Essar Shipping Limited. · NSE:ESSARSHPNG
Essar Shipping — Essar Oil — Investor Presentation (May 2009)
49 slides from Essar Shipping's investor presentation, May 19, 2009
Slide 1: Essar Oil Limited Corporate Presentation
Essar Oil Limited Corporate Presentation Analysts Meet – May 19, 2009
Slide 2: Disclaimer
4 Disclaimer ESSAR’ All information and material in this presentation is provided by Essar Oil Limited (‘Company’) on an “as is" basis. No information contained herein has been verified for truthfulness completeness, accuracy, reliability or otherwise whatsoever by anyone. While the Company will use
Slide 3: Essar Refinery View
Essar Refinery View ESSAR
Slide 4: Essar Oil Limited
Essar Oil Limited Performance Snapshot Refinery Environment Operation Performance Sales & Marketing updates E &P updates Financial Snapshot Expansion Project Management Team
Slide 5: Company Overview
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 A
Slide 6: Performance Snapshot
r | ESSAR’ Performance Snapshot
Slide 7: Performance Snapshot Q4 (January – March 2009)
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 Operatin
Slide 8: Performance Snapshot FY08-09 (11 months)
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
Slide 9: Industry Environment
r | ESSAR’ Industry Environment
Slide 10: The Year gone by - Global Oil Market
The Year gone by‐ Global Oil Market Dubai Crude Movement 160 11th July 08 $147.27/bbl 140 120 100 80 31 March,09 60 $49.66/bbl 40 19th Dec 08 $32.40 /bbl 20 0 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 2008‐09 showed unprecedented volatility in crude oil pr
Slide 11: Light Heavy Crude Price Differential
Light Heavy Crude Price Differential 140 C rude P rice 120 100 80 US$ per barrel 60 40 20 Ja n -0 8 Ma r-0 8 Ma y-0 8 Ju l-0 8 Se p -0 8 No v-0 8 Ja n -0 9 Ma r-0 9 B o n n y L ig h t Arab L ig h t Arab H eavy M aya Fall in light (Bonny Light) & heavy crude price (Maya) differential is in line with
Slide 12: Products Cracks Trend
Products Cracks Trend 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) Cracks on all the products have been highly volatile during the year Cracks slumped on all products in Q4 and for all types of refinery configuration, b
Slide 13: Global Oil Consumption
Global Oil Consumption 88.50 88.3 88.00 87.50 mbpd 87.1 87 87.00 86.7 86.50 86.00 85.50 2 Q 2008 3 Q 2008 4 Q 2008 1 Q 2009 Source : IEA 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.
Slide 14: Global Refinery Capacity Utilization
Global Refinery Capacity Utilization Refinery Runs Europe North America Asia‐Pacific 92 90 88 86 84 Refinery Run 82 80 78 76 74 72 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 Source - IEA Asia‐Pacific refineries have demonstrated better ca
Slide 15: Global Oil Market
Global Oil Market GDP & Oil Demand Growth Correlation between GDP & Oil Demand Growth @ COP Growth Me Ot Demand Growth 4.25% + Emergi << 3.75% 4 SD * driving ’ strong . 3.25% + sa : growth e 2.75% 4 * . . 2.25% + = : ® . 1.75% + ' ‘ s ‘ bd . 1.25% 4 . ‘i is . oi = = 0.75% 4 . & Technology © 8,4 bubb
Slide 16: Continued Delay in Capacity Additions
Continued Delay in Capacity Additions Cost Inflation, regulatory hurdles, economic & financing are resulting in delays kbpd Due to financial crisis, companies have resorted to major cuts in their capex spending.
