5.70 ABBContinuous Catalytic Reformer (CCR) 1.00 Axens/ UOPDiesel Hydrodesulphurisation (DHDS) 4.50 Axens/ UOPDiesel Hydrotreater (DHDT) 3.80 UOPIsomerisation Unit (ISOM) 0.70 UOPSulphur Recovery Unit (SRU) (TPD) 440.00 675.00 JacobsATF Hydrotreater 1.00 UOPAmine Regeneration Unit (ARU) 11.30 UOPSour Water Stripper (SWS) 3.05 UOPHydrogen Manufacturing Unit (HMU) (1x130,000 +
1x10,000) NM3/Hr
Haldor Topsoe
Train I
New Units addition increase the complexity from 6.1 to 11.8
Implementation Schedule
Refinery Debottlenecking & Upgradation ‐ 16 MMTPA
Activity
Debottlenecking & Upgradation
Basic Engineering
Detailed Engineering
Procurement ‐ Long lead items
Procurement ‐ General Items
Construction / Erection
Mechanical completion
Oil In
Stabilisation & Trial Run
Start Commercial Production
Q1 Q2 Q3 Q4Q4 Q1 Q2 Q3Q1 Q2 Q3 Q42011Q1Q1 Q2 Q3
2007 2008 2009 2010Q4
Debottlenecking & Upgradation Project – 16 MMTPA
32.84%Overall
13.85%Construction
47.78%Procurement
68.53%Detailed Engineering
100.00%Basic Engineering
Debottlenecking & Upgradation ProjectParameters
Project Status as on 31/03/2009
Project Cost & Proposed Financing Plan
USD 100 million disbursed and Capex LC worth of Rs. 1600 crore already opened.Promoters infused $ 300 million as towards equity
7,810Total Cost
390Contingency
610Interest During Construction
126Pre‐Operative Expenses
989Miscellaneous Fixed Assets
5,602Plant and Machinery
93Land
Rs. Crores
Project Cost
7,810Total Source
4,600Debt
3,210Total Equity
1,210Internal Accruals
2,000Equity
Rs. CroresMeans of Finance
Total Cost $ 1562 mn Equity ‐ $ 642 mn & Debt – $ 920 mn
Setup Indian retail network Setup Indian retail network of 5,000 outlets and of 5,000 outlets and establish footprint in establish footprint in
important export marketsimportant export markets
Crude Oil Crude Oil ‐‐ 30% of 30% of refining capacity refining capacity
Gas Gas –– 100% of group feed 100% of group feed stock requirementstock requirementTarget refining capacity Target refining capacity –– 1 1
million bpd* with state of million bpd* with state of the art technologythe art technology
Significant Presence throughout hydrocarbon
value-chain
* 705000 bpd at Vadinar & balance outside India
Essar Oil envisions to be a fully integrated energy company with global footprint
Refinery Business: Set to Deliver Strong Value
Strategic Location, Proximity to Materials, Access to End
Markets
Strategic Location, Proximity to Strategic Location, Proximity to Materials, Access to End Materials, Access to End
MarketsMarkets
One of the Largest Single Location Refineries Globally –Economies of Scale Benefits
One of the Largest Single One of the Largest Single Location Refineries Globally Location Refineries Globally ––Economies of Scale BenefitsEconomies of Scale Benefits
High Complexity, Cost Competitiveness,
Product Flexibility and High GRM Potential
High Complexity, Cost High Complexity, Cost Competitiveness, Competitiveness,
Product Flexibility and High Product Flexibility and High GRM Potential GRM Potential
Refining Industry Outlook Remains Strong
Refining Industry Outlook Refining Industry Outlook Remains Strong Remains Strong
India Emerging as a Global Refining Hub
India Emerging as a Global India Emerging as a Global Refining HubRefining Hub
Leverage Existing Project Execution Capabilities and
Infrastructure
Leverage Existing Project Leverage Existing Project Execution Capabilities and Execution Capabilities and
InfrastructureInfrastructure
Building an Environmental Friendly “Green Refinery”
Thank you
Management Team
Experienced Management Team
Naresh K NayyarManaging Director & CEO
Chartered Accountant and IIM, Ahmedabad Alumnus34 years of experience in Oil & Gas sector including development of multi billion dollar project, new markets and global operations in Oil & Gas IndustryWas on the Board of reputed companies like IOC, ONGC, IBP, and Petronet LNG
P SampathDirector – Finance
Cost Accountant and Company SecretaryOver 30 years of experience in areas of Corporate Finance, M&A, Investors Relations and Management Accounting in diverse industriesWas MD of GHCL Ltd and Group CFO of RPG Enterprise Ltd
Naren VachharajaniCEO – Operations & IST
B.Sc, PG Diploma (Marketing Management) from Centre for Management StudiesOver 35 years of rich experience including 18 years with IPCL13 year of experience with Essar Group
Nasir IftikharExecutive Director ‐ Strategy & BusinessDevelopment■ Graduate (Chemistry), PGD Marketing,
Senior Executive Program, Stanford■ 20 years of experience in British
Petroleum■ 1 years in Essar.
