Nov. 26 (Bloomberg) -- Essar Energy Plc, owned by billionaire brothers Shashikant and Ravikant Ruia, almost doubled sales in the fiscal first half after expanding Indian refining capacity and buying an oil-processing plant in Britain.
Revenue jumped to $12.8 billion in the six months through September from $6.5 billion a year earlier, the company said today in a statement. Adjusted earnings before interest, tax, appreciation and amortization almost tripled to $582 million.
Essar Energy completed an expansion of the Vadinar refinery in the western state of Gujarat in June, increasing annual capacity to 20 million metric tons from 14 million tons. The company also boosted fuel volumes with the acquisition last year of Royal Dutch Shell Plc’s Stanlow refinery in northern England.
“We are getting excellent results from our major investments, in particular from our Vadinar refinery expansion and the Stanlow acquisition,” Chief Executive Officer Naresh Kumar Nayyar said on a conference call. “The expansion means we are now able to process a greater percentage of lower-cost ultra-heavy crudes, notably from Latin America.”
Essar Energy, which recently changed its financial year-end to March, reported a loss after tax of $200.8 million in the first half, compared with a profit of $206.2 million a year earlier. The Port Louis, Mauritius-based company cited higher interest costs and depreciation, increased currency losses and the loss of a sales tax benefit.
Operational earnings from the power division fell 13 percent to $93 million as a monsoon affected the amount of river water available for its Salaya plant near the Vadinar refinery. The company is awaiting government approval to build a seawater pipeline to the Salaya facility.
While Essar Energy has expanded power generating capacity more than fourfold in five years, plans to mine coal for its electricity plant in Madhya Pradesh state have been delayed by a federal government decision to seek a ministerial panel review.
Mahan Coal Ltd., a joint venture between Essar and Hindalco Industries Ltd., has now received forest clearance for a coal block to feed the Mahan I power plant, and expects to produce the first coal in 15 to 18 months, Nayyar said.
Essar rose as much as 7.4 percent in London trading, and was up 5 percent at 127.2 pence as of 1 p.m. local time. The shares have dropped 26 percent this year, losing 25 percent in January alone after India’s top court overturned a ruling that allowed the energy producer to defer payment of a sales tax.
The company, whose borrowings rose to $6.69 billion in the first half from $6.27 billion, has started a program to recast $4.8 billion of debt, extending overseas-loan maturities and switching some rupee liabilities into dollar-based debt, two people with direct knowledge of the matter said this month.
“We are looking at a program of refinancing our liabilities for the next two to three years, but we are at an initial stage,” Nayyar said. “We are looking at about $900 million.”
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