Slide 17: Petro Products Consumption Growth Rate in India
Petro Products Consumption Growth Rate in India Petro Product Consumption Growth HSD 12% 11.1% 8% 6.66% 7% 10% 8.4% 6% 6.79% 8% 6.9% 5% 4% 3.60% 6% 6.7% 3% 3.68% 3.48% 3.45% 4% 1.4% 2% 2% 0.3% 1.2% 1% 1.42% 0% 0% 2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09 2002‐03 2003‐04 2004‐05 2005‐06
Slide 18: Operational Performance
r | ESSAR’ Operational Performance
Slide 19: Capacity Utilization
Capacity Utilization 135% 131% 130% 129% 129% 130% 126% 123% 123% 125% 121% 121% 118% 120% 114% 115% 110% 105% 100% 10.5 MMTPA 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 commercia
Slide 20: Capacity Utilization (2008-2009)
Capacity Utilization ( 2008 ‐ 2009 ) % Utilization 150 130 123 122 120 104 103 97 97 92 90 60 30 0 MRPL EOL HPCL IOC BPCL RIL CPCL BRPL Source - PPAC Capacity Utilization one of the Highest in the Industry in first year of Commercial Production
Slide 21: Crude Diet
Crude Diet 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% 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
Slide 22: Product Profile
Product Profile Product Slate Q1 Q2 Q3 Q4 Light Distillates 23.7% 20.4% 19.6% 21.7% Middle Distillates 42.9% 44.9% 46.4% 45.7% Heavy Distillates 33.3% 34.7% 34.0% 32.6% Total 100% 100% 100% 100% Optimized Production of Middle Distillates – High Margin Segment Naphtha replaced with profitable mid
Slide 23: Product Profile
Product Profile Butane & Lighter % for FY 2008‐09 SGU/LMU • LPG – 3.70% 90”-220” F Naphtha Crude NHT/CCR • MS – 17.4% 11.95 MT 220-315” F Gasoline Distillation Tower KMU/DHDS • ATF/SKO – 4.5% 315-450” F (Crude Unit) Kerosene DHDS 450-650” F • HSD – 40.70% Light Gas Oil Furnace 650-800” F • Bitumen –
Slide 24: Sales & Marketing
r | ESSAR’ Sales & Marketing
Slide 25: Sales Analysis
Sales Analysis Qty in Tonnes 2,000,000 400,000 PSUs Sales 1,800,000 350,000 1,600,000 Direct Sales 300,000 1,400,000 250,000 1,200,000 Retail Sales 1,000,000 200,000 800,000 Export Sales 150,000 600,000 100,000 400,000 50,000 200,000 ‐ ‐ Q1 Q2 Q3 Q4 Company is aiming to increase presence in domestic
Slide 26: Sales Analysis
Sales Analysis Domestic Export 90% 78% 78% Revenue 80% 70% 71% Products Realized (%) 70% 60% LPG 4.0% 50% 40% Naphtha 0.3% 30% 29% 30% 22% 22% 20% Motor Spirit 19.6% 10% ATF / SKO 5.8% 0% Q1 Q2 Q3 Q4 Diesel 53.5% PSUs Bulk Sales Retail Sales 100% 93.6% 92.7% 89.5% Fuel Oil 15.7% 90% 80% 74.7% Bitume
Slide 27: Marketing Developments
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 India
Slide 28: Retail Outlets
Retail Outlets Pan India Presence with 1,276 retail Outlets 46 y First private company in India to enter petro 8 8 retailing sector (2003) through a franchisee 53 1 model 22 191 3 4 4 101 31 y 1184 are operational as on 31st March, 2009 29 1 1 106 199 25 2 1 34 173 y Positive Gross Margin on MS and
Slide 29: Exploration & Production Updates
Exploration & Production Updates
Slide 30: E&P Assets
E&P Assets Assam ● Part interest in 2 Gujarat exploration blocks ● 70% operatorship interest in Mehsana block CB‐ON/3 ● Certified 2P Reserves of 2.7 mmbbl of oil in one discovery alone West Bengal ● 100% interest in RG(East)‐ CBM‐2001/1 block in Ratna Durgapur, WB ● 50% joint operators interest in R
Slide 31: Exploration & Production Updates
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 Consumer
Slide 32: Financial Snapshot
r | ESSAR’ Financial Snapshot
Slide 33: Financial Performance
Financial Performance Rs. In Crore May ‐ Dec 08 (Jan ‐ March 09) Cumulative Particular 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
Slide 34: EOL's GRM v/s Singapore Cracking
EOL’s GRM v/s Singapore Cracking USD/bbl GRM Singapore Cracking EOL's GRM 14.00 12.54 12.00 10.92 10.00 8.00 8.17 6.59 6.00 5.48 3.78 5.81 4.00 2.00 2.26 ‐ Q1 Q2 Q3 Q4 Sourece : Platts Company is set to create a platform to improve the performance for next year After recovering from forex and Invent
Slide 35: Tax Benefits
Tax Benefits Income Tax Benefit 100% 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
Slide 36: Expansion Project
r | ESSAR’ Expansion Project
Slide 37: Ramping up Capacity to 34 MMTPA with complexity 12.8
Ramping up Capacity to 34 MMTPA with complexity 12.8 Period Planned Today Dec, 2010 Dec, 2011 Particular Base Refinery Existing Refinery Phase ‐I Phase ‐II 000000000000000 12.8 complexity 000000000000000 34 MMTPA 000000000000000 00 11.8 complexity Refinery Details 16 MMTPA 6.1 complexity 14 MMTPA 6.