S. R. AgrawalDirector & CEO of E&P division
Chartered Accountant with over 31 years experience in oil & gas industry including heading E&Poperation, Finance, Accounts & Commercial activities
With Essar Group since 1986
K GovindarajanCEO– Refinery Expansion
Graduate Chemical EngineeringOver 25 years experience in refinery projects, operations, maintenance & supervisionWorked with Indian Oil Corporation Ltd. as Executive Director ‐ Petrochemicals
S. ThangapandianCEO ‐Marketing
Over 26 years of experience in the Oil and
Gas industry in Sales & Marketing
Previously wokred with HPCL, Gulf Oil,
Petro Fina, RPL.
With Essar since 2004
C ManoharanHead ‐ Refinery■ Graduate in Chemical Engineering ■ Over 30 years of experience in
Refinery Operations and also has rich experience in commissioning various process units including FCCU and Hydro Cracker
D.K.JhaHead‐ EPS
MBA from IIPM, Gurgaon & B.Tech (Chemical), IIT Kanpur Over 25 years of experience including with Reliance Industries, UOP at NNPC Nigeria and IOC, Barauni Refinery
Experienced Management Team
K V RadhamohanHead ‐ IST
B.Tech – Chemical Engineer23 years of experience in International trading, Supply & operations with IOC & Reliance Industry.
Robert KuiperiSr. Vice President ‐ Commercial■ Master of Law from University of
Leiden,Holland■ 30 years of experience with ABB
Lummus Global where he was Director for the Commercial & Legal department
Kaustubh SonalkarHead – HR
Post Graduate program in Marketing & Human Resources at Texas School of Management, USAOver 14 years experience in HR and Business Strategy, Compensation & Benefits, HR Operation & Marketing
Shailesh SawaCFO – Refinery Expansion■ Chartered Accountant & Cost
Accountant■ Over 25 years of experience in
Corporate Finance, having worked with Gujarat Ambuja Cements, Modern Woollens Ltd. and SEBI.
■ With Essar since 1994 & has worked in various positions
Sheikh ShaffiCompany Secretary
Over 31 years of experience in Legal, Secretarial, compliances, Capital Issues and Corporate GoverenceWith Essar Group since last 13 years
Raahil BurhaaniHead – IT ( CIO)
B.E. (Electronics) from Bombay University18 years of rich experience with 1.5 years with British Gas prior to Essar, Tata Teleservices, Enron, Bharat Bijlee, Piramal, CMS
D.K.ShuklaHead – Project Review■ PG Diploma MBA from I.I.sc., Bangalore
and B.Tech( Chemical), Kanpur■ Over 31 years of experience & worked
with Reliance Ind. as a Sr. VP leading the process engineering team.
■ Worked earlier with Engineers India Ltd.., MW Kellogg ( Houston), BOC Gases ( USA), BOC Process Plants( U.K.) & IOC( Delhi)
S. StalinProject Director, Essar PMC Ltd■B.E( Chem). & Diploma in Management from AIMA
■Over 35 year of experience in Technical Leadership, Project Management, General Management, Evaluation of Investment and Marketing of fertilizers & agro chemicals
■ Worked with SPIC, Chambal Fertilizers, Chemicals Ltd, Paradeep Phosphates & Nagarjuna Fertilizers & Chemical Ltd
Bharat GalaPresident‐ Hydrocarbons & PetChem■ MS – Chemical Engineering 1985 from
Mississippi State University USA■ Work Experience of 26 Years with
Chemtex International in Wilmington, Fluor Daniel in Sugarland Texas, Intergraph – Huntsville Alabama and KBR in Mobile Alabama. 1.2 years of experience with Essar Group