Slide 38: Upgradation & Expansion Project - Implementation
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
Slide 39: Expanding to 16 MMTPA with higher complexity
Expanding to 16 MMTPA with higher complexity • 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 & H
Slide 40: Refinery Debottlenecking & upgradation - Configuration
Refinery Debottlenecking & upgradation - Configuration Major Units Train I Licensor / Basic Engg. Provider Existing 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,
Slide 41: Implementation Schedule
Implementation Schedule Refinery Debottlenecking & Upgradation ‐ 16 MMTPA 2007 2008 2009 2010 2011 Activity Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Debottlenecking & Upgradation Basic Engineering Detailed Engineering
Slide 42: Debottlenecking & Upgradation Project Status
Debottlenecking & Upgradation Project – 16 MMTPA Project Status as on 31/03/2009 Debottlenecking & Parameters Upgradation Project Basic Engineering 100.00% Detailed Engineering 68.53% Procurement 47.78% Construction 13.85% Overall 32.84%
Slide 43: Project Cost & Proposed Financing Plan
Project Cost & Proposed Financing Plan Rs. Means of Finance Rs. Crores Project Cost Crores Land 93 Equity 2,000 Plant and Machinery 5,602 Internal Accruals 1,210 Miscellaneous Fixed Assets 989 Pre‐Operative Expenses 126 Total Equity 3,210 Interest During Construction 610 Debt 4,600 Contingency 390 T
Slide 44: Essar Oil envisions to be a fully integrated energy company
Essar Oil envisions to be a fully integrated energy company with global footprint Setup Indian retail network of 5,000 outlets and establish footprint in important export markets Significant Presence throughout hydrocarbon value-chain Crude Oil ‐ 30% of refining capacity Gas – 100% of group feed Tar
Slide 45: Refinery Business: Set to Deliver Strong Value
Refinery Business: Set to Deliver Strong Value Strategic Strategic Location, Location, Proximity Proximity to to Materials, Materials, Access Access to to End End Markets Markets India India Emerging Emerging as as aa Global Global Leverage Leverage Existing Existing Project Project Refining Refinin
Slide 46: Thank you
d ESSAR’ Thank you
Slide 47: Management Team
r | ESSAR’ Management Team
Slide 48: Experienced Management Team
Experienced Management Team Naresh K Nayyar P Sampath S. R. Agrawal Managing Director & CEO Director – Finance Director & CEO of E&P division Chartered Accountant and IIM, Ahmedabad Cost Accountant and Company Chartered Accountant with over Alumnus Secretary 31 years experience in oil & gas
Slide 49: Experienced Management Team
Experienced Management Team K V Radhamohan Sheikh Shaffi Raahil Burhaani Head ‐ IST Company Secretary Head – IT ( CIO) B.Tech – Chemical Engineer Over 31 years of experience in Legal, B.E. (Electronics) from Bombay 23 years of experience in International Secretarial, compliances, Capital Iss